Hercules Props. Share Discussion Threads

[rivaldo] 03/9/2004 11:58

Results are forecast for the week of September 13th according to the HPS web site. Small selling has caused a minor dip, but in line or better results should cause a much greater rise IMO based on a forward P/E of just 7.3 and a healthy dividend.

[rivaldo] 20/8/2004 12:35

Ta for that sandbank - seeing as Investec keep reiterating their forecasts and HPS have said everything is on track I'm expecting results to be in line at worst, which should encourage another re-rating...

[sandbank] 20/8/2004 12:00

RIVALDO: No. I wish I was in the property business. But I have spoken to someone this week who I believe is in the know. The line I heard was that HPS are "very pleased with themselves". ...although pride (or was that price?) goes before a fall etc etc!

[rivaldo] 19/8/2004 17:06

Sounds like you're in the property business or in the know Sandbank?! Sounds convincing anyway. On a forward P/E of around 7.4, with a decent divi and showing excellent growth I can't see much downside but can see 50% upside over the next few months.

[sandbank] 19/8/2004 16:08

SIMON: ..Know what you mean. But HPS really is a different business and, whilst the city takes a long time to forgive past transgressions, this really is a much improved company IMHO. The little aside in the recent RNS about the acquisition is a hint about the transformation HPS has undergone. The full year results are out on September 15th and - from what i hear - I don't think anyone will be disappointed.

[simon gordon] 12/8/2004 10:15

Rivaldo

I thought you might like this website:

[rivaldo] 10/8/2004 19:23

Investing is about timing and instinct Simon - you could have said the same about HPS when the share price went down to 70p or so. I bought at around 130p when the prospective P/E was only around 4, and evidently since then a number of people have warmed to HPS sufficiently to drive the price up to 285p and for institutions to subscribe for a placing at 275p.

HPS have also beefed up their management - Joanathan Gooding was appointed a year ago to head up the Property Services division, and Nigel Davis (ex-Hanson) was brought in as FD in 2002. I agree that management is all-important, and a decent FD in particular should help avert any warnings such as those of 3 years ago.

I see from HPS' web site that Investec have reiterated their Buy recommendation for HPS once AGAIN, dating from 2nd August. Their EPS figures remain as:

Historic to 30/6/04 - 34.82p, divi 8.55p
Current to 30/6/05 - 37.92p, divi 9.15p

I'm hopeful, given that HPS have consistently delivered for the last couple of years, that these imminent results will start a re-rating to a P/E of 10 or 11, i.e a price of around £4.

[acamas] 10/8/2004 16:12

Simon

Thanks for your comments. To me it is a puzzle as to how to get the best from both shares. On paper(fundamentals) both look like growth companies/recovery plays but the market seems slow to acknowledge this fact. However, the market never takes prisoners it wants winners all the time. I shall be patient a little while longer and see if the recovery situation becomes more bullish. Perhaps the next three months will prove crucial.

[simon gordon] 10/8/2004 15:47

Acamas

I know a little about Serco and I've never been tempted to buy them.

I missed them in the early days - Serco, Capita, Sage, etc.

The Analyst used to back them but in a recent issue they are not mentioned.

Serco had a share price crash before and maybe it just can't get market momentum, for some will never buy again, and its glory days are past now, it is valued as a fairly large cap who can't go that extra step like Capita or Compass.

That is just a theory!

[acamas] 10/8/2004 13:54

Simon

I take your point it is well made and clearly laid out. However, if we changed the company in question from HPS to SRP then I think they would pass all your criteria. Yet their share price is reducing when on all the information available it should be going the other way. I cannot help but feel that the HPS of yester year is not the HPS of today. I would be very interested in any comments you may have on both these companies as I hold shares in both and I do find them in conflict when trying to apply a logical approach to analysis. SRP have long term contracts and a very good management team, well trained staff, financially sound. Itis a mystery to me at this moment? Help!

[simon gordon] 10/8/2004 12:42

Rivaldo

I am not into deramping - what ever that is - I just post an opinion of why HPS is cheap. In the market a reason exists for why a stock is valued at a consensus price.

HPS has a poor history of delivery and when you buy the shares this is a big factor, and that is why I will not buy them, even though they look good value -I just don't trust management. And management, for me, are the most important factor when buying a share.

These are the key factors I insist on when I buy a stock:

1. A sound balance sheet.
2. Satisfactory cash flow.
3. An above average return on equity.
4. Able managemnt.
5. A satisfactory outlook for continued growth.
6. An attractive product or an attractive service.
7. A strong market in which to operate.

