RE: Share price25 Jan 2021 12:45
Lots of theories and taking soundbites from previous reports
August H1 report also mentions renegotiating contracts and reviewing loss making contracts, controlling costs
The uncertainty of Cv19 then (and now) meant that until those contracts were (hopefully) renegotiated, then projections to City were extremely difficult to make.
I've renegotiated "activity" type contracts with Local & Central govt during the past year and all have been reasonably easy to do, so I expect CPI to have also had great benefit from some.
All of the above was known when Schroders increased their holding above 15% at avg 38p - ESS estimate, debt, estimate future revenue and profitability.
Yes, no doubt there is debt, but the firm confirmed that they had complied (unsure why anyone says differently?) to covenants
2020 will have the benefit of ESS profits and the cost savings as a business
The substantial contract wins, that we understand will be profitable in Yr1 will help replace that profit
I would expect substantial reduction in costs in 2020, which will continue throughout 2021
In Tight margin businesses like CPI, cost control has a far greater effect on profit than increasing revenue and I expect this has been greatly managed - all non core delivery staff Furloughed, rest mainly working from home etc
I am invested here more than most and not trying to ramp (anyone who thinks these BBs affect the SP are delusional!) here is my take:
This share will be 1 pound by summer 2022.
Dropping this price now will mean even more people will take profits when price gets to mid 40s and up to 50s
II's will mop these up, all the way to 40p and even into 50s.
PI's just have to jump on and off when they are happy - I hope to take profits 48-52 but still intend leaving a decent investment for 90p+ within a year
At least, this is my plan and my reason behind why I think CPI will deliver - We will see when the RNS lands (probably next week?)
GLA
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