Hays Share Discussion Threads

[johnds] 27/9/2004 19:07

Anybody any idea as to what price a DX share could be worth. What are we getting as Hays shareholders out of the money coming into the group. I for one would have preferred a special div in the form of a sterling cheque!!

[lyntwyn] 27/9/2004 11:41

Rob, I'm not huge on TA but note that several indicators are currently negative. RSI turning down but I can't see much harm.
Lyn

Investtech -Positive Candidate (Medium term) - Sep 24, 2004
Has broken up from an approximate horizontal trend. This signals a continued strong development, and the stock now meets support on possible reactions down towards the ceiling of the trend channel. It also gave positive signal from a rectangle formation at the break up through the resistance at 125. Further rise to 135 or more is signaled. The stock has marginally broken down through the support at p 130. An established break predicts a further decline. RSI is overbought, which indicates a potential short-term reaction down. The RSI curve shows a rising trend, which could be an early signal for the start of a rising trend. The stock is overall assessed as technically positive for the medium long term.

[littlechops1] 23/9/2004 13:31

Lyn, L and G buying?
ROB

[littlechops1] 23/9/2004 11:34

seems lots of small (accumulating) sells going through then a big(ish) buy to follow,
ROB

[littlechops1] 23/9/2004 11:26

Hi lyn, would you say support was at 128 or there abouts, it seems to have hit resistance at this level then pushed through, or maybe my charting is pants!!!.
ROB

[lyntwyn] 23/9/2004 11:16

yep. down 3% as I post!! looks like profit taking,(not aware of any negative news) - I would expect it to recover later ubless the market goes down further, - but DOW could recover today- dependant on oil situation. Probably safe to trade for a couple of (easy?)points.

[littlechops1] 23/9/2004 10:58

anyone watching?

[lyntwyn] 19/9/2004 16:07

Interest feature in todays Times. Sorry its a long post but thought it might be useful/interesting for future reference. I will continue to hold, although not looking forward to my tranche of shares in DX!

Judgment Day: Should you buy shares in Hays Group?

Recruitment drive is just the job for Hays

HAYS specialises in recruitment and human-resources services for companies all over Europe as well as in Canada, Australia and New Zealand. It provides professional, technical and temporary staff in taxation, accountancy, banking and IT.
The company, which dates back to Alexander Hays's warehouse operations business in 1651, merged with Ronnie Frost's Farmhouse Securities in 1981, and Frost bought it outright in 1987. The company went public in 1989. Since then it has sold its commercial and distribution divisions to focus on its personnel arm. It is in the process of demerging its DX mail and courier operation.
Hays employs 4,700 workers and is run by Denis Waxman, the chief executive, though Frost still owns a 5% stake.

The two experts below have been selected for their skill in several investment areas. They, or the funds they manage, may buy or sell shares in the companies or sectors discussed.



Tim Steer, fund manager at New Star.
I saw the enthusiastic Denis Waxman, chief executive of Hays, for lunch last week. He kept on saying he was very glad he had got rid of the trucks.

Well, Denis, soon the mail business will be going too. The mail activities, DX Services, are to be demerged later in the year. This raises an interesting point. If conglomerates attract a poor rating, then activities that are demerged usually attract a better rating. Just take a look at the value created by the demerger of Burberry from GUS.

On a demerger, DX Services could be worth £190m. At the current price of around 131½p, Hays, including DX Services, is worth £2.3 billion. It is estimated that Hays Specialist Recruitment will make £121m of profit in 2005. That puts its activities on a price-earnings (p/e) ratio of 16.5. Contrast this with the rating of its main rival recruitment company, Michael Page, which trades on 22.5 over the same period.

Hays trades at a discount to Michael Page of 25%. Admittedly, Michael Page has a higher proportion of permanent recruitment income and a large part of this falls through to the bottom line as activity increases, but just imagine what could happen to Hays's p/e ratio if it expanded its permanent recruitment activities. I believe it will do so in the year ahead.

Waxman is convinced his recruitment market is due for another good year. There are skills shortages in accountancy and IT and these markets picked up in the last quarter of the year. Earnings were being diluted as large users of contract IT staff were able to exact cheap deals. But this has lessened recently as a more robust spot market for IT staff has started to return. This is good for profit margins.

Between 1996 and 2001, Hays managed a conversion rate (percentage of net fee income converted to operating profit) of about 40%. The rate is currently running at 33%. I am a betting man and I will bet that Hays (unfettered by trucks and mail) might just get there again - one day soon.

Judgment: Buy.

Andy Brough, fund manager at Schroders.
In the late 1980s conglomerates were in vogue, as companies such as Hanson and BTR made acquisitions across several sectors, the idea being that shareholder value was delivered by management rather than by a particular industry.


How times change. The emphasis now is on focus, with companies encouraged to concentrate on their core activity. Corporate financiers, who charged the companies a fortune to make the acquisitions, are generating a whole new range of fees as so-called non-core activities are sold off, demerged or floated.
With the demerger of DX Services, Hays is now focused entirely on its market-leading Specialist Recruitment business. Hays operates in both the temporary and permanent employment markets in several countries and sectors. Temporary recruitment represents 59.5% of its income, but profit margins in this area fell because the company took on a greater proportion of high-volume, low-margin contract business. "Spot" deals have higher margins.

