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The sp does look odd. Are the market thinking the future looks bleak? For example, government debt growing, no money to spend on services G4S offer? Seems odd the sp has barely moved since covid.
We will come back. Rerate is on the cards, patience needed.
Yes, it defies belief....
Covid-19 impact on revenue YTD -1%
Covid-19 impact on share price YTD -50%
Slightly surprised by no lift in sp even with a great trading update. I sense a rerate on the cards. Precovid we were 200p, so significant money to be made here in near term. I will top up on Monday!!
Well I'd say that was an excellent trading update today and pretty much in line with my belief that the impact of Covid-19 in G4S has been greatly overestimated by the market.
Great to hear that since the disposal of Cash Solutions, the higher margin Secure Solutions part of the business now accounts for 90% of revenue. This bodes well for the long term strategy to turn G4S into a consultancy and technology led security provider. The work now must be on trimming the fat and focusing on this future direction.
Regarding the impact of Covid-19...
"Group revenues were 1% lower than the first five months of 2019, with revenues in Secure Solutions slightly ahead and a 16% decline in Cash Solutions. Group revenues in April and May were 7% lower."
So the impact has been greatest in the old Cash Solutions business (which is not surprising) and even though April and May were difficult, revenues are still only 1% lower than the first five months of 2019. This suggests to me that once we put the whole China flu thing behind us we should emerge as a much leaner and higher revenue business. Obviously a second wave of the virus is always a risk.
No mention of a dividend for next year but I can understand not wishing to commit at this stage but I'd say, barring an unforeseen disaster, we should see a return to dividends.
Long term the strategy to become a technology led group is looking good and I am very satisfied with today's update. A little disappointing the share price didn't react to a greater extent but maybe we'll see another few percent rise tomorrow.
Topped up while market lower,
Super quiet board this one. But I fancy GFS to do quite well with gradual rises as things reopen. Business was clearly ran well presented Covid, lost the cash business and been paid nicely for it. I think they’ve done well
another good day of clearing out the low holders and balancing the previous rise.
much better to do this now then when the price is much higher, this should create a great platform to have a solid rise over the next few weeks, hello Mr.Blue-Sky
Great day of clearing out the low holders, and some good tree shaking from the MM.
This needed a rest to balance and have a more stable raise.
speak to a number of people G4S have some great potential contracts in the pipeline, and considering everything will need security for the rest of the year they are in a great place to bring in some serious revenue.
excited and looking forward to the 200 region
Further update on cash business sale, monies in the bank. We are about to take off IMO!
I think the reason this hasnt rebounded quite as fast as many of us might have thought is due to many businesses going under and slashing costs, this would be offset by extra guards required in some areas, but then you have courts working on reduced capacity, this will restart, I work for G4S as a corporate guard and they are the biggest security company in the world so it wont take too long me thinks.
Morgan Stanley recently gave cineworld a target of 60p and hammerson a target of 50p - both companies are far exceeding those broker targets. Broker targets are often way out so take them with a pinch of salt.
JP Morgan raises price target to £1.25, I don’t think that will be far away IMO
Protests are continuing in London and throughout the UK. A few counter protests are now being planned for next weekend. I imagine an increased security presence at sensitive sites, especially in central London. Assume there is a fear of 2011 repeating itself, many shops will probably want to protect their stock too. I am speculating that there is going to be an increase in an outbreak of violence at the protests as they continue, probably peaking into next weekend.
Dreamachine - I got in couple of weeks back at 92p and bought another tranche last week at 102p based on similar thinking and the latest RNS - which clearly mentions some clients are even asking for additional services! I think we may be next Halfords!
From Q1 update: "As our services have been designated as essential in all of our major markets the overwhelming majority of our employees continue to support our customers, including in the provision of additional services in some markets."
Hope so, I accidentally bought 2k worth at 106 hahaha, meant to buy 1k but something happened!!
Anyway I'm sure they'll go up quite well soon after having seen them down for the past couple of weeks by a bit.
Can't see why they wouldn't go up now
Perhaps you mean £1.40+ in coming days?
With everything on the cusp of reopening, G4S will increasingly be in demand very soon. So should see a steady uptrend in the share price from hereon to somewhere in the region of about £1.35 to £1.40+ over the coming weeks, imo.
Never any chat here :(
G4S has played an absolute blinder by selling the conventional cash business for c.£750m - it will go long way in helping manage the debt - sp will rerate back to 200p IMO.
HI All, what is everyones views on G4s demand increasing as we come out of lockdown and economy begins to restart? will there be an option for G4s to have increased presence in retail shops to monitor social distancing?
Boris 'end of lockdown' speech was a bit of a damp squib. The market is definitely valuing G4S as dependant on lockdown outcome. Who knows, maybe the market is right; but I'm happy to take the contrarian view. There are a lot of empty warehouses, retail centres etc. that still need looking after. A lot of the criminal class with time on their hands. I'm betting H1 results will show G4S relatively unscathed from this lockdown.
Gone down despite the golden cross whatever that is.
I must admit I haven't shorted in the past but given the shock of the recent crash I thought it might be wise to have some sort of hedge. I might be being too clever for my own good!
My first attempt at shorting was Costain and this more or less doubled in price a couple of days and I got closed out .
99% of my positions are long so I will not be too upset if this short fails because it will probably mean that the market has risen and the benefits from my longs will far offset the costs of my shorts.
Personally I think there are more oblivious shorts than G4S. I would say you’re taking a big risk but it sounds like you’ve been sensible in limiting your exposure. I’ve never shorted, too stressful. I’ve played about with a demo account on ig.com and it confirmed what I already knew; that it’s hard enough to predict long term price movements so I have no chance predicting short term noise.
I agree that any share price can go to zero but I still see this as oversold at P/E = 6. We can also agree that the pension deficit is significant £400m (presumably higher given recent market correction) but this is easily serviceable and not untypical of other long established blue chips.
But all this was known (and in the price) for a long time beforehand yet the share traded in a narrow range around £2. Now we are at half that price!
I can accept that a lower share price is inevitable given recent events but I find it difficult to accept that many travel, leisure and retail shares have suffered less declines than G4S. Despite the fact that there has been no significant effect on business (Q1 revenue actually 2.5% higher than last year) and a relatively small proportion of G4S revenue is derived from activities impacted by the lock down.
My personal opinion is that the impairment charge announced in March was a shock to the market at a time when the market is most sensitive to unexpected news. I’d also say that withholding dividend is not a good look for a company whose main attribute is it’s ability to generate cash. The market can forgive pension deficit, debt level etc. because it knows G4S is a cash making machine. But withdrawing the dividend sent out the wrong message imo.
At some stage the market will wake up to the fact that G4S has very little exposure to this lock down and we can start to see through some of these one off issues. We may have to wait until H1 trading update to settle some nerves but by then the dust will have settled and the share price should better reflect the underlying business.