Share Name Share Symbol Market Type Share ISIN Share Description
Costain Group Plc LSE:COST London Ordinary Share GB00B64NSP76 ORD 50P
  Price Change % Change Share Price Shares Traded Last Trade
  0.70 1.21% 58.70 971,566 16:35:26
Bid Price Offer Price High Price Low Price Open Price
58.90 59.60 59.80 56.80 58.00
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Construction & Materials 1,155.60 -6.60 -2.70 161
Last Trade Time Trade Type Trade Size Trade Price Currency
17:11:50 O 684 59.311 GBX

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Date Time Title Posts
25/11/202019:33Rishi Sunak's National Infrastructure Strategy for Ј100 billion of long-term inv6
03/9/202007:33UNDERVALUED GOOD recovery play.. COSTAIN6,508
17/4/202013:35COSTAIN - PE of 28
24/4/201307:47*** Costain ***13

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Costain Daily Update: Costain Group Plc is listed in the Construction & Materials sector of the London Stock Exchange with ticker COST. The last closing price for Costain was 58p.
Costain Group Plc has a 4 week average price of 34.15p and a 12 week average price of 30.35p.
The 1 year high share price is 217p while the 1 year low share price is currently 30.35p.
There are currently 274,949,741 shares in issue and the average daily traded volume is 1,007,798 shares. The market capitalisation of Costain Group Plc is £161,395,497.97.
imastu pidgitaswell: Yes, they need to gain some interest and traction with institutions. Nobody wants to know at the moment. And you can see why. I always thought of advertising (a sector I used to work in) as a great socialist business, as it rewarded the directors and staff handsomely, but never made any money for the shareholders. This sector seems to share those traits. I spent some time over the weekend re-reading the half year stuff - always important to make sure you are not missing something, given the extreme nature of the share price action last week. I can't see that I am, but that doesn't mean I am right. In regard to the margins and the other issues above - the half year presentational slides answer those questions. I think it is important not to think of this as purely a roads construction business as it was 5-10 years ago. And a key wildcard in the pack is what happens if(!) and when KIE goes bust. Arguments both ways - but my view is that it would be good for COST. But I would say that, wouldn't I?
zeek: I remember being annoyed at the time of the RI in that it seemed to happen at the worst possible time with the share price bring very low. Surely if they had identified the strategy of needing a better balance sheet to bid for better contracts they would have raised money earlier when the share price was over £1 causing less dilution. Now I suspect it was solely due to the realisation that they were going to need this money to cover these 2 contracts and that without the RI they would have struggled.
imastu pidgitaswell: I don't know too much about either, but KIE (large debt, no recent information and a very entertaining thread) and GFRD have some activities in the same field - GFRD a similar balance sheet with significant net cash. But I agree, they are much more pure building construction, especially GFRD - city centre stuff etc, and I can therefore understand their share prices. MGNS is more successful, maybe a better comparator. All the rest (Jarvis, Carillion, Amey et al) went bust. Worth remembering the COST order book is over £5 billion, or c5 years' work. It's not a great sector recently, as their share prices show - but when the business is available for less than 1p per share (as it was just before the close), there comes a point...What is needed is institutional support, i.e. demand for their shares. Currently there just isn't any. They need to generate some appetite. I do keep reminding myself that when I first bought these at 38p, just before they shot up (thanks to a lot of shorts caught, erm, short) to over 100 (intraday), that it was meant to be a long term hold and a proper 'investment'. As such it doesn't matter whether it is 38p, 100p, 200p or 52p. Yes, I keep telling myself that... :-)
imastu pidgitaswell: They can't buy as it is in a closed period - until the results are published. The thing about the ballsed-up contracts is that COST have paid almost all of the costs (staff costs, contractor costs, supplies etc). From a cash perspective, there is only potential upside - broadly speaking - from the arbitration process. Regarding cash needed to operate - they just need sufficient liquidity, be it cash in the bank or borrowings, same as any business, but even more so for a long term contract construction company where you pay for stuff ahead of being reimbursed by the client. Also for the reasons they stated at the time of the placement - potential clients do like to see a financially robust company servicing their business, they do not want it to go bust and deal with all of the complexities and expense of that - I have seen it happen professionally and it's a mess when it happens. It is all part of a scoring system that is reduced to just 'pass' or 'fail' in theory, but in practice all of the other scoring (to decide who to award the contract to) is influenced by that initial perception of the company's stability. Basically having net cash on the balance sheet and plenty of it helps. Re selling - me too. Holders seems a bit silly, at these prices, and after the placement at 60p. For me, the question is what needs to happen to turn the share price around. Nobody wants this (from the institutions - I want plenty) - doesn't matter how cheap it gets. I guess the answer is they want to see certainty re these 2 contracts (although I think they're not relevant going forward), and that COST (and others in the sector, e.g. KIE) can generate cash on a consistent basis without regular contract messes. The balance sheet cash, the future income is all there for COST (not so for KIE) - it's all about execution and delivery.
