ASX stock snapshot: Empired Limited

By Trevor Hoey. Published at Aug 10, 2017, in Features

Company: Empired (ASX: EPD)

Market Capitalisation: $100 million

Share price: 61 cents (18 month high)

Profile: Provider of IT services to the energy and natural resources industries, State and Federal Governments as well as Utilities and Transport sectors. Generates income from both cyclical and defensive segments.

Achievements: Transitioned from a business with a significant reliance on mining services revenues to a provider of a broader range of services generating both contract and recurring income.

It remains a speculative stock and investors should seek professional financial advice of considering this stock for their portfolio.

Status: A turnaround story still trading at discount to Bell Potter’s 12 month consensus price target of 75 cents (increased from 70 cents following this news).

The past performance of this product is not and should not be taken as an indication of future performance. Caution should be exercised in assessing past performance. This product, like all other financial products, is subject to market forces and unpredictable events that may adversely affect future performance.

Event

Fiscal 2017 unaudited results update triggers 6% share price rerating.

Key data was as follows:

EBITDA within management’s guidance of between $15 million and $16.5 million, and broadly in line with broker forecasts.

Operating cash flow of $9.6 million 12% above Bell Potter forecasts.

Looking forward

Management forecasts earnings growth with strong cash conversion underpinned by top line growth in fiscal 2018. Company expects to benefit from further margin expansion after increasing margins from 32% in the first half of fiscal 2017 to 35% in the second half.

Management sees sustained momentum from the proliferation of digital business models heavily reliant on data analytics, modern applications and mobile devices.

Watch for impact of improved operating leverage, reduced costs and higher efficiencies from ramp up of delivery centre at Bengaluru.

S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.

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