The company is seeing good growth in accountancy and banking. These are two areas where businesses would have cut back on training new recruits during the past few years. As a result, salaries are now being bid up as companies try to hire new staff. Hays is also seeing recovery in technology recruitment, and the results for the year to June 2004 show that this division, along with the other, had an acceleration in growth during the second half of the year.

These comments have led brokers to upgrade their forecasts for the next two years as they start to see the group benefiting from hiring more consultants and opening more offices, together with a pick-up in economic activity.

The shares are on a prospective price-earnings (p/e) ratio of 16.5 to June 2005, falling to 14.7 with a yield of just over 3%. At this level they trade on a lower multiple than their peers as they are perceived to have less operational gearing or recovery potential. The shares have had a good run recently.

Judgment: Buy at 120p

HAYS GROUP AT A GLANCE

Share price: 131¼p

Market value: £2.2bn

Year end: June 30

Consensus forecast for 2004 pre-tax profit: £186.5m
Consensus forecast for final dividend: 3.86p
Barclays owns 11% of Hays, and Morgan Stanley holds 10%.
Scottish Widows, Legal & General and Ronnie Frost all own 5%

[dramatis] 18/9/2004 20:38

I bought at 1.18 and still holding.

[suejarvie] 17/9/2004 12:51

Also long and added this morning as we appear to have got past £1.30 resistance.

[royaloak] 16/9/2004 15:13

Took some profits yesterday, but still a few longs, looking to add again today as looks a lot of underlying strength!

[suejarvie] 15/9/2004 15:07

I agree breakout could be imminent!!

[haystack] 15/9/2004 13:04

Level 2 looking very strong. There are 24 buy trades to 13 sells in the order book.

[haystack] 15/9/2004 11:58

This is looking very strong now with good volume. Very good results recently and the prospect of money returned to shareholders.

[royaloak] 14/9/2004 16:11

Surprised there has been little comment on here. Lot of profit taking after the results which was not surprising after the good run, that has now been absorbed, on the verge of a chart breakout. I am long so DYOR!

[lyntwyn] 08/9/2004 09:41

Apparently there were parties (venture groups) interested in acquiring DX but HAYS reckoned that shareholders would be better off with a float "otherwise they would lose out on the premium". I'm not so sure myself,- a sale would have been cleaner. I don't like units being floated (probably because it messes up my portfolio, having messy little bits I never wanted!! in this case having 1 DX for every 20 HAS . However, HAS seems to have won favour:

07.09.04 analysts lifted their earnings estimates for the current financial year after meeting the business services company's management. House broker UBS hiked its 2004 pretax profit estimate to 197m from 189m previously after the company confirmed it expects sales growth at its key recruitment division to leap 16% in the year to June 2005. UBS upped its earnings per share forecast 7% to 7.9 pence. The broker held its 'buy' rating and 145 pence share price target. "We believe that as we approach the mid-point of the economic cycle Hays' valuation will rise in comparison to its main peer Michael Page," UBS said in a note. Earlier Hays posted profit before tax, goodwill amortisation and exceptional items of 181.0m in the year to June 30, up from 178.9m the year before. That comfortably beat the 166.5m expected by financial analysts.

[broadwood] 07/9/2004 08:15

Looks as though they have delivered on all fronts - spin off of postal side, results beating analysts expectations and a share buy back.

Should be some good upside from here.

[lyntwyn] 06/9/2004 14:19

Gone very quiet on here, - Results tomorrow, which should be good if the pick up in business follows PAGE and also dutch peer Vedior which posted earnings per share before goodwill of 0.16 eur, up from 0.11 previously, against expectations of between 0.14-0.16 eur. The increase was driven by sales growth in its US and UK markets..

Still waiting for the promised return to shareholders following unit sales,- a long time ago!!

[explorer88] 07/8/2004 13:47

Check out OMG (www.omg3d.com / www.vicon.com)

With world class products, new markets opening up and cash available for further acquisitions, we expect OMG's turnover to increase dramatically in the next twelve months. Our fair value price targets for OMG are:

July 2005 : 52p (market cap. £28 million) + 116% on current level
July 2006 : 91p (market cap. £49 million) + 279% on current level

Current Price : 24p (market cap. £13 million)

Siggraph event starting Monday 9th August will generate significant sales for new MX system

[hortcom] 06/8/2004 22:49

Ran out of patience yesterday and pulled out, just in time by the looks. I think it will turn round, but not yet

[losloslos] 05/8/2004 11:38

HAS, is a pick, not a good one

[haystack] 05/8/2004 11:36

Moving up well now and almost at the point of a breakout above the resistance level of about 128p.

[haystack] 05/8/2004 11:36

Moving up well now and almost at the point of a breakout above the resistance level of about 128p.

[prince26] 28/7/2004 09:35

it is moving at last.omhop