Sysgroup Share Discussion Threads

[hedgehog 100] 07/4/2022 14:41

RP,

Results in the software-ITservices sector as a whole have tended to be weaker since the pandemic hit, but SYS seems have fared better than many.

And indeed SYS's interim basic eps actually increased, as did its interim statutory profit before tax.

The fall in revenue meanwhile is consistent with SYS's gradual exiting of lower-margin business from prior acquisitions.

This seems to be paying dividends, with SYS last Autumn forecasting the same profit as expectations, but on lower revenues, which means that margins are increasing.

This is very important, because improved margins are a sign of competitive strength.


SYS's CEO Adam Binks said last October:

“Our plan is to take the business to a £100m market cap. It only takes two or three strategic acquisitions.”

Well, they've just made one, which means just one or two more to go!


22/11/2021 07:00 UK Regulatory (RNS & others) SysGroup PLC Half-year Report LSE:SYS Sysgroup Plc

" ... Financial highlights

-- Revenue of GBP7.58m (H1 FY21: GBP9.01m)
-- Recurring Managed IT Services revenue represented 86% of total revenue (H1 FY21: 83%)
-- Adjusted EBITDA (1) of GBP1.34m (H1 FY21: GBP1.41m), in line with management's expectations
-- Adjusted profit before tax (2) of GBP0.96m (H1 FY21: GBP0.99m)
-- Statutory profit before tax of GBP0.25m (H1 FY21: GBP0.13m)
-- Adjusted basic EPS (3) of 1.5p (H1 FY21: 1.7p)
-- Basic earnings per share of 0.3p (H1 FY21: 0.2p)
-- Cashflow from operations of GBP1.14m (H1 FY21: GBP1.68m)
-- Cash of GBP3.47m at 30 September 2021 (30 September 2020: GBP3.02m)
-- Net cash (4) at 30 September 2021 of GBP1.96m (30 September 2020: GBP1.17m) ..."

[rp19] 06/4/2022 21:59

I thought the interims in November '21 were a little weak (reduced revenue, profit, EPS). Am interested to see if there have been improvements in H2 as the recently announced acquisition looks a good fit.

[hedgehog 100] 06/4/2022 21:30

The fact that SYS are using cash-debt, rather than equity, to fund the Truststream acquisition, tells you all you need to know.

The SYS directors are simply not prepared to dilute shareholders - which of course includes themselves - at the current undervalued level.

Especially when they have such a strong, profitable, and growing business, of the type that banks are only too keen to finance for expansion.

SYS just might be the most undervalued company in the software-ITservices sector at the moment.

It's not so much GARP - Growth At a Reasonable Price - as GASP - Growth At a Stunning Price!

[gleach23] 06/4/2022 19:04

Nice 10k reported @ 30.4p in the closing auction to hopefully keep the momentum going tomorrow.

Having been once of those who averaged down it's nice to see how apparently few shares there are available to buy at these levels since yesterday, especially after contending with the long descent from 50p almost a year ago.

[hedgehog 100] 06/4/2022 18:28

SYS has just come up from an all-time closing low of just 23.5p, which was lower than even in the COVID-19 market crash two years ago.

And it certainly looks poised for a rapid return to the mid 30s, followed by likely further gains from there going forward.

Relatively few shares have been bought at below 30p, and most of those were probably bought by people averaging down, which should mean that there should be minimal profit-taking at this level to hinder a rise.

[hedgehog 100] 06/4/2022 17:23

"Tech update 4th April 2022

Russian cyber-attack threat: How to protect your business

As the devastating Russian invasion of Ukraine continues, the risk of a cyber-attack hangs over every business here in the UK.

It’s thought Russia could launch online attacks in response to sanctions and the Government has been warning us about the risk for some time. ..."




With the threat of Russian cyber-attacks now looming larger than ever, then SYS's acquisition of a cyber-security firm to enhance its offering and reach looks very timely.


