Tclarke Share Discussion Threads

[cc2014] 14/11/2017 18:32

My guess Dozey is the fall is due to the analysts downgrade on 2nd November. Whilst there is no doubt that the selling accelerates from this date there was selling before this date too.

Other than this it's all Brexit woes. Anything Brexit related with high gearing is getting battered. I wouldn't call CTO highly geared but the pension fund deficit is an annoyance which although it should have improved lately, is about £10m higher than I'd like to see it.

[cc2014] 14/11/2017 18:18

So, after today's fall I went and did some research.

Analysts consensus for 2017 is an EPS of 12.4 and a dividend of 3.5p (5.0%) This equates to a profit before tax of £6.5m. So, a P/E of 6.

Analysts consensus for 2018 is an EPS of 14.74 and a dividend of 3.85p. (5.5%) This would equate to a profit before tax of £7.74m. So, a P/E of 4.75

Personally I think the profit figure for this year is low by about a million and low by 2 million for 2018. Let's put that aside for a moment.

Only one of the analysts to my knowledge provides a recommendation. On 2nd November 2017 the recommendation was changed from overweight to hold. In other words downgraded.

I then looked at the others in the construction sector.

Galliford has a P/E of 20 and a dividend yield of 8.2%
Kier has a P/E of 68 (!?!check) and a dividend yield of 6.4%
NMD (market cap £35m) has a P/E of 10.5 and a dividend yield of 1.8%

[dozey3] 14/11/2017 17:51

One would have thought the fundamentals would mean that the market would soon mop these up in quantity near the 70p mark: net cash, high yield, low PEG - all according to Sharescope. The fraud case should no longer be influencing sentiment, and the Eton takeover seemed to be a perfect fit. I can understand an executor sale for example unloading large numbers of shares in a hurry, but not the null response of the market to an apparent bargain.
Could it be that the healthy order book reported at the interims is tailing off? Forward visibility was never great, especially as slow payers seem quite common. Or is it the microcap nature of CTO, which would obviously sit better on AIM where
IHT-relief hunters would soon bid it up.
Seems to me there is something lurking in the background not quite right, with insiders jumping into the lifeboat, which stops me adding to my modest holding. Time for an update from the BoD methinks.

[cc2014] 14/11/2017 16:25

That's another 76k sold and whoever wants out must clearly know the market can't absorb this sort of sell volume at this speed.

[cc2014] 14/11/2017 08:39

Presumably someone took the day off Friday and we didn't see any selling then.

Someone is in a hurry again today. 26k dumped at 8:25 and another 16k at 8:29, although the second one could be a triggered stop.

Roll on the IMS

[cc2014] 08/11/2017 13:31

Thank you Tuscan. Your thoughts on MIFID II and their impact on smaller companies hadn't occurred to me. Particularly the unbundling of research from execution services.

Maybe this would account for some of the selling. I have the privilege of being able to watch L2 all day and whoever is selling CTO isn't doing in such as way as to maximise their exit price. Indeed from what I've seen the MM's appear as confused as I do as to the price action over the last month and most of the time don't want anything to do with this stock, thus the crazy spread at certain times.

We can see another 24k trade at 73.1 today. It's clearly a delayed sell which has now been absorbed but one wonders if whoever is selling has yet managed to sell whatever they want to today

[tuscan4] 08/11/2017 12:50

I too am a patient investor. 4 years in January since my first purchase. Unfortunately the outlook for the construction sector has deteriorated in recent months,so it is understandable that a steady drip of selling is taking place.
Could it be that technical factors are also weighing on the CTO price? MIFID II in January will negatively impact interest in smaller companies and perhaps the few remaining investment advisors left in the City who are able and willing to look at the CTO's of this world may throw in the towel.
I retired from stockbroking nearly five years ago in the face of rising regulatory onslaught, and I suspect that the new breed of "advisors" must sing from a fairly bland song-sheet and have little appetite for sub £100m companies. Indeed , the appetite for investing in individual companies is under attack, as risk levels are racheted downwards.
Current CTO selling may be merely partly the result of portfolio cleansing and not specific to the company.
Value will out has always been part of my investment philosophy, however , with the rise of Passive investing, which will never encompass smaller companies, we must now assume that there will be a growing disparity between large/small, liquid/illiquid stocks . For the smaller quoted company this opens the way to acquisition, and perhaps CTO could be vulnerable on this count but after 100 years plus as an independent company one shouldn't hold ones breath.
If ,as I believe CTO will come in with c £8m pre-tax, a strong balance sheet,a diminishing pension problem as rates go higher, and a business model which will help build an economic moat around its market position, then the shares are clearly outstanding value sub 100p. Patience will be rewarded IMO.

[cc2014] 07/11/2017 17:35

I have to say I'm a little frustrated in that the selling continues. No one big trade today but a couple large enough to move the move down to the 73 area for a few hours.

