-1x Square Discussion Threads

[spaceparallax] 10/6/2015 12:15

Octopus seem keen

[aishah] 20/5/2015 21:37

Up 167% since buy from 11/2012. I have a target well north of 725p. Run your winners long term imo, dyor.

[bbluesky] 01/5/2015 21:37

GB yes, we are still in agreement, the US is the next stage growth driver! What I like is that it is not a nibble, but a decent size acquisition, which pays its way from day one. I don't think it will be instantly fabulously value added, but has a longer term focus and there will be offshore benefits to be gained. For me it is the client list, the peer group and sales force that to my mind make it a v good strategic move. Big company ahead.

[gargleblaster] 01/5/2015 19:30

Essential that they gain a foothold/expand into the US market as this is where all the action is - far more dynamic in the IT space that Europe, and by the looks of things SQS has not over-paid - all imho of course!

[spaceparallax] 01/5/2015 10:22

Not so sure about this acquisition - hope it works out.

[bbluesky] 01/5/2015 07:16

Siemens are a Trissential client. They are proving to be very handy at opening up the US for SQS. A good friend to have!

[aishah] 30/4/2015 13:54

TechMarketView

Trissential deals adds to SQS's potential

SQS, the AIM-listed, German HQ'd supplier of software testing services, has bought the US IT project, programme and portfolio management company Trissential for a maximum consideration of US$30.7m. The company generated US$32.3m of revenue and US$1.6m of PBT in 2014, so on comparable valuations, this looks like a reasonable price. Trissential logo

The deal marks a departure from the SQS strategy of expanding into Financial Services, as seen in the very timely and so far successful move to absorb ThinkSoft. The value of the ThinkSoft deal was clearly shown in the full year results, see our recent HotView here.

Trissential is active in the manufacturing sector where SQS is also strong by dint of its German base and also adds capability in retail, energy and healthcare. The deal also strengthens SQS's underweight position in the US (where it turned over only US$12.3m last year, or 5% of Group revenue). At the full year the management pointed out the strategic goal of expanding in the US where revenue more than doubled in 2014.

The market for SQS's capabilities continues to grow strongly, particularly in managed services and the company has made good strategic progress and has improved margins. We continue to consider that the SQS management is on the right tracks and we expect further good performance

[spaceparallax] 28/4/2015 10:48

coming alive again - perhaps the move towards £7ps

[bbluesky] 08/3/2015 00:00

independent software testing company to be correct

[bbluesky] 07/3/2015 23:59

Yes it is different to a software related co, in that it has a physical presence: not one guru in a room producing a whammo product. But that profit goes up and up and imv the US will keep that growth rate going for years.

What I think is still undervalued is given the growth of hacking etc is the need for all new software to go through resilience testing, which will keep the banks etc on board as they are the obvious targets and lose huge sums currently.Er and who is the world's largest software testing company?

[nfs] 07/3/2015 04:13

The pbt to turnover ratio is low for what is perceived as a software related company
Is that what holds back the share price?
Lots of hard work needed to claw that profit up

[gargleblaster] 07/3/2015 02:24

Positive IC write up.

SQS passes with flying colours

The growing use of complex software in cars, consumer products and workplaces is great news for SQS (SQS), which roots out glitches and bugs for the likes of UBS and Volkswagen. Together with its focus on large, long-term contracts and selective acquisitions, that drove a 52 per cent increase in adjusted pre-tax profits to €18.8m (£13.6m) last year.

The Cologne-based group delivered a 32 per cent increase in sales of managed services, whereby it handles clients' software and IT testing for one to five years. The division landed several new contracts and extended others, including three in Europe (with two banks and a telco) worth a combined €55m. That widened its margins, swelled the order backlog and sent the group's average revenue per client up by more than a third to €634,000. It also pushed SQS's bank account into the black: in 2013 it had net debt of €2.9m.

India-based Thinksoft - acquired in late 2013 - contributed €26m in revenue. SQS's former competitor helped it more than double its US revenues to north of €12m. Yet organic sales also rose 7 per cent as the group captured a larger share of the European market, which accounts for more than 90 per cent of its revenues.

Broker Panmure Gordon expects pre-tax profit of €22.6m for 2015, giving EPS of 48.5¢, up from €18.8m and 43¢ in 2014.

