Costain Share Discussion Threads

[pinemartin9] 05/7/2024 16:44

They've got much more selective about the jobs they pursue. Prioritisation of higher margin contracts. It's the old adage - revenue is vanity, profit is sanity, cash is king.

[phg87] 05/7/2024 13:28

Looked through lat 2 reports but cannot see, can anyone tell me why the FY revenue between 2022 and 2023 dropped by 6%?

Can only see this... a reduction in volumes due to the rephasing and rescoping of certain projects in the division.

Thanks

[pinemartin9] 01/7/2024 14:26

Good read. Looks primed for another leg up IMO.

[mirabeau] 01/7/2024 09:32

Costain Group – Are These Shares Significantly Undervalued?

“We shape, create and deliver pioneering solutions that transform the performance of the infrastructure ecosystem across the UK’s energy, water, transportation and defence markets.”

That is the claim by the 150 year-old Costain Group (LON:COST) – which is a business that I continue to rate as significantly undervalued.

Its shares, now 84.20p, could double and still look cheap.

Costain brings together a unique mix of experts to transform the performance of infrastructure that connects, protects and powers people’s lives.
The Business

The group operates in six main sectors – Rail, Integrated Transport, Road, Water, Energy, and Defence and Nuclear Energy.

Rail – it delivers end-to-end asset lifecycle solutions across the entire railway, from major station projects to multi-disciplinary rail projects.

Integrated Transport – it works with diverse customers spanning Aviation, Light Rail and Place to transform organisational performance and accelerate the transition to net zero.

Road – it is a leading provider of end-to-end highway services, delivering technology-led solutions for its customers.

Water – it is a leading provider of engineering solutions to UK water utility companies across the asset lifecycle.

Energy – it supports the decarbonisation of the UK’s energy infrastructure by improving existing asset efficiency and life extension while leading the transition to a sustainable clean, green energy future.

Defence and Nuclear Energy – it supports the strategic defence capabilities and energy resilience that protect and power the UK, its people, values, and interests.
Recent Comment

The AGM Trading Update issued on 16th May saw the company confirm that trading in the first four months of the current year were in line with expectations and that the group continued to have a high-quality forward work position that aligns with its strategic plans for both the Transportation and Natural Resources divisions.

It is in line to deliver its margin targets of an adjusted operating margin run-rate of 3.5% during the course of 2024 and 4.5% during the course of 2025.

“While the Board is mindful of the macro-economic backdrop, it remains confident in the group’s strategy and medium to long-term prospects.”
Brokers’ Views

Analysts Joe Brent, Alex O’Hanlon and Sanjay Vidyarthi at Liberum Capital have a 100p a share Price Objective on their Buy recommendation.

Ahead of the First Half Results to end June being announced on Wednesday 21st August, the brokers have estimates for the current full year to show £1,219m sales, £46.5m profits, 12.3p earnings and paying a 1.2p per share dividend.

For next year they see £1,216m revenues, £52.1m profits, 13.8p earnings and a 1.4p dividend.

Recent Order Book intake is looking very positive, with hopes of better margins.
My View

I am impressed that Joe Brent is so convinced about this group’s value that he predicts that the company will be showing a 20p a share earnings figure in due course.

I have been a long-term fan of this group and I continue to rate its potential very highly.

Importantly, I also like that its balance sheet is predicted to have £140m net cash within its coffers by the end of this year – which compares with its current market capitalisation of £235m, with its shares trading at around 84.20p each.

It may well take a very long time to achieve my first pre-Brexit, pre-Covid Target Price, even so these shares are destined to rise substantially, in my view, over the next couple of year or so – they remain a Very Strong Hold.

[pinemartin9] 28/6/2024 22:19

I always find Blackhorse to be an inverse indicator of reality. For some bizarre reason his crazy ramblings seem to have a positive imact on the shares he talks about! I see it as a positive thing that he's appeared! Long love BH! He's inversely correlated to positive share prive movement! Viva le Blackhorse!

[owenski] 28/6/2024 20:05

Oh dear, bellend blackhorse has appeared.

[blackhorse23] 28/6/2024 10:48

Switched to RNK [better change to capital gains] 4 brokers issued strong BUY

[catabrit] 28/6/2024 08:26

M Group - an infrastructure contractor with 2bn turnover and 6bn order book - just got bought by PE for over £1bn. Interesting comp for Costain. I have asked around for more details.

