Servcorp Limited (SRV) AI Stock Analysis

• Market Cap: AU$503.33M
• Dividend Yield: 5.29%
• Average Volume (3M): 63.77K
• Price to Earnings (P/E): 9.3
• Beta (1Y): 0.21
• Revenue Growth: 6.85%
• EPS Growth: 237.34%
• Country: AU
• Employees: 674
• Sector: Real Estate
• Sector Strength: 81
• Industry: Real Estate - Services
• EPS (TTM): 0.55
• Shares Outstanding: 98,692,890
• 10 Day Avg. Volume: 64,274
• 30 Day Avg. Volume: 63,772
• PEG Ratio: 0.04
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.00
• Price to Cash Flow (P/CF): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: AU$6.30
• Price Target Upside: 22.33% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 1

Servcorp Limited's stock score is driven by strong financial performance with solid profitability and cash flow, albeit with high leverage risk. The valuation is compelling due to an attractive P/E ratio and high dividend yield. Technical analysis shows mixed signals, with some short-term weakness but potential long-term strength. The absence of notable earnings call insights or corporate events leaves the primary focus on these factors.

Servcorp Limited Business Overview & Revenue Model

Company Description

Servcorp Limited provides executive serviced and virtual offices, coworking and IT, communications, and secretarial services. It offers office space solutions; and virtual office services, including business address, secretary and receptionist, mail forwarding, and telephone answering services. The company also provides co-working and meeting room services. It operates in Australia, New Zealand, Southeast Asia, the United States, Europe, the Middle East, North Asia, and internationally. Servcorp Limited was founded in 1978 and is headquartered in Sydney, Australia.

How the Company Makes Money

Servcorp generates revenue primarily through renting serviced office spaces, coworking spaces, and selling virtual office packages. The company offers flexible leasing arrangements, including short-term and long-term contracts, which provide businesses with professional workspaces equipped with necessary amenities such as reception services, high-speed internet, and meeting room access. Additionally, virtual office packages allow clients to benefit from a prestigious address, mail handling, and call answering services without needing a physical office presence. These packages are popular among companies seeking a professional image without significant overhead costs. Servcorp enhances its earnings with ancillary services, including IT support, secretarial assistance, and meeting room bookings, thereby creating additional revenue streams. Strategic partnerships with technology and telecommunications providers also contribute to Servcorp's competitive edge and operational efficiency.

Servcorp Limited Financial Statement Overview

Summary

Servcorp Limited demonstrates strong profitability and cash flow generation, supported by effective cost management and operational efficiency. Revenue and profit growth are positive, but the high leverage is a significant risk factor. Overall, the financial health is solid, but careful management of debt levels is necessary to sustain growth and profitability.

Income Statement

Servcorp Limited shows a solid gross profit margin of 45.6% for 2024, indicating effective cost management. The net profit margin improved significantly to 12.4% from 3.8% in 2023, showcasing enhanced profitability. Revenue growth rate was 7.6%, demonstrating a positive growth trajectory. However, EBIT margin is extremely high at 84.4% due to a potential one-time gain, which may not be sustainable. EBITDA margin is 54.3%, marking healthy operational efficiency.

Balance Sheet

The debt-to-equity ratio is 1.91, indicating a high level of leverage, which could pose financial risks. Return on equity improved to 20.1%, reflecting better profitability and efficient use of equity. The equity ratio stands at 28.9%, suggesting a moderate reliance on equity financing compared to total assets. Overall, while profitability metrics are strong, the high leverage remains a concern.

Cash Flow

Free cash flow in 2024 decreased slightly by 4.0%, but the operating cash flow to net income ratio of 4.2 indicates robust cash generation relative to net income. The free cash flow to net income ratio of 3.3 suggests strong cash flow health. Despite the nominal decline in free cash flow, the company's cash flow metrics remain strong and supportive of its operations.

