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Property and commodity prices (particularly PM) usually always move up when an inflationary environment is there or expected as is the case today with all the global money printing/QE, hence IMO this trend will continue and should significantly benefit KL here going forward.
Mark, I am a little sceptical about the £ amount of savings only because this was posted by kier previously and some savings will have been made but still the debt increased. I still think kier will get through this but I can't see how they do it without dilution of the current SP.
Wyndrum, totally agree. Also I guess KL value has gone down 33% or more if you were to look at housebuilder share price delta for pre and post covid.
It's odd as house prices appear to be acting strangely - almost like a gold hedge at the moment- but for how long who knows!
I think the other things as well as margin that need to be thought about are the £100m operational savings (per trading update) and no divvy. This will help too, but I do agree shovelling out from £450m debt will be difficult. It will be a multi year effort.
Good luck all
Marked: Lets say margin up from 2% to 3%, the extra 1% is worth £40m on £4b order. That £40m is going to have to work very hard to bring £400m debt down.
This is the problem, the scale of the debt is challenging to trade out of. So, cut overheads, sell assets and increase margins.
I think kier are doing all the right things but again I think it shows how key the sale of KL is (or was). I seem to recal it was expected to have a value of about £150m when debt was £350m, now with the debt higher and the value of KL apparently less, (perhaps significantly), you can at least see the scale of the problem that kier has?
Meant to say 4bn turnover opposed to order book. Order book 7.9Bn or 2 years of work
Rizzy, whilst the average per week of 80M per week is true there will be some extremely big one offs like HS2, Cross Rail, etc that mean the weekly one off announcements do no need to add up to anything near £80M. I dont think the order book is a problem - the low margins and how many years to pay off the debt principal plus accruing interest is the issue.
As you can imaging cranking the profit margin from 2% to 3% or 3.25% on a £4Bn order book would make an amazing difference.
Good luck all
I've posted similar before on previous months, I'm still not sure I like the breakdown given, It can be read a few different ways. Just remember they need £80M a week of wins to stand still on revenue, so maybe more interesting is that they didnt appear top 10 for the month again (entry point at £60M for the month). Is this down to trying to be more selective on the Margins?
Also, previous reports in the construction enquirer showed top contractors are seeing a 40% drop in orders over 3 months to June. How much impact have KIE seen from both the general reduction in works and not winning as much of the smaller amount of works available??
They have pretty much sat in top spot on the rolling year for a while now will be interesting to see where they are in a few months as it looks like they are getting caught, and how does the rolling 12 month revenue of £1.8B compare to what they need for this side of their business?
I'm still in here and have brought my average down a little recently, but I still have doubts and hope for some clarification soon .
We all love the positive press and rolling streams of wins, but £15M here, £25M there may not be enough and may be why the prices is where it is for now.
Very impressive performance by KIE, again! Unless KIE are winning unprofitable contracts, which I assume is not the case as KIE came second recently £10m behind the winning contractor at £40m. So we can assume these impressive wins have the right profit margins which will feed in to the bottom line. Another compelling reason to hold and add more KIE shares. IMO.
Kier is the top winning UK contractor YTD July 2020 (Total £m):
https://www.constructionenquirer.com/contract-spy/top-contractors-league/