TECHIE SHORTAGE BENEFICIARY
EMPOWERED IT recruitment company Paracon is well placed to benefit from the sector’s skills shortage. A recent run in its price, from below 160c in early January to 210c/ share puts it on a fairly high historic price:earnings of 18 times. However, earnings growth this year of at least a similar magnitude brings the forward p:e to a more respectable 13,3 times.
Though in only small amounts, CEO Mark Jurgens recently bought some of the company’s shares – almost always a good sign for shareholders.
Paracon recently released its annual report and held its AGM on Friday, 16 February, for shareholders to vote on, among other things, the 8c annual capital distribution (up 33%).
Results last year to September showed 36% growth in headline earnings per share to 11,6c on turnover up 19% to R635,4m. It generated R56m in cash from operations and had R115m on hand. Management has long boasted efficient debt collection and good cash conversion. OPPORTUNITIES Its resourcing division, accounting for 79% of turnover, should continue to be driven by a demand for ICT professionals. To build further on its relationship with Didata, which owns 27,4% of Paracon. • Growth last year was organic, but this year should also
be boosted by three recent acquisitions. RISKS • The lack of skilled ICT professionals. However, the Nihilent deal should help it to source these from India if necessary.