For one hour and 39 minutes, shares in construction group Keir (KIE) traded in what was in effect a false market. Long-suffering shareholders deserve better.
On the morning that results for the year to June 30 were expected at 7am, it took just over an hour – and six minutes into trading – for the stock market to be informed that “there has been a technical issue” and the figures had been delayed. In the absence of any proper explanation, or any idea when the figures would be eventually released, the shares quickly slumped from 55p to 49p, a drop of 11%.
Was the technical issue merely a computer glitch? Was it a niggle from the auditors over the valuation of work in progress? Was it a euphemism for something more serious?
Given the problems there have been for Kier and its competitors even before the coronavirus disruptions, it is an absolute disgrace that investors were given no idea whether this was a serious matter or a minor glitch. How could anyone make an informed investment decision on that basis?
The shares stood at 53p when the statement suddenly appeared at 9.39am. The results weren’t great and the dividend is suspended, though that was hardly surprising given the lost three months of lockdown. The current order book was described as “strong” in the headline but only “stable” in the text – while that is a minor niggle compared with the earlier state of limbo, it doesn’t restore confidence in the company’s ability to communicate accurately.
Relief that there was nothing more serious propelled the shares to an intraday peak of 66p. Those who quite reasonably took fright and sold at the bottom lost the chance of an extra 16p a share. Those who took a speculative punt quickly banked a profit of roughly a third.
Should you buy for recovery? Don’t even think about it. The post-coronavirus revival in the share price petered out in early June and the slide is likely to resume. The shares have lost over 90% of their value in three-and-a-half years.
There have been fears that Kier would go bust and while I am sure that will not happen you cannot trust a board that treats its shareholders in such a contemptible manner.
Hoping for a Spring Rebound
You have to feel sorry for paving slabs and landscaping group Marshalls (MSLH). While Covid-19 has hit sales for almost all companies, some have been affected worse than others and the lockdown came just as homeowners would have been turning their attention to sorting out the garden.
In the circumstances, a 25% fall in revenue in the six months to June, half of which was virtually lost, was not at all bad. Alas, profits were virtually wiped out, even before restructuring costs, though again it could have been worse. Shareholders can thank a valiant effort to keep production lines and logistics rolling throughout the worst of the period and the restructuring should pay for itself within 18 months.
It took until August to get sales back up to 100% of normal levels, by which time the great outdoors had turned a bit nippy. Some sales have been lost forever and we shall probably not know whether Marshalls has fully recovered until next spring.
The company is hoping that if people cannot afford to move they will take the cheaper option of improving what they have got. It is reasonable to believe that the worst is over but the struggling share price shows that investors are far from convinced.
With the shares standing at around 620p the downside looks limited to about 30p, so shareholders might as well stay in and hope for the best. However, the upside also looks limited to 50-60p until there is better news so the case for buying now is hard to make.
On balance though, I would buy rather than sell. Marshalls will get back on its feet in due course.