CSV - CSG Limited

[Footsie]

I've bought into this coy as i think they will end up trading like DWS, OKN and SMX

My valuation is 1.70-1.80

s/p currently 1.33

FY07, FY08 and FY09 will be 40%+ CAGR

its a great business model

just listed a few weeks ago
IPO price 1.00

[corky]

Footsie

The performance since listing had caught my eye too. But what do you like about the business model? Is is the regional nature? (Bias - I have to say I dislike IT outsourcing from both the provider and client viewpoint) I couldn't find anything in the prospectus to get too excited about but what have you seen?

Thanks
Corky

[winner69]

I've bought into this coy as i think they will end up trading like DWS, OKN and SMX

My valuation is 1.70-1.80

s/p currently 1.33

FY07, FY08 and FY09 will be 40%+ CAGR

its a great business model

just listed a few weeks ago
IPO price 1.00


Reached that valuation of yours footsie .... well done

Sold out ....... or revised your expectations and increased your valuation

Good effort there mate

[Footsie]

I think I now have a number in the low $2's

It's gaining the interest of many an insto now.
It's good run will probably continue

[macduffy]

Hi Footsie

Had a look at this and its certainly done well since listing.
Re Corky's points about the business model. I can see that it has a strong hold in its fields in the NT - now that it has expanded into QLD and WA should we expect stronger competition in these bigger business communities?

By my calcs trading on an historical P/E of about 30 at current SP of $1-84.

[Footsie]

hist p/e of 26 ish

fwd p/e on my numbers is 16.8 @ 1.85 on eps of 0.11

cheers

[Footsie]

Been on this story for a while.

From a TA perspective its bottomed.

broken out of its trading range on friday on big volume. followed up again today with another big vol day.

Fundamentally a great story. been increasing NPAT for past few years and has secure govt IT contracts.

Phaedrus can you confirm the TA picture for everyone else to see.

Thanks
FTSE

[Phaedrus]

It would have been difficult for anyone to have missed that OBV "Buy" signal eh Footsie? I know that I have marked a trendline there, but it is really quite superfluous.

http://h1.ripway.com/78963/CSV46.gif

[Footsie]

KW whether u like this stock or not, from a TA perspective its just broken a major downtrend on serious volume.

okn and smx have already had a big run.... csv had been lagging. Until now.

[Footsie]

If this stock is to have a run like OKN... then it could quite easily advance to 80c-1.00

Buying pressure seems to be building. It hasnt really had a breakout since we had the massive jump in OBV, but no doubt the breakout is just around the corner.

Those big buyers will want to see the price moving in the right direction and will give it a nudge soon.

Thanks my thinking.

PS not their was a perfect retracement back to the old resitance line around 58c.... it then became support

[upside_umop]

hey footsie,

a good little play here. i bought some purely as a chart play at 65 cents.

sellers depth slipping right away and buyers building.

technically little resistance from here to 85 cents - 1 dollar, so as you say, a run could be in order.

it is relatively illiquid however.

[Footsie]

yes liquidity is a real issue compared with say OKN...

That's something the company needs to work on.

[upside_umop]

Testing $1.09

Once it breaks out from here, test 1.25 then 1.45?

Still cheap fundamentally but this has been a pure TA play for me and I've had to give it some breathing room at times!

Kinda tough without any charting program but I notice volume is greater on the up days and I'm 'imagining' the weekly chart looks good too.

Still here footsie? That OBV step really did wonders...

[Footsie]

i've been on this for 2 years... so not about to walk away now as the fireworks starts


p/e compco should have this trading mid 1.60's

thats my target for the moment. Cant see any reason why we wont get there by year-end (from the company's perspective)


i'd expect a re-rating to 1.45 post results.

Like you say, once it clears 1.15... technically there is some blue sky up to the 1.45 range.

[Phaedrus]

The most immediate hurdle is the resistance at +/- $1.10.

http://h1.ripway.com/78963/CSV812.gif

Notice how the Trailing Stops are the last to fire. I don't know why they get so much press (both good and bad!). I don't use them.

