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Synnovia PLC: DEEP DIVE
OVERVIEW

Synnovia to focus on further organic growth opportunities in 2020

Plastics Capital changed its name to Synnovia in December to reflect the unification of the films division
plastics capital
OVERVIEW: SYN The Big Picture
Synnovia develops specialised film packaging and industrial consumer components
  • Significant revenue and profit growth expected in 2019

  • Name change to reflect recent reorganisation 

  • Synnovia to focus on organic growth opportunities in 2020

 

What Synnovia does:

Synnovia PLC (LON:SYN), formerly Plastics Capital, develops specialised film packaging and industrial consumer components. It has two main divisions - films and industrial. 

What it owns:

Synnovia owns: Bell Plastics Ltd, a maker of hydraulic hoses; BNL (UK) Ltd, which manufactures plastic rotating parts; C&T Matric, a packaging consumables firm; Flexipol Packaging Ltd, a specialist sacks and bags supplier; Palagan Ltd, which provides high strength film packaging; and Synpac Ltd, a maker of specialist food pouches.

Inflexion points:

  • Plastics Capital changed its name to Synnovia in December to reflect the unification of the films division. The films division switched from being three separate businesses, each with their own sales forces and factories, to a unified division with just one sales force and one raw material procurement team.
  • Synnovia expects “significant growth” in sales and profits for the year to 31 March 2019.
  • Profit in the films division was affected by project delays in 2019 but this was offset by a strong performance in the industrial arm, led by growth in the bearings business. The projects have since been completed, paving the way for a return to profit growth in the films division in 2020.
  • Synnovia continued to invest in adding capacity to support sales and profit growth in the year and said it would focus on “organic growth opportunities across the business” in 2020.

Blue Sky:

Capital Network analyst Ed Stacy expects Synnovia will post revenue growth of 7% and earnings per share (EPS) growth of 2% for the year to March 2019. For 2020, he predicts a 18.6% jump in EPS and 9.7% rise in revenue.

“The shares are now trading on a FY March 2020e price/earnings (P/E) multiple of 7.4x,” he said.

“We believe that this discount multiple reflects market concerns about the issues that have affected films.

“We expect to see a material positive re-rating if the company can demonstrate steady progress towards market expectations during FY Mar 2020.”

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Synnovia PLC Timeline

CN Research
July 09 2019
CN Research
April 26 2019
CN Research
February 27 2019

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