Ross Human Directions- RHD

[Tinker]

Ex JRR.

In the recent capital raising the majority holder of RHD, Julia Ross, did not take up some of her allocation to allow the smaller shareholder to get their allocation ( A$5000/shareholder). This was at a direct, and substantial, cost to her.

I am, and will, remain a shareholder of this company.

A reflection on their work may be the ROE last 6 years 50% 55% 44% 8% 24%.

Maybe a company and majority owner that thinks of its owners in this way deserves some consideration?

Cheers
Tinker

[Stock Man]

Ok tinker.....I admit, I purchased just over a week ago, due to the current retracement and minor low at .80c. I thought this a fairly safe entry, with low risk. There were just to many telling signs that I could not ignore.

cheers

[Stock Man]

Yep certainly are getting rerated. Still holding!

[OneUp]

Thanks Stockman.

Ross Human Directions (RHD)

Bit of a heads up to y'all that RHD is trending up nicely at the moment and should continue to gain ground.

Why?

Mainly because of the recent acqusition of Spherion which doubles the size of RHD.

Market cap $80m. Profit after tax for all of last year $4m. Profit after tax for for first quarter this year: $2 million. Annualised PE of 10 if earnings do not improve from here. See Candle (PE 15) and Catalyst (PE 15). So should be $1.50 no worries. But earnings should get better and better as synergies are realised with Spherion. Spherion also has unutilised tax losses of $40m ($0.50 cps) which may be available to RHD. Could be $2 or more within the year. Watch this space!

[Nimble]

Anyone aware what caused the big drop on Friday? 95 -7, approx -7%. Hit 85 at one stage, previous close 102. No ASX announcements. Sliding further today.

[leonchai]

89 now...what's going on...
getting very close to my stop loss...

[Nimble]

I called the company today to see if they had an explanation. Below are comments from Neil Mitchell-Clark, Chief Financial Officer/Company Secretary.

"We understand that 80-85% of trade has been thru Comsec and Etrade (ie retail). Stock is up 5c in trade today - as far as we can tell it seems to be reacting to local job vacancy stats and interest rate concerns."

[OneUp]

Thanks Nimble. Recent price movements have been baffling. No apparent company news, at least that I'm aware of. No matter share price should recover strongly (and then some!) when they announce $4m + for the half.

[leonchai]

Down to 77...no signs of stopping...=(

I thought the recently released report actually looked quite healthy, don't you think so?

[Damo79]

I thought the same leonchai.

A half year profit of 2.8mil after one-off expenses of almost a million in the restructure, not to mention economies of scale likely to come in from the spherion acquistion. I would look for a full year profit of about 8mil before abnormal expenditures, making the P/E around 8. To me, this is a good solid buy at this price... except for the fact that the share price is plummeting...

I've had this on my watchlist for a couple of months, and am definately looking at buying at the first sign of a SP turn around. I can't really offer any suggestions as to why it's dropping, except maybe that buyers from a year ago are trying to retain some profits and snow balling the price down.

Cheers

Damo

[OneUp]

Hi fellas
I thought the half yearly was pretty good too. I expected a bit more given the $2m for the first quarter but probably failed to take into account the Christmas period when the recruitment market tends to slow down. (There's also the question of whether the $2m for the first quarter was EBITDA, EBIT or NPAT....I got the impression from Julia Ross's wording that it was NPAT but I could have been wrong there). Oh well, live and learn :). And I think you're into it Damo when you suggest that economies with Spherion will come to fruition over time. It's worth remembering that Julia Ross, who owns most of the company, was very keen on increasing her shareholding when the deal was announced, and at the rights issue price of $0.67, which is now only 13c from today's closing price of 80c.

RHD is trading at a lower valation than its peers. I can't say for certain but it appears to be being sold off because of generic concearns about "higher interest rates" and a slow down in economic activity (0.1% GDP growth in December quarter) and its potential affects on the recruitment market. But RHD has not reported any slowdown.

I have held for a while with an average in the high 60s but am thinking about increasing my holdings at the mo. There seem to be a few holders captiulating - always welcome [:p]

[Nimble]

Was expecting a higher HY result as well. From the Chairman's address at the AGM on 19th Nov "Our after tax unauditied profits for the first quarter amounted to $2.0 million". This implies NPAT for second quarter was just $0.8M (2.8-2.0=0.8). Even if you add to this restructuring costs of $0.8M assuming they were all expensed in 2nd quarter you get $1.6M, which is a 20% drop on the first quarter result of $2.0M. A little disappointing. Oneup you could be right re some form of seasonable variation.

