CSV - CSG Limited

CSG Limited is Information and Communication Technology (ICT) company
head-quartered in the Northern Territory. The company provides expertise in the
provision of integrated technology solutions to key customers include some of
Australia’s leading companies, along with state and federal governments. The
company offers services through: Managed Services; Print Services; and Enterprise
Services.

Showing real growth potential for 2010 and solid fundamentals.

Financials
FYE June 6/2007 6/2008 6/2009
Revenue $m 76 133 195
NPAT $m 11.0 18.8 23.2
EPS ¢ 6.4 11.0 13.3
EPS Growth % 0.0 70.7 20.9
DPS ¢ 0.0 4.0 4.5
Franking % 0.0 100.0 100.0
Dividend Yield % 0.0 2.9 6.3
PER x 19.6 12.5 5.3
ROE x 24.4 28.8 27.1

Date Last % Change Vol *
04 Dec 2009 1.790 2.87% 585,078
03 Dec 2009 1.740 1.16% 361,621
02 Dec 2009 1.720 -0.58% 138,401
01 Dec 2009 1.730 2.67% 106,422
30 Nov 2009 1.685 -3.44% 73,907

Volume has started to increase over the last few days, approaching double top, possible breakout play.

DYOR

What do you think are the growth prospects for the company?
Which companies are their customers?
Had a quick look and they look interesting...
Cheers

bloomy88 said:

What do you think are the growth prospects for the company?
Which companies are their customers?
Had a quick look and they look interesting...
Cheers

Click to expand...

Have a look at their “18/08/2009 5:58PM 15 Results presentation” should answer a lot of your questions.

Today’s news is encouraging, though CSV got sold down on very lite volume. Looks like another Government contract should be sealed early 2010.

“Darwin based IT Services Company CSG (ASX: CSV) announces that it has moved to contract negotiations with the Northern Territory Government.”

Trading halt, let hope its good news on the NT contract, would have a good chance to break 52 week high if it is.

Got this email this morning...

CSG Limited - (CSV .ASX)
10th December 2009


Offer Details
________________________________________

Offer Summary: Institutional Placement

Issuer: CSG Limited

Offer Size: Approximately $65 million

Pricing: $1.60

Macquarie's Role: Macquarie Capital Advisers is Sole Lead Manager and Underwriter to the offer


Key Points
________________________________________
Offer Summary:
• CSG to acquire 90% of KMBS, for NZ$107m (A$84m) and associated financing business, Leasing Solutions Limited (LSL) for $NZ25m (A$20m)
• KMBS has exclusive rights to import, sell and service Konica Minolta Multi Function Devices (MFDs) throughout New Zealand
• Acquisition of KMBS would see significant growth in CSG core print services business and is consistent with CSG's acquisitive growth strategy
• Transaction expected to be immediately accretive
Overview of CSG:
• Leading full service Australian information, communication and technology company with end to end capability to deliver integrated technology solutions
• Broad variety of customers ranging form blue chip organisations and government SMEs.
• Strong track record of earnings growth and longstanding customer relationships.
• CSG is now Fuji - Xerox Australia's (FXA)'s largest dealer in Australia, with five dealerships across Queensland and the Northern Territory
• Business shows resilience through the cycle with 20% profit growth recorded through recent economic downturn

Timetable
________________________________________

Offer Opens: 10th December 2009

Settlement Date : 16th December 2009
(Unconditional placement)

Commence Trading: 17th December 2009
(Unconditional placement)

Settlement Date : 25th January 2010
(Conditional placement)

Commence Trading: 27th January 2010
(Conditional placement)

Yeah, while placements are normally not good for the short term SP, I think today announce is fantastic for shareholders, but a shame shareholders can’t participate. This will really add to the company’s growth in the coming years and the CEO is keen since he is buying $12M of the $64M being placed (which is a big positive for the SP). Don’t forget upcoming news on the NT Gov contract. I am bullish on this stock if you haven’t noticed!!

DYOR

Well today move is just amazing, looks to brokers trying to accumulate from the volume and trading pattern in the last few days. The question is how much more will the news from the NT Gov contract add to the share price.

Director can’t help himself, bought 100k more shares at ~$1.93. Only time will tell how much the NT GOV contract will add to CSV market capital

Well, need I say more about this stock, price broken to new all time high and director continues to buy.

