RE: No cash no revenue23 Sep 2024 12:43
AdamWoodman - interesting you've opted to sell your shares, I suppose being on the inside gives you an advantage in knowing what things are really like 'at the coal face'...
The two main reasons I've had a negative view of CPI are:
1. CPI has not kept pace with changing times - Poor sales figs are being championed by AH and the board as a strategy to 'pursue the profitable sales and reject the unprofitable rest' which to me is a blatant exercise of pulling the wool over people's eyes. A truly competitive business would not behave this way and instead it would ruthlessly pursue all sales. For the apparently less profitable wins it would seek out ways to deliver the contractual win with a greater level of cost efficiency down the line i.e. to take the contract win and backload profits, as the contract progresses over time and savings accumulate.
2. Macros - The wider economic backdrop has become significantly worse - BoE is applying 'old hat logic' to what is a newly emerging situation. A rates hold would have been the correct strategy in the past, to deal with inflation with domestically caused inflation. However, much of the inflationary effects felt by UK have their roots in the terrible Brexit trade deals, global conflicts having caused input material price rises (food, fuel, metals), mid-term speculative bubbles (property, energy, other 'big ticket item' assets) and additional costs from covid debt borrowings. Holding rates high is going to ruin demand which will rapidly fall; causing job losses and deflation. CPI having already seen sales volumes significantly drop is going to see them fall even further, at the very moment the business critically needs them to be picking upwards.
So AH is going to come to market at somepoint with demands for more cash, it's inevitable - When he does that's when the stock is really going to suffer.
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