At the AGM "our forecast indicates that the full year will show an earnings per share increase over 2004". EPS last year was 6.8cps. With approx 80M shares on issue now the equivalent profit this year would be $5.3M (6.8cps * 80M). So they are aiming for an increase so lets say a minimum of $5.5M. With obviously further gains to be made in years to follow.
If they achieved a profit of 2.8M in the 2nd half as well this would be $5.6M for the year, which is in line with above. Comments from HY result were "this (profit) is in line with expectations", "Directors remain confident that the objectives associated with the aquisition of Spherion are being achieved" and from Julia Ross herself "I am confident that our objective of the Spherion acquisition being earnings accretive from the first year is being achieved".
Would love to see a FY result of $8.0M as mentioned above but I think unlikely. Hard to know how many more restructuring costs to be incurred. Third quarter result will give us more of an idea. I think anything over $6.0 will be consider a good result by the company. Looking to acquire a few more myself.

[OneUp]

For Dough Boy.

[robbo]

Ross Human Directions (RHD)

Cyclical player with a PROFIT MARGIN of only a tiny smidge over 2%...no room for error; or Margin of Safety in any downturn on those numbers...IMO....

And Observe that RHD has curently a declining Return On Equity (ROE) in what was and is meant to be a Boom Market for Employment, especially White Collar and Skilled...labour..

Why ? My theory is a new Technology followed by an example with 4 letters.

(1) On Line and companies like (2) Seek (.com)

Low Barriers to entry and a crowded market, make this a difficult Play IMO...very difficult to get any form of significant Market Dominance...or ever Get Pricing Power nowadays....

IN some ways is suffering the same problems as Flight Centre in this respect ... although there are disimlarities as well....

....So re Rossh Human Directions, (formerly Julia Ross Personnel) -- (RHD) ...... Do Be careful guys, don't personally like the look of this one at all, and I reckon you could do a lot lot better frankly in many other Share Investment Choices ....but as always that is only my personal view...

Kind Regards,

Robbo :)

[OneUp]

Cheers for your thoughts Robbo. I had a few weeks ago reconsidered my position on RHD. On reflection I do agree that online job portals are a big threat medium to long term. Not the least because I'm looking for my own job next year exclusively using the net! I also note comments across the industry of a trend to lower margins, probably due to the competition from search portals.

I do still hold my shares....hopefully a suitable opportunity to exit will present itself in the next few months.

[robbo]

Ross Human Directions...... (RHD)

Big Profit Down Grade Today...

Hope everyone caught the commentary on this thread re. RHD...and took a Snagglepusss... Stage Right..... & Head For The EXIT...

Yep indeedy, Hope eveyone jumped off this Ross Human Directionless ship earlier in the week.......as it is not a real good look now going forward, IMO... for RHD.....

To make matters even worse they've also LOST rights to Branding and Brand equity in the SPHERION Name...which if your in IT Recruiting, you'll know is a MUCH bigger loss than they like to admit...

Spherion has almost Instant Brand recognition in IT recruiment....

and in their ASX announcement, they sounded almost taken by surprise... unfortunatately....that was ,made a stuff up bit time....oooops.... etc, and admin oversight in their dealings when they did that Spherion deal...without locking up the Naming/Branding Rights...some one definitely does NEED their Ass kicked very very big Time...... as it just sort of seemed to crop up..... which was in conjunction with the RHD...Profit Down-Grade downward revision this arvo.......

RHD..... down today 6 %...

Kind Regards,

Robbo :)

[OneUp]

RHD earned $2.8m in the first half, and $2.2 in the second. Clearly they've had a tough time of it so far this half. But that'll still leave this $45 m market cap company making $5.0m. They also report that significant integration expenses have been incurred in both halves, that will not be repeated next year. So perhaps we will see improved performance next year.

For existing shareholders, I think rather than bail at current prices, a hold is in order. The bad news is probably fully reflected in the share price.

[Lizard]

Yes One Up. Came to the same conclusion. And am thankful it will be some time before RHD appears on car number plates to taunt me... :D

[Hommel]

Seems to have moved up a couple of cents this week. I have been waiting patiently for this one to be seen by the market for a year or so now, or maybe even taken over at a premium. Trades at a significant discount to it's peers - eg. Candle and Skilled Group.

[Stranger_Danger]

Skilled shouldn't be buying anything right now.

Disc : Happy RBD holder, not quite as happy SKE holder!

[COLIN]

On another note, CMG share price is also responding on the back of RHD takeover and rumours that Skilled Group were looking at it.

Good to see CMG move up 7%, on an all-market "down day".

KW: Are you still holding CMG and VOC, which also moved similarly today?

[percy]

Hi KW and colin.Having so much fun with VOC,I decided to join you with CMG which I brought at 40cents today.Just keep them coming KW.watchingMNF.I have some AMM and a few NTC.

[percy]

CMG is no longer cheap - its had a good run and there may not be too much left in it (I was in at 23c). That's probably one of the reasons why they've decided to jump on RHD (which is still very cheap even at current takeover price, as it will give them some growth. But its not a done deal yet - Peoplebank may come back again on the RHD offer price.

FYI I sold NTC as it started to drift downwards - I respect the trend these days and move on to something else. In this case MNF :-)
As always thank you KW.I have watched NTC drift,so will shift.

[percy]

As always thank you KW.I have watched NTC drift,so will shift.

Gone,now onboard MNF,ready for takeoff.!