Rps Share Discussion Threads

[guru11] 01/3/2009 19:49

Be an interesting week for RPS - as said above results this Wednesday,
and I thought they said that they would be at the top end of expections,
but one has to ask -
why has the share price fallen last Friday and again today ???.

Despite a prospective of 6 said to follow, Britishbulls now have a sell confirmed on this stock - defies logic after the company statement, unless there is a black cloud over the horizon to fall on Wednesday.

[nfs] 05/2/2009 11:03

I bought in today on the confirmation of results-this is a very good long term growth story

[barnesian] 05/2/2009 10:25

Preliminary Results Notification

"RPS intends to announce Preliminary Results for the year ended 31 December 2008 on 4 March 2009.

RPS performed well in 2008. As a result the Board expects to announce full year profit (before tax and amortisation) towards the top end of expectations. Working capital management during the year was good with the result that net bank debt at the year end was reduced to approximately £29 million. The Group has bank facilities of £125 million in place until 2013.

5 February 2009"

[barnesian] 19/12/2008 20:31

Now 40% up on the 100p floor.

[sheik yerbouti] 28/11/2008 09:13

I had some SWG too. They haven't bounced yet, seem to be rather overlooked.

[wjccghcc] 27/11/2008 16:01

I had a few at 103p. Wish I'd bought more now.

[barnesian] 27/11/2008 14:53

Now 27% up in seven days. I hope bloggers took my advice on 20 Nov and bought around 100p. I know Sheik Y did.

[barnesian] 26/11/2008 12:29

16% up already on the 100p floor of last Thursday.

[phillis] 25/11/2008 13:33

Still a growth business even if at reduced levels
One to tuck away in quiet times

[bletherer] 21/11/2008 14:44

Gah, terrible timing from me as usual, adding just before the really precipitous drop. At least I sold off a few tranches during the big move up so the pain is slightly diminished. I still see this as a good long-term hold: I believed it to be overpriced at £3.50 but see it as good value now. Chart is terrible - all the gains from the 2003-7 bull market completely lost. But then that's the story more or less across the board right now.

[sheik yerbouti] 20/11/2008 16:25

Couldn't resist a small holding at just over 100p.

A couple of recent articles:



RPS Group, Britain's biggest environmental consultancy, has grown profits in each of the past 17 years and shows no signs of breaking that run. But its shares – which have halved in three months – would appear to suggest otherwise.

Part of RPS's problem is that, through its planning and development division, it is exposed to a downturn in construction.

The more recent worry has been the potential impact of a falling oil price on the company's energy division, which provides advice on big-ticket oil and gas projects and accounts for two fifths of this year's forecast profits.

But as yesterday's trading update confirmed, RPS has yet to feel any effect of an oil and gas slowdown – as might be expected given the long-term nature of the sector's capital spending: energy and environmental management, its other big division, continues to "perform well". Should oil prices remain at current levels, there is a strong chance that investment decisions will be postponed. However, the longer-term trends that have buoyed RPS – declining output from existing oilfields and the drive to reduce carbon emissions – remain intact. More immediate relief might come from any move by the Government to bring forward capital spending in next month's Pre-Budget Report.

At 141p, or seven times next year's earnings, hold.




Our view: Hold for now

Share price: 141p (+1.5p)

As BP's results on Tuesday testified, energy companies are in the habit of making lots of money. Good news for BP, but also good news for companies like RPS, which advises energy firms on securing planning permission for their projects.

The group issued a market update yesterday saying it, "remains well positioned to deliver results for the full year in line with expectations". All fine then, and in these markets a sure-fire winner for investors, especially as watchers at Royal Bank of Scotland argue that the shares are attractively rated, "[our] forecasts remain unchanged (full-year 2008 profit before tax of £57.6m). The shares are trading on a 2008 price earnings ratio of just 8.1 times, dropping to seven times in 2009 (enterprise value to Ebitda of 4.2 times), which looks cheap". The problem for buyers is that the company has been saying that for some time now, but the market does not appear to be taking too much notice. True, nearly every stock on the FTSE 250 has been hammered, but RPS's share price has fallen by 46 per cent in the last month, and yesterday's upbeat statement could only muster a 1.1 per cent rise in the stock.

The truth is that RPS looks to be a well-managed group that has enough strings to its bow to survive the coming recession without too many problems. As such, investors should, in normal circumstances, buy the stock at its depressed levels. We would wait, however, to see just how deep the recession is before committing to a group that seems to garner little support among investors. Hold for now.

[barnesian] 20/11/2008 16:13

Point taken on margins. It depends on how distinctive the RPS offering is, and how much pain its competitors can take before withdrawing from a market segment. Spare capacity will eventually be closed out - it is mainly people not plant so easier to exit. I'm guessing a 10% reduction in prices and a 10 point reduction in margin might happen which would have reduced last years PBT from £45m to £9m.

I have calculated the currency effect on 07 results. Using today's exchange rates and applying them to 07 revenue by geographic regions (assuming international is US $) then revenue rises from £363m to £407M. Doing the same to costs (pro rata to assets distribution) then costs rise from £318m to £346m and pre-tax profit rises from £45m to £61m. Very crude but it illustrates the point I was trying to make on the benefits to an exporter of a weak currency.

