Firstgroup Share Discussion Threads

[sanks] 29/1/2015 08:31

Dropped into the 99's!!...only 94p off my 5p level 4 sheepshaggers target
Sensible comments appreciated
Hope this is helping

[sanks] 28/1/2015 13:11

The chart look hell bent in taking out my 7p,5p and 4p buy orders.
I see i was right on AFR too!..ohhh goshhh, how good am i!!

Hope it starts making some sense soon, as it drips towards single digits, and genuine nobs get to realise the current form of revenue does not bode sufficient enough to tackle the monstrous debt currently held!

Sensible comments appreciated
Sanks

[eastbourne1982] 28/1/2015 12:42

Just out of favour Old Bean.

I bought some yesterday, I love a bit of bottom picking, reckon we will see £1.10 again within the next week or two.

[dealy] 28/1/2015 12:30

this stock is doing so badly. don't understand why there is no interest in it given QE, low interest rates, zero bond yields, cheap energy etc. etc.

[tonytaxi] 27/1/2015 19:38

hxxp://www.firstgroup.com/ukbus/greater_manchester/travel_news/news_initiatives/?item=24951&conf=0

Nice contract win

[eastbourne1982] 27/1/2015 16:40

Climbed on board today, average price of £1.02.

[hyden] 26/1/2015 19:38

What dividend? FGP won't be paying one.

[123qwer] 23/1/2015 17:08

I dread to think what will happen to the share price once it goes ex div

DYOR ATB

[dealy] 21/1/2015 09:47

Thanks for posting this.

With global interest rates at zero and more QE coming I just cannot understand why these shares are so unloved. They should trade at 20 times 2017 earnings.

[justwondering] 21/1/2015 09:35

FirstGroup plc (LON:FGP)‘s stock had its “buy” rating reiterated by analysts at Shore Capital in a research report issued to clients and investors on Wednesday. Other equities research analysts have also recently issued reports about the stock. Analysts at Panmure Gordon reiterated a “hold” rating and set a GBX 140 ($2.12) price target on shares of FirstGroup plc in a research note on Friday, January 16th. Analysts at JPMorgan Chase & Co. reiterated an “overweight221; rating and set a GBX 153 ($2.32) price target on shares of FirstGroup plc in a research note on Tuesday, January 6th. Analysts at Deutsche Bank reiterated a “hold” rating on shares of FirstGroup plc in a research note on Monday, December 8th. Finally, analysts at Liberum Capital reiterated a “buy” rating and set a GBX 155 ($2.35) price target on shares of FirstGroup plc in a research note on Thursday, December 4th. Nine analysts have rated the stock with a hold rating and four have assigned a buy rating to the company’s stock. The company presently has an average rating of “Hold” and a consensus price target of GBX 137 ($2.07). FirstGroup plc (LON:FGP) opened at 105.50 on Wednesday. FirstGroup plc has a one year low of GBX 100.00 and a one year high of GBX 146.139. The stock’s 50-day moving average is GBX 106.0 and its 200-day moving average is GBX 116.6. The company’s market cap is £1.271 billion. FirstGroup plc is engaged in the provision of passenger transport services principally in the United Kingdom and North America together with some activities in other European countries, including Denmark. The Company operates in five segments: First Student, First Transit, Greyhound, UK Bus and UK Rail.

[justwondering] 21/1/2015 07:38

Released : 21/01/2015

21 January 2015

FirstGroup plc

THIRD QUARTER 2014/15 TRADING UPDATE

FirstGroup plc (the "Group"), the leading transport operator in the UK and
North America, reports the following update in respect of trading since 1
October 2014.

