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Tomorrow's GDP figs may provide support, if early estimated data released by ONS is on the favourable side (figs get revised down the line though: MoM always more volatile even post revision whereas quarterly changes smooth out the natural statistical variance). Though I do not think UK GDP is doing well, if i'm correct then early data tomorrow will be more bad news and it could be deep in the red by COP tomorrow.
Market confidence? Its gone up like 0.5p since yesterday. Calm down
Quite right Savage re the conversion OR smaller offices allowing homeworking/hotdesking etc. Capita will almost certainly have a dilaps liability there unless they can assign the lease (unlikely)
Back into the 13s I see which is disappointing. When are we going to get a break?
Quite right Savage re the conversion of smaller offices allowing homeworking/hotdesking etc. Capita will almost certainly have a dilaps liability there unless they can assign the lease (unlikely)
Back into the 13s I see which is disappointing. When are we going to get a break?
Trisor... interesting info on that Belfast office sell off - I wonder what that stranded asset will eventually fetch? Shame CPI are stuck renting it until the 2026 break clause (I imagine CPI will take the option to exit). "Beacon House represents an excellent investment opportunity"... more like an investment liability! The death of office working means there are many more debt right downs yet to come and they can't come soon enough imo! Get them offices converted into housing I say!
BOE can say what they like but they will follow the FED, sometimes right away sometimes with a delay. All in all the BOE is a waste of time concentrating on ESG and WOK issues, all we need is a simple computer program that follows the FED makes the odd useless comment (just choose at random from a list) replacing the overpaid Andrew (out for lunch) Bailey and his cronies.
BoE policymaker says UK interest rate cuts should be ‘a way off’ - attempt using rhetoric to put a floor underneath the blatantly falling £ and what will be ongoing £ weakness for the foreseeable future ahead.
Previously, I'd though BoE would first cut in May and I'm sure they'll try, for as long as possible, to fight US$ strength... at what cost to business & homeowners though, before they bow out to the inevitable?...
Yes, BT could well trim divi but it'll continue growing as demand for telecoms and data is monstrous and traders will seek out safer equities. Imo weak UK economy is heading for troubled waters, companies no longer able to rely on record revenues flowing into their coffers (mostly servicing their large debts) on the high tides of inflation during these past years. If UK embarks on keeping pace or closely following USA it'll be a big error in Monetary Policy imo.
Https://www.irishnews.com/news/business/beacon-house-capitas-belfast-headquarters-on-the-market-for-46m-S7CALJZPCNEPFCQY2E6T4B6DWE/
Thought this might be of interest . Surely these types of leases will become a thing of the past. Fit out, dilapidations , rates as well as rents
Savage - to be fair I have BT on an income watchlist but it wouldn’t be an either or with a share like CPI as others have shown they are very different - my concern with BT is the possibility of divi cut.
" one potential route out could be for CPI to merge with another business, perhaps one with expertise selling to private sector. I did think the comment someone made about the over reliance on Gov contracting i.e. calling for diversification would be a wise move, possibly a merger could be a good method to achieve that."
Just won't happen and isn't what an investment in CPI should be based on, IMO. This just isn't realistic when your market cap is circa £200m and when private sector outsourcing and the consulting services market in the UK/Europe is in the dumps!!! The upside to CPI's profitability/FCF forecasts could come from increased corporate spend in H2 24 and 2025 - that's realistic, but isn't a given unless the UK economy recovers from herein on. Another possibility as suggested by Peel Hunt is that CPI is an acquisition target at these rock-bottom price levels.
@Savage
I'm a huge CPI fan but I can definitely see the benefit of BT at just over £1 (not least because that's COVID prices and also Drahi bought a very large percentage at £1.80).
CPI has the prospect of multiplying by 5 whereas BT could multiply by 3 (but it's a much sounder purchase as long as they don't cut the dividend .... Which is what they might do in May).
I think you'll look back though and see that either CPI or BT were good purchases
"Trisor... I guess i'd be concerned CPI were to again fall short at the next set of results and if concurrently BoE holds rates high & gilts remain elevated i.e. debt refinancing options are limited..."
Debt refinancing is the least of concerns for CPI, IMO. It's not like there are mountains of debt coming due in the next couple of years that this is a real concern. A read of the 2023 AR will inform us the private placement amortisations are the following.
2024 - NIL
2025 - £30m and $75m
2026 - £69m and $64m
2027 - £24 and $27m
2028 - $23m
The USD debt is forex risk hedged for a GBP carrying value of £132m. The interest rates on private placement notes above is fixed till maturity and unless they're needed to be refinanced at maturity, it doesn't matter what happens to interest rates in the interim.
