Synnovia PLC: Latest update

Written by Ed Stacey

Synnovia PLC: Latest update
Trading statement

Synnovia (LON:SYN) released a trading update on 19 February, confirming that trading in the full year (FY) to 31 March is broadly in line with expectations. We continue to forecast growth in revenue and earnings; however, we are lowering our FY earnings per share (EPS) forecast from 11.9p to 10.4p to reflect a slower increase in profit margins due to operating issues in the Films division.

Both the Films division and the Industrials division continue to deliver organic growth, and we believe the group is well positioned for growth in FY March 2020. Some details of the divisional dynamics are included on p2.


The company's rebrand to Synnovia (it was previously Plastics Capital) has gone smoothly, and growth initiatives are bearing results. Following the revised expectations, the shares are now trading on a forward price/earnings (P/E) multiple of 8.0x (our March 2020e forecast). We argue that this represents an interesting level for investors to revisit the Synnovia proposition.

Year end Mar 31 2017 2018 Current* 2020
Revenue £M 36.5 76.7 83.5 87.0
EBITDA (£m). 2.6 7.0 7.9 8.9
Underlying PBT 1.2 4.2 4.6 5.6
EPS (p) 2.8 9.5 10.4 13.1
Share Price




Revenues by segment, Mar2019e
Source: Proactive Research
Revenues and EBITDA margin
Source: Proactive Research

The chart above left shows Synnovia’s revenues by business segment:

  • High strength packaging (Films division) – High strength plastic films for industrial packaging applications.
  • Speciality sacks and pouches (Films division) – Packaging for the food industry and other applications.
  • Creasing matrix (Industrial division) – A plastic consumable used in the manufacture of cardboard boxes and packaging.
  • Plastic ball bearings (Industrials division) – Ball-bearing assemblies for application such as steering columns, dashboard controls, and household appliances.
  • Hose mandrels (Industrials division) – A specialised plastic rod used as a consumable in the manufacture of hydraulic and industrial hoses.

Growth strategy and mix effect:

In May 2017 the company announced a capital raise of £3.8mln, with the proceeds to be invested in various growth initiatives. The full-year benefit of this growth programme is expected to be evident in the March 2019e results, with strong growth across both divisions. Improving profit margins are driven by growth in the Industrials division, and in the Bearings business in particular.

Partly offsetting this mix effect, the 19 February update refers to delays and teething problems in major programmes to add new capacity and new capabilities within the Films division, resulting in cost increases ahead of revenue growth in this division.

For FY March 2020e we are forecasting continued revenue growth for both divisions, and increasing profit margins for the group.


Proactive Research is a trading name of Proactive Investors Limited which is regulated and authorised by the Financial Conduct Authority (FCA) under firm registration number 559082. This document is published by Proactive Research and its contents have not been approved as a financial promotion by Proactive Investors Limited or any other FCA authorised person. This communication is made on the basis of the 'journalist exemption' provide for in Article 20 of The Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 and having regard to the FCA Rules, and in particular PERG 8.12.

This communication has been commissioned and paid for by Synnovia PLC and prepared and issued by Proactive Research for publication. All information used in the preparation of this communication has been compiled from publicly available sources that we believe to be reliable, however, we cannot, and do not, guarantee the accuracy or completeness of this communication.

The information and opinions expressed in this communication were produced by Proactive Research as at the date of writing and are subject to change without notice. This communication is intended for information purposes only and does not constitute an offer, recommendation, solicitation, inducement or an invitation by, or on behalf of, Proactive Research to make any investments whatsoever. Opinions of and commentary by the authors reflect their current views, but not necessarily of other affiliates of Proactive Research or any other third party. Services and/or products mentioned in this communication may not be suitable for all recipients and may not be available in all countries.

This communication has been prepared without taking account of the objectives, financial situation or needs of any particular investor. Before entering into any transaction, investors should consider the suitability of the transaction to their individual circumstance and objectives. Any investment or other decision should only be made by an investor after a thorough reading of the relevant product term sheet, subscription agreement, information memorandum, prospectus or other offering document relating to the issue of securities or other financial instruments.

Nothing in this communication constitutes investment, legal accounting or tax advice, or a representation that any investment or strategy is suitable or appropriate for individual circumstances or otherwise constitutes a personal recommendation for any specific investor. Proactive Research recommends that investors independently assess with an appropriately qualified professional adviser, the specific financial risks as well as legal, regulatory, credit, tax and accounting consequences.

Past performance is not a reliable indicator of future results. Performance forecasts are not a reliable indicator of future performance. The investor may not get back the amount invested or may be required to pay more.

Although the information and date in this communication are obtained from sources believed to be reliable, no representation is made that such information is accurate or complete. Proactive Research, its affiliates and subsidiaries do not accept liability for loss arising from the use of this communication. This communication is not directed to any person in any jurisdiction where, by reason of that person's nationality, residence or otherwise, such communications are prohibited.

This communication may contain information obtained from third parties, including ratings from rating agencies such as Standard & Poor's, Moody's, Fitch and other similar rating agencies. Reproduction and distribution of third-party content in any form is prohibited except with the prior written consent of the related third-party. Credit ratings are statements of opinion and are not statements of fact or recommendations to purchase, hold or sell securities. Such credit ratings do not address the market value of securities or the suitability of securities for investment purposes, and should not be relied upon as investment advice.

Persons dealing with Proactive Research or members of the Proactive Investors Limited group outside the UK are not covered by the rules and regulations made for the protection of investors in the UK.

Notwithstanding the foregoing, where this communication constitutes a financial promotion issued in the UK that is not exempt under the Financial Services and Markets Act 2000 or the Orders made thereunder or the rules of the FCA, it is issued or approved for distribution in the UK by Proactive Investors Limited.

Latest Research