PiteCo SpA (MI:PITE) traded broadly in line with management objectives, with 30 new contracts signed in FY17, up from 26 in FY16. Nevertheless, revenue and EBITDA came in below our forecasts, as the group lacked any large-size projects during the year, while Juniper Payments suffered on translation from the continued strength in the dollar. Recurring revenues grew by 5% organically and by 46% including Juniper, which is predominantly recurring revenues, and now represent 65% of the total. We have cut revenues by 5% and EPS by 7-8% in FY18 and FY19 mainly due to the weakness in services and the strong dollar. With Juniper trading in line with targets and management expecting the treasury business to return to its growth trend in FY18, we believe the shares are attractively priced on 12x our FY19e earnings.
Final results: Held back by dollar and lack of larger projects
Net revenues grew by 21% to €16.4m (we forecast €17.1m), reflecting flat organic revenues and an initial €2.9m from Juniper Payments, which contributed from May. While the 30 new contract wins were 15% ahead of the number signed in FY16, the FY17 batch lacked sizeable deals with large services elements and consequently services revenues were subdued. Juniper contributed in line with plans in dollar terms, but suffered on the decline in the dollar against the euro. Cash generation remained healthy, with FCF increasing by c 7% to an estimated €4.4m, and the group ended the year with net debt of €6.5m (we forecast €6.0m).
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