Partway Share Discussion Threads

[mwaters74] 21/9/2017 08:14

https://simplywall.st/news/2017/09/21/is-it-the-right-time-to-buy-parity-group-plc-aimpty/

[kemche] 20/9/2017 20:13

A very warm welcome GHF. All your observations chime with mine. I think there still seems to be some scepticism in the market but I am hopeful that value, as always, will out in the not too distant a future.

[glasshalfull] 20/9/2017 19:47

PTY

Courtesy to declare I've been a buyer of Parity over recent sessions following the strong H1 results they delivered last week.

On a prospective single digit PER of 7.8 for 2017, with forecast double digit earnings growth, strong cashflow & improving operating margins through focus on Consultancy Services that is growing strongly.

Share price has failed to react to the improving picture with a low price of 9.13p and high of 12.88p during 2017 in comparison to the current price of 10.13p

Checked back & pleased to see kemche here who I'd the pleasure of corresponding with over on the APC thread & chrisdgb, where we share an interest in TAVI.

Background

Parity has been on my watchlist since the 2016 Full Year results were released in March 2017. This highlighted a turnaround in the business with the company generating £3.4m cash & reducing net debt by £3m (from £7.4m in 2015 to £4.4m). PTY also achieved PBT of £1m (vs. £3.3m loss 2016).

Importantly the company had removed £1m of costs from the business & highlighted growth of 30% in their higher margin Consultancy Services. This resulted in operating margins increasing to 1.9% from 1.2% the previous year.

H1 2017 Results

These highlighted further progress with Parity generating a further £2.16m cash in H1 & net debt falling from £4.4m to £2.3m. That's a reduction of £5.1m net debt in the last 18 months.

EPS for H1 2017 was 0.62p (vs. 0.23p H1 2016) & PBT came in at £0.68m (vs. £0.28m H1 2016) on continuing operations.

Again, Consultancy Services was the engine of growth with revenue +48% although margins were held back as they invested £300k-£400k through an increased sales headcount & requirement to utilise contractors on new projects.

To place this in context, the current market cap @10.13p is only £10.1m & WH Ireland have adj. PBT of £1.6m pencilled in for 2017, growing +18% to £1.9m in 2018. This equates to 2017 adj. EPS of 1.3p this year, growing +15% to 1.5p in 2018.

The discontinued business Inition, has been up for sale since Dec 2016 & shows on the balance sheet with net assets of £1.9m. Sale anywhere in this ballpark would wipe out net debt entirely, although the performance of the group hasn't been too shabby in reducing debt by £5.1m in the last 18 months as highlighted above.

Conclusion

It looks good value to me on a prospective PER of 7.8 for 2017, falling to PER of 6.8 in 2018 especially with the H1 2017 results indicating that the positive momentum was continuing with over 50 new client wins across the business & extension of a major contract with the MoD since the period end. They have also been awarded positions on major frameworks such as Digital Outcomes & G-Cloud for consultancy services.

Parity has also been throwing off cash & are currently forecast to end 2019 with £2.5m net cash before any proceeds from the sale of Inition. That's some improvement on a net debt position of £7.4m at the end of 2015.

WH Ireland have also indicated that the pipelines in both divisions cover revenue forecasts for 2017, mitigating risk somewhat. They retain a 17.5p target price.

Please DYOR.

Kind regards,
GHF

[a2584728] 20/9/2017 13:12

Great buyout target at this PE

[chrisdgb] 19/9/2017 13:09

Mystified by this move.............?????????

[kemche] 16/9/2017 21:38

Year Ending Revenue (£m) Pre-tax (£m) EPS P/E PEG EPS Grth.
2017-12-31 88.00 1.60 1.30p 7.7 0.2 51%
2018-12-31 91.00 1.90 1.50p 6.7 0.4 15%

[kemche] 16/9/2017 10:50

Get rid of Inition over the next six months, continue to expand the consultancy offering, and generally stick to the knitting should see us home and dry. I don't think anyone appreciates just how much cash this thing is throwing off. I make it £4.4m for the year to 30th June 2017 - all for a market cap of circa £10m. A paltry 2.3x annual cashflow.

[weatherman] 16/9/2017 07:01

1.33 p over rolling 12 months. Good point kemche. A doubling from here would still put them on reasonable rating of PE=15. Assuming they can keep momentum going.

[weatherman] 14/9/2017 16:41

Annualised Forward PE of under 10.

[+eysenck] 14/9/2017 15:45

Did the fall in revenue take the shine off the results?

[zipstuck] 14/9/2017 10:54

WH Ireland have 17.5 target

[chrisdgb] 14/9/2017 08:05

Cracking results, let's hope the broker has plenty of meetings lined up............!

[a2584728] 14/9/2017 07:20

Looks like a good set on interims and good outlook

[chrisdgb] 13/9/2017 08:13

Indeed, I am hoping they are tomorrow......

[kemche] 12/9/2017 14:29

Results should be good - he says, crossing everything!

[chrisdgb] 12/9/2017 11:18

Feel the momentum has changed here, results soonish, should help...!!!

[kemche] 10/9/2017 09:51

spooky - don't encourage it - it is a multi handled special case. Been infecting ADVFN for a number of years. Just use the filter pest control mechanism.

[spooky] 10/9/2017 09:27

diku, that post has me a little confused, would you like to elaborate?

[diku] 10/9/2017 09:02

Buying here is like supporting insiders life style...

[opodio] 05/8/2017 10:09

Pension black hole is sucking up all the free cash here
Will be a placing at 5p in due course i suspect as needs cash

[mctmct] 26/7/2017 09:38

inbrackets: thanks, I hadn't seen that.

The new strategy seems to be better than the old one! It's strange - Philip Swinstead used to get things right. It's good to see Parity back on track, doing what it knows best.

[abergele] 25/7/2017 21:34

I bet there's many like myself who forgot to top up here earlier this month at the lows we've just seen,oh well.another chance tomorrow,
something brewing perhaps.
gla lth's

[inbrackets] 25/7/2017 15:53

Mctmct, was given a fairly good write up in DT this morning, showing debt reducing even with pension shortfall, whilst pushing into higher margin consultancy.

[mctmct] 25/7/2017 15:13

must be insider trading. announcement soon.