Servcorp Limited

ASX:SRV

Servcorp Limited

ASX:SRV
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$7.07 (+0.7%)
Last close price
#223
Rank
4
Held by
3
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GavCo
Added 4 months ago
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Servcorp Limited (SRV) has released its FY25 full year results.


• Underlying free cash: $84.9M, up 17% on PCP


• Underlying operating revenue: $332.9M, up 11% on PCP


• Underlying NPBIT: $69.1M, up 23% on PCP


• Underlying EPS: 65.3 cps, up 25% on PCP


• DPS: 28.0 cps, up 12% on PCP


• Final dividend: 14.0 cps, 10% franked, payable on 2 October 2025


• FY26 guidance: Underlying NPBIT between $72.0M and $76.0M, and dividend not below 30.0 cps


• Opened 6 new operations and closed 2 locations in FY25


• Scheduled to open 6 new floors in FY26


ServCorp are a quiet achiever, managing to stay afloat during COVID while other similar companies struggled (WeWork). Their business model targets high end professional clients (law firms, accountants, consultants) while WeWork focussed on volume (aggressive scaling). Servcorp runs fairly conservatively and has weathered several market downturns since established in 1978.

Their current market cap is $640m and FY25 NPAT of $53.1m puts it at PE of 12. They also have $140m in Cash and Investments.

Disc: held

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Valuation of $3.38
stale
Strawman
Added 6 years ago
Very hard to gauge earnings exactly as a huge amount of operating leverage (due to high fixed costs). But, I'm (very conservatively, i think) thumb sucking 30c EPS by 2023 (compares with 34c for trailing 12 months). Give that a PE of 15 and discount back by 10% for 3 years to get $3.38. At this price, i think you could expect a starting yield of 3.5% at least (assuming the dividend is cut), and one that would quickly recover as we emerge out the other side. Expect plenty of volatility!
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