Synectics – we should be watching them as they watch everyone else, AGM Update encourages further purchases of its shares, now 325p, DCF 486p

07.05.2025

Ahead of today’s AGM Synectics (LON:SNX) has issued a Trading Update stating that its recent wins across all key sectors continue to support the company's solid order book and encouraging sales traction.

The Business

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

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.

Operating globally, its solutions help to protect its customers' interests in various business sectors, such as critical infrastructure, energy, public space, transport, leisure, and hospitality.

The Update

In the energy sector, the recent wins include projects for new installations and refurbishments, notably within the floating liquefied natural gas and floating production storage and offloading markets.

The leisure and hospitality sector continues to see positive momentum with new customers secured, particularly in North America and the Far East.

Additionally, sustained demand from established casino customers remains buoyant with both upgrades and repeat orders.

Further gains have been made across the group's critical infrastructure, public space, and transport sectors, including the award of new projects from local authority housing associations and the West Midlands Police.

Analyst View

Analyst Rob Sanders at Shore Capital Markets believes that there is scope for further significant share price upside.

His current year estimates, to end-November 2025, are for £65.0m (£55.8m) in revenues, with adjusted pre-tax profits increasing to £5.3m (£4.7m), increasing earnings to 24.9p (21.6p), easily covering an improvement in its dividend to 6.5p (4.5p) per share.

For the 2026 year, he goes for £70.5m revenues, £6.0m profits, generating 28.4p of earnings and paying a dividend of 8.0p per share.

Sanders considers that there remains the potential for a further significant uplift in group profits, due to the technology infrastructure in place provided by the Synergy command & control software platform.

He continues to believe that the group can deliver £10m of adjusted EBIT in the future.

In My View

The shares of this £58m-capitalised group, which boasted some £9.6m of net cash as at the end of its last trading year, are currently trading at 325p, which is some way below the discounted cash flow per share valuation of 486p.

I consider that they offer some useful upside potential over the next couple of years.