SMS Mgmt warns on profits

The tough environment has caught up with this IT Services provider.

Starting with its 2014 AGM a year ago, when it reported a surge in new contracts, SMS Management & Technology seems to have been defying the negative winds in the IT Services industry. Eventually, with this year’s final result on 19 Aug 15 (Sell – $4.08), we let our gloomy industry view overshadow the positive signs at a company level and downgraded the stock to Sell. We’re pleased we did, as with the profit warning at today’s AGM the tough conditions appear to have caught up with the company.

First-half earnings before interest, tax, depreciation and amortisation are expected to fall 15-20% from last year’s $13.5m – putting it at about $10.8m–11.5m, which is roughly the underlying level back two years ago, before last year’s surge.

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