14/05/2008
Recommended here two years ago at 105p, shares in niche recruitment group Empresaria are back to square one after a spike to 187p, but the company is worth staying with due to its increasing and profitable focus on overseas markets.
With operations in six European countries, seven in Asia including Japan, India and China, and now a first in South America via Chile, the business should derive 70% of its revenues from abroad, if 2008’s predicted results are to be believed. In 2007, four acquisitions were made, with German business Headway by far the largest at €14.6m (£11.61m).
Buoyed by an eight-month contribution from Headway, continental European revenues mushroomed from £0.5m to £52.4m in 2007. The ‘rest of the world’ grew revenues 57% to £14.2m as recent start-ups in India, China and neighbours rocketed to profitability, or close to it.
Empresaria operates a de-centralised structure, where start-ups or acquisitions are part owned by the company and by management. Furthermore, the focus is on specialised sectors or niches, which, along with geographical diversity, de-risks the business.
Meanwhile its 12-year old UK operation enjoyed 20% organic growth driven by strong performances from temporary staffing in construction and banking. The ongoing future of the public sector division, the only UK area where it experienced a decline, is under review.
With sales expected to top £200m this year, house broker Kaupthing Singer & Friedlander has minimally downgraded 2008 and 2009 earnings forecasts to ‘accommodate more rapid growth in the Asian start-up’. It now foresees 12.2p in the former and 13.4p in the latter, giving prospective p/e ratios of eight and 7.3, which the broker argues are materially lower than European and Asian peers. If you failed to book profits at higher levels, now is not the time to sell. Hold on.
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| Market cap: | £32.6m |
| PE Forecast: | 7.99 |
| Share price: | 97.5p |
| AIM | £22.82m |
68.00p
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