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I've posted similar before on previous months, I'm still not sure I like the breakdown given, It can be read a few different ways. Just remember they need £80M a week of wins to stand still on revenue, so maybe more interesting is that they didnt appear top 10 for the month again (entry point at £60M for the month). Is this down to trying to be more selective on the Margins?
Also, previous reports in the construction enquirer showed top contractors are seeing a 40% drop in orders over 3 months to June. How much impact have KIE seen from both the general reduction in works and not winning as much of the smaller amount of works available??
They have pretty much sat in top spot on the rolling year for a while now will be interesting to see where they are in a few months as it looks like they are getting caught, and how does the rolling 12 month revenue of £1.8B compare to what they need for this side of their business?
I'm still in here and have brought my average down a little recently, but I still have doubts and hope for some clarification soon .
We all love the positive press and rolling streams of wins, but £15M here, £25M there may not be enough and may be why the prices is where it is for now.
All these wins are good news, but just keep it in perspective that they need to be winning £320M+ per month just to stand still against the reduced revenue seen in the last report.
Hopefully these wins are at a better margin, but with the volume of wins we are seeing, I would suggest that the margins are still very tight for KIE to be winning so much.....
hopefully its not just a math problem. xx number of employees we want to make redundant now who are currently on furlough, versus the cost of their salaries at £2.5k-£4k per month to keep them for a few months to gain a bonus from .gov
I would guess, like a lot of other companies, they are realising that they have had xx number of employees on furlough but the business has kept running.
They might as well make a bold statement now and getting some positive press.
Uncle_D, when Interserve went into admin they were still winning works a week before they went pop, The banks and major investors were all over them like a rash, share price was through the floor and .gov still awarded them work. They went into admin on the Friday, came out on the Monday and continued to win work and are now regularly featuring on the monthly top winners lists.... I dont think Gov really cares about the state of the company being awarded to.
BTWD, thanks for your wonderful reply with your very first post....
Many posters on here seem to love to predict 150 tomorrow, 300 next month 800 next year etc, and everyone (including me) has said that this is way undervalued. I'm now currently in here for ~25k shares with an average of 83, I got out in the high 90's for a small loss when price was dropping and back in through the 60s 70s & 80s and if I can keep my average in the 80s I will keep taking more as/when I can.
As I've posted before, I'm planning for 12 - 18 months out and will stick with it unless something drastic appears over the horizon. When this eventually gets to 150 that'll make my day, if it happens sooner brilliant, if it smashes through that and it gets me closer to my goal of packing my bags and moving off to retirement in Aus sooner than my current plans even better.
With regards my post and your reply, I did not say that they hadn't appeared regularly on the list, just that they also don't appear on it or near the top some months (Glass half empty/full), and I stated that they have been top of the yearly list for a long time, so I'm glad you fully agree with me there. I just tried to put some potential reasoning behind one of the common question here on why is the price not doing so much better when they seem to be winning so much work etc etc etc., and alluded to something else thats been posted here a few times, that they need to win an awful lot of works just to stand still, so its great to see them on the lists, but maybe it should also be viewed with a hint of caution.
I'd like to think I know a little about the bid process for major works having run many successful bids from both sides of the table over the last 30 years, and again completely agree with your statement on timelines, although a response in weeks after closure is a little optimistic, but hey, thanks for the heads up on that.
As for my blindingly obvious statement, yep it is, but it doesn't stop people posting regularly for the last 6 months or more on "why is the price so low", so maybe not so obvious for everyone.
I dont post too often on boards like this, but I do like to try and reflect a little on both good and bad news and make my own opinions on how things are likely to work out (I really got it wrong on Connaught lost £100k and a job when they went, and IRV did me no favours, but we live, learn and grow). What I'm not going to do is keep posting headlines and guessing tomorrows price and then wonder why nothing much seems to change. So if putting out there the odd alternative view to spark a different type of discussion/thought other than ramp ramp ramp (Thanks for your reply, I dont get many :) ) or even posting the blindingly obvious just makes one person stop think and do a bit more research before jumping in then my day has been a good one.
Just note that although they topped the chart in May it was generally due to a large one off win, prior to that I believe they did not feature on the list in some of the previous months, In april I think they topped the years wins, but were not in the month list at all.
The fact that they are top of the years list is great, but not being on the list for some months earlier in this calendar year, indicates that a lot of their wins may have come before the new team were in place and had controls on margins in their bids?!
So yes great they are winning work, but being top of the list may not be such a good indicator for this year.
Also, not being on the list in some of the earlier month in the year may indicate an impact on revenues going forward, it will be interesting to see if they can maintain a regular place on the list, whilst they are also being a bit more price/margin sensitive.
A clear positive update from Kie will be the key driver here, No reasonable update may see this stagnate for another 6 months+
Weststowpods - my only real fear and caution here is based on the "once bitten twice shy" saying.
I worked at IRV for many years was involved in share schemes and personally bought in based on the internal narratives at the times. As news on debt piles etc came out and the price fell and rose and fell more and rose and fell more (you get the picture) everyone was saying exactly the same as on here, it was a good underlying business, winning loads of work etc etc. even at the end everyone was adamant it would survive, which it did, except everyone still invested lost everything including some major players.
As I watch the price continue to fall here I always have a nagging doubt that IRV have shown another way for a major contractor to deal with its debt....If there hadn't been a good underlying business at IRV it would not of re-emerged on the Monday and carried on business as normal.
The underlying issues which brought kier to this position have not yet been seen to be resolved. This is a company with a major debt issue which they were looking to partly resolve with the sell off of profitable parts of the business. CV has put a big dent in those plans.
