Interquest Share Discussion Threads

[cfro] 09/6/2016 18:29

It beats me as to why folk follow such silly 'guru's' and especially those that pay for their useless advice!

[standish11] 09/6/2016 16:30

5p drop in the share price today. Robbie Burns has sold out and Helium Fund has dumped some.

[cfro] 07/6/2016 13:36

Full trading update in early July..

Sounds like today was just an introductory meeting for the new management.

[adamb1978] 06/6/2016 22:31

AGM statement tomorrow...expectations anyone? I'd settle for a trading update saying that performance YTD is in-line with expectations

[aishah] 06/6/2016 11:03

As SCSW points out, ITQ are involved in high growth areas like IoT,Big Data Analytics, etc. That's the reason I invested here a while ago. Still cheap imo. dyor

[battlebus2] 06/6/2016 08:22

Thanks cfro....

[cfro] 06/6/2016 08:20

Tipped in scsw. :-)

[battlebus2] 31/5/2016 18:43

Thanks IC2, a very detailed summary, I think we are still looking for that potential buyer at some point.

[cfro] 31/5/2016 18:16

Excellent post interceptor,

It's this target of the digital economy that could be the key to ITQ's future success. This sector is currently exhibiting high growth.

To me, i would then expect to see a much higher rating put on the share price So many recruiters fail to trade on pe's much above ten. This reason for this, imo, is because many have a focus on the public sector which is much more steady growth.

[sailing john] 31/5/2016 09:44

Good summary I2. I agree with your analysis and thanks for sharing (increasing margin is the key metric). As you say the next TS (AGM 7th June) should give a better idea of current trading.

SJ

[interceptor2] 31/5/2016 09:33

Thanks for highlighting revenue reduction last year in H2, this prompted me to take a close look at the business, and I believe I have a clearer picture now of where this business is heading.

I have looked further into why revenue was lower in H2 of 2015, so decided to look back at the historical difference in the past 3 years, As can be seen from the figures below in 2013 and 2014 revenue was slightly stronger in H2, yet this reversed in 2015. But look at the net margin figures that have strengthen strongly in H2 of 2015. This I believe highlights the change of business emphasis towards higher margin business which accelerated last year and will I believe accelerate further now that the new management team are in place.

2013 H1, REV = £56.23, PAT = £0.986m, Net Margin = 1.75%
2013 H2, REV = £57,06, PAT = £0.918m, Net Margin = 1.61%

2014 H1, REV = £73,00m, PAT = £1.179m, Net Margin = 1.61%
2014 H2, REV = £77,65m, PAT = £1,466m, Net Margin = 1.88%

2015 H1, REV = £81,19m, PAT = £1.624m, Net Margin = 2.0%
2015 H1, REV = £77,42m, PAT = £1,751m, Net Margin = 2.26%

Following statements from interims in September 2015.

"Interquest operates at the leading edge of the analytics and digital technology"

"It is, however, our continued strength in developing specialist niche markets that drives growth and as the Group benefits from the operational leverage inherent in the business our financial performance during the period has further improved:"

Statement below is from a report on Interquest which was available after the last full year results, which I believe shows clearly their business focus.

"Revenue improved 5% to £158m. However of greater importance to a recruitment company; the NFI (Net Fee Income), improved a more sedentary 3% to £23.8m. This lower figure belies what is beneath, as we will learn that the Interquest strategy is to increase focus on higher margin business, leaving the more generic technology recruitment to its peers."

I think this statement fits in with the message that came across from both the CEO and the CFO at last month's investment show, Next week's AGM statement should hopefully confirm that this strategy is continuing to be successful, higher margins are already being achieved, if revenues also start to increase that can be a rather powerful combination.

[adamb1978] 31/5/2016 08:38

Essential cool,

It depends on what measure you look at. In 2012-4 H2 was strong than H1, yet in 2015 H2 was 7% than H1

In terms of profits, if you look at pre-exceptional EBITA then H2 was weaker in 2012 and 2013 but marginally up in 2014 and more or less flat in 2015.

