Shares in Scisys (SSY:200p), a supplier of bespoke software systems to the media, space, defence and commercial sectors, have increased by 25 per cent in value since I reiterated my buy recommendation when I covered the annual results ('Scisys set for another record year', 28 Mar 2019) and have now doubled in value since I first suggested buying, at 102p, in the autumn of 2017 ('Tune into a media play', 11 Oct 2017).
It’s justified, too, as Scisys’s space division is absolutely flying. Having Brexit-proofed this operation by redomiciling the company to Dublin at the end of November, Scisys won multiple contracts on European Space Agency (ESA)-funded projects. In fact, between mid-December and the end of January, the company won €23.3m (£20m) of new space contracts to lift the division’s order book to £40m. Since then, the space division has won two further European Union-funded contracts, worth €9.7m, from Thales Alenia Space France for the development and implementation of security-relevant elements within the Galileo Ground Segment. These follow-on orders cement Scisys’s space division’s position as an expert for innovative ground-segment solutions and as a longstanding partner of Thales Alenia Space, the prime contractor to the ESA.
The orders also further boost Scisys’s record 2018 closing order book of £98.6m, derisk analysts’ 2019 revenue forecast of £62m, and support expectations that the company will lift full-year pre-tax profit by 15 per cent to £5.3m to produce earnings per share (EPS) of 14p. Buoyed by strong operating cash flow, net debt was slashed by almost 50 per cent to £3.1m last year, which cut the interest bill by 30 per cent to £0.5m, and analysts are predicting the balance sheet could be almost debt-free by the year-end. This means that more profit is being retained by shareholders. That’s good news for the dividend per share, which has been hiked by at least 10 per cent a year since 2013. Expect a payout of 2.62p a share for the 2019 financial year, rising to 2.88p in 2020.