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@JG68
And there lies the problem - CPI have not YET proved that they have been turned around and those large contracts are profitable ....
BUT when they do prove the above .... this will absolutely fly ...
Just need to be patient!
I was on Jury duty yesterday and got chatting to a current CPI employee (of some years standing) and he was very positive about the company and the transformations that have been implemented under JL.
I know JL isn't often flavour of the month/year (on this forum) but the guy I was chatting to couldn't praise JL enough and he was also mega positive re: Aldopho joining and the ways that his Amazon experience could be utilised to cut costs and improve profitablity.
Ha a fellow juror overheard our conversation and said she was going to buy some Capita shares after listening to our discussions .
I'm going to do an AimMaster .... and make the call .... I think the bottom is in here ... and we will never see the 15s ....
That's probably the kiss of death ... but that's what I think!
@NoFear
Welcome back - glad you are not locked up! - we would all miss you (well most of us would miss you anyway 😁)
This share seems to like to sit range bound for long periods of time before zooming upwards or downwards....
Just need to be more patient ...
@mylordflashheart
Thanks for your kind words. There is just so much ramping on this board that it can get a bit draining. NoFear seems to have disappeared (perhaps he's been locked up in the funny farm) and sharehead has replaced him as ramper in chief.
I think most people here are in a hole - I'm personally in a crater - and only time will enable us, hopefully, to escape.
This is not a share to watch every 5 minutes however, like you, I can't help myself
Best wishes Trenners
@JG68
I didn't hold a lot of hope re: II roadshows drumming up more support - they have rarely delivered anything substantial.
I think Crispen Odey became a new II in the early part of the year (but I think he sold out at 27p) when he had to resign from his funds. 27p looked a ridiculously low price then .... he had a lucky escape!
Unless we get some unexpected news then I think we are stuck here for a while.
It doesn't seem to want to break 18p and British Bills will be recommending a SELL tonight as it's dropped below 17.44p.
Ha the only person making money at the moment is AimMaster who seems to be able to scalp a few % points as we bounce around in the 17s.
I do think though that our patience will be rewarded ... I just don't know when 😁
@Xenor
I totally agree - let's get to 20p first - I seem to remember plenty of people here predicting we'd be back over 20p by the end of September... well I know we've got a few days left .....but that prediction is looking pretty lame at the moment.
Nice to see Schroders buying back the shares they sold in August though ..... that was another wrong prediction by the doomsayers who suggested Schroders were selling up!
@RA11
It's probably unwise to try and predict a bottom in a share but, historically, CPI has never traded below 20p until now.
A lot of people have lost a lot of money over the last 5 years buying CPI shares (as the price plummeted) and the MMs haven't forgiven CPI for that loss and the share is unloved.
IMO - CPI is really a dividend stock that currently isn't paying a dividend! It runs big government multi-year contracts and creates huge quantities of revenue. But are those contracts profitable? CPI say they are - MM aren't so sure and want more evidence!
Looking at the last set of number and what IR stated afterwards - those contracts do look profitable and the size of contracts being awarded to CPI is growing not least a half billion pound contract confirmed last week.
There are still some headwinds in the H2 2023 results (due to be announced in March 2024) as exceptional items are likely to affect short term profitability again (as was the case in H1 2023 results).
So - if the exceptional costs are below MM expectation or if the underlying profits are higher .... we can expect this to head towards 50p in March 2024.
If H2 2023 results are as expected then we are going to need to wait until August 2024 for the H1 2024 results before we head to 50p.
Of course - any talk of resuming dividends is going to make this rocket.
As for £1? I would like to conquer 50p first but with solid growth, profitability, new CEO and dividend .....no reason that this shouldn't be trading at £1 in 2025.
That's my view and I'm happy to hold into 2025 because if I'm right then I'm going to see 5 X my investment
If I'm wrong - I can't see these shares being lower than they are now in 2025 as I firmly believe CPI won't go bust!
@Xenor
The thing is that, very often, when you buy into a share it continues to go down .... so you've, on probability, got to be wrong before you become right (and the share rises).
I think we could see some upward momentum once Adolpho starts (and even more momentum if Adolpho makes a big purchase) but it's looking like 2024 now for spectacular rises (unless something comes out of the woodwork).
I'm just sat tight now - not averaging down anymore - and I'm waiting for the tide to come back in! My first target is 33p (which allows me to pay off my mortgage) and my next target is 40p and beyond running a 10% trailing stop loss once we cross 33p.
That's probably not going to be until next August ... but who knows what goodies (or nasties) the December update and March 2024 results will show!
But as long as we don't go bust .... happy days!
@Xenor
I would hardly call a 19p average awful as I would imagine that a huge number of LTHs here (including me) have much higher averages.
Historically, before this latest drop, I don't think this share has traded much below 20p.
IMO - what's important now is not to dwell on the "awful 19p" average but to plan at what price you will cash in your shares.
PIs usually sell too quickly (when the shares start to rise) after suffering a paper loss .... and that leaves II (such as Schroders holding at an "awful 46p" average) to enjoy the massive returns for long term ownership.
@sharehead
It's never been lack of revenue that has held back this share - it is perceived lack of profit on that revenue.
As soon as we can show profitability is improving (and the costs from the data hack are known) then this will rocket .... but until then .... An air of distrust will hover over this share ....
