Kier Share Discussion Threads

[gerhart] 24/5/2022 08:32

So, much as expected: steady as she goes. And who could have hoped for much more in today's circumstances, all things considered, etc etc.

And for anyone worried about the hidden, the fact they are doing a PR day straight after an update should allay those concerns, as the BoD will be open to a wide variety of public questioning and answering.

Would be interesting to hear all...

[wallywoo] 24/5/2022 08:22

Dull predictable RNS. It seems incredible, that a company that has had huge cash outflow issues for 6 years now, and has had to issue over £800m in new equity over that time. ANDDuring a key trading statement, don't even give 1 indication on debt and cash generation. Be very careful here, it's what they don't say that's important!!!! Cash and debt is everything, order book is completely irrelevant to company success in this sector.

[stdyeddy] 24/5/2022 08:09

Not exactly setting the world on fire, but also, presumably, making a profit, since that's what the board's 'expectations' are. Which means that a p/e of 3 is WAY UNDERVALUED!


Trading
Kier performed well in the period 1 January to 30 April 2022, despite the continuing inflationary pressure. The Group continues to trade in-line with the Board's expectations.

Order Book
Kier continues to win new, high quality and profitable work in its markets on terms and at rates which reflect the bidding discipline and risk management introduced under the Group's Performance Excellence programme...

As at 31 March 2022, the Group's order book was c.GBP8.5bn, an increase of c.6% from the 31 December 2021 position of GBP8.0bn.

[stdyeddy] 24/5/2022 08:05

Well, 'in line with expectations' must be Davies's family motto. At least he isn't preparing us for bad news, and the order book is up. Evidently more detailed numbers are coming tomorrow.

[dasty1] 24/5/2022 07:56

Sticking my neck out: 79.5 at close

[bathboy2] 24/5/2022 07:42

Medium term expectations, so nothing changed, meaning no dividend, and the share price could carry on its downward path, cant wait for the spin, how this is good news

[itisonlymoney] 23/5/2022 14:29

Market is holding its breath. So 7am tomorrow...

[stutes] 23/5/2022 14:16

[...]

If auditors are punished by FRC then the fine should be linked to fee income and the financial fallout actual or perceived.

[itisonlymoney] 23/5/2022 10:43

So now you're 'concerned' about 'ovulation'. In construction. Nothing more need be said.

[stutes] 23/5/2022 10:34

London tenders have 10% margin for ovulation built in yet why should contractors not be on formula increase cost?
As BoE hikes rates those with debt or working capital funded by debt are likely to see a margin squeeze.

It looks tough for construction sector

[bathboy2] 19/5/2022 17:49

What do they say, the markets normally read it right, by Monday morning if there's a lot of large buys, then it could be positive, or sells then negative, someone possibly will be tipping the wink to a London trader mate over drinks at the weekend, maybe wrong, wait and see lol

[stdyeddy] 19/5/2022 15:32

Wow, we actually went blue just now on a day when the main UK indices are down more than 2.5% and the dow is continuing its losing streak -- finally we have buyers emerging here. We have a trading update on Tuesday and the current share price is pricing in a megaton of bad news. My instinct is that the results update will be much better than the share price is expecting.

Looking at the market cap (roughly £340m), Kier is currently worth approximately the same amount of money that was raised in the rights issue and the sale of Kier Living.

In other words, the UK's largest regional construction firm, with an £8bn order book (over 90% in agreed contracts), booking an actual profit in January for the first time in three years, with very low debt, pension funds with surpluses, hundreds of contracts in progress with government and local government customers (ie NOT discretionary spending, but essential schools, hospitals, roads etc) would be valued on the current share price, minus the recent cash injection, at practically ZERO. That is nonsensical and shows that the market has been irrationally spooked by wider events. Assuming no disasters on Tuesday, I think we can expect a significant re-rate next week.

On Wednesday there is Kier's 'Capital Markets Day' which will involve presentations and discussions with investors and analysts, so next week should be a big one for us here.

