Research, Charts & Company Announcements
Research Tree provides access to ongoing research coverage, media content and regulatory news on SGS SA-REG. We currently have 6 research reports from 1 professional analysts.
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Performance not really exciting!
25 Jan 17
SGS reported final 2016 results. Revenues increased 4.8% to CHF5.99bn and 6% on a constant currency basis. Acquisitions contributed around 3.5% to revenue growth and 2.5% was organic growth. The operating performance of the company, however, was not really exciting. EBITDA increased 0.7% to CHF1.15bn and real EBIT declined marginally by 0.7% to CHF816m. The EBITDA margin dropped from 20% to 19.2% and the EBIT margin from 14.4% to 13.6%. The adjusted operating margin also declined from 16.1% to 15.4%. During the year, the company completed 19 smaller acquisitions and invested around CHF193m. Net debt increased from CHF482m to €736m. The board of directors proposed a dividend of CHF70 per share (increase of CHF2 from €68). Management also initiated a share buy-back programme worth CHF250m.
Weaker performance for 2016 expected
16 Jan 17
SGS is planning to grow the business by digitalising its activities. The company already has minority stakes or partnerships in tech companies such as Savi, Agflow and Sensima Inspection. The first priority will be information, systems and platforms followed by technology integration, analytics (predictive maintenance, asset tracking) and cybersecurity. In addition, the strong regional focus should increase the footprint in the largest market China. In 2016, the company had over 120 locations with more than 125 laboratories and 14,000 employees. The total TIC market is estimated to be around CHF25bn. Growth is mainly driven by e-commerce (contract with Alibaba), food and environmental testing.
Acceleration of earnings growth required
18 Jul 16
The company reported first half year results (no quarterly results available). Revenues increased 5.4% and 7% at constant currency of which 3.6% organic and 3.4% acquisition driven. Management acquired ten companies for a total of CHF99m. These companies contributed CHF99m to revenues and CHF1m to the operating performance. EBIT jumped 18.3% to CHF394m and the EBIT margin increased from 12.1% to 13.6%. The operating performance excluding restructuring charges of CHF64m in 2015 remained unchanged. EBITD declined from CHF577m to CHF563m. The market expected EBITDA to reach CHF587m.
Solid but not exciting
21 Jan 16
The company reported final 2015 numbers. Revenues declined by 2.9% to CHF5.7bn but increased by 3.6% based on constant currency. Organic growth was 2% and 1.6% driven by acquisitions. The company faced a difficult environment especially due to the strengthening of the Swiss Franc against major currencies and the fall in commodity prices. Adjusted EBITDA reached CHF1.19bn and increased by 3.4% at constant currency. Real EBITDA however declined by 8.1% to CHF1.14bn. The EBITDA margin declined from 21.2% to 20%. EBIT dropped by 12.7% to CHF822 and the EBIT margin declined from 16% to 14.4%. Net income also dropped by 12.7%, and stood at CHF549m compared to CHF629m in 2014. The dividend will remain unchanged from the prior year at CHF68 per share.
Not giddy with excitement yet
02 Nov 15
On its capital markets day in Chile/Peru, management announced some minor changes within the group. The regional structure will be optimised from 10 to 8 to improve efficiency. The business in Northern and Central Europe will be merged with Southern Central Europe. Central America will beintegrated into South America. In addition, management will merge three Asian regions down to two by the end of 2016. Management is also planning to increase the footprint in North America and China. In North America, acquisitions will be the key element to drive the expansion of the business. In China, management will shift from exports to the local market. Strong growth is expected in Industrial, Food and Transportation. In addition, the company launched a focused programme to reduce costs. One operational business model, three shared service centres across the world and a team of 1,500 employees should help to reduce the cost base by at least CHF20m per year. Another efficiency programme (procurement savings) was launched and is expected to save CHF180m between 2015 and 2017. Furthermore, the net working capital, which will remain the key driver of the operating cash flow, will be structurally improved. In January 2014, the company changed its dividend policy. The dividend of CHF65 per share is the floor for 2013 up to 2016. For the current year, we expect a dividend of at least CHF68 per share. Around CHF500m of the share buy-back programme of CHF750m will be used for share cancellations.
Solid but not really exciting
20 Jul 15
The company reported half year results. Revenues declined 1.9% to CHF2.75bn mainly due to the strength of the Swiss franc. At constant currency revenues increased 3.4%, of which 1.8% was derived from organic growth and 1.6% from acquisitions. The lower than expected growth was mainly impacted by reduced and delayed capex from the oil and mining industries. The Environmental Services, consumer testing services and automotive services were the main contributors to revenue growth. EBIT declined 16.1% to CHF333m and the EBIT margin reached 12.1% compared to 14.2% in H1 14. Adjusted EBIT including restructuring charges and other less pleasant cost items declined 1.9% to CHF412m. The adjusted EBIT margin remained stable at 15%. Net income also dropped 16.1% to CHF214m. The company issued two bonds with a total volume of CHF550m. The CHF325m bond with a coupon of 0.25% will mature in 2023 and the second bond with a total volume of CHF225m with a coupon of 0.875% will mature in 2030.
The tide is turning
20 Apr 17
Any investor worth their salt knows it is impossible to precisely call a bottom in a particular stock. For Gattaca, though, we believe this moment has now passed given the compelling valuation (6.9x EV/EBIT vs 9.8x sector average), attractive 9.8% unlevered cashflow yield and constructive secular trends supporting its specialist markets. Sure, Net Fee Income (NFI) like-for-likes (LFL) have fallen of late, yet equally there are now early indications that organic growth may soon turn positive.
19 Apr 17
We take a look at the supply and demand dynamics of the world’s largest diamonds. Less than 200 very large (>200 carat) gem quality diamonds have ever been found, yet 23 of these have been found in the past three years. This dramatic increase is being driven by a combination of the rapid increase in the number of billionaires and hence price and demand, combined with technological developments that have improved large diamond recovery and a certain amount of geological good luck.
Small Cap Breakfast
19 Apr 17
Global Ports Holding—Intention to float on Standard List. International cruise ports operator. Seeking $250m raise including $75m primary offer. Dorcaster—Schedule One Update. Admission now expected 3 May. RTO of Escape Hunt raising £14m at 135p Verditek— Intention to float on AIM. On Admission, the Company's subsidiaries will be involved in advanced solar photovoltaic, filtration and absorption technologies specialising in providing environmental services. Raising £3.5m. Admission in May. Eddie Stobart Logistics— Schedule 1. Admission expected 25 April but capital raising details TBC. ADES International Holding— Intends to join the Standard List in May raising up to $170m plus a vendor sale. Provider of offshore and onshore oil and gas drilling and production services in the Middle East and Africa. Admission expected in May. Tufton Oceanic Assets– Offer extended to 9 May to enable investors to complete further due diligence.
19 Apr 17
Lombard Risk Management* (LRM): Beats demanding growth and profit forecasts (CORP) | Frontier Developments* (FDEV): Steaming ahead (CORP) | Tax Systems* (TAX): Right place, right time (CORP) | Acal (ACL): Stronger H2 and brighter outlook (BUY) | Fenner (FENR): Interim results signal upgrades (BUY) | Minds + Machines* (MMX): US and Europe domain sales (CORP)