Kier Share Discussion Threads

[salpara111] 12/4/2019 12:19

The only thing you can say with any certainty is that the new CEO will do what every new CEO does......a Kitchen Sink Job!
There is probably not much more downside but personally I am waiting to see what possible nasties the new guy manages to unearth before looking at taking a stake.
The commercial construction industry is over capacity and as a result the public sector can afford to write contracts with T&Cs that any sane person would not touch with a bargepole.

[ltcm1] 12/4/2019 11:09

A good discussion yesterday I thought.

The line from trident5 was astonishing and bears repetition:

Over the last 6 years profits have totalled £119m on Sales of over £20bn - that's a margin of around 1/2%.

Minerve2 is saying this is a VALUE play, a chance to buy in at 4 times forward earnings.

But on a historical basis earnings will be £20m based on £4BN of turnover, which puts the p/e on 20.

If Kier hasn't made any money for six years why do people think they are about to suddenly crank our £100m a year? Also given their absurdly sprawling nature and the complexity of the work they do, I think it is sheer pot luck when it comes to predicting future earnings.

Kier is not a fallen angel but a mirage in my opinion.

Also I don't think it's a given they will be able to increase margin on their maintanence work. The govt have got used to paying very little and it will be hard to wean them off that. Also this is work a lot of companies can do so the barriers to entry are quite low.

As I see it Kier needs to get back to what it is good at, big infrastructure works involving technical know how. It would be a much more interesting business if they had some clear focus.

[sharetradergray] 12/4/2019 10:40

And the share price rocket is off!

[sharetradergray] 11/4/2019 14:39

gettingrichslow - You talk a load of tosh! Casino is an out and out gamble shares are an investment and this is a ripe opportunity you cant compare the two

[gettingrichslow] 11/4/2019 11:55

All wishful thinking chaps! You can go to a casino if you want to gamble...and there are lots of top quality companies out there to invest in if you want to make money.

[minerve 2] 11/4/2019 11:42

New CEO starts soon. FD has to up his game or he can kiss goodbye to employment with Kier.

[sharetradergray] 11/4/2019 11:35

Well said minerve, the fundamentals are looking attractive Kier is well placed long term to bounce back this share is a bargain in my eyes and a key part of my portfolio, I know Woodford gets a bad press but if hes buying more of Kier and choosing to sell other stocks then this must be a key signal he knows and believes long term this company has got the legs to climb back up! Fill ya boots time!

[minerve 2] 11/4/2019 11:24

Mmmm, I love the smell of a brexitplus/getting defeat in the morning.....

[minerve 2] 11/4/2019 11:02

Additional fundraising will not be needed IMO UNLESS the working capital situation doesn't rewind.

I wish you would focus more on the detail brexit rather than just making very easy general comments.

Do you know how much working capital is expected to be reversed as positive cash flow for example?

Erm, no, you don't.

So don't say "Neither, I believe, takes into account the possibility of further fund raising or contract problems.".

You have no idea whether it will be needed or not. A very easy comment to make in a negative sector which makes you look good if it turns out to be true.

A bit like the laymen saying it will be dry tomorrow and it turns out to be dry. That doesn't make him a meteorologist.

[minerve 2] 11/4/2019 10:51

I don't think anyone disagrees that this company has problems, or more specifically, this sector. It is what it is. If it was a super business model with superb margins then you will not have the opportunity to buy this at less than 4 times forward earnings. If the economy starts to stutter one would expect government to invest in infrastructure, like it has always done, and ATM the government finances are reasonably good. Much of Kier's business in its two largest sectors are within framework contracts which are easier and more efficient for works and cash flow. These frameworks are increasingly becoming more difficult to get onto. Governments now require faster payments to suppliers and other yardsticks like health and safety, economies of scale, and other ethical objectives are just as important as getting the job done. Kier is No 1 in the UK with regards to some of these new tendering requirements. Government can request suppliers be paid quicker but it would be unreasonable to set the objective of 30 days and expect construction companies to fund this all with their own working capital whilst the government continues to pay slowly. The government must recognise that they need to step up to the plate too because they can ill afford another Carillion or Interserve. What is happening is making a mockery against Tory ideology that privatisation works for all. It needs to be seen to working or they might as well hand the keys over to JC straight away.

The new wave of projects for roads, rail and utility development have increasingly higher budgets and are on the horizon. Carillion has gone, suppliers are hurt, Interserve and others will not meet the strict criteria for tenders - one reason why Kier had the rights issue. If the sector can ride the storm Kier stands to benefit big-time, if it doesn't you might lose your money. It really is very simple.

