Sign up Australia
Proactive Investors - Run By Investors For Investors

Sanderson Group Plc - Company Update

We had a management meeting with Sanderson after their successful round of investor updates post their 1H 2018 results. The group’s trading results were slightly better than management’s expectations, with both revenue and adj. operating profit increasing 34% YoY. On a like-for-like basis, excluding the Anisa acquisition, the top-line grew 3.6% (after adjusting for a small exceptional item in 2017) and operating profit by 12%, thanks to improved efficiency and cost of delivery. The management has a good level of confidence in making further progress for the remainder of FY2018, supported by a stronger and a more balanced order book and growing sales prospects. The total order book stood at £8.6mln with organic growth of 16%, largely driven by the Digital Retail division. Aside from consistently strong demand from existing customers for the mobile/omni-channel solutions, the company has secured a high-quality global luxury brand for a multi-year contract to deliver a digital store transformation. Within the Enterprise division, the flattish performance of the Wholesale Distribution business was offset by an improved performance by the Manufacturing business. Anisa has integrated well into the group, further enhancing Sanderson’s solutions and services.
Sanderson Group Plc - Company Update

The group’s growth strategy is a combination of organic growth via continued product development and selective acquisitions. The company plans to continue investing across the business with a key emphasis on mobile and e-commerce solutions to capitalise on digital transformation trends in retail, wholesale distribution and logistics. While the ongoing Brexit negotiations could lead to some uncertainty, the management is not overly concerned given the positive feedback from Sanderson customers and the healthy order book and balance sheet. We maintain our earnings estimates, currently not incorporating the company’s updated three-year plan. However, integrating longer-term financial targets, the fair value per share derived by DCF and DDM valuation implies 10-20% upside from the current share price in our view.

Full report is available via Capital Network website
View full SND profile View Profile

Sanderson Group Timeline

Related Researches

no_picture_pai.jpg
September 07 2017

Proactis Holdings Plc (LON:PHD) is a provider of software for Spend Control and eProcurement, systems which are used by most large organisations to manage the way they transact with their supplier base. In recent years Proactis Holdings Plc (LON:PHD) has been gaining market share, within a growing market, delivering a 35% CAGR in revenues, and 62% in EPS.

no_picture_pai.jpg
September 15 2017

YEAR-TO-DATE PROGRESSING STRONGLY

Corero Network Security Plc (LON:CNS) H1 results release (14/092017) showed strong progress, with revenue up 51% for the flagship SmartWall product. Perhaps even more importantly the recurring revenue element for SmartWall was up 177%. This reinforces the growth profile going forward because licence fee income grows cumulatively as new customers are added. 

We believe these results demonstrate that the company has essentially completed its transition from a software generalist to a DDoS protection specialist, and that the SmartWall DDoS protection product continues rapidly gaining traction in the market.

In this report we review the progress of the group. We also revisit some of the fundamental drivers, and how the DDoS protection market functions. We argue that SmartWall’s real-time threat mitigation represents a disruptive new presence in the space.

KEY INVESTMENT THEMES

Among the main attractions of Corero Network Security Plc (LON:CNS) as an investment:

• A highly differentiated product in SmartWall which offers game-changing performance compared with anything else in the market place. • Substantial headroom for further market share gains, within a continuously growing end market for DDoS protection. • An expanding range of channels to market, and technology partners including Juniper Networks, Gigamon, and McAfee to extend Corero Network Security Plc (LON:CNS) market reach. • Support of a shareholder base that includes specialist institutions such as Miton and Herald Investment Management, and also the Chairman and principal shareholder Jens Montanana.

In this report we examine some of these themes in more detail.

INVESTMENT CONCLUSION

The shares have gained 81% since the successful fund raising in April. Still, looking forward we believe the company could reach revenues of $50m in 3-5 years. This would imply a market cap of £115m based on peer-group multiples (e.g. Radware, RDWR:NSQ), with no further fundraising required in our view, or 4x upside from the current level. If Corero continues to deliver on milestones, there is still everything to play for here for investors.
 

No investment advice

The information on this Site is of a general nature only. It does not take your specific needs or circumstances into consideration, so you should look at your own financial position, objectives and requirements and seek financial advice before making any financial decisions. You acknowledge and understand that neither the Company, its related bodies corporate, the information providers or their affiliates will advise you personally about the nature, potential value or suitability of any particular security, portfolio of securities, transaction, investment strategy, or other matter. You should read our FSG and any other relevant disclosure documents and if necessary seek persona advice prior to making any investment decision.

You understand and agree that no Content (as defined below) published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable or advisable for any specific person.

You understand that in certain circumstances the Company, its related bodies corporate, the information providers or their affiliates may have received, or be entitled to receive, financial or other consideration in connection with promoting, and providing information about, certain entities on the Site and in communications otherwise provided to you.

You understand that price and other data is supplied by sources believed to be reliable, that the calculations herein are made using such data, and that neither such data nor such calculations are guaranteed by these sources, the Company, the information providers or any other person or entity, and may not be complete or accurate. From time to time, reference may be made in our marketing materials to prior articles and opinions we have published. These references may be selective, may reference only a portion of an article or recommendation, and are likely not to be current. As markets change continuously, previously published information and data may not be current and should not be relied upon.

Before you act on any general advice we provide, please consider whether it is appropriate for your personal circumstances.

© Proactive Investors 2018

Proactive Investors Australia PTY LTD ACN:132787654 ABN:19132787654.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use