Synectics – what a cracking set of results from this security solutions provider, its shares now at only 330p, brokers valuation is 486p

04.03.2025

Now we know what it is doing!

This morning Synectics (LON:SNX), a solutions provider in the growing global security market, announced its Final Results for the year to end-November 2024.

On the back of a 13.6% revenue increase to £55.8m (£49.1m), the group saw its underlying operating profit expand almost 57% to £4.8m (£3.1m), with earnings per share increasing to 21.6p (14.2p) and with a 50% improvement in its dividends to 4.5p (3.0p).

By the end of its last trading year the group’s order book was standing at £38.5m (£29.2m).

The group also ended that year with no bank debt and with £9.6m (£4.6m) cash in the bank.

These strong results showed record gross margins and adjusted profit before tax being materially ahead of recently upgraded market expectations, supported by a solid year of growth in all sectors, particularly within its Gaming division.

The impressive order book has been boosted by consistent contract wins across all of the Group's sectors, which we have already seen has continued into this current trading year, with recent contract wins in South-East Asia and the US.

Management Comment

CEO and CFO Amanda Larnder stated that:

"I am immensely proud of our strong performance in FY24 and the positive momentum we have built heading into FY25, which is backed by a robust order book.

During FY25, we are investing in strategic initiatives across our products, operations, and in strengthening customer and partner relationships to ensure sustainable growth in future years.

We are confident that our commitment to delivering operational excellence combined with our innovative offerings position us to be a trusted leader in our chosen markets, enabling us to seize new and exciting business opportunities."

The Business

The Sheffield-based group is a leader in advanced security and surveillance systems that help protect people, property, communities, and assets around the world. 

It also has operations in Berlin, Macau, Singapore and in Wheat Ridge, Colorado.

The company’s expertise is in providing solutions for specific markets where security and surveillance are critical to operations.

Such markets include gaming, transport, public space, oil and gas, and critical infrastructure. 

Its experience and technical excellence, combined with long-standing customer relationships, provides fundamental differentiation from mainstream suppliers and makes the company a stand-out in its field. 

Synectic Systems develops and delivers its proprietary, technology-led solutions to specialist markets globally - including gaming, oil and gas, public space, transport and critical infrastructure - through local systems integrators and channel partners.

Capabilities centre around a proprietary software platform, Synergy, that is tailored to the unique requirements of each customer, and specialist hardware for oil and gas markets built on our COEX camera range.

The Ocular side delivers integrated solutions, service, and support directly to end-users in the UK and Ireland - principally within public space, transport, and national infrastructure - utilising a combination of the Group's proprietary technology and third-party products

Analyst View

At Shore Capital Markets, its analyst Rob Sanders has estimates out for the group’s year to end-November 2025 showing £65.0m (£55.8m) revenues, lifting its adjusted pre-tax profits to £5.3m (£4.7m), with earnings of 24.9p (21.6p) and paying a dividend of 6.5p (4.5p) per share.

For the 2026 year he looks for £70.5m sales, £6.0m profits, 28.4p earnings and a dividend per share of 8.0p.

The year to end-November 2027, he estimates, could show £75.1m revenues, £6.8m profits, with earnings leaping to 32.1p per share, easily covering a dividend of 8.0p.

In today’s note on the group, which states a 486p DCF valuation per share, Sanders states that:

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

In My View

This is a cracking business – with a global market for its proven systems, with a growing order book and increasing sales and profits – that is just what stock markets are about in backing such companies.

And that is why I continue to rate highly the potential for this group’s shares, now 33

0p, to rise to above 400p and trade the 420p/450p range.