Hydrogen Share Discussion Threads

[cfro] 04/9/2011 18:47

Oh yes, a busy week indeed and i will be up bright and early tomorrow morning.

Net margins will have to be atleast 2% imo. I see no reason why that wont be the case tho. Its the forward statement that im most interested in.

Dont forget EMR reporting Thursday too. Thats three recruiters this week.

Especially looking forward to TTR Thur. too.

And as for SDM.....You either can read my mind or i can read yours....not sure which, but SDM had dropped off my watchlist a while ago after i became bearish on the stock.
Was only thinking this weekend after the discussion of EKT and the electronics sector over on the Zulu board, that i ought to take a fresh look again at SDM which seems to have held up well in the sell off. Was going to take a look at when the next set of results were due either today or tomorrow.....and lo and behold its mentioned here!!

edit - I will add that i only own 2000 shares here but i hope to be to be given an opportunity tomorrow to buy more. We'll see.

[interceptor2] 04/9/2011 15:48

Half year results tomorrow.

I will be very interested to see tomorrows statement. The net margins will tell the story imo, if they are 2% then we should see a very healthy EPS, which would make the forecast of 10.5p to the full year look conservative.

Set the alarm clock nice and early.

Busy week

HYDG - Monday
STAF - Monday
AMS - Wednesday
SDM - Wednesday
TTR - Thursday

ic2...

[cfro] 30/8/2011 16:02

Up a penny on the bid.

[interceptor2] 17/8/2011 22:11

Not in IDOX after a bit of a clear out, but still in APC, HYDG, IDG, JDG, TCN and TTR. Just sitting on the fence for now, and will wait for a market trend before buying again. And how the company reporting season feels looking forward.

I liked the HVN results very much, but one holding in this sector is enough for me. The interesting point thing about the update was how close the percentage increases were to the last HYDG update.

ic2...

[cfro] 17/8/2011 18:54

Thanks IC and duely noted. Im pretty convinced that the results will make excellent reading and will most likely put a rocket up HYDG's bum. I will also buy more first thing if the statement is good.

PS. Its obviously up to you when and where you commit your portfolio money, but i do recommend HVN too. It has to be on a single digit PE and has cash on the balance sheet too. A very good opportunity for surefire substantial gains in the next few weeks in my strong opinion.

PPS. Are you still in IDOX btw? I reckon thats due a big move up soon as well., all in my opinion.

[interceptor2] 17/8/2011 13:06

Confirmed - Interims due 5th September

[interceptor2] 16/8/2011 21:13

With Interims due on the 6th September, I will be looking at the net margins closely. 2010 results had net margins of 1.4% due mainly to the effects of additional staff, which looks like a one off.

I have looked at the balance sheet and tried to conservatively work out what the EPS figure might be using +30% revenue growth. At 2% = 13.8p, At 2.5% = 17.2p.

We should have a clearer picture on the 6th September, and if projections look realistic I will have my finger on the buy button at 08:00.

ic2...

[interceptor2] 16/8/2011 19:29

I agree the HVN statement did seem very strong, unfortunately I was playing golf today (badly) so was out before the market opened, and back after it closed. I will take a closer look tonight, but inclined to just hold this one for now.

I haven't had much luck with this sector yet, first EMR had problems in Germany, then Fridays RNS for a lost a contract at ITQ looks messy. Just as well we sold when we did.

Good to see you here, Interims expected 6th September.

ic2...

[cfro] 16/8/2011 09:28

Bought 2000 sharea @£1 IC2.

That HVN statement is the best i've seen in months from any share. I bought a few HVN this morning too. Ought to buy some of them yourself imo...

[interceptor2] 16/8/2011 07:23

Strong trading statement from HVN, bodes well for HYDG imo.

ic2...

[interceptor2] 13/7/2011 16:27

Correction to previous post.

Shore Capital was reiteration of their buy stance.

ic2...

