SNP recorded c 14% organic growth in Q4 and a c 6% EBITDA margin. FY17 group revenue of around €122m was €2m ahead of our forecasts while EBITDA, at €2m, was €1m below our forecast. We have edged up our revenue forecasts while maintaining profit forecasts. After a hectic FY17, with multiple acquisitions, fund-raisings and significant corporate change, we understand that management intends to focus on organic growth in FY18. Given the attractive industry drivers and the potential for margin recovery, the shares look attractive on c 21x our FY19e earnings.
Written by
SNP Schneider-Neureither & Partner |
Focusing on organic growth in FY18 |
Preliminary results |
Software & comp services |
5 February 2018 |
Share price performance
Business description
Next events
Analysts
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SNP recorded c 14% organic growth in Q4 and a c 6% EBITDA margin. FY17 group revenue of around €122m was €2m ahead of our forecasts while EBITDA, at €2m, was €1m below our forecast. We have edged up our revenue forecasts while maintaining profit forecasts. After a hectic FY17, with multiple acquisitions, fund-raisings and significant corporate change, we understand that management intends to focus on organic growth in FY18. Given the attractive industry drivers and the potential for margin recovery, the shares look attractive on c 21x our FY19e earnings.
Year end |
Revenue |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/15 |
56.2 |
3.4 |
58.8 |
34.0 |
59.3 |
1.0 |
12/16 |
80.7 |
5.7 |
94.4 |
39.0 |
37.0 |
1.1 |
12/17e** |
122.0 |
(1.7) |
(27.5) |
45.0 |
N/A |
1.3 |
12/18e |
151.2 |
6.4 |
76.9 |
52.0 |
45.4 |
1.5 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. **12/17e shown are preliminary results.
Record revenues in Q417, full year organic growth 8%
FY17 revenue was €122m, up c 51%, including 8% organic growth. This implies Q4 revenues of c €40m (Q416 €23.1m). FY17 EBITDA was c €2m, indicating that Q4 EBITDA was c €2.5m for a c 6% EBITDA margin. Excluding c €4.3m of one-off extraordinary costs, FY17 EBITDA was €6.3m, for an EBITDA margin of c 5.2%. Incoming orders were €130.7m in FY17 for a book-to-bill ratio of 1.07x. This implies that Q4 orders were €35.7m, equating to a book-to-bill ratio of 0.87x.
Strategy: Pushing out the new products
The immediate focus remains on integrating the recent acquisitions and harmonising group-wide process. Consultants from the acquired companies are being trained on transformation software. In January, SNP appointed a software industry veteran in the new role of chief revenue officer to head the global sales effort. The role is based in Philadelphia, US, supported by a small team. A key focus will be on pushing the new products CrystalBridge and Interface Scanner. The group’s acquisition strategy has shifted away from consulting businesses to acquiring businesses that will broaden the group’s technological expertise.
Forecasts: Revenues edge up, profits maintained
We have brought our FY17 revenues and EBITDA into line with the update. SNP forecasts FY18 revenues of €150-155m (we were forecasting €149.2m). We have increased FY18 and FY19 revenues by €2.0m and €2.2m respectively. We have broadly maintained our FY18 and FY19 profits and balance sheet forecasts. We are forecasting operating margins of 4.9% in FY18 rising to 8.4% in FY19.
Valuation: Strong growth play in the ERP space
The stock trades on c 45x our FY18e EPS, which falls to c 21x in FY19e. Our discounted cash flow valuation (based on c 7.8% organic revenue CAGR over 10 years, 10% WACC, 15.8% long-term margin and 2% terminal growth) is €43.30/share, 24% above the current share price.
Exhibit 1: Financial summary
€'000s |
2014 |
2015 |
2016 |
2017e |
2018e |
2019e |
||
Year end 31 December |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
||||||||
Revenue |
|
|
30,480 |
56,236 |
80,685 |
122,000 |
151,249 |
165,280 |
Cost of sales |
0 |
0 |
0 |
0 |
0 |
0 |
||
Gross Profit |
30,480 |
56,236 |
80,685 |
122,000 |
151,249 |
165,280 |
||
EBITDA* |
|
|
862 |
5,484 |
8,524 |
2,000 |
10,967 |
17,924 |
Adjusted Operating Profit * |
|
|
(66) |
4,222 |
6,857 |
(500) |
7,394 |
13,936 |
Amortisation of acquired intangibles |
0 |
0 |
0 |
0 |
