Looks as if the politicians are going tough on company pension schemes suffering while generous bonus/divs are paid to Directors/Shareholders. K has agreed with Pension Regulator a schedule of payments to reduce the pension deficit, will the same politicians require quicker deficit reduction payments while limiting dividend growths below say 10% to 5% or 3%?
In the wake of the Carillion liquidation the construction sector is set for significan changes - some big contractors are already being reported as unwilling to price PFI schemes; the other side relates to new tougher regulations concerning pension deficits , bonus, dividends, etc.
Not inconceivable for this lot to go down towards the £9 mark and this might be influenced by market sentiment towards construction sector as a whole following Carillion and whether the trading update next week is as boring as the last one. However, if £11.50 is the resistance level to beat this represents a 15% potential profit on current prices so definitely one to watch for a fast buck at least.
All that will happen is as follows:
1. Contractors will moan about how awful and unfair life is.
2. A few politicians will agree and try to make a name for themselves in the conference circuit saying "Things must change...this is awful"
3. A few Academics will look for a Phd or Professorship by writing pointless papers about "How awful life is"
4. A few journals will cash in on the emotional aspect of "poor contractors and their supply chain" and talk to "experts" about what needs to happen.
5. Lawyers will run business breakfasts on how to rip of contractors and how not to be ripped off.
6. More Investors will lose money by backing the wrong contractor.
7. Wise investors will make a lot of money by following the money.
All will then carry on as normal and they will live as miserable as they always have been.
If you consider Carillion's 2016 margin, subsequent profit warnings and the role of auditors how can investors be protected from another big contractor either facing a C-situation or unjustified shorting.
I think the politicians will opt for new Regulation over payments to suppliers/subcontractors, pension deficits and dividends to shareholders which will mean contractors beefing up their balance sheets just like the banks had to from 2008 onwards.
I remain doubtful over K being able to push margins up when the UK economic/political background is that of: low growth, Boris Johnson calling for additional £100m per week spend on NHS, Brexit negotiations part 2, low UK commercial development with some Chinese developers selling a few UK assets to comply with Chineses Government restrictions.
We also have the Labour Party wanting FM/PFI Government contracts to be taken in-house which could in turn force the Government to seek more value from bidders. Overall Carillion's demise is only the start , banks need to be confident to lend to the construction sector but the Carillion fallout will take time to trickle down through the supply chain.
There will be a backlash from clients now who do not want big firms getting too much work. Galliford and Balfour suffer cus they are part of the AWPR nightmare.
Enjoy the rise today but this lot needs to get above 1150-1160 before anything worthwhile happens.
Watkin Jones over 70% rise in 1 year plus dividends. That is how you do it!!
Demise of C will provide additional skilled trades onto the market producing downward pressure on labour rates , no Industry impact on pension deficit , did BHS deficit have any retail impact, ? I am not being rude but this is flawed logic as is the suggestion that Bank lending could be affected , Banks risk assess each proposition and Cs plight has been on the Banks' radar for years .
Just really good news for Kier as the concentration ratio of the sector adjusts and Kier in prime position to benefit in classic Schumpeter process. I have upgraded my target to 1400p year end Kier will soon have a very full order book , and the maerket agrees with this by the rise today breaking out from the key 1100 level..
The loss of Carillion may not drive tender prices/margins upwards. The fallout from C is likely to mean company pension deficits, dividend payouts and bonus are subject to reviews. Banks could also reduce their lending to the sector.
Some politicians are calling for FM contracts to be brought back under Government control.
Overall I think it is too soon to say more revenue will mean better profits.
"Kier Group has put in place contingency plans for the joint ventures involving Carillion on HS2 and the Highways England smart motorways programme.
Kier said it was working closely with clients to achieve continuity of service.
It said after a short period of transition for these contracts following today's announcement that Carillion had gone into liquidation, Kier did not expect there to be an adverse financial impact on the group arising from these joint venture contracts."
Kier is well placed to pick up extensive business from the loss of C from the market place.
This is a great time to gather some KIE shares
Share price has failed to maintain the upward trend which began at the start of December 2017. It now seems to be ranging between 1050 - 1100p.
RSI showed a bit of a bearish divergence around the 8th January which seems to have proved correct in terms of a sell off down to current levels.
So Kier back on the watchlist for the moment as it does not seem to be getting out of the bit.
The ongoing media speculation over the fate of Carillion and HMG confirming contingency planning provides K with opportunities to secure work during this period of uncertainty but what about if banks at the same time reduce their exposure to construction firms?
Breaking through key 1100p marks a 10% return over three months ,throw the dividend in and its a stonking 14% return on the October entry point recommended on here .
This nicely reverses the doom mongers misplaced fears of construction meltdown
six months ago and the loon getting into power and nationalising everything that breathes. Kier will have good year with the sp reflecting the solid management of a well run company and that handsome dividend. Full order book low debt level and good sectoral diversification
i am looking for a 20% return on 12 months from here, targeting an sp of 1300p and a 4.5% dividend all tucked away in the wife's ISA
Construction will remain at around 2017 levels being driven by housebuilding ( new private and social ) but commercial and civils will continue to disappoint until this Brexit nonsense gets sorted out.
