Recommendation: sell | target price: PLN 13.70 | current price: PLN 25.80
SGN PW; SGN.WA | IT, Poland
Sygnity’s final results for the first quarter of fiscal year FY2022/23 (calendar Q4 of 2022) came in line with the preliminary figures published on Tuesday. The quarterly revenue came 10% ahead of our estimate after rebounding 14% from the same period a year earlier – a pace of growth that marked a significant acceleration relative to the average achieved in FY2021/22 (+3.7% y/y). Sygnity attributes the increase in topline growth to successful public tenders. The fiscal first-quarter profits exceeded our expectations by a substantial margin, and it is unclear at this juncture whether the strong growth can be sustained in the future.
- The consolidated Q1’22/23 revenue amounted to PLN 61.9m, representing an increase of 14% from the corresponding year-ago quarter.
- Of this, revenue from implementation services registered PLN 41.4m vs. PLN 34.4m a year earlier.
- Sygnity said in the earnings release that it had entered into a maintenance contract with the Ministry of Family and Social Policy in December 2022 for the "POMOST Std" social services software. The contract term is 1 January 2023 through December 2023, and the total fees are estimated at PLN 10.3m.
- In our view, which we intend to confirm with the Company, Sygnity may have booked a major portion of these fees in the financial statements for 1Q 2022/23.
- Gross profit came in at PLN 23.6m in 1Q’22/23, and the gross margin amounted to 38.1% (we had forecast 29.0%).
- SG&A expenses fulfilled our expectations at PLN 9.9m.
- Other operating activity resulted in a quarterly net gain of PLN 0.2m.
- EBITDA came in at PLN 16.2m.
- Net profit stood at PLN 10.7m after increasing from PLN 6.0m in the same quarter the year before.
- Sygnity in its earnings report highlighted having secured several business-critical contracts during 1Q’22/23 that helped to turn the tide after a period of slow sales in selected areas of the market.
Analyst: Pawel Szpigiel +48 509 603 258
GPW’s Analytical Coverage Support Programme 3.0