[muckshifter] 27/6/2024 16:10

I understand your scepticism Catabrit, but I'm not talking about jobs making 2%. I've been heavily involved in both parts of various contracts which made 30% or more. My point always was that if you lack the expertise to price and run appropriate types of big one offs they are dangerous, but if you stick to areas were you have the expertise they are worthwhile.

Incidentally, the other day I posted that the most extreme incompetence that I had ever seen in major civils was a project with Trafalgar House, who were subsequently taken over by a Norwegian company who were saved from implementing the project by political turbulence, and then sold on the construction division a couple of years later to Skanska. But that was many years ago.

[muckshifter] 27/6/2024 14:19

The problem with moving away from the large one off projects is that you miss out on the big winners which with the right expertise in tender selection and preparation followed by good site expertise can be very lucrative. The reluctance to tender for such projects is perhaps a reflection of that lack of expertise making it safer to avoid pricing contracts with badly understood technical requirements or contract terms.

Aren't Alstom train builders rather than anything to do with civil engineering?

[catabrit] 27/6/2024 13:59

The new MD of Transport apparently has an excellent track record in rail (7-yrs at Alstom prior to Skanska) and is widely liked and respected.

[chris magpie] 27/6/2024 12:55

They mostly tend to be frameworks and if you don't get all of the variations signed off you can come unstuck.
Let's hope commercial teams are on the ball.
But helps order book but quiet on Rail still hopefully after election might be some more investment.

[catabrit] 27/6/2024 10:26

I think it depends on the nature of the work (long-term via a framework say or a one off) and the nature of the relationship. One off projects are inherently more risky and that's why Costain has walked away from these sorts of jobs: they no longer bid for them.

On quite a lot of Costain's tenders they are one of three bidders, essentially. Likewise on a number of their frameworks they are the only party so there is no competition.

All of the Tier 1 firms are turning down the same sort of risky work and that is why all of them are signalling margin expansion. Obviously the market is in 'wait and see' mode but I think we will all be pleasantly surprised over the coming months and years.

[chris magpie] 27/6/2024 08:54

Hisorically a very tough sector to make good margins on.
Pain/Gain T & C's etc.

[mirabeau] 26/6/2024 06:37

You can see more contracts coming from the 'water industry'

[pinemartin9] 26/6/2024 06:36

Nice. We're building quite a niche in the water treatment sector. Lovely. Keep the good news coming!

[someuwin] 26/6/2024 06:13

Costain Group PLC

26 June 2024

Costain and MWH Treatment joint venture CMDP awarded £65m programme by Southern Water

Infrastructure upgrades will provide long-term resilience of water supply

Costain Group PLC ("Costain") announces that its CMDP joint venture with MWH Treatment has been awarded contracts worth £65m by Southern Water as part of the water company's AMP7 investment programme.

The work will run until late 2025 and will see the joint venture improve the resilience of the local water supply and upgrade wastewater treatment works at Testwood near Southampton, and Burham in Kent.

The integrated CMDP team will work closely with Southern Water and its engineers to develop cost-efficient solutions, optimise asset performance and deliver the implementation through to the end of AMP7. Both sites will see major renovation, refurbishment and expansion of existing assets to cope with rising demand for drinking water and increasing volumes of wastewater.

This contract extension adds to Costain's growing positions with leading water companies, which include Anglian Water, Northumbrian Water Group, Severn Trent Water, Thames Water, United Utilities and Yorkshire Water.

Alex Vaughan, CEO, Costain, said:

"We are pleased to extend our relationship with Southern Water and to bring our strategic expertise to critical upgrades of its infrastructure. We will ensure Southern Water continues providing clean drinking water to its customers while improving its resilience for the future. This is important work that will have a transformative impact on the lives of residents and local communities, and builds on Costain's growing positions with the leading water companies as they continue to improve the quality of our water supply."

[dickbush] 25/6/2024 14:28

Liberum: We expect H1 to show further margin progress.

It would have been a disaster otherwise...but good to know.

[hamhamham1] 21/6/2024 15:09

Lovely spikerooni

[pinemartin9] 21/6/2024 14:07

If the trade was reported has it not already been filled?

[no24rton] 20/6/2024 13:21

Once the 5mil from earlier in the month is filled this will go above 90.. taken a while on such low daily volumes

[roguemale1] 19/6/2024 07:39

hxxps://schroders.podbean.com/

[foreverbull] 18/6/2024 13:32

Please would you mind posting a link

[catabrit] 18/6/2024 11:35

Leo Quinn (CEO of Balfour Beatty) was recently interviewed on the Schroder's podcast and I highly recommend everyone listen to it.