Empresaria Share Discussion Threads

[paleje] 31/3/2011 19:00

Edison's view on the situation, keeping current yr forecast in tact:-

Empresaria's prelims show good progress across all reported regions, with a recovery in permanent recruitment driving the UK market and a maturing of developing market operations. The cashflow is inherently strong and the net debt position improved to £6.1m at the year-end, despite investment in working capital and buying in minorities. Given uncertainties over the outlook in Japan and in Germany (following court rulings on collective labour agreements), we have kept our current year forecast broadly unchanged and built only modest growth for FY12.

Last updated on 31/03/2011


Unchanged current yr and modest growth for FY12 still makes them cheap for sector considering the markets they trade. If the German short term 'turbulance' proves to be just that they'll be in demand again.

[battlebus2] 31/3/2011 18:38

Not one buy today which surprises me these haven't fallen further.

[cfro] 31/3/2011 18:27

100% agree GHF. I see you got a better price than me with your sale. :-)

Just for the record i had about £8K's worth and had to except 2p below the bid to get them sold. The bid then imediately dropped by that much and then continued to fall further throughout the morning. I do wonder at time how bigger holders get by. Take someone like Mark slater for instance who would have been in this stock much heavier than any of us. How would have dumped his holding assuming he would have wanted out? I cant imagine there would be a market for anything too big.

[interceptor2] 31/3/2011 09:56

It wasn't easy to sell, I had to use the TDW Fill or Kill system and it took some time to deal. But I learnt an important lesson today with this system. When the spread was 65-67 I placed the price at 65p which failed because it was too close. In future I need to place it at 63 or 64 to give them room to deal.

ic2.......

[cfro] 31/3/2011 09:44

Results read really well.....until you get to the Germany and Japan bit!

Annoying! I thought this company was 'safe' but proved wrong, so sold out first thing and not easy to get a price either but still come out with a ten percent profit overall so cant really complain. Japan obviously having far more effect on business than we all thought.

ic2, did you have any problems obtaining a 'good' price for your batch that you dumped? Just interested.

[interceptor2] 31/3/2011 09:23

Well a few negatives in todays statement, Japan was to be expected but Germany was unexpected news. Maybe this may just prove to be a blip and EMR will perform very well this year.

But I try not to hold any companies I have any doubts about, so sadly I sold out this morning at breakeven. Shame because this was a strong conviction stock for me.

Regards ic2......

[paleje] 31/3/2011 08:41

Good results on first glance and current year growth still looking good to me. Japan accounts for 6% of business, only part of that 6% will be hit we don't know how much. Germany's a blow but maybe not as bad as it seems - they're not saying the German economy is stalling, just admitting that along with other staffing firms they were paying a too low rate in some sectors, which they've now corrected but (1)they're open to back claims from staff and (2) possibly action by government (3) having to renegotiate with employers. Any back claims or financial penalty could well be offset by the increased business Germany should provide after they lower their borders to foreign labour in a month or so, EMR are already ahead of the game there.

Judging from how UK plc handled penalties on transgressing recruitment companies 10 years ago when our economy was roaring, I'd guess the German government wouldn't want to over-punish companies that provide the workforce that's powering its industrial growth.

[topvest] 31/3/2011 08:29

Same here - I'm out for a quick profit - didn't like the forward outlook and the held dividend. Scope for claims in Germany was the straw that broke the camels back!

[battlebus2] 31/3/2011 08:21

I've already taken profit way too early so will hold the rest with rose tinted specticles!

[stegrego] 31/3/2011 08:09

Maybe im reading it wrongly but weakness in Japan and more specifically Germany, with possible legal action and margin pressures, doesnt make for good reading. That along with the lack of visibility means this now has an element of doubt about it and its enough for me to sell out my small stake for slightly over breakeven.

It may all work out ok, but for now Im out.

[battlebus2] 31/3/2011 07:49

Fantastic results the increase in profit is classy but future outlook not certain but then again who's is.

[interceptor2] 29/3/2011 08:31

I'm finding Kenneth Fishers methods very useful, when trying to set future price targets usung the PSR and Net Margins. For example with EMR and the table at post 246, I can see that margins are quickly approaching pre 2008 levels, and a price target of 139p = 0.3 PSR wouldn't be unreasonable imo. At a PSR of 0.4 the share price would be 185p.