Summary

Overall trading for the Group is in line with management's expectations, and
our transformation plans continue to make progress:

* First Student: recovery plan on track, with improved pricing achieved in
recent bid season and cost efficiencies

* First Transit: revenue expectations benefitting from organic growth on
existing contracts

* Greyhound: demand adversely affected by sharply lower fuel prices over the
key holiday period

* UK Bus: continued volume growth and progress with cost savings, with
increases in yield starting to contribute

* UK Rail: robust volume and revenue growth, with financial performance
towards the top end of our expectations

Commenting, Chief Executive Tim O'Toole said:

"Overall trading for the Group is in line with our expectations. Our First
Student and UK Bus transformation plans are on track and both divisions are
delivering the expected improvements in financial performance. Demand for
Greyhound services over the important holiday period was adversely affected by
the significant and rapid reduction in fuel prices, which makes car travel more
affordable and competitive with our services. This was offset by good
performances in First Transit and our UK Rail operations, which are both
achieving growth towards the top of our expectations with robust margins.
Overall we are on course to meet our full year expectations for the Group, and
we are confident that our multi-year plans will deliver improved cash
generation and create sustainable value over the medium term."

First Student

First Student's operating performance in the period has benefitted from the
important step forward made earlier in the year, with the improved pricing
achieved on contracts awarded in the 2014 bid season making an impact for the
first time. Market conditions are improving modestly with organic growth still
limited, and we continue to expect our bus portfolio at the end of the current
financial year to be broadly similar in size to the prior year. We are
delivering against our target of $50m per annum in cost efficiencies and remain
confident of achieving approximately $20m in the current financial year, with
margins in excess of 7.5%. As previously indicated, with cost inflation running
ahead of price indexation on some of our multi-year contracts, we will continue
to focus only on retaining or winning contracts in future bid seasons at prices
that deliver an appropriate return on capital employed. We are on track to meet
our medium term target of double-digit margins for First Student through our
contract pricing and cost efficiency programmes.

First Transit

In the period First Transit's organic growth on existing contracts has been at
the higher end of our planning range, and we now expect revenue growth of
approximately 6%, with margins around our medium term target of 7% for the
current financial year. As expected, the second half of the financial year has
so far seen a number of larger contracts coming to an end with fewer start-ups,
though we continued to win additional new business in the period that will
commence in the next financial year. Our focus on disciplined bidding,
operational excellence, and investing in innovative technology for the benefit
of our customers ensured that First Transit continues to deliver good growth
and margins with relatively low capital intensity.

Greyhound

Demand for Greyhound's traditional services has lagged the US economic
recovery, with the disposable incomes of our core customers not significantly
increasing with the improvement in the overall macroeconomic environment for
much of the financial year. In the period, this demand challenge has been
exacerbated by the significant and rapid fall in consumer fuel prices, which
improves the affordability of using private cars for some trips compared with
Greyhound. As a consequence, Greyhound's like-for-like US dollar revenues in
the period decreased by 1.1%. In order to mitigate the impact of lower demand
on our profitability, we are actively managing our mileage and timetables, and
are flexing ticket prices in order to remain competitive. Nevertheless we
expect margins for the full year to be modestly below the prior year level.
Although our point-to-point brands were also somewhat affected by the sharply
lower fuel prices, Greyhound Express continued to grow profitably, with
like-for-like revenue growth of 2.1% in the period.

As previously indicated, our programme to roll out real-time pricing and yield
management capabilities across the network will give traditional Greyhound more
tools to stimulate and manage passenger demand. At the end of October, for
example, Greyhound launched its passenger-facing smartphone app, and our
commercial team continued to be augmented with additional hires in the period.
This programme, which replicates the commercial model of our newer
point-to-point brands across the whole of Greyhound's unique national network,
is expected to be fully operational over the next year. We remain confident of
achieving our target of 12% margins for the division in the medium term.

UK Bus

Our UK Bus transformation programme is on track, with overall like-for-like
passenger volume growth of 1.4% in the period, despite mixed local economic
conditions across our portfolio. Our volumes continue to be driven principally
by growth in commercial passenger volumes (up 2.8% on a like-for-like basis in
the period), responding to the work we have done to improve our commercial
proposition through selected fare rebasing, network redesigns and additional
investment in fleet and ticketing. As anticipated, we began to achieve positive
yield in the period with overall like-for-like passenger revenue increasing by
2.7%, with some of our local operations beginning to put through
inflation-based price increases, having reached the anniversary of our fare
changes in their area. The other key elements of our plans to restore
double-digit margins in UK Bus over the medium term - including more
disciplined operations, further fleet investment and mobile and smart ticketing
initiatives - have continued to progress. We are on track to deliver the cost
efficiencies targeted for the second half, and this, coupled with continued
passenger volume and price momentum, will result in margin progress for the
financial year as a whole.

