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London, UK, 3 April 2017

Edison issues outlook on SNP Schneider-Neureither & Partner (SHF)

SNP Schneider-Neureither & Partner's (SNP) results indicated that the business environment remains healthy. The group has a strong balance sheet with net cash, boosted by the EUR30m capital increase last year, and has raised additional EUR40m in loan notes to build a war chest to make additional acquisitions. We have edged up revenue forecasts, but eased profits, to reflect the increased costs as it positions for the next phase of its growth. Given SNP's strong market position in software-based transformation projects and assuming a sustained high level of activity, we believe the shares remain attractive on c 21x our cash-adjusted FY19 EPS.

The stock trades on c 36x our FY17 earnings, which falls to c 28x in FY18. However, the group has a net cash position, and adjusted for this, the ratings fall to c 33x in FY17 and to c 26x in FY18. Our discounted cash-flow (DCF) model indicates that the shares are fairly valued. However, our model is based on conservative growth assumptions and takes no account of any acquisitions.

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