Synectics Share Discussion Threads

[sevenccc] 08/11/2024 18:44

Boystown do you think it is appropriate to post today's IC article from Simon Thompson here? Are there no copyright issues? Don't the subscribers have a reasonable expectation they might at least get until Monday to act on what they pay for?

[adorling] 08/11/2024 14:39

Decisive breakout now above 300p which should now become support.

[someuwin] 08/11/2024 13:13

Demand is strong here - can't even buy £2k.

[qs99] 08/11/2024 09:27

Maybe market waking up to opportunity?

[qs99] 05/11/2024 10:36

So 3 year doubling of EPS and p/e ratio drops to 9.5 next year for that growth?

Re-Rating required, plus line of sight & strategy for further growth beyond 2026, but why is rating assumed by Simon T (and others) to be so low for such a high growth stock?

Should be over £5 IMO

DYOR

[boystown] 04/11/2024 13:05

Re-tipped by Simon Thompson today...

This technology stock keeps on delivering

A security and surveillance systems company has won yet more contracts to underpin another step change in profits that is simply not priced in

- £2.2mn additional contract wins with National Grid
- EPS set to double over three-year forecast period
- Cash-adjusted ratio set to fall to 9.5 within 12 months

Sheffield-based Synectics (SNX:265p), a leader in advanced security and surveillance systems to customers operating in technically and logistically demanding environments, has won further contracts with National Grid to protect its critical infrastructure across 12 sites.

In January 2024, the energy group awarded Synectics £4mn of additional contracts to deliver security improvement work across 13 new sites. The latest contract win means that Synectics’ technology is now deployed across 32 sites throughout National Grid’s estate. The company has a 30 November financial year-end, so the contract awards help underpin house broker Shore Capital’s expectations for the 2024-25 financial year, when analysts expect annual revenue to increase by 8 per cent to £60mn.

Furthermore, as I noted when I rated the shares a buy, at 233p, at the interim results (‘Another upgrade for this cash-generative tech stock’, 16 September 2024), order intake is underpinned by a raft of contracts for the installation of security and surveillance systems at casino resorts in Asia and further contract wins with oil and gas giant Saudi Aramco. Synectics has deployed more than 10,000 specialist COEX camera stations to safeguard oil and gas refineries, pipelines, offshore vessels, and platforms for industry giants including Saudi Aramco and Shell. The gaming and global oil and gas market account for a fifth and a quarter of annual revenue, respectively.

Accelerated earnings growth

It’s worth noting, too, that a leaner cost base following a restructuring programme, the natural operational leverage of the business and a tailwind from the recovering oil and gas market mean that the operating margin will expand in a positive revenue cycle. In fact, analysts expect pre-tax profit and earning per share (EPS) to increase by 28 per cent to £5mn and 23.9p, respectively, in the new financial year, or more than three times the growth rate of revenue. On this basis, the shares are trading on a modest forward price/earnings (PE) ratio of 11.

In addition, the business is highly cash generative, so much so that Shore Capital forecasts a doubling of annual free cash flow (FCF) to £4.8mn (27p), which underpins a bumper FCF yield of 10.3 per cent. It means that even if the board hike the dividend per share by 44 per cent to 6.5p at a cost of £1.2mn, as analysts predict, net cash will continue to build. Indeed, the house broker pencils in a near-50 per cent increase to £7mn (39p) in closing net cash in the 12 months to 30 November 2025, rising to £9.3mn (52p) a year later. On this basis, the cash-adjusted PE ratio could drop to 9.5 by this time next year, falling to 7.3 in November 2026.

That’s a modest rating for a company targeting end markets with high barriers to entry and in sectors that are often challenging to penetrate. For instance, Synectics' proprietary security and surveillance software manages and records more than 250,000 channels across 270 locations worldwide, including high-security environments such as town and city centres, stadiums, tourist attractions and critical infrastructure sites.

Synectics’ share price hit a seven-year high of 299p earlier this month after I suggested buying the shares in the summer, at 188p (Alpha Research: ‘Spying a small-cap profit opportunity’, 12 July 2024). I now feel that my upgraded fair valuation of 320p (up from 280p) is achievable to capture the anticipated doubling of EPS to 29p over the 2023-26 forecast period. Buy.

[texaspete2] 04/11/2024 12:02

Hopefully the company sees a benefit to the increase in UK infrastructure investment too

[rimau1] 04/11/2024 11:19

Wonder if our CFO is going to get the perm CEO role. She has Rebranded surveillance, order book growing, expanded the NG gig and overseeing a growing order book throwing off net cash. Casino markets must be in a new growth cycle too. I am hoping for 21p eps and 7m net cash this year so for me this is still too cheap.

[qs99] 04/11/2024 10:08

Nice new contracts

[johndoe23] 30/10/2024 15:35

Yep, relieved. May drop back a bit now though

[adamb1978] 30/10/2024 15:18

Yes, relief rally in lots of small caps

[nfs] 30/10/2024 13:28

Budget impact positive. Not as bad feared

[chester9] 14/10/2024 17:41

Trades show greater volumes later. Could be Downing

[chester9] 14/10/2024 15:17

It may have dropped to get another buyer in as volume small. Watch out for end of day data or a TR1

[chester9] 14/10/2024 15:16

It may have been pushed up as Dowgate took their position.

[jimbob17] 14/10/2024 15:09

Has this been marked down on the (mistaken) thought that an increased UK gambling tax will have a significant effect?

[moreearl] 14/10/2024 13:40

Can't see this staying as SNX independant for that long with contracts wins and very very low valuation with very mingy forward P/E and cash on account

[someuwin] 14/10/2024 13:34

Crazy drop today. This is what they told us last month...

"As a result, the Board expects the Company's underlying PBT for FY 2024 to be materially ahead of market expectations"

[someuwin] 10/10/2024 11:28

Yup, one of my current favourite stocks. Security and surveillance are becoming ever more important. And SNX outplaying the big boys...

“We deliver large-scale programmes for world class companies. We protect and support critical public infrastructure around the world. We win highly prized contracts in direct competition with global conglomerates many, many times our size.”

[qs99] 10/10/2024 10:55

great effort all those in since £1! Have only just come across this firm, bought a few as a starter for ten. Looks great with net cash, momentum on contracts, good order book, look forward to full year update/results....DYOR

[johndoe23] 01/10/2024 09:12

Well done all holders here. Missed two bites of cherry

[someuwin] 01/10/2024 08:26

No buy quote avaialable.

[someuwin] 30/9/2024 22:14

Synectics Introduces AI-Driven Threat Detection at ADIPEC 2024

Monday, 30 September 2024

Synectics, a provider of advanced surveillance systems, will unveil a raft of technologies for detecting security and safety threats to oil and gas operations at this year’s ADIPEC.

Visitors to stand 14545 – located in ADIPEC’s digitalisation zone (Hall 14) – will see how Artificial Intelligence (AI), analytics-enabled COEX cameras, and the latest integration capabilities can dramatically enhance remote and on-site monitoring capabilities for both new and existing facilities.

With almost four decades of experience in the sector, Synectics’ range of solutions is used by onshore refineries, processing plants, pipelines, vessels, FPSOs, and other offshore facilities worldwide. Supporting customers in the energy transition, Synectics is also the number one provider of surveillance equipment for FLNG facilities worldwide, reflecting increased emphasis on this important transitional fuel...

[someuwin] 27/9/2024 18:39

Cheers missmimz. Direct link to the SNX part here...

[missmimz] 27/9/2024 13:26

SNX - Judith Mackenzie, Downing, one of her favourites, from 1:02:40