Babcock International Group

Babcock International Group

Babcock International Group Socially Speaking

Babcock International Group News, Fundamentals and Discussion on:

Interactive Investor | Financial Times | ADVFN | Motley Fool | Proactive Investors
Ayondo
Ayondo

Babcock International Group on Social Media


Babcock International Group RNS, News & Media


Headline
15 Mar 2017
News - Babcock International boosted by Liberum Capital upgrade on "compelling" valuation from Proactive Investors
14 Mar 2017
RNS press release - Realignment Presentation from Proactive Investors
28 Feb 2017
News - Babcock International's shares rise as it expects to meet full year targets from Proactive Investors
28 Feb 2017
RNS press release - Trading Update from Proactive Investors
24 Feb 2017
RNS press release - Holding(s) in Company from Proactive Investors
15 Feb 2017
RNS press release - Holding(s) in Company from Proactive Investors
9 Feb 2017
RNS press release - Holding(s) in Company from Proactive Investors
7 Feb 2017
RNS press release - Director Declaration from Proactive Investors
3 Feb 2017
RNS press release - Holding(s) in Company from Proactive Investors
20 Jan 2017
RNS press release - Director/PDMR Shareholding from Proactive Investors
5 Jan 2017
RNS press release - FOMEDEC Contract Award from Proactive Investors
12 Dec 2016
RNS press release - Director Declaration from Proactive Investors
28 Nov 2016
RNS press release - Holding(s) in Company from Proactive Investors
28 Nov 2016
RNS press release - Director/PDMR Shareholding from Proactive Investors
23 Nov 2016
RNS press release - Holding(s) in Company from Proactive Investors
23 Nov 2016
RNS press release - Holding(s) in Company from Proactive Investors
22 Nov 2016
RNS press release - Half-year Report from Proactive Investors
21 Nov 2016
RNS press release - Contract Award from Proactive Investors
21 Oct 2016
RNS press release - Holding(s) in Company from Proactive Investors
17 Oct 2016
RNS press release - Capital Markets Day site visit from Proactive Investors
13 Oct 2016
RNS press release - Contract Award from Proactive Investors
4 Oct 2016
RNS press release - Publication of Final Terms from Proactive Investors
23 Sep 2016
RNS press release - Holding(s) in Company from Proactive Investors
20 Sep 2016
RNS press release - Publication of a Prospectus from Proactive Investors
16 Sep 2016
RNS press release - Holding(s) in Company from Proactive Investors
8 Sep 2016
RNS press release - Contract Award from Proactive Investors
16 Aug 2016
RNS press release - Director/PDMR Shareholding from Proactive Investors
29 Jul 2016
RNS press release - Director/PDMR Shareholding from Proactive Investors
21 Jul 2016
RNS press release - Result of AGM from Proactive Investors
21 Jul 2016
RNS press release - Annual General Meeting Trading Update from Proactive Investors
20 Jul 2016
RNS press release - Holding(s) in Company from Proactive Investors
8 Jul 2016
RNS press release - Holding(s) in Company from Proactive Investors
28 Jun 2016
RNS press release - Director/PDMR Shareholding from Proactive Investors
22 Jun 2016
RNS press release - Director/PDMR Shareholding from Proactive Investors
20 Jun 2016
RNS press release - Director/PDMR Shareholding from Proactive Investors
17 Jun 2016
RNS press release - Director/PDMR Shareholding from Proactive Investors
16 Jun 2016
RNS press release - Director/PDMR Shareholding from Proactive Investors
16 Jun 2016
RNS press release - Annual Report and AGM Documents from Proactive Investors
14 Jun 2016
RNS press release - Director/PDMR Shareholding from Proactive Investors
3 Jun 2016
RNS press release - Total Voting Rights from Proactive Investors
31 May 2016
RNS press release - Additional Listing from Proactive Investors
25 May 2016
RNS press release - Final Results from Proactive Investors
20 May 2016
RNS press release - Contract Announcement from Proactive Investors
18 May 2016
RNS press release - Holding(s) in Company from Proactive Investors
12 May 2016
RNS press release - Director/PDMR Shareholding from Proactive Investors
12 May 2016
RNS press release - Director/PDMR Shareholding from Proactive Investors
13 Apr 2016
RNS press release - Director/PDMR Shareholding from Proactive Investors
13 Apr 2016
RNS press release - Director/PDMR Shareholding from Proactive Investors
14 Mar 2016
RNS press release - Director/PDMR Shareholding from Proactive Investors

