Synectics – we are looking at it looking at us, its Interims tomorrow will point the way, its shares are 330p, DCF 486p

07.07.2025

Tomorrow morning, Tuesday 8^th July, Synectics (LON:SNX) will be announcing its Interim Results to end-May, they should be good and give off positive signals to the market.

The group’s shares have enjoyed a good run over the last year, having almost doubled from the end-July 2024 price of 170p to around 330p now - and they may well do even better going forward.

The £56m-capitalised group, which is a leader in advanced security and surveillance solutions, has seen solid order intake and ongoing new business momentum across the business in the first half.

The Business

The company is a leader in advanced security and surveillance solutions that help protect people, property and assets around the world.

Synectics has some 300 employees, mostly in the UK, but with sales and support staff in seven sales hubs spread globally.

It operates in all leading control room surveillance markets, with a focus on critical infrastructure, energy, public space, transport, leisure and hospitality.

It transforms customer operations by seamlessly integrating systems, technologies, and data into a unified solution-enhancing safety, improving efficiency, and enabling smarter, faster decision-making and response capabilities.

The company has expertise in providing solutions for specific markets where security and surveillance are critical to operations, such as gaming, oil and gas, public space, transportation and infrastructure.

It operates through two segments: Systems and Security.

Its Systems segment develops, integrates and delivers flexible electronic surveillance solutions based around its proprietary hardware and software, and operates globally across all sectors.

The Security segment is focused on the design, delivery, maintenance and management of end-to-end security and surveillance systems for high security and public space applications and operates principally in the UK.

It is engaged in the development of its intellectual property, the fourth-generation Synergy platform and COEX camera station range.

Latest Trading Update

On Monday, 9^th June, the group stated that its first half to end-May had seen positive progress in securing extensions and repeat orders with existing long-term customers across a variety of sectors and geographies, in addition to securing new customer mandates.

The order book remained strong, with a number of sizeable projects due to be delivered in the second half of the year and beyond.

Analyst View

Prior to tomorrow morning’s Interim Results announcement, Rob Sanders, at Shore Capital Markets, was very positive about the group’s potential.

His estimates were for the business to see a rise in group revenues this year, to end-November, from £55.8m to £65.0m, while adjusted pre-tax profits could increase to £5.3m (£4.7m), lifting earnings to 24.9p (21.6p) per share and easily covering the payment of a 6.5p (4.5p) dividend.

His estimates for 2026 show £70.5m sales, £6.0m profits, 28.4p earnings and a dividend of 8.0p per share.

Sanders is looking for the group to show £75.1m revenues in 2027, with £6.8m profits, 32.1p earnings and a 10.0p per share dividend.

Another impressive pointer to the group’s fortunes is that the analyst looks for the group to increase its net cash balances, from a predicted £8.2m end-2025 year to £10.1m in 2026, then up to £12.4m in 2027.

He notes that the new AI features in Synergy, released over the last 12 months, have the potential to increase recurring revenues through subscriptions, in due course.

There also remains the potential for a further significant uplift in group profits, due to the technology infrastructure provided by the Synergy command and control software platform.

“We continue to believe that the group can deliver £10m of adj. EBIT in the future.

Even though the share price has performed well over the last 12 months or so we believe that there is still scope for further significant share price upside, especially considering the valuation metrics in the outer years.”

In My View

This group has it all – as far as I am concerned – it has a growing sales market, it has very attractive annualised recurring revenues, it has both expanding profits and an increasing cash pile.

And what is more, its shares have a good momentum having risen steadily from 100p in November 2023 to 330p now.

The group’s brokers have a 486p discounted cash flow valuation on its shares.

Tomorrow’s Interims should point to a good second half-year now underway, with the outlook for even greater sales and development over the next few