Looking at a chart like this, I find it hard to credit that some people claim TA "doesn't work"!

[Footsie]

Broke through 1.10 to trade as high as 1.18.
now trading 1.075

will be interesting to see the close.

based on that chart ... CSV is looking very much like it wants to BREAK OUT

[Footsie]

stock is subject to big moves from algo/bot trading. bit silly for a fairly solid IT stock
You can use this to your advantage.

[Catalyst]

CSV recently caught my attention after reading last week's FY10 result announcement with the company stating that its FY11 NPAT will be more than double the FY09 NPAT. The fundamentals aren't quite as good as I first thought but it's still one to keep an eye on over the next six months IMO. (Half of CSV's business is IT servicing/outsourcing in Aus and the other half is Print across Aus and NZ - it recently bought Konica Minolta printing in NZ and Cannon printing in Aus.)

From last week's FY10 result (in $A):
EBITDA = $59.3m
NPAT = $31.5m
FY dividend = 5.5c
Net debt = $52m
# shares = 242.8m
Current share price = $1.81

PE = $1.81 / ($31.5m/242.8m) = 14x
EV/EBITDA = (242.8m x $1.81 + $52m) / $59.3m = 8.3x
Dividend yield = 5.5/1.81 = 3.0%

All fairly standard multiples for a growing IT/Print company IMO.

The forecast FY11 figures look a little bit more attractive. (The only guidance the company has given is that FY11 NPAT will be more than double FY09 ie 2 x $23.3m, say $47m. The main reason for the jump is that FY10 only accounted for 6 months trading of Konica Minolta and nothing from Cannon.)

EBITDA = say $87m (working backwards from the $47m NPAT figure)
NPAT = say $47m

PE = $1.81 / ($47m/242.8m) = 9.4x
EV/EBITDA = (242.8m x $1.81 + $52m) / $87m = 5.7x

The biggest risk with the company IMO is the execution risk of the 2 big printing acquisitions it made during FY10 (Konica Minolta printing in NZ, Cannon printing in Aus - it issued more shares at $1.60 to pay for KM and more recently at $1.90 to pay for Cannon). Its IT division would also get hit if the Aussie economy slows. But the thing I like about them is a large chunk of its earnings are now reliable recurring revenue streams (mainly from the printing clients that lease the companies printers on long-term leases).

If the company can bed down its acquisitions and the economy doesn't tank, then this time next year I wouldn't be surprised to see the company trading on similar multiples to todays:

PE of 13 to 14x = 13 to 14 x ($47/242.8m) = $2.52 - $2.71
EV/EBITDA of 7 to 8x = (7 to 8 x $87m - $52m) / 242.8m = $2.30 - $2.65

[Footsie]

phaedrus
could you give us an update here. wondering if it has bottomed or just a bounce within a downtrend

[drillfix]

Footsie,

It seems to have shown a bottoming bounce on the 17/3/2011 and the hourly made a snap upwards after that/those hours some time.

The stocks Williams % R is shown overbought and looks set to decline, the RSI is strong and nearly completely overbought @ 78, yet be careful of the OBV which still lacks conviction.

If anything it seemed to be a need to try to test the 150EMA only to fail and want to fall back to the 60EMA which is at approximately $1.25

MACD is positve on the histogram and rising on both hourly and daily though how long this can sustain will be answered today and tomorrow.

My verdict would be bounce whilst in a downtrend unless it can break $1.41 or even $1.62 imo.

[Phaedrus]

Looks like an obvious reversal to me, Footsie. Note how the OBV is rocketing up.

Since triggering unequivocal Buy signals on 23/3/11 and 24/3/11, CSV has been rising nicely.

Don't take my word for anything, though, Footsie. Ask yourself these questions :-

(1) Does CSV appear to be a good TA candidate with nice clear trends?
(2) Historically, have technical indicators given reasonably consistent signals with this stock?
(3) Would trading CSV using TA have been profitable over the last few years?
(4) Have the indicators shown here performed well in the past?
(5) Can we therefore expect the recent "Buy" signals to be reasonably accurate?

http://i602.photobucket.com/albums/tt102/PhaedrusPB/CSV329.gif

P.S. Up another 5% this morning - not shown on chart.

