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Communisis: Acquisition, Trading Update

ByEdison
Published 06/20/2012, 08:01 AM
Updated 07/09/2023, 06:31 AM
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Trading Continues Positive

While the market is focused on economic uncertainties, Communisis’s corporate performance remains sound, as its trading statement emphasises. We expect EPS growth of 26% in 2012, reflecting new business wins, investment and cost cutting as the strategy unfolds. Acquisitions (such as today’s TGML) should help attract new business. The shares are on a humble rating in view of the performance and the prospects.
Trading continues positive
Communisis reports that trading since the last IMS (2 May) has been encouraging, with the pipeline of opportunities remaining strong, and it remains positive about first-half trading. Our estimates are unchanged.

Communisis has acquired 49% of The Garden Marketing Limited (TGML) for £0.4m with an option to acquire the balance for about £0.6m. TGML is a small (£1m of revenues) full service, integrated marketing agency. It specialises in lead creation and collateral marketing communications, largely for financial services and technology clients, which include Lloyds TSB, Legal &General, Ricoh and Cisco. The deal enhances further the group’s creative services operations and follows the acquisition in May of Kieon (a website and app developer) and Yomego (a social media agency).

Since our note on 3 May, the shares have fallen by 25%. For 2012, this leaves the shares on a discount of 69% to the Support Services sector and 61% to the FTSE Small Cap Index (2013: 67% and 46%). The market is clearly focused on macroeconomic concerns, but at some point the focus will switch to corporate performance, the low P/E and the well-covered (3.6x) and rising dividend. The NAV is 93p (end December 2011).

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