Synnovia (LON:SYN) released a trading update on 19 February, confirming that trading in the full year (FY) to 31 March is broadly in line with expectations. We continue to forecast growth in revenue and earnings; however, we are lowering our FY earnings per share (EPS) forecast from 11.9p to 10.4p to reflect a slower increase in profit margins due to operating issues in the Films division.
Both the Films division and the Industrials division continue to deliver organic growth, and we believe the group is well positioned for growth in FY March 2020. Some details of the divisional dynamics are included on p2.
The company's rebrand to Synnovia (it was previously Plastics Capital) has gone smoothly, and growth initiatives are bearing results. Following the revised expectations, the shares are now trading on a forward price/earnings (P/E) multiple of 8.0x (our March 2020e forecast). We argue that this represents an interesting level for investors to revisit the Synnovia proposition.