SNP Schneider-Neureither & Partner
Written by
SNP Schneider-Neureither & Partner |
Strong Q4 trading prompts another upgrade |
Trading update |
Software & comp services |
15 December 2015 |
Share price performance
Business description
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SNP Schneider-Neureither & Partner is a research client of Edison Investment Research Limited |
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SNP Schneider-Neureither & Partner (SNP) has announced that, due to continued healthy business activity in Q4, it has again raised guidance for FY15. Consequently, we have raised our EPS forecasts by 24% in FY15, by 5% in FY16 and by 2% in FY17. These numbers are before the inclusion of Astrums, the fast-growing, Singapore-based consulting and IT services company, which SNP announced it intended to acquire earlier this month. Given the continuing high level of activity, we believe the shares remain attractive on c 16x our FY17e earnings.
Year end |
Revenue (€m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/13 |
23.5 |
(2.8) |
(64.7) |
8.0 |
N/A |
0.3 |
12/14 |
30.5 |
(0.1) |
(13.9) |
13.0 |
N/A |
0.6 |
12/15e |
56.0 |
3.7 |
68.8 |
20.0 |
34.2 |
0.9 |
12/16e |
64.0 |
5.7 |
107.1 |
30.0 |
21.9 |
1.3 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
New guidance: €56m revenues and a 8% EBIT margin
SNP has increased its FY15 revenue guidance to c €56m (previously €51-53m, which was upgraded in October), while the EBIT margin is expected to be about 8% (previous guidance 6%). The new guidance does not take into account the impact of the proposed acquisition of Astrums, which has not yet been finalised. Astrums offers solutions around various ERP systems in the Malaysian and Singaporean markets. The group has had an extremely busy year, and completed a prestigious contract with Hewlett-Packard (HP) well ahead of schedule. The HP contract involved an ERP “carve-out” as part of the US technology giant’s plan to demerge into two separate companies in early November. The HP contract demonstrates the value and efficiency of the group’s SNP Transformation Backbone software, which is the only off-the-shelf software solution that automates the process of combining, upgrading or carving out data from ERP systems.
Forecasts: EPS goes up 24% in FY15 and 5% in FY16
We have brought our FY15 forecasts in line with management guidance, increasing revenues by 5% to €56m (previously we were above the guidance range), while operating profit (or EBIT) rises by 18% to €4.5m, for an 8% margin. Our revenue forecasts rise by 2% in each of FY16 and FY17, while operating profit goes up by 5% and 2 % respectively. Our EPS forecasts rise by 24% in FY15, 5% in FY16 and 2% in FY17. We will incorporate Astrums in our forecasts in early FY16, after we have more information on the acquisition. Given that Astrums generates healthy profits, we expect the deal to be immediately earnings enhancing.
Valuation: Strong growth play in the ERP space
The stock trades on c 34x our FY15e EPS, falling to c 22x in FY16e and to 16x in FY17. We believe the ratings continue to look attractive given the forecast strong growth and margin recovery potential. Our DCF (WACC of 11%) values the shares at €25.07 (previously €24.39), 7% above the current share price.
Exhibit 1: Financial summary
€000s |
2012 |
2013 |
2014 |
2015e |
2016e |
2017e |
||
Year-end 31 December |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
||||||||
Revenue |
|
|
27,157 |
23,536 |
30,480 |
56,010 |
64,006 |
73,264 |
Cost of sales |
0 |
0 |
0 |
0 |
0 |
0 |
||
Gross Profit |
27,157 |
23,536 |
30,480 |
56,010 |
64,006 |
73,264 |
||
EBITDA |
|
|
3,714 |
(1,972) |
862 |
