Costain Share Discussion Threads

[barnesian] 14/5/2020 11:26

shawr: "That is the problem - the "next Friday" you talk about is the 22nd, which is your broker's cut off date. The cut off date for the company is the 27th and in these markets anything can happen in that time."
Very good point.

[imastu pidgitaswell] 14/5/2020 11:15

Short term noise, imho. Big picture is forward earnings, number of shares etc. Put it in a previous post, turnover £1 billion (order book several times that), target margin 7% = pre tax profit £70m post tax £50m, shares of 275m, EPS of 18p.

The issue is delivering the 7% margin, and doing it through proper cash profits rather than accounting estimates. Turnover and profitability may well be significantly more if they prove able to 1) win contracts (hence the placement cash) and 2) manage well.

So that's the risk:reward for me - deliverability. If they can it's undervalued, price will be nearer 200p. If not, it'll fart around under 100. Until the next set of management, new strategy, share placement etc etc.

It's all a racket.

[htrocka2] 14/5/2020 11:00

'If you are already a holder, you will top up on the placing at 60p rather than pay market price over 60p.'


Not necessarily......if this drops into the 50's..then no one will take up their rights when they can buy them cheaper in the market place. Then that will mean £20m worth of shares looking for a home..The only way for this to succeed is if the share price remains above the option price of 60p.

[sharw] 14/5/2020 10:18

That is the problem - the "next Friday" you talk about is the 22nd, which is your broker's cut off date. The cut off date for the company is the 27th and in these markets anything can happen in that time.

[imastu pidgitaswell] 14/5/2020 09:05

Completely agree.

But to be honest, I am looking at it as a long term investment, c5 years or so, it's just a question of whether I want to add to it. Not sure that I do, as I thought about it at 45p and 55p on the way up and decided against it, so why would I add at 60p unless it was guaranteed to trade higher - but it's not, hence my ambivalence.

But yes, I can't see why anyone would buy before next Friday - hence the price weakness. If I knew I could sell and buy back lower, I might, but I don't, so am just doing nothing for now.

[barnesian] 14/5/2020 09:01

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.

[imastu pidgitaswell] 14/5/2020 08:56

Maybe, but:

1) It's only 4/13 (maximum) of current investment - I don't feel the need to apply for more; and

2) it's only for a few days (cash being tied up) and I'm happy to take that 'risk'.
It doesn't feel like there are many screaming opportunities out there (that I haven't already taken) at the right price just now.

Mind you, as a poster noted yesterday, we might be below 60p at this rate...

[rogerrail] 14/5/2020 08:52

Chances are if the share price at the time is high enough to convince you to apply for more you wont get a sniff anyway and you will tie up a potentially significant amount of cash because people always apply for far more than they expect to receive knowing allocations will be scaled back.

[imastu pidgitaswell] 14/5/2020 08:29

yup.

:-)

[barnesian] 14/5/2020 08:23

You can apply to buy more if you want.
I guess most of us will wait until the last minute to see where the share price is?

[imastu pidgitaswell] 14/5/2020 08:01

Open offer blurb now issued - seems very straightforward even for thickies like me; 4/13 of shares held to be bought at 60p or do nothing. We have until noon on Friday 22nd May to instruct.

[imastu pidgitaswell] 13/5/2020 14:52

I dunno - we have recently been awarding a large contract for construction, and a key consideration was the solvency of the bidders, especially post Carillion and Keir's ongoing issues.

I do believe it is a factor in getting through the bidding process to have the levels of cash that they will have - and that not having it would be damaging to those prospects. I've seen it in the past few months, and that was before CV19.

[rogerrail] 13/5/2020 14:34

SP will slowly drift down to 60p IMO. I am still shaking my head over this placing, dilution is massive and unecessary, a large chunk of the company is being given away so the cash can sit in contract accounts.As far as I am aware there is no pressure from banks to reduce debt so why they cant wait until covid crisis is largely over I dont know. No doubt board will be lining their pockets with generous options at sub 60p level.

[barnesian] 13/5/2020 12:54

I think you have until 11am on 27th May to apply and pay for your new shares. I don't know how this works on online platforms like Hargreaves. I assume they'll alert us in good time.

[htrocka2] 13/5/2020 11:43

At the rate this is dropping...if you hang on another week or so...you'll be able to bUy them for less than 60p.

[imastu pidgitaswell] 13/5/2020 11:32

Now showing "Basic Open Offer Entitlement" as a new share ownership in my online portfolio, with 4/13 of the number of 'normal' shares I hold.

Presumably I can subscribe to these at 60p at some point before the process closes, so need to have funds available to pay for those?

[dollyparton95] 12/5/2020 10:59

To the guy who said "this is standard practice" that's the problem!

[npp62] 11/5/2020 23:52

You're a happy little soul aren't you :-)

[pejaten] 11/5/2020 04:25

That is not correct. In reality XD is what matters. Holder on 4th has to pass on entitlements to holder who bought before XD. Standard practice not unique to Costain

[volsung] 10/5/2020 16:52

Hope this shower go bust and we can get rid of HS2 forever

[aquaesulis01] 10/5/2020 16:12

You had to have held the shares on 4th May and still be a holder on the 11 th May if you read the terms on the Costain Site

[pejaten] 10/5/2020 15:34

That is not correct. 11 May is ex date

[skasher094] 09/5/2020 09:07

You had to have already been a shareholder on 4 th of may any shares bought after that date won't count as your entitlement

[owenski] 08/5/2020 10:22

It's now well capitalised which underpins their ability to win large contracts, with vendors going with contractors that have robust visible balance sheets.

CEO is relatively new and seems to be more switched on with a plan to drive better margin from other verticals within sector.

Very substantial order book.

Projects bid for and secured appear to be a fair bit of infrastructure government backed spend which is a more secure business element.

Seems the downside is more limited here with improved upside prospects. IMO

[farrugia] 07/5/2020 21:04

not sure if it will go down - the capital raising was a big threat and it has now been cleared - this has fallen from a high ceiling...The rights issue was however done at a miserable price! They could have asked 80p at least!