CFA Society Singapore
SINGAPORE (Nov 15): DBS Group Research is maintaining a “buy” call on Procurri with a target price of 56 cents, citing a potential acquisition in the works.
Analyst Sachin Mittal notes in a Friday report that Procurri is one of the few companies in the world that offer hardware resale and independent maintenance services, which is reflected in its 33% gross margins. This is further bolstered by 23% earnings compounded annual growth rate which could be aided by potential acquisitions to enhance its global footprint.
To recap, Procurri’s 9M16 earnings growth excluding one-offs was slower than expected at $5 million, below forecasts of $6.5 million due to revenue miss, notes Sachin.
Post listing, the company plans to bid for bigger projects between $5 million to $10 million, which requires more paper work and processing time. Procurri is also focusing on maintenance services which commands higher margins, notes Sachin.
Sachin believes that there will be a significant acquisition by the end of FY16 or start of FY17 that could contribute over $3 million in earnings in FY17. Procurri could also see earnings grow organically to $11 million in FY17 by securing larger IT projects, notes Sachin.
“Enterprises are increasingly extending the life of their IT infrastructure by using pre-owned equipment and independent maintenance service to secure up to 60% cost savings,” says Sachin.
Shares of Procurri are trading flat at 46 cents.