GREY:SYTHF - Post Discussion
Post by
93Darkhorse93 on Jun 13, 2016 11:42am
Valuation Too Cheap Given Sound Fundamentals…
I agree with the recent posts about the resulting lack of movement given significant positive fundamental improvements in the business in particular the extension of the REACH contract that caused the stock to drop 75% from 2 down to 0.5 within two weeks last fall which was such an overshoot.
Since the middle of April it’s been flat right at the 0.50 mark. Since this point management has announced the extension of the REACH contract and signed on multiple land customers in addition to more profitable air contract but no movement in the share price as the business model continues to scale. High margin businesses like Syncordia gain so much profitability as they are able to scale.
In addition the recent acquisition of Billing Solutions LLC mental and behavioural health business got me real excited given the strategic synergies, vertical expansion and price paid especially given the recent acquisition by Inspira Financial of RBP Healthcare Technologies for 2.83x sales while Syncordia picked up Billing Solutions LLC for only 1.3x sales for their 80% controlling interest. Valuing Billing Solutions LLC at the level that RBP Healthcare just got a LOI for would put it at 17.2M which is greater than the entire market cap of Syncordia as a whole.
Given the recent announcements revenue should be around 23M annually which puts it at only 0.4x sales. This is trading way out of line due to at the sector level for software and IT services the average valuation is around 4x sales. At that valuation for Syncordia would put it at 4.68 SP. Granted this would be a high given the enterprise value and shorter term nature of contracts but below 1.20 SP it is still at only 1x sales or a quarter of the value of the sector average
Clearly the street is waiting for an update from Q4 numbers and an outlook for the year ahead which will be positive given recent developments in the business given the contract wins and the strategic acquisition.
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