I'm working through my holdings working on historic PSRs and Net Margins, I will post one for FOUR on it's thread which you may find interesting.

ps...The attraction at SAG is the strong management which are building for the future imo, CEO brought shares yesterday.

ic2.....

[cfro] 28/3/2011 21:55

O/T interceptor2, you might have a great deal of trouble tho in your search for Fisher type stocks. I made a packet through this kind of investing back in 2003 just after the tech bust. At that time one could find many bombed out tech stocks selling at very low valuations. Many ten-bagged and more from there. Theer tends to be a certain time and place for applying these sieves. I think in todays markets if a stock does go to 'bombed out' status then it usually because there is a genuine reason and doesnt mean it is a 'buy' in any sense of the word. Whereas in 2003 the baby was generally thrown out with the bath water and one could 'sieve' and find the apparant undervaluation.

Having said all that you will be interested to know that i apply Fishers sieves on my Company REFS each month and for the last few months SAG...a favourite of yours.... has been coming through. A PSR of 0.67 and PRR of a very low 3.

[interceptor2] 28/3/2011 19:43

I guess the low PSR just reflects the relative low historic net margins. But net margins were 1.4% in H1, which is a quick recovery from 2008/10. It will be interesting to look at the figures on Thursday, and it looks like they should at least match the normalised high of 1.9% in 2007.

Once the market forgives them for the problems in 2008 onwards, we should start see a more fair valuation.

ps - As you might of noticed I have now read the excellent book Super Stocks by Kenneth Fisher, and am now trying to apply PSR and Margins in my analyst of stocks, plus PRR when appropiate. So my search begins now for that super stock.

ic2......

[cfro] 28/3/2011 13:32

Theres a nice long awaited tick-up! :0))

Interesting analysis ic2, EMR has always traded on a low-ish PSR no idea why really. To my mind this shouldnt be the case. But whatever, we are still some way off that high of 0.57 in 2007.

[interceptor2] 27/3/2011 18:08

Thanks for the Altium update GHF, seems a very positive note

I have been working at historic PSR figures, which I believe is interesting to look at at where we are in this current cycle. Todays PSR is 0.14 @ 65p.

PSR....2005...2006...2007...2008...2009...2010
High...0.27...0.40...0.57...0.20...0.09...0.13
Low....0.21...0.26...0.29...0.05...0.04...0.07

Net Margins...2005...2006...2007...2008...2009...2010
..............0.9%...1.6%...1.9%...2.7%*..2.0%*..1.1%*

*Note 2008/9/10 are adjusted net margins, and before is basic net margins.

Looking forward to thursday also.

ic2.........

[cfro] 27/3/2011 17:47

Indeed, looking forward.

[glasshalfull] 27/3/2011 10:55

Thought I'd share the Altium update from 31st Jan 2011.

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We introduce forecasts for 2010, 2011 and 2012 which are above consensus. We set our adjusted PBT forecasts at £6.7m for 2010 (8% above consensus) and £7.6m for 2011 (9% above consensus). Our 2011 Adjusted EPS of 7.8p is 7% ahead of consensus.

These forecasts reflect an element of caution in our opinion. The group trades on a 2012 PE multiple of just 7.0x, offering significant scope for share price appreciation towards the peer group average. We set a price target of 85p which offers 39% upside from the current level. This equates to c.10x normalised 2011 EPS of 8.4p. Our estimate of normalised (cycle average) EPS reflects an adjustment to our forecasts to reflect an estimated cycle-average EBITA margin for the group of 4.0%.


--------------

Roll on results this coming Thursday ;-)

Regards,
GHF

[jeff h] 22/3/2011 08:19

A new Australian office opening:-

[cfro] 16/3/2011 22:13

Thanks GHF for your excellent analysis. The japanese market obviously isnt going to make much diffence to overall sales, so nothing to worry about. That IC article is due to be published when IC goes to print on Friday.

[glasshalfull] 16/3/2011 19:54

I've just discovered this positive piece on EMR that was published yesterday.




Value in small-cap recruiters

Created: 15 March 2011 Written by: Richard Bennett

With growth likely to be stable or slightly lower in most economies in 2011 after a strong 2010, we do not expect strong share price outperformance from the recruitment sector as a whole this year.