SQS SOFTWARE QUALITY SYSTEMS (SQS)
ORD PRICE: 567p MARKET VALUE: £173m
TOUCH: 558-575p 12-MONTH HIGH: 614p LOW: 508p
DIVIDEND YIELD: 1.7% PE RATIO: 31
NET ASSET VALUE: 306¢ NET CASH: €9.8m
Year to 31 Dec Turnover (€m) Pre-tax profit (€m) Earnings per share (¢) Dividend per share (¢)
2010 163 6.4 18.0 8.0
2011 189 5.6 15.0 5.0
2012 210 7.8 21.0 7.0
2013 226 8.6 18.0 9.0
2014 268 10.1 25.0 13.0
% change +19 +18 +39 +44
Ex-div: 14 May

Payment: 28 May

*Includes intangible assets of €74.3m, or 243¢ a share

£1=€1.38

IC view
SQS's new strategy scores highly in our books. Its shares trade on 16 times forecast earnings, which isn't steep for the pricey software sector. Buy.
Last IC view: Buy, 559p, 7 Mar 2014

[gargleblaster] 05/3/2015 10:49

The answer to the last paragraph is I think "classic Teutonic caution"!

[aishah] 05/3/2015 10:29

SQS tests positive on FY14

Software testing and quality management services provider SQS did not disappoint with its full year results, exhibiting positive movements across the board. We could say that the gross margin improvement could have been bigger given the progress in high value Managed Services, point to management changes, and that the company is only looking ahead with “cautious optimism” but these are quibbles.

Results were in line with its pre close update (SQS points to a positive year) with revenue up 19% to €268.5m (to December 31 2014) and PBT up 18% to €10.1m. While organic revenue growth was respectable at 7.4% to €242.5m, the value of the Thinksoft acquisition (now known as SQS India BFSI) continues to come through; it generated revenue of €26m over the 12 months. Given the level of change and spending within BFSI, SQS has further growth prospects.

Managed Services is core to the SQS growth strategy and the main growth engine, with revenue up 32% to €120.5m and now representing 45% of total revenue (vs. 41%), against a target of 50%. The gross margin moved from 34.2% to 36.8%. Quality matters and there is good revenue visibility and importantly average revenue per client increased by 34% due to the strategic focus on larger client engagements. It is mining its customer base which is always a sensible strategy but also bringing in new business.

Expansion of its US business is another strategic goal and the 105% increase in revenue earns another tick in the box although that only took the total to €12.3m, or 5% of total revenue (vs. 3%), so more work is needed.

Demand for standalone testing services, as opposed to testing bundled with development, seems to be on the rise due to the need for rapid execution and low cost, which should play to SQS’s strengths but that just makes us wonder why management is not more buoyed up about the future.

[spaceparallax] 05/3/2015 10:21

Mighty impressive results - surely we must see a rise in sp

[gargleblaster] 05/3/2015 01:34

Date Company Broker Recomm. Price Old target price New target price Notes
04 Mar SQS Software Quality...
Westhouse Securities Buy 0.00 660.00 660.00 Retains
04 Mar SQS Software Quality...
Canaccord Genuity Buy 0.00 690.00 690.00 Reiterates

[nfs] 04/3/2015 16:36

me neither so happy the market allows me a chance to acquire at this price

[gargleblaster] 04/3/2015 16:03

So lets get this right;

Gross profits rise 24%
Margins improve by 1.5%
Cash position improves despite additional purchases
Improved visibility - managed services 45% of total rev (41% previously)
Rapid growth in the US (worlds biggest market)

Market reaction - share price down 2.5%!

nfs - I don't pay too much attention to currency movements as it tends to be swings and roundabouts, but agree this may be a factor at this time.

Hopefully when analysts comb back through the figures they will re-evaluate more positively!

[nfs] 04/3/2015 11:06

yes super ,now if that Euro thingy would just strengthen...........

[proactivest] 04/3/2015 11:00

Results video with CEO and CFO



Diederik Vos (chief executive) and René Gawron (chief financial officer) of SQS Software Quality Systems (LON:SQS) run investors through the highlights of the group’s full-year results for 2014.

[bbluesky] 04/3/2015 07:32

Results out. Will put holders in a very good mood this morning.

[thewheeliedealer] 04/2/2015 21:25

Hi Everyone,

I visited the Shares/Cenkos Tech bash yesterday and I bashed out a Blog on the companies I spoke to - SQS were one of them. You can read the Blog at the link below and feel free to have a nose about my Website while you are there - I hope you like it !!

cheers, wd

[spaceparallax] 03/2/2015 10:11

That looks like a wise acquisition - and from existing cash reserves! Onwards and upwards.

[cfro] 29/1/2015 07:49

Octopus over 10%.

Always good to see this insti acquiring shares. :-)

[cfro] 19/1/2015 09:37

Pleased to see the share price bouncing back up a little today. It had got a touch oversold in recent sessions.