PRG - Programmed Maintenance

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)

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

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.

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

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

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

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

SEC

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?

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

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

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.

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.

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

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.

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

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

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?

Full year result looks good to me. Starting to warm up to it a bit. At $2.30, I would say looks good buying.

Tried to get a few on open Lizard but missed out. Not prepared to chase in this market. Seemed a reasonable result with a good outlook for FY13. ROE still lagging though

PRG has been flagging again of late, especially after going ex-div (8cps) and this morning was down at $2.05. However, market seems happy with the AGM (still forecasting moderate growth, despite weak conditions in some areas of business). Currently up at $2.20.

Along with SKE, PRG has also been a beneficiary of the Ichythys LNG development contract awards with a $100m value contract.

SKE has so far been able to extract more profit from their revenues than PRG and are priced accordingly as "better quality". PRG have taken the interesting step of acquiring their own on-line recruitment business (announced on the same day as labour-hire company, AWF:NZX spent a more substantial sum on acquiring recruitment firm, Madison).

Currently at $2.77, PRG trades lower than my dcf valuation of $2.85 - $3.04, but without the confidence of growing profits. One to hold for half-yearly report in late November and further guidance.

Put on a run to $3.07 in recent days in anticipation of HY reporting. Will be standing by to take profits if the report does not suggest growth this year.

Half year result out - good increase in NPBT and increase to div. However, likely yoy NPAT will be flat, though with reduced debt and increase to div.

Overall, a good performance for current environment and, allowing for reduced debt, puts value in the range $3.10 - $3.30 in my view. Happy enough with that for now.

Quote:

---

Originally Posted by Lizard

Half year result out - good increase in NPBT and increase to div. However, likely yoy NPAT will be flat, though with reduced debt and increase to div.

Overall, a good performance for current environment and, allowing for reduced debt, puts value in the range $3.10 - $3.30 in my view. Happy enough with that for now.

---

Nice result out. Impressive debt reduction. Similar to those employed by SKE. Merging PRG and SKE seems logical.

Been hammered well outside the rest of the market in the last couple of sessions. Been a week or two since they went ex-div so can't be that. Suspect an analyst put a sell on it somewhere - which was probably justified up around $3.30 - $3.40, but not sure about down here at $2.80 unless they have some better insights on half year than the market does.

FY14 NPAT $31.1 million*
• Profit before tax up 5.5% to $44.4 million*
• Final dividend up 10% to 11 cps fully franked
• Net debt down 37% to $42.2 million

Share price reaction to the result 4 weeks ago is very muted. Currently at $2.74, div yield just over 6% FF. Cum div of 11 cents until next week.

Looks like PRG are priced in for a recession and major downturn in mining and hiring services. Just like their counterpart SKE. The share market is a beast of forward looking 12 months ahead. Nevertheless, PRG looks decent for value investors.

PRG has taken over SKE Skilled engineering. Mkt cap now re $700 mill

Im reading that @$2.66 valued around 7.5x P/E.3x EV/EBITDA, 8% D/Y with suggested value of $3.50
I have held SKE , now happy holder of PRG. DYOR

Half year presentation
Download Document
Ahead of schedule re integration with Skilled; but it will take until 2017 for full phase 4 integration.

Marine services mkt has rapidly declined as a number of major offshore projects are completed.etc

Forecast $20 mill synergies by Dec 2015
Workforce demand increased in blue collar economy first increase in 3 years

Well performing F/M business with strong pipeline
Creating a better, stronger company now covering ALL industry sectors when maintenance/ FM outsourcing is growing in size and scope

medium term view of general growth across the non resource industry.

Solid if not spectacular growth from here imo. DYOR

Programmed FY2016 Results and Market Update-PRG.AXDividend/Distribution - PRG-PRG.AX

Good move from $1.47 to $1.87

‘It will take a number of years for the benefits of our increased size, scale and efficiency to be fullyrealised as we integrate business systems and seek growth across our expanded network. We have alarge, scalable platform that will allow us to continue to invest in technology and lower our unitoperating costs for many years to come, creating a more competitive service provider and enabling us toprovide more benefits for customers.’


‘Customers in markets such as retailing, tourism, transport and manufacturing are hiring people andspending on their assets again, and there are growing opportunities in the education, health and aged caresectors. Demand is growing for staff and maintenance services across these sectors which represent morethan 2/3 of group revenue going forward. Demand for labour in the resources sectors, however, hasweakened due to the completion of major projects, cutbacks in mining companies’ exploration andoperating budgets, and a sharp drop in services for the oil and gas industry following the decline in oil andgas prices.

acquisition of Skilled.
Continued focus on capital management and strong operating cash flow reduced the company’s netdebt to $239 million at 31 March 2016 from $302 million at 16 October 2015 on completion of Skilled’sacquisition. This compares with guidance in February 2016 of between $260 million and $290 million.

Quote:

---

Originally Posted by Joshuatree

Programmed FY2016 Results and Market Update-PRG.AXDividend/Distribution - PRG-PRG.AX

Good move from $1.47 to $1.87

‘It will take a number of years for the benefits of our increased size, scale and efficiency to be fullyrealised as we integrate business systems and seek growth across our expanded network. We have alarge, scalable platform that will allow us to continue to invest in technology and lower our unitoperating costs for many years to come, creating a more competitive service provider and enabling us toprovide more benefits for customers.’


‘Customers in markets such as retailing, tourism, transport and manufacturing are hiring people andspending on their assets again, and there are growing opportunities in the education, health and aged caresectors. Demand is growing for staff and maintenance services across these sectors which represent morethan 2/3 of group revenue going forward. Demand for labour in the resources sectors, however, hasweakened due to the completion of major projects, cutbacks in mining companies’ exploration andoperating budgets, and a sharp drop in services for the oil and gas industry following the decline in oil andgas prices.

acquisition of Skilled.
Continued focus on capital management and strong operating cash flow reduced the company’s netdebt to $239 million at 31 March 2016 from $302 million at 16 October 2015 on completion of Skilled’sacquisition. This compares with guidance in February 2016 of between $260 million and $290 million.

---

Nice run up the last two days. Am a long suffering SKE holder but did top up some more PRG at 1.18 a few months ago. So sitting ok on this one now. Might take some off the table but with debt reduction, integration synergies and a better outlook this should (no guarantees here) run up to $2.50 in the next year or two.....

Have gratefully accepted T/O offer as an opp to get out about even(s/p responds up 65%:) but with ,oh opportunity lost on this one; my sentiment changed , to an imaginary soundtrack provided by Flight of the Concords called "Free From Conviction".:t_up: