Tclarke Share Discussion Threads

[igoe104] 07/3/2024 15:20

A couple of medium size sells on very little volume, looks to have caused the fall back..

[kneecaps2] 07/3/2024 15:08

Why are they so weak this afternoon?

[igoe104] 07/3/2024 08:26

Looks like CTO are gearing up for lots of growth in the south.

[rivaldo] 06/3/2024 14:59

This dated yesterday just reinforces my view that CTO really are a top quality company always looking to the future, whatever your views on cyclicality etc:



"TClarke Climate Solutions team leads major decarbonisation project with Exeter University

One of TClarke’s successful in-house startups, Climate Solutions leads critical decarbonisation projects in public and private sectors generating substantial revenue. Director Gary Tidball explains:

The present time is the perfect opportunity for us to utilise our engineering skills. Companies in all areas of the UK economy are required to move away from using fossil fuels and switch to low-carbon energy sources and more efficient energy systems. This is a complex engineering task that demands specialised skills, integrated teams, and expertise. Fortunately, we possess all these qualities and can deliver successful outcomes.

Recently, Climate Solutions completed the Bio-Science project at Exeter University with Willmott Dixon (pictured). The client from the University stated, “I do want to say that it has been a long time since I have seen such a quality M&E installation.”

This project is part of a broader decarbonisation project across the entire University Campus. Climate Solutions is also working on another project at Cornwall House, where they are removing two large commercial gas boilers and replacing them with a cascade heat pump system. The existing boilers serve the heating/hot water services and a swimming pool, so our challenge is to keep all these systems online while transitioning to the new heat pumps.

The Climate Solutions Team supports all the Group offices across the UK and is currently working with Oxford on projects at Portsmouth and Bournemouth Hospital and will be working with Bristol at Guys Marsh Prison and with Derby and Peterborough on various projects and also with London and the Design and Build Team."

[thorpematt] 04/2/2024 23:22

Peg ratio 0.1 nuff said.


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Full year TS 5th March is in my diary

[18bt] 01/2/2024 11:45

Nothing on their website. Given that they only updated on 30/11, I’m not expecting anything else unless it’s a material change. in 2023 they updated after the year end (28/1), but not before. in 2023, full year announcement was 8/3, but nothing showing for this year yet.

[mortimer7] 01/2/2024 08:35

Anyone know if there is a date for their year end trading update please?

[muckshifter] 03/1/2024 13:56

I think that's a good assessment and hope he's right rivaldo. I've long been a fan of CTO as they dealt with various severe obstacles over the years, and now just hope that they can cope with a fast expanding workload without mishaps.

[rivaldo] 03/1/2024 12:35

FYI I came across analysis from the IC's Simon Thompson not posted here before:

"TClarke’s forecast profit recovery is underrated

The building services contractor’s record order book should deliver a 90 per cent recovery in 2024 earnings, a factor not reflected in a miserly forward PE ratio of 4.9

November 30, 2023
by Simon Thompson

Record £1.1bn order book
20 per cent revenue growth forecast in 2024
One-offs costs to dent 2023 earnings
EPS set to rebound 90 per cent in 2024
Net cash position better than forecast

Building services contractor TClarke (CTO:117p) has reported a 41 per cent increase in its order book in the second half, more than doubling in value to a record £1.1bn since the start of the year. In addition, the group has more than £1bn of quotations in the tender process with potential clients. This provides strong visibility of revenue for the next two financial years and is supportive of house broker Cavendish’s revenue estimates of £600mn (2024) and £650mn (2025), up from £500mn forecast in 2023.

The boom in data centres and smart buildings have been key growth drivers. The
segment delivered 31 per cent of first-half revenue and accounts for a third of the £1.1bn contracted order book, up from a 20 per cent share at the start of this year. Work on major engineering projects is another boom area, accounting for £489mn of the order book, up from £225mn in December 2022. For instance, TClarke is working on major UK government-funded healthcare infrastructure projects, such
as the National Rehabilitation Centre near Loughborough, one of 40 new hospitals to be built by 2030. It is also enjoying ongoing success in the education sector, too.

The booming order book notwithstanding, the turbulent conditions in the construction sector are impacting several market participants. This prompted the board to make the strategic decision to enter early contract agreements and
change some supply chain partners mid-contract to protect completion dates. These actions have incurred one-off costs of up to £3.2mn, which explains why operating profit guidance has been lowered from £12.2mn to £9mn-£10mn for the 2023 financial year, down from £11.5mn in 2022. On this basis, analysts now expect a 30 per cent
decline in current year pre-tax profit to £7.2mn, and 35 per cent lower earnings per share (EPS) of 12.7p.

That said, the actions protect the business, and with the benefit of a greater proportion of higher-margin work on data centres and smart buildings, as well as more complex projects, analysts forecast a strong rebound in TClarke’s
profitability in 2024. The house broker expects operating profit to double from £9mn to £18.6mn (2024) based on operating margin improving from 1.8 to 3.1 per cent, slightly above the group’s 3 per cent target.

