##{"id":58958,"date":"2011-10-07T10:27:50","date_gmt":"2011-10-06T23:27:50","guid":{"rendered":"http:\/\/www.fnarena.com\/index.php\/2011\/10\/07\/minnow-humanis-on-high-speed-growth\/"},"modified":"2011-10-07T10:27:50","modified_gmt":"2011-10-06T23:27:50","slug":"minnow-humanis-on-high-speed-growth","status":"publish","type":"post","link":"https:\/\/staging.fnarena.com\/index.php\/2011\/10\/07\/minnow-humanis-on-high-speed-growth\/","title":{"rendered":"Minnow Humanis On High Speed Growth"},"content":{"rendered":"

\n\t– Recent acquisition to boost operations and earnings for Humanis<\/span>
\n\t– New management and senior staff delivering improved performance
\n\t– Year to date earnings better than expected
\n\t– Moelis<\/span> rates Humanis<\/span> a Buy<\/strong><\/p>\n

\n\tBy Chris Shaw<\/p>\n

\n\tSpecialist labour<\/span> hire and professional placement firm Humanis<\/span> Group ((HUM)) recently acquired Total Recruitment Group, a deal stockbroker Moelis<\/span> expects will deliver both strategic and financial benefits stemming from an expansion in overall activities.<\/p>\n

\n\tMoelis<\/span> notes the acquisition gives Humanis<\/span> additional recruitment services and HR solutions for the office and business support market. The deal also provides Humanis<\/span> with some points of differentiation, including a mining training simulation facility and some international operations in the Philippines.<\/p>\n

\n\tProjected sales for the Total Recruitment operations acquired are more than $150 million in FY12<\/span>, while EBIT (earnings before interest an tax) should be around $5.7 million.<\/p>\n

\n\tThe Total Recruitment acquisition will mean Humanis<\/span> now comprises four key brands, with an 80:20 earnings mix split between blue collar and white collar employment. Moelis<\/span> estimates around 35% of group revenues will be generated by providing temporary labour<\/span> to the resources sector via its Philippines business.<\/p>\n

\n\tAn earnings update offered by management at the end of September indicated both the Humanis<\/span> and Total Recruitment businesses were ahead of budget for the first two months of FY12<\/span>. Moelis<\/span> notes this is particularly a positive for the core Humanis<\/span> business, as it suggests the new senior management team and new staff in all key positions are delivering improved performance.<\/p>\n

\n\tEarnings for both divisions are expected to exceed September quarter expectations, management seeing this as a result of expansion into new, higher margin segments that has more than offset ongoing economic volatility.<\/p>\n

\n\tSolid earnings performance should continue according to Moelis<\/span>, its earnings per share forecasts standing at 2.5c<\/span> in FY12<\/span> and 3.6c<\/span> in FY13<\/span>. This compares to the 0.5c<\/span> earned in FY11<\/span>. There is little basis for comparison as with a market capitalisation<\/span> of around $60 million there is no coverage of Humanis<\/span> among brokers in the FNArena<\/span> database.<\/p>\n

\n\tAssuming its forecasts prove reasonably close to the mark, Moelis<\/span> sees value in Humanis<\/span> at current levels, as this would indicate earnings multiples of 9.0 times in FY12<\/span> and 6.4 times in FY13<\/span>. Risk appears to be to the upside, as Moelis<\/span> notes EBIT margins remain below management's target of 5% within the next three years and around 7% longer-term.<\/p>\n

\n\tThe upside potential stems from the expectation Humanis<\/span> will enjoy significant operational leverage from a revenue base of a forecast $500 million in FY12<\/span>. Earnings will be the primary driver of investment returns according to Moelis<\/span>, as no dividends are forecast through FY14<\/span>.<\/p>\n

\n\tMoelis<\/span> has set a price target on Humanis<\/span> of $0.28, which compares to a current share price as at 10.15am<\/span> this morning of $0.23, unchanged on the day. Over the past year Humanis<\/span> has traded in a range of $0.125 to $0.45. <\/p>\n

\n\t
\n\tFind out why FNArena<\/span> subscribers like the service so much: "Your Feedback (Thank You)<\/a>" – Warning this story contains unashamedly positive feedback on the service provided.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"