Costain Share Discussion Threads

[ttny2004] 10/1/2024 07:17

Costain Group PLC AMP8 Water Framework Win with NWG & Trading Update10 January 2024 RNSCostain AMP8 Framework Agreement with Northumbrian Water Group and Trading UpdateAppointment adds to Costain's wins in the new water regulatory cycleCostain Group PLC ("Costain", or the "Company") announces that it has been appointed by Northumbrian Water Group (NWG) to shape, create and deliver its strategic infrastructure upgrade programme. The framework will see contracts awarded with a potential value of up to GBP670m to Costain during a 12-year period and builds on recent significant wins in the water sector for the Company.The framework contract will see Costain work with NWG and its partners to shape, create and deliver solutions to meet the strategic needs of its business plan during Asset Management Period 8 (AMP8). The contract starts immediately and will run for a seven-year initial term with an option for a five-year extension.AMP8 will see the biggest investment in the water industry for decades. In 2023, Costain extended into AMP8 its Managed Service Provider contract with United Utilities and its consultancy work with Yorkshire Water. Costain has also won funding from Ofwat to support innovation projects.Trading UpdateCostain has had a positive trading year in 2023 and expects to deliver adjusted operating profit in line with market expectations. As a result, and reflecting an increase in financial income compared to 2022 and strong working capital management, together with the accumulation of GBP25.0m of positive working capital timings, Costain has ended 2023 with a net cash position of GBP164.4m (2022 year-end: GBP123.8m), significantly higher than market expectations of GBP128.6m.."We are also pleased to report that we have had a positive trading year and expect to deliver adjusted operating profit in line with market expectations. Our cash performance has been very strong, driven by continued improved operational performance, an increase in financial income compared to 2022, and ongoing positive working capital timings."Costain will issue its results for the financial year 2023 on 12 March 2024.

[chris magpie] 08/1/2024 19:08

Well don't think they have won a really decent size job for over a year.

[roguemale1] 08/1/2024 10:20

HNY all.
FYI
Some may have seen the Construction Enquirer Work won top 100 listing for 2023 published last week.
Costain are not on it. According to IR it's an error... Turnover is as per FY and HY updates blah blah.

[catabrit] 29/12/2023 08:35

Concur with rogue. It will never become full consultancy. The complex delivery provides decent profits in £ terms. You just have to manage risk properly like the guys do over at Morgan Sindall.

Also it might not be a meme stock - not that any of us would want it to become one? - but let’s not forget that Costain is one of the largest and oldest civil engineering firms in the U.K. with over 120,000 followers on LinkedIn.

It is hardly insignificant. And the more market cap we gain, the more liquid it becomes etc.

[roguemale1] 29/12/2023 08:12

I don't think it can ever be mainly consultancy? That just provides a %age of turnover with an enhanced margin which sweetens up the high turnover at low margin traditional contracting. I don't think he's ever laid out a picture of what the turnover split might look like? AT the moment that trad turnover is OK as far as I can ascertain so am expecting decent solid results. Some of HS2 dollar should start showing up also which should help...some crazy stuff going on there.
Roll on FY!

[thags] 28/12/2023 18:46

It all depends on whether they can survive on a mainly consultancy basis or not. This is no meme stock with very little interest so the numbers are everything here, no BTC type speculation happening here just results

[ttny2004] 28/12/2023 18:29

Looking for over 100p for starters by end of 2024.

[ttny2004] 28/12/2023 18:27

My reasons why I continue to hold and still think we will see a substantial share price rerating in 2024.1. If we compare Costain to industry peers it has a P/E Ratio of 7.9 whereas its industry sector average is 13.3. Nearly double. Keller 10.3 and Galliford even 23.2. Fair value would equate to 1.18 which shows we are over 47% undervalued. Looking at future cash flow forecasts using DCF models.3. Hope greater broker analysts coverage in 2024 which should give a more significant rerating.

[pinemartin9] 28/12/2023 18:18

Very encouraging move today

[catabrit] 28/12/2023 17:50

We are bubbling nicely and it feels like it is just a matter of time before the cork pops. We will see. But a great way to cap off 2023.

