||EPS - Basic
||Market Cap (m)
Real-Time news about Hercules Props. (London Stock Exchange): 0 recent articles
You've got to get it out of your mind that this is a 350p bid, it may have been at the time of the announcement, but no longer is, thanks to the falling ERG share price.
Rightly or wrongly the market is taking a view on the ERG share price, and selling is driving the price down. I've spoken to a number of people and now feel comfortable owning the ERG paper. Once the merger is consummated(if it is) then you are taking a bet on the ERG management successfully integrating HPS into ERG.
ERG would like to model themselves on Mears Group who have a great track record and a rating to match it. If ERG can prove themselves there is no reason why their rating can't improve.
|acamas: Can somebody explain to me why another company should bid when there is a recommended bid of £3.50 on the table and the current hps share price is falling. Why should I as a third party offer more than £3.50 when to all intents and purposes the involved parties are almost a union. I have not got a clue what is happening with this takeover. It is the first time I have been in a takeover where the share price is falling.|
Correct me if I am wrong but if ERG's price continues to fall then the agreed bid of £3.50 is not worth accepting because we are being offered paper for our shares not money. Therefore this failing ERG price becomes in effect to me a sleight of hand. Why should I say yes under these conditions.
Also is the reason for the fall in ERG's price the market indicating in its opinion that ERG are over streaching themselves with this takeover bid. If this is the case how long then would it take for ERG's share price to reflect any future growth in the two combined companies should the take over be successful? What affect will it have on HPS's share price should the takeover fail and no white knight comes to the rescue
I would appreciate any comments on the above as an aid on what would be the most sound financial action to do with this situation.|
|davethehorse: Simon - No, you cannot take 45p from the HPS share price in the calculation - this is a fixed 45p cash offer + 2.183 ERG shares per HPS share.
Therefore someone with 1000 shares in HPS gets:
45p per share = £450
1000 x 2.183 ERG shares = 2183 shares at 120p.
At the current share price of ERG your HPS shares are worth £450 + (2183 x 120p)
Value = £3069.60 based on the cash/share offer.
Based on the HPS share price 1000 shares is currently worth 1000 x 287.5p = £2875.
Therefore there is a difference of £194.60 which equates to about 6.5%.
Hope this helps with your calculations.
|simon gordon: I meant it was a dog's because of the share prices today.
I think you are right to focus in on the ERG board's priorities and why they don't go for organic growth which they have in spades if you look at Haywards and the Lettings divisions.
After meeting Neil Bellis twice I come up with two words - ambition and FTSE250. These are the key things that drive ERG.
Here are some rough figures:
2005 - March
ERG 12 mths. 9m ebit
HPS 9 mths. 9m ebit
Ebit - 18m
Interest - 3m
Tax - 4.5m
Profit - 10.5m
EPS - 11.9
P/E at £1.28 = 10.75
2006 - March
ERG - 11m ebit
HPS - 13m ebit
Ebit - 24m
Interest - 3m
Tax - 6.3m
Profit - 14.7m
EPS - 16.7
P/E at £1.28 = 7.66
I base the EPS on 87.8m shares in issue.
The figures above do not take into account stripping out HQ costs, merged offices in London and Manchester and cross selling.
The way I see it - correct me if I am wrong - is that ERG are basically at the same place they where before the takeover but that now they will go into the Small Cap. Index and have the opportunity to sell themselves to the fund managers who will ultimatley get the share price up.|
|rivaldo: Investing is about timing and instinct Simon - you could have said the same about HPS when the share price went down to 70p or so. I bought at around 130p when the prospective P/E was only around 4, and evidently since then a number of people have warmed to HPS sufficiently to drive the price up to 285p and for institutions to subscribe for a placing at 275p.
HPS have also beefed up their management - Joanathan Gooding was appointed a year ago to head up the Property Services division, and Nigel Davis (ex-Hanson) was brought in as FD in 2002. I agree that management is all-important, and a decent FD in particular should help avert any warnings such as those of 3 years ago.
I see from HPS' web site that Investec have reiterated their Buy recommendation for HPS once AGAIN, dating from 2nd August. Their EPS figures remain as:
Historic to 30/6/04 - 34.82p, divi 8.55p
Current to 30/6/05 - 37.92p, divi 9.15p
I'm hopeful, given that HPS have consistently delivered for the last couple of years, that these imminent results will start a re-rating to a P/E of 10 or 11, i.e a price of around £4.|
|rivaldo: Welcome back Simon! We've been through your prognosis several times before, so why have you suddenly appeared again? Could it be because your fave ERG is dropping whilst HPS appears nice and stable and in an uptrend?
You've posted some good stuff on the ERG board which I lurk on (ERG looks interesting, but it's on a too expensive P/E for me compared to HPS). So why bother keep coming back with the same old meaningless speculation as before?
Above all, HPS are making all the right moves:
- raising money from institutions at just below the current share price
- confirming that this year's results are on track to meet forecasts
- consolidating internally and growing via acquisition
- buying in shares for the AESOP at around the current level, another good sign
- and on a cheap P/E with an excellent dividend
These are the facts, not speculation. If you're proved right I'll take my hat off to you. If not and the share price continues to rise I hope you'll do the same. But do us a favour and post facts, not hearsay and bare-faced deramping.|
|rivaldo: I think Welsh got a little prematurely excited - can't see any connection myself?
Anyway, now I'm here - it's been comforting to see the HPS share price so stable, especially in view of smaller companies' drift over the last few weeks/profit-taking before 5th April. All selling has been soaked up - I suspect there's still buyers out there, and on a forward P/E of just over 7 there's plenty of mileage left in HPS for this year.
The residential housing market (amazingly) still seems to be thriving, and there's still all the activity to come from the start of REITs and the admission of property into SIPPs.
Greatbear's 475p target would be a forward P/E of only around 12, yet would be a 67% price improvement over today's price and could happen within the next
|campbed: People's thinking seems to have come back to (but not moved on from) that expressed in my post #892 two days ago responding to YdderF:
HPS is a seasonal business with H2 being much stronger than H1.
They seem on course to achieve market guidance of FY adj EPS 35.6p (H1: 12.9p)for a PER of 7.3 at a share price of 260p. On my preferred measure of EBTIA/EV they are on target to make 16.7%. The assets of such businesses as HPS largely walk on 2 legs so there is no support from the balance sheet for the share price. Results are pretty much as expected, though I was hoping for no increase in net debt which did increase by £2.55m in H1 but well within covenants by the look of things and there should be big reduction in H2. I'll continue to hold unless I've missed something but somehow I doubt your rantings will show that up. Share price down slightly to 250p on opening as profit takers sell on interims in line rather than better than expectations but I suspect share price will recover ... following analyst's notes later today.
Hopefully, I will be proven right to have regarded the post-interims price dip as a buying opportunity.|
|stevemarkus: Yes, I would agree with rivaldo, and I too bought today, after having sold out whilst the bid dragged on. As the recovery in the market has taken hold, I think potentially there was a fear that HPS might be sold on the cheap, and the bid could have held the price down. Now, I hope to experience some recovery in the HPS share price, helped by the 'trading in line' statement. In fact, having bought this morning, by this afternoon, I had already seen some.|
Hercules Props. share price data is direct from the London Stock Exchange