Costain Share Discussion Threads

[salpara111] 27/7/2023 11:19

As someone who recently took my first stake here at 46p, a few observations.
Their core business is not an attractive one, even with the exit of Carillion from the marketplace, competition for work means bidding at little more than cost with potentially unlimited liability for cost overruns.
The consultancy work produces much better margins but is still peripheral to the main business.
My reason for buying is that they have finally worked through all their legacy basket case contracts, they are cash flow positive, they have got an agreement from the pension trustees which crucially means that they can look at reintroducing a dividend which will be the signal to the market that they are confident that there are no more skeletons lurking in the cupboard.
The main problem they have is that they don't have the scale of the likes of Balfour Beatty which means that if only one big contract goes bad they can see their profit wiped out for a year or more which is problematic.
If the share price can climb back to the 60p level that would be a good return for me and I would look at selling at that point.

[casholaa] 27/7/2023 10:02

It's been on a subtle uptrend since 22 June, which was easy to somehow not see lol

[pinemartin9] 27/7/2023 09:14

Maybe they have! Do my eyes deceive me or I see a 50!

[catabrit] 26/7/2023 10:23

Can someone wake the bid up.

[hamhamham1] 26/7/2023 07:46

Kibes, re the sustainablility aspect, it's the kinda tripe you need to say to get a broader investor pool, f you tick these boxes, the way of the world today it seems.

[kibes] 26/7/2023 07:39

Good news about the refinancing and for three years not one. This demonstrates real bank confidence. But 'The sustainability linkage includes three key performance indicators (KPIs) relating to reduction in greenhouse gas emissions, spend with small, local business and charities, and an increase in gender diversity'- what a lot of rhubarb.

[hamhamham1] 26/7/2023 07:09

Excellent, steady as she goes!

It's still at a crazy valuation with a net cash position of nearly £124m and a market cap of only £136m, absolute bonkers!

[hamhamham1] 26/7/2023 07:09

bank and surety facility providers to refinance a new three-year agreement of its bank and bonding facilities.



The Group's new facilities agreement to September 2026 comprises an £85m sustainability-linked revolving credit facility (RCF), and surety and bank bonding facilities totalling £270m, with the reduction in facilities reflecting the Group's positive cash generation and cash position. This new agreement replaces the previous one-year "amend and extend" of its facilities from September 2023 to September 2024, as announced in November 2022.



The new facility is backed by a group of four banks and five sureties, with Lloyds Bank acting as coordinator, Lloyds Bank and HSBC as joint sustainability coordinators, together with Crédit Industriel et Commercial (CIC) and National Westminster Bank (NatWest), the latter being a new addition to the banking group.



Costain had a positive net cash balance of £123.8m as of 31 December 2022, comprising Costain cash balances of £67.3m and cash held by joint operations of £56.5m. The revolving credit facility was undrawn throughout 2022 and 2023 to date. Utilisation of the total bonding facilities as of 31 December 2022 was £88.8m (FY 21: £100.7m).

The sustainability linkage includes three key performance indicators (KPIs) relating to reduction in greenhouse gas emissions, spend with small, local business and charities, and an increase in gender diversity.

Alex Vaughan, Chief Executive Officer, commented:

"I am pleased that we have successfully secured a new three-year facilities agreement, with Costain's continuing strong cash generation enabling us to reduce our overall level of bank and bond requirements for the Group. I am also delighted that NatWest has joined our banking group, demonstrating its confidence in our business plan."



Costain will issue its results for the six months to 30 June 2023 on 23 August 2023.

[casholaa] 21/7/2023 12:02

Wouldn't it be great if someone could make small household nuclear energy generators.

[catabrit] 21/7/2023 11:35

Costain appear to be hiring quite aggressively within energy, nuclear and defence. Lots of demand on the framework side of things apparently.

[pinemartin9] 20/7/2023 22:28

This will fly at some point. Tightly held I think. Not much free float. We need PR, good results, director buys and the economy to pick up!

[casholaa] 20/7/2023 20:46

IMVHO, the number one problem with this company is not only lack of news flow but, possibly substandard presentation of the work it has and what the benefits of that work are. It just feels like a hodge-podge jumble-sale box where one has to do all the digging and donkey work.

[casholaa] 20/7/2023 20:43

Very rare beast. There may also be activist investors lurking.

[hamhamham1] 20/7/2023 19:08

If someone buys this company, allowing for the cash in the bank, it will cost them net about £40m.
A rare beast indeed!

[casholaa] 19/7/2023 11:07

I think 50p is the lowest broker expectation thanks to Peeled Hunt back in March! However, I've seen this a few times where an 'old' or outdated low share price expectation remains on databases for a prolonged period, which I think affects the share price for months. In the case of one company in my portfolio, the broker still based their share price target last month on the old number of shares which were preconsolidation from last year, the website either removed it or asked the broker to adjust as it's not there anymore. I tend to look at the average and have the high expectation pencilled just in case a company says 'upper market expectation'

[catabrit] 19/7/2023 09:59

Ttny2004 true but usually these things take a bit of time to flush out so for me the delay to getting back to intrinsic value isn’t much of a surprise. It’s why I typically avoid investing in stock-specific drawdowns in any meaningful way immediately after a fall. I wait to get a temperature check.

I wouldn’t have expected this to rally hard so close to all the issues it had. As we know, stocks can remain in the dog house for a long time. We can’t forget the macro environment either which hasn’t helped. It’s been a tough three years and the cost of capital has rocketed and many former darlings are on their knees (or were). So Costain - from an opportunity cost perspective - has much greater competition than it had in 2020/21 say. The U.K. is now a fertile hunting ground for value.

But I think we’re there now. All the key catalysts are being hit and we have another big one on the 23rd August.

In a way, low expectations kinda help. And they’re still pretty low down here at 50p I reckon.

Key technical test is clearly 60p and whilst a non-drinker, I’ll be opening the proverbial bubbly when we smash through it!

[casholaa] 19/7/2023 08:21

uk & german main indexes out of the traps and flying

[pinemartin9] 18/7/2023 23:34

Agreed, but this feels different to me. Let's see what tomorrow brings.

[ttny2004] 18/7/2023 23:22

Agree, been undervalued for ages, but been going nowhere for ages.

[pinemartin9] 18/7/2023 15:49

This share really is in so much better shape than it has been for a long time. I like the focus and selective nature of opportunities being progressed. Good news about the pension fund. Healthy cash balance. It passes two screens on stockopedia now for quality and momentum investing. Stock numbers currently:

Quality 80
Value 97
Momentum 77
Stock rank 98

Bankruptcy risk cautious/safe
Piotroski F score 6/9

Average broker consensus Buy/Strong Buy
Price target 73p
48% of shares held by top owners.


All looks pretty positive to me.

[casholaa] 18/7/2023 14:11

My maths isn't great, but I do prefer a 55% share price uplift to a 37% uplift lol

[catabrit] 18/7/2023 13:38

Lots of ways to cut it. FYI- that’s a 55% increase, not 37%.

[casholaa] 18/7/2023 13:22

Yahoo puts us at NAV of 77p with - 37% above the current sp, with an ebitda of 41m

[casholaa] 18/7/2023 13:10

Half Year / TU, 23rd August.