Tclarke Share Discussion Threads

[cc2014] 06/12/2018 09:48

Interesting this as once upon a time the nominated subcontract ensured payment to the subcontract chain in 17 days. Looks like the governments has caused it's own problem.

The government are getting tough on this as the 30 day payment code all the large contractors have signed up has been ignored. Now the government will enforce it.

This will be good for the industry and CTO in the long term.

I'm wondering though... Some of the supermarkets standard terms are 120 days. Of course the government won't pick up the tab if one of the supermarkets goes bust.

[cc2014] 05/12/2018 11:33

Another competitor in financial trouble.



Building services specialist Proline Group is fighting for survival after being left with a string of unpaid bills by stricken contractor Forrest Group.

Proline had been working on two major Forrest sites in Machester – the X1 Gateway where it had a £3.7m M&E package and the X1 Plaza.

More follows...


What company with a turnover of £11m takes on a £3.7m contract for one customer? Eggs in one basket. It defies belief. Of course perhaps the only work they can get is for builders who are in financial trouble themselves?

The sooner all these zombie companies disappear the better for the whole industry

[tuscan4] 05/12/2018 11:21

It is clear that liquidity is drying up in the construction industry, which has prompted the Kier rights issue, and threatens Interserve. CTO made it clear at Mello that balance sheet strength is crucial when allocating contracts, in particular CTO are winning the bulk of Lendlease's business, to the chagrin of their competitors, partly or mainly thanks to their secure financial position.
All other things being equal CTO should be a beneficiary of this,and helps explain their new financing facilities put into place when they seem not really necessary.
On the other hand dividend largesse may be constrained longer than we had hoped.
The elimination of competitors which may be accelerated by these liquidity problems will be margin enhancing for CTO over the coming years.

[squarepeg86] 03/12/2018 15:05

Some very large trades gone through earlier this afternoon too!

[cc2014] 03/12/2018 12:29

Someone has read the results and decided to take a decent sized position here.

We can clearly see the 15k iceberg bot running today at 91.2 It's been there or thereabouts ever since the results. Usually 15k, occasionally 10k or 12.5k.

I also wonder if it the same party who was soaking up all the volume at 84.0 before the results.

[cheshire man] 30/11/2018 16:22

Thanks for that igoe104 and NC :-0))

[igoe104] 30/11/2018 16:00

Got It Now cheers,

[norbert colon] 30/11/2018 15:40

Just tried it myself on my phone and the link works / maybe copy and paste to your browser instead but the URL is correct. Thanks

[igoe104] 30/11/2018 15:37

Can't get the link to work Norbert ?

[norbert colon] 30/11/2018 15:16

Presentation from Mello London event:http://www.tclarke.co.uk/wp-content/uploads/2018/11/TClarke-Investor-Presentation-27-11-18-1.pdf?platform=hootsuite

[cc2014] 30/11/2018 08:51

I think this is what you mean. The two red lines show the share price heading into a wedge, which a break to the upside is significant. I like the two red lines but if you are a pessimist you might substitute the purple line for the lower red line; it's still a wedge though.

Or one might argue the share price is within a channel bounded by the upper purple line and the lower red line. Good enough for me if it is.

What I think happens next is as follows which I posted a couple of days ago. The share price is now bashing it's head at 90 resistance on the chart. I guess it is inevitable it was going to stop there for a while until such time as those inclined to sell on the basis of a wiggly line have all done so. What's more interesting is what happens once the chart resistance high point is breached. In our case once the sellers at 90 have got exhausted, there is no chart point or other psychology to stop the price rising and in this case stocks tend to accelerate away at speed once the 90 psychological barrier is breached. Or put another way having waiting for all the sellers to sell at 90 why would you sell at 92 or 94 or 96. Psychologically even the most eager person ready to sell is going to be thinking about 100. You can read about this sort of trading psychology, in a book by the greatest trader of all time, Jesse Livermore.


Of course it might fail at 90p and stay in the wedge a little longer. I sense though given the results and the P/E of 5.3, net cash of over £10m and a great order book, there will be buyers willing to step in if the price falls back to say 87p




Please note I'm an amateur chartist. I believe but only in so far as predicting the share price is the sum of historical events which works particularly well with a stable long term management team. I also recognise that others believe so it can often be useful to get a slightly better entry or exit

[tuscan4] 29/11/2018 16:43

This chart is really interesting. Apologies for those who think they are mainly used by men in dirty old raincoats.
There is an 8 year wedge here with rising lows and multiple resistance at 90-92p.
As we move towards the apex it will either move out on the upside or break down again.
A clear move above 92-93p would suggest a major move up to the 125-165p area.
I am a 99% fundamentalist but this pattern is potentially very exciting.

[cc2014] 29/11/2018 16:19

Definitely worth a quick read

[rivaldo] 29/11/2018 13:49

Extracts from N+1 Singer's note this week FYI:

"Strong FY18 performance with EPS upgraded 12%

Specialist building services group TClarke has reported strong trading in FY18.

Operating profit is expected to be 11% ahead of our previous forecast, driven by
better than expected revenue and margin progression (approaching management’s
3% target). The outlook statement strikes a confident tone, supported by a record
order book, which stood at £403m in November.

We have increased our EPS forecasts by 12% and 15% in FY18 and FY19. Our FY19 revenue forecast is 70% covered by the order book, giving us confidence that earnings momentum will continue.

We believe the shares are attractively valued, trading on an FY19 P/E rating of 5.3x, and believe a peer group rating is justified. We also note the attractions of a >4% dividend yield."