[wallywoo] 19/5/2022 09:32

Lol, Kier has been going bust for 6 years. No idea why investors keep bailing out them. £800m poured in steadily over those years to keep them going. Over £100m of that money has gone to their pension funds over that time, perhaps it is them that keep the ramping going on this BB (or the debtor's, suppliers, etc it's a long list??).


Perhaps fund managers have their hands forced to support this, by government? (Infrastructure is a key employer and government priority). After all no idiot would keep piling more money every few years at cheaper and cheaper prices.


Just think if you had invested in all the equity issues at 858 (2016), 409 (in 2018), and 85p (2021). What an idiot!!! If the share price has a bounce after their trading statement I would sell quickly (they have become experts at spin over these years, hard balance sheet figures always leads toa sell off). However, I think a bounce is unlikely.

[ant_eater] 18/5/2022 07:27

WALLY ANT........CANT BELIEVE YOUR STILL HERE! I THOUGHT YOU SAID KIER WAS GOING BUST 2 YEARS AGO? ANY WAY, IM THINKING ABOUT BUYING BACK IN........WHAT DO YOU THINK?

[bathboy2] 17/5/2022 14:33

Kier could go for the 1bn PFI contract, for United Utilities, might as well, bit more borrowing won't hurt,

[wallywoo] 17/5/2022 12:41

Lol yeah solid results, you do know;


1) Kier is the only builder in the sector with >£200m negative tangible net assets (ie has the poorest balance sheet, even after £800m+ poured in through 3 equity issues over 6 years).


2) Kier is the only Builder with a large operating cash outflow in the last half (-£109m).


The best you can hope for is that no more cash flows out in H2. That really doesn't sound like a investment with solid results coming to me !! Let the share price trend be your friend and steer clear.

[takeapunt1] 16/5/2022 18:55

I would expect solid results with rising costs being passed onto clients in recent contract wins. Turnover however may be down a as clients re-assess schemes to get them within budget or seek further funding. If they can make a dent in the average monthly debt that would be a positive sign.

[dasty1] 16/5/2022 08:34

Sorry if old news, but I note a trading update will be released 24 May. Not long to wait. Will be very interesting to see if the 40% share price drop this past 6 months or so was warranted.

[driver101] 13/5/2022 22:19

Business services company Kier Group (KIER) trades on an ultra-low PE of 4.7.

[itisonlymoney] 13/5/2022 19:47

lol. Advisory role? No. Kier will be the prime contractor on this, same as its other regen projects. It's a long project potentially over 8 years. Still a good win and one of many. The partnership is with Kier Property. Kier Property makes higher margins than the other Kier divisions.

[bathboy2] 13/5/2022 07:02

Kier the way it reads, is the project lead, not principal contractor, i would take this as an advisory role, with the possibility of doing some of the work, ie the biggest building

[stdyeddy] 12/5/2022 16:42

Wow!! Our favourite construction firm has won yet another massive regeneration project.



KIER PICKED FOR £350M LEATHERHEAD REGEN PLAN
Mole Valley District Council has signed up Kier Property as its joint venture partner to lead the £350m regeneration of Leatherhead town centre in Surrey.

Councillor Keira Vyvyan-Robinson, MVDC Cabinet Member for Projects, said: “Kier not only bring technical excellence, innovation and technology to the partnership but, more importantly, extensive in-house experience of complex public-sector regeneration projects.”

[wallywoo] 11/5/2022 09:53

Since there are 8x the number of shares in issue than there were 6 years ago (55m to 446m), Kier have no choice but to try and keep shareholders happy.


Unfortunately with cash still flowing out of the company that will be very difficult. I went through the last 6 years accounts to see the cash inflow / outflow in H2 compared to H1. I found the cash improvement was around +£40m for 5 of those years, and -£40m in 1 year. Not surprisingly all of those years had a large cash outflow in H1, but only 1 was worse than this years (2018/19). 2019/20 was the year where cash flowed out in H2, 6-12 months after a equity issue (ie like today). Kier like to spend money when shareholders give them more!!!


Since they have a operating £109m cash outflow in H1, that means the best you can hope for is £69m cash outflow (£40m improvement). Though I doubt it will be anywhere near. With 8x the number of shares and no chance of any dividend, and a weak market, Kier's share price will be under pressure for a long time!!!

