Kier Share Discussion Threads

[stdyeddy] 23/9/2021 10:35

Another large volume day by the look of things. Several 150,000 share transactions going through. I'm guessing perhaps 3 or 4 million today. It looks as though the market is re-assessing Kier. I anticipate a steady climb in the shareprice now to the January results. Last year over this time period we doubled in very different circumstances (less optimistic, no cash raise in place, high-debt, a lot of fear about covid). I won't be surprised if we double again due to no net debt, solid order book and a current price which is still at distressed levels.

There's also a lot of coverage about the Lower Thames River Crossing today; Kier is in contention for roads contracts on both north and south sides of the proposed development and this could be as big a boost for Kier as HS2, but contracts haven't been awarded and I'm not going to get excited about it until they are awarded. However, Kier's name is prominent and I'm guessing it's adding a little to the interest here.

[stdyeddy] 23/9/2021 08:29

Another chunky contract win for our favourite construction firm:

Thames Water has appointed Kier to deliver a £66m upgrade to its third largest sewage treatment works in Isleworth, just outside of Twickenham Stadium.

[stdyeddy] 22/9/2021 11:22

I'm seeing a series of buys at 122p for half-a-million shares each time this morning. Someone is stake-building and seems to have bought 3 million today alone.

Also interesting to see the institutional holders building their holdings here; a few weeks ago they were down at 32% and now they are just a fraction under 40%.

[rikky72] 21/9/2021 23:33

Don't know why the question mark always turns into an exclamation mark instead. Makes me look like an excitable whippet..

[rikky72] 21/9/2021 23:31

Funnily enough, I did decide to do both and went for COST too, but have a ratio of about 3:1 KIER: COST.Just curious if anyone else holds both and what their timescales/ targets are for them!

[wallywoo] 21/9/2021 17:06

Well we shall see if Kier generate £120m cash per annum or not. Because they have a lot less tangible net assets than in Dec 2018 after the last equity issue, I am very sceptical of this net cash position now.


That in a nutshell will be the test. In the meantime I think the share price will drift lower untill proven.

[imastu pidgitaswell] 21/9/2021 16:56

Maybe. I am cautious, as you know - prefer solid balance sheets and it's better still if they have hundreds of millions of net cash. Even more so in a sector like this where an investor needs some insurance if things get messy, as they tend to do - the ability to trade their way out. Hence I like housebuilders like TW. and RDW and cash-rich construction companies on low earnings multiples in this sector.

But cash generation is the key for any business. The cash generation here going forward is clear enough, as far as I can see. Some of the detail may be different, but in broad simple terms it is £4,000 million at 3% = £120m, less tax (take your pick - but that is why the 12 year period of no tax really matters). Compare with the market cap of (446 million shares at 120p) £535m.

(Edit - just checking that issue again - it won't be nil tax for 12 years. The tax asset of £138m will take 12 years to utilise. Not the same thing. But the tax charge will be something like 10-15% of Profit Before Tax for the forseeable, as they use those deferred tax losses carried forward.)

They were also fair points stdy made regarding the trade finance and delayed tax. Truth is it's not that important at those levels whether £100m or nil or somewhere in between. At £600-£700m, debt levels mattered. Not now.

In my book, a business available for £535m when it generates £120m per annum is a decent prospect. Sure, COST is even cheaper, particularly when looking at enterprise value (as any predator would), but there is no rule saying you can't be in both.

What I think is difficult to deny is that this is not expensive now.

[wallywoo] 21/9/2021 16:37

Imastu, I am not looking backwards with Kier. I am looking at them now as a investment.


The problem I have with that is balance sheet capitalisation (ie large negative tangible net assets).


If you study history of all the past failures in this sector, that is the main correlation. In deed, Jarvis had 2 equity issues, and a debt for equity issue, and sold a load of assets. However, because they never managed to get better than (-£100m) tangible net assets they eventually went bust.


Of course that theory, although tested through history is still playing out here. Is it worth the risk?? I am not adversed to risk taking (in deed just taken profits from jkx, that I tipped on here 6 months ish ago at 47.5, bgt at 20p). But to own a company with such a poor balance sheet in this sector is silly. IMO is is just as likely they will continue to lose cash as make it going forward, especially as the interest rate on debt has increased.

Your Costain investment went very lack luster 4/6 months after the equity issue. Very likely to happen here too.

[imastu pidgitaswell] 21/9/2021 15:32

Zzzzzzz

🙄

[sparty1] 21/9/2021 14:39

and he still does not know why....never will..

[imastu pidgitaswell] 20/9/2021 20:42

Had already liked a couple yours...

Despite the aggravation, and the infantility of Pinky and Perky, I have only ever looked at this - and everything else - from a view of objectivity. Kept saying that, but no-one was having it.

The high risk play that this was is now a much lower risk; not risk-free, and riskier than some others - but you need different options from safe to risky. And it is also 3 times higher than its lows in terms of share price. Different risk:reward profile from here onwards.

Going all the way back to my first post - which I've copied before - it's a case of assessing the facts, preferably without a bias. Difficult if you hold, easier if you don't.



Be honest, this is how it has panned out - the share price performance has been better than I reckoned (which is probably all that matters), but in terms of actions and events, basically correct. They have done extremely well as a management group to manage an extremely difficult inheritance.

[stdyeddy] 20/9/2021 19:01

LIBERUM: Kier Group - Distressed rating for a sound business

[stdyeddy] 20/9/2021 17:21

I can't quite believe it; I just liked a masturpig post. I couldn't help myself! Is it possible that our detente could become an entente after everything that's been said here? Well, let's not get carried away just yet.