Breakdown
Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Income Statement		Total Revenue
314.11M	292.72M	272.53M	270.66M	349.73M
	Gross Profit
238.05M	116.29M	106.80M	71.49M	101.93M
	EBIT
35.51M	37.43M	39.59M	-4.25M	51.36M
	EBITDA
171.02M	159.32M	159.75M	119.70M	203.84M
	Net Income Common Stockholders
39.04M	11.07M	28.02M	22.12M	6.93M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
116.84M	116.35M	108.23M	104.54M	109.10M
	Total Assets
674.35M	640.97M	582.67M	619.56M	723.93M
	Total Debt
371.20M	367.85M	310.78M	349.47M	414.35M
	Net Debt
267.90M	298.36M	256.34M	280.33M	347.40M
	Total Liabilities
479.74M	453.19M	384.42M	424.94M	502.97M
	Stockholders Equity
194.62M	187.78M	198.25M	194.61M	220.96M
Cash Flow		Free Cash Flow
129.51M	134.94M	130.74M	135.81M	163.03M
	Operating Cash Flow
165.79M	155.53M	145.58M	139.65M	182.27M
	Investing Cash Flow
-38.69M	-24.66M	-12.62M	-6.47M	-17.97M
	Financing Cash Flow
-125.19M	-122.81M	-122.27M	-131.26M	-132.95M

Servcorp Limited Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 5.15
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AU:SRV, the sentiment is Positive. The current price of 5.15 is above the 20-day moving average (MA) of 5.04, below the 50-day MA of 5.22, and above the 200-day MA of 4.88, indicating a neutral trend. The MACD of -0.02 indicates Negative momentum. The RSI at 52.27 is Neutral, neither overbought nor oversold. The STOCH value of 58.23 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for AU:SRV.

Servcorp Limited Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
SRV	66 Neutral	AU$503.33M	9.32	25.52%	5.29%	6.85%	237.34%
Sector *	60 Neutral	$2.80B	11.09	0.20%	8508.36%	6.13%	-16.84%
GOZ	54 Neutral	AU$1.77B	―	-10.45%	8.87%	2.70%	-8.39%

Servcorp Limited Corporate Events

Servcorp Limited to Quote New Securities on ASX

Servcorp Limited has announced the issuance of 5,000 fully paid ordinary securities to be quoted on the Australian Securities Exchange (ASX) as of May 8, 2025. This move is part of the company’s strategy to enhance its capital structure, potentially strengthening its market position and providing additional resources for operational expansion.

Servcorp Director Increases Shareholding

Servcorp Limited announced a change in the director’s interest in securities, with Director Alfred George Moufarrige acquiring an additional 48,000 ordinary shares through an on-market trade. This acquisition increases his indirect shareholding, potentially signaling confidence in the company’s future performance and stability, which may positively influence stakeholder perceptions.

Servcorp Limited Advises Caution in Investment Decisions Amid Volatile Market Conditions

Servcorp Limited has released a presentation that emphasizes the inherent risks and uncertainties involved in investments related to the company. The presentation cautions investors to conduct thorough due diligence and seek professional advice before making investment decisions. It highlights that the company’s forecasted financial guidance and dividend predictions are subject to certain assumptions and may not guarantee returns, emphasizing the volatility and unpredictability of future financial performance.

Servcorp Achieves Record Half-Year Financial Results

Servcorp Limited reported record results for the first half of the 2025 financial year, with a net profit before non-cash impairments and tax of $34.4 million, marking a 19% increase from the prior year. The company also saw a 13% increase in underlying free cash to $40.5 million and a 7% rise in operating revenue to $158.8 million. As a result, an interim dividend of 14.0 cents per share will be paid. These strong financial results reflect the company’s robust positioning in the market, with expectations of continued growth and stable dividend payments, despite global economic uncertainties.

Servcorp Limited Declares New Dividend Distribution

Servcorp Limited has announced a new dividend distribution of AUD 0.14 per fully paid ordinary share, covering the financial period ending December 31, 2024. The ex-dividend date is set for March 4, 2025, with a record date of March 5, and the payment scheduled for April 2, 2025. This announcement reflects Servcorp’s commitment to returning value to its shareholders and may impact its market positioning by signaling financial health and stability.

Servcorp Limited Announces Quotation of New Securities

Servcorp Limited has announced the quotation of 7,500 ordinary fully paid securities on the Australian Securities Exchange (ASX) under the code SRV, effective from February 14, 2025. This move marks an important step in their financial operations, potentially enhancing liquidity and offering more investment opportunities for stakeholders.