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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
  -0.25 -0.53% 46.55 164,311 16:35:19
Bid Price Offer Price High Price Low Price Open Price
46.15 46.90 46.90 46.80 46.80
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Construction & Materials 978.40 -96.10 -36.70 128
Last Trade Time Trade Type Trade Size Trade Price Currency
16:35:19 AT 1 46.55 GBX

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Date Time Title Posts
01/2/202314:06Costain2,280
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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Posted at 29/1/2023 16:51 by trader465
Stupid - I don’t think semiconductors and custom silicone is your cup of tea? Not really my area either, however, I stumbled on growth stock AWE today and thought I’d share my findings. I reckon they may be musicians making musical instruments or perhaps making silicone breast implants? Anyway, whether they make breast implants or musical instruments is irrelevant, it’s the figures that are of interest to us.

2021 full year results show revenue of $89.9m up 173% on 2020 with a gross margin of 94%. EBITDA $51.8m up 168%, pretax profit $23m up 43%. X10 profit would give a GBP valuation of £185m + £400m cash = £585m, that’s without the future growth prospects. Total current assets $548m, total current liabilities $34m, the main asset is $500m IPO cash yet to be deployed.

47% is held by insiders, the founder CEO Tony Pialis is former Vice President of Intel and has previously successfully built and sold two tec startups, he was Co-Founder of Microelectronis which was acquired by Gennum/Semtec in 2007, he then built V-Semiconductor which was acquired by Intel in 2012.

Since a ridiculously overvalued $3b IPO in May 2021 the AWE share price has fallen from 410p to 97p, giving a more reasonable valuation of £650m. IMO the price collapsed because they IPO’d at a bad time, (just as the tec sell-off started) they also suffered at the hands of short sellers due the over valuation and bad press in a Financial Times article sighting suspicious related party transactions.

In the last update they said “Alphawave expects 2023 revenue of US$340m to US$360m and adjusted EBITDA of approximately US$87m at the mid-point of the revenue guidance range.”
That’s a forecast revenue increase of 278% and EBITDA increase of 67%.

FY22 results are due in April, bear in mind they tanked on 2021 results even though results were very good, probably due to the high valuation at the time. I don’t have a position yet but will be watching closely.

Apologies for off topic.

Posted at 18/1/2023 14:33 by catabrit
Nice write-up in IC:

Scale and track record mean companies such as Balfour Beatty (BBY), Kier (KIE) and Costain (COST) are the most likely to be commissioned for big-ticket projects given their breadth of services and track record. In turn, the multi-year tenure of such work gives these companies the visibility they need to make investments, Peel Hunt analyst Andrew Nussey said.

If recessionary pressures are felt by the sector – and the latest purchasing managers' index (PMI) data for December indicates that they are, with companies reporting lay-offs for the first time since January 2021 – it is most likely to be mid-tier contractors that will struggle and find themselves bidding for contracts on less attractive terms, Nussey said.

Yet even if market conditions favour the larger contractors, investors who have put money into most listed contractors over the past decade have been badly burned. Even if they avoided total wipeouts such as Carillion and Interserve, returns have generally been dismal. On a total return basis, Kier has generated a cumulative negative return of 90 per cent and Costain a negative 78 per cent. Balfour Beatty shareholders have at least enjoyed a gain, of 56 per cent, but of the bigger companies only Morgan Sindall (MGNS) has outperformed the benchmark, returning an impressive 330 per cent.

Individual factors can be identified in each case for sub-par performance, but the common thread is that they took too much risk for too little return.

Nussey said the industry has turned a corner, with years of contract reform aimed at taming an adversarial culture paying off. Larger projects are often carried out on a ‘cost-plusR17; or target cost basis, involving more of a partnering approach where risks are shared between contractor and client. For instance, only 12 per cent of orders on the books of Balfour Beatty’s UK construction arm as of June 2022 were for fixed-price projects. Four years earlier, that figure was 50 per cent.

