Parkwood Holdings Share Discussion Threads

[edmundshaw] 09/5/2006 08:16

Added too, the price a bit slow to move up this morning.

Two words of caution on FY estimates, though.

First, I'm not sure when the new health clubs will be earning, though I'd expect soon. Rebranding would be good - "Sportz Academy" - ye gods!

Second, the new leisure centres won't be adding noticeably to the bottom line till end of calendar 2007; so at the next results we have to see that as part of the future earnings growth already built in.

Still stonking value though, I'd say!

[iandippie] 09/5/2006 08:05

Looks likwe it's being well received. A few more buys could see this swiftly overtake the recent high, as this can move real quick on low volume.

[chester] 09/5/2006 08:03

Picked up a few at 80p, not showing yet.

[lfdkmp] 09/5/2006 07:57

Have they mentioned a timescale for achieving that target?

- My understanding is that an order book of £1billion, translates into annual revenue of £100 million - just under 20% top line growth on last results.
Depends on how they manage their cost base - earnings growth of 30%look reasonable. On a prospective p/e, could be lookng at 50% share price uplift, imo

ps, told you it was a good one to watch for the ISA , rivaldo!! ....(rarely have the opportunity for a "told you so" type comment, so will grab it with both hands) :-)

[rivaldo] 09/5/2006 07:45

It's not just the two council leisure centres - PKW are now moving into private health and fitness too, which is another massive business with huge potential - the two private health clubs will generate around £1.5m of extra revenue per annum, and that's from just two clubs...

Which perhaps partly answers your question LFDKMP - the two council leisure centres might be expected to provide more revenue than the two (I assume) smaller private clubs. So PKW might have added more than £3m of revenues per annum, or another 4% of last year's revenues, at a stroke.

Glad I topped up in my ISA!

Tony Hewitt's closing comment is worth a look - PKW are well on their way towards his targets:

"Tony Hewitt, Executive Chairman, commented:

"These deals are part of our strategy to double the size of our Leisure
division over the next two to three years, including entry into the private
health and fitness market. We have also set ourselves the challenge of
achieving an order book of £1 billion, and are delighted to be announcing these
positive developments towards that target"."

Earnings upgrades soon maybe? The 8.9p EPS figure for this year is looking pretty reasonable now imo.

[lfdkmp] 09/5/2006 07:20

"The total capital cost of
the two projects is £14 million and they will be operated by the Group's
leisure business, Parkwood Leisure Limited."

Capital cost of the projects mentioned - anyone any idea of what this means in terms of incremental revenue for PKW?

[sheik yerbouti] 09/5/2006 07:12

Good news, they need something to get them going again.

[iandippie] 09/5/2006 07:11

Nice contract wins. Probably will just miss out on a mention in SCSW this weekend :-(

[mistertibbs] 05/5/2006 22:53

Been looking at not only my local garden centre but also bbr and that to me looks interesting. First profit in 5 years. Damn good money in garden centres which no longer just sell plants. Would this be a good addiotion for pkw as they could supply their own centres from their nurseries and also any landscaping jobs could use excessive non selling items? I wonder?

[penpont] 04/5/2006 22:03

Thanks for sharing that info rivaldo.

[rivaldo] 04/5/2006 20:44

Hi edmund. Having made money in my ISA buying and selling PKW before, and having talked to management a few times, I hope I'm getting a feel for this company.

I've now talked to them again. A few points (my interpretation only):

- they won't be moving to AIM for the foreseeable future, so anyone who wants to ISA them should be OK. They do review this every year, but Tony Hewitt (who owns 52%) is happy to remain fully listed

- they've begun presenting to institutions and touring the City to make themselves better known

- to help with the above they've now employed a PR firm (Gresham PR)

- at some stage Tony Hewitt will understandably want to sell a few shares, but apparently not for a while - I suspect he wants to build the company up and see the share price a lot higher before he does.

I agree that PKW has huge upside, but don't want to get carried away! On such a low P/E, and with a slightly limited free float, any institutional or other buying interest should quickly translate into a decent re-rating.

[edmundshaw] 04/5/2006 20:01

Looking further ahead, with long term contracts and a good order book and management looking to drive the business much bigger, I'm looking for much larger returns than just a non-risked 134p (i.e. lower than 134p expected result in the mathematicl sense of the word). Definitely looking to more than double if things pan out well.

There is risk, not least from the business moving into less familiar sectors with (to me more than to the management perhaps) relatively unknown competitive and risk parameters - e.g. the garden centres and waste management. But as long as management keep their eyes open and expand the newer segments only when they have good confidence in them, there is quite a high prospective return. Swimming pools and such look a good base, meanwhile.

I too shall keep my eyes open and do further research before I get too heavily involved; I'd like to know more about the management in particular. But for me this is a very intriguing prospect...

[rivaldo] 04/5/2006 19:06

I've received SCSW's write-up on PKW from 10th April, and it includes the Brewin Dolphin forecasts, which are 6.3p EPS this year and 7.1p EPS next year, held back by slightly higher utility costs.