[interceptor2] 13/7/2011 08:47

Yesterday saw nearly all my portfolio decline, apart from HYDG which slightly increased.

We now have a third broker covering them (Shore Capital) with a Buy and EPS forecasts of 10.50p and 14.30p.

I haven't found their research report yet, but if I come across it I will post it here.

ic2...

[interceptor2] 07/7/2011 11:00

Below are some figures I have been working on after the Finncap increased forecast this week. I think it shows they have been very conservative, under promise, over achieve etc. See below...

ic2...

Hydrogen Group

2010 Results =
Revenue £123.0m, Profit after tax = £1.75m divide by 21,991m shares = 7.96p EPS
Net Margins = 1.4%

Finncap forecast = PBT = £3.5m and EPS = 10.7p
After Tax profit must be £2.52m to give EPS figure.

HYDG trading update said NFI had increased 41% for contract division which = 86% of group revenue. So below is how Finncap might have come to their forecasts using only a conservative 20% and 30% increase in revenue.

Revenue £148m + 20%
PAT = £2.52m divide by fully diluted 23,195m = EPS 10.8p (close)
Net margin = 1.7%

Revenue £159.9m + 30%
PAT = £2.52m divide by fully diluted 23,195m = EPS 10.8p (close)
Net margin = 1.56%

It's interesting to see what I believe the Net margin figure Finncap may of used.

I believe net margins will increase more due to last years increase in staffing which held margins back, HYDG confirm in it's recent statement that conversion of NFI to profit to be significantly ahead of last year.

Below is how the EPS could look at 2% and 2.5% net margins using the full diluted share figure of 23,196m.

Revenue £148m + 20%
PAT = £3.00m divide by fully diluted 23,195m = EPS 12.9p
Net margin = 2.0%

Revenue £148m + 20%
PAT = £3.70m divide by fully diluted 23,195m = EPS 15.9p
Net margin = 2.5%


Revenue £159.9m + 30%
PAT = £3.20m divide by fully diluted 23,195m = EPS 13.8p
Net margin = 2.0%

Revenue £159.9m + 30%
PAT = £4.0m divide by fully diluted 23,195m = EPS 17.2p
Net margin = 2.5%

Conclusion = Plenty of room for upgrades this year.

[interceptor2] 06/7/2011 08:21

Strong Q2 trading update from Robert Walters (RWA), International business very strong. Together with the HYDG statement, these updates show how this sector is accelerating now.

ic2...

[chrisb1103] 04/7/2011 17:58

Thansk again ic2 great initial reaction today to a very strong statement, good to see those PBT upgrades and long way to go here to their tp

[interceptor2] 04/7/2011 15:14

Finncap bullish research note, see below.


Finncap highlight the record performance put in by the firm´s contract business, which accounts for 88% of revenue and 46% of net fee income. As well, its permanent business has recovered after a slow start to the year. Furthermore, Hydrogen´s strategic overseas expansion seems to be continuing successfully.

finnCap has raised it's PBT forecasts to £3.50m, from £3.25m, and EPS from 9.9p to 10.7p. As well, it believes that, "forecast risk remains on the upside."

Finncap states that in the last twelve months, "the stock has moved from one of the most expensive in its peer group to one of the cheapest. The stock now sits at a PE of 8.3x and a yield of 4.6% representing a PE discount of c.40% and a yield premium of 35%."

For all of the above reasons finnCap has decided to retain a buy rating on shares of Hydrogen with a price target of 150p.

[interceptor2] 04/7/2011 08:35

One of those trading statement that until you have read it a few times, it only slowly sinks in how strong it is.

"Contract business delivered record performance" Contract business is 86% (£108.0m) of revenue against Permanent @ 14% (£15.4m)

They also state that conversion of NFI to profit significantly ahead of H1 in 2010. Which should mean the rapid improvement in net margins that I was writing about in my previous post.

This could really fly now.

I could only buy 1000 @ 95p this morning, but will keep trying.

ic2...