The onus is now on contractors to convince investors that they can deliver profits consistently. Only Balfour Beatty, which has other strings to its bow including a portfolio of infrastructure investments and a higher-margin support services arm, trades at a double-digit earnings multiple – 11 times FactSet’s consensus forecast earnings. Morgan Sindall trades at seven times, while Kier and Costain both trade at less than four times earnings. The latter’s share price has been so beaten down that its current market capitalisation of £110mn is only marginally higher than its net cash balance of £96mn, as of 30 June.

Contractors still have issues to contend with that can hurt margins – not least a skills shortage exacerbated by a workforce that shrunk by 2 per cent in the 12 months to September.

Yet even if the UK slides into recession, “I think a lot of infrastructure will be OK”, said Alasdair Reisner, chief executive of the Civil Engineering Contractors’ Association. “The general perception is the industry is relatively busy at the moment – and will continue to be for the short to medium term,” he said.

“It’s always a risky thing to say that the market feels as though it’s in a relatively good place in terms of a workload point of view. But generally speaking, our members do see a reasonably good outlook.”

Posted at 09/12/2022 14:15 by sphere25
A murky art indeed Pinemartin9 :-)

People more enlightened?

Seen as I am often less enlightened, I will give you my often less enlightened one penny (inflation included) opinion.

Two consecutive days of interesting exchanges and certainly out of the ordinary for COST. As per most shares, we have had the downtrends, and many are still in those, or moving around in ranges near the bottom like COST.

COST is illiquid and prone to very sharp moves on nothing volume, which makes the exchanges interesting, but also makes trading it more difficult. It can gap through levels and buy orders can get sweeped away in a flash taking out stops quite easily too.

It is in a lumpy wide range here. You can call it 35p at the bottom end and 43p at the top end of the range. So we have a bearish stance overall with the market apprehensive of the macro environment, but enough buyers in size to buy at the bottom of the range, but too many sellers in size preventing the breakout and re-rating above the top end.

The interesting thing is that when you see an order book filled with minimal and often small sized sell orders on the offer like COST it becomes easy to think "Hey, there are only a few small sell orders there, surely it can break out with abit of buying!".

Except today we are seeing what is hidden behind those small orders. There are whopping big sellers sat there preventing any move higher and keeping the price range bound. The interesting thing is that buyers are coming in to try and clear those sellers in a bid to cause a price breakout.

Yesterday we saw notable exchanges that included a delayed late trade reported of 1.21m (both sides reported from buyer and seller) and today we have numerous blocks of around the 400k-500k mark. There are some smaller ordinary trades too so it looks like some smaller investors too are seeing those big sell prints (the way ADVFN logs them) and selling too. Clearly all trades are an exchange, but the interpretation of the dynamic depends on the overall situation.

The question now is do these buyers (who have bid the price up to try and take on the sellers) have enough firepower to clear the sellersm and cause sufficient an imbalance to go through the top end of the range, as well as through any other price points slightly higher to cause a sharp pop higher?

In this market, the sellers sit in layers at different price points and buying through one price point doesn't guarantee a sharp move higher. We have seen examples recently like VIC, SPEC, FIF, AUGM have seen sufficiently large volume to clear sellers and cause at least a sharp pop higher.

Whether the price holds onto those gains is another matter. In the case of SPEC, it hasn't as the market questions whether they will warn again (though there are some buyers in there of late trying to go for another pop higher) but we have also seen the likes of FIF, which has held its gain.

However at FIF, it has taken a whopping big buyer in LDG to come in and pick up 13% of the company (it still looks like they are in the market for more) to not only cause the move higher, but also keep the gain. The reason being, at present, it really is a case of the few or single versus the rest of the market. It is very tough going to clear sellers to form a proper bull trend.

So back to COST...

It is getting long this I know. Try not to fall asleep. Perhaps save the rest for another day, or life time?

