Fund Manager Summary
The fund managers believe that Servcorp Ltd presents a compelling investment opportunity as it demonstrates significant growth potential, particularly with its positive outlook into 2025. They note that despite a history of being perceived as a stodgy business, Servcorp has evolved, leveraging its considerable surplus cash to expand into new markets and enhance its service offerings. The shift towards flexible working solutions has strengthened its economic model, resulting in a step-change in profitability and substantial free cash flow generation. While the share price has risen, reflecting recent positive developments, the fund managers opine that there is still further upside potential, particularly with the anticipated IPO of its Middle Eastern unit in 2025.
Source: Trading View
Commentary From The Managers
Subscribe To Unlock
Date
Price
Summary
Unlock Recent Updates With ThesisTracker Pro
Don’t let information asymmetry undermine your investment returns. Join other engaged investors on ThesisTracker Pro.
Tamim Funds Management
31 Aug 2025
$6.91
Summary
- Servcorp (ASX: SRV) reported full year results for the period ending 30 June 2025.
- Underlying NPBIT: $69.1 million, up 23% on FY2024.
- Underlying free cash: $84.9 million, up 17% on FY2024.
- Operating revenue: $352.1 million, up 11% on FY2024.
- Statutory net profit before tax: $62.6 million, up 46% on FY2024.
- Statutory net profit after tax: $53.1 million, up 36% on FY2024.
- EPS: 53.8 cents, up 35% from FY2024.
- NTA: $2.17 per share, up 22% on 30 June 2024.
- Final dividend: 14.0 cents per share, 10% franked; total dividends for FY2025: 28.0 cents, up 12% on FY2024.
- Expected dividends for FY2026: not below 30.0 cents per share.
- Tamim Funds Management continues to hold Servcorp as it sees upside potential despite having taken profits above $7.00.
- Having bought SRV under $3.00 almost 2 years ago, the total return so far has been 170%.
Text:
Text:
Text:
Summary
-
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua, ut enim ad minim veniam.
-
Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat, sed ut perspiciatis unde omnis iste.
-
Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur, at vero eos et accusamus et iusto odio dignissimos.pedita.
Text:
Text:
Text:
Summary
-
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua, ut enim ad minim veniam.
-
Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat, sed ut perspiciatis unde omnis iste.
-
Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur, at vero eos et accusamus et iusto odio dignissimos.pedita.
Text:
Text:
Text:
Summary
-
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua, ut enim ad minim veniam.
-
Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat, sed ut perspiciatis unde omnis iste.
-
Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur, at vero eos et accusamus et iusto odio dignissimos.pedita.
Text:
Text:
Text:
Summary
-
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua, ut enim ad minim veniam.
-
Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat, sed ut perspiciatis unde omnis iste.
-
Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur, at vero eos et accusamus et iusto odio dignissimos.pedita.
Text:
Text:
Text:
Summary
-
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua, ut enim ad minim veniam.
-
Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat, sed ut perspiciatis unde omnis iste.
-
Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur, at vero eos et accusamus et iusto odio dignissimos.pedita.
Updates are made available to members within 12 hours in accordance with the ThesisTracker Pro Service Level Agreement.
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.
Commentary From The Managers
Tamim Funds Management
31 Aug 2025
$6.91
- Servcorp (ASX: SRV) reported full year results for the period ending 30 June 2025.
- Underlying NPBIT: $69.1 million, up 23% on FY2024.
- Underlying free cash: $84.9 million, up 17% on FY2024.
- Operating revenue: $352.1 million, up 11% on FY2024.
- Statutory net profit before tax: $62.6 million, up 46% on FY2024.
- Statutory net profit after tax: $53.1 million, up 36% on FY2024.
- EPS: 53.8 cents, up 35% from FY2024.
- NTA: $2.17 per share, up 22% on 30 June 2024.
- Final dividend: 14.0 cents per share, 10% franked; total dividends for FY2025: 28.0 cents, up 12% on FY2024.
- Expected dividends for FY2026: not below 30.0 cents per share.
- Tamim Funds Management continues to hold Servcorp as it sees upside potential despite having taken profits above $7.00.
- Having bought SRV under $3.00 almost 2 years ago, the total return so far has been 170%.
