Hercules Props. Share Discussion Threads

[acamas] 02/8/2004 11:14

rivaldo - My view on the company is as follows. The group is now bigger and stronger. Past problems are ancient history. Profits are incoming from all areas of the business. The debt burden is slowly decreasing. Based on this the share price has the potential to double before next Easter. As regards the annual accounts of any company when it comes to presentation some get it right and some don't. So long as the maths and ratios look ok that will do me everytime because for around 340 days of every year mine just collect dust.

[rivaldo] 02/8/2004 10:59

No offence sg, but simon evans' post above has already alluded to the events of 3 years ago, so why bring it up again? If you raise serious points other than "a bloke in a pub told me..." that's fine, but to suddenly appear here from nowhere and start de-ramping without substance comes over badly to those who've been here for a while..and I agree, too many photos of directors is not good. If they announce they've bought a new head office I'll be out!

Shares up 7.5p now, but still only on a P/E of 7.5 to 30/6/05.

[simon gordon] 02/8/2004 10:21

Have you looked at the annual report which has a full page picture of the main director. The report is full of pictures and very little data on what makes the company tick!

It is one of the worst annual report presenations I have yet to see.

If the HPS strategy is sound why did the profits collapse and have yet to fully recover?

To parody anothers contribution is short sighted.

I'll be back!!!

[rivaldo] 02/8/2004 09:23

Thx simon. Looks like others agree - excellent start to the morning, but still another 50% to go for IMO.

[simonevans] 31/7/2004 19:36

simon gordon - I have to agree with Rivaldo. The HPS strategy is sound and is based on referrals. The only mistake they made (3 years ago now) was to stretch their balance sheet too far, but this is now well under control. I would still like to see the group re-focus through a demerger though. The rating is poor and a split down the middle to a property services group and a property insurance company may be the tonic that is required and the chance to start again + raise investor attention.

[rivaldo] 31/7/2004 17:26

Hello Simon, where've you come from?! I got this e-mail from a bloke in Nigeria who tells me there's $30m sitting in a bank account just waiting for me - sounds like it can't go wrong...

Lack of coherent strategy eh? Have you read this announcement?



I quote - "'This is an important step for us and takes us closer to our ambition of becoming the foremost property insurance broker in the UK."

Unless that is you know the company personally and can give us a little more meat on your generalisations?

Otherwise I'd rather concentrate on the facts:



"' We expect to announce preliminary results for the year ended 30 June 2004 in
September. These will be in line with market expectations and I remain
optimistic about the Group's future earnings growth.'"

I would also guess that the institutions who invested at 275p in March did so in the belief that HPS' rating will improve along with yet another good set of results from its derisory P/E to 30/6/05 of 7.3.

[simon gordon] 30/7/2004 16:07

Once a company has shown it cannot control its profit lines it will be rated lower by the market.

I spoke to someone in property/insurance and they said Hercules will not be able to get the previous margins they had in the past.

If you look at the structure of this company it is lots of little units.

I do not perceive a coherent strategy and branding policy.

[rivaldo] 30/7/2004 14:18

Thx for that ynotna - always good to have the chartists onside as well.

Dupree - not so. Back in mid and late 2001, after results showing adjusted EPS of 51p, HPS was trading at 650p-700p, i.e a P/E of 13 or 14. It was the events afterwards that affected faith in the company and therefore its rating.

Other similar companies (i.e ERG) are trading at P/E's of 11 to 13, or more. If HPS continues to deliver, then a run to £4 could be on the cards. All the recent indications, from trading statements, placings with institutions etc etc, show that everything is in place.

[ynotna] 30/7/2004 12:19

Posted this on pbb board as well

HPS edging better - results 8 sept last year. acquisistion statement on 23 july said

"We expect to announce preliminary results for the year ended 30 June 2004 in
September. These will be in line with market expectations and I remain
optimistic about the Group's future earnings growth."

share price still pegged close to March placing price of 275p....chart looks good for a run into figures...bolly bands really tight & price about to break through 10, 20 & 50 day MA

[dupree] 30/7/2004 12:13

I am always boring on about this, but hasn't hps always had a modest p/e? I think I remember hopes of a re-rating going back years. Someone good at numbers and research might post some facts on this. My inclination is that we may have to put up with quite conservative p/e.
I headlined the thread p/e 4. If p/e is now over 7 as mentioned above then maybe we should look for other indicators than p/e to push it on much further.
I would certainly bet against double figures or even 9.
meanwhile the % divi is getting smaller not bigger

[rivaldo] 27/7/2004 11:30

Yep. Two small-ish buys today have forced the MM's to widen the spread, and Level 2 is 2v1, so maybe there is now a shortage of stock. Punters buying now can get in at virtually the same price as the institutions did at their 275p placing price.

HPS have also updated their web site with those latest Investec forecasts. Interesting that Investec have kept their EPS forecasts despite the placing in (from memory) March - they must be confident.:



Y/E 30/6/04 - PBT £9.25m, EPS 34.82p, divi 8.55p
Y/E 30/6/05 - PBT £10.4m, EPS 37.92p, divi 9.15p

[acamas] 27/7/2004 10:55

rivaldo - It cannot be long before someone in the press wakes up to the fact that this company is now solidly based and has future potential. Once this happens I feel confident that the shares will climb above £4. I hope to be proved right on this within the next 10 months.