IMO these are far too low, and SCSW agree. They say "We think this is too low given the operational nature of activities and reducing losses from acquired businesses".

And "The high level of visibility of earnings is not reflected in the rating. After these excellent results, add to holdings".

They also say Brewin's have a 95p price target, and that's with their cautious forecasts. If you take the same P/E on Objective Capital's 8.9p EPS you're looking at a 134p price target.

With the 18th April contracts RNS, plus today's AGM update, SCSW might update again in their May issue which is out in a few days' time.

[sheik yerbouti] 04/5/2006 14:19

What are the boards expectations though? The discrepancy in the brokers forecast is ridiculous. Digital Look are showing 5.4p from Evolution which looks like an error or incredibly pessimistic. 8.9p souunds much more like it given last years outperformance.

[rivaldo] 04/5/2006 14:09

Excellent - AGM statement has, unusually for PKW, a trading statement noting that trading is in line with the Board's expectations:



As I said before, Objective Capital's 8.9p EPS puts PKW on a current year P/E of 8.7...gawd knows what the forward P/E is - 6? And it's ISAble too.

[edmundshaw] 28/4/2006 15:35

My buys of today not been reported yet.

[edmundshaw] 28/4/2006 15:33

Ditto wessie.

Spread narrowed a bit after todays buying. Looks an easy 25% just to get to a nearly normal valuation; but with the deals in prospect I'm aiming for more (buying £1 coins for 75p is just not cheap enough for me).

[wessie] 27/4/2006 19:40

Been watching for a while and decided it was not going much lower so jumped in for some today. Hope the timing was right but whichever way I looked at it the price looks very good value.
W

[edmundshaw] 27/4/2006 11:59

Spread is a bit mean at 5%.

[tole] 27/4/2006 11:32

Spot on NJP - especially noted with the initial heavy volume on the break and as the pattern develops, volume usually contracts.


free stock charts from ADVFN.COM


Taking the pattern as a flag - with the initial flagpole say from 60p to 85p (25p rise) gives a target as long as the flag/pennant devlops at a breakout circa 80p to a price target of 105p(80p+25p)

Moving up
L2 3v1 76-80

[sheik yerbouti] 26/4/2006 07:39

8.9p sounds more like it. Remains overlooked for the moment, loads of value here if they meet those forecasts.

[njp] 26/4/2006 02:17

Thanks Tole. Nice write up.

Looking at the chart, which has put in a lower high. Can't imagine we'll see a lower low, given how cheap this is on fundamentals, which means we're looking at a pennant formation - a period of consolidation within the uptrend. Which also means now is a good price at which to add.

[rivaldo] 25/4/2006 22:26

Many thx Tole. I wondered why on earth EVO's forecasts were so ridiculous. And why haven't Brewin Dolphin put out anything as the company's broker?!

Crazy. 8.9p EPS puts PKW on a current year P/E of 8.7...and gawd knows what the forward P/E is - 6?

I suppose the only positive is that this might allow me (and you?) to top up in my ISA before the market catches up with the obvious undervaluation.

[tole] 25/4/2006 17:23

Objective Capital put an update out on Parkwood the other day.

This Month's Companies to Watch
Name (EPIC): Parkwood Holdings (PKW)
Sector: Support services

Basic business: The company is involved in managing parks and open spaces for
local authorities, the management of leisure facilities and arboriculture, and in the provision of an agency service to supply medical personnel to hospitals and nursing homes. It also provides non-emergency transport facilities for patients.

Reason for potential mispricing: Muted reaction to better than expected results.
After a surge in the price immediately following the announcement of results,
the shares have settled back to around 9% up. At both the pre-tax and earnings
level, the results announced on March 13 were better than forecast. Pre-tax profit reached £2.1m compared to an expected consensus outturn of around £1.6m, and earnings per share emerged at 6.8p versus an expected 5.3p.

The company is optimistic about prospects for 2006, having recently closed on
a large new leisure contract and acquired a waste recycling and horticulture
business to expand its 'green' offering. The company comments that 'prospects
for 2006 and beyond are good... we are looking to continue the long-term programme of initiatives which we expect to improve returns for shareholders.'

Value criteria: Even after the recent rise, market capitalisation is around £15m
versus historic revenue of around £77m, expected to reach £100m in 2006. Return
on capital is around 19% and after tax ROE in excess of 50%. Operating cash
flow last year was in the region of £4.6m, although this was largely depleted by
high capital spend. Gearing was, however, substantially reduced. All of this puts the group on low multiples to sales, earnings and cash flow. If margins are maintained, pre-tax of £2.75m looks feasible, suggesting earnings of 8.9p on a similar tax charge, a prospect multiple of 8.5 times.

Analyst coverage: Evolution Securities is the only broker to cover the stock. It is not currently providing any 'live' forecasts on Parkwood.
More information: www.parkwood-holdings.co.uk
Next results: Interim – mid-September