Interquest Share Discussion Threads

[cfro] 05/5/2011 13:22

Well done for all your hard work on the research interceptor2. I dug out that old Chronic Investors article and that basically swung my vote in favour. I like that emphasis on reducing the reliance on the public sector and increasing the private sector element. In my eyes that makes a hugh diffence between ITQ and STAF, where i believe that STAF are trying to diversify into the public sector. Im convinced that that will be a big mistake.

Directors also seem very bullish on the outlook for the IT industry.

I needed to have some exposure to the recruitment sector in my 'folio and after selling out of STAF and EMR recently i was left with none.

So first up, a puchase for me of 3100 shares @65p or just over. Will look to add as the story unfolds.

[interceptor2] 05/5/2011 10:59

Staffline

PSR.........2006...2007....2008....2009....2010
High........0.47...0.46....0.22....0.14....0.41
Low.........0.30...0.22....0.05....0.04....0.13

EPS..........8.0....11.3....14.2....11.1...11.5
Net Margin...2.7%...2.8%....2.5%...1.9%...2.1%

Price
High.........138....188......130.....80.....223
Low...........90......120.....30.....25.....70

Revenue......61.5...84.0....120.0....120.....115.0

Interquest

............2005...2006...2007...2008...2009...2010
PSR High....0.65...0.48...0.51...0.27...0.17...0.19
PSR Low.....0.38...0.20...0.30...0.11...0.09...0.07

EPS.........7.0p...5.2p...8.2p...9.0p...4.3p...6.1p
Net Margins.5.9%...2.5%...2.7%...2.6%...1.3%...1.6%

SP High.....77p....98p....153p....95p....55p....70p
SP Low......45p....40p....90p.....38p....30p....48p
Revenue.....27.6m..57.0m..86.7m..105.5m..97.4m..112.0m

Harvey Nash

...........2004...2005...2006...2007...2008...2009...2010
PSR High...0.38...0.32...0.24...0.21...0.15...0.11...0.10
PSR Low....0.26...0.21...0.10...0.12...0.03...0.05...0.05

EPS........0.55p..5.6p..6.3p...7.5p...9.0p...1.09p...5.85p
Net Margins.0.2%..1.7%..1.6%...1.7%...1.6%...0.23%...1.0%

SP High....105p...95p....95p....90p....55p....55p....58p
SP Low.....70p....65p....40p....55p....20p....25p....30p
Revenue....163m...202m...251m...318m...420m...376m...442m

Networkers International

...........2006...2007...2008...2009...2010
PSR High...0.63...0.23...0.17...0.16...0.20
PSR Low....0.42...0.16...0.05...0.04...0.14

EPS........2.08p..3.14p..3.75p..2.83p..2.82p
Net Margins.3.3%..1.6%...2.1%...1.6%...1/7%

SP High....39p....45p....30p....28p....33p
SP Low.....26p....30p....9p.....7p.....24p
Revenue....54.5m..177m...163m...163m...153m

I thought I would post some comparison figures for the four companies, I researched recently. All companies are attractive and I follow all four, while investing STAF and ITQ.

I find the figures of interest when compared with each other, and hope that they are of some interest to others. I will let others draw their own conclusions.

ic2.......

[interceptor2] 04/5/2011 10:27

I'm pleased you have brought up the overseas expension in either Hong Kong or Singapore, because it struck me as being very positive also that existing customers had requested ITQ to have a presence in these areas. So if or when they open an office there, they can do so with some confidence.

ic2......

[paleje] 04/5/2011 09:54

This thread has come to life and nice to see it; a few things could stimulate share price movement apart from broker and press comment. From last year's pattern:-

May - AGM statement
Jul - Trading update
Sep - Interims
Any time - Share buybacks

UK prospects for ITQ's main markets financial and IT look good with other recruiters seeing similar and they seem to have managed public sector cuts well.
Exciting bits are on-site wholesale recruitment management, which could involve training too, and to my mind very important expansion overseas where they are being asked to get involved by existing clients (that tells us there is strong client loyalty and trust). Imo any government dependent work will carry risk for some years yet but I think GA is on top of things.

[interceptor2] 04/5/2011 08:34

IC article from March below...........

InterQuest sparkles

InterQuest's chairman, chief executive and 40 per cent shareholder, Gary Ashworth, is so confident about prospects for the UK recruitment industry that he has actually been buying shares in his rivals. And there's certainly no sign of a double dip in the company's latest results as recruitment demand from the private sector is far outstripping a contracting public sector.

The recruitment company provides permanent and contract staff to the information technology sector. A combination of renewed demand from banks, as well as regulators led by the Bank of England and the Financial Services Authority, means that business is booming: those two sectors now account for around 60 per cent of revenues. The company has also secured its first two sizeable contracts (one with Carphone Warehouse) to manage recruitment needs on-site and undertake additional ventures such as "talent mapping" - the new name for poaching rival staff.