My concern was more about the top-line though and the H2 decline in 2015

Adam

[effortless cool] 30/5/2016 20:40

H2 has been weaker than H1 in all of the last four years, although the gap between them was relatively small in 2014 and 2015.

[pj 1] 30/5/2016 20:36

No access to my files / records at the mo. But is a weak H2 a trend or was it a blip? Hands up for when I researched and chatted with the CEO I missed any H 2 threats.

[effortless cool] 30/5/2016 14:41

Adam,

Yes, that's one of my concerns. I don't get anywhere near those forecasts for 2016 (£160.3m revenue, 9.1p EPS). Thus, whilst ITQ is fairly valued on my methodology, I am concerned that there may be a profit warning in the pipeline due to the broker forecast being too high.

[adamb1978] 30/5/2016 14:00

Currently a holder and checking back in on these and a couple other things after been manic at work for a month or so.

Whilst I liked the positive tone in the prelims and also the comment from the CEO made at an investor show (referred to a few posts above), I really don't like the fact that H2 last year was poor - turnover 7% below H1. I'm struggling therefore to see how you get from that to the £176m revenue and 11.8p EPS forecast.

Anyone have any views (aside from H2 being hit my the management changes)?
Thanks

[cfro] 25/5/2016 18:17

Worth noting the sector/s of the economy that ITQ are targeting - ie big Data!

Investors paying 99p now....

[effortless cool] 25/5/2016 09:30

Yes - a very good non-exec recruit.

[sailing john] 25/5/2016 09:16

That photo reminded me that 12 months back they recruited David Higgins - founder and CEO of Harvey Nash as a non exec. I assume he provides both wise council in growing the business and perhaps some important contacts.

[interceptor2] 25/5/2016 09:04

I can see what you mean :o) It does make him stand out from the background.

[effortless cool] 25/5/2016 09:01

Thanks for the info, i2. I was perturbed, however, on clicking your link, to find that the Chairman seems to be wearing Trigger's suit!

[interceptor2] 25/5/2016 08:46

Good posts EC and SJ.

AGM statement due in less than two weeks 07th June. In the results statement 9th March CEO Chris Elderidge said that "Following on from a record 2015 the new financial year has started positively." then at the Master Investor show 23rd April he said that ITQ has seen a smart start to the year.

Gives confidence that the AGM statement will be positive.

I was impressed with both the CEO and CFO at the investor show, spoke to the CFO David Bygrove who came across well and answered all my questions comprehensively. I had the impression that the plan is to build the business and then be in a position to sell for a decent profit within a timeframe of two years.

Looking back at the history of David Bygrove shows that he has had a successful and profitable career in this area.

[sailing john] 25/5/2016 08:20

I have a theory about the CEO/CFO - but I might be wrong. Their departure was announced about 9 months after the For Sale Board went up and I think they perhaps took the decision that they didn't want to be part of a larger Group - probably in a lower position assuming they were even offered a position if the business was sold.

I have assumed that the new incumbents are aware that part of their remit might well be to promote the sale of the business.

All guesswork of course so just imo

PE 10 reasonable if low/no growth but I sense both the sector and ITQ are strong so I am expecting further growth and along with my theme above I think they will pull out all the stops to make the business look attractive to a potential buyer.

SJ

[effortless cool] 25/5/2016 07:05

Fair challenges, SJ.

I used a target PE ratio of 10, then adjusted the valuation for net debt, tax liabilities and in-the-money options. All of these three adjustments reduced the valuation. I would want to see stronger revenue growth to justify a higher target multiple.

Your comment about the Chair is interesting bit not something I can model. Similarly, I can't model the departures of the CEO and CFO last year, which hardly suggests that they saw great things in the pipeline.

Overall, I am happy to hold, and certainly hope that your valuation proves more accurate than mine.

[sailing john] 24/5/2016 22:21

Thanks for sharing EC but a key piece of info missing is your PE assumption as we know that currently ITQ's PE is relatively low compared to Peers.

Also have you factored in the Chair's desire to cash in his 35% holding presumably through another attempt to sell the business either as a whole or in parts perhaps within a couple of years.

My valuation is well North of where we are now taking relatively low PE and potential sale into account.

SJ