We remain committed to maintaining strong partnerships with local authorities
throughout our markets, as experience of our existing partnerships demonstrates
that this model is the most responsive, efficient and cost-effective way to
achieve our shared aims of higher bus passenger volumes, investment in bus
fleets and increased use of smart and mobile ticketing, with competitive fare
levels. We and the industry continue to present the strong evidence for the
success of such partnerships when engaging with stakeholders on emerging policy
proposals which could impact the current structure of bus service provision.

UK Rail

Our rail businesses achieved like-for-like passenger revenue growth of 7.3% in
the period, underpinned by robust passenger volume growth. Overall financial
performance for the year to date is toward the top of our range of
expectations. We continue to work to minimise the disruption for our passengers
and keep them informed while supporting Network Rail and other industry
partners with the significant infrastructure and fleet upgrade programmes
taking place throughout our networks.

We are negotiating with the Department for Transport ("DfT") for a longer
direct award to at least March 2019 for First Great Western, our largest rail
franchise. We are shortlisted to bid for the next TransPennine Express
franchise, and are negotiating with the DfT to extend our current operation of
that route to February 2016. As previously announced, the DfT informed us that
we were not awarded the contract to operate the InterCity East Coast franchise
in the period. We continue to examine and assess the feedback from this and
previous rail bids to help shape our proposals in future competitions. We have
been, and will continue to be, disciplined in our approach to bidding for these
significant contracts. We remain focused on reaching our desired position in
the rail industry over time, which is to achieve earnings on a par with the
previous franchising cycle at an acceptable level of risk and return.

Financial position

As previously indicated, we expect a total cash outflow for the full year of
approximately £100m, which is principally due to the cash outflow of
approximately £70m associated with the end of the First Capital Connect
franchise.

[j l] 20/1/2015 20:52

FGP reports tomorrow. Watch the charts of companies reporting tomorrow here:

(SAB,JDW,FGP,HFD,LAND,CCC,PLND)

[bottomfisher] 20/1/2015 16:45

Third quarter management statement out first thing tomorrow (Wednesday). Hope it will not be as bearish as the recent share price performance suggests.

[sanks] 16/1/2015 20:59

Me and my bird Sheila are waiting till it drips below 10p
I won't be investing at current levels purely because the debt does not
seem to be given primary focus.... It never has..
My level 4 targets are seldom wrong.

VED and TLW targets recently hit...FGP is next
Hope this helps

[eastbourne1982] 16/1/2015 11:21

Watching these closely with the intention of buying, current price £1.03, any thoughts ??

Looking to get in at £1.02 if possible.

[dealy] 10/1/2015 10:04

well, I was saying the exact same thing about Balfour Beatty's share price in November and then the stock rose 30%.

The UK stock market is suffering from irrational pessimism right now. Now decent alternatives yet risk aversion is so high institutions won't buy shares. Low oil prices and low interest rates will help this company. It should logically speaking be trading at about 20 times forward earnings to reflect the dearth of alternatives. I remember in 2007 earning 7% interest on cash. Those days will never return.

[dealy] 08/1/2015 10:24

Just don't understand why there is no interest in this stock and why it is basically at an all time low. They are in a utility type business in two countries that are seeing decent GDP growth. No reason why this should not be trading at 20 times normalised earnings with interest rates so low.

[hyden] 02/1/2015 20:56

Edit: But of course the CapEx requirement will fall substantially from 2018 as the transformation plan completes leaving more than enough cash to pay down debt and reinstate dividends. Indeed, one could argue a case for a high risk buy as, should the company act prudently, then there will plenty of cash (c. 33% mcap) to pay dividends from FY2025 onwards.