Broker Finncap has upgraded its forecasts and now expects 2011 adjusted pre-tax profits to rise from £3.4m last year to £4.3m on revenues of £115m. Further help might come from the recruitment incubator business as it may turn a 2010 loss of £326,000 into a modest profit.

Summary

After allowing for a higher tax charge, 2011 adjusted EPS could work out at 9.4p, up from 8.6p in 2010, thereby reducing the PE ratio to seven. That's far too low and the shares remain a buy.

[interceptor2] 03/5/2011 21:39

............2005...2006...2007...2008...2009...2010
PSR High....0.65...0.48...0.51...0.27...0.17...0.19
PSR Low.....0.38...0.20...0.30...0.11...0.09...0.07

EPS.........7.0p...5.2p...8.2p...9.0p...4.3p...6.1p
Net Margins.5.9%...2.5%...2.7%...2.6%...1.3%...1.6%

SP High.....77p....98p....153p....95p....55p....70p
SP Low......45p....40p....90p.....38p....30p....48p
Revenue.....27.6m..57.0m..86.7m..105.5m..97.4m..112.0m

Broker forecasts are 9.4p and 10.9p respectivily, which gives a PER of 6.86 and 5.92 for a PEG of 0.12 and 0.37. this looks very achievable when you look at historic net margins. In H1 2010 they = 1.4%, so H2 must have been at least 1.8%. Over 2% looks on the cards for 2011, maybe even towards historic margins of 2.5% with strong demand from the IT sector, and first profits from the new IQ division.

Using a conservative PSR figure of 0.40 would give a price target of 145p, against the current PSR of 0.18.

ic2....

[interceptor2] 03/5/2011 18:58

The reason I have become more enthusiastic with the recruitment sector, is that I believe there is pent up demand for IT staff from Financial markets like banking and insurance. I also have noticed that paleje who I understand runs a recruitment company is bullish on the sector. Last week I was watching the BBC news reporting the GDP figures, they had two owners of small businesses in the studio to interview. One of the interviewies had started up a small recruitment firm for IT staff, and was positivily very excited by prospects at in this sector.

One point to remember is that Public sector revenue dropped from 40% of revenue in 2009 to 26% in 2010 with net fee income below 20% now. Even this sector seems to be stabilising a little now now. And of course the growth in financial services has more than offset this decline.

Mark Braund the new CEO owns 167k shares, so it looks like he brought them from the FD.

ic2.........

[cfro] 03/5/2011 18:37

ITQ still on my watchlist for the time being.

Looks cheap but a couple of negatives are the link to the public sector with 36% of T/O and the FD selling 167,000 shares @60p recently.

Im disliking anything that is relying on the public sector for growth ATM. I fail to see how money can be made there for the next few years atleast. Now, if i could find a company which was making money by public sector 'sackings' then what a great investment that would be ! ;-)

But of course, ITQ do have 64% of their T/O related to the private sector, so that could be viewed as a positive. If they could grow that and lesson the reliance on the public sector then that would do it for me.

May i ask tho interceptor2 what are you 'seeing' in the recruitment sector ATM ?

I think its a great sector but i've had my disappointments of late namely STAF and EMR. Both i sold out at a profit tho atleast. Sold my remaing 10% of STAF today. Loved the company up to the announcement that they were buying that Dutch co. I thought they were doing OK with the temporary staffing business model, but one has to now wonder what their real game is. The deal is not earnings enhancing in its first couple of years, and im always put off by those kinds of deals to be frank. And one wonders why the owners wanted to sell in the first place? Is there some cosying up going on? Doesnt smell right to me so i wanted out. I might be wrong tho, who knows?

[hastings] 03/5/2011 17:03

Cheers paleje, appreciated.

[interceptor2] 03/5/2011 16:50

Brought an initial holding today @ 65.04p, I left a limit order because I was out today @ 65.5p but it was never filled. So I brought at market when I returned home, and had no problems with the order.

I spent the weekend researching ITQ, NWKI and HVN plus I compared them all with STAF which I hold. ITQ compares very well with STAF with similar upside potential imo. I have placed the other two on my watchlist, both could double from here within 12 months I believe.

I will post some of my research here which may be of interest.

Regards ic2.........

[paleje] 03/5/2011 14:14

Hastings well spotted, the more supportive articles like this that come out the more interest and eventually some buying and price movement. Rivaldo made a point on the STAF thread about ITQ being illiquid, he's right, you can buy 10k online but then its refer to broker.

