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Author algardish     View Profile     Add to favourites     Ignore
Date posted 2017-02-23 13:39
Subject Soames - truthful but making errors 
Opinion Strong SELL
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At least Soames seems to be telling the truth when things are not going well, unlike the previous lot. But that truth is: wafer thin margins (wild swings to loss if revenue drops), governments extending loss making contracts because they can, Serco taking all the risk in the contracts, the Government none or little. Prison contracts not a good future revenue stream (recent documentaries). Trump ending Obamacare where SRP thought they were onto a good future revenue stream. Contract rebidding in 2018 40% I think so more uncertainty. The decision to get out of all Non Government business when now it is the Government shafting Serco with risk not the other way round as was thought a few years ago. Sold Intelenet in India in 2015 to Blackstone - bad decision!
Add to that Brexit uncertainty,(no immigrants to recruit) Living wage costs increasing......

I cant see where the growth phase he talks about is coming from. Nor when he will mention dividend payments restarting.

Valuation 33 times earnings- I dont think so!

Its a sell and the market realises that.= future price drop
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