05/04/2022 07:00 UK Regulatory (RNS & others) SysGroup PLC Acquisition of Truststream Security Solutions Ltd LSE:SYS Sysgroup Plc

" ... Adam Binks, Chief Executive Officer, commented:

"I am delighted to announce the acquisition of Truststream. The addition of Truststream to the Group further supports our stated strategy to become the leading provider of managed IT services to the UK mid-market. The business strongly complements our existing portfolio of services and has high levels of recurring revenue.

In addition, cyber security remains a key priority for businesses of all sizes as threats become both more prevalent and more harmful. Our end-to-end offering means that we can help companies navigate the forever evolving technological landscape and provide best of breed solutions backed by the highest quality of ongoing security, monitoring and support.

Our investment in the Group's systems and infrastructure over the last few years means that we have the platform in place to be able to scale SysGroup and will continue to identify further complimentary acquisition opportunities in line with our stated strategy.

I'm excited to welcome the Truststream team and look forward to working with them all as part of the enlarged Group." ..."




Especially as the pandemic has depressed valuations in the sector, which makes this the perfect time to pick up some bargains, and the Truststream acquisition certainly looks like one.

And it lends credence to SYS's stated £100M. market cap. ambition:

"October 21st, 2021 by Bethany Whelan
Creating a ‘super-brand’: SysGroup targets £100m market cap
CEO and CFO explain how transformational deals and organic growth are key to rapidly scaling a technology company
... “Our plan is to take the business to a £100m market cap,” says CEO Adam Binks. “It only takes two or three strategic acquisitions.” ..."

[hedgehog 100] 06/4/2022 15:20

There's a few further potential share price catalysts for SYS in the very near term:

1. We should receive a year end trading update from SYS for the year to 31st. March soon (it was on 19th. April last year).
- And the signs are bulllish.

2. Potential directors share buying on the day of the update, as occurred 2 years ago:

21/04/2020 06:00 UK Regulatory (RNS & others) SysGroup PLC Directors Share Purchase LSE:SYS Sysgroup Plc


3. New research note from newly-appointed Zeus Capital, including upgraded forecasts, & Zeus's share price target for SYS.

[rivaldo] 06/4/2022 14:08

Up another 1p this afternoon on just £1650 of shares bought....

[rivaldo] 06/4/2022 09:11

Online looks very good indeed. I can buy just a maximum 800 shares at 30p! Whereas I can aell 35,000 at a big premium to the bid at 28.7p.

[rivaldo] 05/4/2022 09:53

SYS were forecast to make 3.3p EPS for the year just ended 31st March.

On 22nd November SYS confirmed:

"The Board remains confident that Adjusted EBITDA for the current financial year will be in line with its expectations"

Hopefully the trading update will follow pronto - tomorrow? At which point I'd assume the newly appointed Zeus Capital will bring out forecasts incorporating the new acquisition (there wasn't anything out earlier from Zeus).

SYS could look very cheap indeed at these levels, particularly for a cyber-security specialist, if all goes well (famous last words!).

[eezymunny] 05/4/2022 09:20

"single pane of glass business intelligence platform"

Enough to put anyone off the shares, or products :)

[hastings] 05/4/2022 09:07

Be rude not too!

[tiltonboy] 05/4/2022 08:29

Hate averaging down....but I've had a small top-up!

[rivaldo] 05/4/2022 07:47

Yep, very good news. Quite transformational, and immediately earnings-enhancing.

And all paid for without dilution - Santander evidently have great faith in SYS and its management in significantly increasing the available facilities. Which would suggest that they've been given sight of the latest management accounts? Perhaps a clue as to that forthcoming trading update.

Truststream has high recurring revenues, and there's lots of cross-selling opportunities, synergies etc. Plus of course the huge and growing cyber-security market.

There's much to like about today's news.

[hastings] 05/4/2022 07:29

Looks a decent purchase and no dilution.Not that they would want to raise at these levels. Surprised no TU though!

[weatherman] 05/4/2022 07:20

There is the acquisition - looking good to get into managed security.

