Rtc Share Discussion Threads

[the big fella] 26/7/2017 15:48

Given Oryx haven't notified they have fallen below 3% I assume they still have a stake.

[rivaldo] 26/7/2017 15:39

Glawsain, AFAIK most recruitment companies trade on multiples of 8-10 up to anywhere from 15-20 for the larger companies.

I generally keep away from recruitment companies as I don't like their cyclicality. However....as I noted above, RTC is a very different animal given its long-term contracts and high recurring income. Hopefully the market will now start to recognise this and move RTC towards a premium rating.

Oryx had 700k shares in May per their last RNS. By now they must be nearly or completely out. When they are I suspect the price will do rather nicely.

[glawsiain] 26/7/2017 14:32

Thanks again. Sounds like quite a compelling story and risk:reward seems to be firmly to the upside.

Sorry for all the questions but how are we valued in comparison to peers? pe of 7 given its fundamentals seems extremely low, but perhaps not so low in engineering recruitment field??

[speedsgh] 26/7/2017 14:29

Great thread & good to see some familiar faces (riv, TBF). Have taken an inital stake at 70p today. I assume the weakness following yday's contract rns may well be Oryx reducing their holding further? Think they held 700k shares at last notification.

[rivaldo] 26/7/2017 14:05

Indeed they did - a one page update. Brief highlights:

- RTC now have 76% recurring income. RTC should not therefore be seen as a typical cyclical recruitment company
- PBT forecasts have been upgraded by 13% and 11% for 2018 and 2019
- price target increased to 95p
- P/E of 7 for 2018 based on 9.8p EPS and a 4%-5% divi yield means they say Buy
- dividend cover rises to 3x in 2019 due to free cashflow
- interims will be next month

Note also that these upgrades only reflect the "contracted minimum" of the £28m contract.

[glawsiain] 26/7/2017 12:05

Thanks riv. Did Whitman Howard provide any text to accompany their target price rise?

[rivaldo] 26/7/2017 11:42

Glawsiain, I subscribe to Research Tree, which gives you access to a number of brokers' research like Finncap, N+1 Singer, Whitman Howard, Panmure Gordon etc.

[glawsiain] 26/7/2017 10:29

Hi Riv,
Where do you find info on whitman howard's increase price target? I can see nothing on either rtc's website or whitman howard's.

[mr hangman] 26/7/2017 10:27

Could not agree more, shame the market can't catch on

[rivaldo] 26/7/2017 10:12

Hi hangman - I've amended my prior post to include the forecast dividends.

I agree your summary, though 51% EPS growth in 2 years is more than a "bit of growth" :o))

The PEG of 0.29 is evidence of this - it's ridiculously good value at these levels imo.

[mr hangman] 26/7/2017 10:01

Any views on dividends going forward Rivaldo ? if anything this is turning into a safe income stock, with a bit of growth & an interesting major shareholder thrown in for nothing

[rivaldo] 26/7/2017 09:34

Whitman Howard have today increased their price target to 95p, and increased their forecasts as follows:

this year : 7.4p EPS, 3.3p divi
next year : 9.8p EPS, 3.6p divi
2019 : 11.2p EPS, 3.9p divi

It's certainly possible to envisage say a 120p-130p share price in just over a year's time moving into 2019 based on those forecasts. And that's without any further contracts or acquisitions.

[mr hangman] 26/7/2017 09:05

I agree with rivaldo & BF, but why are people selling ?

[the big fella] 26/7/2017 08:47

Riv. Yes extremely cheap even before yesterdays contract news. A few stale bulls cashing in their chips this morning. Surely these should head towards a £1 short term.

[rivaldo] 26/7/2017 07:36

In March Whitman Howard already had an 85p target, forecasting 7.4p EPS this year and 8.7p EPS next year.

Those forecasts are now going to have to be raised heavily.

And the divi of 3.3p rising to 3.8p is by itself a pretty good reason for investing :o))

At 75p that's a forward P/E of 8.6 and a divi yield of 5% - even before any upgrades.

[thebarber1] 25/7/2017 20:27

now that is some RNS , i guess its a no brainer at this level, because if it drops at all the mcap in relation to the contract value becomes so stupid if not already. also, note institutional and fund buyer TR1's since the start of the year increasing their stakes. share price can only go one way surely

[briggs1209] 25/7/2017 18:24

I'm lucky. For a couple of weeks I have been thinking of selling all positions in companies with small market caps - RTC being my smallest. Great contract to demonstrate they can deliver a good service.

[x54v] 25/7/2017 15:35

40% up now.

[rivaldo] 25/7/2017 15:21

Well, that's stirred things up nicely :o))

Back up to 90p-100p for starters now hopefully.

[the big fella] 25/7/2017 15:20

Wow. Just seen the announcement. Looks like we are in for a massive rerating

[x54v] 25/7/2017 15:04

Yes, that mcap comes up on my Quotestream but confusingly ADVFN is smaller.

Huge contract size compared to it though!

[rivaldo] 25/7/2017 15:03

The m/cap is around £8.5m, with 14.54m shares in issue.

This contract is indeed massive :o))

Around £9m per annum on this one contract....and don't forget the huge ongoing Network Rail contract.

RTC was extremely undervalued before today. Now it's even more so imo.

[x54v] 25/7/2017 14:58

Massive contract in relation to market cap there.

£28m contract, market cap on ADVFN seems to be just £5.1m.

"The initial term of the Contract signed on 25 July 2017 runs until 31 December 2020 and has a revenue value of GBP28m which will be realised over the initial term."