The volume is interesting enough to keep a watch. It isn't blowout volume that can cause at least a short term imbalance, but if the buyers keep coming in for shares, the order book builds on the demand side and the resistance gets cleared, then clearly it could bode for at least a bullish short term move.

As to why they are coming in for shares, unsure. Is it BBY? Is it the sector? Is it that the macro isn't as bad as feared? Perhaps news is on the way with trading expected to be in line? Perhaps it is some sniffing out value earlier than others? Maybe speculative bottom pickers?

How long have I been waffling on here?

Still awake?

So let's see if an imbalance occurs as the exchanges unfold. There is nothing major as yet. The rest will clearly depend on the macro and how trading goes.

Better stop there right?

Wrong!

Only kidding...

And breathe!

All imo
DYOR

Posted at 30/11/2022 08:58 by muckshifter
Surely Blackhorse you understand the bonding facility isn't a bond provided by Costain!

The two types of bond most regularly provided by a contractor to a client are performance bonds which are effectively guarantees that the work will be carried out properly and with diligence, and often a bond is required when the client makes an advance payment before mobilisation of a very large contract, to ensure that the client's advance payment is secure. These "bonds" are "bought" for a small fee (I think I remember them them costing something of the order of 1-2% of the face value) from banks and insurance companies. Most performance bonds are almost unenforceable., and experienced contractors refuse to tender for contracts with unacceptable bond requirements - ie. "on demand bonds" with no proof of responsibility required. In terms of bonding requirements to cover huge advanced payments, I can't remember the costs of these but you don't get many major international contractors running off with the advanced payment, so they should be provided by banks etc at very low cost to Costain on the rare occasions they are required, usually in dubious countries.

Posted at 29/11/2022 16:02 by imastu pidgitaswell
Read note 18 to the financial statements. It details the use of performance bonds and their utilisation.

As I said then, and you did not answer - why is this a surprise to you? Did you really think a construction company operated without bond facilities? How would that work? And once again, for the record, it is not a debt. Where is it in the financial statements?

It's a facility which is utilised when a client demands it. The cost is part of the bid process, if the client wants it, and the client pays it; it's an in and out cost for the contractor. It is basically an insurance policy for the client - if the contractor goes bust, the client (in theory) gets the value of the contract from the bond provider (the bank). It is not a debt of Costain (or anybody else unless the contractor goes under). If you have a problem with the process, then you might want to stay away (please do) - but be aware that performance bonds have existed since the Roman times. They are not going away. I'm just amused that you are concerned about something that you apparently were unaware of, given that it has always and will always be there, and is not a risk to the contractor (Costain) - either that or it's a pitiful attempt at deramping, just like your first post today.

I suppose it's quite helpful that every time you put up something stupid the share price rises. But other than that, it's a waste of time. Go back to plugging CURY on every other thread you infest - whatever it is they're paying you, it's too much. Enough.


Blackhorse2329 Nov '22 - 15:53 - 2175 of 2180(premium) (Filtered)

Posted at 11/10/2022 15:53 by imastu pidgitaswell
Somewhat better buying volumes the past couple of days, but very little price movement. Back above the 50 day ma at least, but below the 200 day ma. A very narrow channel - all of 1p. Hmmm....

By the by, I saw this just now:

hTTps://www.constructionnews.co.uk/contractors/amey/amey-sold-for-400m-to-private-equity-consortium-11-10-2022/?eea=b0RkdXRsLzhJNVlMV0tkTThqWW1WZjRnekVyZXdCNnVSZmt5YWxpN1J4Yz0%3D&utm_source=acs&utm_medium=email&utm_campaign=CONE_CN_EDI_REGS_Breaking_111022B&deliveryName=DM84017


£400m for a construction business, doing very similar things in the same markets as Costain, revenue of £1.38 billion (see Costain's in the header - very similar). No mention of profitability or balance sheet, but given Costain's net cash balances, I don't imagine it will include selling £100m of cash, as anyone buying Costain would be getting. Nor do I think its forward margins will be outdoing Costain's by much.