It is not much of a buffer but it would raise the £9m PBT described above to £25m. (I'm using last year's results as an example).

So overall I would expect RPS's PBT could halve for a couple of years before growing again at 15% plus pa with many competitors in stronger currencies removed from the scene. Do the DCF and the share is grossly undervalued. Even if prices are squeezed by 20%, and it dips slightly into loss it has the debt capacity to survive a couple of rough years and come out in a strong position.

[simon gordon] 20/11/2008 15:17

Barnesian - if we are going into a global recession/depression then I imagine their margins will come under pressure just through spare capacity and savage price competition. Net debt is c.46m. How low do you think PBT could fall in a severe slump?

I am keenly watching.

[barnesian] 20/11/2008 15:06

Extraordinary collapse today in the share price to 100p! Many are automatic trades.

Yet just three weeks ago the company said third quarter trading had been robust and it was likely to meet analyst expectation for the full year ending 31 Dec i.e. pre-tax profit of £57m and eps of 18.9p. That is a P/E of just over 5!

I guess the concern is that RPS's businesses in planning and development, environment management and energy are likely to suffer badly in the downturn.
Planning and development (45% of turnover) is mainly UK, Ireland and Australia, Environment and H&S management (23% of turnover) is mainly UK, Netherlands and Australia, energy including renewables(32% of turnover) is international. The downside is obvious.

But the upsides are: Many countries including the UK seem to be planning a fiscal stimulus including investment in infrastructure and energy renewables.
Much environmental and H&S is compliance driven. Weakened sterling will help overseas revenue translations and also margins as 58% of revenue is outside the UK but only 39% of assets. Most income is fee income based on consultant costs. This isn't an company with large fixed costs like auto. It can flex its cost to match revenue where it is underperforming.

This drop in share price in my opinion is grossly overdone. I believe 100p is a floor - both psychological and P/E and div yield driven.

[barnesian] 20/11/2008 14:58

Extraordinary collapse today in the share price to 100p! Many are automatic trades.

Yet just three weeks ago the company said third quarter trading had been robust and it was likely to meet analyst expectation for the full year ending 31 Dec i.e. pre-tax profit of £57m and eps of 18.9p. That is a P/E of just over 5!

I guess the concern is that RPS's businesses in planning and development, environment management and energy are likely to suffer badly in the downturn.
Planning and development (45% of turnover) is mainly UK, Ireland and Australia, Environment and H&S management (23% of turnover) is mainly UK, Netherlands and Australia, energy including renewables(32% of turnover) is international. The downside is obvious.

But the upsides are: Many countries including the UK seem to be planning a fiscal stimulus including investment in infrastructure and energy renewables.
Much environmental and H&S is compliance driven. Weakened sterling will help overseas revenue translations and also margins as 58% of revenue is outside the UK but only 39% of assets. Most income is fee income based on consultant costs. This isn't an company with large fixed costs like auto. It can flex its cost to match revenue where it is underperforming.

This drop in share price in my opinion is grossly overdone. I believe 100p is a floor - both psychological and P/E and div yield driven.

[toriel] 30/10/2008 08:13

With each downward lurch in the market as a whole (not just RPS) shares seem increasingly good value and the niggling fear grows that one might be mainly in cash at just the wrong time.

I've added to my holdings of both WSP and RPS in the last few days, believing both to offer considerable value. And yet there are many shares that now seem to fall in that category and I can only hope that I've got my timing right - or at least not too badly wrong.

[ben gunn] 24/10/2008 11:37

blether
I hold and may add soon.
Quality will out, just as soon as the tsunami is over.

[ben gunn] 24/10/2008 11:36

blether
I hold and may add soon.
Quality will out, just as soon as the tsunami is over.

[bletherer] 10/10/2008 17:13

Added today at 186. At some point you just have to go for it and hope that the world's not actually going to end. I don't think RPS suddenly stopped being a good company and it no longer looks overvalued to me. If the worst comes to the worst I can console myself that I'm just buying back at a much better price the shares I sold 18 months ago.

[bletherer] 08/10/2008 09:51

Wow, so much for 220 being important support - crashed straight through that without even pausing.

As I mentioned when I first did the analysis, there is one last important level at around 180p which would still allow RPS to hold onto a long-term uptrend.

The fascinating thing is that this entire sell-off is pretty much about general market perceptions rather than anything changing about RPS (except perhaps some fears about its interests in oil-related consultancy being damaged by plummeting commodity prices). People just don't want anything growth-oriented any more at a time when the economy looks like entering recession, and RPS's consistently excellent track record is no competition when set against this extreme risk-aversion.

[sleveen] 26/9/2008 12:49

Consultancies seem to be taking a bashing, whaterever the sphere of activity.

[bletherer] 26/9/2008 12:26

Retesting the support at 250 today. 220 should be the next big area of support if this one goes - it's always been my intention to add if RPS goes back that far, and so far nothing has happened to change my mind.

[wjccghcc] 11/9/2008 09:48

There's nothing directly comparable. They overlap a bit with HYC in the water area, WSP in the environmental area and then they have the energy consultancy as well.