Hercules Props. Share Discussion Threads

[crawford] 09/1/2004 12:41

Directors won't be able to buy until after results - they are in a closed period. We will see after that.

[tiltonboy] 09/1/2004 11:50

rivaldo,

Look at the share purchases made by Chapelthorpe a couple of years ago, on behalf of their employees; the shares subsequently collapsed.

A real sign of direcors faith in the company is to put their OWN money into it; I see little evidence of that.

I have held(fool) the shares since the days of £7, and have averaged recently, but I wouldn't rely on the AESOP purchase as a buying signal.

tiltonboy

[rivaldo] 09/1/2004 10:54

New RNS out - the AESOP's been buying again. How many more signals do people need that this company is now going places?

"Hercules Property Services PLC (the 'Company' or 'Hercules') was notified on 9
January 2004 of dealings in its ordinary shares of 5p each ('Ordinary Shares')
by HPS Property Limited, the trustee of the Hercules Property Services PLC All
Employee Share Ownership Plan 2001 (the 'AESOP'), which is a discretionary trust for the benefit of its employees (including executive directors), in connection with the following transaction (the 'Transaction').

Date of Transaction: 9 January 2004
Transaction: Purchase of Ordinary Shares
Number of Ordinary Shares Purchased: 25,000
Price per Ordinary Share: 222p

Following the Transaction, the trustee of the AESOP holds a total of 364,100
Ordinary Shares in Hercules representing approximately 2.00 per cent. of the
Company's issued share capital. Under paragraph 2 of Schedule 13 to the
Companies Act 1985 (the 'Act'), the executive directors are deemed to be
interested in these shares for the purposes of section 324 of the Act."

[rivaldo] 08/1/2004 13:23

Thx crawford - that's a great post by Rennaug. I wonder if he could be persuaded to post on ADVFN, since iii is virtually a ghost town!

Maybe peeps are stocking up today ahead of those soon-come results.

[crawford] 08/1/2004 12:26

Posted by Rennaug on III - have to say I agree with his sentiment.

As far as I'm concerned, the only problem at present is the stupidity of some shareholders in the way they are selling their shares too cheaply and this seems to have infected even the usually responsible and intuitive FSL!! Rest assured that the underlying business recovery which has been gathering momentum since the middle of Hercules' last financial year has in no way stalled (as will be revealed by the interim results on 16th February) and House broker Investec's annual PBT and EPS forecasts of £9.2m and 35.6p should be left well behind with e.p.s reaching at least 40p,c2% more than Investec's (public) estimate for y/e 30/6/05!

The management is sanguine about the prospect of lower property inflation and its impact on rents, rates and insurance premiums within its portfolio of interlinked businesses and would be far more concerned if rates looked set to escalate (which they don't) with the risk of insurers exiting the market and leaving brokers / agents without underwriting cover for their clients. This, of course, almost destroyed Deacon several years ago but strong alternative ties have now been established with the likes of Axa and Zurich at satisfactory premiums and the clientele has been rebuilt even though recovery to former profitability will take time. Elsewhere, Cadogan and Farr are growing and producing synergies with Deacon whilst Dunlop Heywood Lorenz and Gross Fine are capitalising on opportunities in the estate management / consultancy side with the former exploiting the potential of Manchester's major Spinningfields business park.

The board's current strategy is to maximise the cross-selling potential amongst the group's subsidiaries and the economies from integrating as many back-office functions as possible. Consequently, no further acquisitions are planned at present whilst there might be the odd disposal. Trading will be cash positive and geared, as usual, towards the second half given the timing of service charge/insurance collections from tenants and lower net interest will have a progressively important impact on the bottom line. A further and significant improvement in liquidity when combined with much increased earnings should permit 50% restoration of the dividend (cut from 12p to 8p last year) to give the shares an attractive prospective yield at 212p "offered" of 4.7%.

On minimum "headline" e.p.s of 40p, compared with 32.5p last year and 43.7p the year before, the shares are trading on a prospective p/e of c5.3x whereas IMHO, a multiple of at least 8x would seem more appropriate to give a target price of around 320p. Such a rating would pay heed to the company's blip two years ago when it issued a couple of profit warnings with Deacon the culprit and the victim of the turmoil in the insurance market following 9/11. Naturally, one can observe the ratings of property companies, estate agents/auctioneers and insurance brokers but Hercules is unique as being a quoted vehicle for the lot and is, therefore, difficult to value independently. But given its increasing ability to benefit from having all these services in-house and that it will soon show how it has moved its whole operation up-market to a more value-added outfit, a re-rating should be imminent so let those silly sellers beware!!

[crawford] 06/1/2004 11:31

The 96000 trade was a sell, are u sure the 100000 was?

Anyway, I'm looking forward to the results next month - should blow forecasts away IMO.

[rivaldo] 06/1/2004 09:29

A comforting bounce today on low volumes - maybe I was right about getting those large trades out of the way.

Looking forward to a trading statement in early February (as in 2003) to kick-start the re-rating.

[greatbear] 06/1/2004 00:06

Agree entirely rivaldo, deserve a P/E of at least 10, and perhaps 12 (sector average) if you take into accound the dividend yeild of over 4%.


GB.