[chrisb1103] 04/7/2011 07:59

Trading ahead of board's expectations in first 6 months, NFI up 40% and improved conversion of NFI to profit though continued cost control - "significantly ahead of the first half of 2010"

Great statement. Very confident here for further progress.

[chrisb1103] 03/7/2011 17:52

Thanks IC2 - appreciate your research here and totally agree with the sentiments from your findings - HYDG has an unjustly low rating. If standard life have cleared their remaining holding, without the overhang this really could rebound very sharply. If previous years are to be a guide a statement is now well overdue - could be the catalyst needed here.

[interceptor2] 03/7/2011 09:56

Net Margins in 2010 were 1.4% with H1 and H2 very similar.

2007 = 5.4%, 2008 = 1%, 2009 = n/a, 2010 = 1.4%

2010 net margins were held back by increased administration due to increased staff, as HYDG expanded internationally and in Engineering. See Finals extract below.

"We continued to invest in our internal training and recruitment functions over the year, which in turn enabled us to increase total headcount by 31% to 329 (December 2009: 252). It is encouraging to note that headcount has now returned to our peak 2007 levels. Productivity per head is yet to reach the levels achieved at the peak of the last economic cycle and therefore we expect to see an incremental impact from this investment in the future."

Even though Brokers forecasts are very positive with PERs of 8 and 6.6, I believe they could prove too conservative as margins increase faster then anticipated.

The peak price in the last economic cycle of 325p giving a PSR of 0.71, todays PSR @ 88p = 0.16.

Undervalued imo.

ic2...

[interceptor2] 01/7/2011 21:43

I was thinking about the possible overhang today, and looking back at the RNS statements it seems that the two directors brought their 116k off Standard Life on 20th May. Hence the price below the spread of 85p.

On the 20th May Sandard Life had 250k left or 1.063%, and I think todays 50k transaction showing as a sell @ 87.5p could very well be a buy under the spread. If so the overhang could clear quickly now, if this is the case.

I guess it would be in the interest of a large seller in an illiquid company, to have arranged sales below the spread rather than sell at the market and drive the price down further.

ic2...

[chrisb1103] 30/6/2011 22:05

Good to see you here IC2, i reckon you could be right about a seller having taken these down - illiquid so it's taken a knock. But it's presented an attractive entry point for me too and am surprised there's not been more interest considering. Some fairly chunky trades went through a few days ago so maybe a good sign and we could get a sharp reversal on a good statement. CEO/Chairman have big stakes which i also like and there's a number of good indicators that there's plenty of growth prospects in the business too. Let's see, could even see a decent re-rating as with others in the sector in the weeks/months to come if the positive news flow of late continues imo...

[interceptor2] 30/6/2011 15:01

These came up when screening for value stocks with growth prospects. So I brought an initial holding today, I wanted a position before the forthcoming trading update.

I can see no reason for the fall in the stock price from May. They even opened a new office in Hong Kong in April, after the success of the Singapore office.

As chrisb1103 points out, that the CEO and Chairman both brought shares @ 85p each, this could prove a very good entry price.

BTW - I managed to buy in @ 88p below the spread, which might indicate a seller in the background. Or I was just very luckly like the two Directors.

ic2...

[chrisb1103] 23/6/2011 00:18

Had these on my watch list for a while and added today, should be an update at the start of July (which seems usual going by previous years) and I'm seeing lots of reasons why it could be very positive. Strong results for 2010 anounced in March with excellent progress from recent international expansions, CEO and chairman buying 58,000 each in May at these levels (both with significant holdings), EPS growth forecasts i've found are good, for 33-36% in current year to end Dec 2011 (P/E of 8) and 20-23% next year (P/E falling to 6.7). Seems a bit too cheap for that kind of growth to me. Decent yield at this price too.

Quiet message board here (good sign?) - reckon the drop has been overdone, maybe a double bottom on chart and could reverse sharply here - some other players in recruitment sector doing well lately. Rather illiquid but the spread has been very tight today. I'm in...