Spectra Systems Share Discussion Threads

[leedsu36] 01/4/2025 14:50:17

• 2024 revenue rises 142 per cent to $49.2mn

• Underlying pre-tax profit up 46 per cent to $12.1mn

• Earnings per share (EPS) of 18.9¢ ahead of 18¢ estimates

• Annual dividend of 11.6¢

• Net cash of $8.5mn exceeds forecast of $6mn

Aim-traded technology company Spectra Systems (SPSY: 205p) has reported annual revenue and earnings ahead of upgraded forecasts with net cash also comfortably ahead of the expectations I outlined ahead of the results (‘This company’s strong earnings are woefully underrated’, 20 February 2025). The company is a specialist in banknote authentication, brand protection technologies, security printing and gaming security software.

Part of the $3.7mn outperformance of Allenby Capital’s revenue estimate reflects the pull forward of a huge $39.6mn (£30.6mn) contract Spectra was awarded (in July 2024) to manufacture advanced high-speed banknote sensors for a central bank. However, the majority of revenue from the contract will be booked between 2025 and 2027. So, although analysts at both Zeus Capital and Allenby clipped in their 2025 revenue estimates by a similar amount to $52mn, the impact on earnings forecasts is minor with both broking houses still expecting pre-tax profit and EPS to more than double to $25mn and 38.1¢ (29.5p), respectively. Moreover, analysts expect net cash to increase to $10-11.5mn by the year-end, a healthy sum in relation to Spectra’s £99mn market capitalisation.

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The other key take from the results were the comments from chief executive Nabil Lawandy on Wolverhampton-based Cartor Security Printers. Acquired in December 2023, Castor has advanced Spectra’s position in the $1bn global polymer substrate market for banknotes and strengthened its competitive position against incumbents De La Rue (DLAR), Crane NXT (US:CXT), and CCL Industries (CA:CCL). Lawandy notes that through efforts at Cartor “we have continued our progress with a major central bank to achieve qualification and near-term participation in a tender for polymer banknote substrates.” Upside from any contract award is not embedded in earnings forecasts.

In addition, Lawandy notes that “the business brings many optical materials opportunities through Castor’s existing sales pipelines and has provided Spectra with rapid access to a number of large corporate partners, which can adopt and drive sales of our cutting-edge authentication technologies.”

Potential for further outperformance is certainly not being reflected in Spectra’s current valuation as the shares trade on a forward price/earnings (PE) ratio of 6.9, less than half the rating of CCL Industries and a 46 per cent discount to Crane NXT. Spectra’s shares also offer a 4.3 per cent dividend yield and are priced on material discounts to analysts’ fair valuations of 355p (Allenby) and 280p (Zeus). Please note that Spectra has two classes of shares, and the unrestricted ones (AIM:SPSY) are the most liquid. Buy.

[leedsu36] 01/4/2025 14:49:22

• 2024 revenue rises 142 per cent to $49.2mn

• Underlying pre-tax profit up 46 per cent to $12.1mn

• Earnings per share (EPS) of 18.9¢ ahead of 18¢ estimates

• Annual dividend of 11.6¢

• Net cash of $8.5mn exceeds forecast of $6mn

[death by donut] 01/4/2025 10:23:23

Thanks ZhoDbD

[zho] 01/4/2025 10:20:45

Well, you can read part of it:

A business with a licence to print money

Simon Thompson: The banknote manufacturer is delivering on a huge contract and is set to be a disruptor in a growing market

• 2024 revenue rises 142 per cent to $49.2mn

• Underlying pre-tax profit up 46 per cent to $12.1mn

• Earnings per share (EPS) of 18.9¢ ahead of 18¢ estimates

• Annual dividend of 11.6¢

• Net cash of $8.5mn exceeds forecast of $6mn

Aim-traded technology company Spectra Systems (SPSY: 205p) has reported annual revenue and earnings ahead of upgraded forecasts with net cash also comfortably ahead of the expectations I outlined ahead of the results (‘This company’s strong earnings are woefully underrated’, 20 February 2025). The company is a specialist in banknote authentication, brand protection technologies, security printing and gaming security software.

