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Security Matters Limited

( ASX:SMX ) - Software & Services

News

Solid Growth Expectations For SMS Management

IT services provider SMS Management & Technology (SMX) reported what UBS viewed as a strong full year profit result, earnings of $27.9 million coming in a little above the broker’s $27.1 million forecast. Earnings in the second half were particularly strong, rising by 32% against a 16% increase in earnings on a full year basis.

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Analyst Views

SMX – UBS rates the stock as Neutral

The March quarter update confirmed for the broker that momentum is robust and project margins have stabilised. These positives are offset by soft demand in Victoria and ACT, largely from lower-than-expected government revenues. FY15-16 forecasts have been lowered by 2-6% to reflect slower growth and margin pressure.

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SMX – CIMB Securities rates the stock as Neutral

The broker’s channel checks suggest corporate IT demand is not getting any worse, but then its not getting any better either. Industry participants are optimistic of a second half recovery but the broker can’t see any indication at this stage. SMS does offer a second half skew, but the broker can’t see any valuation appeal at this level.

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