We have recommended shares in the AIM-listed security and surveillance group Synectics (105p) before, but we feel that now is an opportune time for investors to move into the shares. The company is expected to issue a trading update in the next few days, covering the year to 30 November, and if the recent director share buying is any guide then this is likely to be good. The share price of the company has recovered a little lately from a ten year low, but remains well below the high for the year pf 160p. In years gone by, the share price has been much higher than that as well and so there is clearly scope for significant recovery going forward.
Synectics is a leader in the design, installation and support of advanced security and surveillance systems. These are supplied to customers around the world and the company can provide a bespoke surveillance system using its sophisticated range of cameras. The company has built expertise in a number of industry sectors such as transport and gaming, with the latter including high profile casinos.
In the most recent trading update, issued in September, the company confirmed the adverse effect of Covid-19, especially in the global casinos and gaming sector, which is the company’s largest market. It is now apparent that projects originally planned for 2020 will be delayed into 2021 with an adverse impact on the 2020 results. However, other areas of the business, such as transport have not been as badly affected and this provides some re-assurance on the future.
The share price reflects the disappointing position at the moment, but clearly as and when the world returns to a more normal way of working there will be considerable pent up demand for the group’s services. Recent share buying by the directors also provides a certain amount of comfort as does the strong balance sheet with net cash of £7.3m being held at 31 August. The shares are a BUY.