The growing trend for flexible working is likely to be reflected in positive results from serviced-office landlord Regus (RGU) when it reports interims on 26 August. But despite this strong momentum we suggest investors steer clear of the £1.6 billion cap which is trading at a near-200% premium to the value of its assets.

Regus provides offices, meeting rooms or just a desk with an internet connection and a landline at some 2,000 locations across 100 countries, and is currently in the process of adding an additional 300 new sites this year. Acquisitions play a huge role in its growth strategy, adding 123 centres in the first quarter. New additions will be funded by its free cash-flow, which is expected to grow 24.8% this year to £218.9 million, a figure which is vulnerable to currency headwinds.

Agenda - Regus - 21 August 2014

Investec?s 10.5p prospective earnings per share forecast puts the company on a price to earnings ratio of 17.9, which looks expensive even if you primarily view it as a trading operation. However, due to its main assets being bricks and mortar Shares would argue the firm really needs to be viewed as a property company, in which case the eye-watering 186% premium to this year?s forecast 65.8p net asset value per share is a major red flag.

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At 188.4p Regus looks too expensive.

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Issue Date: 21 Aug 2014