Premier Technical Services Share Discussion Threads

[battlebus2] 12/10/2016 15:55

Slater investments look o be exiting, now below 3%.

[rivaldo] 12/10/2016 14:17

Looking much better now - but still only on a P/E just in double figures given 6.84p EPS forecast for the year ending soon and 7.77p EPS next year.

OT : LOL Apad!

[apad] 07/10/2016 14:16

My driver is that they are acquisitive in a specific area that is their management's expertise.
It is my only criterion for acquisitive companies. All others are no-go.
I think the recent fuss is an interesting artefact of share investment that treats all companies as black box balance sheets.
I shall hold for a while to see how things develop, I am not inclined to increase at the moment.
apad
ps
Good to be in a company where Riv is researching - but it does make me lazy!

[rivaldo] 07/10/2016 13:48

FYI this is how Numis summarised PTSG in their initiation note from last month, with a 125p target:

"PTSG
Initiating Coverage
Strong growth, high returns

Premier Technical Services Group (PTSG) offers an attractive combination of rapid
revenue growth, high margins and ROCE. It is the market leader in the provision
of specialist services in Access and Safety, Electrical Services and High Level
Cleaning, yet has less than 10% share. We forecast an EPS CAGR of 19% (2015-18),
but expect PTSG to continue its track-record of EPS upgrades. Trading on a 2016
PE of 11.5x and EV/EBIT of 9.9x, we think the shares are significantly undervalued.
We initiate with a BUY recommendation and 125p price target (60% upside).

Strong revenue growth. PTSG has delivered a 24% revenue CAGR 2009-15 (14%
organic, 10% acquired, we estimate). Its addressable markets are worth around
£600m, implying a PTSG share of c.6%. Its activities are highly regulated, creating both barriers to entry, and high levels of repeat business. Renewal rates on maintenance contracts are high (88% in 2015). PTSG has undertaken 20 acquisitions since its formation in 2007. We expect PTSG to continue taking market share both organically and through further acquisitions.

Sector leading margins. PTSG has consistently delivered gross margins >50% and
adjusted EBITA margins >20%, 2012-15. The specialist services, and unit rate pricing (rather than cost plus) lend themselves to high gross margins in inspection, testing and maintenance services. The attractive EBITA margins are generated through a combination of scale, national coverage, and use of technology, that serve to maximise engineer utilisation and leverage costs.

Attractive returns. Between 2010-15, post-tax ROAIC has averaged c.42%. Post-tax
return on operating capital, which more closely approximates the return on organic
investment, has averaged c.74%. We think that management has established a strong
track record of significantly improving the profitability of the businesses that it acquires, driving attractive returns on that investment. We estimate that the company has c.£5m of headroom against current facilities to undertake further deals."

[swiss paul] 06/10/2016 20:35

better than a kick in the ar$e

[battlebus2] 06/10/2016 17:15

Not a lot 0.7p I believe.

[fizzypop] 06/10/2016 17:08

Whoops thx bb2

[battlebus2] 06/10/2016 17:05

Ex dividends on Thursday.. Today :))

[fizzypop] 06/10/2016 17:02

Ex div tomorrow I believe.
battlebus welcome aboard - your patience is exemplary and justly rewarded!

[larva] 06/10/2016 16:31

cheers mate

[battlebus2] 06/10/2016 16:31

I've joined the PTSG party with a few today, watched and waited long enough :))
See i'm in good company.....

[larva] 06/10/2016 16:14

tipped with target of 130p? Midas?

[rivaldo] 06/10/2016 15:58

Nice move today. Back to 80p for starters?

[rivaldo] 04/10/2016 23:28

Cheers fizzypop, here's the link (it's dated 1 day ago):



The last couple of paragraphs are interesting in terms of (a) recurring income and (b) recent successes:

"The contract will see the Group’s highly skilled engineers at 20 sites across Scotland, testing lightning protection systems and carrying out servicing and repairs wherever necessary. All works will be carried out to British Standards, and as ever, will demonstrate the commitment to quality and safety on which PTSG has built such a strong reputation.

This announcement follows a number of other recent contract wins for PTSG’s Electrical Services division for lightning protection services; including a national framework with the major UK retailer Timpson, and contracts with Anglian Water and Ofsted; further enhancing the Group’s reputation as one of the leading suppliers of niche specialist services across the UK."

[janeann] 04/10/2016 20:38

larva - you have never a good word about anything. I reckon larva = immature stage of insect development - synonynm = maggot

But agree the payment time is overlong for this sector.