There's too much fear built into the stock price without an appreciation for the large scale cost cuts being implemented - these will result in susbtantial FCF generation in 2025 and forwards. I suppose you can invest in a beast like BT and be happy with a good dividend yield or you hit the jackpot with a turnaround play like CPI. The focus that Adolfo is bringing to generate truly sustainable FCF via the volume of cuts being implemented is just not being reflected and I suppose fairly so given JL's history of missed forecasts. This is where the real opportunity remains for those who get in at these rock bottom valuations, IMO.
Happy to debate!!
Correct, I went with buying another tranche of BT shares. Still keeping an eye on where CPI moves though and the option is still available for me to take a stake albeit it's looking increasingly unlikely I'll be minded to do so. I'll be looking at where Friday's GDP figs suggest the macro is heading.
Savage - thought you’d decided to go with BT and leave CPI? Just your comments on here seem to be trying to convince yourself you made the right call bro? Ha ha
Yes that was me Savage
Trisor... one potential route out could be for CPI to merge with another business, perhaps one with expertise selling to private sector. I did think the comment someone made about the over reliance on Gov contracting i.e. calling for diversification would be a wise move, possibly a merger could be a good method to achieve that.
Fair enough Savage -I hope they are sorting longer term debt but my understanding was that financial related institutional debt was fairly low and Capita has not called on its existing overdraft facility
Trisor... I guess i'd be concerned CPI were to again fall short at the next set of results and if concurrently BoE holds rates high & gilts remain elevated i.e. debt refinancing options are limited...
Savage-Capita has long term contracts . Labour wont be breaking those without substantial penalty.The services have to be provided. Who's going to do it? Unqualified perhaps more highly paid public sector workers?
Personally I see Capita as a recessionary hedge and Labour will just borrow more, exacerbating things. They wont cut . If anything they will ramp it up.
However, I do think Capita would be wise to diversify from the UK public sector an I do hope this is part of the strategy
I think the macroeconomics are highly relevant for CPI because there's significant reliance on Gov contracts which I suppose I am saying the UK economy weakness is a potential significant threat, unwise to underestimate this imo... If UK properly hits the buffers (in contrast to a booming USA & strong dollar) there will be spending cuts to immediately follow and I think CPI could struggle if that occurs... esp given the debt context.
Not where Im sitting -property is holding up very well. If they cut interest rates, that will put wind in the sails of the property industry
If, I as I believe, there will be a very large debt/currency crisis at some point you are going to see terrible deflation probably wiping out Covid and war related inflation. At that point, banks will aggressively cut interest rates and the new cycle will begin.
Trisor... Yep I know the differences between them. What I'm saying is if the BoE cuts rates then the falling inflation will quickly become real deflation and I think parts of UK economy are already in deflation e.g. Commercial and residential property
@GoCPI-I think its relevant to talk about the macro on a CPI share board . I agree with your last paragraph but would argue that US hegemony is now being challenged and countries are seeking to ween themselves off the dollar precisely because it continues to lose value specifically against gold (See BRICS and what they are doing)
Savage that's not deflation...what you mean is that the rate of inflation increases has slowed. The cost of things is not going down. There is no deflation.
I would argue that the decreases in the rate of inflation are misrepresentative in any event. The ultimate inflation hedge, gold , is soaring. That's despite it being non income producing (when you can get 5 percent in a bank) and having storage costs. Central banks are buying hand over fist
"uk gilts up 11bps too..... seemingly bondholders suddenly now betting boe will struggle to make rate cuts to support uk economy because else it'll trigger £ to fall further against to $ as cutting would cause significant inflation to resume."
@savage - i'm not if this 11bps yield jump is at the short-end or the long-end of the gilts spectrum, but the us 2-yr treasury yields are up 21 bps and a deeper inversion is manifesting today in the treasuries market. i'm with you that i'd rather be the us than the uk. uk with its brexit shenanigans is a complete **** show versus the us which has the dollar as the world's reserve currency and there will always be plenty of 'creditors' who'll be willing to buy up their debt. the demise of the dollar and the us economy has been written by too many and too often, and every single time it confounds sceptics.
anyway, this isn't an economics discussion board, but a cpi stock discussion board and i won't labour on this too long, but it'll suffice to say that if the us economy prospers so will we, and vice versa. that's incontrovertible. we'll certainly run into deflation issues should the us economy slow down like we did in h2 2023 and that won't be good for cpi.