From Oct 12th 2009.
SRV ~3.10 down 25%.

All posts by this poster is not financial advice or a reccomendation to do something. Can change my mind quickly on any decision I make, given markets always change. Have positions in instruments discussed unless otherwise indicated.

As for Servcorp:
I will hold for now, but wont takeup rights. I guess a positive is at least they are being aggressive at the bottom of the cycle. Most of the implosions I mentioned previously occured from aggressive expansion towards the end of the cycle. Also obviously they wont be using debt.
However the cautions mentioned earlier are real and need to be monitored.

Hey just a side issue – above not advice, only for debating – pls see a financial advisor for decision making and advice.

Hey just a side issue – above not advice, only for debating – pls see a financial advisor for decision making and advice.

Cheers for the recog.

“the question is will these extra locations bring home the money or become a liability over the next few years?”

Thinking about this more overnight, I am more unsure as to how the market is going to price this. Will they price the growth in the future now or wait until its proven? The institutional placements were well received.

Not sure whether to unload my full position or partial. I guess I have time to ponder, theres scarce liquidity this morning!

Hey just a side issue – above not advice, only for debating – pls see a financial advisor for decision making and advice.

ABC Learning

Centro

IINET

Babcock and Brown

I have never seen a company, of this size, essentially triple its operations (in a few years) and avoid an eventual implosion on themselves.
I thought they were going to have an ambitious growth strategy – not a “go for broke” one !
I really hope it works out…if they can pull this off there is good potential here. I prefer lowest risk of capital loss (and safety of dividend) as opposed to high risk high reward, so this investment has gone out of my risk tolerance capability.
I may well re-enter if and when Servcorp prove they are capable of rolling this long term strategy out. Until then, I will remain skeptical and stay on the sidelines.

Hey just a side issue – above not advice, only for debating – pls see a financial advisor for decision making and advice.

“Trading for the first two months of 2010F continued to be very difficult. The financial impacts of the
new expansion plan means there will be a drag effect on profits into the medium term.”

“Servcorp intends to implement an expansion plan which will target on opening more than 100 new
floors over the next 3 to 4 years, the vast majority of which will focus on the Virtual Office model.”

“Over the next 3 to 4 years, Servcorp is expected to expand at a faster rate than it has historically. The
larger number of immature floors is expected to have a material negative impact on profitability until
the new floors reach maturity.”

“Today, Servcorp operates in 13 countries, with 67
floors.”

Usually when growth is done too quickly this isn’t a good sign. Its going to tripple its floors. If the economy doesn’t pickup as much as expected this is going to be a disasterous strategy regarding their cost base.
Pe is now approx 11-13 post dilution. Then if we factor in a medium term drag on profitability we could be above 13-15+ (best case scenario…worst case 17-20+) Historical valuations max have been 15-20 but with significant growth in forward eps. This will trade around 8-10 if eps goes backwards/ growth is slow/flat for the medium term.
I am dumping my holdings (above $4) as longterm growth looks unreliable and dividend growth may not be assured.

Hey just a side issue – above not advice, only for debating – pls see a financial advisor for decision making and advice.