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Https://martinflitton1.wixsite.com/privatepunter/post/sysgroup-sees-new-investor-on-board-24-04-23
An excellent new feature on SYS as ever from the Private Punter . Very useful info on the transfer of shares to our new large 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.
The RNS just out confirms that Heejae Chae bought the 1m shares which went through yesterday - he now has 6.8m shares worth £2.1m here and 13.92% of the company.
Quite a vote of confidence:
Https://uk.advfn.com/stock-market/london/sysgroup-SYS/share-news/SysGroup-PLC-Holdings-in-Company/90801318
Out last night so just seen the news - intriguing! Here's his CV - 12 years as CEO of Scapa and 4 years as CEO at Volex. Plus he started out as an analyst, so he knows his onions re investing in companies.
I'm guessing he's around 52 or so now, so definitely young enough to still be looking for opportunities, though whether his motives here are simply investment-based or whether he wants to get hands-on remain to be seen:
Https://www.linkedin.com/in/heejae-chae-817362a/details/experience/
Our mystery man, at least for 11.87% of the company, is Heejae Chae. Experienced AIM CEO and a director at IP Group.
Another 1m shares have gone through at 27p (must be a sale), so it seems our mystery background buyer remains very keen.
Even more fascinating - there is absolutely no overhang from those sold shares and apparently big demand for more.
Online now you can buy a maximum of a measly 800 shares at 29p - there is just no stock available. Whereas you can sell a whopping 50,000 shares at a premium at 27.8p - an unheard of amount for SYS.
So Helium Rising Stars Fund sell 6.9% of the company, and Cannaccord sell 1.9%, and Downing LLP sell 4.5%, (that's approx 13.3% of the company) all between April 14th and April 17th, and the share price doesn't tank but actually rises?
Someone wants in, big time, and hasn't declared it yet.
After hours Rns X 2 detailing the sellers from Friday. Someone has taken a 12% stake and the market has no stock on offer. Any ideas ?
As you say Rivaldo...truly excellent update given the performance of other names in this sector e.g. SWG. I was actually quite nervous for this update...was expecting a potential horror story. Exceptionally managed business this and the value on offer is brilliant.
Online just earlier you could only buy a maximum 2k shares at the full 29p offer price, whereas you could sell 35k shares at a premium at 25.65p.
Looks like shares are scarce to meet the demand out there.
An encouraging in-line year end update today, especially compared to the likes of others in the sector like SWG and NCC - credit to the management here.
With 3.7p EPS in the bag that's a historic P/E of only 7.8 even at the full 29p offer price.
Cash generation in H2 looks good, with net debt down to an insignificant £1.3m compared to £1.9 at the interims.
Crucially "Momentum from the year end has continued into FY24". I suspect Liberum will initiate cautiously, leaving room for forecasts to be beaten, so maybe 3.8p-4p EPS forecast for this year.
Zeus had a fair value of 61p here, i.e 100% upside from the current share price.
Considering how well-run Sys Group have been over the past couple of years, that isn't really reflected in the share price or enthusiasm for the stock.
There are no indications that Zeus had any reason for wanting to leave, so I'd agree with your analysis, Rivaldo, that this is a sign of a management team that are very keen to grow and want more time in the spotlight.
Liberum have replaced Zeus, who were only in place for ten months.
I suspect this management team are ambitious, and Zeus haven't done much for the share price despite SYS having traded well and made acquisitions. Hopefully Liberum will do the trick.
Happy new year to everyone (anyone?!) 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 H1 outlook statement showing confidence that trading will be in line with expectations.
A couple of nice buys this morning totalling 75,000 or so shares (one at the mid-price), and a small uptick. Perhaps an overhang has been cleared.
On a P/E of just 7 this is a company with a large presence in cybersecurity which is on a ridiculously low rating imho.
Tipped overnight by Mark Watson-Williams :
Https://masterinvestor.co.uk/equities/small-cap-catch-up-sys-zinc-nic-and-more/?mc_cid=45562b1e4f&mc_eid=db9f9bbaf2
"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."
On a current year P/E of just 8.1 - crazy low for a cyber-security/managed IT services company:
Https://martinflitton1.wixsite.com/privatepunter/post/sysgroup-on-the-growth-path-22-11-22
Conclusion:
"All in all, the H1 results point to a solid performance with further ongoing growth and progress, where with a first half adjusted pre-tax profit of £1.1m already recorded it is looking comfortable on achieving the anticipated forecast numbers.
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.”
Zeus Capital have a 61p valuation here, and today 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."
Agreed. This is a quietly confident, well-run company.
They are weathering the economic headwinds with impressive resilience. It goes to show what a nimble, forward-thinking board can achieve.
One to hold onto for sure.
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.
after a nice 20k buy at 30.05p just now - well above the 29p published offer price at the time. Very keen.
PrivatePunter, I hate to correct you but the results are next Monday 21st November, not on the Tuesday!
Should be interesting to see the Interim results next Tuesday as both revenue and EBITDA appear to be tracking ahead of the broker full year estimates following the update last month. Adj EPS of 3.7p already looks cheap, so any beat on that should hopefully push the shares further northwards.
Some decent Institutional investors on board too, such as Gresham, Canaccord, Herald and Downing.
Continuing to rise. I'm assuming there are some further buys still to be reported. Now on a heady P/E of 7.6!
Encouraging too that the share price is rising before next Monday's interims, which will follow last month's strong and in line H1 trading update.
Nice to see an 11k buy causing a tick up.
But still only on a current year P/E of 7.2.....
Here's the latest update from Mark Watson-Williams at Master Investor (cheers Qd22, I did indeed!):
Https://masterinvestor.co.uk/equities/sysgroup-centralnic-and-nine-other-interesting-small-cap-stocks/?mc_cid=f4d0495386&mc_eid=db9f9bbaf2
"SysGroup (LON:SYS) – 58p ‘fair value’ for shares now at just 25p
Last Wednesday this multi award-winning managed IT services, cyber security and cloud hosting provider, provide a trading update for the six-month period ended 30 September.
SysGroup focuses on a customer’s strategic and operational requirements – enabling clients to free up resources, grow their core business and avoid the distractions and complexity of managing IT services.
The Update reported a strong trading performance, despite the challenging macro-economic environment.
It expects to report first-half revenue of £11.32m (£7.58m) and adjusted EBITDA of £1.67m (£1.34m),
The company notes the need for managed IT services remains prevalent and as businesses increasingly seek to invest in technology to increase efficiencies and improve their margins, it is ideally placed to capitalise on that growing market opportunity.
Analysts Bob Liao and Carl Smith at Zeus Capital consider that this strong update demonstrates just how robust its business model is in the face of the general hassles.
They state that the group’s recent acquisitions are doing well, and that they are confident in their estimates for the current year.
The brokers are going for revenues to end March 2023 to rise to £20.5m (£14.7m) while adjusted pre-tax profits will rise to £2.4m (£2.0m), generating earnings of 3.7p (3.4p) per share.
Their valuation on the shares is 58.3p, which is significantly higher than Friday night’s closing price of just 25p.
The group’s interim results are due to be announced on Monday 21 November, by that time I would hope that the shares will be trading towards the 34p level at which they stood this time last year."