Robert Walters Share Discussion Threads

[madmix] 22/2/2008 12:37

Courtesy of AFX :

Robert Walters PLC's first half conversion ratio (CR) of 18.7 pct is comparatively low, compared with Hays PLC achieving 33 pct and Michael Page International PLC 31 pct.

This, however, reflects the group's high level of overseas expansion for what is actually quite a small company, compared with its larger peers, points out Ian Jermin of Landsbanki. For example, its AsPac net fee income (NFI) represents 40 pct of total NFI and in quantum is equal to Page's NFI and EBIT from this region, he adds.

Nevertheless, the improvement in the ratio in H1 (from 15.3 pct) allowed a relatively modest 17 pct growth to translate to a 44 pct growth in EBIT. For the second half, Jermin is expecting similar NFI growth to H1, but a maintenance of the 20.5 pct CR achieved in H2 2006.

Of course, this may be too conservative and management itself sees no reason why its CR peak of 26 pct at the top of the last cycle cannot be repeated in this cycle. Therefore, for the year to December 2007, the analyst anticipates NFI of 127.5 mln stg and pretax of 24.75 mln (19.0 mln) -- growth of 17 pct and 30 pct respectively.

Jermin sounds a note of caution in respect of Resource Solutions, the group's recruitment process outsourcing consultancy. It is particularly active in the UK Financial Services sector, although through 2007 it has traded out of some large accounts (Credit Suisse) into more profitable ones and into other sectors such as telco.

However, financial services clients still represent the bulk of fee income in this subsidiary. Overall, the group has a relatively low exposure to financial services at around 5 pct of NFI. With 61 pct of NFI derived from overseas staffing, Jermin considers Walters reasonably protected from any localised weakness.

In the meantime, the analyst expects the total payout to rise to 4.70 pence from 4.0.

Edit : Only 5% of Net fee income exposed to the banking sector. Also, 61% from outside the UK. Suggests to me that RWA is one of the better stock picks in this sector.

[liarspoker] 21/2/2008 16:13

Few big swaps & trades today.

I reckon Ruane & co are adding.

Edit: Nice intraday reversal as well.....

[madmix] 21/2/2008 15:29

You're not the only two invested here, I have some too!

I agree that the sector looks a wee bit oversold, and RWA looks like one of the better companies within it due to their geographical mix.

Results on Monday should be interesting.

[cockneyrebel] 21/2/2008 15:10

~Looks like it's me and You LS - world isn't comingto an end and the chance to buy a recruiter like this on a P Eof 5 is just too hornilicious to miss.

Those large trades this morning cleared a chunbk of stock imo.

Onwards and upwards.

CR

[liarspoker] 21/2/2008 14:54

those book value and PBT figures are for 2007 btw. :O)

[liarspoker] 21/2/2008 14:23

Picked up a few of these - less then 3X book value, less than 5X PBT, nice cash flow & an 11% stake held by Ruane & co. Results Monday too.

P/E of 6 and a 3% yield - gotta be worth it imo. :O)

[cockneyrebel] 20/2/2008 14:46

MPI flying today, RWA will follow imo.

CR

[cockneyrebel] 19/2/2008 13:28

Been buying over the past few days, incredibly cheap imo, and buy backs too.

CR

[lomax99] 18/2/2008 22:15

that teaches me for not reading previous RNS announvements!

[madmix] 16/2/2008 19:34

lomax,

"hopefully the first of a number of purchases"

Not exactly, they've made a number of buyback over the past few months :

28 December, 2007

Close Period Share Repurchase Programme

Robert Walters PLC announces that it has entered into an irrevocable,
non-discretionary programme to purchase Robert Walters Ordinary Shares on its
own behalf, for cancellation during its close period which commences on 1
January, 2008 and ends on 25 February 2008.

[lomax99] 16/2/2008 12:01

Good to see them buying some of their own shares for cancellation, hopefully the first of a number of purchases.

[amitkoth] 12/2/2008 08:35

Results are soon, and this has been thumped to literally a third to a quarter of their 2007 highs. I very much doubt that earnings are a third or a quarter of last year's, which makes it a proper over-reaction imho - in this environment.

We appear to now have a solid floor on the share price, should be directly north from here in the 1-12 month timeframe. Results should confirm various things.

[singing the blues] 11/2/2008 20:21

Hi folks been following this one for a while now, been in it before and a reasonable success. I am interested in the recent purchase by Ruane, Cunniff & Goldfarb Inc, it seems that since 31/12/07 when they held 5.5 mill or 7.28% this has now increased to 11% or 8.6 mill shares all these extra shares in one month. Do they now something we dont! I found this write up on the company which explains how they are a value long term invester the same as a certain Mr Buffet.
"Ruane Cunniff
Profile:
This is the firm founded by William Ruane, who died in Oct. 2005. We continue to track its stock picks. The current investment committee is directed by Richard T. Cunniff. William Ruane is a Graham-and-Doddsville superinvestor recognized by Warren Buffett. William Ruane was founder and Chairman of Sequoia Fund, Inc. (SEQUX). Since inception in 1970 through September 30, 2007, the Fund has returned 15.57% average annually. During the same period the S&P 500 returned an average 11.86% annually. He is a student of Benjamin Graham, and attended his class at the same time as Warren Buffett.

Investing Philosophy:
Ruane Cunniff are value investors focused on the intrinsic value of business. They are long-term investors, and will buy a stock and hold it for a long time, even if sometimes the stocks seem to be overvalued. They look at common stocks as units of ownership in a business, and purchase them when the price appears low in relation to the value of the total enterprise. The Firm shuns technical stock market studies, and looks at the balance sheet, earnings history, and prospects of each investment when determining its value.


