AIM listed iEnergizer Ltd, (IBPO.L) is a global provider of Business Process Outsourcing (BPO). Leading companies in the Healthcare, BFSI, Gaming, Publishing and Legal industries successfully outsource mission-critical business processes to the Company. With over 12,000 staff, IBPO builds and operates customized customer contact, back office and high-volume transaction processing centres serving the entire customer lifecycle, from outbound first contact to post-sales support and everything in-between.
On November 13th, 2018, IBPO reported a strong set of interim results, with a 9.5% increase in service revenues to $82.4m, EBITDA up 39.1% to $24.3m and an increase in EBITDA margin to 29.1% (H1 2018: 23.0%). Profit before tax increased to $21.0m from $12.1m previously, while net debt fell to $18.5m (31 March 2018: $26.4m). Chairman Marc Vassanelli said the performance “reflects the significant progress being made by colleagues across the Company, as we continue to focus on recurring revenue streams, as well as effectively offsetting pressure in the traditional publishing sector by capitalizing on our advantageous position to service existing and new customers’ needs in the evolving digital technology landscape ”… adding… “The Company’s healthy cash position, together with its cash generative business model, puts iEnergizer in a strong position to invest in both organic and inorganic growth opportunities in the periods ahead. We expect sustained business performance through the second half of the year and the Board looks forward to the remainder of the year with confidence.”
The VectorVest stock analysis and portfolio management platform flagged up the IBPO investment opportunity to members in August 2018. Although the stock has literally doubled in price since then, it still logs an excellent Relative Timing (RT) (stock price trend) rating of 1.48, (scale of 0.00 to 2.00) and a very good forecasted GRT (Earnings Growth Rate) of 16.00%. Less adventurous investors may be discouraged by the RS (Relative Safety) rating of 0.92, (again on a scale of 0.00 to 2.00), but trading at 120p, IBPO is still clearly undervalued against a current VectorVest valuation of 140.27p per share.
The chart of IBPO is shown above using weekly candlesticks over the past 3 years. The share is trending upwards strongly and is on a BUY recommendation on VectorVest. Earnings per Share (EPS) has risen strongly over the past two months while EPS has increased by 3 times over the 3-year period shown.
Summary: VectorVest members who bought into IBPO after the platform flagged up a clear valuation gap in August will have doubled the value of their holdings in the space of just a few months. Normally a period of consolidation occurs after such a rise, but IBPO still appears to have legs, thanks to a stellar set of interim numbers, strong cash position and bullish view for the second half of the financial year. The low RS reading may serve to discourage some investors, but the results, outlook and charting position all point to further near-term growth.
This has been a great trade and the share promises much more upside.
29th November 2018