Do you think HPS passes all these factors?

A very wise nugget I learnt:

'Share performance is ultimately a reflection of past progress and expected future prospects'.

When you buy HPS you are speculating that they can deliver on future prospects after having failed in the past. The past performance has created uncertainty which the market hates!

[rivaldo] 09/8/2004 22:40

Fair enough GB, I agree ERG looks reasonable value - it's just that it's on a P/E of 10 for the current year whereas HPS is on a P/E of only 7.5 (assuming the historic results come in on track as flagged by the company). So, especially in the current market, IMHO there's far more upside and less downside in HPS.

But ERG have certainly impressed me so far - it's been on my watchlist for a while and if it falls far enough.....

[greatbear] 09/8/2004 21:54

Rivaldo,

I have a foot in both camps, ERG and HPS (probably not on my own as these were SCSW tips).
I've noticed on a few occasions on this board you have references to ERG, claiming that HPS is better value.

I certainly would not call a rolling P/E of 9.5 expensive, with the EPS growth for ERG (85% then 27%), justifying easily a sector average P/E of just over 12.
This is not accounting for the 3.3% yeild.

HPS is undervalued (rolling P/E of 7.5), but steady growth company which I believe also justifys an average sector P/E due to it's generous 3.3 yeild.

IMHO judging by the forcasts and valuations, both are worthy stocks to buy/hold.

GB.

[rivaldo] 09/8/2004 17:14

Welcome back Simon! We've been through your prognosis several times before, so why have you suddenly appeared again? Could it be because your fave ERG is dropping whilst HPS appears nice and stable and in an uptrend?

You've posted some good stuff on the ERG board which I lurk on (ERG looks interesting, but it's on a too expensive P/E for me compared to HPS). So why bother keep coming back with the same old meaningless speculation as before?

Above all, HPS are making all the right moves:

- raising money from institutions at just below the current share price
- confirming that this year's results are on track to meet forecasts
- consolidating internally and growing via acquisition
- buying in shares for the AESOP at around the current level, another good sign
- and on a cheap P/E with an excellent dividend

These are the facts, not speculation. If you're proved right I'll take my hat off to you. If not and the share price continues to rise I hope you'll do the same. But do us a favour and post facts, not hearsay and bare-faced deramping.

[greatbear] 08/8/2004 14:17

On a P/E of 12.25 (sector average) these are worth 470.
Even P/E of 10 they are worth 380 on a years growth.

GB.

[welsheagle] 08/8/2004 13:49

From August's 'Company Refs':-
a/ Prospective PE ratio of 7.52 (based on one broker forecast, recommending 'buy').
b/ Forecast growth in eps of 8.9%.
c/ Dividend yield of 3.21%.
d/ Margin of 24.3%.
e/ Net asset value per share of 308p per share.
f/ Cash flow of 50.4p per share.

Overall these compare favourably with the rest of the market.

[acamas] 03/8/2004 09:54

rivaldo-interesting; people not tempted to sell how will the mm's get their hands on stock other than by pushing up the price if a big buyer lurks in the shadows. I hope it is not just the good news because like daylight it tends to fade into night. I want large buyers to advance the stock

[rivaldo] 03/8/2004 08:29

Acamas, no big late trades went through - I tend to think that with all the good news there might not be a lot of stock around. Good solid start to the day anyway.

[acamas] 02/8/2004 15:50

There must be a big buy somewhere because the mm's do not mark up 7p unless they are trying to obtain stock. Todays figures are weak for a 7.5p mark up

[acamas] 02/8/2004 13:16

Simon - Thanks. I believe that since Robert Plumb came on board the company has been slowly but surely moving in the right direction. Currently I have confidence in the man to continue to support him and the company. I trust my bank balance will reflect this view also come next Easter. An expensive holiday in The Med is what I am hoping for from these shares.

[simon gordon] 02/8/2004 13:06

I suppose my thesis is that HPS are a recovery stock with upside potential but that after losing control of the profit lines and having debt of around £30m they are a risky bet, for if they lose control again, the share price would collapse violently. So looking at the probabilities I passed on buying shares in HPS even though they are cheap and have potential profit.

P.S. Both Larry Lipman and Robert Plumb have full page photos of themselves in the annual report - always a worrying sign!

Good luck!!!

[acamas] 02/8/2004 11:57

Simon - My understanding was that the French Insurance Company went belly up on them and they were left with a large debt to cover. Often when you trade with foreign companies you need to be as wise as an owl and as sharp eyed as an eagle.