The H1 pre-close update saw positive Q1 trading momentum carry through into Q2. This performance has been delivered despite uncertain macro data. Encouragingly, SThree remarked ‘expectations for the full year remain unchanged’. Group H1 net fees + 9% YoY, is a creditable outcome, reflecting a consistent performance across Q1 / Q2. We are leaving our headline FY PBT/EPS forecasts unchanged, although we have made some minor changes to our regional mix. We would also highlight the improving balance sheet position, with net debt down to £8m (£12m at Q2). The update was also the first opportunity for investors to hear from new CEO, Mark Dorman, who joined SThree in March. Major shifts in strategy are unlikely in our view, as SThree’s unique combination of STEM and Contract focus continue to hold it in good stead. Although SThree is some way off its 52 week highs, it is now also some way off its lows, suggesting the more extreme cyclical concerns have now been priced in. Dividend growth remains a positive catalyst. SThree continues to trade at a material discount to the Staffing peer group (FY19E PE of 9.1x, 5.1% yield) despite keeping pace with its more cyclical peers.
24 Jun 2019
Encouraging H1 19 trading update
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Encouraging H1 19 trading update
SThree plc (STEM:LON) | 426 12.8 0.7% | Mkt Cap: 574.9m
- Published:
24 Jun 2019 -
Author:
Iain Daly -
Pages:
10
The H1 pre-close update saw positive Q1 trading momentum carry through into Q2. This performance has been delivered despite uncertain macro data. Encouragingly, SThree remarked ‘expectations for the full year remain unchanged’. Group H1 net fees + 9% YoY, is a creditable outcome, reflecting a consistent performance across Q1 / Q2. We are leaving our headline FY PBT/EPS forecasts unchanged, although we have made some minor changes to our regional mix. We would also highlight the improving balance sheet position, with net debt down to £8m (£12m at Q2). The update was also the first opportunity for investors to hear from new CEO, Mark Dorman, who joined SThree in March. Major shifts in strategy are unlikely in our view, as SThree’s unique combination of STEM and Contract focus continue to hold it in good stead. Although SThree is some way off its 52 week highs, it is now also some way off its lows, suggesting the more extreme cyclical concerns have now been priced in. Dividend growth remains a positive catalyst. SThree continues to trade at a material discount to the Staffing peer group (FY19E PE of 9.1x, 5.1% yield) despite keeping pace with its more cyclical peers.