While I like SSM's business, it is increasingly difficult to identify the growth engines. SSM has been priced as a 'fast grower', which has definitely been the case for some time. However, this latest news re-rates SSM. The top-line is increasingly under pressure - the Comdian acquisition while accretive is experiencing negative organic growth (e.g. losing revenue); 5G / wireless has been reducing due to ongoing delays; and now the NBN which has been the cash cow for so long is likely to see -$200m revenue in FY21 because it is a shrinking pie and they are giving up market share to BSA and Downer EDI.
As I said, I like the business and I reckon management will be able to fill the hole. But in the meantime, a quick back of the envelope discounted cash flow analysis shows their intrinsic value has reduced from $1.93 (was frothy coming in to this news) to around $1.53 (not suggesting that is the target price). As another commentator said, I'd be interested in seeing some support, improved news, or insider buying ...
SSM Price at posting:
$1.80 Sentiment: None Disclosure: Not Held
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