Babcock International Group 3 Month Chart


Babcock International Group Discussion on Interactive Investor

Realignment presentation by sharegardener

  Thu, 16 Mar 2017 17:25:00 GMT

Hi all,
there may well be a few broker/analyst emissions following on from yesterdays presentation and Q&A. The webcast and slides are up on the website - replay takes about an hour. All subjective and aimed at putting the best gloss on their business of course.
The existing 4 divisions are regrouping into Sectors. (slide 18) essentially it becomes ground (Land), air (Aviation), water (Marine) and atom (Cavendish Nuclear). The aim is to build on growth but cost agnostic.
Archie Bethel new CEO gave an overview of BABs main activities and a run through of his 5 year strategy review - as you would expect of an incoming CEO, though he has been at Babcock a long time. He specifically said he wasnt giving any new guidance on this years performance which will only come out at the finals in May.
The main emphasis was on BABs areas of future growth, pushing their UK formula into international markets. The combination of engineering expertise around complex infrastructure and their long customer relationships give high barriers to entry but the slides give detail on their main contracts with values, the competition and growth prospects.
They will integrate training with maintenance of fleet across military and civilian areas. They are particularly pleased at winning the French Airforce contract but think this approach has potential into other countries and across civil aviation as well as other fleets eg Fire and Police etc.
The usual analyst crowd were asking tame Qs. (Cr Suisse, Liberum, Jefferies, Deutche etc)
The main responses I noted were
- South Africa flat with little growth prospect
- Rail has improved to 6% margin from 3% but keen to offload as long term returns are poor value
- the new sectors will take time to bed in but will be more efficient with tech support and with improved flexibility for overseas contracts.
- keen to develop dockyard contracts and see growth potential worldwide
My impression is that BAB have very diverse expertise and a high contract renewal rate. They are targeting non-military and international bids as well as having a strong and long term military offering. The trouble is that contracts may only produce returns over 10 years or more so visibility of earnings & cash flow not always clear (to me).
No one mentioned Faslane & Rosyth in relation to the Scotland uncertainties in fact I dont recall mention of Brexit either!
The share price has struggled ever since the Avincis rights issue but to me looks oversold at 900p. Im holding for the long term as divi returns are fairly consistent and the growth prospects sound realistic with a focused management team. We will hear of this years progress in May.
SG


By sharegardener

Re: liberum note says buy by nk1999

  Wed, 15 Mar 2017 20:55:00 GMT

Some details from ADVFN:

"Engineering support and outsourcing company Babcock got a boost on Wednesday as Liberum upgraded its stance on the stock to 'buy' from 'hold', maintaining its 960p price target.

The brokerage attributed the upgrade to the fall in the share price and attractive metrics relative to the peer group.

In addition, it noted the business should deliver 6-7% revenue growth in 2018, which makes it too cheap to ignore.

The brokerage said the company trading statement in February guided to an in-line performance. It expects total group revenue of £5.1bn in FY17 versus £4.8bn in FY16 at a steady margin of 11.4% compared to 11.1%.

Liberum forecasts total profit of £576m in FY17 versus £540m and maintains its estimate for FY17 underlying earnings per share of 80.2p compared to 74.3p. It reckons the dividend will be upped by 8.1% to 27.9p.

The brokerage noted that at the seminar, management re-iterated overall guidance of 6-7% organic revenue growth, and it expects that around 1.5% growth will come from the contracts on the Met Police, Qantas and FOMEDEC (French aircraft training).

"We believe that this growth is achievable and makes Babcock stand out in a market bereft of growth."


By nk1999

liberum note says buy by valeite

  Wed, 15 Mar 2017 09:03:00 GMT

new price target £9.6

By valeite

Shore Capital by nk1999

  Thu, 26 Jan 2017 21:03:00 GMT

From ADVFN:

"Following BT's shock profit warning linked to a deteriorating outlook for UK public sector work, broker Shore Capital wondered "when will Babcock warn?"

Babcock's shares fell around 2% on Wednesday as investors read across the implications from BT and had also fallen in sympathy with Capita when it warned on profits last year.

With circa 70% of the group de-facto dependent upon the UK public sector, ShoreCap felt the market was expecting a similar warning from Babcock, even though the profile of services delivered and the infrastructure supported is "more than a little bit different" to BT and Capita.

"Babcock supports essential and critical infrastructure with professional engineering support services that attract less discretionary spend, but still support additional ancillary revenues. We see a very different, lesser revenue flow 'risky' profile," wrote analyst Robin Speakman.

