Charles Jillings, CEO of Utilico, energized by strong economic momentum across Latin America. Watch the video here.
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@meta
Debt is an issue. Not a problem. That’s what AD has eluded to himself, and that makes perfect sense.
Cash burn. Most companies are burning cash like crazy to stay afloat at the moment, whilst taking no orders. I’m not quite sure re Kier but think they have secured near £0.5bn of work during CoVid. I can’t top of head think of any other project organisation which have done that.
As for the share price, well that’s entirely in the hands of market sentiment and doesn’t prove a damn thing other than what the market sentiment is. Kier is hardly a ‘follow the flock“ kinda share).
Hi Wyndrum, I hope that the mention of the RI in the recent update was just to keep all avenues open, so that in extreme circumstances they would be able to fall back on that option and say we did warn you. However, I think your Xeros example is a good reminder that it is not a route that Kier would like to go down after their previous disastrous fund raising that tanked the share price. It feels like another RI would just result in the same negative feedback loop... the RI would lower the share price and they would raise less cash than they needed and investors would flee like rats from a sinking ship.
Hoops,
I think expecting/hoping banks cutting companies slack is not how they work. (They cant' cut slack to one company and not to another, can they?) I'd draw your attention the HUGE provision of bad debt all the banks are now pencilling in. None of that background is in kier's favour presently.
It's jus,t as it always has been, revolves around the debt to asset ratio. The debt seems to be increasing, but by how much and at what rate? There is no news on KL sale, or even a projected likely/expected value. (Again its an asset and its potential write down could be significant regarding its loans/debt).
It could all turn out absolutely fine, and I mean that,but the lack of clear info (and I take your point that that in itself is genuinely difficult), from the last update given the current economic backdrop makes this a very high risk buy in my view
W. I find you posts very useful, in so much as they remind me that I am overexposed here at the moment. However I think the update that the Bod gave was fair enough and clear. They don't know exactly what the plan is but are keeping options open. There are few companies than see ahead with confidence at the moment. At least Kier have work.
IMO I can't see any great interest in KL currently. The last interested party was a private equity firm and the risks of acquisition now are higher.
I am hoping that, with the positive progress on cost reduction and the forward order book, the banks cut Kier some slack and, over the next couple of years, Kier
trade their way out if their current situation. Hopefully the sale of KL can happen when the market has a more certain future.
Crinsing, the problem I have with your view, (which is fair enough by the way, no criticism there), of the 3 things you think matter I would argue, that point 1, maybe, but if the conditions are overwhelming them then its not much help, 2: ok, but it all depends on point 3, which the latest update says is better so that's real positive going forward.
The you go on to criticise the board (undermines point one,) with not keeping shareholders better informed. Which I agree with, but why? Why did the BoD leave such room for interpretation. Its not meant to be a game of read the runes to understand what really is going on, is it? So that is not good from the B0D either, unless, they are trying to buy time because things are not quite as good as some here think?
I find it difficult to come to any other conclusion unfortunately
"Everything else is just noise..."
Debt and cash burn are not "just noise".
Its the reason why this share is at 63p.
@Weststowpods.
Totally agree.
The only things that (imv) matter now is 1) efficacy of team running the business, 2) quantity of work won, 3) quality of work won (as in margin). Everything else is just noise...
I appreciate that many former/current holders have suffered badly. This sector was for years mismanaged by its bosses. Those days are (imv) gone....
I guess Kier could have kept holders more up to date with what’s going on, but all things considered I’d prefer they just get on with sorting themselves out, which I have absolutely no reason to think isn’t happening........
Yes, point taken and all valid points, thats assuming you/we are comparing a like for like comparison - my gut reaction is NOT!
A lot of guess work going on all round we need Mr Davies to tell his poor shareholding followers what is going on - please!!
Westi, "So given the turbulence and extremely low value of the SP amid speculation of a RI, even if these rumors were correct, the current valuation must be already at a point where any dilution of shares and with the resultant cash raising would justify a bounce in SP???"
Or, maybe not.
An example (but not relevant to Kier's industry), is a company called Xeros (XSG). They have patents on clever tech that allows washing machines to use less water and filters to remove micro plastics.). At 10p (they were floated at 250p I think) they were running out of cash waiting for an uptake of the tech. Everyone knew it was coming. When it arrived it was a 10-1 RI, which no one saw coming!! and the SP went to 1p and instead of raising £10m raised less than £2m! so a 90% reduction in the value of the individuals shareholding!
So, while you could say, what has this to do with kier, and (to a degree, that's fair) l use it to illustrate that RI's can be tricky things to get away when a company is up against it. Which is why, for all of Kier's order wins, until this is resolved many will shy away from buying. Its not unreasonable. And it certainly is NOT a no-brainer that Kier is undervalued right now.
(PS XSG live on with a bit later on, another fund raining exercise that due to more positive news was oversubscribed and does now, look to be quite an opportunity there. But the SP is still only 1.5p bot this with an update in Sept could move dramatically I think)
In recent days the Government has announced the extension of the ' Buy to Help ' scheme - and Planning Approvals to be fast tracked - very positive for KL
So given the turbulence and extremely low value of the SP amid speculation of a RI, even if these rumors were correct, the current valuation must be already at a point where any dilution of shares and with the resultant cash raising would justify a bounce in SP???