The question is will Kier continue to be regarded as rubbish by the markets or will it pull back some of the losses from this year. Some evidence to suggest that the price has broken through the previous resistance levels in terms of the negative channel which started around March last year so has come back on my watchlist. I think 1150p will be an interesting level to watch and if it breaks this we might see some growth.
Morgan Sindall have been a great buy this year, do not understand why the market loves them so much but who cares, as long as they continue to love them that is all that matters. Have taken serious profit from this lot and am basically playing with opm at the moment.
The UK growth figures coming through continue to exceed market expectations and now that the fear of a hard Brexit has subsided , although there will be wage controls , the prospects for the Uk are clearly understated and to my mind underestimated are likely to outperform all other EU countries in 2018.The UK is a tech innovative powerhouse and is at the forefront across wide sector ranges. Productivity has been lower than Major EU nations but these figures are skewed by the concentration ratios of business sizes. For example France has far more people working in large companies compared with the UK , it would be astonishing of it was less productive per head.
As far as the housing sector is concerned , for some time now there has been an increasing separation in the causal links between house prices and interest rates per se and the fortunes of house builders .
This is characterised by an increasing societal obsession with a new home and all its "new" accoutrements , characterised by the growth of companies such as Howdens to the extent that traditional fiscal tools of market constraint have been diluted in their potency . Uk has an astonishing internet home delivery take up.
We are a nation driven by conspicuous consummation and only the loon will stop the march of Veblen's ideas and the UK growth
Kier will have a good year and from here will return double digit growth net of dividend income .
How can HMG set any realistic construction budget in the short term when the overall Brexit deal is still to be agreed? I think UK construction sector will be squeezed by HMG to cut its margins and they will time the contracts for political reasons. In otherwords HMG will use its buying power, better to focus more assets on housing sector than low margin contract work.
November figures indicate a slight pick up in terms of sentiment due to policy statements but the bull needs to be backed up with real investment before we will see a real improvement. Civils projects seem to be stalling and once again due to the direction that Kier has taken this could be a real problem.
All other previous comments remain the same.
I do wonder if Kier's downward share price movement is not just down to negative construction sentiment but also management factors; contrast how the City/investors are pricing Morgan Sindall to Kier?
K have bought 3 businesses but the jury is out on value creation, when funds re-directed to the housing division could have generated better returns for shareholders. I would ask you to read today's Times and the reported bonus payout at Persimmons, helped by Government's Help to Buy strategy. The rewards were there but K appear to have missed capitalising fully on the housing sector tick up?
Glad someone seems to fall for your nonsense, probably another Kier shareholder.
No evidence to suggest hedge funds are shorting the Construction sector at all, Kier 2nd worst performer in the Construction and Materials sector over the last 52 weeks at -27% with North Midland and Morgan Sindall both over 90% plus over the same period. This makes your statement another example of the cxap you speak.
The bottom line is that the market realises that Kier are a crxp firm to invest in because they are boring and lack the risk taking attitude that is needed to impress investors.
Still made my night seeing your post because the Dundee v Rangers game was getting a bit boring.
BTW why do you not reply to my postings, especially the ones where I ask you nicely to cite your references. I am getting the impression that you do not like me either that or you cannot back up your bullxxit.
However, I have to say that there does come a point where a real investor will do some serious research on a share price and start to think there might be an opportunity to make a fast buck, even out of a dog like this,
Hedge funds doing well shorting construction sector, creates amplified sp movement
looks like Kier may be suffering from unwelcome attention .. BKG suffered same fate for a while till shorters got their fingers burned on results.
Got to take a long term view now with too many contra- construction variables stewing away in the unknown pot which the market hates. Just bank the div and forget it all to the early Spring , the market and the pound will bounce on post- trade agreement .
Could be Armageddon though , hard Brexit with the breaded loon and his mates in office
if the DUP do a volte face and force an election . I'd invest in a firm that make worry beads
if I was you , win/win sitch then.
Important message from the Financial Conduct Authority:
Posting inside information that is not public knowledge, or information that is false or misleading, may constitute market abuse.
This could lead to an unlimited fine and up to seven years in prison.
If you have any information, concerns or queries about market abuse, click here.
The content of the messages posted represents the opinions of the author, and does not represent the opinions of Interactive Investor Trading Limited or its affiliates and has not been approved or issued by Interactive Investor Trading Limited.
You should be aware that the other participants of the above discussion group are strangers to you and may make statements which may be misleading, deceptive or wrong.
Please remember that the value of investments or income from them may go down as well as up and that the past performance of an investment is not a guide to its performance in the future.
The discussion boards on this site are intended to be an information sharing forum and is not intended to address your particular requirements.
Whilst information provided on them can help with your investment research you need to consider carefully whether you should make (or refraining from making) investment or other decisions based on what you see without doing further research on investments you are interested in.
Participating in this forum cannot be a substitute for obtaining advice from an appropriate expert independent adviser who takes into account your circumstances and specific investment needs in selected investments that are appropriate for you.