SMS Management & Technology Limited (SMS)

By Jason Fittler

SMS is a consulting, technology and systems integration company.

SMS specialise in improving operational performance and IT delivery by addressing everything from business integration to Compliance, process improvement to change management and technology strategy to systems integration and application development.

Offices are located in Australia and Hong Kong.

The industries serviced are Defence and National Security, Financial Services, Governments, Health and Human Services, Information and Communications Technology, Mining and Resources, Transport and Utilities.

The company has performed well since the start of the year and is currently trading at $5.70, we have a price target of $7.10 on the company and it is paying a 7.5% gross dividend yield.

The main risk with the stock is that it has a number of government contracts which over the past 12 months have seen a decrease in government spending on IT projects this has caused a drain on both cash flow and staff utilisation.

We are expecting that the company will end of year profit of $31 million which is below original forecasts. The company has provided no guidance at this time on profits.

For 2013 year, we are expecting a profit of $36 million. We also expect to see the dividend improve over time as they maintain their payout ratio around the 67% level.

We maintain an "accumulate" on this stock with a long-term view of growth and income.

We are cautious, as in the current economic environment we expect that capital expenditure will be reduced or postponed.

SMS is a solid investment for those who are looking for exposure to the IT sector.  

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

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