buy rec by apsec

apsec have put a buy rec on CLH with a target of 1.00 here is an extract from report
Financial Performance and Valuation
On the 28th of October 2011 Collection House issued an earnings guidance stating that EPS had risen 48% in the first quarter of FY2012. While the company said that due to seasonal factors the next six months weren't likely to be as strong, CLH was confident that it could deliver another increase in earnings in FY2012 in the range of $11-11.5 million for the full financial year. While we expect some earnings dilution from the recent capital raising we think the forecast earnings should still provide small growth in earnings per share of roughly 4% to 10.7 cents.
For FY11 company revenue came in at $76.7 million compared to $73.8 million an increase of 3.9%. Revenue in the Account Asset Management segment increased from $44.9 million to $39.5 million an increase of 13.67%. However revenue in the Commission Collections segment actually decreased to $32.1 million from $34.2 million a decrease of 6.1%.
The commission collection market continues to be very competitive with thin margins. In response the company has introduced new service offerings mentioned above and has improved marketing capabilities. While we think there is scope for a turnaround in the commissions and collections segment we think there will be continued growth in the account asset management segment specifically as the company continues to grow its PDL book which should increase the segments overall revenue and profit share.
NPAT for FY11 came in at $10.1 million compared to $8.9 million for the (pcp) and increase of 13.38%. EPS was up to 10.3 cents compared to 9.1 cents an increase of 13.18%. The company's debt to equity ratio stood at 79.9% consistent with previous years.
We value the shares using the company's 5 year average PE ratio of 11.2 and FY2012 estimated earnings of 10.7 cents which equates to a valuation of 1.20 per share. We start our coverage with an initial price target of 1.00 per share.