[hedgehog 100] 04/4/2022 11:51

SYS had cash of £3.47M. at 30 September 2021 (30 September 2020: £3.02M.), and net cash at 30 September 2021 of £1.96M (30 September 2020: £1.17M.), and is profitable.

But the company has been looking for acquisitions, and with the appointment of Zeus something could be in the offing - perhaps something quite substantial.

With depressed tech valuations now looks like a good time to be buying, and acquisition placings tend to be at higher prices than placings to fund losses.

From the current depressed share price of 23.5p, a premium placing should be very possible.


We should receive a year end trading update from SYS for the year to 31st. March soon (it was on 19th. April last year).

And interestingly, SYS has 9 current job opportunities on its website, which suggests that business is good.


"Current Opportunities

We are always on the lookout for sharp, agile and enthusiastic people to join our team! If you are excited by who we are and what we do and want to be part of SysGroup then take a look at the amazing opportunities below."

[scepticalinvestor] 04/4/2022 11:10

Placing ahoy ladies lol

[hastings] 04/4/2022 07:21

Interesting to see a change of broker with Zeus now appointed.

[hedgehog 100] 02/3/2022 17:17

Tiltonboy,

SYS's financial year ends at the end of this month, and we can expect a trading update soon after that year end, in April.

I don't think that it would be good practice for directors to buy in so relatively soon before that, even if it's not an official close period.

Rather, the time to buy would be straight after that update, in a brief window before the two month close period ahead of the final results themselves.

Indeed that was the case two years ago. -

20/04/2020 06:00 UK Regulatory (RNS & others) SysGroup PLC Trading and COVID-19 Update LSE:SYS Sysgroup Plc
" ... The Group's trading for the year is in line with the Board's expectations ..."


21/04/2020 06:00 UK Regulatory (RNS & others) SysGroup PLC Directors Share Purchase LSE:SYS Sysgroup Plc


30/06/2020 06:00 UK Regulatory (RNS & others) SysGroup PLC Final Results LSE:SYS Sysgroup Plc



SYS's first half performance was on course, at which point SYS expressed confidence in its full year outcome.

I think that we would have heard already if there was going to be any dramatic divergence from that.

Moreover, SYS's adjusted annualised eps (earnings per share) based on H1 is 3p per share, so SYS's current share price of just 24p is dirt cheap for a quality, profitable IT services company, in a strong cash position.

22/11/2021 07:00 UK Regulatory (RNS & others) SysGroup PLC Half-year Report LSE:SYS Sysgroup Plc
"... Adjusted EBITDA (1) of GBP1.34m (H1 FY21: GBP1.41m), in line with management's expectations ...
Adjusted basic EPS (3) of 1.5p (H1 FY21: 1.7p) ...
Adam Binks, Chief Executive Officer, commented:
"I am pleased with the performance of the business in light of the ongoing economic uncertainty and the Board is confident in meeting expectations for the full year. We have a strong customer base who rely heavily on the business critical support that we provide and we benefit from very high levels of recurring revenue.
"Throughout the pandemic we have focused on ensuring that our business is optimised to take full advantage once conditions normalise and I am delighted with the progress made. IT infrastructure and support is integral to all businesses and as budget confidence returns we have the right market solutions, the right people to deliver and the right platform to scale rapidly." ..."

[tiltonboy] 15/2/2022 21:48

Theres's no support....and no insiders buying. Rather suggests that we may not meet numbers this year.

[gleach23] 15/2/2022 20:25

The 23,796 sell @ 24p today chimes with the apparent distressed selling of many small caps currently.

Last year the company cited the inability to hold face to face meetings with clients as a reason for the revenue drop - that being the case, one would hope revenues will now benefit going forward.

[masurenguy] 15/2/2022 15:54

Yes, the shareprice has declined by almost 25% over the past 10 weeks. The company is profitable with a current market cap of circa £12m, including cash of circa £2m. P/S ratio is 0.8 and current year PER is also in single digits. Average daily trading volume of just 13K shares since interims on 7 December, which indicates some bored PI sales as there has not been any newsflow since then.

[tiltonboy] 15/2/2022 12:53

Now at an all-time low!