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My own analysis has kept me averaging down all the way, but DYOR
(i've shared my views and analysis many times on here before. It hasn't changed for the worse, just for the better because of AH and his vision)
It does look as though it could rise up towards 16-18p on short term optimism ahead of next set of results.
I still think this looks ok for a rise personally and am even tempted to add.
Good lord, the FUDsters are in full swing here. Give the man (AH) a bit of time to work though his cost cuts and a broader corporate strategy and lay it out to us in about 6 weeks time. In the meantime if it hangs around here or goes a bit lower with the broader market, so be it. We had a recession in 2023 and private sector spend was in the dumps - the recovery will come around in 2024 and IMO, we will benefit from a spend recovery in the Experience sector, albeit modestly in 2024. With a much lower cost base and small debt repayments due this year and next, I'm not sure why this talk of administration makes sense. Oh I forgot, FUDsters do what they do best to rankle nervous holders on here.. Doh!!!
Check out the recent Yellowstone webinar. Available on YouTube. The CEO talks about his plan.
IMHO it's a good one.
5 billion euros of debt, half of it current. Hardly comparable
Nofear’s post could perhaps be a positive. With Fujitsu on the naughty step and Atos now under severe margin pressure, perhaps Capita may win some juicier contracts. Bottle half full and all that jazz.
Hi Trisor, Capita is currently losing money YoY, if the trend continues it'll weaken the market capitalisation value of the business, which has already suffered considerably due to YoY revenue reductions from nearly £5bn in 2015 down every single year hitting just £2.81bn for 2023. CPI may well have long term contracts but... there's little evidence they're proving to be lucrative, as else Revenues at the very least would have stopped falling.
So imo CPI has to generate some entirely new business, take some business off from its competitors, or make gargantuan efficiency gains with enough magnitude that as a bare minimum the revenues stabilise. Naturally this is way way easier to achieve in a growing economy... now Chancellor Hunt said at the despatch box when he presented his budget figs said OBR expects UK economy to grow 0.8% this year and 1.9% next year... problem is that is not happening. Growth has fallen short and debt is higher too. So the cards are sadly imo very stacked against CPI and other struggling businesses too. It's less of a problem for businesses with better financials.
I don't want to entertain the idea of Takeover or Administration so long as AH is in charge. He is on a mission and has substantial stake in Capita and will want to make IT great. It is no secret that CEOs make or break a company irrespective of the external factors, because companies have thrived. I believe we have a top tier CEO and he will make things happen. Be patient till June 13th to hear from him what his plans are and what he has already achieved. IMO
GLA
SK-I disagree -if there is no global crash then the UK will be fine. Even if there is one, generally everything recovers within a year to 18 months. Capita has little debt institutional debt to deal with and has long term contracts, some with options. Many of the clients they do business one are very solid institutions many backed by the government. If anything Capita is a strong recession play. Please can you elaborate, given my points, why you feel Capita will be going bust because Im seeing things in quite a different way and its useful to have the opposite view
SK -we have long term contracts with renewal options. What are you talking about please?
Administration is not just an outside possibility, it's a very real possibility if demand is either weak or falls through the floor. That's because cuts can be made by a business to become more efficient... However, few businesses can weather full blown demand collapse, which is where I believe UK economy is heading towards, at full steam ahead right now too.
Trisor, I don't think there will be a global crash, a correction perhaps but because USA economy is very strong the Fed should only need to carry out a little trimming of bank rates to gently support the strong economy. I don't think they'll need to make rounds of steep cuts to keep the wheels turning...
Conversely UK is looking very weak, many more cuts will be needed to support businesses and demand but the weak £ will prevent BoE from delivering the number of cuts required to properly support the economy. When BoE makes even a small cut the inflations will return with considerably more gusto than anyone anticipates. BoE will be stuck between a rock & hard place, the result being a whole heap of pain as few will feel any benefits from MPC decisions.
Actually a joint enterprise with UK government for the section of CPI that deals with UK government would be a good tie up but unfortunately they’re be all sorts of objections
Administration is only a possibility if the company is insolvent ( or about to become insolvent)
The share price has nothing to do with it
SK- if there is a global stock market crash this could go sub 10. Otherwise I don’t think so
Administration possibility and another company struggling
Just what I wanted to see first thing in the am
29th April 2024
Struggling IT firm Atos said on Monday that it had received a letter of intent from the French government including an offer to potentially take over some of its business.
The deal would see the government acquiring Atos' advanced computing, mission-critical systems and cybersecurity products.
Financially struggling Atos on Monday also said it would require substantially more cash than previously anticipated to fund its business through 2024 and 2025.
https://www.cnbc.com/2024/04/29/france-moves-to-rescue-atos-as-it-company-struggles-to-stay-afloat.html
Shares in Atos jumped as much as 19% on the news of the French government's offer early on Monday, and were last up by 22.01% at 11:57 a.m. London time.
RR - Should the SP head sub 10p then my bet would pivot on the spot towards it heading rather quickly into administration. I don't think there will be enough economic activity to offer CPI much by way of support. Tough times are coming.
Think folk getting way ahead of themselves on the speculation front; the new guy hasn’t come in to see it taken away in months. The takeover of Capita would be far from simple and I don’t see it on the cards at this point
I'm not sure how Capita is 'ripe for a takeover bid'. All of the most lucrative bits of this business (i.e. those with growth potential) have been sold off. Let's not forget that the original turnaround plan was for Capita to offload the parts of the business they are now left holding. These leftovers might be saleable post-administration, but it's hard to see anyone wanting to pay good money for them at the moment.
Capita's only hope now is to slowly haul its behind into profitability, while not making any major blunders (which, as everyone knows, is a big ask with this company). That may be achievable, but it might also require further fundraising, which will drag the sp even lower.
SK -for now. AI is the future as is blockchain and the re-writing of the Internet on the blockchain with the use of smart contracts
Zuckerberg has gone large betting on AI for Meta... It hasn't helped their SP...
Nothing has changed for the worse (except the SP!) since AH came in. He’s made some positive statements, invested in the company & announced £100m savings + potential to improve margins further. Not bad in 4 months.
I hope that the June statement will give an impetus & a clear sense of direction (sadly lacking under JL). My worry is that return to FCF could be put off to 2026 but I think that’s unlikely.
We have £60m saving announced by JL, £100m by AH, from next year £20m saving from pension, £25 m not going to data leak.
I reckon there will be a£50m spend on AI etc but even so the above should show profit in 2025
I empathise with your situation Trisor and what I'm about to say probably doesn't help you here but.... being honest the factor which weighed on my decision to avoid investing in CPI in the end was I couldn't see good probability for either short or mid-term gains.
I only saw potential for dipping in for a very long term hold and right now I saw greater potential for mid-term gains in another equity. I'm keeping a close eye on CPI though because I'm open minded of the potential for that to change and I could take a position if it does.... Signals I'm looking out for in priority order: 1. General Election UK - if this happens very soon I will very likely take up a position but... it has to be soon, longer it takes the higher the odds I won't be buying in. 2. Better than anticipated results at the next CPI results, I'd only make an investment before seeing the results if a GE comes beforehand. 3. Significant uptick in UK GDP with simultaneous reduction in unemployment figs (unlikely to happen). 4. USA interest rate cut before BoE (unlikely to happen).