[rivaldo] 05/1/2004 22:01

Two large trades went through totalling 196,000 shares, almost certainly sells, so I think these probably had more effect than the other smaller trades.

With those out of the way, perhaps HPS will resume its upward path. On current ratios it's hard to see much downside and easy to see 100% upside to give rise to a P/E of 10 - or maybe more given the forecast growth in EPS.

[sranmal] 05/1/2004 13:46

The Fleet Street Letter "take profits" advice just before Xmas said to sell this week so as to get a better price due to illiquidity, hence, the small sells I presume.

Divi should be paid today, and very nice it is too!

[crawford] 05/1/2004 12:31

I don't think Hercules ESOP would be buying at 209.5p if they didn't think it cheap.

[largeronald] 05/1/2004 11:22

Rivaldo - I have to agree. It was a toss-up as to whether to top up with these last week or have a dabble on HCU. Went for HCU, but I'm sure it will only be a short-lived advantage.

[rivaldo] 05/1/2004 11:02

No posts for 13 days and a load of small sells today - not a good start to 2004!

Despite the signal from the AESOP on 23rd December, and the excellent fundamentals and prospects, the shares seem to have reached a plateau at these levels. There's been a lot of profit-taking on advice from tipsheets etc who recommended HPS at much lower levels - I wonder if there's been another take profits rec? Personally, I'm bemused - the property markets still look firm and the ratios going forward are cheap as chips. I'm happy to leave these in my ISA for another 100% this year - but happy to accept other opinions.

[rivaldo] 23/12/2003 12:28

And more good news - new RNS shows the Hercules ESOP buying in 20,000 shares. I wonder why...!

"Hercules Property Services PLC (the 'Company' or 'Hercules') was notified on 23 December 2003 of dealings in its ordinary shares of 5p each ('Ordinary Shares') by HPS Property Limited, the trustee of the Hercules Property Services PLC All Employee Share Ownership Plan 2001 (the 'AESOP'), which is a discretionary trust for the benefit of its employees (including executive directors), in connection with the following transaction (the 'Transaction').

Date of Transaction: 23 December 2003
Transaction: Purchase of Ordinary Shares
Number of Ordinary Shares Purchased: 20,000
Price per Ordinary Share: 209.5p

Following the Transaction, the trustee of the AESOP holds a total of 339,100
Ordinary Shares in Hercules representing approximately 1.87 per cent. of the
Company's issued share capital. Under paragraph 2 of Schedule 13 to the
Companies Act 1985 (the 'Act'), the executive directors are deemed to be
interested in these shares for the purposes of section 324 of the Act."

[penpont] 23/12/2003 11:25

Quite agree rivaldo - looks like around 100 small punters jumped yesterday, on what looks likes the flimsiest of reasons, from a stock valued at around 5 times forward earnings. Have a feeling most of them will regret it.

[rivaldo] 23/12/2003 11:08

Yep, thanx sranlmal. Amazing how many people follow advice like lemmings.

That was an 187,500 X trade at 210p - quite a chunk. HPS remains a bargain IMO, and with all going well could be a 1-bagger in 2004. This would give a forward P/E of 10 - not exactly demanding.

[crawford] 23/12/2003 09:01

sranlmal, thanks for the info. Looks like this tip has made a good buy opportunity.

I think a number of things have happened. The large seller made MM's mark down stock first, it fell out of the uptrend meaning more people would sell, it continued down forcing other sellers out, then the tip sheet take profits advice.

There is a big cross trade this morning which looks like good news.

[penpont] 22/12/2003 19:48

thanks sranmal - was pretty sure myself it had been a tip sheet inspired fall as had all the usual signs.

[sranmal] 22/12/2003 18:29

Fleet Street Letter said take profits over the w/e, nothing at all wrong with the company but they've made a tidy profit and they think there is resistance to further moves up in the short term, and there was some small selling over the last few weeks. They don't think debt will be tackled till later in 2004. They did advise selling after the New Year due to the illiquidity, plus I expect MMs have marked down excessively on seeing their advice. Their "take profits" advice seems strange given their LTBH strategy. I continue to hold as there continues to be significant value here for the patient investor.

Note that SCSW featured these as one of their main plays a couple of months ago at 194p. With the price now only slightly above that, wouldn't surprise me if they picked this as one of their 2004 naps. Their next issue is 10th Jan.

[rivaldo] 22/12/2003 10:58

Go on then Crawford, spill the beans! Did the FD say anything about current trading or reasons for the recent fall?

[crawford] 22/12/2003 10:00

Agree Rivaldlo - I've topped up.

I spoke to the Finance Director of HPS last week and I'm quite content to hold/top up.

[rivaldo] 22/12/2003 09:08

Must be some tipster or other saying take profits before the year end, i.e covering his backside to protect his record for the year.

With a trading statement due in just over a month's time (based on last year), followed quickly by interims, on a current year P/E of just over 6 and with a 4% yield, and on a fast recovery path, seems to me like a buying opportunity.

The price appears to have recovered a bit and stabilised anyway.

[compscidude] 22/12/2003 08:37

what a great start to the day :)

oh well. I was looking for an excuse to sell, but I had hoped it would be a rise rather than a fall.

[penpont] 22/12/2003 08:06

Quite a few small sells fist thing today - suggests it's been given a sell or take profits rec over the weekend?