Sygnity - Attractive Valuation as Revenue Decline Stemmed
Sygnity stock fell more than 16% over the last five months on weaker-than-expected financial results; in the third quarter of FY2020/21 (“FY’21”), ended 30 June 2021, LTM revenue registered a 10% drop from the corresponding year-ago period, prompting downward revisions of 5-6% to our sales forecasts for FY21-FY23. However there is cause for hope ahead judging by a more upbeat revenue outlook outlined recently by Sygnity's Management Board based on successful contract acquisition which has brought the pipeline for Q4 FY’21 7% above what it was this time last year. Assuming Sygnity maintains its high sales margins, and costs remain in check, EBIT in Q4 FY'21 could register a substantial rebound o more than 15% relative to Q4 FY’20. After updating our models to reflect also changed peer multiples and finalized restructuring payments, we raise our target price for SGN from PLN 11.60 to PLN 11.70, indicating 20% upside potential. There have been other developments recently at Sygnity, which is currently trading at 6.2x adjusted 2021E EV/EBITDA and 9.1x P/E, that we see as potential upside catalysts. These include relatively low leverage ratios after a tough period of restructuring and refinancing, and an ongoing review of strategic options that can prove an attractive opportunity for potential investors. With all this in mind, we upgrade our view on SGN from hold to buy.
Co. is engaged in providing information technology (IT) services to corporate and institutional clients primarily in five sectors of the economy: banking and finance, industry, public, telecommunications, and health care. Co. offers production and implementation of software; IT enterprise consulting services; building and integration of local and wide area networks (LAN, WAN); delivery and installation of hardware; software, network and hardware maintenance services; and training services. Co. has also enhances its traditional offer by four business models: implementation of package products and services concerning e-business; IT outsourcing - managing client's IT resources; ASP (Application Service Provision) - making software available to clients via the Internet; and webhosting - leasing servers for running e-business activity, as well as for worldwide web services.
Set up in 1986, mBank (originally BRE – Export Development Bank) is Poland’s 4th largest universal banking group in terms of total assets and 5th by net loans and deposits at the end of June 2019. mBank has one of the oldest brokerages in Poland – we have been providing brokerage services since 1991 - and the biggest, serving about 300 ths clients.
We provide all brokerage services available in the Polish capital market (i.e. Warsaw Stock Exchange, non-public markets and forex) in a way that meets the expectations of all groups of investors, both individual and institutional. Participating in the dynamic growth of the Polish capital market since its inception, we have acquired competences and experience needed to provide the highest quality of service and we have won the trust and satisfaction of our Clients.
Over the past decade, mBank's Equity Research Team has been consistently ranked among the top research teams in Parkiet's annual institutional investor surveys (Parkiet is Poland's leading daily business newspaper). mBank analysts provide coverage on an extensive list of companies, mainly in Poland but also elsewhere in the CEE region: Austria, Czechia, Portugal, Ukraine and Hungary.
Clients get access to a comprehensive selection of research products including daily market insights, monthly roundups, macroeconomic views, industry- and company- specific analyses, investing strategies, earnings comments, etc.
We give our institutional clients numerous opportunities to connect with industry professionals, top executives, and leading analysts:
- Get direct access to senior management teams at listed companies (over 30 meetings in 2018),
- Engage in our many industry events, featuring listed Polish and global firms (in 2018, we hosted sector-themed conferences around industrials, chemical companies, telecoms, retail, and financials, and co-hosted a Best of Poland investors' with Commerzbank and the Warsaw Stock Exchange),
- Stay informed through an array of enlightening discussion panels, workshops, and briefing sessions with regulatory officials.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.