So it's one of those stocks when you decide it's time to part company you have to wait for the right moment, usually after good news, and sell into strength. For that reason I would limit my holding but I suspect I will buy at some point. I particularly like they are looking at Asia/ Singapore where existng customers have interests and are requesting their services. EMR already have an office cluster in Singapore doing well.

[paleje] 05/4/2011 09:01

I'm not a holder but looking since reading an interview with CEO on weekend. Anybody following this stock?

Their March results were good, outlook statement good visibility, dividend increased, strong increase in financial sector, looking for acquisitions, today they've announced a share buyback programme to improve shareholder value.

Current year PE under 7, seem cheap to me.

[davydoo] 23/12/2010 21:16

Good to see Jim Mellon on board as a new shareholder.

[davydoo] 15/9/2010 08:59

Results look good. The final six months will look very strong if IQ Equity swings from a loss to a profit.

Looks like the price has been moved up on no volume aswell.

[davydoo] 14/9/2010 14:28

Interims were on 15th September last year. So should be soon.

[johnrxx99] 30/6/2010 10:45

Buying shares for cancellation, must be throwing off cash as pays a divi as well.

Shares in issue reduced by about 3%.

[davydoo] 10/5/2010 10:07

Nice one johnrxx99

It'll be good to get a fresh discussion going about ITQ

These were brought to my attention by the 'Small Cap Wrap' published by Hybridan on the PLUS website. It's not a tip sheet, but a very good news and comment roundup. I find this very helpful to bring small companies to my attention that I then research further. Others that I've bought following this approach are JCR and REDT

I really like the model ITQ are following, and agree with your comments about government cuts. Any merging of departments or systems in the name of 'efficieny savings' will generate huge needs for contracted IT staff.

In my own industry ive seen this a lot with banking mergers, e.g LTSB and HBOS

Although I dont know much background about Ashcroft, i always like small co's with large director holdings that pay a dividend, it gives me a lot of confidence to join the company as a shareholder. JCR and REDT meet this, aswell as my favourite stock Avation, AVAP (on PLUS)

[johnrxx99] 10/5/2010 02:36

I've created a new thread with charts etc.

Noticed this in latest Momentum Investor and recent movement makes it iteresting.

[johnrxx99] 10/5/2010 02:35

Thought I's start a new thread with charts and so on.

The company has a good mananger and I like this sector coming out of a downturn and this the prospect of large government cut in perminent staff, assuming the Tories do get a pact together.

[johnrxx99] 10/5/2010 02:33

Towards the end of the last Millennium one of the most successful investments was Abacus, a fast-growing IT recruitment firm, whose shares increased from 20p to 186p when it was eventually taken over by Michael Ashcroft's Carlisle Holdings in late 1998. Founder, Gary Ashworth, walked away with a cool £8.5m and his new IT recruitment vehicle, Interquest, which floated in May 2005 at 55p. At the time, Ashworth injected £2.5m for a 41% stake, while another big holder is non-executive Luke Johnson (also at Abacus) with nearly 12%.

Ashworth has built Interquest from a business making a small loss on turnover of £12m seven years ago to one whose pretax profit peaked at £4.9m on sales of £105m in 2008 before collapsing in 2009. While its fortunes inevitably waned last year current trading has significantly improved although the shares are stuck around its float price, even though the business should be debt free by the autumn.

Operating a "buy & build" strategy Interquest has acquired four businesses post the float, each for between £4m-£5.5m.The two largest comprise PeopleCo, an IT contracting business, specialising in placing candidates with skills in SAP, ERM and software testing and Sand Resources, a public sector focused business on the Government's approved supplier list. The others brought in specialisms in manufacturing and infrastructure, security and data management respectively.

Today, Interquest has a network of six offices and operates in roughly three equal areas: financial markets, such as big banks and insurance companies; general IT (retail and utilities); and the public sector (FSA and Bank of England to NHS and the Home Office). Work includes SAP upgrades, systems integration, data warehousing and compliance / risk management with contracting comprising 80% of net fee income and permanent placements 20%, compared with a 71:29 split in 2008.

Although profits fell 40% last year there are two reasons why the future should be better. First, current trading is much improved with bigger margin permanent placements 40% higher in the last quarter than the average of the first three while contractor numbers have increased 11% to 1,031 in the first eight weeks of this year. Secondly, Interquest has launched nine new joint ventures to milk any upturn and is providing its own office space and funding for the salaries, training and back office in return for a majority stake and the great thing is that all set-up costs were expensed last year.

Broker Cenkos forecasts pretax profits to recover to £3.6m (eps: 8p) this year and £3.9m (8.8p) next.

[davydoo] 28/4/2010 18:56

I love how 'under the radar' this company is.

A high number of ADVFN BB postings is a contrarian signal for me and vice versa