Edison Investment Research - Scisys Group (SSY) SCISYS Group - Outlook is very encouraging

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Edison Investment Research

SCISYS Group - Outlook is 'very encouraging'

SCISYS reported strong performance in FY18, led by the UK-focused Enterprise Solutions and Defence (ESD) division, which benefited from a reinvigorated sales team. We expect the Space division to lead growth in FY19, following the recent spate of contract wins, while the enlarged Media Solutions division has strong potential for margin recovery. We have upgraded our revenue forecasts but maintained profits as the group needs to invest in its infrastructure to sustain growth. Noting managementâ€™s new goal to achieve revenue of Â£75m and operating profit of Â£7.0m by end FY22, we believe the stock is attractive on c 13x our FY20e EPS.

28/03/2019 3 EN

Underlying

Scisys Group

SciSys designs and delivers bespoke software systems, customized product solutions and professional services. Co. has four divisions: Space, which combines work for space institutions in specialist research and development with marketing and delivers commercial off-the-shelf software, and bespoke software solutions to commercial space operations; Enterprise Solutions & Defense, which creates software systems across defense, security and maritime, government and emergency services, and commercial business groups; Media & Broadcast, which provides radio broadcasting solutions, the dira! software solutions suite; and Xibis Ltd, which is a software house focuses on web and mobile-app solutions.

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IE00BD9PKV79 United Kingdom

Provider

Edison Investment Research

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisors and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting.

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The Canadian IT services company CGI is acquiring SCISYS for 254.15p in cash. The offer price represents a 24.6% premium to Thursdayâ€™s closing price and values the entire issued and to be issued ordinary share capital of SCISYS at c Â£78.9m. In addition, SCISYS shareholders will receive the final dividend of 1.73p. The offer price translates to c 20x our FY19 earnings forecast, which falls to c 19x in FY20e and 18x in FY21e. Alternatively, the offer values the business at 1.2x FY20e revenues and 11x EBITDA.

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SCISYS Group - Outlook is 'very encouraging'

SCISYS Group - CGI to acquire SCISYS for 254.15p in cash

SCISYS Group - Confident, in line, on record opening order book

Headlam Group - Strategy for growth in tougher market

Lithium Power International - Termination of coverage

paragon - Termination of coverage

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