[larva] 04/10/2016 20:08

won't get paid quickly

Scots are known to have short arms and long pockets

So 120 debtor days will become 200 dd i guess

Any instutiotnal investor won't invest here because of 120 days to get paid BIG RED FLAG

L

[fizzypop] 04/10/2016 13:13

Awarded a lightning protection contract with National Trust Scotland across 20 sites.

[larva] 04/10/2016 12:29

"Small-cap red flags can include:

* too much debt vs profit
* poor profit-to-cash conversion (especially too much cash being absorbed into working capital -- i.e. customers not paying, stock going unsold etc)
* substantial tangible/intangible capex and consistently much greater than the associated depreciation/amortisation charged against earnings
* frequent and/or significant acquisitions (especially where the purchase cost is greater than the annual profit)
* poor/haphazard past operating record
* dependence on handful of or powerful group of customers
* dependence on single/few products, with significant R&D required to remain competitive
* operating in an industry that is suffering obvious structural decline (e.g. newspapers)
* unproven or colourful or greedy management
* a chief exec without direct hands-on experience of the product or industry (i.e. avoid financial engineers and accountants turned bosses)
* anything you read where the main bull case is based on a "cheap valuation" or "turnaround potential", and skirts around any business qualities
* anything foreign "

PTSG falls foul of a number of them

[larva] 04/10/2016 12:28

60p might not hold

[robinskardon] 02/10/2016 08:41

Yes, good post Ghf. And good to see management responding to queries so promptly and openly. I am satisfied with their replies and believe the share price will recover and more in due course. As others have said comparisons with Mitie are not valid. Mitie is a completely different business which has also been poorly managed. Numis 125p target is encouraging!

[fizzypop] 01/10/2016 18:30

Thanks GHF. I hold and see good prospects for the future.

[ggbarabajagal] 30/9/2016 21:00

wrong thread

[swiss paul] 30/9/2016 20:25

Larva, Capita are a completely different ball game DYOR

[glasshalfull] 30/9/2016 18:57

Many thanks to Paul Scott for providing clarification via his stocko-blog which I see has been replicated in post 136.

I've been fortunate to speak with the CEO and FD and received similar explanation to Paul over the reduction in DSO from 130+ to 110 (if you discount the £900k payment received in July & after H1 period end). They were comfortable with the payment terms & I've provided a further update on w.c. below. While slow payers, they haven't had any bad debts.

Couple of other points,

* MTO - The team reiterated that Mitie (MTO) warning has no bearing on them. Different business entirely. PTSG have visibility through to 2018.
* Organic Growth - Focus on achieving similar organic growth levels and excellent opportunities to cross-sell to existing 12,500 customer base.
* High Level Cleaning - restructured to focus on higher margin, niche work.
* Working capital - Half year phasing resulted in £1.2m prepayment + £0.2m accruals for a £1.4m increase in working capital. Some of the H2 2015 acquisitions required further reflating of the balance sheet which had been reflected in the price PTSG paid. Excluding this highlights that w.c. increased in line with H1 organic growth but was below Q2 organic growth level.
* Dry Risers - Consider this a v good acquisition (as do I) and see scope to leverage business.

Overall, I understand a number of the concerns voiced but welcomed PTSG's managements openness in responding & clarifying (for me anyway) the receivable position and the steps they were taking to drive margins and grow the business organically and via bolt on acquisitions that meet their exacting criteria.

As I've previously mentioned on this thread, I've been impressed by the PTSG team and development to-date. No need to regurgitate.

Numis have reiterated their 125p price target. A few snippets,

"...demonstrated strong growth of PBT +48% (£3.5m), EPS +44% (3.19p), and DPS +52% (0.7p). We make no changes to our forecasts (consensus was increased in July with the two Dry Rise acquisitions), but think that the growth profile (19% 2015-18E EPS CAGR) looks very attractive in the context of the valuation (2016 PE of 10.9x and 9.5x EV/EBITA)"

"...1H16 revenues £18.5m +57% (21% organic, 36% acquired). Performance of the Group's largest division, Access & Safety, was particularly impressive +72% (49% organic, 23% acquired)."

and

"Electrical Services grew revenues 69% (test, inspection and maintenance +15%) and the small High Level Cleaning division contracted 14% and is being restructured. In 1H16, 42% of Group turnover was generated from installation sales: this builds a pipeline of future inspection, test and repair work."

---

Hope this assists.

Kind regards,
GHF