Skilled Group Limited (SKE)

By Jason Fittler

SKE provides staffing solutions to the public and private sectors.

SKE provides

• supplementary trades and professional labour,

• maintenance services,

• project management,

• healthcare professionals,

• offshore marine staffing services,

• customer contact solutions and

• trainee and apprenticeship management.

SKE has a branch network of over 100 local and regional offices across Australia, New Zealand, United Kingdom, Malta and the United Arab Emirates.

SKE reported adjusted earnings of $95.4m, which was flat but was in line with expectations.

The Engineering & Marine Services division drove the result. This division reported a 41% increase in earnings. This offset a decline of 14% decline in Workforce Services and a 38% in Technical Professionals.

Gearing increased greatly to 2.1 times earnings.

They announced a final dividend of 9.5cps, which is up 5.6%.

Going forward, the stronger 2H14 earnings trend (+11%) is expected to continue into FY14, despite external market challenges.

This is expected to be driven by some growth. Mainly from stabilization in activity levels within Workforce Services. Plus a moderate improvement in Technical and a $10m benefit, from a cost reduction program.

Our fair value for SKE is $3.00. Given it last traded at $2.12 this is a healthy 38% up side.

The company is also paying an 11.4% gross yield. But it does not come without some risks as the labour market is expected to be poor for many years yet.

The price is right to start accumulating positions in this company.

For more information about Skilled Group Limited (SKE) please contact us on 07 4771 4577.