Brokers have this stock as a buy with a price target of $2.60 (ASR)

DYOR

Price closed today @ $2.12

Gee the bot is relentless on this stock.

My father in law recently bought into this stock. One of his friends son is on some REALLY good money working for CSG (not a director or anything) and he reckons the NT contracts going ahead are extrememly likey to say the least.

Does anyone think these could be a sell down from the recent cap raising?

Indeed if the CEO is buying 12Mil of 64Mil, that is a fantastic thing for shareholders.

FYI I DO NOT hold this stock and know very little about it other than what I have stated. I bougth BRM instead

Goodluck

Anyone else find the buying and selling of this stock "unusual"??

Just doesn't seem to look right.

I read somewhere else, someone speculated that the bot was buying and selling to itself....what would be the point of that? Other than to seem like the stock was liquid.

hmm, not sure if I'm seeing what your seeing with the recent trades. They had an excellent run at the end of last year - driven by what I have no idea, but it looks like a bit of a correction now.

CSV has had a disappointing run these past months, pity I didn't sell when it dropped - anyone know why it has hit the doldrums despite a recent contract in the UK?

As a potential holder, do fundamentalists see the current net profit, P/E ratio and paying dividends as an attractive value buy proposition. Not too cluey about cents/ share valuation of a company myself but it looks overdone and is at historical resistance zone which may become support. 12 month down trend hard to ignore and must be for fundamental reasoning.

Wysiwyg said:

As a potential holder, do fundamentalists see the current net profit, P/E ratio and paying dividends as an attractive value buy proposition. Not too cluey about cents/ share valuation of a company myself but it looks overdone and is at historical resistance zone which may become support. 12 month down trend hard to ignore and must be for fundamental reasoning.

Click to expand...

This one got me a little bit baffled as well. They fix photocopiers and you think they'd be a cash cow...The ratios look pretty good on the surface. But I think cash is one part of their problem. Negative operating cash flow and large investment / acquisition cash flow, putting the sustainability of the dividend in question.

Balance sheet isn't that tight either - big intangible asset line (from all the acquisitions) and substantial debt ($100m borrowing + others).

And a court case to confuse the issue... that might just be enough for many to shy away from it.

Could be good value though if you can understand the gist of the business in more depth.

skc said:

Could be good value though if you can understand the gist of the business in more depth.

Click to expand...

Thanks fellow. Further investigation suggests this business will be difficult to sustain.

It's less than half than the unsolicited offer price only months ago but looks like it will be a value trap for awhile.

suhm said:

It's less than half than the unsolicited offer price only months ago but looks like it will be a value trap for awhile.

Click to expand...

Perhaps the bidders were just being polite when they said "We are walking away because of concerns re Europe", when they really found a few skeletons in the closet.

The revised NPAT of $10m for the half year pitch them at 7-8c EPS. So even with the downgrade you think it can support a share price of 70-80c. At 50c the market is probably pricing another cap raising or more $hit to be dug up.

The half year details will show their cash flow situation.

Is there any information or chance of debt issues?

Picked up a position today at 74c on these guys.

They just announced an asset sale for the technology solution division of their business at $225m (plus $32m earn-out). The net proceeds after tax will be $190m (~67cps).

Management intends to distribute most of these capital after transaction costs, restructuring costs (of remaining business) and pay down some debt.

Say transaction cost = 3% = $7m.
Restructuring costs = $7m in a separate announcement.
Total debt = $85m so say they pay down 2/3 = $56m.

This leaves the company with $120m for distribution or ~43cps.

At 74c this leaves the remaining business at ~30cps, or $85m in market cap. With remaining debt ~$29m less cash of $14m as per half year, the enterprise value of the remaining Printing Service division is ~$100m.

CSV also announced a bit of profit downgrade for the Printing Service division... FY12 EBITDA to be 30% less than last year (which was $45m)... so ~$31m this year. Say we take out ~$5m in corporate costs, that leaves EBITDA of $26m.

In other words, currently the remaining business is trading at ~4x EV/EBITDA. Plus there's a free punt at the earn-out (~10cps).

Hopefully the market will re-rate this to something a little bit more generous over the coming days.

The print services division must be really struggling. Last year segment PBT was $38.5m at the half PBT was $14.3m and now they're saying EBITDA will be $30m. That might be why the market isn't getting too excited.

skc said:

Say transaction cost = 3% = $7m.

Click to expand...

According to the announcement the $190m is net of transaction costs.