Anyway, £400m compares very favourably with Costain's market capitalisation of £111m.

Four times higher.

Food for thought...

Posted at 08/9/2022 15:15 by imastu pidgitaswell
It certainly has.

A couple of salient points though:

- Every (remaining) player recognises and accepts this - and there have been a lot of fundamental changes since the worst of the bad old days. The industry does not bid for work without an inflation mechanism built in, and contract negotiation is far more robust. Read all of Costain's recent presentations with results on how they have changed how they bid and monitor. Read also about the Construction Playbook - a government-sourced set of rules for these sort of contracts, put together with the industry - as everyone on all sides recognises there is no benefit to anyone in punitive contracts resulting in the issues with Carillon, Jarvis et al, plus the stuff that has affected KIE and COST in recent years.

- The move by all (remaining) players to shore up their balance sheets and have large net cash balances, which gives a lot of reassurance in the bidding process to clients. BBY have large net cash balances (and will retain them) for the same reasons. Equity value is protected by the enterprise value not being dominated by net debt - note that Costain's enterprise value (the net cost to a third party) at the current share price is around £10m. Less than then value of one year's earnings. Really.

And that's before any mention of £86m pension surpluses, £40m annual cash generation etc etc. The sheer value in this business is astonishing.

sikh - I won't be taking questions on this post - and you never answer my questions so why should I? No response on "the pension issue" after your comment?; you need to do some basic research first. You really should - you honestly could make some money here, if you just take the blinkers off and put your pride aside.

Posted at 06/9/2022 15:32 by imastu pidgitaswell
I didn't bring it here, obviously - he did. Just like last time. What would you have me do when he starts spouting what he does - accept it? Or refute it factually, particularly the bits relating to COST?

Speaking of which - he made fatuous comments about reductions in government spending in relevant sectors, because Truss didn't mention them in her speech yesterday. Well she did today - investment across the country, and specifically roads, hospitals, homes and broadband. So I correct him when he regularly makes these misleading and plain wrong comments.

And it was clearly dealt and finished yesterday, but you felt the need to bring it back up. Not terribly helpful.

To being things back to the specifics, I'll just repost my original comment here yesterday, on the specifics of the pension and dividends relationship, and maybe you could respond to the detail of it?



imastu pidgitaswell5 Sep '22 - 11:02 - 2027 of 2046 Edit

Spent a bit of time stumbling around recent and past statements on the pension and dividends:

There is a long-standing commitment, renewed in 2019, to funding the (former) pension fund deficit, with annual payments of £10.2m a year. They state (Note 12 to the half year results - see link in the header) "In March 2020, the valuation and an updated deficit recovery plan were agreed with the scheme Trustee resulting in cash contributions of £10.2m for each year commencing 1 April 2020 (increasing annually with inflation) until the deficit is cleared, which would be in 2029 on the basis of the assumptions made in the valuation and agreed recovery plan. In addition, as previously implemented, the Group will continue to make an additional contribution so that the total deficit contributions match the total dividend amount paid by the Company each year."

So the current payments of £10.2m allow dividends of up to £10.2m to be paid without triggering any more payments into the pension scheme. Should they decide to do so - which they haven't yet, but that is the only restriction; they can pay up to £10.2m (4p dividend, as per the header, would cost a total of 0.04*275m = £11m) even with the current commitment to the scheme.

More positively, and I wonder if the market has really noticed it yet, the former deficit is gone now and is staying gone - it is a significant (£86m+) net asset (£688m gross assets, £602m gross liabilities). And that net asset will only grow as interest rates rise, resulting in higher gilt yields and a (much) reduced actuarial projection of the future liabilities - which are the discounted value of all future cash payments. Higher gilt yields = higher discount rate = lower current valuation of the liability = higher net asset valuation on the balance sheet.

