There were few surprises in the FY19 final results as the net fee; adjusted PBT and net cash headlines had been announced at the Q4 trading update. The detail in the results confirmed that FY19 was a strong year with net fee income and profit all coming in at all-time highs. Net fee income growth of 7% (5% on a constant currency basis) YoY was also ‘best in class’ in terms of the other quoted staffing groups. This endorses SThree’s well-differentiated STEM-flexible working strategy. The overall trading backdrop half- way through SThree’s fiscal Q1 remains unchanged from Q4 and is perhaps best described as ‘subdued’. We now adjust our FY20/21 forecasts for multiple factors, the most material being the increase in sterling value (relative to other currencies) and the FY19 headcount investment. As a result, we lower our FY20/21 PBT estimates by -7%/-8% respectively. Given the phasing of the headcount investment, a higher than normal H2 profit weighting is to be expected. Further out, medium-term targets – as discussed at the recent capital markets day- reflect management's ambitions to aggressively grow market share, and drive material further improvements to group profitability as the scale benefits of a well invested global platform bear fruit. Despite a good run, the shares still trade at a 20% plus discount to listed peers.
06 Feb 2020
FY 2019 final results – Continued out-performance
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FY 2019 final results – Continued out-performance
SThree plc (STEM:LON) | 428 -6.4 (-0.4%) | Mkt Cap: 576.9m
- Published:
06 Feb 2020 -
Author:
Iain Daly -
Pages:
12
There were few surprises in the FY19 final results as the net fee; adjusted PBT and net cash headlines had been announced at the Q4 trading update. The detail in the results confirmed that FY19 was a strong year with net fee income and profit all coming in at all-time highs. Net fee income growth of 7% (5% on a constant currency basis) YoY was also ‘best in class’ in terms of the other quoted staffing groups. This endorses SThree’s well-differentiated STEM-flexible working strategy. The overall trading backdrop half- way through SThree’s fiscal Q1 remains unchanged from Q4 and is perhaps best described as ‘subdued’. We now adjust our FY20/21 forecasts for multiple factors, the most material being the increase in sterling value (relative to other currencies) and the FY19 headcount investment. As a result, we lower our FY20/21 PBT estimates by -7%/-8% respectively. Given the phasing of the headcount investment, a higher than normal H2 profit weighting is to be expected. Further out, medium-term targets – as discussed at the recent capital markets day- reflect management's ambitions to aggressively grow market share, and drive material further improvements to group profitability as the scale benefits of a well invested global platform bear fruit. Despite a good run, the shares still trade at a 20% plus discount to listed peers.