Tclarke Share Discussion Threads

[jonwig] 14/1/2011 12:12

I popped the question to Markets Live, FT Alphaville.
They gave us a quote from Panmure, which more or less confirms what I said first thing this morning:

Cautious trading comments and a cut in the dividend will put pressure on the
share price. Our new target price is 106p (previously 160p), and we
downgrade from Buy to Hold.

Trading update. The company has indicated that, while markets were tough during
2010, they were "particularly challenging" in the final quarter. Its margins were under "extreme pressure", and the poor weather at the end of the year disrupted work at a large number of sites, particularly north of England and Scotland. So, 2010 results will be below expectations and it is likely that 2011 will be below that of 2010.

New structure. Management believes that the "longer term prospects for the group are encouraging", and it remains resilient. It is implementing a new structure to ensure it can offer clients a broader range of services. The sector focus going forward is: facilities management, intelligent buildings, green technologies, rail, utilities & technologies, manufacturing, residential and M&E contracting.
Valuation & recommendation. We target an 8% dividend yield for the shares, this
being the level that other sector stocks have hit when have had issues. This implies a target price of 106p, so we downgrade our recommendation to Hold. With its specialist offering, it may attract some speculative interest.

[hvs] 14/1/2011 12:10

lol !!!!

lol !!!!

Get cheaper and cheaper.

[effortless cool] 14/1/2011 12:07

jonwig, your "good recession" point is very valid. I think these could be a very good buy in due course, but I expect them to get cheaper in the short to medium term (especially once xd).

[goliard] 14/1/2011 11:59

Not expecting to see 80p today, maybe within 2 weeks though. Not short, just looking for an entry point. I've seen too many shares stage a brief rally after poor news only to fall much further in the following weeks.

[jab118] 14/1/2011 11:57

Don't think anyone will be get 80p today l"2 looks like it's hotting up.

[jab118] 14/1/2011 11:35

Sounds like the bear trading herd has arrived, LOL I wouldn't like to be short and once the Directors have filled their boots it will be plain sailing Northwards

could be a mm's bear trap ? ;-)

[jonwig] 14/1/2011 11:31

EC - they did say "below" and not "significantly below". Also, I'd expect the new 8.5p divi to be covered by earnings.
"Rebased" generally means a new base - ie. I'd expect 2011 to be 8.5p too.

Whilst I agree margins are being squeezed, there's a sense in which CTO can turn out to have a "good recession" in that much of the competition will expire.

At least the balance sheet suggests they will prosper, ultimately.

[effortless cool] 14/1/2011 11:26

The increase in the current order book is all well and good, but the announcement makes it clear that there is very little profit margin in these orders, hence the lower profit expectation for 2011 compared to 2010.

I would tread very carefully here.

[jab118] 14/1/2011 11:15

goli.
Or do you mean, that's what your hoping to close your short at ;-)

[goliard] 14/1/2011 11:10

They have made it clear that they are reviewing dividend policy. It is clear that this means lower dividends, with the most likely outcome being to pay a percentage of profit. Given lower profits this means lower dividends. For income investors this may mean moving out of the stock and the yield may well drop to 3 or 4% against the current 100p share price. This isn't bad, but it is not exciting either.

My concern is that there wont be any more good news for a while, so we may see more selling next week when holders have had a chance to digest today's statement.

I would like to see sub 80p beofre investing here.

[garth] 14/1/2011 11:05

Tucked a few away in the ISA for the divi and potential recovery.

[garth] 14/1/2011 11:05

Tucked a few away in the ISA for the divi and potential recovery.

[pifedayo] 14/1/2011 10:42

At current share price the proposed reduced final dividend is still attractive. Also with the remote, IMHO, possibility of a bid, it looks like a good time to buy.

[hvs] 14/1/2011 10:20

Thank you jab118.

The current order book bodes well.

[gre] 14/1/2011 10:19

This is shocking news indeed. I've been a long-term holder and thought briefly about selling out this morning. However, I'm going to hang on because this news could flush out a bidder. Market cap is now about £40m but with £7m in cash and an order book of £190m (£30m up on this time last year!). This might well tempt someone to take the plunge with an offer.

[jab118] 14/1/2011 10:18

Given the difficult trading conditions, it is the Board's intention to reduce the final dividend to a level equal to that of the interim payment. It is also the Board's intention to rebase its dividend policy.

Hi Mark

won't be for long IMO, as the order book looks encouraging despite the construction down turn, this could get exciting soon..

Order Book

At the end of the period under review our forward order book remains impressive, standing at GBP190m (GBP160m December 2009).

[mark1000] 14/1/2011 10:07

Any ideas what is meant by rebase the dividend 5p / 6p a year? or will they go for 50% EPS with no debt they will be a survivor IMHO.

[jab118] 14/1/2011 09:54

DEFCON... 60- 70p would be a luvely investment long term, I think the company is to well respected for a drop to that level, I'm looking for an entry point to start buying, did it with RWD a few months back, still holding loads of them..;-)

Just had to pay above the odds, so looks like the mm's are expecting an up surge as well, after their aggressive down grade first thing..;-)

[defcon4] 14/1/2011 09:46

What's the chance there'll be another profit warning in due course? Looks cheap but probably wise to let it drift to 60-70p. Only hope short term is bid action.

Austerity only just starting to bite remember.

[jab118] 14/1/2011 09:41

hvs

I think there's not to many investors that has been frightened out this morning, good buying opportunity for the brave.

Best of luck ;-)

[hvs] 14/1/2011 09:31

Weoll I am in with 25K at 102.

We could see a bid coming.

[jab118] 14/1/2011 09:21

Well it will soon be back up IMO time for a plunge into a good company.

...;-)

[its the oxman] 14/1/2011 09:10

sold what I had left today - shame

[willsy50] 14/1/2011 08:59

The general consensus to everyone i have talked to in the industry is that the next 12 months or so are going to be the tester.
IMO a lot of the firms buying work are going to struggle with rising commodity prices and then there is the risk of Main Contractors going under, as ROK has recently, taking them for money which is virtually impossible to make back. It's hard enough making jobs pay in the first place.

I think T Clarke have a good business, with repeat clients being the main plus.
Competitive tendering is a nightmare at the minute, especially when in some cases when you are up against up to eleven or twelve other companies.

I'm not invested here BTW.