But the formal process is based on an actuarial valuation which takes place every three years. The current one is being undertaken, with the results within a year - hopefully less. They say "The next triennial valuation of the Costain Pension Scheme has an effective date of 31 March 2022. Initial results are expected from the Trustee’s Actuary imminently and discussions on these are expected to take place over the second half of 2022. We have until 30 June 2023 to finalise the valuation."

So, I think that valuation process, once completed, will result in an elimination, and certainly a large reduction, in the £10.2m annual payments, sooner than previously projected. What is irritating is that the 31st March 2022 date is already notably out of date given the rise in interest rates since then - the current position will be even more positive than the favourable position that the March 2022 valuation will show - but it should be clear enough that the valuation will continue to show an increasing net asset and that the deficit days are gone. It has been eliminated.

So it seems likely with the levels of cash they have and the cash generation, that we will get dividends reinstated and/or buybacks, together with an elimination/reduction in deficit contributions. I would think that will happen with the full year results early next year.

One final point - if the £10.2m annual cash payments through to 2029 are eliminated, that's around £71m of cash payments that is built into valuations of the business. So if they are not paid - because they are no longer needed - that's a further 30p or so onto the share price, on top of the rationale set out in the header.

Posted at 10/8/2022 08:44 by chelseamann
the bottom line is ....who knows what is happening with the costain recovery...it does appear to be happening but not as fast as we all would like but patience is the key and sometimes none of us have it. i worked with costain 1987 to 1991 and have followed them ever since.....the highs and lows ...takeover rumours, rights issues, you name it but i have always felt that costain is a solid company and IMO as long as they don't screw up with bids and then delivery they will get to the promised land of a much higher share price and dividend payments. In 1987 the share price was £4.86 and in about 1998 they were as low as 9p. It's a different world today and your performance is about everything you do....not just cheapest price anymore....zero carbon, social value, waste management, innovation, etc and i think this is where costain can get ahead of the others ....but little steps ...first ....lets see those interims on 24 Aug
Posted at 14/12/2021 07:33 by imastu pidgitaswell
Fair comment, I think.

I'm staying - the story hasn't fundamentally changed, it's just the amount of cash they have and how silly the share price is that has moved, apparently less positively (but we still don't know).

I would like to think the current management are not as disingenuous as the previous one - but it's not a good start. Misleading reasons for the placement of £93m at 60p and now this botched announcement.


hTTps://www.constructionnews.co.uk/contractors/costain/costain-faces-54m-charge-on-gas-project-13-12-2021/?eea=*EEA*&;eea=b0RkdXRsLzhJNVlMV0tkTThqWW1WZjRnekVyZXdCNnVSZmt5YWxpN1J4Yz0%3D&utm_source=acs&utm_medium=email&utm_campaign=CONE_CN_EDI_REGS_Daily_131221&deliveryName=DM21064

Costain has warned investors that it expects to pay National Grid £53.5m in January for a contract it agreed to exit in June 2020.

In a market update this morning, the company said it would look to recover some of this payment from the National Grid. It said its claim was supported after a recent adjudication came down on the side of Costain on three compensation events linked to the £113m project.

The adjudicator did not determine the value of the compensation events, and ruled against the company on a fourth point. As a result, the final outcome of the contract termination will result in an overall cash outflow for Costain.

Costain sought to reassure investors today. It said year-end net cash was expected to be ahead of market expectations of £100m. It added that the £53.5m payment due at the start of Costain’s next financial year in January would not affect its banking arrangements. The payment will be included in the results for 2021 as a provision.

The contractor maintained that it is making “good progress” to cut its risk exposure and improve returns. It added that “considerable” expected investment in infrastructure gave the company confidence for the future.

Costain won a £113m contract to upgrade gas compressors in Huntingdon and Peterborough in November 2016. Costain announced in June last year it would exit the contract claiming changes to the schemes’ design and scope, which affected the cost and programme of the job.

A spokesperson for National Grid said: "National Grid and Costain are working through an agreed dispute resolution process. We don’t plan to provide an update until the adjudication process is complete in early 2022."

Murphy is completing the Huntingdon and Peterborough project.

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