jevanss25

CAPITA - BUY (long term)

Long
LSE:CPI   CAPITA PLC ORD 2 1/15P
Capita's shares took a tumble today after earnings revealed;

The Bad;

£28.5mln for the first 6 months of the year (vs a £31.2mln profit for first 6months of 2019)
-9% revenue
There is also a concern on the groups ability to handle it's debt obligations (which the above has reinforced)

However;

Shares are already down 80% since covid

Capita are on course to sell their Education Software Solutions (ESS) business for as much as £500 million - which will strengthen the balance sheet significantly

Dig a little deeper into the earnings and a £42.8mln hit for untaken holiday is shown- clearly a short term covid impact

Investors have ignored the £355 million of contracts for the London traffic charging schemes awarded to the group last week

Rewind 2 years earlier - Capita had a few scandals with government contracts (army recruitment probably the largest) - a new management team has taken over and Capita has now won £80 million of contracts to help various government departments deal with the impact of the pandemic - the CEO acknowledged this renewed faith in Capita from the government "the government now regards us as a reliable, committed, strategic supplier, and that was confirmed to by a senior civil servant in the last two months"

Costs within the group look set to fall (which is of extra significance due to Capita's shift to lower margin operations) - this is evidenced by the decision not to renew leases on 25 of its 250 offices as the group look to make working from home more permanent


Comment: Shares up 15% today ;)
Comment: Rumours of a takeover bidby CVC have once again lifted shares - up 9%
Comment: Still in this
A few positions got stopped out as per the chart however I re-entered at around 25.88 (multiple positions).
Some have hit TP1 today as per the chart however most are still in play looking for the bigger gains

Comments

what broker do you use to buy shares
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jevanss25 HarryDillon
@HarryDillon, Sorry for the late reply - completely missed your message - I use TIOmarkets / Trading212. Then hargreaves lansdown for longer term investments / funds
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