Re the trade finance of £80m (a smidge under at £79.1m for anyone trying to identify it), it's there on the 'trade payables' balance sheet line as a liability within the £330m owed to suppliers. I've said this before -- if those suppliers hadn't opted for the early payment scheme, they would probably still be in the trade payables line. Arguably they might impact a little on Kier's working capital if the business tries to maintain its prompt payment policy and 34-day payment average but I have a sense it wouldn't change very much. For comparison, I checked the trade payables line at Costain, and at a third of Kier's revenue, Costain's last reported number owed to suppliers was about £252m. My point being; I think it's fair to class it as a trade liability rather than an interest bearing debt, and in that context, it's not big and probably won't change even after KEPS is done away with. Maybe.

Still got to pay the last bit of covid-support VAT deferment of £18.8m in January, but then, surely, SURELY, the 'adjusting items' will be down to thousands and not millions. Please, Andrew Davies and Simon I-refuse-to-wear-a-tie Kesterton, read the Morgan Sindall results and make it so.

[imastu pidgitaswell] 20/9/2021 16:23

I was surprised by the level of debt reduction.

Some of it will be due to (unsustainably) low capex (which will increase) and some working capital effects which will not recur, and there is still £80m of trade finance and £20m of delayed tax to be paid, but stdy's tax comment on results day recently was interesting. If it is c12 years of no (or limited) tax, then does put this on a PE of around 5, maybe less.

You can't keep looking backwards wally: caution - yes, but intransigent blindness - no.

[stdyeddy] 20/9/2021 16:04

Another thing wolly would be wise (lol, as if...) to keep in mind would be the increasing margin. In the first half, profit margin was 2.93%. For the full-year it's 3%, due to a second-half margin of very nearly 3.1%. IF Kier can maintain that rate of improvement, against cost pressures etc, we might see a first-half margin for 2021/2022 of 3.3%. Davies is saying that despite inflationary pressures, they still think their forecast is right. Medium-term target is 3.5% margin on revenue of £4.0 to £4.5bn, which would be £140m at the low end and if the business can get to the low end of that forecast in this half, it will make £70m.

And I think it's just possible that we have finally seen the end of the 'restructuring' which has cost another £31.6m for the full-year and £24.8m for the discontinued business (inc £12.1m as a writedown on KL's final value), which along with advisor fees have eaten up most of the operating profit, eventually leaving us with £5m. I look fwd to seeing the results in January with no restructuring costs, no surprises and increased margin.

wolly will never leave btw. He's always promising to do something more productive with his time, but he never honours ANY promise, including the one he made us before the share price rocketed through 100p, when he said he would apologise for being wrong about Kier. It seems he has no friends (perhaps because he is so unreliable) and no hobbies, and cannot tear himself from this thread -- and that is quite sad, but maybe he deserves it.

[petersw1] 20/9/2021 10:53

Wally, since you're so obsessed with P + L you should note the total comprehensive income of £23m for the 6 months to 30th June 2021.
They don't state it directly, and I don't find it as useful for understanding the business as the underlying profitability. Though, given you obsess over that it should be an important figure for you.

[wallywoo] 20/9/2021 10:41

That's great, so Stdy you are agreeing to not post / ramp on this BB until next year when the results come out?I am sure the BB will be much better as a result. Take care now, bye!!!

[stdyeddy] 20/9/2021 10:06

Yes, wolly, perfectly happy to wait for the next news or set of results. It's you who is constantly 'deramping' on here because you have a stupid fixation with Kier. You lost on your short; you're a well known figure of fun on here for lying and constantly posting rubbish; you lost on Interserve going long. Half the people on this board are only checking in to see how you are being skewered by the sensible people here. When you are silent, there is very little posted here. You would be better off not posting your ridiculous doom-mongering rubbish, and just waiting for genuine news.

And also, when will you honour the promise you made on 1st May to apologise when the price rocketed upwards through 100p??

[wallywoo] 20/9/2021 09:42

Yes you have been saying forward pe for 3 years now, except that for each of those years Kier actually produced a loss.Surprise surprise you are saying the same thing again. Don't you think it is time to actually wait for the next year before you speak?It is getting embarrassing now!!

[stdyeddy] 20/9/2021 09:36

wolly, when will you stop lying? I said FORWARD p/e. Kier will earn upwards of £100m on current performance and has a market cap of about £520m. The results have just been published. And also, when will you honour the promise you made to apologise when the price smashed through 100p??

[wallywoo] 20/9/2021 09:34

Kier made a bottom line loss, so have no PE ratio, despite Stdy saying it has had one for 3 years now (with losses in each year)!!!When will you stop lying to posters, Stdy???

[stdyeddy] 20/9/2021 09:29

Indeed. All the longs are sitting on good profits, maybe even big profits now. Kier itself has zero net debt (in fact it has net CASH), a massive order book, a slimmed down workforce. Hardly a 'worry truck'. Current forward p/e is about 4.5. Dirt cheap, and even at risk of a bid.

Today's opening price is affected by a market-wide drop in prices in the US, China and as a consequence, globally.

[iammrweald] 20/9/2021 09:19

But if I ' invested'in this worrytruck @ circa 88p and look to sell now will I be paid no returns? he he

[itisonlymoney] 20/9/2021 09:00

Yes, you do keep saying it even tho you're always wrong.

[wallywoo] 20/9/2021 08:21

As I keep saying, despite the numpty's on here insisting this £550m non dividend return company is the bargain of the century!


Support now firmly broken, next stop for the share price is 100p!!!!


Why buy a company that has issued 454 percent more shares in 3 years, pays no return, has paid rampers that have been saying how great it is for 2.5 years (with no share price increase), and will be deeply affected by huge inflation??