The company will spin hard in their capital markets day, as they have always done but cold hard cash generation (ie lack of), will dictate where the share price goes. None of the figures above count the cost of debt, which with inflation and interest rates rising is only going one way (also increase pension liability with their massive £2B fund).

30p by July / August

[stdyeddy] 10/5/2022 13:44

The 'interesting times' continue. The Ruskis seem to be running out of puff. Meanwhile Europe is getting more and more organised behind the Ukrainians. Let's hope this terrible tragedy comes to an end soon.

However, I think the war, whilst it has probably been a major factor in tipping the world into recession, isn't the only one. China continues to struggle with covid. The fight for energy and food is manifesting in violence in the poorest countries (eg Sri Lanka) and this is bound to continue. The era of very low interest rates seems to be coming to an end.

How will this affect Kier? I will make a few guesses. First of all, many more firms in the construction sector will likely fail over the coming months. The demand for homes and new projects generally will likely diminish. The reduction in house-building MIGHT reduce inflation across the construction sector, although energy costs will, I suspect, remain high. Construction wages might be caught in the tug-of-war between higher living costs and wage inflation generally, versus a wind-down in construction in particular. It's a complex picture and impossible to predict easily, but I think personally that wages will not continue to rise in a recession. My guess is that we're going to see a short-term inflation hit (another one) on Kier's profits for the second half, but my guess is that it will likely not be as big as the trolls on here hope for.

New submarine pens for the Dreadnought class will POSSIBLY be an unadvertised opportunity for Kier, along with other military infrastructure, as well as all of the ongoing renewable and nuclear energy projects. Kier has experience in all of these. How will our government pay for it, plus new hospitals, HS2 and everything else in Kier's orderbook? Taxes are going up massively. VAT has not been reduced from the pre-Brexit crisis, and the recent rise in wages and frozen tax thresholds will suck money away from consumer spending and give it to government. So if there's a sector of construction (ie govt spending) which will do better than the economy generally, I think Kier is in it.

itsonlymoney - regarding profitability on the HS2 joint venture, I think that's a 'maybe'. That JV (known in the Kier accounts as simply HS2, and organisationally as EKFB) doesn't produce publicly available accounts, so it's not possible from where I sit to disentangle the profits from the rest of Kier's 'Infrastructure' earnings. JVs did however contribute £10.9m in dividends to Kier's last six months earnings -- a huge proportion of overall earnings. I presume though that the largest part of this may have come from the block sale of the Twickenham Gateway development. We will probably have to wait for the annual report in September to know for sure.

That said, the H1 results do show that infrastructure operating profit rose by £5.5m and margin increased to 4.2% for that segment. Kier said: 'Segmental revenue was 15% higher than the comparative period due primarily to the ramp up of capital works on HS2. This increase in volumes of the segment has primarily driven the 20.5% increase in adjusted operating profit to GBP33m.'

So you might be right, but no cigar yet. Two weeks to go until the capital markets day -- very nice to see Kier communicating with the investment community for a change. With any luck we'll get some answers on these issues then.

Regarding cash outflow in H1 -- I was not overjoyed to see THAT, but it seems to be a Kier tradition that cash flows out as working capital in H1 to fund work which then produces earnings in H2. Also, the business reduced the disreputable KEPS balance (the Kier early payment scheme) which pays suppliers with a form of factoring (surely unnecessary if Kier's avg payments are now running at 34 days) AND repaid outstanding VAT (the covid support deferment) of £53m. I will be very keen to see whether cash generation returns by the end of the full year (June 30th) and whether we actually return to net cash at that point. By then of course we could be in the middle of a market meltdown, so I have no idea where the shareprice will be.

Good luck everyone and please do your own research.

[bathboy2] 10/5/2022 08:22

Update on the HS2 contract, said by ItsOnlyMoney, to be profitable, but hasn't come back with any proof, thats probably what everyone thought with Roadbridge Uk,on HS2 also, massive debts, and nmcn, who i warned about, their debts are enormous, sadly a lot of subbies will end up going to the wall through this,