Think I may dip my toe back into this one very soon, any comments?

[lomax99] 03/2/2008 22:10

This sector summary was also interesting, looking forward to results in late February.

Recruiters laid-off
Created: 22 January 2008 Written by: Algy Hall
The recruitment sector's new year has started with a flurry of strong trading updates, yet share prices, which have been on the wane for five months, have continued to collapse. Michael Page , which reported a stunning 38 per cent rise in fourth quarter net fee income, including 15 per cent in the UK, has seen its shares plunge 23 per cent since the start of the year. Meanwhile, blue chip peer Hays was rewarded for achieving 27 per cent growth in net fee income during the period with a 16 per cent new year fall. And smaller recruiters, too, such as Harvey Nash and Spring Group, have seen the market turn its nose up at their reports of strong trading (see table).

Advertising


What's more, the overall job market still looks very perky despite the credit crunch. The Office for National Statistics reported a jump in the number of people in employment in the three months to November of 175,000, which was the fastest rise in 11 years. Employee earnings growth was also encouraging at 4 per cent. And the widely followed January , which is compiled by KPMG and the Recruitment and Employment Confederation (REC), reported growth in both permanent and temporary placements. In fact, permanent placement growth hit a 14-month high while temporary placements were at a 13-month high. So, based on the evidence coming from the industry, shares in recruitment companies look oversold. But there is another factor at work - fear.

Given international banks' huge sub-prime writedowns and early evidence of consumer retrenchment both here and in the US, it has begun to look more likely that a nasty economic downturn could be on the cards with its usual gnarly implications for employment. And if the job market does take a sudden turn, as it is prone to do in such circumstances, recruitment companies have little chance of seeing it coming, as their order visibility is about six weeks at best. "The main thing is that there are no warnings [of a slowdown], it just happens," says Landsbanki analyst Ian Jermin.

What's more, recruiters' profits are very sensitive to falls in turnover (see History lessons). So, although valuations in the sector look incredibly low on a price to earnings (PE) basis, they won't necessarily remain so for long because earnings could fall very quickly. But a lot of pain is already priced-in and brokers have already started to adjust their forecasts aggressively downwards to reflect the increased likelihood of a downturn. For example, this month ABN Amro has cut its earnings forecast for the sector by between 40 and 60 per cent which it says reflects "a moderate economic downturn". Even so, based on its new EPS figures for 2008 (23.6p, down from 39.3p) and 2009 (18.5p, down from 50p) for Michael Page, it has upgraded its recommendation from sell to buy. In fact, broker sentiment in general is very positive at current prices.

And even if we are heading for serious trouble, there are some good reasons to think that many of the big players could weather the storm better this time than they did in 2001's difficult market. One advantage that many of the larger companies now have is diversity, both in terms of geography and the job markets in which they recruit. Many companies have been expanding in both Europe and Asia and, while neither region's job market would be immune to a US recession, both look better positioned to withstand it than the UK does.

Exposure to the temporary staffing market, which tends to get more popular as employers get more nervous, also provides some defensive characteristics for companies such as Hays. Moreover, trading in the permanent placement market should be cushioned by the candidate shortages that have characterised the professional job markets in recent years. "Initially a slight economic slowing would actually be good news for recruiters," says Seymour Pierce analyst Kevin Lapwood, "There's an acute shortage of candidates. If we have some people being made redundant recruiters can get more candidates and fill more posts."

There are also hopes that the rock bottom valuations will spark bid activity in the sector, which is awash with cash following several years of buoyant trading. Hopes are being stoked by the battle for control of troubled City recruiter Imprint and a European mega-bid for recruiter Vedior, by Ranstad.

However, even though the market has already priced in a serious downturn, the shares could still be punished as the expected bad news arrives. If the economic situation proves to be less precarious than the prevailing dire sentiment suggests, there could be a lot of money to be made and there is definitely a strong contrarian case at these levels for patient investors. But given the present market fallout, and while prices are looking tantalising, the current uncertainties mean we're not buyers just yet.

[thetiger] 31/1/2008 15:12

Agreed. Looks to be at or around a 4 year low. Cash in the bank, good yield and has been taken private once before I think. May wait until nearer the results or even after, because there's a long way to go back up! Might be safer to miss the first bit of any rise.

[jeanal] 30/1/2008 19:31

This looks so cheap...tempting! Very oversold IMO...

[yewtrees] 25/1/2008 16:13

a few decent buys around 2pm

[gottalovealphameric] 25/1/2008 13:58

look s,ike decent support at 100p

[amitkoth] 25/1/2008 13:54

from long term chart:


probably further down to go on this cyclical

[gottalovealphameric] 24/1/2008 20:37

is there a bottom here?

[yewtrees] 24/1/2008 08:59

michael page up 11pct.

[yewtrees] 30/12/2007 13:45

Why is the company using a Sharebuyback Scheme? Why are they buying the shares in a closed period, rather than buying them on the open market?

[scburbs] 04/12/2007 22:54

Closed my short on this one way too early at 190ish, but still got a nice profit. However, it is starting to look very cheap, particularly with the strong Asian growth so might consider going long if it keeps this up.

However, IMP is an example of how people focussed the recruitment business is and how quickly value can be destroyed by the actions of certain individuals (see the terrible value achieved on the recent disposal of one of their UK recruitment businesses).