Quindell Portfolio (LON:QPP) (13.5p and 4.6% of JIC Portfolio) has issued an upbeat trading statement this morning in which it also tries to answer some of the concerns of those who are sceptical of its business model. The highlights are; It has had a 100% success rate at converting all it outsourcing pilots into on-going long term contracts, so much so that it now has visibility on volumes to meet the market's current revenue expectations for 2013. It also says that the growth rate is accelerating with new prospects referencing existing clients and thus bypassing pilot schemes.
Rob Terry, Chairman and Group Chief Executive attempts to allay the doubts of some commentators around cash flow and margins. He said:
"The Group is focused on early conversion of those relationships where the cash profile is optimal. In preparation for this additional volume, in line with its previously stated strategy, the business has from mid-February 2013 transitioned itself towards higher margin outsourcing work with a targeted EBITDA margin of 25% as opposed to pure hire or pure repair contracts where EBITDA margins were in some cases as low as 5%."
The Company will announce results for the year ended 31st December 2012 on 7th May and the Company also re-iterates its desire to move form AIM to a full listing later in the year.
Conclusion; Since hitting its high of 17.5p at the end of November the shares have been disappointing, down some 23%. Despite this fall the JIC portfolio is still sitting on a 195% return. On consensus earnings forecasts the shares are valued at 11.25x 2012 earnings for 200% growth and on only 5.7x 2013 earnings for 95% growth. This seems far too cheap to me and hopefully today's statement will encourage the market. At 4.6% of the JIC portfolio it is the 7th largest holding. Happy holder.
