Need to have some patience in this undervalued growing little stock.
It could be another Webjet to me.
Pros to me:
(1) The board is small and CEO holds a very significant shares ($8m) compared to his annual salary($800k).
(2) High business efficiency:
Column 1
Column 2
Column 3
1
RXP
DTL
2
Sales (in millions)
$127.1
$983.2
3
NPAT (in millions)
$11.9
$13.8
4
Before tax margin
13.3%
1.9%
5
Return on Tangible Assets
23.0%
4.7%
One of the main reasons for RXP to have a extremely high return on tangible assets is because it mainly does the consultancy service business which involves bigger and bigger staff that will not be reflected on the balance sheet while DTL has its legacy software license distribution business earning relatively easy predictable but also very thin margin. DTL knows its problem and it invested heavily to strengthen its service segment in recent years to make it from 15% of total sales to around 20%.
(3) Solid cash flow and good balance sheet
(4) Keep growing since listed for 5 years but very cheap market valuation (< 10× forward PER) compared to peers average 25×. This situation looks pretty much like back in Dec 2014 when I bought 7-years-growing Webject @$2.9, around 11× PER while Flight Centre by that time was trading at 16× PER. But bumper, I sold it 4 months later after earning a poor 35% profit. Now Webjet is $11 dollars.
Column 1
Column 2
Column 3
Column 4
Column 5
Column 6
1
RXP Services
2012
2013
2014
2015
2016
2
Cash Rcpts ($m)
12.4
32.5
54.2
83.6
128.6
3
Revenue ($m)
12.1
30.2
55.7
79.2
127.1
4
NPAT ($m)
0.4
3.5
6.5
7.4
11.9
Cons to me: From time to time it asks shareholders for money to do acquisitions.
Honestly, after checking the chart, since the history low in Jan 2015, any long shareholder who has bought in and held onto it for more than 4 months shouldn't be disappointed. I am in today.
