Henderson Opportunities Share Discussion Threads

[daz] 27/12/2004 22:02

Rog

I would hope that the downgrade is too severe, given that the company haven't issued any guidance.

However, if it turns out to be accurate, the company is taking a big step backwards not forwards, if you look at the figures. Adjusted EPS for the six months to June were 0.58p. Numis are forecasting 0.8p for the full year, which if met, will mean that the 2nd half has contributed just 0.22p, a severe reverse from the 1st half and justifying the fall in the share price in my view.

Looking further out to 2005, annualising the 2nd half figure gives 0.44p, to which you need to add growth. Numis are going for 1.2p, giving a figure of (1.2 - 0.44) 0.76p for the extra profits from the integration of acquisitions.

I don't know whether the education market is suffering a short term blip or whether the downturn is going to be longer term, I just come to the conclusion that there is uncertainty, with a risk that the company is fully valued if things don't improve but equally if the educuation market does better than expected the shares look cheap.

As you say I'm being careful but trying to take a balanced view. As I said above, I think this uncertainty merits the company issuing a statement to clarify current trading.

Daz

[r0ger moore] 27/12/2004 17:22

this company is moving forwards not backwards look at the chart and see the savage drop in the share price can you really say profits have been hit that badly no the low share price is due to the share issue and the downgrade millions may of been wiped of the market cap in share price terms but not profits at these prices the shares are a steal.but it is your money so you have a right to be carefull we cant just look at the positives

[daz] 26/12/2004 21:38

Jag

I hope you're right that the company beat these figures and that Numis have over-cooked the downgrade. Otherwise it doesn't look very good for the management. The interims issued in September included the following quote:

...Although the summer marks a period of no activity for our education businesses, we have experienced a very good start to the September term...

There is no reference at all to a downturn, in fact quite the opposite. If the situation is as bad as Numis suggest, the company should have issued a profits warning, as the decline must have happened rapidly after the interims were issued in September and we are now right at the year end. I am still a little nervous about the continuing effect into 2005 as the decline will now be felt for a full year and education is a significant market for the company.

I'm not totally convinced that the recent pattern for a run up to the results will be repeated.

I think the company ought to issue a trading statement to clarify things and will try and contact them, although I suspect most senior management will be on holiday next week.

Daz

[jaguarboy] 26/12/2004 17:33

yes it can not be too long now until the full year results are published which should spark some activity in these shares and increse their profile in the market. Reeves the charirman of Hot has a very good track record so I am quietly optomistic that estimates will be beaten.

[r0ger moore] 26/12/2004 16:56

the big trades i saw the other day were sells i think this is due to the share issue because this has been a low volume share as a rule and i have been in and out of this share for a year.if it was directors there would have been an rns so let those sellers sell and we will see this share level out then move upwards sharply on results.check the above chart the two large spikes are due to results they are the only events that will shift this share.

[daz] 26/12/2004 15:03

Jag

Thanks very much for that. The downgrade seems genuine enough, Numis would have been reluctant to issue bad news on a company with which they were connected.

Current estimates (source Barclays) are:
2004 0.8
2005 1.2

Although the shares are cheap on 2005 forecasts, there is a risk of a further downgrade, so I would expect continuing uncertainty until the effect of the decline in education recruitment is clearer.

Daz

[jaguarboy] 25/12/2004 22:19

Here is another article from the Times:

Hot Group, the AIM-listed recruitment agency, lost 1p to 15p after Friday's downgrade from Numis, which is concerned by weaker than expected demand from schools for new teachers.

When Numis were the house broker for Hot they had a target price of 30p a share so it does seem it a bit of a coincidence that the week after they were dropped they come out with such a harsh downgrade.

[jaguarboy] 25/12/2004 21:56

Daz - Here is the article in the independent on the 18th Dec:

Hot Group, the online recruitment specialist, was unchanged at 16.25p despite a quite savage downgrade by its house broker Numis Securities. Although the trading environment for recruitment companies seems to be improving, Numis said that Hot is suffering from an oversupply of teachers, which has made recruitment by schools easier than normal, and a shift towards using less qualified classroom assistants. As a result, Numis fears that demand for the company's services will wane and so cut its earnings forecasts for Hot by 20 per cent for the current year and 33 per cent for 2005

Quite agree with both you and Roger that Hot should come out with some good figures despite this statement from Numis. If Hot continues its rapid expansion with sucess then I would not be at all surprised if they are taken over in the next 18 months.

I have also topped up my holding last week. I find it reassuring that the directors have a big stake in this company and are probably the ones putting the big trades through you saw.

[daz] 25/12/2004 21:14

Jag - do you know the exact nature of the downgrade? Is it this years figures, next years or both? It could just be related to Numis being dropped as brokers to the company and being replaced by Collins Stewart

Would have thought that this years figures were in the bag after the interims and the reasonably confident outlook statement.

There also looks to be a line of stock on offer, judging from the large trades that went through earlier in the week

[r0ger moore] 25/12/2004 17:43

very true jag i am sat here laughing at how easy its going to be to make money on this share got in the other day but if they want to keep driving the price down then i will sink a good bit of money in. results will keep improving so long term its a no lose

[jaguarboy] 24/12/2004 15:15

Numis have downgraded this stock but I think at these levels it offers some real potential.

[r0ger moore] 14/11/2004 09:39

keep ticking down baby

[roger moore] 20/9/2004 19:16

when new shares come onto the market then a share only goes one way down lucky i sold out friday because the rise had halted.these are not worth buying now untill the next results hopefully at around 16-17p good luck everyone!

[james t kirk] 20/9/2004 08:13

Looks like the market believes hey have paid too much for a company making a loss - have to say I agree.

[james t kirk] 20/9/2004 07:50

Worthing aquisition now confirmed, marked up first thing on the bid.

[james t kirk] 16/9/2004 20:40

Missed it, but good to see the publicity. Must be a good chance of a mention in IC tomorrow, as news was probably too late for Shares Mag.

[jswift] 16/9/2004 17:49

Did any body read the London Evening Standard last night, a 3/4 page article in the pink section on the boss of HOT, it reads as he makes money for fun.

[roger moore] 16/9/2004 16:34

nice small tick ups just how i like it. looking to see if its tipped over the weekend so we can hit mid 20's if not could run outer gas

[james t kirk] 16/9/2004 08:04

Moving up again today.

[james t kirk] 15/9/2004 08:11

Thought I'd start a new thread with charts, as I can see this being a nice long term play