Hi Nick_btw1, I'm a long term investor in SRV, entered about 8 years ago when the price was where it is about now, enjoyed the ride up to around $8, and have suffered the We Work inspired fall all the way back down again But lately I've been adding, as I also agree it looks good value now. No debt as you observe, and additionally there is about $70m surplus cash just sitting invested, which represents about 25% of total market value in itself at the current share price. I'm entirely comfortable with 'non hip" annual reports, as I think our future lies in not trying to compete with WeWork, but rather, to differentiate ourselves as a more mature, upmarket service provider (which we are). If it wasn't for USA things wouldn't be so bad. As it is, we've gone from an underlying NPAT of around $50 million to around $30 million. Ok, it's a significant fall, but it came on top of significant growth. If the profit has stablised at current levels and starts to gradually grow again, then at ten percent (already) of market cap, with no debt and a substantial cash holding, it does seem potentially undervalued. Yes, competition is hot, but this is an industry with a rapidly growing market. I sometimes reflect that a US recession and subsequent "cleanout" might, surprisingly enough, be good for Servcorp...it might reveal that the likes of WeWork,which seems intent on grabbing market share without much regard to margins, have actually been swimming with no clothes, and Servcorp might thrive again in a normalised market. I think other favourable scenarios are possible too (such as being taken over, or being taken private). Anyway, I've been adding recently, with a long term perspective in mind.
SRV Price at posting:
$3.00 Sentiment: Buy Disclosure: Held
But lately I've been adding, as I also agree it looks good value now. No debt as you observe, and additionally there is about $70m surplus cash just sitting invested, which represents about 25% of total market value in itself at the current share price. I'm entirely comfortable with 'non hip" annual reports, as I think our future lies in not trying to compete with WeWork, but rather, to differentiate ourselves as a more mature, upmarket service provider (which we are). If it wasn't for USA things wouldn't be so bad. As it is, we've gone from an underlying NPAT of around $50 million to around $30 million. Ok, it's a significant fall, but it came on top of significant growth. If the profit has stablised at current levels and starts to gradually grow again, then at ten percent (already) of market cap, with no debt and a substantial cash holding, it does seem potentially undervalued. Yes, competition is hot, but this is an industry with a rapidly growing market. I sometimes reflect that a US recession and subsequent "cleanout" might, surprisingly enough, be good for Servcorp...it might reveal that the likes of WeWork,which seems intent on grabbing market share without much regard to margins, have actually been swimming with no clothes, and Servcorp might thrive again in a normalised market. I think other favourable scenarios are possible too (such as being taken over, or being taken private). Anyway, I've been adding recently, with a long term perspective in mind.
