PRG - Programmed Maintenance

[winner69]

From the SKE thread but worthwhile following PRG Programmed Maintenance Services

When looking at at outsourcing related businesses a year ago I came up with a subset of PRG TEM UGL SKE SPT and TSE

Of those SKE and PRG (Programmed Maintenance) seemed the best of the group and I ended up taking PRG on board - mainly because PRG's EBIT margin of 13% was significantly higher than SKE's 4% and because PRG was trading at a lower PE than SKE at the time.

In addition I felt more comfortable with PRG because of business dealings here and in OZ and one could keep ones eyes and ears on how they were progressing.

As it has turned out both SKRE and PRG have done very well over the last year -but SKE did do a little better. when it put on a surge since acquiring another business.

I expect PRG to be a good steady performer - it's PE is creeping up but only 13 times forecast earnings. There is no real reason to expect the forecast double digit earnings growth not to eventuate as a lot of future income is to a certain extent 'locked' in.




Occasionally you do hear talk that they could be a takeover target for somebody like Spotless. After all PRG has a relatively low market cap at $200M - the smallest of all the companys mentioned.

I'll stick with it for a while longer .... but sec still watching SKE as well.

(And no - PRG isn't Pacific Retail)

[SEC]

Agree with you W69, I sold my remaining SKE holding in March to buy PRG. They upgraded forecasts in April and announced a 17% increase in NPAT for 03/04 today.

There were other things that impressed me with today's result. They must be conservative when it comes to accounting procedures because they have previously underestimated valuing WIP. Also highly cashflow positive and wisely using this cash to reduce long term debt. 30% dividend increase. Six consecutive years of 10+% revenue and NPAT growth. And finally, they're forecasting another year of 'more of the same'.

All this for PE of 11 looking forward.

SEC

[pajama]

i have not performed any analysis on this coy and it may well be a sound purchase based on fundamentals. i have however had some experience as a customer and have been very unimpressed. a smallish for them painting contract (80k) has dragged on and on with the quality of the work being very ordinary. i will not be using them again although the choices in the market are lmited. a client opinion for what it is worth.

[SEC]

Pajama, if your painting contract was in Chch I am not surprised at delays. I have been waiting for weeks to get maintenance work done on my rental property, this sector is so busy at the moment.

The market likes the PRG story at the moment though, the share price is setting all time highs and up 20% in less than 2 months...

SEC

[winner69]

Price been a bit flat overall lately but some reasonable dips to top up.

Long term uptrend still in place - company outlook still looking bright

Good steady performer

[Stock Man]

Another one that I've looked at also: seem quite impressive[?] Perhaps topping out a little...[?]

[SEC]

No news to drive the PRG price lately since it reported months ago. Wait until October/November for earnings guidance/profit announcements.

SEC

[stephen]

I must say (PRG holder here) that I'm feeling a little disappointed here. At first blush PRG has lovely ratios, and has performed steadily and well for the last several years. Yet it seems to be stuck on a modest p/e that to my mind does not reflect its potential at all.

Is there some cloud hanging over PRG that I am unaware of?

[winner69]

Don't think there is a cloud hanging over PRG .. still on track to make that double digit earnings growth and that 13% EBIT margin is very good

Everything i said above still holds

Price action has been a bit unexciting of late but PRG keeps on keeping above the SMA200 line so technically still trending up ... just

Trouble is next profit announcement is not to April so might be out by then

[winner69]

Out of this now ... fundamentally still looks OK but chart started to look weak

a solid 60% plus over 2 years not all bad but time to move on

Will continue to keep an eye on

[stephen]

Anyone else still holding PRG? A solid result announced today.

And yet... over the last year, the price has hardly gone anywhere.

I confess I am mystified.

[Z_Man]

Hi Stephen,

I have held some PRG since 2001. It is a good solid company which has given reasonable returns over the long term.

It does not offer the potential of high growth rates and returns like, for example, biotechs or mining explorers, hence will always trade on reasonable PE's.

The price of many smaller industrial stocks have gone backwards over the last 6 months, so PRG's recent price is not unusual.

I gather there is some concern amongst investors as to whether PRG can maintain its margin. With its low growth rates, any margin squeeze could see earnings static or even fall.
You will see on page 19 of todays Results Presentation that EBIT/Revenue has falled from about 15% in 2000 to 13% in 2005.

I have this one tucked away in my super fund to give steady longer term returns.

[stephen]

Annual report in this afternoon.

No surprises there. It looks as though a few people bought in this week in anticipation - I'd be thinking "meh" if I were one of them.

Straight away I note:
- substantial increase in personnel costs
- operating cashflow down
- financing cashflow up, because of lower debt repayments.
- ROE is steady on 15%
- favourable exchange movements are partly responsible for current AUD result.

I'm not selling. But if I didn't own them, at first blush I would not be buying up large either.

I shall do some better numbers over the weekend and see whether I have reason to change my mind.

[SEC]

Stephen, it would take you ages to 'buy up large' in PRG. I have taken the recent rally to sell out. It's gone sideways over the past year and is too illiquid for my liking. I never added to the parcel I bought over a year ago.

Like you Stephen I was thinking 'meh' at PRG's recent profit announcement. On the basis of that uninspiring result and forecasts I think this stock will continue to go sideways.

SEC

[Z_Man]

CSFB have upgraded PRG to Outperform with a 12 month price target of $3.90 Currently trading around $3.44

It has already increased by 40c, or 13% since their recent acquisition announcement.

http://www.aireview.com/index.php?act=view&catid=8&id=2897

[stephen]

I'm happy to report I didn't sell them, caution and sloth being a major part of my investing strategy at the moment. $3.90 would be nice. I bought at $3.17 and have received two dividends since, so I have nothing to complain about at this point.

[winner69]

Time to put back on the watch list after todays market update

NPAT in 2011 more than this year .... and shareprice collapses 20% plus

Love these beaten down stocks ... PRG has a profitable business model and at 200 is now at 8 times projected earnings so could be a candidate for a decent recovery in the the next few months

[winner69]

Now it looks like the financial model is sort of broken and on top of that not as many commiting to long term contracts

And PRG sinks to new lows and chart continues to look really sad .... but one day there will be a recovery .... just keep watching the chart until starts turning up

[Lizard]

Maybe a slow recovery here at $2.17 for you, Winner, although essentially trendless here. Debt at manageable levels and a good revenue book if they can just squeeze a few more points of margin.

Not a company that appeals to me, but could be an okay time to buy for recovery?