Sanderson is a well established software and IT service provider in the UK. The company has a proven strong revenue model and a reputable track record of delivering both organic and acquisition-led growth. The Sanderson shares climbed 18% during 2017 and we believe the share price has more room to grow. We find Sanderson well poised in the growing multi-channel retail industry not only with its existing business but also with newly acquired Anisa, which complements the enterprise business of Sanderson and should accelerate new customer attractions
The management believes macro economic conditions present the most significant risks. A downturn in the economic environment or consumer sentiment can affect digital retail and enterprise software markets as it directly leads to Sanderson’s existing and prospective customers’ IT spending. While the company has not been hit from any Brexit impact, it remains as a concern should it result in further slow down in the UK economy.
Other risks include people and product development and M&A risks. The business largely relies on its own IPR development and skilled people who specialize in respective areas, both of which have a major impact on building and maintaining longstanding customer relationship. As for acquisition, successful integration of selective acquisitions can play a key role in driving growth.