Growth in demand for recruitment services is currently strong in most overseas markets. However in the UK, which is the most mature recruitment market globally, the picture is more mixed with private-sector employment showing reasonable growth but demand from the public sector likely to remain very weak. We therefore prefer exposure to those recruitment stocks which have greater exposure to the less mature overseas markets and a smaller proportion of their business in the UK.

We also favour recruiters with a greater focus on permanent placements fees, which we expect to outgrow demand for temporary staff and contractors while economic growth remains solid. Among the larger recruiters, this argues for Michael Page and Robert Walters over Hays and SThree.

Valuations of these larger stocks for the most part reflect the relatively buoyant outlook. However, we see moderate upside to fair value at Michael Page and Robert Walters, both of which have substantial exposure to immature recruitment markets in Asia and Latin America where we see significant longer term growth potential.

In contrast, the smaller recruiters trade on lower valuations. In most cases this reflects their mainly domestic UK focus and hence a lower growth outlook. However, an exception to this is Empresaria which offers comparable exposure to faster growth international staffing markets as Michael Page or Robert Walters, but on less than half the PE valuation of its larger peers.

About the author:
Richard Bennet is a support services analyst at Altium Securities


Regards,
GHF

[glasshalfull] 16/3/2011 19:39

Hi cfro. You are correct.

EMR has minimal exposure to Japan...c.6% of turnover at year end in 2009, via two brands:- Fines (Fashion/Retail) and Skillhouse (IT) both based in Tokyo.
Given the growth that Germany has contributed this year and also growth in other ROW countries then I'd expect Japanese turnover will be approximately 4% of 2010 turnover, extremely minimal. Sure they've been affected this past week but I don't see it having anything other than a very negligible impact on EMR and don't believe it material when considering the EMR investment case.

From the 2010 interim statement:

"The Japanese market was the last of the Group's markets affected by the economic downturn to recover lost ground with a strong rebound in the IT and Financial Services sectors in early 2010 and some tentative signs in recent months of an improvement in the retail sector."

The likes of Indonesia on the other hand had NFI up 100% at half-year mark.

Fast forward to the end of year trading update released in Jan 2011:

"In Asia we have benefited from a combination of maturing businesses moving from early stage development to material profit contribution as well as from underlying economic growth in the region. In Continental Europe, where 90% of regional net fee income is derived from Germany and Austria, we are benefiting from structural growth in the still immature German temporary staffing market as well as from a strong German economy.

Our focus in the UK on developing temporary staffing operations away from the public sector has created stable and growing revenue streams. In addition, we have benefited from an exposure to recovering market sectors, particularly professional and financial services."

As I said at the opening, given the growth exhibited by Europe (Germany) and the size of the UK business, I would expect the UK & European arms of the business to command 80% NFI in the past year & growth in other Asian economies mitigating a lower contribution from Japan, which I estimate will be c. 4% for 2010 and potentially lower in 2011.

EMR shares remain excellent value and I fully expect further positive news when they release results in a fortnight.

I extend my sympathies to the Japanese people and all those caught up in the terrible events that have unfolded.


Regards,
GHF



EDIT - I've refreshed my memory via the Investor presentation for the interims 2010 & 2009 and 2009 full year



For example Indonesia were up to 7% of group turnover at 2010 interim period and growing like fury with Japan at 6% group turnover. Indeed in 2009 Indonesia grew by 36% while Japan contracted by 25%. EMR are building their presence in a number of markets which weren't on the radar in 2009.

[cfro] 16/3/2011 18:28

EMR is holding up well in this stock market malaise and im very pleased thus far. Just trying to work out if it has any exposure to Japan, dont think it has but if it has then it cant/doesnt represent much in sales. Its new offices have been opened up in China, Singapore and Australia which really diversifies the business nicely even if any Japanese trade was hit.

[paleje] 01/3/2011 08:58

Agree with you ic2, looking for continuing strong growth from EMR.

Incidentally STAF have got a solution for dealing with the temp worker directive when it comes into force later this year - they'll take over a whole production section and do everything incl supply staff, training, qual control, h&S, so there won't be any client company staff to synchronise with. Clever. Nevertheless I think their growth will be slower than it has been and I sold half yesterday, will be adding to EMR and STHR.