Good news. Much credit to SYS for achieving 6% organic growth when many sector comparators have been performing so badly.
The historic P/E is only 8.7, and the current year has started well. Cash flow from operations was up 23% to £3.02m, and net debt is fine at £1.32m - I'd hope for further acquisitions now the last two have been successfully bedded in.
Recurring revenues remain at an extremely high 81%, and the new major shareholder Heejae Chae will want to drive things along now he's Chairman. |
Results out and adj EPS at 3.9p ahead of previous guidance. Current year has commenced in-line with expectations. Hopefully Liberum will have the initiation note out today. |
It will be more interesting to see what the plans are following the board changes |
 Reminder. Notice of results.
SysGroup expects to publish its full year results for the period ended 31 March 2023 on 26 June 2023.
The RNS on 17April 2023 said...
...Following a strong close to the year the Group is pleased to report trading for the FY23 period in line with expectations. Despite the difficult economic backdrop, Group revenues grew 47% to GBP21.6m (FY22: GBP14.7m) and Adjusted EBITDA (1) increased to GBP3.33m (FY22: GBP2.82m). The growth in Group revenues was achieved through a combination of 6% organic growth supplemented by the successful acquisitions of Truststream and Orchard (the "Acquisitions"), both in April 2022.
SysGroup's strong track record of cash generation has continued, with gross cash of GBP4.18m at the year end (FY22: GBP4.13m), achieved after payment of GBP5.8m in aggregate in respect of the initial consideration payable for the Acquisitions. As expected, following the Acquisitions and successful refinancing, the Group has a net debt position of GBP1.32m excluding contingent consideration (FY22: net cash GBP2.99m)..." |
Taken from another BB....
illiswilgig
Machinations afoot? At SysGroup (LON:SYS) (I hold) the micro-cap buy-and-build managed IT business based in Liverpool.
Heejae Chae (apparently ex CEO of SCAPA and Volex) recently purchased 14% of the shares.
Today its announced that the CEO of 9 years, Adam Binks, will step down following the annoucement of results on 26th June and the founding Chairman, Michael Edelson (noted inestor) will step back to non-executive director and retire at the next agm.
Heejae Chae will be appointed executive chairman with immediate effect after the announcement of results on 26th June.
I wonder what that all this means?
Sysgroup has made some good acquisitions at small scale which have integrated well. By contrast larger £266m EV peer Redcentric (LON:RCN) seems to have made some quite disastrous acquisitions recently but remains quite highly valued at 41x current year earnings and 21x 12m forecast, 2.8x book and 10x EV/EBITDA. In this market, that seems strange to me?
Sysgroup appears undervalued:
£19.2m EV
9.5x current year earnings
0.8x book (admittedly almost all acquisition intangibles)
7.5x EV/EBITDA
With negligible debt and a tenth the size of its peer there is scope to continue funding small regional acquisitions to continue its buy-and-build.
But organic growth has been poor to pick up after the pandemic. Probably it's been more of a struggle than management expected and probably their market has become more competitive under the difficult economic environment.
Could just be that the founder and longterm CEO are happy to hand on for the next stage of growth? Presumably Chae sees some potential? Is that good for shareholders or bad?Anyone know anything about Chae? Good or bad?
It's a small holding for me. I shall watch with interest as it has demonstrated an ability execute buy and build efficiently under difficult circumstances which is a rare skill. How much of that was down to the soon to be ex-CEO and Chairman remains to be seen? Alternative views are welcomed - it's not a share in which I have a very strong conviction,
cheers
Mark |
To justify being a listed Plc the company need to be much more aggressive in building the business especially via niche acquisitions. Whilst solid it has been boring. Hopefully the new guy will bring it on! |
So was Banks forced out by Chae, or did he see an opportunity to move on for personal reasons ? Nice pay off of his options. |
Agree, you sum it up well. |
Certainly an interesting move, but a positive one on balance. AB can't be faulted for the job he has done, but perhaps didn't have enough of a following to get the share price up and deal flow going |
Well, all change with the Adam Binks moving on and the new man in as Exec Chairman.Interesting development, but not surprising! |
Thanks for the reply and info santangello - useful to know :) |
Many thanks gleach for your efforts and advice.....On this occasion, however, due to liquidity I had to buy T+20, hence the premium.Cannot wait to see how this gem of a company blossoms going forward. |
Hi santangello...good luck with your investment.
On the 20k @ 38.75 trade, I did notice that being reported yesterday. At the time it looked very bullish (being outside the 36-38 market quote) but when I did a dummy trade immediately afterwards I was surprised to be offered 20k @ 37.74. This morning it's 37.24. Might want to keep an eye on your broker? |
I see IOM has enjoyed a blistering run over the last month. Improving sentiment and prospects or further consolidation on the cards!Either way Sys looking well placed. |
*38.75p today |
I am in at 32, 33, 34.5 and another 20k @ 38 today. I will remain a buyer in the short term up to around 43.Obviously I will react accordingly to any (expected positive) RNS's or possible takeover action. |
Added a few more to the sipp.
This now looks like a flag or pennant.
Target 48-49p |
...that would be nice |
...or pop up to 45p.... :o)) |
Drift back to 30 then! |
Decent trade above the offer, with a sale at just over 35 that covers.
Nice to see there has been no pull-back in price, since the appointment. Perhaps a few followers climbing on board! |
Interesting that Gresham has reduced from 28.3% to 26.6%. I'm guessing the new man has upped again! |
Despite the recent rise, with market quote currently @ 34-36, one can sell over 36k and not buy 1k so strong demand remains evident |
rivaldo, Chart pattern concurs with your share price and has a confirmed bottom with a target price min 42p
Additionally, price is rising above rising 50/100/200 smas |
Excellent article hastings, cheers. Very useful info on the transfer of shares to our new investor from the sellers.
If Liberum's new forecast for this year is around 3.9p EPS as suggested then it's easy to see a share price of say 47p on a modest multiple of 12.
And with only a small and improving net debt position there could soon be another earnings-enhancing acquisition too. |
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