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Suddenly we get volumes. The 26p resistance has crumbled, they threw the kitchen sink at it to keep it from rising but it's begun folks.
I see more action ahead, those who have been driving this share up and down in narrow channels and are day traders are losing control of it. Once the volumes hit, it cannot be controlled and us longs will be holding a long awaited party.
IMHO the catalyst will be the size of the bids for the latest sale and if they are north of 200mil then that would make a significant dent in the debt pile potentially enough to drive the SP by 40%.
GLA.
Well Panama Pete after that many years working I'm not surprised your hanging up your hat.
I'm doing the same myself, my mileage is a bit lower than yours but I've also had enough and will be lowering living costs and chasing the sun.
The energy crisis was entirely predictable and I work in the sector and most saw the outsourcing of raw materials as ruinous and risky.
Meanwhile they have been building giant tin windmills.
Ignored our once world leading nuclear power industry and IMHO led us down this risky path.
We need a big change of direction FAST, frack our way out of the crisis and build small nuclear ourselves and full on embrace battery storage for the future via true green energy (hydro, wave, solar).
The flow out from many stocks is putting cash into the hands of the traders and they will be scouring the stocks looking for safe havens where huge electricity costs are not a factor.
Capita don't manufacture or transport much if anything so are a potential for investment. Their inbuilt inflation clauses will also raise interest.
SP rises ahead, won't be long now.
GLA.
So if Pay360 @200million pays just 6% of the profits, that puts Capitas true worth at 3.3billion.
Equate that to share price and you get roughly 8x the current price, so that puts the true worth around 2 quid a share.
Yes please!
Pedrobull, I'm surprised you left CPI getting that level of wage for doing nothing. It backs up my feelings that in the past, the company didn't have a handle on things and it increased its SP by reporting constantly growing revenues not because it was necessarily performing well but by buying company after company and loading up the debt pile.
No doubt former board members made a bucket load of cash based on those metrics.
With CPI being a FTSE 100 company, getting kicked out then out of the 250 absolutely hammered the price and I suspect a lot of fund managers got burned. This will make them a bit shy of calling for its future inclusion.
However, the market is sometimes fickle but money is money and when the momentum is swung in favour of CPI and there is good money to be made, they will pile back in.
Currently, volumes are so low, the sp is being driven by a couple of mms.
The headwinds are gathering though.
You won't go far wrong at these prices, specially when dividends restart.
All IMHO.
Pedrobull, if you worked at CPI in management for 13 years, on a decent wedge, I don't see your point.
Something kept you there for a fair time.
If you have a personal axe to grind, fair enough but on matters of SP, a 25p price seems a bit low given this company is comprised of an assembly of parts when broken down would probably be worth 8 x the price today.
I do think the management has been too slow to turn it around though and the initial 3 year of Lewis's tenure amounted to rearranging the deckchairs and he only really started addressing the issues when he sensed his time was up unless he took action.
I reckon he is probably frustrated that the sp is still in the doldrums despite progress on the turnaround but it should focus his mind that in order to get his big payday he will need to announce a big improvement in capitas performance and possibly the herald of free cash flow to the tune of decent dividends.
Us playing the long game are accumulating potentially life changing amounts of shares should they come good.
It's all to be played out in the next 18 months, all IMHO.
However you look at the results, the TU was poorly delivered and had signals that yet more work is needed.
I feel the direction of travel is good, but I have concerns about selling profit generating parts of the business after you have already announced the portfolio arm is for sale then sell a bit off from outside that division.
It raises unanswered questions in my mind, how much else will be sold off, what are the now expected results to future profit, will there be more goodwill write down indicating yet more stagnation.
This IMHO is why IIs might want to bolt out of Capita, its just taking forever to turn the monster around.
But it is a monster. If you bit off more chunks and sold off every part, it would amount to probably 6x the share price at least.
So underlying reason to stay invested is still there, the longs seem to have the right idea and I do feel the first we will know about good news is when the sp steps up substantially when the market gets a whiff of a strong performance with profits, plus the CEO actually nailing down the actual news in a positive and fully explained way, perhaps with updates before YE stating they are AHEAD OF EXPECTATIONS.
GLA
Cheers Opulentia, I will give them a look over.
Meanwhile, buybacks also solid as sp will graduate higher. I'd prefer dividend to stay invested not high sp temping some to cash in their chips.
The circa 400 million large under valuation of this share can demonstrated by the sale of just one of their bolt on divisions for over 200 million.
The sum of all parts does not equal the sp and pretty soon I feel there will be an upwards momentum.
I have to say that once again Capita go and shoot themselves in the foot though. The sale of a valuable part of the business from outside the announced portfolio division just has a bit of a smell about it. No word from Lewis on why the family silver is now on the for sale pile, just awful communication once again.
I strongly suggest Lewis employs a decent investor communication person who can inject a bit of sense and strategy into how they present themselves as it just seems a bit amateur for a billion pound company.
GLA.
Thanks Gocpi, I've been trawling through the TU to make sense of the strategy to turn the company around.
After reading through it, there is a lot that is actually happening and it is all to strengthen the balance sheet.