[Footsie]

Thanks P

I think we can answer yes to all your 5 questions.

My only hesitation is that it is an extremely sharp V out of the downtrend.
1) Do you seen this as unusual?
2) Because the trend reversal is so sharp does that negate its usefullness? i.e do we need more consolidation
3) lastly after today presumably your chart would go green with the MSI

thanks

[Phaedrus]

My only hesitation is that it is an extremely sharp V out of the downtrend.
1) Do you seen this as unusual?
Not really. V reversals are not rare and while the "angle out" is quite often the same as the "angle in", there is a lot of individual variation. By way of comparison, look at the other V reversals on the same chart.


2) Because the trend reversal is so sharp does that negate its usefulness?" i.e do we need more consolidation. No - while it is quite common for reversals to retest previous support, the best of them never look back.


3) After today presumably your chart would go green with the MSI. Maybe not. The MSI is really quite a conservative indicator so will always lag behind more dynamic indicators as you can see from the chart.

[Lizard]

Pity Phaedrus isn't around to update that CSV chart, as that break-out petered out hurriedly at about $1.49. Might have given buyers the opportunity to exit again at around break-even.

Required an issue to boost funds for working capital. Still has quite a lot of deferred considerations on the books to fund. Market didn't like the result too much and now down to 95.5cps.

[blackcap]

Now 97c. It has totally defied the market of late. But I must be talking to myself, otherwise there would be a few more happy campers in here :t_up:

No keep it going KW. Im a happy camper too :), just not enough to make it really worthwhile. The big divvie (capital repayment) a while back was handy. 20 cents and recently 9 cents. This stock really has defied the market indeed. Its almost surreal to see it climb of late. I just cant seem to work out what they (the company) are up to half the time. Will keep watching with interest.

[Hoop]

Now 97c. It has totally defied the market of late. But I must be talking to myself, otherwise there would be a few more happy campers in here :t_up:

No No ..I've to like Blackcap have been listening
I'm not a happy camper as I've been "out" of all markets for nearly 7 weeks now...

CSV has a special place for me ..I made good coin here Buying in at 65c back in April 2009....back when the very large majority were crying doom and my small voice saying "new bull market cycle folks" Was drowned out by the thundering noise from the Ghosts of Bears, the Global Gurus the so-called experts, and the general media (incl ST) predicting the worst is still to come. It was a lonely world for me back then when most disagreed with my "new" bull view......so yeah I remember CSV well

I mistimed (hindsight) my sell at $1.86 on 25 Jan 2010 when it broke the steep up trend line (see P's chart..his trendline is re-adjusted)...but manged a nearly 300% gain.

Back to now......Well done KW
It is interesting now.. as CSV has entered the Phaedrus Spike area. (P's chart post#23 showed buy signals around April 2011 when the spike started) however in hindsight it wasn't a reversal it was a sucker rally that quickly topped at around $1.49 (Liz's post)....Always wondered if P got back in here then having to quickly bail out..:D.

Most Charts defaults include adjustments and the Phaedrus Spike is now seen at the $1.07 point (old $1.49?) with a first and last successful retest off an 18 month S&R line at 0.97 (old $1.31).

CSV has been a TA chart friendly share and responds well at S&R levels ..Its present up trend has seen it pause then breaks above each minor S&R hurdle to date.

I can't see any TA reason atm why the uptrend should not continue but hurdles have to seen first before they can be jumped..so CSV has reached another "be careful (mindful)" hurdle....another pause then the jump...eh?

[Stranger_Danger]

No No ..I've to like Blackcap have been listening
I'm not a happy camper as I've been "out" of all markets for nearly 7 weeks now...


Very little would have to happen to make that a good call.

[blackcap]

Company not announced to market yet so what is going on or do they not have to announce this one to the market?