Tclarke Share Discussion Threads

[cwa1] 19/4/2021 07:35

Any chance anyone can post some/all/the gist of the recommendation? Cheers

[18bt] 19/4/2021 07:33

It's up there this morning

[podgyted] 18/4/2021 22:19

? When ?

Can't find it on their website.

[mfhmfh] 18/4/2021 18:30

Tipped by ST in IC

[igoe104] 16/4/2021 15:59

Yep, looking strong now. Hopefully we can see £1.50 plus over the next couple of months or so.

[deadly] 15/4/2021 16:17

sp gradually recovering after the results; should continue the trend.

[thorpematt] 26/3/2021 09:11

Whatever way round i look at this, I still cannot make a case for the share price being down around here.

I have tried giving it lower ratings for being a contractor (and thus allowing for earnings being lumpy....even though they're not really - due to the mix of work and spread of locations they are very consistent, COVID aside)

I have tried allowing for the increase in pension defecit (even though that is mainly to to low yields on gilts....which have recently risen).

I have tried to pretend it's a "no growth stock" (even though it clearly hasn't been, and looks like its forecsts show stronger growth going forward).

I have tried to pretend there are no barriers to entry and that there is no unique niche or IP that can be readily re-produced (even though neither of those thing are true).

And so I came up with a very lowly PER multiple, I applied it to the market cap, and made a deduction for debt (there wasn't any).

I came up with a target of £1.75 p per share.

[wfcreserves] 25/3/2021 12:28

@Sphere25

Sorry, can't afford a bench. Perhaps when CTO take off?

You would likely be better off and fitter running "up and down" the touchline with a flag. They're apparently all the rage currently.

[janeann] 24/3/2021 12:03

Same sphere - managed to get some at 100p; did get a quote at 99.6 but it didnt execute which was a little annoying. Been in CTO for years.

[wfcreserves] 24/3/2021 11:38

@Sphere25

In other words delayed herd instinct?

[sphere25] 24/3/2021 11:25

See that, price drops first and then it gets bought up (so I bought the dip). Price now up 2% having fallen 5%.

I think this is going to do what AMO did. Clearly it is different, but based on the principles of market psychology and the continued belief in the bull case here, I think the market won't get behind it.....

..until it does.

Sounds daft right? Not get behind it until it does get behind it? What the hell is he talking about? Wots-a-wotsit?

Get the broom out, get Nora Batty's broom out...get it out right now...sweep him out of the market!


AMO set an ambitious revenue target (Amino 2025) and the market didn't get behind it (to any extent imo) initially with the price farting about, up abit, down abit, up abit, flat abit, down abit, diagonal abit.

It then made a substantial leap higher i.e. a greater belief in the plan. I think the same will happen here - the market won't get behind it until it does. That is when the shares will move alot quicker.

Currently there is a gradual bull trend in play since late January, but looking for an acceleration once the market gets behind the forward £500m plan.

All imo
DYOR

[effortless cool] 24/3/2021 11:17

profdoc,

The restructuring costs are covered in the Group Financial Review: "The cost of the programme was £3.7m accounted for in non underlying items. The programme has reduced the Group's cost base by in excess of £4 million per annum; 2020 results have benefited by £2.5m of these savings".

Personally, I think it nonsense to count the £3.7m of costs as non-underlying, but take full credit in the underlying for the corresponding £2.5m of savings. I consider them as underlying costs, but not necessarily repeatable. However, give the frequency with which they occur with CTO, I am also going to build an 'average' annual restructuring cost into my projections going forward.

Finally, these savings are another reason that they should now be targeting an operating margin in excess of 3%.

[effortless cool] 24/3/2021 11:09

minardi1,

"I am wary of arbitrary revenue targets - only bid for appropriate work and let the revenue take care of itself".

A fair point, but I get the sense from their announcement that they are trying to quantify the opportunities they see with this target, rather than setting a target and then trying to find opportunities in order to deliver it.

However, I do think that if they can see an opportunity to increase revenue to £500m, then they should also be targeting an operating margin of over 3%, otherwise they are just giving all the savings from operational gearing back to their customers.

[profdoc] 24/3/2021 10:09

Does anyone understand the nature of the "restructuring" costs, the item that makes so much difference to "underlying earnings"?
Are director bonuses linked to "underlying earnings"?

[jeff h] 24/3/2021 10:08

Cenkos new forecasts:-

Y/E 31/12/21 Pre Tax £8.0m EPS 15.4p Div 4.6p

Y/E 31/12/22 Pre Tax £10.6m EPS 20.3p Div 4.8p

[sphere25] 24/3/2021 09:07

Noted CTO has a tendency to drop on updates, but then it gets bought up, and and then it is back to sitting around doing very little, so here we are again with more apprehension.

We can all see the issues from the past year with delays and closures galore. There is the pension deficit, though clearly rates are on the rise. What else is bad in there...

We know that margins are thin and we know the sector has been fraught with problem contracts.

This is the thing though. These are known knowns with CTO. I think it is all in the price here. The slightly surprising thing is how the market is not willing to price in any substantial recovery, let alone the new £500m revenue target.

Yes they have mentioned a "slightly slower start", and in a normal year, that would cause more concern. However, these are clearly far from normal times and they have also mentioned a strong second half recovery which should feed through to the following year.

The market isn't looking at that though and refuses to price it in. If the market did, the price should at least comfortably sit back at those pre-covid levels in the mid 130's.

Perhaps more patience is needed, but the market is very stubborn here so it looks like someone will have to get the extra large mop out to clear out sellers at these levels to give the price a chance of breaking higher.

I can see a highly irregular 200k buy order (Regent Gas wanting more? They added last month) on the bid at 101.5 willing to back the future and the £500m plan, but overall there continues to be no substantial interest.

All imo
DYOR

[edmundshaw] 24/3/2021 08:49

Minardi, T. Clark is nothinglike Serco. It is a very well run business with great growth markets in its natural areas of expertise, I doubt strongly that it will chase potentially unprofitable turnover or cut corners, that is not their modus operandi.

[cwa1] 24/3/2021 08:40

Decent sized block(200,000) of stock gone on the bid at 101p FWIW

[cc2014] 24/3/2021 08:34

Pension deficit

[minardi1] 24/3/2021 08:33

Muted market reaction seems fair, given that they have flagged a slower than expected start to the current financial year. The departure of a Senior Independent Director with just a cursory statement could suggest a bit of a board bust up. Also, I am wary of arbitrary revenue targets - only bid for appropriate work and let the revenue take care of itself. Chase targets and you risk cutting corners, Serco did this ahead of their near collapse in 2014 and I was glad to exit that position in time!

[edmundshaw] 24/3/2021 08:16

Excellent revenue target.

Putting aside 2020, and ssuming a base case for 2019 underlying EPS was 18.81p on £334.6m revenue, margin 3%.

On £500m revenue and assuming an unchanged 3% margin that looks like 26p EPS after taking into account the hike in corporation tax to 25% (which shaves 7.4% off post tax profit with the current 19% rate).

26p EPS on an unchallenging PER of 10... um, what price would that give us, now?? :-))

[jaf111] 24/3/2021 07:38

....and in the meantime the 4% yield provides a tasty morsel!

[effortless cool] 24/3/2021 07:22

Well, if they can deliver their plan to progress to £500m revenue per annum at a minimum 3% operating margin over the next three years, then there certainly will be a lot to like.