0 |
0 |
||
Exceptionals |
1,505 |
356 |
0 |
0 |
0 |
0 |
||
Associates |
0 |
(3) |
8 |
0 |
0 |
0 |
||
Operating Profit |
1,439 |
4,575 |
6,865 |
(500) |
7,394 |
13,936 |
||
Net Interest |
(66) |
(828) |
(1,137) |
(1,200) |
(1,000) |
(800) |
||
Profit Before Tax (norm) |
|
|
(132) |
3,394 |
5,720 |
(1,700) |
6,394 |
13,136 |
Profit Before Tax (FRS 3) |
|
|
1,373 |
3,747 |
5,728 |
(1,700) |
6,394 |
13,136 |
Tax |
(344) |
(1,195) |
(1,517) |
510 |
(1,918) |
(3,941) |
||
Profit After Tax (norm) |
(477) |
2,198 |
4,203 |
(1,190) |
4,476 |
9,195 |
||
Profit After Tax (FRS 3) |
1,028 |
2,552 |
4,211 |
(1,190) |
4,476 |
9,195 |
||
Minority interest |
(40) |
0 |
(147) |
(248) |
(267) |
(289) |
||
Adjustments for normalised earnings |
0 |
0 |
0 |
0 |
0 |
0 |
||
Net income (norm) |
(517) |
2,198 |
4,056 |
(1,438) |
4,208 |
8,906 |
||
Net income (FRS 3) |
988 |
2,552 |
4,064 |
(1,438) |
4,208 |
8,906 |
||
Average Number of Shares Outstanding (m) |
3.7 |
3.7 |
4.3 |
5.2 |
5.5 |
5.5 |
||
EPS - normalised (c) |
|
|
(13.9) |
58.8 |
94.4 |
(27.5) |
76.9 |
162.7 |
EPS - normalised & fully diluted (c) |
|
|
(13.9) |
58.8 |
94.4 |
(27.5) |
76.9 |
162.7 |
EPS - FRS 3 (c) |
|
|
26.6 |
68.3 |
94.6 |
(27.5) |
76.9 |
162.7 |
Dividend per share (c) |
13.00 |
34.00 |
39.00 |
45.00 |
52.00 |
60.00 |
||
Gross Margin (%) |
100.0 |
100.0 |
100.0 |
100.0 |
100.0 |
100.0 |
||
EBITDA Margin (%) |
2.8 |
9.8 |
10.6 |
1.6 |
7.3 |
10.8 |
||
Adjusted Operating Margin (%) |
-0.2 |
7.5 |
8.5 |
-0.4 |
4.9 |
8.4 |
||
BALANCE SHEET |
||||||||
Fixed Assets |
|
|
8,291 |
15,243 |
29,054 |
70,404 |
69,856 |
69,173 |
Intangible Assets |
5,190 |
11,675 |
24,179 |
62,939 |
62,939 |
62,939 |
||
Tangible Assets |
1,231 |
1,999 |
3,161 |
6,151 |
5,603 |
4,919 |
||
Other |
1,871 |
1,570 |
1,714 |
1,314 |
1,314 |
1,314 |
||
Current Assets |
|
|
17,882 |
29,996 |
59,478 |
84,155 |
79,359 |
83,841 |
Stocks |
0 |
0 |
0 |
0 |
0 |
0 |
||
Debtors |
11,286 |
16,084 |
27,201 |
41,129 |
50,990 |
55,720 |
||
Cash |
5,681 |
13,769 |
31,914 |
42,663 |
28,006 |
27,758 |
||
Current Liabilities |
|
|
(9,782) |
(13,703) |
(34,382) |
(34,853) |
(44,078) |
(48,040) |
Creditors |
(9,182) |
(11,101) |
(21,583) |
(32,753) |
(41,978) |
(45,940) |
||
Short term borrowings |
(600) |
(2,602) |
(12,799) |
(2,100) |
(2,100) |
(2,100) |
||
Long Term Liabilities |
|
|
(2,501) |
(15,513) |
(5,576) |
(52,440) |
(40,366) |
(32,792) |
Long term borrowings |
(1,650) |
(12,344) |
(434) |
(40,434) |
(35,434) |
(30,434) |
||
Other long term liabilities |
(851) |
(3,169) |
(5,141) |
(12,005) |
(4,931) |
(2,357) |
||
Net Assets |
|
|
13,890 |
16,024 |
48,575 |
67,267 |
64,771 |
72,183 |
CASH FLOW |
||||||||
Operating Cash Flow |
|
|
2,579 |
1,879 |
1,005 |
(929) |
10,211 |
17,098 |
Net Interest |
(66) |
(167) |
53 |
(1,200) |
(1,000) |
(800) |
||
Tax |
(1,102) |
(554) |
(412) |
476 |
(1,790) |
(3,678) |
||
Capex |
(701) |
(1,779) |
(3,451) |
(5,490) |
(3,025) |
(3,306) |
||
Acquisitions/disposals** |
(500) |
(3,228) |
(5,923) |
(27,770) |
(11,701) |
(1,716) |
||
Shares issued |
0 |
0 |
30,129 |
18,293 |
0 |
0 |
||
Dividends |
(335) |
(483) |
(1,264) |
(1,932) |
(2,352) |
(2,847) |
||
Net Cash Flow |
(124) |
(4,332) |
20,137 |
(18,552) |
(9,657) |
4,751 |
||
Opening net debt/(cash) |
|
|
(3,505) |
(3,431) |
1,176 |
(18,681) |
(129) |
9,528 |
HP finance leases initiated |
0 |
0 |
0 |
0 |
0 |
0 |
||
Other |
51 |
(275) |
(281) |
0 |
0 |
0 |
||
Closing net debt/(cash) |
|
|
(3,431) |
1,176 |
(18,681) |
(129) |
9,528 |
4,777 |
Source: Company accounts, Edison Investment Research. Note: Includes c €4.3m exceptional costs in FY17. **Includes additional payments for ADEPCON in FY18 and FY19, and final payments for RSP, Astrums/Hartung and Harlex in FY18.
|
|
Pluristem Therapeutics has had a productive FY18 to date. The company is advancing PLX-PAD in its Phase III study of critical limb ischemia (CLI) and Phase II study of intermittent claudication (IC), with the latter expecting results in early 2018. Additionally, the company received an orphan designation for PLX-R18 for acute radiation syndrome (ARS) currently in non-human primate studies and expanded its Phase I study for support of stem cell transplant to additional sites. We value Pluristem at $202m.