The latest Investing Matters Podcast episode with London Stock Exchange Group's Chris Mayo has just been released. Listen here.
NoFear
Many thanks for all the info & let’s hope ( possibly with some prompting from you!) Stuart Morgan reports up to date figures in his Yellowstone presentation.
I do think it’s time for a statement on dividends even if this is for dividends to start in 2023.
This should be a game changer on share values if announced.
Reading through the report & comments I do get the impression that now the basics are in place attention is going to be given to getting a decent return for shareholders. There will have been meetings with the IIs over the last year and by not withdrawing support they must be relatively happy with medium/long term prospects .
With the £200m + from the 3 major sales completed since year end & prospects of further sales + income from operating profit there should be scope to reduce debt by at least £250m
Giant squid I agree broadly with your comparison with Serco although Serco is a bit bigger all round. However the main difference (& one of the major factors holding CPI back) is that Serco has been paying dividends for the last 2 years.
As you pointed out CPI margins are better than Serco & likely to improve further so with another £200m debt repaid & dividends reinstated we should fly but this may be another 12 months before that happens.
Who know swat
The Pru contract was lost because of appalling service at that time by Capita (I was a broker on the receiving end of years of Capita’s incompetence) & was delighted when it went to elsewhere, but the Capita of 2022 is a very different company to the Capita of 2018 as shown by their customer ratings.
Total rethink here on timescales.
Had been looking for 60p after results (this was 6 months ago when the price was over 50p) & 80p by August.
I think now 40p - 50p by 1/2 years August results ( where I hope to see all the hard work resulting in increased profits) & £1.00 by March 2024.
I know it’s a long time but 2 yrs for a 5X rise is fine.
If there are a few more sales to reduce debt quicker that would be good & I really do hope for an announcement that dividends will restart in 2023.
The frustrating thing with CPI is that we hang on every 6 months for results which are usually reasonably good & result in another drop.
Until we see a substantial drop in debt, genuine trading profit & return to dividends I can’t see any major improvement.
I do agree, as posted by others that results are somewhat obscure & there always seems to be some unexpected nasty. Last year was the money needed to prop the pension deficit & now we have £50m or so spent on updated computer system which isn’t needed + £40m or so to finance a loss making contract. I just hope there are any more of these unknowns in the woodwork.
I do have long term faith in CPI but patience is beginning to run out.
Overall a positive set of results although I would like to see a statement re dividends such as ‘we intend to reinstate dividends in 2023 at a modest level’
Serco has being paying dividends for 2 years and I think CPI is similar in terms of size & profitability although a little smaller.
SERCO
T/O £4.1bn
Profits £156m
Dividend 2.4p
debt £443m (£180m before leases)
Market cap £1.6bn
Based on the above if CPI can come close to this it would indicate an uplift of 5X or around a£1.00 which to me seems achievable
Just added another 50,000. I keep adding & the price keeps falling!
Fingers crossed for tomorrow but if this was good value a year ago at 50p (& I believe it was) after some solid progress 20p now seems ridiculous.
If we see earnings in the region of £100m - £150m this is giving a P/E of 2 to 3.
Just hope I’ve got it right this time & results don’t disappoint.
A good positive forward looking statement would be helpful.
My worry is that unless results are very bullish it will fall again.
Mildly good news seems to result in a gradual fall & anything even slightly negative and the SP gets hammered. I believe the valuations are ridiculously low but unfortunately the market doesn’t agree with me.
We desperately need a large reduction in debt and reinstatement of dividends or I can see this drifting for yet another year.
Does anyone have a reasonably accurate projection of year end trading ( not including one offs & sales) profit. I’ve seen figures ranging from £100m to £300m.
At the top end this would mean a market cap being less than 2x earnings which is totally insane for a company with no debt, growing revenue & profits.
My guess is around the £150m.
David, I share your frustration at slow progress but I’m not overly concerned.
Management have done pretty much what they said & brokers are still positive. I suspect we may have to wait for half year results ( unless full year figures have some positive surprises such as dividends restored, good forward looking statement better than expected profit etc) before we get a major breakout. I would still expect to see figures approaching £1.00 by March 2023 after next years results.
Happy New Year everyone & let’s hope for better things in 2022.
My guess for what it’s worth is nothing very much until the year end results with a gradual improvement after but nothing major ( unless there is some really good news) but with a very positive improvement on the 2022 half year results.