If it's the same seller every day and he's going to sell 30-40k every day until the trading update I can't see it continuing to bounce back to 75 over and over.

On the other hand it doesn't really matter to me as I expect to be in this trade for 3-5 years so the vagueries of one or two big sellers are kind of irrelevant.

It would however be nice to see a day when someone doesn't sell at this level

[xajorkith] 07/11/2017 10:33

Thankfully, not long to wait for an update here.

IMS on 17/11 should help clear the fog of uncertainty hanging over this.

[cc2014] 06/11/2017 17:00

And the selling continues. Another 42.5k dumped by someone at 73.5.

But we end the day where we started

[cc2014] 03/11/2017 16:56

Another load of trades today at what I consider knock down sale prices, with whoever wanting to sell shifting another lump today.

I'll be glad when they've finished.

[cwa1] 03/11/2017 11:30

Morning all. Just picked up a few at 74p. Hoping that longer term this will look a sensible price to get in at. Fingers crossed for the IMS bringing something either good, or simply to settle nerves! Good fortune to all holders.

[cc2014] 03/11/2017 11:09

Yeah. It will help especially as CTO have minimal borrowings. (although they report positive net cash at half and year end, they still run the £3m credit line permanently )

[allstar4eva] 03/11/2017 06:39

Albeit a small one the rate rise should help? with the pension deficit here...

[turbocharge] 02/11/2017 15:59

Interim Management Statement Release on 17/11/2017

Wonder what the market is expecting, seems a bit uncertain going by the SP

[cc2014] 01/11/2017 12:31

Construction firm Morgan Sindall (MGNS) hiked its earnings forecast thanks to better margins in construction, infrastructure and fit-out. The stock advanced 1.9% to £14.72 on the news.

now up 2.8% as I write. Not a direct comparison but it does at least suggest the construction sector is doing fine on the margin front

[ivancampo] 01/11/2017 11:56

Fwiw, I still believe there's a large institutional seller, must be one of the notifiables. Company has done its best to raise profile, including a flurry of tips a few months ago, but not to the extent where this overhang is cleared.Will only move up on this news irrespective of company's performance in the meantime. Very frustrating.I maintain directors buying in sizeable chunks would be a great barometer for future success and increased liquidity but this is conspicuous by its absence.Added earlier in the week at 74 ish.

[cc2014] 01/11/2017 11:44

Something going on with the MM's but I don't understand what for sure. WINS cut their spread to 5 and another load of volume going through at 75 ish after a quiet day yesterday. Volume came in during the first hour so looks pre-mediated rather than reacting to news

Looks like Singer want to buy stock for someone and WINS are trying to push the price up to fill whoever is selling? I can't be sure though

[cc2014] 31/10/2017 10:01

So, today nothing. Not a trade. Zilch. The MM's have opened up the spread and whilst you can buy significantly within the spread who's going to even bother getting a quote when you see that sort of spread

[cc2014] 30/10/2017 12:18

Well it seems to be coming back now on low volume and as irrationally as it fell. Certainly the selling has stopped completely.

Who knows what's going to happen next. 76.8p to buy right now despite the ridiculous spread

[igoe104] 30/10/2017 11:55

over a 6% fall, for no reason ?

come on CTO learn to be a bit more share holder friendly, no trading update even though lots of new contract wins ?


No director share purchasers even at this level ?
even though they have a fair few directors.

[cc2014] 30/10/2017 09:50

That's a long way to fall just because Tony Pidgley at Berkeley sells a few shares. At least I assume that's the reason. Stops firing I guess. Hard to tell. Fell sorry for whoever sold at 70.25

Edit: quite a few sells gone through at 73 and continuing to come through. Someone serious about selling for whatever reason.

[xajorkith] 26/10/2017 02:17

Interesting article discussing how undervalued companies with large pension deficits should gain from a rise in interest rates & updated longevity forecasts:



Not the most upbeat piece, but something to consider in light of todays GDP figures, here & for many other companies weighed down in this way.

Should probably go to sleep now.......

[cc2014] 24/10/2017 18:08

It's now apparent office building and civils are going to struggle a bit next year. CTO don't do civils of course which are being hit particularly hard.

However, they've won one nine elms starting on site in 2018 so I think that should nicely dovetail into 22 Bishopgate, leaving them with a fantastic order book to see them through 2018 before things pick up again in 2019.

So, whilst I recognise the sector is struggling CTO look to be in a good position.

I have no idea how much this project is worth to CTO but those are two serious sized towers and surely leave them secure regardless of any downturn. Through Multiplex too who CTO get on with very well.

This from the nine elms website "Nine Elms is the largest regeneration project in Europe, transforming 3km of London's riverside into an ultra-desirable residential quarter, international business district, and outstanding cultural and leisure destination"