RXP - RXP Services Ltd

[steve fleming]

I thought the half year result was solid and proved RXP are progressing their strategy. Margins are down, but I suspect there are some one offs in there that have impacted. Results IMO are not as bad as some think.

However, FY minimum guidance of $7.8m EBITDA is so far short of the $9.6m consensus estimates, so it is no longer going to be a brokers favourite. There is some acquisition upside, but all these acquisitions are starting to make me nervous.

I reduced my holding today, and no longer have RXP as a core hold

[noodles]

I exited the entire IT sector a while back with the sale of EPD. With most of the sector in the doldrums it is unlikely that one company gets to outperform (ditto for mining services). Too hard to look for a diamond in the rough, when there are enough gems sitting on the green :-) (ie. look to other sectors)

I've got a position in CGO.AX. They are growing in Europe. Other than that, no IT service stocks.

[mark100]

I dumped RXP immediately after the last capital raising. That turned me off. Too much focus on acquisitions and raising cash rather than showing the existing businesses are generating a sustainable EPS figure.

Like noodles I do own CGO. Recent upgrade has them trading on potentially <10x FY14 with overseas growth, net cash on the balance sheet and ROE of 20% plus

[steve fleming]

Nice to see a recovery on big volume yesterday

It was a solid half year result
organic rev growth of 18%,
total rev growth of 105%
increase in eps of 29%
increase in NPAT of 158%
EBITDA margins of 16%
Australian profit on budget and just HK under performing

I just think there was a big expectation gap between the brokers, the ACN crowd and a couple of other high profile RXP supporters, and reality

I think in part this was caused by RXP's earlier guidance when they released their full year report and they talked about exceeding current EBITDA margins. I (and others) took it as exceeding 2H13 EBITDA margins (20%) rather than full year FY13 margins (16.3%)

Management should probably have done better in resetting these expectations and being clearer in their guidance

[mark100]

stevefleming,

Another comparison could be against the previous consecutive period i.e. the last half of FY13 against the first half of FY14. On this basis:

NPAT fell 16% from $2.63m to $2.2m
EPS fell 40% from 3.7cps to 2.2cps

Seasonal or not, the NPAT fall seems odd for a business making acquisitions along the way.

WAM were sellers a few months back. They are more often than not on the money

[Joshuatree]

Thanks for the sequel kw I'm holding DTL,,RXP ,CGO and EPD atm . "Early because i don't wanna be late" .DTL and EPD have had good results atp and banking on RXP having one too.

[Lizard]

Yes, I picked up a few DWS hoping for a good result...

[Joshuatree]

RXP results REV up 85% to $56 mill
NPAT up 86% to $6.5 mill
PBT margin increased to 16.6 % from 16.3%
cash at bank $18.4 mill with zero debt
staff numbers from 212 to 420
completed 6 acuisitions successfully

We are again targeting strong rev and earnings growth in FY15 and expect to maintain a PBT margin in line with this past year allowing us to continue to grow organically and through acquisition We have had a strong start to FY15 with July 14 rev in excess of $6 million."

Poss div in 2nd half 2015
"...we are genuinely excited by the opportunities we see ahead for RXP"
S/P up 6% to 78.5c atp.

[Westboy]

A good result but cashflow wasn't great. Given the working capital cycle of paying employees, then billing clients, then collecting cash I am still trying to get me head around just how much cashflow will lag profits! It's probably about 10% of revenue but that is a total guess at this stage!

[Joshuatree]

Update
expect REV FY15 $75 to $80 mill and EBIT $9 to $11 mill Last year $9.3 mill(haven't certified)
1H15re$35 mill EBIT $2.5 mill
Several large contracted projects postponed commencement dates to the third qtr
But will they deliver;mkt is doubting.