"This is not to say that pressures on UK public spending are having no effect on Babcock, it cannot be totally immune, but it is difficult to delay spending on that decommissioning nuclear reactor, in servicing that submarine, or leaving a gap in national electricity grid infrastructure."

He said Babcock undoubtedly has other issues to address, namely convincing investors of the strength of its long term profitable growth potential.

But the weakness in the shares was a long term buying opportunity, the analyst said investors should not have too long to wait as the company updates on its third quarter on or about 28 February.

Looking at the new financial year, he pointed out that Babcock shares were trading at 10.6 times 2018 forecast earnings on a free cash flow yield of circa 8.0% with debt-to-EBITDA falling to circa 1.4 times.

Speakman is not alone, with Morgan Stanley recently expressing its preference for Babcock among the government outsourcers, with the continuing pressure on growth due to increased competition and fewer large outsourcing opportunities seen as more of a worry for Capita."


By nk1999

deutche downgrades by valeite

  Mon, 09 Jan 2017 10:26:00 GMT

deutche downgrades from buy to hold and reduces target price from £11 to £10.2 ,basically sees a lack of upside

By valeite

Re: Bought 920.20 by pasak

  Fri, 09 Dec 2016 09:53:00 GMT

That level was the confluence of two trend lines, as was the PRU sell. It was a limit buy. I had the orders in for days, if not 2-3 weeks. The science is very simple.

By pasak

Re: Bought 920.20 by Our Haven

  Fri, 09 Dec 2016 09:41:00 GMT

Well your timing looks spot on for today Pasak. Some of the industrial sector has been doing well against financials post Brexit but it is largely dependent on foreign earnings. Have confidence Babcock will see an upturn soon.

By Our Haven

Bought 920.20 by pasak

  Fri, 09 Dec 2016 09:21:00 GMT

I've bought here at 920.20. I'm hoping this level will represent the moment that the market rotates back to industrials from financials. Sold PRU two days ago at 1645, near the highs. Identifying technical buy/sell levels and working the spreads between sectors in conjunction with the predetermined levels is the safest way I know of getting good returns. Even if I'm wrong, the spread should work in my favour.

By pasak

Forecasts on BAB looking good! by Komatsu100

  Tue, 06 Dec 2016 18:05:00 GMT


LINK

Support star

But the medicines mammoth isn't the only Footsie stock with dynamite dividend potential. Indeed, the number crunchers also expect payouts at Babcock International (LSE: BAB) to continue shooting higher in the years ahead.
The support services colossus is predicted to hike last year's 25.8p per share dividend to 28p in the 12 months to March 2017, and again to 30.4p next year. Consequently the yield canters to a chunky 3.2% for next year from 3% for 2017.
And these spritely projections are underpinned by robust growth projections too. For both 2017 and 2018 Babcock is expected to post earnings advances of 8%, figures that also create ultra-low P/E ratios of 11.7 times and 10.9 times.
Babcock saw organic sales miss analysts' targets during April-September, reflecting current contract phasing issues and a weak South African economy. Still, I believe the company's strong order book illustrates the firm's excellent long-term potential -- £2bn worth of new orders pushed the book to £20m in the period. And a bid pipeline of £10.8bn looks set to propel organic growth from 2018.


By Komatsu100

Re: Half year report by sharegardener

  Sat, 26 Nov 2016 21:10:00 GMT

some analyst comments on the results
Goldman
Babcock reported slightly weaker-than-expected 1H16 results this morning, with organic growth of 4% vs. our expectations of 5%. Total revenues and EBITA including JVs was broadly in line (1% ahead) with our estimates as the company benefited from FX and delivered stable profitability. The bid pipeline was replenished successfully and is up to £10.8bn (from £10.5bn at end FY16), reflecting a £3bn intake during the period. Revenue visibility is strong, with 93%/63% of FY17/FY18 revenue already under contract. The group pension deficit went up by £60mn y-o-y, reflecting the change in interest rates (up to £261mn). Cash conversion post capex was 79%, up from 73% in 1H16. The outlook for FY17 was, as usual, qualitative, with Babcock expecting continued good progress for both this year and beyond. Despite the slightly slower organic growth in 1H17, the board expects the full-year results to be in line with its expectations.
Overall, 1H17 was slightly weaker-than-expected owing to more pronounced phasing of revenues towards 2H. The organic growth slowdown in 1H17 was largely driven by support services on a slowdown in decommissioning JVs. We believe the company is well on track to deliver 6.8% yoy organic growth rate for the full year supported by improving bid pipeline and stable win rates. While slower 1H growth rates might create some concerns over the outlook, in our view the market expectations were already for organic growth to be weighted more to 2H.
Jefferies
On track to meet consensus FY17E expectations. Outlook comments stress that “despite slightly slower organic revenue growth, the Board expects the full-year results to be in line with its expectations. We therefore remain confident of making good progress both this year and beyond”. In our view, FY17E consensus organic revenue growth estimates may drift to c.4% given the H1 trajectory but higher margins offset, and EPS estimates are likely to remain unchanged.
Reiterate Buy rating. Our unchanged 1330p price target applies a 17x CY16E PE multiple, which should be attainable given a 9-19x through-the-cycle historical range. At the current share price, the FY17E FCF yield is 5.3% and 6.1% before the additional cash pension payment. Risks include mobilising increasingly large contracts and managing international expansion.