Until KL is sold and recovery on the debt can physically be seen, not just covered in sound bites, then I think this will be held back. Yes they are seen to be placing on a lot of frameworks etc, but you could argue that they need these just to stand still. What frameworks that they were on have expired? what frameworks havent they won a spot on? I read something the other day showing KIE were a long way down the recent win lists for major contractors, there are recruitment freezes/proposed redundancies and new directors now not being brought on-board (not sure how accurate it all was), and some of this could be seen as good news, but I dont think any of this is the news needed to steer KIE back to where we hope it will be.
I'm here for the long haul, If this jumps in the next few days/weeks/months then I'll be cashing in sooner, but I suspect this is a 6 to 12 to 18 month recovery, and only on the back of truly positive news. All those jumping in daily with their it'll rise today , 200 tomorrow types of statements dont help, but hopefully will be right one day.
With the sale of KL somewhere around the corner, it might be that the price reflects the point that Kier will soon be without its house building business and they are unlikely to see any upsides from return to work in this sector?
I would guess that although Kier has weathered the Covid storm reasonably well and kept a lot of projects moving, there will still be a financial impact which coupled with their current debt, may keep things suppressed until the sale of KL and maybe further whilst people wait to see if an honest recovery is on the cards.
Also, with the reduction in house building at the moment, it might be some time before KL is valued at what ever number Kier need for their debt recovery so the whole recovery process is stalled for longer than expected and price remains suppressed. At the end of the day the issues surrounding Kier have not gone away and any possible solution is delayed further.
All that said, I got out of here at about 96 with a small loss, got back in at about 79 and going to give it 6-12 months to see where it goes from here. IMO theres a good underlying business but it has its issues and only time will tell.
Ha Ha Ha I bet this gets stamped out pretty quick, although the Heathrow challenge may open the door for more of these things. Pretty much just delaying the inevitable I think.
From the BBC
TV naturalist Chris Packham has launched a legal challenge to HS2 high-speed rail link.
The Springwatch presenter said the government's approval of the controversial project fails to take carbon emissions targets into account.
Mr Packham said: "In regard to the HS2 rail project I believe our government has failed."
The Department for Transport (DfT) said it was considering the challenge and would respond "in due course".
Mr Packham said that the Oakervee review into the project's spiralling costs and delays was "compromised, incomplete and flawed".
Just remember that Interserve proved you can go bust and have little to no impact on Gov contracts, and even win more contracts whilst going bust.......
A precedent that should not be forgotten or overlooked.
Personally I think Kier has weathered the worst of the storm, but Interserve did demonstrate another way to resolve debt issues.
Hi uamalik1, lots of different views out there, but I dont think this is one that will now go bust, I think the time for that has come and gone, however I dont think in immediate terms that this one is as rosy as some are trying to paint. There is an underlying debt issue which still needs to be resolved.
Lots of good news stories, rumours and clutching at straws out there, but I think until real news lands such as a factual sale of KL, demonstrateable and sustainable reduction in debt etc then this one is not going to be the high achiever everyone keeps predicting.
Long term this could fly, but any news that shows that despite what everyone is hearing debt reduction is not actually making that much impact, or a long delay in sale of KL, and this could easily drop back down below 100 before we see a true recovery.
I've been in, out and back in to this one and hoping for slow and steady recovery towards 200 over the next 3-6 months
Their re-instatement may be more led by the fact that most tenders/contracts with the public sector now have a mandatory requirement to sign up to and accept a prompt payment code. If they are not prompt payers then they can be removed from contracts/not allowed to bid for new ones. Releasing cash to resolve payments to subbies is a no brainer and not necessarily a sign of business improvement/better cash flow.
Bigtibbs, I wouldn't say you have bought into a failure, I think this could still go either way, its how willing are you to see out the gamble is the question....
There are plenty who will tell you one bit of the right news and this will jump back up to 200+
Equally, there are a lot of similar vibes here that preceded Interserve, Carillion and others.
Unless I've missed something, I can see no obvious reason for the drop in the last couple of days, much the same as the jump a little while back.
My personal feeling is that people are waiting for some real news and until then this is a guessing game. The release of things like contract/framework wins are not "real news" for me, any business needs to win work just to stay afloat, so I see these as business as usual types of statements rather then something to get excited about. If they weren't winning works I'd be worried.
Some good appointments, sale of the right bits of the business for the right money and a good next business update and this could turn around quick.
FYI I got out of here yesterday.......
my2penneth, it isnt the government that states the price of the contract, it is the bidding companies.
If Kier and others want to bid at almost 0% margins it is not the governments fault....Yes the government will typically choose the lowest price regardless, but they are not the ones putting that price in. If companies all submitted pricing at around 10% Margins then the Gov would accept those prices, but companies wont because they need to keep winning work and the only way to do that is to be cheaper than everyone else......
The bid process does try to be fair to all parties, and not usually rely just on price and most bids are submitted on the basis of a quality score and a price score, but there is little to differentiate the bigger companies with regards the things they promise within the qualitative element, so it will nearly always come down to price.
The issue is shareholders etc who expect to see the companies with huge pipelines, winning works and growing so they can get their bit of the pie, which has driven companies in a race to the bottom on price. Being seen to be the one winning the next prestige project or getting on a specific framework is more often more important than the margin it is won at in the hope of making margins back on variations etc to the initial contract spec.
There are many "non construction" industries which can happily still operate and bid in the 20% margin regions, but these are typically not big players working on a headline project. For example a Water Hygiene company wins a £0.5M/yr 5 yr contract to sample for legionalla etc across a residential housing provider is not headline making, but there is a good chance it will be priced between 15% & 25% GM.