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Solid Keeper to buy on dips
CPG
Dialled into the conference call and listened to the analysts questions. Most were about growth over the rest of the year, in the current quarter "strong growth across all regions". We can expect slightly more of this year's forecast revenue growth to come in the second half than the first. Food inflation is coming down progressively and margins are intact and growing in some places. There was also talk of their acquisition policy. Dominic Blakemore (CEO) made it clear that, it was an important element in their vision but it would be wrong to assume that the margins were lower in the companies they bought and it was only about getting margins up. It was about deeper penetration of their chosen market. He said they had exited some smaller markets because the amount of management time was disproportionate. Analysts liked what the heard and the bottom line here is that their guidance for 2024 remains unchanged. "Underlying operating profit growth is expected to be towards 13% delivered through high single-digit organic revenue growth and ongoing margin progression."
All very reassuring, nothing to worry about here.......................................(famous last words!)
It was worth the time to listen in. Input inflation is moderating across their markets with wage growth slightly ahead of food price growth and they have been able to push up their prices to compensate. Dominic (CFO) said that talent retention was a key component to future growth in a market where they can still gain market share. They are focusing in on core markets and have let some peripheral ones go. Growth next year to be broadly, equally spread between first and second half. Some of the analysts seemed to think that next year's profit growth of "13%" to be rather cautious, of course they had to confirm their figure, but it transpires that it does not assume volume growth from existing customers and yet we know people are coming back to their offices more hours a week and therefore in house catering contract will see some volume increase. And Garry Green said, "Yes, there might be."
Cash conversion continues strong and even with the share buy-back, further dividend growth and bolt on acquisitions they will be at the lower end of their target gearing. In future years accounting will be in US$ rather than sterling reflecting the dominance of the the US. Palmer Brown is retiring. Conclusion: despite the fall on the results the shares are in my view a "firm hold" (They had a bit of a run ahead of the figures.) I think they have set themselves a beatable profit growth target for the y/e 24 and an acceptable one if they don't beat it.
The Results were very good but they were expected to be very good. Not sure that they will impress the market sufficiently to give the share price a boost. The forward guidance is for a slowdown in profit growth. "The Group expects 2024 underlying operating profit growth towards 13%, delivered through high single-digit organic revenue growth and ongoing margin progression. Underlying finance costs are expected to be around $225m1, with an underlying effective tax rate of around 25.5%."
I shall be on the post results video call and will do a follow up note if anything new or worthwhile comes out.
Price target is 2120, for line connecting trough of 22/8/23, with second subsequent peak of 12/10/23. That line extended to the right provides the sp, target of 2120. The sector, is one of the few, and strongest sectors today, when the FTSE100, is falling.
Sp, recently bottomed where there is major support going back to August 2022, at 1950. The highest one day volume for more than 3 years, happened on 23/8/23, which also occurred in the vicinity of a major up trendline . There is no serious bottom formation in place , so look for the sp, to show retracement, support above 2000, before buying. Future price projection is 2300.
Now sold out. Happy enough with a 5% return over the past year, momentum now seems to have turned.
Well, the fall this morning on perfectly satisfactory results is, I think, about as much as I am going to get on the bear tack this time round. I bought back the shares I sold in May at 2177p for 2030p. Not the 10% profit I was looking for but I will settle for just over 5%. I have learnt not to be greedy in this game.
Just spotted very large bullish triangle price formation , which would forecast sp, of 2250. Bollinger bands, are still separating , which means a fast movement. When the bottom Bollinger band begins to turn up, would probably mean the start of a sp, retracement, for those wishing to take profit.
We have had a tremendous run since the results and no share goes up forever. So I reduced my holding by about 40% at 2177p and took my annual CGT allowance at the same time. (I have been a holder for about twenty years.) If they retrace 10% of their recent rise I may buy them back but this time inside my ISA. Nothing wrong with the company just, I think the shares have got ahead of themselves a bit, although the buy-back programme may prevent them from falling too far.
Sp, symmetry would suggest 2180, from looking at the previous sp, history . There is,a negative divergence in the Relative strength indicator, which does not support , the bullish price action. A straight line drawn through an earlier trough to the subsequent second peak suggests a sp, of 2200. Weekly Relative strength is falling which is another bearish factor. Summing up expect sp, in range of 2180-2200 and subsequent retracement.
That's more like it !!!
Decent momentum last few months. 3 year high. Can it break out even higher now?
Yep, short term is just noise, probably why most day tradrers lose money. I am holding for at least a year.
I bought in here a few days ago thinking that results would be strong and the sp would rise for a quick trade. They were better than I expected and it's gone down. Have I missed something?
Odd pullback in SP when today's RNS is good and workers are returning to work. Broad-based rises across all sectors. Another 24% increase in revenue on top of stellar figures last year. Markets are weird. Definite buying opportunity. SP was 1966 ten days ago.
Average broker TP @2100p
Momentum continues.
Some good broker upgrades in last few months.
Average broker TP @2081p
I have bought these based on good recent momentum.
Broken out of range. 2 year high hit today. Re-rating incoming.
Happy with today's rise. Good to see markets are responding to results now. My target is 21xx.
Wow. Absolutely stunning results and a very confident outlook. Another 10% rise easy here ... and a dividend increase I would think. SP on course for 19xx. Strong Buy.