Galliford Try Share Discussion Threads

[marksp2011] 26/4/2019 07:12

EI

No-one can have faith in the numbers when, you are working on a 1% margin. A badly timed fart and you are in a loss. The construction business is running on a margin 25% of that achieved by Tesco with oodles more risk

It is not an investable sector. trade maybe but not an investment

[dr_smith] 25/4/2019 18:52

Sleepy.
I am guessing that is a figure for lost business, without costs such as:
1) Labour force being paid-off or re-trained.
2) Equipment write off costs.

also "cash outflow" implies pay out to s/h, but could well be sucked up by investment in whatever new direction they may envisage.

NEW DIRECTION?
For new direction as something to complement housing, I have idle thought of prefab construction.
Historically prefabs = bottom end of market, but could be done with quality much higher than traditional build.

Insulation and heating meeting new green standards will become more important and probably a legal requirement (if not already), so different build methods will come to the fore, possibly with government assistance re thermal values and the like, that will presumably become progressively higher.

Work-force can be re-trained rather than redundancy payments.
Prefabs can augment tradtional (Linden) builds.

It would mean continuity in complementing but same business as Linden, in same way as traditional construction has been, but hopefully with good margins, but carries risk of high investment at outset.

Analogy for projection:
We see car makers buying in engines from supposed competitors in the world market making most of economies of scale.
In like manner, GFRD quality prefabs could be bought by their peers, who will be under same pressure to produce houses with high green credentials.

Everyone.. including the planet.. a winner :-)

All my imagination working overtime ;-)

Dave

[sleepy] 25/4/2019 18:03

EI - my understanding is that a complete wind down of the construction business would lead to a cash outflow of at least £200 million

[bookbroker] 25/4/2019 12:32

This company is a sitting duck for a takeover nonetheless!

[essentialinvestor] 25/4/2019 12:06

That's the issue. No one appears to have much faith in any figures quoted.

If they came to a decision just to wind down the construction side
this might be very interesting.

And I would tend to ask, why has this decision not been made?.

Would that reveal the full extent of their construction liabilities?.


Remember in construction, you often get paid a front end loaded fee on
winning business, which has the effect of flattering cashflow.

[sleepy] 25/4/2019 12:02

Are they going to need another rights issue?

[nigelpm] 25/4/2019 11:47

tangible asset value is £762m less £160m goodwill so £602m vs market cap of £580m - looking good value here.

[woodhawk] 25/4/2019 11:44

...and I often do. My stats say I seem to get it right 9 times out of 10 - so it's profitable for me - as long as I limit my losses.

[essentialinvestor] 25/4/2019 11:31

You can make great returns going against prevailing sentiment,
if your logic is ultimately validated. That's the important proviso.

[chucko1] 25/4/2019 11:08

Careful, on the subject of derivatives (especially including credit default): these people were by no means stupid, but they were rational in that they banked their huge bonuses and leveraged the risk to the utmost in order to inflate the bonuses even more. Why? Because they knew that party would end and they wanted to get as much for themselves out of the punch bowl as they possibly could.

I was in that market at the time and saw it coming about two years prior. Very few, if any, of the bad actors paid any penalty.

The guys at the top also benefitted from the bonanza and failed to look closely at the risk their banks were undertaking. One of the exceptions was JP Morgan (Jamie Dimon), and they continue to fly high today (notwithstanding the ludicrous “Whale” episode - a separate CDS fiasco).

[careful] 25/4/2019 11:06

We are all nervous about the upcoming strategic review.
A CFO elevated to CEO may be tempted to come clean and do some kitchen sinking.

[woodhawk] 25/4/2019 11:03

I hope so.

[careful] 25/4/2019 11:00

This is a contrarians dream.

[woodhawk] 25/4/2019 10:57

Trouble is, Porsche1945, I'm a dyed-in-the-wool contrarian, so I've just added to my bottom-picking pile here.

[careful] 25/4/2019 10:24

Looking at financials today on this website.
Amusing, historic data.

GFRD. pe 4.34 yield 14.64%

In the good old days bells would be ringing and punters would be piling in.

[dr_smith] 25/4/2019 10:14

Nature of contract is not stated. e.g. paid fixed price or a pre defined split upon sale of each house.
If resources are finite, they could buy/use own land and do a like project, taking all profit. Why share profits. May be good reason for commercial justification, but if not stated, you don't know.

From council point of view, having same contractor do infrstructure and houses/commercial premises likely means easier project management for who does what on grey areas, so GFRD perhaps has edge over other other house builders - though peers preumsbaly do infrastructure too, just not on same scale as GFRD.

Dave

[hairballradical] 25/4/2019 07:42

Always a bit of a concern when following a profits warning, new contracts are announced as they are won. Smells slightly of desperation but will give them the benefit of the doubt.

Shows how hard you've got to work in construction to offset poor performance. This RNSed contract will probably help to eradicate only 50% of last weeks loss.

HBR

[gabsterx] 23/4/2019 08:28

At these prices I'm inclined to think that there is a big margin of safety in GFRD, based on a conservative DCF analysis I estimated the fair value of the stock to be around 633p offering a 20% discount to the current share price

Despite my lashing out at the recent events, the positives I see right now are:
- Truscott is out, performance before his arrival speaks magnitudes about his incompetence
- Strong balance sheet
- Risk of further hits to construction business can be absorbed thanks to Linden until their 'restructuring' is complete
- Ridiculously low PE, with less risk than a pure play construction company
- share price has collapsed before (in 2007 by 80%) and recovered

Negatives have already been well covered by other posters.

Just added 320 shares at 535p, I may be completely wrong and the price can still go down by a lot. But I see more upside than downside at these levels.

[spudders] 22/4/2019 17:14

A series of cover ups since GF’s so called retirement. I think things will start to look better in May bwdik 🤔

[careful] 22/4/2019 16:57

The call in the Sunday Times to get out of construction and concentrate on Linden House builders seems retrospective wisdom.

The Aberdeen Bye Pass and the new Forth Bridge are impressive projects to have been a part of, both significant achievements.
A pity GFRD were tangled up with CLLN and did not cost that impressive Queensferry crossing bridge properly.

The Sunday Times article did say that some in the City believed that GFRD had become 'an incredibly cheap business' after the recent share price collapse.

Let us hope the latest CEO is the man, now that he has the top job.
We were badly misled by Truscott a few short weeks ago. Things seemed promising with a decent profit in a troubled year.

Then he jumps ship.
Amazing he is not held to account.