Finweek English Edition - - Cover -

AS­SESS­MENT Hasn’t ex­actly been a model worker over the past few years, but there’s ev­i­dence of a much im­proved work ethic. With the great ben­e­fit of hind­sight this is per­haps the share that pun­ters keen on staffing shares should have ac­cu­mu­lated. Prime­serv had en­dured a hor­ri­ble time for a variety of rea­sons. But the group was a clas­sic op­por­tu­nity to buy a good com­pany do­ing badly in a tra­di­tion­ally bad in­dus­try where the go­ing is now good.

Last year Prime­serv’s shares were still avail­able at around the 20c level, which is well off the cur­rent price of 60c/share on the JSE. Prime­serv, which made its first sig­nif­i­cant ac­qui­si­tion (Staff Dy­namix) a few weeks ago, was one of the many com­pa­nies that sported bruises af­ter the flour­ish of cor­po­rate ac­tion among am­bi­tious small cap com­pa­nies in the late Nineties.

In Prime­serv’s case it was ac­quir­ing The Learn­ing Cor­po­ra­tion (TLC) that left the com­pany limp­ing for many a year. Things have got bet­ter oper­a­tionally, though you’d re­ally like to see Prim­serv fat­ten its trad-


ing mar­gin.

CEO Mer­rick Abel says there’s scope for ac­qui­si­tions “as we have cash on the bal­ance sheet but we’re not pre­pared to over­pay”. Abel also con­tends that Prime­serv presents in­vestors with a more so­phis­ti­cated op­tion, say­ing: “We’re the only com­pany with an in­te­grated hu­man re­sources of­fer­ing.” If its next set of re­sults can see bot­tom line growth com­ple­mented by an im­prov­ing mar­gin, plus re­as­sur­ing cash flows, then per­haps we’re look­ing at 100c/ share.

Mer­rick Abel

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