Summary
Monash Investors
31 Aug 2025
$6.91
- Monash Investors notes that Servcorp has performed well, with shares rising another 15% recently.
- Servcorp's shares have doubled in over 18 months due to favorable operating conditions.
- The trend towards flexible working arrangements and demand for serviced and virtual office solutions is growing.
- Servcorp is well-positioned to secure long-term leases on favorable terms in a post-COVID market.
- While headline earnings multiples appear attractive, adjustments for lease accounting rules are necessary, as they may overstate net profit.
- Tax considerations are important, as Servcorp has significant foreign earnings and distributes most earnings via unfranked dividends.
- Given the abnormally good conditions and the recent 100% re-rate, Servcorp has become a sell candidate for Monash Investors.
- Monash Investors has significantly reduced its position in Servcorp to increase exposure to more prospective opportunities elsewhere.
Summary
Ellerston Capital
31 Mar 2025
$5.45
- Servcorp has demonstrated resilience in a challenging market with solid results.
- Performance is tracking towards the top end of profit before tax guidance, which is viewed as conservative.
- Strong growth is reported in the Middle East and Europe.
- The stock is considered attractively valued, trading at 8x PE with a dividend yield exceeding 5%.
- Servcorp maintains a net cash position, enhancing its financial stability.
- The company aligns with the 2050 portfolio strategy due to its virtual office solutions that support remote work.
- Servcorp's offerings contribute to reducing global emissions by accommodating shrinking corporate office footprints.
Summary
Ellerston Capital
31 Aug 2024
$4.76
- SRV had a strong result, delivering an 11% return for the month.
- FY24 saw underlying PBT come in above the top-end of guidance at A$56.6m (compared to guidance of $50-55m) on the back of a strong operating performance and continued office expansion.
- Management provided guidance for 8-15% NPBT growth in FY 25, which was ahead of consensus expectations.
- The group continues to progress the planned listing of its Middle East operations with a final decision to be made early in 2025.
- Ellerston Capital continues to view SRV as a significantly undervalued business with a robust balance sheet position and strong growth prospects over coming years.
Summary
Monash Investors
31 Aug 2024
$4.76
- Servcorp rose 14% due to better-than-expected results and a positive outlook into 2025.
- Considered to have an unfair reputation as a stodgy business with a lazy balance sheet.
- Company holds considerable surplus cash, aiding expansion into new markets.
- Historic growth has been unremarkable, but post-COVID economic model has strengthened.
- Mature core serviced office business now augmented by virtual offers, catering to flexible work trends.
- Profitability has improved significantly, resulting in substantial free cash flow.
- Shares reflect recent positive developments, but potential for further growth exists.
- IPO of Middle Eastern unit in 2025 appears increasingly likely.
Summary
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.
ANALYST INSIGHT
Equity Research Analyst
"It seems Servcorp is shedding its old skin, transforming perceptions with a robust cash flow and a promising future. As flexibility becomes the new norm, this company may just have the edge to redefine its legacy, especially with the anticipated Middle Eastern IPO on the horizon."
Last Updated: 31 Aug 2025
Query The Data
Frequently Asked Questions
Who is investing in Servcorp Ltd (ASX:SRV)?
Fund managers including Monash Investors, Ellerston Capital and Tamim Funds Management have invested in Servcorp Ltd (ASX:SRV).
Why do fund managers invest in Servcorp Ltd?
Fund managers are investing in Servcorp Ltd due to its recent strong performance, with a 14% rise attributed to better-than-expected results and a positive outlook for 2025. Despite a historically conservative reputation, Servcorp has improved its economic model post-COVID, enhancing profitability and generating significant free cash flow. The company's strategic expansion into new markets and the upcoming IPO of its Middle Eastern unit in 2025 further bolster its growth potential.
What happened to Servcorp Ltd (ASX:SRV)?
Fund managers are investing in Servcorp Ltd due to its strong financial performance and favorable market conditions. The company reported significant growth in key metrics, including a 23% increase in underlying NPBIT and a 46% rise in statutory net profit before tax for FY2025. Additionally, the shift towards flexible working arrangements and increased demand for serviced office solutions position Servcorp well in a post-COVID market. Despite these positives, some fund managers are reducing their positions to capitalize on other opportunities, indicating a strategic response to the company's recent stock performance and valuation adjustments.