I have been quite critical of the lack of just paying off the debt but it's a lot more complicated than that.
Capita grew fast in the past and it borrowed loads to buy loads of companies and this appears to have grown the BS and increased revenues and brought a fat inflated value.
Now, we see a different approach.
Proceeds from sales are indeed paying down the debt but alongside this is fiscal responsibility and putting right pension shortfalls, writing down goodwill, minimising tax liabilities etc.
The analysts need to look closely at Capita because the TU is heavily skewed towards putting right long standing problems and dealing with an adjusted financial report that is not an easy read due to the need to evaluate things now sold and thus lost from the BS.
IMHO much better ahead Inc SP strength for the long suffering long investor and a bit of a steal for the enlightened.
GLA.
There is of course some truth in valuation of a company by price but as we all know, the market looks ahead not behind and values change constantly even when a company only talks to the market on a 6 monthly basis.
We all know it's risky investing in a company during turnaround but those of us who have amassed decent numbers see this as a potential winner in the medium term.
I think once again a badly worded trading update lacking clear targets or setting out future markers for events that will signal dividends are not helping the price. These enormous wait times mean speculation on sp and the small rises and falls are easily managed by small changes made by few.
I fully expect the unexpected (almost rumsfeld there) and this one to simply take off for no apparent reason.
Lordys link provides the following of most intelligent forward looking analysis
"The question for investors is how quick they climb aboard: the earlier the cheaper, but riskier. Christopher Bamberry, a research analyst at Peel Hunt, forecasts that the price earnings ratio will fall from 18.5 to 6.6 this calendar year, then to 5.5 in 2023 and 4.5 in 2024. That is cheap and word is that once group cashflow turns positive, possibly next year, dividends will be considered"
Along with a word of warning about the recession and their hold rating.
So from David Watkins message I read this, It's my interpretation of course.
CAPITA are not going to pay dividends because they need to be sure that what is left of the business after they dispose of the bits, is generating the free cash flow. So they must be already generating free cash flow.
I agree though that the big gains on this share are likely to happen next year but there is a chance that those who have dismissed CAPITA in the past are now reading up on its position and will begin to stash a clump at these incredibly low prices and that will move the sp upwards.
The TU tomorrow should set things in motion, I don't know how fast this will rise because nothing happens when you expect it then out of the blue it will begin to motor.
Myself and many on here have filled our boots to the brim with the cheap shares, many of us in positions of loss where our holdings are now significant in number of shares.
Capita should and IMHO will, over the course of the next year increase significantly due to low debt, increased revenue and positive free cash flow. When it begins paying dividends next year (my opinion) it will step up and steeply too.
GLA.
I think we can all see the minute fluctuations in Capita’s shares that appear to randomly swing the price around but these swings can only be achieved when there's not much happening because once the big buys come in, no amount of fidgeting will hold it back.
I do think that the fact the share rose above 30p today it triggered the auto sells so I'm not concerned, eventually they will be swallowed up as cheap crumbs, while the rest of us sit back and await that magical higher level (for me I will seriously want to bail at a quid) but will still keep a speculative bundle for the dividends.
As we approach Friday, I have been thinking about what will amount to a good clear indication that this company is on a sounder footing.
When you sell bits off, you reduce your revenue and your potential to earn profits (and losses) plus unwind areas of complexity.
Key for me will be what have they done with the money from the disposals.
If they have paid off debt, its positive but if they have "invested" it elsewhere, it will create question marks on if they are using the cash to simply stay afloat.
The man at the helm has had plenty of time to turn this around and unless he delivers the goods by year end, he knows he is toast so I feel after years of fiddling he has finally put things into order to deliver free cash flow from year end, the TU will give very clear indication if this is so by debt massively reduced - all IMHO.
Sharehead if Capita rise as much as Serco, for me, that would give me a life changing amount of cash and enough to hang up my keyboard forever.
Exciting times indeed, this could be my big one. I've been so patient and bought all the way down constantly lowering my break even and this has left me with a boat load of shares but little money. I just haven't been able to resist adding at these lows because I believe Capita will return to strength and I see lots of signs this is about to really motor.
It's hit the 30p, fully expect it to now hit a load of auto sells but someone must be background accumulating and I wouldent be surprised if it continues upwards either as the TU is beckoning.
GLA.
I think the 30p resistance might mean a lot of auto sells get hit plus Friday profit taking all may amount to a lower Friday SP.
However, if background buyers are filling up on this one, in anticipation of a TU spike, we may well see action on the 30p mark.
If this closes at 30p it will signal very positive vibes ahead and a steady climb to TU.
GLA and happy friday!
Possibly due to someone background selling a chunk but there is buying going on, the SP is pushing back up. I see 30p ahead, which will be the next barrier to cross due to the usual small margin profit takers and good luck to them, I am however in this for the long view and want to see dividends as well as a SP above a quid.
Looks like a flurry of auto sell orders to fulfill at 28p. The usual small margin traders. Once they are dealt with I think we may see similar at 30p however there will probably be a number of interested parties wanting a bit of the action on the trading update which is due soon so fully expect more to pile in and 28p wall demolished by sheer numbers.
GLA