Scisys Share Discussion Threads

[montyhedge] 30/1/2018 10:11

So forecast p.e 15 at around £2 seems good value, a lot of software companies on 30 to 40 p.e's.

[yump] 30/1/2018 10:06

I reckon a modest rating increase to say a p/e of 15 and looking to coming year, this should at some point be heading towards £2. Or perhaps £1.91 in analyst's speak.

[yump] 30/1/2018 09:36

Interesting - I had trouble earlier on trying to top up and now the share price has jumped a bit.

[montyhedge] 30/1/2018 08:05

That's a great article.

[penpont] 29/1/2018 23:29

Positive update by Simon Thompson in IC today:

Scisys in the ascent

The board of Scisys (SSY:130p), a supplier of bespoke software systems to the media, broadcast, space, defence and commercial sectors, have said its 2017 results will “comfortably meet current market estimates.” This implies it increase pre-tax profits by a third to £4m on revenues of £54m in 2017.

The order book is at record levels and robust across all its business segments, bolstered by a €18m contract win to deliver the ground-station control and communications infrastructure for the German national satellite-communications mission, Heinrich Hertz. I also understand from the directors that the strong organic growth seen at the end of last year “is continuing into 2018”. Moreover, having taken on debt to fund the acquisition of Munich-based Annova Systems, a supplier of software-based editorial solutions, principally to major European broadcasters, year-end net borrowings of £5.9m have been cut by a third since June buoyed by Scisys’ stellar cash generation. Closing net debt is well below the £7.1m level analysts had anticipated.

So, having suggested buying the shares at 102p (‘Tune into a media play’, 11 October 2017), I have no hesitation reiterating that advice and my conservative 155p target price. Scisys’ enterprise value of £44m still only equates to 7.5 times finnCap’s cash profit estimate of £6m for the 2018 financial year. Furthermore, investors are likely to value Scisys’ earnings stream more highly as debt is cut further. There is a progressive dividend too: the board has lifted the payout by at least 10 per cent a year since 2013. The prospective dividend yield is 1.8 per cent for 2018. Ahead of the results on Tuesday, 27 March 2017, I rate the shares a buy.

[montyhedge] 29/1/2018 17:14

Yes of course not holding for the yield, but nice to have a growing dividend getting paid, while we hold these for 250p.

[yump] 29/1/2018 16:56

I'd be surprised if anyone was holding these for the dividend, when the obvious possible event is a re-rating, which if you do a few rough calcs. would probably be a significant % rise from here.

[boadicea] 29/1/2018 16:20

monty - Most unlikely imho. The dividend will likely be "progressive", i.e. increased by about 10%, as in recent years, e.g. 2.16p or perhaps just a little more if they want it to send a message. They are currently in expansion mode and have plenty of potential uses for their modest cash reserve. Also, while there appears little to fear from Brexit given their Anglo-German links, there is always the chance of a surprise downside or indeed an unexpected cash-consuming opportunity.

[montyhedge] 26/1/2018 09:36

With debt down bigger than expected and with their cash flow, I expect a bumper dividend.

[montyhedge] 25/1/2018 16:08

Should be 162p.

[yump] 25/1/2018 12:43

Re: VLE another of those shares that go up in steps - very nicely - not got them though.

The other blatant 'stepper' I've got is RFX.

I suppose SYS is doing that as well, but with a less stable share price

[boadicea] 25/1/2018 12:40

Re: The lquidity factor raised by Paul Scott.
This may be important for traders, but given success it will improve and is of rather limited importance to ltbh.
Take a look at VLE as an example of the outcome where a rerating adds to success. There are usually enough setbacks in the share price to enable a decent holding to be built with patience.

[yump] 25/1/2018 12:39

Thanks for the info. - nice to hear that you've been watching for long enough to know a bit about the team. My first purchase was around 100p as well and had some more recently.

The spread doesn't seem at all bad at the moment, but not really an issue if not trading it.

