Sage sails through challenging market conditions
Recent reports on interim update (26th January 2010) from Sage indicated that its first quarter trading was on par with expectations. Despite the demanding market conditions, the passive software-services and software markets were counterbalanced by a growth in subscriptions at the accountancy software firm.
The subscription revenue derived from payment processing and its maintenance, health insurance claims and customer support contracts had proved to be consistent even during the economic recession.
Though the United States have been vulnerable to the downturn and the support contract growth may diminish because of weak software sales, Sage is well placed to meet any market recovery, thanks to its geographically diverse and large customer base, said Paul Walker,the Chief Executive.
There has been continued competition from other U.S heavyweights like Microsoft & Oracle and German's SAP, but the group is comfortably placed in its banking contracts and committed financing facilities until 2011.Sage's 815 million pounds facilities mature in the year 2011.It had drawn just 460.9 million pounds, nearly half the facility, till September 30 during the interim period.
The group which capitalizes on the sale of software for business management to around six million small businesses or more ,signaled a debt pay-down and ignited news that it would soon resume to make acquisitions.
Sage fell deep into debt in the year 2006 on various acquisitions including that of Verus ,the business catering to merchant servicest and the healthcare group Emdeon.It spent 617.5 million pounds in the process, as its presence in North America were widely expanded.
The net debt has been reduced to 392 million pounds from a whopping 439 million pounds during the three months period to December 31,due to continued cash generation by the group supplying to medium and small sized companies.
According to George O'Connor,a Panmure Gordon analyst, with the debts paid, mergers and acquisitions would return to the agenda very soon
The crisis faced by small businesses around the world due to the economic downturn had its effect on Sage too. The group failed to complete any acquisition in 2009, compared to the 8 acquisitions made in the year 2006, 5 in the year 2007 and 3 in the year 2008.
With shares remaining at 237.7 p, analysts predict the full year revenue to be around 1.42 billion pounds and the pretax profit to be around 322.8 million pounds.
The shares remained constant at 237.7p
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Weekly market update (March 20, 2010)
Equity markets sustained their gradual upward trajectory this week, with the S&P500 and DJIA joining the Nasdaq at new 16-month highs, as traders were transfixed by finance and healthcare legislative dramas in Washington. The fate of the healthcare reform bill hung in the balance all week as the Democrats desperately tried to coral the simple majority they need to pass the final package in the House. The final House vote is expected on Sunday, with a final Senate vote seen early next week. Passage seems likely, although it appears to be far from a sure bet as of Friday evening. Meanwhile, policy meetings at the FOMC and the Bank of Japan left rates alone, most data was comfortably in line with expectations and at its Spring conference OPEC kept its output quotas unchanged for the fifth consecutive time. On Thursday, rumors of a second intra-meeting hike in the Fed discount rate made the rounds, prompting the Fed to issue a "no comment," but ultimately no discount rate action ensued. Among economic reports, the headline February PPI number showed its biggest decline since last July, prompting more deflation jitters. Stocks and commodities traded off somewhat on Friday when India surprised investors with a rate hike just after the US equity market open, driving a sudden wave of risk aversion (volatility in stocks was accentuated on Friday by quadruple witching). A down day on Friday, broke an eight day win streak for the DJIA, but for the week, the DJIA still gained 1.1%, the Nasdaq rose 0.3%, and the S&P500 climbed 0.9%.
Asian stock market, economy and companies update (March 19, 2010)
Asian equity markets enter the final stretch of the trading week on a cautious tone similar to that of the prior session, with little economic data to drive bullish sentiment further. Nikkei225 is the leading index in the region with a 0.7% gain, recovering from late-session selloff yesterday derived from further Greek bailout uncertainty. Consumer goods and technology sectors outperformed in Tokyo, while financials lagged the rally. Sydney's S&P/ASX and Korea's Kospi gains are more contained below 0.5%, while Shanghai Composite and Taiwan's Taiex are down around 0.2%. Front-month S&Ps action is similarly muted, trading unchanged around 1,161.
European stock market, economy and companies update (March 19, 2010)
European equity markets opened positive on the session seeking to erase yesterday's losses. Equities in Europe finished downside largely on the back of macro worries from a resurgent risk in Greece and heavy tone in banks on Tuesday. An 8-session rally in the DJIA and strong trading in Asia set the tone for this morning's trade. What had been a restrained pre-market took a boost from commentary coming out of Llloyds Banking Group [LLOY.UK].