On this basis, EPS is projected to rebound by 90 per cent to 24.1p, implying the shares trade on forward price/earnings (PE) ratio of 4.9.

Well-funded to deliver step up in revenue and profitability

The £62mn market capitalisation group remains well funded. In fact, the directors expect closing year-end net cash of £15mn, or £6mn higher than Cavendish’s previous forecast. In addition, the group has access to £30mn of low-cost bank facilities with NatWest to fund working capital as revenue scales up, as well as £65mn of bonding facilities that are used for a third of contracts, a key differentiator from rivals in the bidding process.

The recovery in 2024 profitability and the absence of this year’s one-off costs should also drive a marked improvement in free cash flow (FCF). Analysts expect FCF to more than treble to £7.6mn next year, implying a FCF yield of 12.2 per cent. That’s good news for the progressive dividend policy. Indeed, analysts expect the
payout per share to be raised by 10 per cent to 5.9p (2023) and 6.5p (2024), which underpins dividend yields of 5 and 5.5 per cent, respectively.

The low earnings multiple, chunky dividend yield and structural growth drivers in TClarke’s key end markets more than compensate for the reversal in this year’s profits, albeit the share price has dipped below the 122p placing price when TClarke raised £10.7mn in an oversubscribed equity raise (‘TClarke̵7;s order book goes from strength to strength’ July 2023). That said, the holding is still 56 per
cent in profit since I initiated coverage (Alpha Research:: ‘Profit from a buoyant earnings‘ cycle’, 7 December), during which time the FTSE Aim All-Share Total Return index has shed 15 per cent of its value.

Once the dust settles, and investors focus on next year's earnings recovery, expect the share price to recover. Buy."

[igoe104] 24/12/2023 19:18

Apparently CTO have had a good week for contract wins according to the electrical director. (On LinkedIn).one of the wins mentioned was work for Miller homes..

[dunns_river_falls] 20/12/2023 12:02

Moving up on good (relative) volume in the last few days and can move quickly when it gets going.

[kneecaps2] 05/12/2023 16:01

I would like to thank the kind person who sold me 10000 shares at just over 107 just after results!

[ansc] 05/12/2023 14:11

Agreed. The dividend should act as a useful buffer.

[igoe104] 05/12/2023 11:03

Cheers Graham, looks very positive going forward, if they can deliver..

[grahamburn] 05/12/2023 10:25

Fairly lengthy piece within this:

[igoe104] 30/11/2023 19:11

Let's hope of a possible work from this.

[muckshifter] 30/11/2023 13:00

The two items explaining the bad news were, imo, interesting, and perhaps prudent. Having to change suppliers or subbies in the middle of a contract takes some doing. I've done both in the past on major civils contracts despite huge resistance from buying departments within the company I worked for, including being told that the CEO of the group said I couldn't do it. The thing that impresses me here is that this appears to have been done with the full approval, and perhaps more, from the senior management. If you intend to complete a contract on time, this sometimes needs to be done, and certain industries, almost certainly including data centres, brook no excuses. So if you want to keep doing the work you can't afford to miss deadlines.

The second item that perhaps I'm the only one who was impressed by, was settling final accounts with dodgy companies early, ie. not pushing too hard for too long on final account variation valuations, with a client who doesn't want to pay and if left too long may not be able to pay. Presumably this was housebuilding contractors, which would tie in with the reduction in the residential order book.

[dr biotech] 30/11/2023 12:48

As the oft quoted phrase goes "Revenue is vanity, profit is sanity"

I also hold shares in MEGP. Today they announced a small miss on revenue, but that profit will be at the top end of forecast. They are also down, by a similar amount. Seems any sort of miss is punished.

I'm not having the best of days..

[dunns_river_falls] 30/11/2023 12:17

Did they mean net cash of £15m in December? If so that alone will make up a big portion of the current market cap.

[tim1478] 30/11/2023 12:03

Very disappointing. Setting stop loss not far below present price

[ansc] 30/11/2023 11:18

To hold or not to hold, that is the question? Wish I knew the answer.

[salpara111] 30/11/2023 10:05

Took a stake here recently at 125p on the expectation of a boost on this update.
I really don't care how big their order book is their margins are virtually non existent, not sure what to do as I can exit for little loss or hold on for another 3 months to see where things go.

[owenski] 30/11/2023 09:49

The problem with CTO is it's a low margin business and they've never have a lot of cash on the books either, it's just not attractive.

They said some time back that their margins in aggregate would move beyond 3% due to increasing contracts in data centres et al, this doesn't seem to have happened.

They touted more cash at this TU but they also tapped up the markets earlier this year, how much of their cash buffer is residue from that.

I suspect the divi will be flat as well.

Great pay and benefits for the directors who don't have much skin in the game and a poor return for shareholders, might be worth a buy and hold if if went sub 100, but nothing about this business is that attractive, 500m revenue targets are pointless if the already thin margins are under more pressure.

Avoid.