CWC – results soon

CWC (Cable & Wireless Communications) will release its Q3 IMS on Tuesday 11 Feb, which will be interesting.

I first became interested in CWC at the beginning of year, when it came up during one of my trawls.

It doesn’t pass any Stockopedia screens, but I notice that it has 6m momentum in the top quintile, and has a PEG of 0.33. Interesting. The PE is 19.7, which doesn’t necessarily put me off, because oftentimes high PE with high momentum can be a positive indicator. For a recovery stock like CWC, high PE stock aren’t unusual.

Its P/FCF looks reasonable, and there has been substantial debt reduction, which works for me.

Director Philip Bentley purchased £2.4m worth of shares on 2 Jan, which is something you should definitely take notice of. I seriously doubt he’s going to splash out that kind of cash if he is expecting disasterous results. On 20 Jan, an RNS was issued saying that Timothy Pennington and Nick Cooper disposed of £231k and £169k, respectively. But, if you read the RNS, the directors were awarded shares as part of a bonus plan, and they actually retained over half of the shares they were awarded. The sales were explained as “to meet UK income tax liabilities”. So, I think it wrong to view them as bailing out – they’re actually retaining a lot of shares.

On 1 Jan 2014, Mr Bentley began his role as CEO, replacing Tony Rice. A new broom sweeps clean. Just look at what happened to TCG (Thomas Cook) when Harriet Green was appointed. Mr Bentley served as the MD of British Gas, has been on the board of Centrica, and has had involvement at a number of other blue chip companies. He looks like a heavy-hitter.

On 7 Nov 2013, the company issued an RNS with a number of encouraging signs that I like to see in a turnaround. Revenue and EBITDA were up (albeit only slightly). Jamaica mobile customers were up 23%, and Caribbean operating costs were down 6%. There were also disposals netting US$1.4b. They have also targeted significant cost reductions across the group.

It looks like a good basis for a turnaround play.

I am a holder in CWC.

Wish me luck.

53.5p

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About mcturra2000

Computer programmer living in Scotland.
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