SLI Systems (SLI)

Business description

SLI Systems' core products are e-commerce site search and navigation tools that learn from customer behaviours to improve the relevance of search results and therefore increase sales conversion.

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Stock data

Market cap.NZ$74.9m
Last closeNZ$1.23
High / Low (52 weeks)NZ$2.8 / NZ$1.2
Stock market listingNZ
Forecast net cash (NZ$m)6.7
Forecast gearing ratio (%)N/A
TeamTechnology
SectorTechnology

Price performance

%1m3m12m
Actual(12.1)(15.2)(35.6)
Relative *(11.5)(15.7)(39)

* % Relative to local index

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Y/E Jun Revenue (NZ$m) EBITDA (NZ$m) PBT (NZ$m) EPS (fd) (c) P/E (x) P/CF (x)
2013A 19.0 (1.4) (1.6) (2.9) N/A N/A
2014A 22.4 (5.4) (5.4) (8.6) N/A N/A
2015E 30.1 (4.0) (4.4) (7.3) N/A N/A
2016E 40.0 (1.5) (1.9) (3.1) N/A N/A

Last updated on 17/09/2014

Investment summary

On 26 August SLI Systems reported its full FY14 results. Annual recurring revenue (ARR) and growth costs (sales, marketing and engineering expense for new clients) were lower than management’s forecasts as a result of it taking longer than expected to find and train appropriate sales and marketing staff. In our opinion, the difference between forecast and actual ARR does not alter the long-term outlook so we have not changed our forecasts. Unwinding our DCF valuation by a year and improved cash flow in FY14 as a result of lower expenditures means our DCF valuation increases from NZ$2.62/share to NZ$2.96/share.

Last updated on 30/09/2014

Industry outlook

E-commerce site search is a growth market, thanks to the overall growth in e-commerce and the importance of effective search in converting website visits to sales. SLI Systems' cloud-based product minimises the initial set-up costs for its customers, resulting in a high ROI in a short time frame. Global e-commerce sales are expected to grow by 20.2% in FY14.

Last updated on 30/09/2014

Key management

Greg Cross, Chairman
Rod Garrett, CFO
Dr Shaun Ryan , CEO and Founder

Company address

78-106 Manchester Street
Christchurch 8011
New Zealand
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