Part of the $3.7mn outperformance of Allenby Capital’s revenue estimate reflects the pull forward of a huge $39.6mn (£30.6mn) contract Spectra was awarded (in July 2024) to manufacture advanced high-speed banknote sensors for a central bank. However, the majority of revenue from the contract will be booked between 2025 and 2027. So, although analysts at both Zeus Capital and Allenby clipped in their 2025 revenue estimates by a similar amount to $52mn, the impact on earnings forecasts is minor with both broking houses still expecting pre-tax profit and EPS to more than double to $25mn and 38.1¢ (29.5p), respectively. Moreover, analysts expect net cash to increase to $10-11.5mn by the year-end, a healthy sum in relation to Spectra’s £99mn market capitalisation.

[death by donut] 01/4/2025 10:18:33

I take it the article was +ve ?DbD

[reapz2345] 31/3/2025 17:14:15

https://www.investorschronicle.co.uk/content/a2985d7c-ec4c-445b-b4bf-c007c2cd1234

[zho] 31/3/2025 13:39:17

Paul Scott likes the results and is mystified by the market's reaction.

His article is behind a paywall but it looks as if there is a 7 day free trial:

[harrogate] 31/3/2025 11:49:38

I think the reaction is fair. This year's beat is just pull forward from next year which has been downgraded. Dividend unchanged and actually now reduced for next 2 years Also wording to me suggests that we have missed the tender opportunity for Fusion this year and taking a knife to Cartor suggests that there are few growth opportunities there. Been amazing and I will hold on but new contract wins have been way too few and far between period

[fozzie] 31/3/2025 11:44:00

Great results from Nabil and the Spectra team, quite ridiculous share price reaction but this is typical of the UK market which is just plain daft. ST should be out with an update in good order.

[shanklin] 31/3/2025 11:21:50

Both Allenby and Zeus notes this morning saying revenue and earnings ahead of forecast

[zho] 31/3/2025 10:10:06

Checking my notes I see that a (pre interims) 2/9/24 article by Simon Thompson quoted forecast eps growth of 31% in 2024, and we've come in ahead of that, at +36%, so perhaps an error by Stockpedia.

[harrogate] 31/3/2025 09:56:00

Not sure where that consensus came from. Zeus were at 18.3c for FY24 and sure Allenby were there as well.

[zho] 31/3/2025 09:47:23

Yes, results look good but eps of 18.9c came in well below the consensus (reported on Stokopedia) of 21.2c.

[welsheagle] 31/3/2025 08:43:53

Results look quite good - any comments

[harrogate] 24/3/2025 07:34:15

Yes so very surprised that they didn't tell us today that is the case. Very unusual for them not to give at least one week's notice

[shanklin] 24/3/2025 07:27:24

As per Harrogate have also heard FY results are Monday 31-Mar

[argylerich] 23/3/2025 19:16:41

The last two years they've given us a "notice" of results for 1-2 weeks subsequently. That's what hopefully should come this week 👍

[3800] 23/3/2025 16:58:37

Investors, especially PI's get very easily bored. Lots are itching to seek out the next 'hot stock'. It is easy to conclude that the share price decline/ stagnation is down to Investor boredom.

lets hope you are right about that PJ1, as we both know sometimes a declining share price coming up to the results means someone knows rather more than we do.

[death by donut] 23/3/2025 16:29:05

Sounds like this week then , at some point.Been here since '17 , just hoping / looking fwd to , the next leg up in the SPSY story.Happy holderDbD :-)

[harrogate] 23/3/2025 15:59:15

I have heard it is 31st March for results

[zho] 23/3/2025 15:35:02

Last year results were announced on 27th March, the year before on the 20th March, so hopefully this week.

[pj 1] 23/3/2025 15:34:44

This is rather subjective but I have used the same criteria for each year.

The number (imo) of news worthy RNS each year, including FY and HY.

2020 10
2021 15
2022 12
2023 7
2024 4
ytd 0

Investors, especially PI's get very easily bored. Lots are itching to seek out the next 'hot stock'. It is easy to conclude that the share price decline/ stagnation is down to Investor boredom.

This is hightened by the fact that Nabil assured that there would be more good news to come following on from the large $38m sensor contract win back in July 2024,Before that we were given hints of tenders to new bank customers, and all we got was silence.

[death by donut] 23/3/2025 15:00:55

Results this week?Got Est of 27th Mar in Sharepad.DbD

[death by donut] 03/3/2025 10:27:25

Apologies, just sat on site having a tea break.DbD :-)

[death by donut] 03/3/2025 10:22:15

Come on Nabil , give us a boomer RNS to the upside.DbD :-)