Well positioned for further strong growth

FY16 was a hectic year for SNP Schneider-Neureither & Partner (SNP), with three acquisitions successfully integrated, a €30m capital increase and a mammoth contract win announced in Q3 to combine the IT landscapes of two US chemical companies (we assume Dow Chemical and DuPont) that are merging. Preliminary figures show FY16 revenues growing by c 42% to c €80m (we forecast €77m) and adjusted operating profit rose by c 66% to c €7m, for a c 8.8% operating margin. We are reviewing our forecasts and would expect to edge FY17 revenues higher towards the middle of the guidance, with the operating margin maintained at c 12%. Given SNP’s strong market position in software-based transformation projects, and the sustained high level of activity, we believe the shares remain attractive on c 22x our existing cash-adjusted FY18e EPS forecast.