Buoyant H1 – guidance reiterated
Sinnerschrader O.N. (SZZG.DE)’s H1 results leave the group on track to deliver on its recently increased full-year guidance. The shares trade in line with digital agency peers on a FY14 P/E of c 20x. Evidence of ongoing strong momentum in the agency business and that management can execute on its NEXT AUDIENCE strategy would drive share performance.
SinnerSchrader reported Q2 results in line with its recent trading update; revenues €11.3m +36%, EBITA €0.9m (vs the prior year’s €0.4m loss). This follows an already strong Q1 (revenues +18%) leaving H1 revenues +26% overall to €22.1m and H1 EBITA of €1.5m (margin 6.7%). Management reports that the order books are well filled, helped by recently securing the largest single project in its history. The group is on track to deliver its recently increased revenue and EBITA guidance of over €46m and €3m respectively for the full year; our forecasts are broadly in line with this guidance. The strength has come principally from the Interactive Marketing division and SinnerSchrader mobile, and has been driven by both existing and new clients. The first pilot of the new NEXT AUDIENCE Platform (NA) was launched at the end of January. Adjusting for start up losses at this division, the H1 EBITA margin would have been 11.1%, a significant improvement on H113’s 4.9%.
The share trades on 20.5x P/E, broadly in line with its digital agency peers. We believe a premium rating is justified given the strong underlying growth being seen in the agency business, the potential for margin improvement and the growth potential of the currently loss-making NEXT AUDIENCE – evidence of progress in these areas would drive the shares forward.
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