Member Info for GoCPI

Just a tidbit from me. H1 2022 net equity on the balance sheet was £406 million up from £296 million at the end of 2021. With the solid number of disposals in H2 2022, including a likely large accounting profit from Pay 360, and not including the other disposals plus improved profitability in H2, net equity is likely to be circa £550 million, if not more.

The current market cap of £475 million is laughable at best - and a rocket ship beckons when divs are restored - all IMO..

Therein is the opportunity for the investor who can look beyond the next few days or their 30p trading targets!!!

H1 2023 has been guided to negligible net debt and there's a clear opportunity to pivot to shareholder returns (Divs) at that time. I believe that the management will pivot and that's the bullish setup for H2 2023 and 2024. Patience is a commodity that trades at a massive discount in the market - it shouldn't !!

Traders, eh???

I keep reminding myself - keep your eye on the ball and think where CPI will be at the end of 2023 and into 2024 - anything in between is a lot of wind from traders like Aim...

This is the biggest reason why someone as clueless as Aim, who supposedly focuses on Macro and can't see trees for the woods. In the current macro environment, the biggest losers were and still will be high-growth Tech. Until an incoming recession washes out (tech and other) demand and I'm sure that industrials and consumer discertionary will also eventually roll over, and ones that will make a quick rebound will be value. BPO company like Capita sits very nicely in that sweet spot.

As I said yesterday, I don't know wher CPI can go in the near term if there is a lot of volatility and VIX jumps up as a result - we could fall into the 25s from here, but I'd be a big buyer at those levels, particularly with all the incoming outsourcing contract news. Aim - if you're really a quarter decent trader, then there are better opps to make a few bucks. Stay fixated on a particular stock without any consideration for real macro impacts, is plain St*pid.

Long and strong here!!!

Lol..zero point listening to Aim's ever changing trading views - they change direction quicker than sh*t off a shovel !!!

Anything's possible in the neat term. Could this go to 25/26p near term? Sure. I'll be adding more should it get there...

CPI news flow has been positive and any recession is likely to be mild. In my humble opinion, CPI should be big winner in 2023, particularly if free cash flow and dividends metrics get baked in. A few more contract wins will be great!!!

OK, I may be overstating the TCV in GBPs and I suggest that my quoted numbers are likely in Euros, but another key point to note is that the vast majority of the investment needed to support Freenet's customer base was mostly completed in 2020. Link below. This is why even if we assume a modest uplift from the circa Eur 230 million contract signed in 2016 to say Eur 400 million now, the impact on the P&L and mostly on Cash Flow for Capita, will be higher.

I agree that this large contract renewal should be put out in an RNS...

https://www.capita-europe.com/de/case-studies/wie-wir-das-groesste-bpo-projekt-der-deutschen-customer-service-branche-umsetzen

NF - "I'm looking to see the new 7 year contract to be worth well in excess of £250millions ". My take is that is will be in the £60 to £80 million per annum range - TCV of between £400 to £550 million. Remember that this has been stated to be one of the largest BPO contracts in Germany and given that this service has now been extended to the entire Freenet customer base of 8.8 million and incorporates a multi-channel digital service that wasn't in place previously and the contract is priced on a per customer basis, rather than on a transaction basis, that's a sweet spot for both parties to improve customer engagement/satisfaction and hopefully lead to a larger customer base - a win-win for both parties.

Read this article to get a better context/understanding for the renewed contract. It's in German, but please use 'translate to English' option as required.

https://www.callcenterprofi.de/branchennews/detailseite/freenet-ag-und-capita-fuehren-strategische-partnerschaft-fort-20237558/

Best..

The total DWP contract, when the award is made later this year, is to the order of £2.8 billion over 5 years for the five different regions of the United Kingdom. If we get 2 or more parts (out of the 5) of the tender, wouldn't that set fire to the SP?

Please check these articles out for details. It's 10 months implementation, followed by 5 years delivery, that could be extended by 2 years, and hence the reference to 94 months in the tender.

https://www.disabilitynewsservice.com/no-dwp-decision-on-2-8-billion-assessment-contracts-21-months-on/

https://www.find-tender.service.gov.uk/Notice/028407-2021?origin=SearchResults&p=1

Personally, it's immaterial to me if CPI goes to 30p this week or sometime before FY2022 results annoucement. I have my eyes firmly on the, I believe, outsized returns that CPI shares will deliver in next 12 to 24 months. Even a move up to a 50% level of what it was in March 2020, will mean returns of over 200% from the current levels. IMO, that isn't an unrealistic target. This year will be the revenge of the value stocks, IMO - recessionary concerns not withstanding. Any recession will be a shallow one at worst, I believe.

Stay patient and we'll be suitably rewarded once the management discussion pivots to dividends!!!

Yes, correct. Its the same contract renewal announced on BidStat last month. £54 million for a 7 month extension is great, but the key will be to win the new PIP assessment contract in 2023 - this is in the government procurement and won't it be fabulous if we win the larger contract renewal this year? fingers crossed!!

Nothing wrong with what Nic62 wrote - spot on, I'd say. If CPI goes down a bit from here, I'll use some of the gains from retailers like THG, ASC and buy more. I'm anticipating return to dividends with the H1 2023 results this summer. Good luck and weekend all...

No real sellers at circa 27p today I'd imagine. All said and done, this is the year of 'value' stocks, after the pounding they took last year. If oil, gas and other commodities hang around these levels and inflation stays tempered, then we should have a pretty good year. We can see this playing out in UK retail shares already. If CPI's management can pivot to dividends which are supported by sustainable cash flow from the remianing businesses, 50p plus should be an achievable target. We'll have to wait till the March update though!! It's a trading and a waiting game till then.

Dear Trenners now needs to keep talking about the 30p resistance - who knows that may also be taken out soon. ;-) Patience is the name of the game!!!

My take is, it doesn't really matter. There's enough interest in CPI for there to be a buyer for circa 4.3 million shares. it's a turnaround story and once we get a few positive earnings updates/contract wins out of the way, this should break out to highs not seen since March 2020. Even a couple of hundred % rise will be welcome news for us - that isn't exactly in the realms of the improbable come 2024.

It could be the Capita pension scheme buying these shares and hence not considered as buybacks?

It's great that CPI is holding up well today, even in the face of a sell-0ff in the US markets on 2023 recession fears, albeit a mild one. That will more be a earnings led recession, IMO, and CPI may just have enough firepower to mitigate that earnings drop. Stay strong CPI.. :-)

Cheers, Wednesday, I understood what you wrote in your 14:58 post. :-) I think it was in the 'investor conference' a couple of months ago that Stuart said he could see dividends recommence in 2024, however, there is also a case for restarting these in 2023 should a pathway to sustainable cash flow generation be seen from 2023 onwards - that's my take. JL needs to shed the veneer of caution if the financial health of the company is strong enough by H1 2023 - that's how leave with a lasting legacy firmly established in a company. That's what I'm counting on!!!

@Wednesday - do you know something we don't?

Jon Lewis' view has been that dividends will be restored when there is sustainable free cash flow from the business. Not only is CPI at the cusp of that, net financial debt is close to zero too!! That is the turnaround investment theme for me. I'm not a day trader or even a trader, and I'll hold out till 2024, if that's what it takes. We'll soon see!!

Spot on, Cashola. The huge debt level is what CPI has been struggling with since JL took oevr as CEO in 2017 (it was over £1.5 billion). Covid didn't help unfortunately. But now, the end is in sight, IMO.

Onwards and upwards!!!