[brexitplus] 11/4/2019 10:30

UpDownTrader

That may be the case, but its highest share price was nearly £15 back in 2013 and the dividend has been drastically cut this year I think you may be "clutching at straws."

I would dearly like to see Kier succeed but history in this sector, I'm afraid, is against it.

Re Liberum, their target is two thirds of what house broker Peel Hunt is saying. Neither, I believe, takes into account the possibility of further fund raising or contract problems.

[trident5] 11/4/2019 10:26

It's a low quality business isn't it?

Over the last 6 years profits have totalled £119m on Sales of over £20bn - that's a margin of around 1/2%.

Over that period shares in issue have doubled.

That's been a period of benign economic conditions and abnormally low interest rates.

Some revenue will be subjectively determined given the nature of longer term contracts - any minor exaggerations would have a huge impact on the bottom line.

Not much scope of getting out intact if the slightest thing goes wrong in the business or the economy.

[updowntrader] 11/4/2019 10:18

Agree with the comments but surely all this negativity has already been built into the share price as it is 29% of what it was a year ago.This is a company capable of making £100M net profit and is tipped " Kier Group: Liberum reiterates buy with a target price of 660p."

[brexitplus] 11/4/2019 10:04

Ltcm1

Absolutely correct. As noted in the last few days, the cost of pitching can be very high, the chances of winning are enhanced by quoting low, penalty clauses are a problem, plus slow payment by clients negatively affect cash flow.

This business environment isn't going to go away quickly.

Also, as you say, the share price performance has been pretty dire.

[gettingrichslow] 11/4/2019 09:51

Ltcm1, I think you're spot on. The strategy has all the hallmarks of being a slightly desperate one. They're not being selective enough in which contracts they're going for. In this market you have to be really selective and not over-reach. This strikes me as pretty obvious so I'm surprised it isn't obvious to others?

[ltcm1] 11/4/2019 09:45

Why don't we get back to talking about Kier? Let's start from the basics. This is a share that has been in serious decline for two years now plus hasn't performed atall well since 2014. I believe the starting point for our discussion should be this - are we looking at a company that never really made much profit in the first place? Is the business model flawed?

To me the stratagy of making yourself massive and going for every building contract that moves is a losing one, surely this is a company that needs to shrink by about two thirds and focus on their most profitable activity.

[minerve 2] 10/4/2019 23:01

updowntrader

I noticed you are fairly new on this site. If you want some help on how to manage risk by selecting the right trade size then let me know. I don't trade much nowadays. I used to momentum trade.

[minerve 2] 10/4/2019 22:58

He just can't let it go can he? He is on holiday! Christ, talk about seriously deranged mind. I couldn't resist checking what he has written, trying hard to discredit me because he is envious of my investing skills. If people want to check my BATS go and look at the thread. I believe I made a comment around the time I bought, but I don't see why I need to make a running commentary. So far we have heard nothing from getting about Kier. Make your own mind up whether he provides better commentary than I. No loss to me quite frankly. LOL

My first tranche in Kier was much higher than 460. My average is now below the rights issue price and getting lower. Will add if this makes further moves downwards pending no changes to the status quo of course.

Kier are second largest construction company in the UK by turnover....

[gettingrichslow] 10/4/2019 22:23

For the record, Minerve actually declared he was buying Kier with his Burford sale. He sold BUR at around 1820 and bought Kier at around 460 so he is well down relative to if he'd stayed in Burford. But if he is an expert in anything, he is an expert in re-writing history, hence the sudden BATS pronouncement - it doesn't fool anyone (except UpDownTrader perhaps!!)

[updowntrader] 10/4/2019 22:06

Minerve. Don't let them drag you down. Block out the haters. You opinion is listened to by many. Everyone on here should try to be more constructive instead of battling with each other, especially when the truth is nobody actually knows what is going to happen with Kier.

[minerve 2] 10/4/2019 18:10

Make sure you find yourself with a chair when the Burford music stops. Rather you than me.

[minerve 2] 10/4/2019 18:05

Yes, and I sold Burford, bought BATs and made 20% (+ divs) in 4/5 months, plus similar profits on domestic stocks since December, whilst you lot were watching the Burford paint dry.

LOL

[trident5] 10/4/2019 17:30

GRS - Minerve is a man who sells Burford to buy Kier, solely for the benefit of amusing us.