imastu pidgitaswell: hTTps:// Of all the excuses for getting your financial results out late in this extraordinary year, the continuing traffic jam on the A465 is one of the more random. Like the Schleswig-Holstein question in the 19th century, many have long forgotten the roots of the ruck over the £400 million Heads of the Valleys road reconstruction between Merthyr Tydfil and Abergavenny. Not so investors in Costain, who have had this tarmac albatross round their neck for the best part of the past decade. In short, a dispute between the construction company and the client, the Welsh government, over the ever-changing specification and spiralling cost of dualling the A465 is about to come to a head, with a final arbitration on what Costain is owed or not owed. A settlement is so financially significant to Costain, possibly running into tens of millions for a company whose profits in a good year are never much more than £40 million, and so imminent that it has said it cannot issue its half-year figures. Couple that with a £49 million write-off on the abrupt end of a contract to build a gas facility in Cambridgeshire after a bust-up with one of its key clients, National Grid, and the wider view of investors on construction stocks has been confirmed: they remain in the only-touch-with-a-bargepole category. The broader context is the collapse two and a half years ago of Carillion. Corporate historians will recall two hospitals, a dual carriageway near Aberdeen and the redevelopment of Doha for the 2022 Fifa World Cup finals did for Carillion and lifted the lid on the debatable boardroom stewardship of a £5 billion-turnover company. The backdrop is that such construction failures — historically endemic in the industry — are supposed to happen less frequently because, as the sector keeps insisting, lessons get learnt and procurement and management of such contracts is handled in a much more grown-up way these days. The A465 and National Grid contract failings are hammer-on-thumb moments for a company that bangs on about its strategic success in staying close to a handful of key infrastructure clients with which relationships are strong. Costain is a brand that punches well above its weight: even now, after a £100 million fundraiser in the spring and with £140 million of net cash, it attracts a stock market value of only £160 million. Its prospects are rich. The government has vowed to reconstruct our post-Covid economy with a “new deal” policy of build-build-build. Much of Costain’s latest £2 billion order flow is tied to £1 billion of work on the first phase of the HS2 high-speed railway. Costain is no Carillion and, embarrassing as it is, delaying its results because of an unquantifiable financial pothole on a rural road in Wales is probably the right decision. But a cratering of Costain’s share price yesterday on the news is more evidence, if any were needed, that investing in construction companies should come with a Health & Safety Executive warning.
barnesian: Why would anyone buy this share at the moment? If you are already a holder, you will top up on the placing at 60p rather than pay market price over 60p. If you are not a holder, and are long term investor, surely you will wait until after the new shares come on the market to see where the share price settles. If you are a short term investor, there is probably more short term downside than upside to the current share price. I can see that there are sellers who don't want to invest more in this company and don't want to be diluted. But I can't see many buyers before 21st May. My guess is that share price will drift down towards towards 60p as we get near 21st May leaving many investors with a difficult decision. When the new shares are admitted to market on 29th May, then I expect the share price to go up towards 70p as delayed purchasers come in, but the price will be constrained by sellers of the placing hoping for a quick turn.
