Sysgroup Share Discussion Threads

[hastings] 01/2/2023 07:28

Perhaps not proactive enough!

[tiltonboy] 01/2/2023 07:16

Wonder what happened to Zeus. Only appointed 10 months ago!

[hastings] 01/2/2023 07:14

Appointment of Liberum looks a good move to me.

[hastings] 25/1/2023 12:25

Another little nudge up, but still looking very cheap.

[rivaldo] 09/1/2023 11:32

Happy new year hastings and everyone else here. Good to see SYS edging up on just a little buying - hopefully not much stock around.

A P/E of even just 10 would see a 37p share price on the 3.7p adjusted EPS forecast. With 2p EPS in H1 alone SYS look in good shape, particularly given the outlook statement showing confidence that trading will be in line with expectations.

[hastings] 23/12/2022 08:09

Still very much under the radar and as you point out riv, remains very cheap. Could provide some decent returns over the next year or two. Well, that's what I'm hoping!

[rivaldo] 22/12/2022 14:20

Good to see around 93,000 shares bought today resulting in a 2p rise - perhaps an overhang has been cleared.

But still only on a P/E of 7.4 for a company with a large presence in cyber-security based on 3.7p EPS forecast this year.

[rivaldo] 24/11/2022 08:46

Tipped overnight by Mark Watson-Williams on Master Investor:



"SysGroup (LON:SYS) – Massive Cross-Selling Potential

On Monday morning this provider of IT services, cyber security and cloud hosting declared its interims to end September.

They showed revenues up 49% at £11.32m, adjusted pre-tax profits of £1.10m (£0.96m), with earnings coming out at 2.0p (1.5p) at the halfway stage.

Due to recent acquisitions the £15m group’s first-half annual recurring revenue rate slipped from 86% to 75% on its Managed IT Services side, but that will return to growth.

The group’s Outlook comment noted that there is further potential for client growth and cross-selling.

It also stated that it is assessing various acquisition opportunities, to help it to further its ambition as a consolidator in its highly fragmented market.

Confidence remains that current year trading will be in line with market expectations.

Analysts Bob Liao and Carl Smith at Zeus Capital, the group’s NOMAD and Broker, estimate that the year to end March will se revenues rise from £14.7m to £20.5m, while adjusted pre-tax profits will increase from £2.0m to £2.4m, lifting earnings to 3.7p (3.4p) per share.

The brokers note that 68% of its customers take only one or two of the group’s five core managed services – meaning that there is considerable scope for cross-selling.

Zeus Capital has a 58p per share valuation on SysGroup shares.

On the basis of such estimates, this group’s shares are really quite appealing, trading at just 30p which puts them out on only 8.1 times current year earnings – that is too low for such growth potential."

[rivaldo] 22/11/2022 11:11

Cheers hastings, excellent summary. And a nice conclusion:

"As a result, on current guidance the shares look very good value to me, trading on such a lowly PER and attractive PEG, particularly by sector averages.

In further making out the investment case, Zeus concludes, “Shares trade at 4.6x FY23 EV/EBITDA (incl. leases in EV, excl. contingent consideration), well below peer average of 6.4x and, in our view, not reflective of the Group’s attractive growth opportunities and cash generation. The average of our valuation estimates (peer mean EV/EBITDA, DCF, regression analysis) is 61.0p per share, or 106.5% upside to the latest closing price. In the long term, we believe the company could reach £50m in revenue and 30% EBITDA margins, with the scale provided by acquisitions and organic growth. Valuing this long-term potential EBITDA (£15m) at sector mean multiples (6.4x) indicates an enterprise value of c. £100m.”

[hastings] 22/11/2022 08:03

Write up for interest, following my catch up with the CEO yesterday.Https://martinflitton1.wixsite.com/privatepunter/post/sysgroup-on-the-growth-path-22-11-22

[hastings] 21/11/2022 12:04

Nice to see you here bamboo2

[bamboo2] 21/11/2022 11:42

Muted reaction so far. I have a minimum near term target price of 34

[rivaldo] 21/11/2022 08:53

Looking forward to it hastings.

Zeus Capital have a 61p valuation here, and retain their forecast of 3.7p EPS - a P/E of just 8.2:

"Forecasts and valuation:

H1 2023 revenue and adjusted EBITDA represent 55.2% and 50.1% of our full year estimates, respectively, providing us with confidence in the company meeting forecasts. Shares trade at 4.6x FY23 EV/EBITDA (incl. leases in EV, excl.
contingent consideration), well below peer average of 6.4x and, in our view, not reflective of the Group’s attractive growth opportunities and cash generation.

The average of our valuation estimates (peer mean EV/EBITDA, DCF, regression analysis) is 61.0p per share, or 106.5% upside to the latest closing price.

In the long term, we believe the company could reach £50m in revenue and 30% EBITDA margins, with the scale provided by acquisitions and organic growth. Valuing this long-term potential EBITDA (£15m) at sector mean multiples (6.4x) indicates an enterprise value of c. £100m."

[hastings] 21/11/2022 08:33

Echo rivaldo and Mas's words and it looks like there is a clear path ahead.Speaking with the CEO later this morning so I'll add some comment in due course.

[rivaldo] 21/11/2022 07:39

Good interims today - 2p core EPS in H1 indicates that SYS are easily on track to meet, and likely beat, 3.7p EPS expectations.

A very confident outlook, the acquisitions are bedding in well, and of course cyber-security and cloud are two areas set to grow for some years to come.

Importantly there's mention of both further acquisitions and of the potential benefits of cross-selling to the new clients brought in via the two new acquisitions.

