SMS Management & Technology Limited (SMX)

By Jason Fittler

SMX is an Asia Pacific consulting, technology and systems integration company.

SMX specialises in improving operational performance and IT delivery through the implementation of strategy and the delivery of business and technology projects. SMX operates predominately within Australia, with operations also in Hong Kong, Singapore and Vietnam. There are two main business units: SMS Consulting and M&T Resources.

SMX is a well established IT services and business management company. It provides a range of consulting services to a diversified portfolio of government and private sector clients. The company has a solid track record of growth over a number of years - to its credit, SMX recorded flat earnings in FY09 despite the Global Financial Crisis.

Looking forward, growth will be underpinned by the growing nature of the IT services sector and a trend toward outsourcing, as well as consolidation opportunities.

Challenges remain in the retention of skilled personnel, the low barriers to entry, and the cyclicality of the IT industry.

Profitability is very strong with return on equity averaging 30.5% for the past four years.

The balance sheet is strong with no debt.

According to Lonsec, SMX is trading on a prospective 13 times earnings and paying a 5.6% fully franked yield at the current price of $5.00.

They have a Fair Value target of $6.00 for the stock.

For more information on SMX please contact us on 07 4771 4577.