Hardboy
09 Feb 2015
Re: What is on? I don't know of any.They said (from memory) the details of the rights issue would be announced in the first quarter, and we are still waiting for that. Volumes have not been exceptional but are a little up on average. So (given also the state of the company) I don't think there is any stake building or likelihood of a take-over.
nk1999
09 Feb 2015
What is on? Swift move up in last couple of days. Any news here that anybody can share please?Cheers.nk
Hyperproject
29 Jan 2015
Re: Free fall 50p to go😃. Should it reach £1 I will give you a case bubbly of your choice from my profit on my bet that it would drop to 150 or below.
nk1999
24 Dec 2014
Re: Today's News Serco now seem to be stuck in a fairly narrow trading range of 160p + or - 5p. There is also apparently good institutional support for Serco around these levels. So hopefully we have found a bottom for now, until further news on rights issue comes in.Merry Xmas all. And happy investing in 2015.nk
Hardboy
22 Dec 2014
Re: Today's News NK: completely right:"What we need is a comprehensive news covering all aspects of strategic review, rights issue and refinancing etc at the earliest. Hopefully that will draw a line under the past, and start building for future."And this will doubtlessly come out with the rights issue details. I don't think they can go much faster - they have given us a high level business strategy and a time scale for the rights issue. Now they will be working on the details and the documentation which should include everything you are requesting. (The fact that it will probably be 2,000 pages of twonk with the same details repeated over and over again in different formats and contexts as such documents usually are; when 15 pages could probably be enough is something we will have to put up with. It is the way these things are done.) "came at a significant cost (£3m from memory), which was not in analyst forecast" That is far more illustrative of analysts' incompetence than Serco's overspending. Agree with your comments on PE 24 on 2016 earnings. There are far too many unknowns for that to have any real confidence.
Hardboy
22 Dec 2014
Re: Peel Hunt Any broker who halves their target price for a company (without specific bad news to account for it) is obviously not on top of the situation.
nk1999
21 Dec 2014
Peel Hunt From ADVFN:"Peel Hunt has slashed its target for Serco from 265p to just 135p to take into account a proposed rights issue by the outsourcing group and kept a 'sell' rating on the stock. The broker said that the valuation - trading at 22 times estimated earnings for 2016 - is too expensive.However, the broker said that the company's amendment of its financial covenants and a successful conclusion to the prisoner escort and custody services investigation are "welcome pieces of news"."nk
nk1999
21 Dec 2014
Re: Today's News I agree HB that Police news is definitely positive.Covenant testing delay agreement is a mixed bag, in the sense it is positive, but according to a newspaper report yesterday, came at a significant cost (£3m from memory), which was not in analyst forecats.What we need is a comprehensive news covering all aspects of strategic review, rights issue and refinancing etc at the earliest. Hopefully that will draw a line under the past, and start building for future.On another note, I read a broker note yesterday saying that Serco is still overvalued, quoting at at P/E of 24 for 2016 post-rights issue EPS. That seems high, but they must have made a lot of assumptions to come up with that figure. I hope that Serco can beat their estimates.nk
Hardboy
19 Dec 2014
Re: Today's News I think you're right NK, but when a company is being investigated by the police and the police say they've ended their investigations and haven't found any reason for to bring charges against any company staff, surely that is good news, and you don't expect a 13% drop in share price. The other uncertainties are unchanged.
nk1999
19 Dec 2014
Re: Today's News HB,I think the news market is waiting for are (1) Outcome of the review and (2) Terms of the Rights Issue.When are these due? I know the RI is to complete by end Q1 2015.IMHO these will keep drifting until we have clarity on the above.Cheers,nk
Hardboy
19 Dec 2014
Today's News I would have expected today's news to be seen as a positive by the market - apparently not.
Hardboy
26 Nov 2014
Share holdings In the last few days we have evidence of some Institutional Investors increasing stakes, and directors buying. That gives some confidence that there is a belief that the strategy being developed is going to work
lambrini girl
22 Nov 2014
Re: Free fall SELL..target £1..
nk1999
21 Nov 2014
Credit Suisse "Credit Suisse has lowered its rating for UK outsourcing group Serco from 'neutral' to 'underperform' and more than halved its target from 325p to 142p, saying that the shares are "too expensive"."After the unveiling of significant onerous contract provisions and the risk of more to come, we see huge uncertainty around the operational cash flows of the business," the bank said."
gamesinvestor
21 Nov 2014
Hadn't read thsi before previous post The outlookSerco is facing a very difficult couple of years. trying to do too much, it has been lumbered with lots of contracts that are losing money. This problem is so large that the company is taking a £1.5bn hit that will smash its balance sheet to bits: shareholders’ funds were just £1.2bn beforehand. Debt is also going up and will probably average over £800m this year. In a nutshell, its financial position is unsustainable. So it is going to have to raise lots of cash to get back on a stable footing. It will do this by selling off businesses it no longer wants and by asking shareholders for £550m in a rights issue early next year. Rights issues have a tendency to frighten investors. With Serco this looks to be justified. Any rights issue will probably have to offer shareholders new shares at a big discount to the prevailing share price, to get them to sign up.But getting back to a sound financial position is only the beginning of the process. What’s of more concern to shareholders is that the company’s profits could continue falling for some time to come. In 2013, trading profits were £285m. This year they are likely to be £140m, at best, before falling further to £100m in 2015. Soames reckons that things could still get worse than this. He reckons that revenues could bottom out as low as £3bn in 2016, with profit margins of possibly 2%, suggesting trading profits of just £60m.The trouble with Serco – and a lot of outsourcing companies – is that it is very difficult for outside investors to work out what kind of sustainable profits it can make. The problem is that it’s just not as easy for these types of company to make money as it used to be. Competition has increased and is putting pressure on profit margins. Governments have also wised up and are now a lot smarter at getting value for money for the taxpayer. A lot of risks – such as cost increases – have been passed back to the contractor.Soames has tried to offer some hope for better times in the future. Serco is going to concentrate on things it is good at, such as defence, justice and immigration, transport, citizen services and health care. It reckons that these areas can offer rates of sales growth of 5%-7% a year with profit margins of 5%-6%. If this is achievable, then perhaps Serco could be making £180m-£200m of trading profits in five years’ time. However, at the moment, Serco has an enterprise value (the market value of its shares plus average net debt) of just under £2bn, which implies the kind of sustainable profits it hopes to make are a given. That is a brave assumption to make. With a big rights issue yet to come, Serco’s shares are still trading at far too high a price to make them worth a bet.Verdict: avoid