[rivaldo] 26/7/2004 19:45

Considering the good trading news, 3k shares traded today was a bit of an anti-climax! I s'pose for the price to stay level on a day like today has to be considered good news. Just frustrating when the likes of ERG are getting recommended in the press on a multiple 50% or more expensive than HPS because apparently ERG's rating is cheap relative to the sector!

[simonevans] 24/7/2004 08:56

Yes, indeed. It's now looking better than at any time in the last 2/3 years imo. Could see a re-rating in the lead-up to the results imo.

[rivaldo] 24/7/2004 08:40

Yep, I particularly liked the MD's comment "I remain optimistic about the Group's future earnings growth.'" - this sounds like HPS will remain on a roll for a while.

I noticed yesterday that Investec updated their Buy recommendation and forecasts on 19th July. They've kept the same numbers as far as I can see:

Y/E 30/6/04 - 34.82p EPS, divi 8.55p
Y/E 30/6/05 - 37.92p EPS, divi 9.15p

So that'll be a current year P/E of just 7.2, and a divi yield of 3.3%. That'll do nicely.

[simonevans] 23/7/2004 16:36

Excellent news today. Back on the acquisition trail is good as Hercules can start to move forward again. Roll-on the results.

[acamas] 23/7/2004 15:53

Thanks for your comments. What can I say but "patience is a virture". Something I was short on a day or two ago.

[rivaldo] 23/7/2004 14:17

Spot on penpont. The price is slowly ticking up now, but I hope peeps realise that there was a trading statement buried in the RNS, as it was only headed up "Acquisition".

Anyway, another 50% in this IMO if, as you say, the City starts to support HPS. The resulting P/E of 11 would not be unacceptable - a higher P/E of 13 or 14 to reflect growth would be more acceptable though!

[penpont] 23/7/2004 13:36

rivaldo - the trading statement seems all that is needed to progress the rerating and I don't see why at least 10x forward shouldn't be possible.

It seems to be taking the market a long time to get over the 3 warnings Hercules had in the past and this may be why the likes of ERG, with a shorter but as yet unblemished market history is accorded a better rating.

This will no doubt be put to rights in time, and each set of good results will hopefully notch the rating up to a more acceptable level.

[rivaldo] 23/7/2004 12:59

Just as a reminder, the broker forecast is 34.82 EPS for the year just ended on 30th June, and 37.92 EPS going forward - a P/E of just 7.25 at 275p, with a dividend of 9.15p for a divi yield of 3.2%.

40plus, your 450p target would represent a current year P/E of 11.87 - i.e just about the same P/E that Erinaceuos Group is already trading at. Given that we now know results will be in line, we could hopefully see the same sort of re-rating that took HPS up from 130p-odd (when I bought) to the current 275p.

[rivaldo] 23/7/2004 12:26

Up 3.5p on just 4,900 or so shares bought straight after the RNS - perhaps not much stock around now?

[rivaldo] 23/7/2004 12:10

And here is the news! A nice acquisition (with consideration dependent on performance - nice), and a trading statment saying results out in September will be in line with expectations and a positive outlook. That'll be a historic P/E of 7.8 or so, and a forward P/E of 7.1 (from memory), plus an excellent divi. Another re-rating in prospect?



"Hercules Property Services Plc ('Hercules' or 'the Company'), the specialist
property services provider, announces that it has strengthened its agency
offering with the acquisition of Berkeley Simmons Davis Limited ('BSD'), a
London based property agency specialising in the leisure sector.

The maximum consideration for the acquisition is £1,000,000, subject to
performance targets being met over a three year period. The initial
consideration of £130,000 is satisfied by £100,000 in shares and the balance in
cash. Hercules will issue 36,180 new ordinary shares at 276.4p to satisfy the
proportion of the initial consideration, which is payable in shares.

Application has been made to the UK Listing Authority and the London Stock
Exchange for admission to (i) the Official List and (ii) to trading on the
London Stock Exchange's markets for listed securities in respect of 36,180
ordinary shares of 5p each ('New Ordinary Shares').

The New Ordinary Shares, which will rank pari passu in all respects with the
existing ordinary shares in issue, are being issued as part of the initial
consideration in connection with the acquisition of Berkeley Simmons Davis Ltd
and that dealings in the New Ordinary Shares will commence on 28 July 2004.

Robert Plumb, Managing Director of Hercules, commented:

'BSD will be integrated into Dunlop Heywood Lorenz, which is an important and
successful part of the Group. The acquisition of BSD will strengthen its
offerings and provides us with an entry to, and experience in, the important and fast-growing leisure sector.

' We expect to announce preliminary results for the year ended 30 June 2004 in
September. These will be in line with market expectations and I remain
optimistic about the Group's future earnings growth.'

[40plus] 22/7/2004 16:38

Acamas - Sometimes investments takes time, the fundamentals still look sound therefore I hold pending the next results announcements. Still looking at 4.50 target based on 12X 2005 EPS Forecast. If HPS keep producing the goods then the shares should start to re-rate to 12 as they last did in 2000. Chart still looks as if its in a price channel from March 2003 and 4.50 looks like a good point to aim at being a resistance point from around May 2002. Top of channel suggests 4.50 could be tested by Year End. No news is Good news I think!

[acamas] 22/7/2004 14:48

Rivaldo - I agree, everything you say makes sense. Other articles on this company say the shareprice is undervalued. So I ask myself what is holding the price back? And I cannot come up with a good answer