SciSys Plc (SSY.L) is a leading developer of information and communications technology services, e-business, web and mobile applications, editorial newsroom solutions and advanced technology solutions. The Company operates in a broad spectrum of market sectors, including Media & Broadcast, Space, Government and Defence and Commercial sectors. Customers include the Environment Agency, the Ministry of Defence, Airbus Defence & Space, Thales Alenia Space, Arqiva, Vodafone, the European Space Agency, Eumetsat, the BBC, Radio France, RTL, RNLI, Pets at Home, Siemens and the National Trust. Employing around 580 staff, the Company has UK offices in Chippenham, Bristol, Leicester and Reading and German offices in Bochum, Dortmund, Darmstadt and Munich.
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On September 20th 2018, SSY published interim results for the half year to 30 June 2018. In what Chairman Mike Love described as a “continued solid operational performance”, SSY secured key contract renewals and the Space division won a contract with Airbus to develop the global navigational EGNOS V3 ground segment. Half-year revenues grew 13% to £28.7m, with adjusted operating profit up to £2.5m (2017: £1.2m restated). During the period, net debt reduced to £3.3m (2017: net debt £9.0m), and with a half-year order book approaching £100m (2017: £64m) the board raised the dividend by 10% to 0.65p. Mike Love added that cash flow was healthy and the balance sheet was increasingly strong. “We expect our financial results to be more evenly spread over the year. The board also expects, based on current performance, to deliver further year-on-year growth for 2018.”
VectorVest identified SSY as an investment opportunity a year ago, and we published an article on November 15th, citing the growth story and positive reading across a range of indicators. Read that article here (http://www.branduk.net/buy-scisys-ssy-says-vectorvest-key-metrics-indicate-the-time-is-right-to-buy-into-this-growth-company/). The stock went on to hit and pass our then price target of 162p, but despite this outperformance, a host of positive readings continue to support an ongoing growth scenario for SSY today. The RV (Relative Value) metric, (an indicator of long-term price appreciation potential) logs SSY as excellent at 1.51 (on a scale of 0.00 to 2.00), along with an excellent GRT (Earnings Growth Rate) rating of 25%. VST Vector, the master indicator for ranking every stock in the VectorVest database, logs a very good rating of 1.28, (also on a scale of 0.00 to 2.00), and with a current value of 257p on offer, there is clear upside potential from the current 182p
The share of SSY.L is shown above with the share about to break above a 3-month high.
Summary: A scintillating interim results performance from SSY shows the diverse revenue opportunities open to the company, and also shows how much progress has been made since VectorVest first highlighted the company here last year. But as can be seen, debt is falling rapidly, a loss has turned to a profit, and SSY now sits with a huge forward order book. Notwithstanding the success of our SSY call last year, fundamentals and charts continue to impress. Keep buying.
Dr David Paul
September 26th 2018
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