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jazz_01, Im not sure which area of the industry you operate but the Construction industry tends to sit at the lower end of Margins, typically 2-3%. In relation to a buy out I see this as highly unlikely. Costain were ranked the 11th largest construction company in the UK in 2018. If you look at those above, they are all having serious difficulties at present, for example Kier who's SP is in the toilet and could be looking at a rights issue. Interserve have recently gone through administration. Laing O'Rourke who have very little capital (even being refused credit for materials).
The only potentials are Balfour Beatty and Skanska, however this wouldn't make sense as they operate in the same sectors and hold similar frameworks, as such there is nothing in Costain that they would want to buy.
This isn't to say Costain are a bad company, they operate very well in a highly competitive industry and return good margins. They also have a solid balance sheet (which is rare in the top 20 UK construction companies). This was definitely oversold on the profit warning and has had its SP held down for a prolonged period now. The SP will sail back over 200 and probably settle around 230 ahead of further trading updates later in the year.
Honestly think this has a higher chance of getting brought out at 200-220p then it being allowed to reach 220p+ again.
I operate in this industry and these types of high margin low revenue companies are what the major construction/specialist companies look for to improve their bottom line. They can absorb central overheads easily and further increase the margin and it really helps drive there % margin up.
They also gain all the expertise and it saves them hastle of bidding and misspricing contracts.
Amazing how this share is being held down, everyday for the past 4 trading days it has had twice as many buys and sells, yet been down end of day each day. Completely against fundamentals of the trading in Market. This will be let go soon and well over £2 again. GLA
Costain #COST 300p to 170p on revenue downgrade for 6mths results to June 30th • £180mln cap with 110mln shares • Will end H1 2019 with c. £65mln cash • Operaring profit of £38-42mln on £1.1bln revenues • Ennismore fund added 3times since the June update to go above 8% and Standard Life added once to go above 8% • Group's order book is £4.2 billion (30 June 2018: £3.7 billion). The Group also has a preferred bidder position of c£600 million (30 June 2018: c£400 million) and tendering levels remain high. • robust balance sheet including a strong net asset position and positive net cash • Yield of 8.8% at 170p • Oversold
I’m in at mid 170s, partly because I personally feel oversold, but also because if the economy takes a turn for the worse through brexit or global slowdown, that government have very little room for manoeuvre with monetary stimulus as interest rates are already historically low, so are likely to use spending to get the economy moving and as such infrastructure spend seems an obvious place to go, and fingers crossed longer term Costain may be the beneficiary. DYOR
yep, just stay quiet for now - buy a few more if you can, wait for September. May be worth top slicing before Brexit (ha ha) even though a hard Brexit will give Costain a massive boost, as they are UK centred and it would wipe out even more of the competition...
The rate of fall appears to have slowed down. No clear buy signal yet and still exposed to political risk. Still have low volume. Still think there could be something in this if the finances are in order and if there is indeed a positive cash position.
The market is waiting for the politics to become clearer before deciding what happens next.....nothing to do with Costain's abilities ....more the bigger,macro picture
Could well get a relief boost after the Conservative party result and the winner giving a well needed sense of urgency,determination and direction.....but I feel it will be volatile, with profit taking...given that Politicians need to do a lot in a short period of time , convincing an awful lot of other parties,consumers,investors ...no time for anyone to be wishy-washy
August being the worse time of year to have meetings and get things moving
I appreciate that the revenue for Gatwick will not be seen until after 2020 but it was still another large contract win that secures future business so it was positive. I may have jumped the gun a bit quickly and purchased a load in the 185 to 190 range fully expecting a bounce after what seems to be a very big overreaction to the trading update which in my opinion seemed to be very positive.
doesnt even start until 2020 so nothing really going to hit the balance sheet in 2019 for it
I think Hunt would probably be calmer for the markets than Boris ....Boris could bring more volatility....either one is going to have to hit the floor running though and be precise and not waffle !!...
Should see the half year report end of next month so maybe that will give the share a kick start. Drifting day by day, when Costain seems one of the few that are in a strong financial position within the sector at the minute
"When will it end and this SP go up like it bloody well should"
When a significant number of people decide that it is a worthy investment and start buying in. 250 or so trades today suggests that not enough would be investors are being enticed in at the current price.