5,585 |
7,630 |
9,723 |
Adjusted Operating Profit |
|
|
2,951 |
(2,714) |
(66) |
4,469 |
6,496 |
8,590 |
Amortisation of acquired intangibles |
0 |
0 |
0 |
0 |
0 |
0 |
||
Exceptionals |
0 |
0 |
1,505 |
356 |
0 |
0 |
||
Associates |
(107) |
0 |
0 |
0 |
0 |
0 |
||
Operating Profit |
2,845 |
(2,714) |
1,439 |
4,825 |
6,496 |
8,590 |
||
Net Interest |
20 |
(85) |
(66) |
(796) |
(775) |
(775) |
||
Profit Before Tax (norm) |
|
|
2,972 |
(2,799) |
(132) |
3,674 |
5,721 |
7,815 |
Profit Before Tax (FRS 3) |
|
|
2,865 |
(2,799) |
1,373 |
4,030 |
5,721 |
7,815 |
Tax |
(947) |
477 |
(344) |
(1,102) |
(1,716) |
(2,344) |
||
Profit After Tax (norm) |
2,025 |
(2,322) |
(477) |
2,572 |
4,005 |
5,470 |
||
Profit After Tax (FRS 3) |
1,918 |
(2,322) |
1,028 |
2,928 |
4,005 |
5,470 |
||
Minority interest |
(127) |
(84) |
(40) |
0 |
0 |
0 |
||
Adjustments for normalised earnings |
0 |
0 |
0 |
0 |
0 |
0 |
||
Net income (norm) |
1,897 |
(2,405) |
(517) |
2,572 |
4,005 |
5,470 |
||
Net income (FRS 3) |
1,791 |
(2,405) |
988 |
2,928 |
4,005 |
5,470 |
||
Average No of Shares Outstanding (m) |
3.4 |
3.7 |
3.7 |
3.7 |
3.7 |
3.7 |
||
EPS - normalised (c) |
|
|
55.7 |
(64.7) |
(13.9) |
68.8 |
107.1 |
146.3 |
EPS - normalised & fully diluted (c) |
|
|
55.7 |
(64.7) |
(13.9) |
68.8 |
107.1 |
146.3 |
EPS - FRS 3 (c) |
|
|
52.5 |
(64.7) |
26.6 |
78.3 |
107.1 |
146.3 |
Dividend per share (c) |
24.00 |
8.00 |
13.00 |
20.00 |
30.00 |
40.00 |
||
Gross Margin (%) |
100.0 |
100.0 |
100.0 |
100.0 |
100.0 |
100.0 |
||
EBITDA Margin (%) |
13.7 |
-8.4 |
2.8 |
10.0 |
11.9 |
13.3 |
||
Adjusted Operating Margin (%) |
10.9 |
-11.5 |
-0.2 |
8.0 |
10.1 |
11.7 |
||
BALANCE SHEET |
||||||||
Fixed Assets |
|
|
4,236 |
7,759 |
8,291 |
14,257 |
14,404 |
14,735 |
Intangible Assets |
2,327 |
5,194 |
5,190 |
11,151 |
11,151 |
11,151 |
||
Tangible Assets |
1,486 |
1,070 |
1,231 |
1,236 |
1,382 |
1,714 |
||
Other |
422 |
1,496 |
1,871 |
1,871 |
1,871 |
1,871 |
||
Current Assets |
|
|
18,316 |
16,145 |
17,882 |
35,787 |
41,477 |
48,588 |
Stocks |
0 |
0 |
0 |
0 |
0 |
0 |
||
Debtors |
7,309 |
9,105 |
11,286 |
20,739 |
23,700 |
27,128 |
||
Cash |
10,152 |
6,355 |
5,681 |
14,133 |
16,862 |
20,546 |
||
Current Liabilities |
|
|
(4,781) |
(5,804) |
(9,782) |
(19,334) |
(22,098) |
(25,382) |
Creditors |
(4,781) |
(5,204) |
(9,182) |
(18,734) |
(21,498) |
(24,782) |
||
Short term borrowings |
0 |
(600) |
(600) |
(600) |
(600) |
(600) |
||
Long Term Liabilities |
|
|
(772) |
(4,338) |
(2,501) |
(12,501) |
(12,501) |
(12,501) |
Long term borrowings |
0 |
(2,250) |
(1,650) |
(11,650) |
(11,650) |
(11,650) |
||
Other long term liabilities |
(772) |
(2,088) |
(851) |
(851) |
(851) |
(851) |
||
Net Assets |
|
|
16,998 |
13,762 |
13,890 |
18,210 |
21,282 |
25,440 |
CASH FLOW |
||||||||
Operating Cash Flow |
|
|
3,022 |
(2,110) |
2,579 |
5,083 |
7,134 |
9,233 |
Net Interest |
42 |
4 |
(66) |
(796) |
(775) |
(775) |
||
Tax |
(1,826) |
(1,062) |
(1,102) |
(1,029) |
(1,602) |
(2,188) |
||
Capex |
(465) |
(230) |
(701) |
(1,120) |
(1,280) |
(1,465) |
||
Acquisitions/disposals |
(107) |
(2,267) |
(500) |
(3,203) |
0 |
0 |
||
Shares issued |
4,839 |
(35) |
0 |
0 |
0 |
0 |
||
Dividends |
(2,048) |
(937) |
(335) |
(483) |
(748) |
(1,121) |
||
Net Cash Flow |
3,457 |
(6,638) |
(124) |
(1,548) |
2,729 |
3,683 |
||
Opening net debt/(cash) |
|
|
(6,695) |
(10,152) |
(3,505) |
(3,431) |
(1,883) |
(4,612) |
HP finance leases initiated |
0 |
0 |
0 |
0 |
0 |
0 |
||
Other |
0 |
(10) |
51 |
0 |
0 |
() |
||
Closing net debt/(cash) |
|
|
(10,152) |
(3,505) |
(3,431) |
(1,883) |
(4,612) |
(8,296) |
Source: SNP (historicals), Edison Investment Research (forecasts)
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