[boadicea] 25/1/2018 12:29

This share has a long history for me. I first held it as part of Coda-Scisys pre 2005, through the split and then added but finally sold out in 2012. Since then it has been on my radar until last Summer when it again looked interesting and I decided to get back in at around the pound mark.
I assessed that a relatively small and committed team had shown survival ability and that recent deals coupled with long term experience and quality customers, not to mention the advantage of a weakening currency, had materially changed the outlook.
The p/e is modest and earnings increasing, so it has the additional probability of a rerating to add sspice to its revenue growth trajectory.

(A big seller to temporarily spike the share price down wouldn't come amiss!)

[yump] 25/1/2018 09:53

I've always liked companies that are doing OK on p/e's of 10 ish. As long as they're not really boring or very small, or (cough) foreign, there's plenty of scope for re-rating.

[montyhedge] 25/1/2018 07:56

ThanksThat's a positive article, I agree I think these will be acquired by one of the big boys eventually. In the meantime onward with organic growth.

[martinthebrave] 25/1/2018 06:59

montyhedge - Paul Scott from Monday.

SCISYS (LON:SSY)

Share price: 128.5p (up 3.8% today, at market close)
No. shares: 29.3m
Market cap: £37.7m

Trading update

SCISYS PLC (AIM: SSY), the supplier of bespoke software systems, IT-based solutions and support services to the Media & Broadcast, Space, Government, Defence and Commercial sectors, is pleased to announce a trading update for the year ended 31 December 2017 prior to entering into its close period.

This sounds good;

The Directors expect the Company's trading results will comfortably meet current market guidance, both in respect of revenues and adjusted operating profit.

That's a strange choice of words. Surely "comfortably meet" would mean beating guidance?

Additional detail also sounds positive;

The Company's overall order book is at record levels and strong across all sectors, bolstered by our 18m contract win with OHB System AG to deliver the ground-station control and communications infrastructure for the German national satellite-communications mission, Heinrich Hertz.

The Directors are pleased to note that the strong organic growth enjoyed at the end of 2017 is continuing into 2018.

The Group's cash flow is particularly healthy, with the net debt position as at 31 December 2017 better than expected, at 5.9m.

Valuation - a broker update today indicates estimated EPS of 10.2p for 2017, and a forecast of 11.2p for 2018. It sounds as if those might be conservative figures, so I'm inclined to value the company on 12p EPS - putting it on a modest PER of 10.7 - whilst that sounds cheap, this company has always been rated on a low PER of 8-10. Maybe it deserves more?

My opinion - I think this share could probably justify a somewhat higher rating, so it looks good value to me. On the downside, I've been frustrated with previous attempts to buy any meaningful amount of shares, because it's so thinly traded.

Eventually I suspect this company might be acquired at a premium, so patience here might pay off. There must be value in its client relationships. So a thumbs up from me, but a thumbs down for the lack of liquidity in the market, which makes it almost impossible to buy in any size, and of course the horrible bid/offer spread also has to be taken into consideration. Maybe management should make some more acquisitions, and considerably increase the size of the group, which would improve market liquidity in its shares too.

[montyhedge] 24/1/2018 22:14

Can you post it ?

[mfhmfh] 24/1/2018 15:09

positive write up by Paul Scott on Stockopedia

[montyhedge] 23/1/2018 12:58

Record order books, a lot of maintenance revenue each year.15 p.e does seem crazy, the other one of mine Kainos p.e 40

[yump] 23/1/2018 12:24

I've got 10p and 11p, so the p/e lower than 15, especially if there's any upgrades.

I can imagine its at a discount to software sector because part of its revenue is based on lumpy contracts, but the discount seems excessive.

[montyhedge] 23/1/2018 11:15

Brucie
Forecast p.e around 15.9, other software companies around 30. Market cap is peanuts, I'm hoping for 235p for this year.

[brucie5] 23/1/2018 10:19

Me too. Model chart, topped up on this morning's RNS. Looks like 1.20 base is firmly in, so I'm looking at how far it can now move towards the 2.00 level in 2018.

[zipstuck] 23/1/2018 10:01

i'm definitely a long term holder with the potential upside here

[mfhmfh] 23/1/2018 09:05

Key statements for me were:

'The Group's cash flow is particularly healthy, with the net debt position as at 31 December 2017 better than expected, at £5.9m.'

'Further contract wins across the Group in the last quarter of 2017 mean that we are entering 2018 with positive momentum across all divisions.'

GLA.