SSP Holdings
BUYChaired by experienced software sector mover and shaker David Rasche, SSP provides ‘business critical’ IT systems and services to the global insurance industry.
Boasting a strong track record of profitable growth, its systems and services improve productivity and efficiency for clients including Zurich, Fortis, Norwich Union and, most recently, in a ground-breaking deal, United India Insurance Company, one of the four biggest insurance companies in India.
In a trading update for the year to March 2008, SSP confirmed it would meet annual numbers following another year of double-digit sales growth, driving pleasing performances from its Insurer Systems and International divisions and enjoying good growth in transaction-related revenues in the UK broker market. Last July’s highly significant Sirius acquisition boosted the group’s position in its core UK and international markets. SSP achieved the £2m of annual costs savings envisioned at the time of the deal, while additional savings are expected in the current year. SSP said it had been particularly successful with Sirius’ S4i product, for which the value of contracts won in the nine months since the acquisition have almost doubled those achieved ‘in any previous full year’.
Continuing to win substantial levels of new business, analysts see SSP as a defensive technology play, based on its exposure to the cash-rich general insurance market, favourable industry dynamics, as well as the high quality and visibility of its revenues.
When results emerge, Alex Jarvis of house broker KBC Peel Hunt suggests investors might expect earnings of 10.9p, from sales up almost 65% to £63.2m and EBITDA up 47% to £14.1m, placing SSP on a price-to-earnings ratio of 10.6, falling to 8.5 times based on 2009's forecast 13.6p. Buy.
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Market cap: £95.85m
PE Forecast: 10.6
Share price: 116p
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