big brother8: Costain Group Costain steams higher on green light for HS2 Euston tunnels contract The new contract marks the point where the work transitions from design and preparatory work to full detailed design and construction Costain Group - The JV has already prepared the site of the approach tunnels to Euston station Costain Group PLC (LON:COST) shares rocketed as the construction group’s next contract for work on the HS2 rail project was given a green signal. Costain's joint venture company, Skanska Costain Strabag, won a £3.298bn contract to design and build the tunnels coming into the Euston station terminus. As the coronavirus lockdown means there is no construction on-site “apart from safety-critical works”, the contract is not expected to make a significant contribution to the group's profitability until the 2021 financial year. Costain is likely to have a 33% share of the JV, analysts suggested, meaning an estimated contract value of £1.1bn will have formed a large part of the group's £4.2bn order book at December's year end. With the contract lasting for six or seven years, revenues are forecast to amount to around £50mln this year and ramp up to around £200mln of revenues by 2021, analysts at Liberym calculated. Following Boris Johnson’s approval of HS2 on 11 February and the award of this contract from the government, the “marks the point where the work transitions from scheme design and preparatory work to full detailed design and construction”, Costain said, building on initial design and site preparation work carried out so far. The High Speed 2 rail line, which has attracted criticism over the destruction of ancient woodland and over whether the massive spending will produce worthwhile benefits, is due to begin running trains in 2028-2031 depending on the construction timetable Separately, Costain said it has won a £210mln contract by Highways England to design and build an upgrade to a section of the A30 north of Truro in Cornwall due to be complete by the end of 2023. The work includes upgrading an 8.7-mile section between Chiverton Cross and Carland Cross from a single carriageway to a dual carriageway, together with the construction of new junctions, slip roads and bridges. Costain said detailed design work will begin in April with works starting in the coming months once lockdown is lifted. Shares in the company surged 33% to 73.14p on Wednesday morning, though they are still down more than 50% so far this year. “The JV has been awarded the contract despite concerns about its financial strength, noting concerns also about the financial strength of other suppliers like Kier,” analysts at Liberum said. “The stand-by under-writing may have helped.” With profit recognition expected to be cautious and, given the delayed start due to Covid-19, the analysts forecast zero profit contribution in the current financial year, rising to £160mln and £200mln of additional revenues, and £4mln and £7mln of additional underlying profit in the 2021 and 2022 financial years. “We have heard elsewhere in the industry that the terms of the contracts are attractive with caps and collars limiting the risk of the supply chain, and limiting the cost to HS2. We assume neutral working capital as it uses a project bank account and therefore the increased profit should flow directly to the financial position, resulting in expected broadly neutral net cash in FY 2021,” the analysts noted. As Costain has a £99m actuarial pension deficit, Liberum still believes the company needs to raise up to £100mln.
majwandco: (As recently posted on LSE) Costain’s share price by all accounts has had an awful run this last couple of months - Overall, the drop is justified, albeit I believe massively oversold. Why? The long-term positives • Equity Raise will only be offered on the basis that a 6-7% profit margin can be proved viable to investors. A £1billion/year revenue gives a target profit of £60m/£70m – For a company valued currently at £38m, that’s impressive. (see below for more details) • A conservative P/E of 10 on the above terms would value the company at circa £600m. Even if the £100m equity is raised at current share price of 35p, that would mean 285m new shares. Yes- Almost 3 new shares for every 1 held. Yet at a market cap of £600m being nearly 16x the current price. It still represents a share price in the region of £1.50 which would be a 300%+ increase on todays share price. • 70% of the workforce still operating throughout Lockdown (See latest RNS) meaning profits will take a limited hit compared to other sectors. This is due to the focus on remote working and the advanced IT infrastructure the company possesses. • £27billion to be in invested in infrastructure by the Government over the next 5 years. Costain are a leader in this sector and stand to benefit from this massively. • Collaborates with UK Government and Blue Chip Clients only • A total order book of over £4billion • £300m of work won in February ’20 alone www. • Potential additional profits gathered from A465 project. (see below) Looking at the most recent results, Profit was down from £40m in 2018 to a £6.6m loss in 2019, a £46.6 deficit, but that was due to a number of one-off events: 1. £20m loss due to arbitration costs resulting from a dispute on the A465 in Wales. (more information on that below) 2. £9.7m loss due to issues relating to a roof at the National Synchrotron scientific laboratory in Oxfordshire. 3. 16m loss due to Contract losses and delays. 4. 