I was of the opinion that this would bounce back into the 20s when the MMs returned to their desks after St Ledger Day ..... but I was wrong ....
Without confirmation of improved profitability I think we are stuck here for quite a while ....December update maybe? .... March 2024 FY results possibly .... August 2024 H1 results probably ....
If a half billion pound contract can't move this upwards .... it's pretty clear what the market is waiting for ....PROFIT
@sharehead
Problem is - that it's only me and you that seem to see this opportunity.
Having languished below 20p for more than a month now - I was hopeful that things would have started to stabilise a bit.... but not so far!
@Barbyard
Maybe tripping is overly optimistic but here are some things that could see very significant moves (in SP) over the run up to Xmas:
1. New CEO joins
2. New CEO buys 1 million plus shares
3. New II announced
4. ICO announces conclusion of attack investigation and no (or minimal) fine.
5. Positive trading update in December
6. Major contract wins
7. Takeover
Although I don't really believe that 7. Is going to happen - I do believe the other suggestions are highly likely ... and the share price won't be 16p after just one of those events!
@Josey
I think this gives at least 100% return - and possibly more - within 11 months. The key date for this share has got to be August 2024 as, assuming dividend reinstated, then this will rocket.
Historically 33p a share has been deemed cheap .... but with a new CEO and a dividend ... this could easily go beyond 50p.
I do agree though, with a 3 to 6 month time frame, that 35% to 50% gain would seem realistic
Here is the investment case for CPI (copied from a post on the ADVFN board)
There are a number of one offs that should dissapear from cashflow during H2 2023 or H1 2024, obviously there will be new one offs, but the savings are substantial:
Pension defecit is now eliminated and in surplus, saving £15 million per half year in payments.
Cyber Incident has more costs to run, but hopefully the chance to offset that with the eventual insurance payout by next results. A one off in any case.
Interest payments should decrease with the continued repayment of debt.
Net capital lease payments should also improve cashflow and are hopefully getting boost from asset sales. I would imagine this will be a longer term headwind, buy will see incremental improvement in lease liabilities. I see this as the long tail of the transformation.
Working capital rocketed vs H1 2022, mainly as a result of trade receivables, much of this was non-cash adjustments. I would assume most of this is a timing issue and not something to be overly concerned about.
I'm not saying all of this should be discounted, other things "one offs" are sure to take the place of some of it. But there are an unusually large number of (understandable from a PI point of view) one off issues that affected cashflow in H1, much of it will be gone in H1 24, possibly by the end of year.
Combine this with £40 million in cost savings and accelerating revenue growth and I see some healthy comparisons over the next few years. I still think it will be 2024 before we see any announcements on dividends, by which time cashflow should well in to positive territory so long as we continue along the same trajectory.
Capita claim they intend to double the EBITD margin, EBITDA is currently £115 million, with amortisation coming in at £15 milion, so 100 million of EBITD and a margin something around 7%. The target then is for an EBIT number of £200 million excluding growth. I'm not sure how a company generating £200 million in EBITD retains a market cap of £300 million. I'm not even sure how a company generating £100 million of EBITD with a clear path of improvement can remain on a £300 million market cap.
The book-to-bill ratio is the ratio of orders received to the amount billed for a specific period, Capita maintained that ratio at '1', in other words they were renewing the business they completed but not meaningfully increasing it. Last year the number cam in at 1.2. That ratio currently stands at 1.5, probably an unsustainable number, but it's a good indicator of near term growth. I'm hopeful we'll see us around 1.2 by year end.
The investment thesis is not that Capita are perfect now, it is that the groundwork has been done and that Tim Weller (FD) knows alot more about current Capita financials than we do !!
@Xenor
Question is - are you gambling or are you investing?
A gambler would look to cut their losses and gamble elsewhere.
@AimMaster is a trader (which is a fancy name for a gambler) and switches into and out of shares very quickly (scalping, hopefully, 5% plus per trade).
An investor invests for the medium / long term (a bit like when you invest in property) - short term movement in house prices don't worry me because I'm not selling!
I don't see Schroders moaning that they bought 19% of the company at 46p a share .....
@sharehead
I agree (be greedy etc) and I think the CFO purchase does put some sort of floor under the SP as he is best placed to see and understand the profitability of this business ... and if he's prepared to put £90k into CPI ... then that's a pretty good sign.
I think we said, previously, news is going to be needed to substantially shift this SP upwards but,.like you, I am too of the opinion that a gradual rise towards 20p is more than probable ahead of the December update.
@Davis_10
Most PI sell too soon and miss the spectacular rises that can be achieved by long term share ownership.
For example - all those PIs who bought Rolls Royce at 75p and patted themselves on the back for banking a 33% profit when they sold at a £1 - are now kicking themselves as the share approaches £2.40 (which is what it was pre COVID).
An actuarial friend of mine simply advised that I should be selective in what I bought and then simply hold. I know Warren Buffet has said similar things.
There are lots of people here, invested in CPI, who are quite happy to scalp 5% or 10% or even 15%, and trade this share very frequently BUT if this ever returns to pre COVID levels (of £1.70) - they would have sold out ages and ages before and the true LTH (like Schroder) will be the ones banking the massive profits. I'm not advocating this will get back to £1.70 any time soon btw!
I wouldn't beat yourself about not selling at 50p as hindsight is a wonderful thing ...
Remember ... shares zig zag and you should never sell on a zag .... because another zig will be along in a minute😕