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Next few weeks will determine perfection or not .watch this space yah rocket.
perfect?
hardly...
* plus the senior hire announced today of course.
Upon further reflection, I've decided to continue sitting on the sidelines.
Why?
1) The multiples here aren't what they were. Even if we assume H1 x 2 = Full Year, both P/E and EV/EBIT appear to have crept up from what I said in June to 14-15 now. But H2 will not be as good as H1 (6 months ending 31 March) because it'll have the full impact of coronavirus. We can already see signs of this with the cash and debt figures skewing sharply, and the furlough scheme being utilised, etc.
2) I find the lack of a business update since mid-April slightly concerning. I know the company typically doesn't provide business updates between April and October but, in the highly unusual year this has been, it's reasonable to update the market somewhere in between this 6 month gap. And I don't fancy investing at such a volatile time in the market into a company which requires so much guesswork.
Let's see what's said on 15 October. I could be wrong (again!)
DYOR & GLA
OK this has caught my eye again because - as explained on 19 June - I do like this sort of company, and now it's roughly at the 50pish level which looks good value on a fundamental basis.
The HY Results that have come out since then show that revenues have fell just 5.6% for the 6 months ending 31 March. One could argue this doesn't take into account covid's impact on the business but that's certainly not true for the APAC business which still performed well. Also the company said that they have been largely unaffected by covid over April and May. So this is clearly a v resilient business overall.
Fee earner headcount is really important in assessing the company going forward, but it isn't clear what's happened here.
The HY Results said fee earner headcount reduced by ~8% only, however it isn't clear what has happened since 31 March. Currently all we know is that the company hired 2 fee earners in New York, and I can see online that they have some vacancies in the UK and Munich, but on the other hand the highly-respected CEO has departed too (and I bet his billable hour rates were v high!)
I'll try do some more research into this at some point but my gut feeling at present is that there's enough info to make a relatively safe punt on Driver but not enough visibility to invest a serious amount.
DYOR & GLA
Well perfect timing for my buy late friday.
Jolly
Think Driver have achieved a good set of H1 results and that we are in a covid period can be seen as extremely good set of results.
is there any obv seasonality (H2 better than H1)?
over last few years the intra year variability of performance masks any underlying pattern
if no seasonaility then run rate H1 performance puts this sp at a fairly demanding p/e
dyor, all
If it follows the usual pattern drops to 40s into results then bam hits 70 after results.
Same here, been hoping for a retrace back to 50p. Market conditions should hopefully suit this company,especially dispute resolution. Good value if can repeat or exceed H1 numbers in H2.
Just spotted the drop .in like a shot results shortly never dissapoints in big demand worldwide.
ST rarely disappoints
have to say management are quick to act in Driver and a massive opportunity
Mark Wheeler, Chief Executive of Driver Group, said : "The opening of our office in New York is a strategically important step for Driver Group. It enhances Driver's ability to serve clients in North America, working closely with our existing network of offices in Canada and providing improved access to important South American markets. We are delighted to welcome two leading experts, who have an enviable record of professional experience and expertise, to lead our new office in Manhattan. We look forward to working with them and with new clients across the Americas."
--> Thordon:
Thanks, appreciated.
Also, a likely post Covid-19 boom on infrastructure work by major sovereign states is another positive tailwind.
Investors looking beyond a likely modest dip in underlying operating profits in the 12 months to 30 September 2020 are likely to be well rewarded buying shares in the £30m market capitalisation company. Indeed, chairman Steve Norris also noted that the recent promotion of Mark Wheeler (who replaced previous chief executive Gordon Wilkinson) will lead to annual costs savings of £600,000, the full benefit of which will be seen in the 2020/21 financial year. Buy.
Expert witness to drive a re-rating
“Our plan is to refocus on higher margin work, minimise revenue break-even [to de-risk the business], keep costs under control, and benefit from the post Covid-19 bounce” says former chief operating officer and newly appointed chief executive Mark Wheeler of consultancy group Driver (DRV:57.5p). Specifically, Driverprovides clients in the construction and engineering sectors with specialist commercial management, planning, project management, and dispute resolution services. It also generates more than a fifth of revenue from expert witness work undertaken by its Diales subsidiary.
Diales is incredibly well placed to benefit from a likely surge in demand for its team of 48 experienced adjudicators, arbitrators and mediators as a direct consequence of the Covid-19 pandemic. Mr Wheeler notes that around 55 per cent of all construction projects normally incur cost over runs or are completed late, a figure that is closer to 100 per cent now. That’s a lot of disputes to earn lucrative fees from (gross margins of 30 to 40 per cent) for a company that has offices in North America and Europe, Asia and Middle East.
Expansion of arbitration activities in USA and South America is one of Mr Wheeler’s main priorities, as is increasing the volume of business from Chinese clients. Another is rightsizing its Middle East operation to have a greater focus on areas like resolution work in the oil & gas industry. Having reacted promptly and taken costs out of that business following last year’s slowdown in the UAE, and seen the division trade at break-even in the six months to 31 March 2020, prospects are quite positive for the underperformer. Indeed, there are 19 live proposals in the pipeline in the Middle East and “if only three or four come off we would need to pull in people [from other regions to work on them].”
Moreover, although earnings guidance was withdrawn when the UK lockdown started, Driver has been trading well throughout the crisis. First half operating profits increased by 60 per cent to £1.3m on revenue down slightly to £28m (highlighting the focus on margin) and the group has been profitable through April to June, making around £200,000 profit during each month. Net cash of £3.3m at the half year-end has since increased to £5.5m (10p a share) and finance director David Kilgour revealed during my results call with the board that cash collection rates are still running at pre-Covid-19 levels of around £5m per month. That’s reassuring.
Admittedly, Driver’s share price has drifted from the 67.5p level since I updated my 2019 Bargain Shares Portfolio in early February, and is below my 74p original entry point. However, this is more the case that investors have yet to cotton on that Driver’s business activities could benefit hugely from the disruption caused by the pandemic and earn chunky fees (as high as US$2m on some cases taken on) from its expert witness work.
Anyone able to help me out with a target or 'sum-o-the-parts
valuation on DRV.
I'm a subscriber so not looking for a 'freebie', just the date of
the report will suffice. I'm not invested, seamed to have missed
this one.
Caught my eye that 'jollyspec' is on the case too. Interesting.
Cheers, Hugh.
wish you bought now JollyS , looks like going to be a good year with back log of deferred projects driver picking up and good cash flow
Naughty MMs
Delayed trade after closing time
10-Jul-20 08:38:02 64.3125 80,000 Buy* 61.00 65.00 51.45k
full of joy you are
suspect we'll be back in the mid 50s before long...
Hahaa sounds like a silly day trader
one poor punter just booked a £120 loss in a few minutes?