So, sit patiently on your hands for 10 years and you will be rewarded with a share price north of 500p and a dividend in the region of 7%. And this is without the benefit of higher fuel prices or improving margins. Perhaps this is where Goldman are coming from. After all they haven't specified a time period have they. ;-)

Let's not make exaggerated share price claims but instead await the FY results and an update on the Group's plans / intentions. :-)

[hyden] 02/1/2015 20:31

Sanks, The reference to CityLink is a gross over exaggeration as I am sure you well know. ;-)

Whilst net debt is very high, the first repayment does not fall due until 2018 (c. £298m) and annually thereafter through to 2024 (2023 excluded). If FGP do not reinstate the dividend and if margins improve in line with management expectations (either as a result of the transformation plan or through lower fuel prices over the longer term) then there will be sufficient funds to meet the first repayment, at least. However, I am less certain about the repayments due 2019 onwards which may need to be re-financed in part or otherwise another Rights Issue is on the cards.

Accepted, there is a big IF in my analysis: improving margins through the transformation plan or longer term lower fuel prices but this explains why the share price is 106p and not 306p, for example. It does not justify 6p and for your target to be borne out then it implies that margins will deteriorate significantly. There is, imho, no evidence of this at present and I don't believe that even the loss of all rail franchises, for example, would be enough to cause the sort of problems that you imply.

Having said this, I did sell just over half of my holding ahead of the new year chimes because I don't think that it is prudent for FGP to reinstate the dividend for FY2014 (Rights Issue Prospectus: "dividend payments will recommence with a … transitional final dividend of up to £50 million in FY2014 … and thereafter, a dividend cover of 2.0-2.5x [Will] be targeted.”). I do not know what the Board intend so I have acted cautiously and I will review my position further when the FY results are announced.

[sanks] 02/1/2015 19:21

I remain a shagger on FGp with a buy target at 5p & 7p respectively
Debt kills unless it is given complete focus..in this case, it is not!

City Link comes to mind...hence why i remain in a shaggers stance.
Sensible comments appreciated

Sanksalot

[dealy] 01/1/2015 08:12

Hyden,

thanks for the info on the fuel hedging. 3.5m barrels at 30 USD reduction amounts to over 100m USD improvement to the bottom line annually. It won't fall through to earnings much in 2015 or 16 but from 2017 on the impact could be substantial.

Company hedges are probably the reason oil stayed so high for so long (self fulfilling prophecy) and why they haven't bounced yet (companies have already bought).

[hyden] 29/12/2014 00:20

I am concerned for my holding in FGP and I am thinking of selling out at a loss.

From the Rights Issue prospectus: “Over the next four years, the Board intends to invest approximately £1.6 billion in its divisions to continue funding the operational transformation plans already underway ...” and “… it is expected that approximately £340 million will be invested in the group's businesses before 31 March 2014 and the remainder over the period between 31 March 2014 and 31 March 2017.”

Now, from the Half Year cash flow statement, Cap Ex to 31.03.14 was £334.5m, in line with what was stated. A further £268.5m was invested in the half year to 30.09.14 leaving a further £997m requirement over the next two and a half years.

The Board will not have an easy task funding this commitment “ … from the Group's existing cash resources, future cash generated from operations, and a portion of the proceeds of the Rights Issue” (Rights Issue prospectus) given that cash generated by operations for the 12 months to 30.09.14 was only £409.4m (net of interest and tax). This implies a cash conversion ratio of almost 100% which is possible (the ratio was 95% to 30.09.14) but leaves no room for error.

So, this explains why the share price is as low as it is but what is the potential upside from here? I am not at all sure that the dividend will be reinstated any time soon nor that the Group will be able to pay down debt. I now understand why Sanks feels able to make such exaggerated share price targets. A further Rights Issue is not out of the question, imo.

What do others think and where does Goldman Sachs expect the strong earnings growth to come from? Certainly not from the low oil price, that's for sure!