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I guess it all boils down to the question, is AH going to turn this around in the next 12 months?
If not CPI collapses & a lot of people including myself will loose a lot of money.
If he does make it work (& my betting is that he will, which is why I’m still invested) the SP should be moving towards £1.00 over the next 2 years.
Unless AH comes up with something spectacular (possibly in the June statement) I think we are still in for a long wait until August 2025 when I trust we really will see FCF. We know 2024 is scheduled for another thumping loss & I can’t see markets piling into CPI until it turns a profit.
Market cap £210m
6% return on £3b = £180m
7% return on £3b = £210m
Either going bust or in 3 years looking at 10X current SP
One of my many worries was why did they need to take on £100m debt at 10% when anyone else could get it at 3-4%
This is either going bust or is an absolute steel of a price.
Having been consistently misled by JL about the true position I’m cautious but I don’t believe AH would have taken on a dead duck unless the situation was totally misrepresented to him, but hopefully his own due diligence would ensure he had a pretty godd idea of what he was taking on.
One very relevant point made by AH was that many existing contracts are tailor made & as such expensive to design & run. He is going to simply the process by having 90% of the contract on a standard basis with the fine tuning to individual contracts carried out in the last 10%.
This should make contracts simpler & cheaper to design & run, reduces duplication, enables margins to improve & widens the scope for bidding for new contracts as well as reducing headcount.
At present re CPI instead of the market looking forwards 1-2 years it’s looking backwards 1 year. So effectively we have a 3 year difference in comparison to most of the market
Once FCF is achieved & hopefully debts reduced to relatively insignificant levels then I believe the market will start to look at CPI in terms of growth
So if FCF achieved in 2025 the market should be anticipating a growing profitability in the coming years which will have a dramatic influence on the SP
@Divan
Interesting that cost of running automation/AI is so high.
Not knowing the figures I would have assumed savings were greater than 1/3 of a salary bearing in mind no need to pay holidays,pensions,sick pay, National insurance, Human Resources etc
I understand the scepticism re CPI & having believed that JI was an upfront guy & being disillusioned on that I also have a worry re AH. So far everything is pointing in the right direction & if JL wasn’t his predecessor I wouldn’t be concerned but having been led up the garden path by JL I’m just very wary
@Trenners I decided to trade around 100k shares whilst keeping the majority for the long term (& I’m now resigned to waiting until August 2025 for a meaningful upgrade in the SP)
If I can make a few thousand every few months it’ll take the sting out of the long wait
@Trenners If you thought CPI was good value (which I & many IIs did) at 25p or higher with JL at the helm think how much better it is with AH at the helm & an even lower entry price for those topping up or lucky new entrants
Presumably CPI have to buy shares in the market to give to him?
Rather than wait for the various dates to arrive CPI would do better buying them now (@ 13p (a good discount to the 19p calculation) & handing them out on the respective dates.
(When prices will hopefully be much higher)
Or have I misunderstood things? No doubt someone will tell me!
@Wildcat yes I think that sums it up pretty well.
Unfortunately in the meantime because of the false financial picture painted by JL trust has been totally lost in management statements & until projections are demonstrated by results I think we will continue to flounder.
This looks to be. August 2025 (not 2024 unless AH pulls off a miracle).