Keller Share Discussion Threads

[salpara111] 10/7/2011 16:35

Decided to sell mine, I dont like the current market cap....they are in the danger zone for eviction from the FTSE 250 and if that were to happen there would be a general sell off.

[jonntara] 09/7/2011 18:49

Last week took up a small holding on these at around 473p last week. I know why they are lowly rated - the US construction market is in a poor state, but we all know it will come back eventually and the margin on their work should increase ratchetting up their profitability. This investment is a buy & forget one - I know it could take a couple of years or more to come round, but I will top up again if they drop substantially.

[jonntara] 17/6/2011 22:43

Very much agree. Glad I have bided my time, but will see where this current plunge finishes up and what happens on the next update and may jump in.

[redips2] 17/6/2011 10:54

If they do cut the divi then the share price will drop---having bought and sold these 3X and I am tempted again, I am watching and waiting---getting v close to oversold, all IMHO.

[jonwig] 17/6/2011 10:34

I'd buy and wait for the upturn if the divi were secure (at say 23p). But there might be a problem, in that the divi was over 5x covered up to 2008 and their policy has reduced this to just 2x covered.

A maintained div and forecast eps of about 37p would mean cover less than 2x. That suggests to me that prudent management would slice the divi.

Summers in the FT suggested earlier in the week that the US economy was crying out for infrastructure spending. Whether that will prove practicable I don't know.

[redips2] 17/6/2011 10:10

Today's competition----how low can they go??

[jonwig] 23/5/2011 07:22

Well, the share price chart (above) is a rollercoaster, and I can see where you get your 30% upside target from.

From here it does look as though the slump in US construction is longer and deeper than expected - and can we expect a programme of public works to help a recovery? I personally doubt that. KLR are beginning to look less sure-footed than in the past.

Even so, as you say, there are attractions at this level.

[jonntara] 22/5/2011 22:42

Hmmm ... At this price I could be tempted for the following reasons...

They are nearly down at book value - there are a few intangibles on the balance sheet, but most of it is tangible stuff. Presumably the assets are piling rigs etc and so this business is not particularly capital intensive.

They have been doing a few take overs whilst the market is depressed and so when it turns around the natural level of profits should be higher than before - maybe £100m/yr or more. That puts them on a forward (long way forward) p/e of 3 or 4.

I like their geographic spread and there's going to be on-going demand for foundations for the forseeable future - so weather the storm and in a couple of years be getting a 30% return on your money...

Any thoughts guys/gals?

[andyrobo69] 18/5/2011 13:07

Possibly but at the moment I'm picking up some handy pocket money shorting it.

[andyrobo69] 18/5/2011 13:07

Possibly but at the moment I'm picking up some handy pocket money shorting it.

[jonwig] 18/5/2011 08:18

True, but ... are they vulnerable to a bid after warning rather too often?

[andyrobo69] 17/5/2011 13:32

This is going down quicker than Imogen Thomas. Glad I've off loaded 2013 is a long time to wait.

[stemis] 17/5/2011 09:17

I think the Citigroup comment is interesting "Keller has again shown itself to be later cycle than we had thought". The savage cut to 2012 by Liberum also shows that its going to be 2013 now before any recovery. A long time to hold with just a 4.5% yield for company.

[jonwig] 15/5/2011 11:56

Broker snippets.
Liberum:

In addition to our earlier comments, we now cut FY 2012 EPS by 35% from 69.7p to 46.0p. We also reduce our dividend to flat at 22.8p. We increase our FY 2011 net debt from £74m to £90m.

n McKinney in the US the key source of the downgrade – McKinney a $70m business has not dropped its prices quickly enough. Volumes have fallen sharply and it will swing sharply from profit to loss. This will lead to questions about Keller's federated model and whether it can control its business well enough.

Australia weakness longer than expected – There is a £4m reduction to estimates. Whilst we have clearly known about the floods, management argue that the impact lasted longer than they had expected.

n Middle East and North Africa has ben more disruptive than feared – While Keller is not in Libya, there is virtually no activity in its businesses in Egypt, Morocco and Algeria. Saudi has already been very slow year to date.
n Continued order book growth – Demand for infrastructure is still strong. The cause of the weakness in trading in the US has been commercial.

n Conclusion – We are surprise that the share price has not fallen by more like the scale of the FY 2012 downgrade, ie 35%. Confidence in forecasts is likely to be seriously undermined by the 47% cut to H1 estimates in June.

Citigroup:
Unlike last year, it is not the residentially exposed Suncoast business which is especially weak, but rather the small-end commercial segments. McKinney, Anderson and Heyward Baker are the main subsidiaries suffering. McKinney in particular has seen a sharp reversal after a solid 2010 and now looks likely to be loss making in 2011E versus profit of £3-4m last year.

In addition, management said it had underestimated the impact of Australian flooding, which is now thought to have cost the company £4m (was £1-2m previously). CEMEA still looks likely to deliver around 10% growth YoY although the UK may slip back to £1-2m losses again; we were previously looking for breakeven.

Clearly this significant deferral of recovery is highly disappointing and we will reviewour model post further discussions with management. Keller has again shown itself to be later cycle than we had thought and patience is now required by investors. The fact that the issues are price related and not volume, which would be much harder to bounce back from, is scant consolation but is worth remembering once the dust settles.

Taken from FT Markets Live 12/05.

[jonwig] 13/5/2011 17:31

Stemis - I suppose, in the context of 'ex-growth' it's worth asking what will happen to the divi in the meantime.
An increase to about 23.5p is still showing. I suppose they can maintain that, in which case they are yielding 4.5% or so, which might make holding worthwhile.

On the other hand, wider market risks are looking a bit menacing to me!

[redips2] 12/5/2011 19:19

Agree--jon, traded these X4 now, and each time been ok---as I say will see tomorrrow, cheers.

[jonwig] 12/5/2011 17:55

redips - I did look but had to go out early.
By the time I got back, it was 50p higher!

Always been volatile! The reaction looks a bit excessive, but that's how the market is these days.

[redips2] 12/5/2011 17:43

It's v quiet here--surprised there no comments. Well maybe an opp for those with strong nerves , sold these at 6.19p 2 weeks ago. I may buy back in tomorrow after a chat with my broker.

[nellie1973] 13/12/2010 08:18

Broker upgrade

[jonwig] 24/11/2010 19:30

Forecasts since IMS:

2010 2011
PBT(£m) eps(p) dps(p) PBT(£m) eps(p) dps(p)
Panmure Gordon
23-11-10 SELL 42.00 44.90 22.80 55.00 57.80 24.00
Numis Securities Ltd
18-11-10 HOLD 40.00 40.00 21.70 47.50 48.10 21.70

[redips2] 24/11/2010 18:47

It's not easy is it! LOL---this timeing thing.

[jonwig] 24/11/2010 16:42

Well, I bought a few below 530p, then it went still lower.

[redips2] 18/11/2010 12:40

Well jonwig, you are in tune with my brokers thoughts, he thinks 5.30p-ish is support--i have just nibbled a few at 5.49, just in case they do bounce.

[jonwig] 18/11/2010 11:11

redips - I read the IMS and felt it was rather more cautious than the last outlook.

The exposure to the US is still uncomfortably large, I think, and who knows whether the situation there will show early improvement.

The last drop to around 530p was a bit overdone, but that sort of level would be my re-entry point.