Here’s why CSG Limited shares just tanked 17%

The share price of CSG Limited (ASX: CSV) has tanked around 15% in mid-Monday morning trade after the provider of printing and business technology solutions reported a full year result which has apparently underwhelmed investors.

Here are the key numbers which CSG just announced:

  • Revenue grew 10% year-on-year (yoy) to $247 million
  • Underlying net profit after tax jumped 20% yoy to $26 million
  • Underlying earnings per share of 8 cents per share (cps)
  • Finance lease receivables expanded 24% to $261 million
  • ‘Technology as a service’ expanded to represent 20% of group equipment sales
  • An unfranked final dividend of 5 cps was declared


CSG has announced that it will launch a direct sales forces of 30 new sales staff across Melbourne, Sydney and Brisbane to target non-CSG customers with its new ‘technology as a service’ offering. This strategy is in addition to cross-selling products and services to CSG’s current customer base.

Management provided an upbeat assessment of the outlook for the current 2017 financial year with revenue forecast to grow by around 22% to over $300 million and underlying earnings before interest, tax, depreciation and amortisation (EBITDA) to expand by between 15% and 26% to between $44 million and $48 million.

The dividend is forecast to be maintained at 9 cps.

Foolish takeaway:

CSG operates in a competitive market place where it competes with both global giants as well as listed peers such as FlexiGroup Limited (ASX: FXL) and Thorn Group Ltd (ASX: TGA), whom also provide financial solutions to businesses.

The provision of leasing finance can be a profitable niche, particularly when it is married with a specialist skill such as technology solutions which CSG specialises in.

The market appears to have taken a dim view on the prospects for the equipment leasing sector however with CSG, FlexiGroup and Thorn’s share prices down around 12%, 11% and 40% respectively over the past year.

Investors considering investing in this space should first determine why they are right and the market wrong.

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Motley Fool contributor Tim McArthur has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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