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Godrej Properties IPO review and analysis by Angel Broking, 9 December 2009
Godrej Properties Limited (GPL) intends to develop its projects through joint development agreements with land owners. Under this asset-light model, GPL will enter into revenue, profit or area-sharing agreements with land owners, instead of an outright purchase of the land. This model avoids direct land dealings for GPL and the locking-up of extensive capital in land. Around 80% of GPL's existing land bank will be executed through joint developments with partners. The Godrej brand name has been associated with quality and strong corporate governance. Both of its existing listed entities, Godrej Consumer Products and Godrej Industries have given CAGR Returns of 48% and 77%, respectively, to investors since 2001. We believe that GPL could leverage its parentage brand (with respect to access to the land at Vikhroli and a strong customer preference towards it), assuring a timely delivery of execution. More than 50% of GPL's existing land bank is exposed towards township projects and in one location (Ahmedabad), which will be executed over the next ten years. Any delay in this execution or a fall in property prices in Ahmedabad will impact our NAV estimates, as 50% of our NAV is derived from this project.
JSW Energy Ltd IPO review and analysis by Nirmal Bang, 8 December 2009
JSW Energy Ltd. (JSWEL) is a power project development company, which is developing, and will operate and maintain, power projects in India. The company has two thermal power projects under operation, with a combined installed capacity of 860 MW. JSWEL is a part of the JSW Group, a leading business group in India. JSW Group has a presence in high growth sector like Steel, Energy, Aluminium, Cement, Infrastructure and Logistics. Post IPO holding of Promoter and Promoter Group would be 78.12%
JSW Energy IPO review and analysis by Angel Broking, 7 December 2009
JSW Energy (JSWEL) currently has operational capacity of 995MW and is in the process of executing projects with capacity of 2,655MW. In addition, the company has 7,740MW power generation projects at an early stage of development. A major portion (2,145MW) of JSWEL’s upcoming capacities is expected to be operational by FY2011E thereby providing near-term visibility. Out of the plants under construction, the company expects to commission 570MW by end FY2010E, while another 1,575MW is expected to get operational in FY2011E. Thus, a robust portfolio and near-term Revenue visibility is a major positive for the company.
Surgutneftegas: Currency rates are putting away the dividends..., 26 November 2009
We have revised our model of Surgutneftegas. The reason for that was the output of the 3Q 2009 report, correction of our suppositions of the company’s future development, and also the postponing of the target time and evaluation one year forward. Particularly, in our model of Surgutneftegas we have corrected the former forecast of income for the current year towards reduction: on EBIT – by 2.2%, on the net profit – by 21.5%. Mainly that happened due to the corrections on the operating estimates, and also due to the continuing strengthening of Russian ruble, which, considering significant dollar liquidity of the company, turns into negative currency exchange. Due to the negative currency exchange precisely For the second quarter in a row Surgutneftegas shows low level of the net profit. The fourth quarter, as we see it, will not make an exception and we expect negative currency exchange similar to the ones in the third quarter.
Gazprom: Having passed the bottom, 23 November 2009
We have revised our estimation of Gazprom’s shares. The reason for up-dating the company’s model was the report by IAS for 1H 2009, the budget draft for the next year and corrections of WACC method calculation. The provided financial report of the gas monopoly totally brought no surprises. As it has been expected, the second quarter was worse than the first one and likely was the weakest within the whole year. In 1H 2009 the financial estimates were affected by the decline of the gas sale at all markets by 22.3% average, and by the reduction of the retail price of gas by 9.6% in the state of the far abroad and by 24% in Russia. As a result within the six months of the year 2009 sales slipped by 24.1 bn USD or by 32.8% and formed 49.285 bn USD, operating profit and EBITDA showed reduction by 56.7% and 52.6% respectively and formed 12.98 bn USD and 16.18 bn USD.
Cox and Kings IPO review, analysis and recommendation, 18 November 2009
Cox and Kings proposes to make its IPO in the price band of Rs316-330/share, at a face value of Rs10 each, and to issue 1.85cr shares, of which 30.5lakh shares are offered for sale by Lehman Brothers Opportunity, Deutsche Securities Mauritius and Merrill Lynch Capital Markets Espana. Therefore, the fresh issue by the company will be to the extent of 1.55cr shares. The company plans to use the proceeds for debt repayment (Rs129.6cr), acquisitions and other strategic initiatives (Rs150cr), investment in overseas subsidiaries (Rs62.5cr), and investment in corporate offices and upgrading its existing operations (Rs60cr).
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