London, UK, 11 July 2017

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

Last week, SNP carried out a 10% capital increase, raising EUR18.74m before costs. The funds will be used to help finance the proposed acquisitions of three South American SAP consultancy firms. The acquisitions will create SNP's first significant presence in South America, and follow recent acquisitions in Asia, the UK and Poland. We will update our forecasts for the capital increase and acquisitions following the Q2 results, when we will have more information. Given SNP's strong position in software-based transformation projects and assuming a sustained high level of activity, we believe the shares remain attractive on c 18x our (pre-deals) FY19e EPS.

The stock trades on c 41x our FY17e EPS, which falls to c 21x in FY18e and to c 18x in FY19e. In our last note, our discounted cash flow valuation came out at EUR47.75/share. However, our model is based on conservative assumptions and took no account of any additional acquisitions.

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