I have bought a holding in Synectics (LON:SNX) (346p and 2% of JIC portfolio) It operates in all of the leading control room surveillance markets: urban surveillance, offshore adverse area surveillance (oil, gas, chemical and mining), casinos, military, banking, retail, transport (buses and trains) and prisons. In plain English it provides CCTV surveillance systems. It is active in many high security programmes throughout the world and has over 450 employees spread across three continents; North America, Europe and Asia. A recent example of the type of contracts it is involved in is the protection of the new Shell "gas-to- liquids" Pearl project in Qatar, where it is providing the surveillance equipment . It seems to me that spending on security, throughout the world, is an area that is likely to be pretty robust.
Throughout 2012 the earnings forecasts were consistently upgraded by analysts and in its last trading statement on the 20th December it said that revenues for the year to 30th November were approximately 10% up on the prior year with growth being driven by the Industrial Systems Division where turnover doubled. The statement went on to say that the "Board now believes that Synectic's results for the year to 30th November 2012 will be materially ahead of market expectations". Not surprisingly the share price reacted positively to the announcement rising from 290p to 375p. The shares have dropped back a little in the last week or so to 346p.
Conclusion: The Company has appeared on one of my screens as it still appears cheap given growth forecasts. For the year to 30th November 2013 it is valued at 11.9x forecast earnings of 29p, up some 24% on earnings forecasts for the year ended November 2012 of 23.4p. It has a strong balance sheet with cash at 31st May 2012 of £4.4m and it is cash generative. It also pays a dividend with a forecast yield of just over 2%. Final results for the year to November 2012 will be published on 27th February which in my view should spur the shares on to new heights. It is a smaller company with a market capitalisation of £61m. I have bought a 2% holding. (see transactions)
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