By sharegardener

Re: Half year report by sharegardener

  Sat, 26 Nov 2016 20:20:00 GMT

The presentation webcasts are always worth a listen - but 1 hour long with Q&A! This was Archie Bethels first.
BAB are big and international with a diverse spread of complex contracts across military & civilian sectors. To me this makes it difficult to pigeon-hole them into any one category (outsourcing, infrastructure, support services, defence, construction, aviation etc). They are a niche player going after specialist contracts and have a bid win rate consistently around 40% and 90% for contract renewals. A lot of what they do is so specialised they see SSRO (single source regulations office) as a threat but can also be viewed as a strength as there is unlikely to be much competition (nuclear power & subs perhaps).
Contracts run over many years so the final return is difficult to estimate. Overall they build long-term customer relations which is reflected in the high renewal rate.
Positives
New contract with French Air Force may be the start of penetration into European military markets - training/simulation as well as maintenance.
New dry dock JV in Oman - they already do a lot of naval work in Oz & Canada so expanding footprint is good.
Aviation work with AlItalia & Quantas as well as in MCS going well
Organic growth from better cross-integration and deleveraging debt is being prioritised over more acquisitions

Negatives
Some contracts delayed or phasing will push income into 2018/19
Bid pipeline & current margins are flat so growth prospects may rely on new customers
South African contracts struggling at present
They see a 2nd Scottish referendum triggered by brexit as a potential threat to the income from nuclear subs
Amortisation of intangibles is puzzling (to me!)

Im still holding for the long term and aim to buy more if theres a drop below 900p
good luck all, SG


By sharegardener

Re: Half year report by Rhigos

  Tue, 22 Nov 2016 18:27:00 GMT

This is only SP negative thing I can find about BAB

LINK

Extract from above link:
“However analysts said its share price fell on a comment on slower internal growth and concerns for the outsourcing services sector after a second profit-warning in as many months from Mitie on Monday. The shares were down 6 percent at 931 pence by 1154 GMT.”

It appears problem is sector related rather than company specific. I would rate it now as a buy.


By Rhigos

Good buying opportunity by Trapper Jim

  Tue, 22 Nov 2016 18:11:00 GMT

Doubled my holding today at 939

By Trapper Jim

Half year report by Rhigos

  Tue, 22 Nov 2016 10:22:00 GMT

Profits +7%
Revenue +6%
Operating profit +5%

Chief executive Archie Bethel said: "Babcock continues to perform; delivering growth in revenue, profit and earnings, and maintaining healthy levels of cash generation and conversion. The long-term visibility provided by our £20 billion order book and substantial pipeline of opportunities underpins our future growth.

"Our UK markets remain positive, with the Group well positioned for the significant future outsourcing opportunities expected from both our defence and civil customers, and we see growing international demand for our specialist and complex engineering support services. Despite slightly slower organic growth, the Board expects the full-year results to be in line with its expectations.

"We therefore remain confident of making good progress both this year and beyond."

So why has SP fallen a 4.2% this morning !!!!

I must be missing something. Now showing a CG of -4.9%, when last posted in Oct was +2.9%. I should have followed through and sold at least a part of my BAB share holding :-(

Broker consensus BUY.

Waiting for jam tomorrow.


By Rhigos

Investors Chronicle article by Rhigos

  Fri, 21 Oct 2016 18:06:00 GMT

Link to article by Phil Oakley that appeared in last weeks Investors Chronicle on outsourcing companies. There is a lot about BAB.

https://download.sharescope.co.uk/doc/IC_1410_outsourcers.pdf

My feeling is that BAB spent too much purchasing that helicopter company.

I am thinking of selling some of my BAB shares. My CG is only 2.9% and first bought 3.7 years ago. The yield although mostly progressive is modest at forecast 2.75%.


By Rhigos