15m less net cash due to its commitment to fairer payment practices (reducing payment terms for Sub-Contractors). This transition is very much a one off financial ‘hit’. The above totals £60.7m, if any of, or a number of the above were avoided then the profits would have been substantially more than what was eventually realised. Granted all/most of the above are the fault of the Company, however these were significant one-off events rather than systemic consistent failures. BP’s oil spill in 2010 cost the company billions, profits were destroyed, but it didn’t turn them into a bad company because of it. Costain communicated that they wished to release much of the bad news within a concentrated timeframe. Ie. (Poor) End of year results, £100 equity raise, then came the unprecedented effect of Covid-19. I would rather this than a consistent drip feed of negative news if a strong, steady Share Price rise is to be realised. The Equity Raise Yes the lack of any information at all was/is extremely frustrating, it seems poorly executed by the board, but the facts remain: In order for this equity raise to take place it was noted that the company would need to demonstrate to its investors that it could move towards a 6-7% profit margin. (See link below) www. If the equity raise takes place, Equity Raise only provided on the basis of a targeted 6-7% profit margin. At £1billion/year revenue gives a target profit of £60m/£70m – For a company valued currently at £38m, that’s outlines how undervalued the current MC will be. So for me, if the equity raise does take place, yes there will be dilution, but it is also huge resounding positive that Costain’s transition to its ‘Leading Edge Strategy’ (Page 18 www. ) is viable. Profits locked in the A465 - £80m? The A465 was/is an extremely complex project which has resulted in a number of disputes with the Welsh Government. The only documented result thus far is a £20m loss to Costain which has obviously negatively affected the SP, however there is a potential HUGE upside coming Costain’s way if the below is to be believed: “as of November 2019 the Welsh government has put aside an £80.5m to cover expected liabilities for adjudications that have been ruled in favour of the contractor” www. A positive adjudication of this nature would have a substantial impact on the share price. Costain may not be primed to make the day traders their quick 40%, it may take a period of time to realise it’s true potential. There are multiple events that could change the landscape of the company overnight. Plus when the world reaches a stage where Covid-19 is a dim and distant memory, the government will be desperate to kick start the economy with heavy investment in the UK infrastructure, Costain will be ready to assist.
value hound: I agree it's undervalued, and I also agree with bogdan branislov that it's undervalued notwithstanding HS2 news - so bought some both before and after the recent TU. At the same time, I think HS2 will be at least modified / scaled back in some way / deferred (if not cancelled) to enable Boris to spend his planned feel-good billions. If that happens (though I hope it won't) the COST share price will surely give us another chance to buy lower.
bogdan branislov: Re HS2 and is cancellation still in the price. I remain a shareholder, I have a 6 figure sum invested in Costain, so clearly I have a vested interest, this is how I see it, warts and all. The chance of HS2 cancellation is, in my opinion, 50% now, possibly higher. Why? because the projected costs have risen and the regional railways desperately need investment, it will be hard to do both in this parliament. Directing investment at HS2 rather than the local railways including in the former Labour regions is not a good re-election strategy for the Conservatives. HS2 is under 20% of turnover for Costain in 2020, so lets say just over 20% of its profits. The long term impact comes down to simple maths. If you deduct just over 20% of next years profits from Costain's 2020 forecast, will this make a distressed business in terms of its balance sheet and does Costain still look cheaply priced without HS2 profits. The answers are, no, Costain's balance sheet equity should grow in 2020 without HS2 and yes, without HS2 still looks very cheap. But we know that markets are skittish, if HS2 cancels then yes there will be an instant share price impact perhaps of 10% or more, hard to see a big fall from the current price as Costain's valuation more than allows for HS2 cancellation, but if the price recovers, say 15%, then HS2 cancels, Costain could fall by 10% or more instantly. This does not concern me, Costain is both high quality and very cheap, a rare combination. If HS2 cancels, Costain will pick up a lot of regional work. The construction sector has been the hardest hit by the economic and political uncertainty of recent years, Costain has shown its quality by facing challenges without balance sheet distress. I also have large holdings in CSP, MGNS, FORT, GLE and LGEN. These companies, like Costain are high quality and under priced. They have not hit quite so many bumps in the road as Costain, but this is in the price, Costain is selling for much the same share price as nearly a decade ago, with very little share issuing since and look what has happened to Costain's balance sheet equity in the past decade, around 5x up I recall. Costain should double to triple in share price over the next 2 to 3 years, no guarantees obviously, but my SIPP is over 12x up since May 2009 from investment returns/dividends alone, so my while my calls are not always right, they are correct more often than not. Essential to take at least an 18 month view here, the road could remain a little bumpy for a while. This is not a 2 way bet on HS2 continuation, I anticipate HS2 cancellation and believe Costain to be a genuine bargain without HS2. I will keep calling it as I see it on this thread.
Costain share price data is direct from the London Stock Exchange
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