Amortisation and acquisition-related expenses are high so the headline EPS is not so impressive, but I look at the core business and cash flows - which were healthy, with 120% cash conversion - rather than one-off adjustments etc.

SYS are looking like a transformed company ready to step up to the next level.

[masurenguy] 21/11/2022 07:37

Good progress and forward prospects !

Half year results for the six months ended 30 September 2022

SysGroup plc is pleased to announce its unaudited half year results for the six months ended 30 September 2022.

Financial highlights

-- Revenue increased by 49% to GBP11.32m (H1 FY22: GBP7.58m)
-- Recurring Managed IT Services revenue represented 75% of total revenue (H1 FY22: 86%), in line with expectations as a result of acquisitions
-- Adjusted EBITDA(1) increased by 25% to GBP1.68m (H1 FY22: GBP1.34m)
-- Adjusted profit before tax(2) of GBP1.10m (H1 FY22: GBP0.96m)
-- Statutory loss before tax of GBP0.19m (H1 FY22: profit before tax GBP0.25m)
-- Adjusted basic EPS(3) of 2.0p (H1 FY22: 1.5p)
-- Basic EPS of (0.2)p (H1 FY22: 0.3p)
-- Cashflow from operations of GBP1.67m (H1 FY22: GBP1.14m)
-- Net debt (4) on 30 September 2022 of GBP1.92m, excluding GBP2.94m of contingent consideration relating to the acquisition of Truststream (30 September 2021: net cash of GBP1.96m)

Operational highlights

-- First two acquisitions since 2019 as M&A difficulties caused by pandemic and lockdowns ease
o Truststream Security Solutions Limited ("Truststream") acquired for up to GBP7.9m, enhancing cyber security offering and adding Edinburgh location
o Orchard Computers Limited ("Orchard") acquired for GBP1m in cash, strengthening south west operations
o Both acquisitions immediately earnings enhancing and integration largely completed as a result of Project Fusion
-- Consistently high customer satisfaction levels maintained above 97%
-- Successful launch of multi-tenanted SysCloud 2.0 platform
-- Early benefits seen from sales and marketing initiatives from Manchester hub with growing pipeline of opportunities
-- Workforce at optimal levels as recruitment market eases

Outlook

-- Further potential for cross selling and client growth
-- Continuing to monitor and assess acquisition opportunities
-- The Board remains confident that trading for the current financial year will be in line with expectations

Adam Binks, Chief Executive Officer, commented: "I am pleased to deliver results in line with expectations as the Group benefits from the operational investments and improvements that have been made over prior periods. Technology can help businesses improve efficiency and protect margins which is increasingly relevant when set against the current economic backdrop. The two acquisitions made in the period have strengthened our offering even further and added more great team members to the Group. Additionally, they have both brought a base of customers which we can service better from our enhanced footprint which now covers the whole of the UK. As well as being earnings enhancing, they are further evidence of our ambition to continue to be a consolidator in this highly fragmented market."

[tole] 18/11/2022 18:04

https://masterinvestor.co.uk/equities/small-cap-catch-up-data-castings-cybersecurity-and-domains/SysGroup (LON:SYS) – A 58p per share valuationNext Monday morning will see the announcement of the end September interim results from this internet and media services company.The sub-£15m capitalised SysGroup is a leading provider of managed IT services, cloud hosting, cyber security and expert IT consultancy.It delivers solutions that enable clients to benefit from industry leading technologies and delivers managed solutions with security, compliance and governance from the core.The company focuses on a customer's strategic and operational requirements – enabling its clients to free up resources, to grow their core business and avoid the distractions and complexity of managing IT services.The indications from the company, at the end of October, were to expect halfway revenues of £11.32m (£7.58m).Analysts Bob Liao and Carl Smith at Zeus Capital have a 58p valuation out on the company's shares, which closed last night at just 28p.Rating the shares as undervalued the analysts are estimating revenues to have increased from £14.7m to £20.5m by the year end in March 2023.They see pre-tax profits of £2.4m (£2.0m), with earnings coming in at 3.7p (3.4p) per share.In the longer-term the analysts believe that the group could reach £50m revenues, with 30% EBITDA margins and taking its enterprise value up to £100m.The shares are still a very good buy, especially so with increased Government-inspired contracts looming.

[rivaldo] 18/11/2022 08:17

Ticking up again after a nice 20k buy at 30.05p - well above the 29p published offer price at the time. Very keen.

[tiltonboy] 16/11/2022 10:32

A few trades over on AQSE again

[rivaldo] 15/11/2022 22:49

LOL Gleach23 :o))

I'm away tomorrow too, at Mello London. Just the sort of event which SYS should be exhibiting at I'd have thought given things are on the up. Oh well....

[gleach23] 15/11/2022 14:40

No problem rivaldo - I think everyone knows you've been away for 3 weeks! :)

Good to see you back.

Trades on the AQSE exchange moving the price this afternoon. They don't show on the main monitor screen but there have been 3x10k at increasing prices since 1pm. Online quote offering 10k now at a full 29p so let's hope there's a shortage of shares available to buy (can't get a quote for 15k).

[rivaldo] 15/11/2022 14:25

Ta for the reminder about next Monday.

Continuing to rise. I'm assuming there are some further buys still to be reported. Now on a heady P/E of 7.6!

[gleach23] 15/11/2022 11:48

Creeping up after a hiatus ahead of next Monday's interims. Next hurdle 30p.

[hastings] 15/11/2022 11:40

Agree riv, good to see. Still well off the radar, so opportunities for buyers at what are very attractive levels.

[rivaldo] 15/11/2022 11:28

Nice to see an 11k buy causing a tick up.

But still only on a current year P/E of 7.2.....