[xamf] 28/12/2023 09:11

It would appear that the once strong resistance level of 60p is now providing an equally strong support level. Low PE, PB but most importantly no debt. Hoping for a rebound here (and the general sector) in 2024 as inflation settles.

[pinemartin9] 25/12/2023 13:54

Happy Christmas one and all!

[catabrit] 21/12/2023 11:27

Not sure it matters over the medium to long term, Cash. These will perform in the same way as other recovery stocks such as Rolls Royce. We have a lot of enterprise value to gain.

Oh and if you check consensus, the sell side is still quite cautious on the margin potential. So if Costain hits target, we’re going to see some big upgrades in 2024 and 2025.

[casholaa] 21/12/2023 11:03

Double top?

[eigthwonder] 20/12/2023 19:16

Thanks Catabrit. I used to be involved in this game for a job so I have seen most tricks of the trade, and while brokership interests have always played an important role in small cap broking today there is so little truly independent research out there. On your further points.... two aspects of PI investing which you won't find amongst professionals is (i) simply repeating "the shares will go up" doesn't mean it is cheap and will go up, and (ii) because shares have recently gone up is not necessarily a guarantee they will continue to go up. As for income - I'm quite fan of it as a value discipline, it's a good underpin if you are early to the idea. But income for income sake, that which is being paid in lieu of capital, is not a prescription for long term capital appreciation.

[catabrit] 20/12/2023 19:14

But is it not offset by higher liabilities? I have no idea how LDI works to be fair. But intuitively it seems wrong to say that higher yields is good for the pension plan and to also claim that lower yields are. Especially as we kinda want the plan to be in technical funded status to get our hands on all that FCF. Still, with the massive rise in yields in the last 18-months it seems - on balance - fair to be quite bullish on the probability of that plan now being fully funded.

If anyone else (with more expertise) could chip in that would be appreciated.

[dickbush] 20/12/2023 19:07

I'm no fan of LDI being a big part of a pension fund, but with Gilts and Corporate Bond yields having declined so substantially in the past few weeks, Cost's Pension Fund assets must be looking pretty healthy.

[catabrit] 20/12/2023 17:52

Thank you Eight. Really like some of your stuff by the way and am glad to read that you are also not a fan of Blackhorse. I find his ramping deplorable. Concur with your thoughts on Phoenix too which most of the yield pigs seem to completely omit from their (typically basic) level one thinking.

[eigthwonder] 20/12/2023 17:42

in small caps, new coverage usually means that the analyst has been told to take up coverage as that helps a corporate broker pitch to win the brokerage (where the real money is these days). In a MIFID world it doesn't pay analysts to take up coverage just because they think it is good or may make money.

[catabrit] 20/12/2023 14:31

Rogue - possibly my favourite ADVFN comment of 2023!

[roguemale1] 20/12/2023 13:42

After that prompt, I just noticed that the Investors Home page has a backdrop of a car dashboard with the quote "Auto Pilot Activated" across the steering wheel in some kind of pseudo head-up display....

I wonder if that refers to them or us??!

Merry Xmas all. Switch off and have a good one!

[casholaa] 20/12/2023 11:45

I once read on one of these boards (within the last 6 months or so) that the best coverage notes are the ones where coverage commences by analysts as they do the number-crunching. Nobody likes dead money and missed opportunities. (new coverage)

[catabrit] 20/12/2023 11:11

Do not mind you knocking and nor do I mind you being weary. Think the latter is absolutely understandable by the way! But it is good to lay down these markers, no?

[casholaa] 20/12/2023 10:57

I'd rather they tried to convince me with numbers. (I'm not knocking it, just weary)

[catabrit] 20/12/2023 10:52

Yeah well the chart sucked pre November and a few people felt smart for selling when it dipped down to 48p. So yeah, that is my view on charts. They look right until they don’t.

Consensus is very helpful as it shows you what the analysts are assuming. Which is useful when you’re woefully undervalued and inflecting.

Oh and if you care about charts then IMHO the only chart that matters is the one from July 22 and that looks consistent and beautiful :)