"Record order book supports outlook

TClarke’s focus on higher quality work is paying off, with progression in the margin profile across FY18. Despite this focus, the order book continues to grow, standing at a record £403m in November (up from £370m at June 2018). The order pipeline also remains strong, with an encouraging level of opportunities which meet TClarke’s tendering criteria. Looking to FY19, revenue of £230m is already secured (2017: £190m), representing 70% of our forecast."

[cwa1] 29/11/2018 09:03

Thanks to all for their "meat on the bones" comments from the Mello event, much appreciated.

[cheshire man] 28/11/2018 15:16

Good to read the positive feefback, share price reacting too :-)

[rivaldo] 28/11/2018 13:54

I too thought CTO's presentation was extremely encouraging and impressive. Great to see the share price finally responding to the terrific trading update. Still lots to go for imho.

Apparently Miton needed cash for another investment, and took the opportunity to top-slice given that Regent Gas were in the market for shares. Incidentally, CTO had no prior connection or contact with Regent Gas, who apparently are friendly stakeholders looking for a home for the excess cash they're throwing off (they've also taken a large stake in INSE).

The cash pile is large - which is great - but is necessary. For example, CTO are going to make a large downpayment at some point soon (can't remember what for, but I seem to remember this would be £9m). So the cash pile can be volatile.

With 14.7p EPS now forecast for the year about to end, and 16.3p EPS for 2019, a minimum share price of say 110p-120p should be quickly achievable in decent markets.

If the perception of CTO continues to improve - and/or there's finally a lack of sellers - then perhaps a P/E of 8 or 9 and a share price of 130p-150p is achievable.

[norbert colon] 28/11/2018 11:23

Lasmo - the topic of the dividend was discussed yesterday with Trevor noting there was lots of potential for this to be increased. With FY operating profit now forecast at GBP 8.6m, I cant see any reason why the overall divi for 2018 cant be circa 5p rather than 3.7p as forecast. This would yield nearly 6% and still be covered >3x. Not a 100% guarantee but I think investors can look forward to a very decent hike in the divi going forward.

[tuscan4] 28/11/2018 11:18

Talking to the Directors at the Mello event, gave me the impression that the high dividend cover will reduce somewhat . Year end cash will either be very high or Debtors will be inflated. The point was also made that the Board need more "skin in the game" via their shareholdings. Miton are not unimpressed with the progress being made.
Otherwise, this is very,very cheap.

[profdoc] 28/11/2018 11:13

Following up what CC2014 wrote: I was chatting with Mark (CEO) and Trevor (FD) after they had spent a long day talking to private investors at MELLO in Chiswick yesterday. They are very keen on the private investor who they see as their primary constituency - hence their willingness to give up most of yesterday to talk to people. BTW, they gave a very impressive presentation - helped by those excellent numbers.

[deanowls] 28/11/2018 11:03

The company would be wise to buy some and it does worry me that we have very little director buying.

[lasmo] 28/11/2018 10:26

For what it’s worth I think what is going to make this share make a significant break through 90p is a good hike in the dividend, directors buying and / or a final year margin above 3%. All our Christmas’s will come at once, if we get all three.

[cc2014] 28/11/2018 09:21

A few thoughts. N+1 the house broker suggest CTO should have a rating similar to their peer group. Now, I'm not entirely sure agree with this as CTO are more specialist, have more stable profits and considerably less debt and in my mind should be at a premium to the peer group. However, let's run with it.

The peer group have a average P/E of 8.8 for 2019. That however, includes Interserve, so I'm going to strip them out (because 75% of their business isn't construction, they have loans totalling £800m+ and under any normal measure would be breaching their banking covenants). Therefore the sector average based on the top 7 excluding Interserve is a P/E of 10.47.

Make of it what you will but with a forecast P/E for 2019 of 5.3, N+1 are suggesting the share price should be 50-100% higher.



So, why isn't it? Some have suggested the Carillion affect. I reject this as this is in BBY, GRFD, KIE share price as well and we are only comparing on the basis of the peer groups P/E's


It is my view that the share price is depressed due to MIFID II, which has meant some funds have been selling down their holdings in small caps on a significant scale. The scale has been dependent on their investment mandate and as a generalisation the shares have been soaked up by private investors.

If you look across the spectrum of small caps, for some this process ended 9-12 months ago, for some it's still going on. In relation to CTO I perceive it is complete apart from Miton. Miton were selling down their holding aggressively until about 4 weeks ago. Since them we can't say anything apart from it's either stopped or it's slowed down to a treacle.


I don't really care as I'm here for the long term. Miton have no more than 3.5m shares left or £3.2m. Even if Miton continue to sell they will get soaked up over time. Of course if this were VRS or TERN they would get soaked up in a day by PI's, but there again those sort of buyers aren't investors and would do nothing for the share price in the long term.


The share price is now bashing it's head at 90 resistance on the chart. I guess it is inevitable it was going to stop there for a while until such time as those inclined to sell on the basis of a wiggly line have all done so. What's more interesting is what happens once the chart resistance high point is breached. In our case once the sellers at 90 have got exhausted, there is no chart point or other psychology to stop the price rising and in this case stocks tend to accelerate away at speed once the 90 psychological barrier is breached. Or put another way having waiting for all the sellers to sell at 90 why would you sell at 92 or 94 or 96. Psychologically even the most eager person ready to sell is going to be thinking about 100. You can read about this sort of trading psychology, in a book by the greatest trader of all time, Jesse Livermore.

[deanowls] 28/11/2018 05:19

Thanks Norbert, if you could let me know when it’s updated.