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HB Corporate retains speculative buy stance on Symphony Environmental Technologies

Published: 10:34 14 Apr 2009 EDT

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Last week’s full year preliminary results from Symphony Environmental Technologies (AIM: SYM) prompted HB Corporate to reiterate its ‘speculative buy’ recommendation for the biodegradable plastics specialist.   

In a note released just before the Easter break, HB Corporate noted that the micro-cap company’s results were slightly ahead of expectations, and that cash flow generated in 2009 would help reduce group net debt.  Results for the full year showed a “strong improvement” on the prior year, with revenues 42% ahead to £5.36 million versus HB Corporate forecast of £5.3 million.  Gross profit margins improved to 44.3% (2007: 21.7%), and HB Corporate further noted that excluding non-recurring items, Symphony posted a maiden operating profit of £0.05 million in the second half.

Looking ahead to the rest of 2009, HB Corporate reiterated that the key driver for the share price will be the continued conversion of revenues into cash flow to pay down group debt, which stood at £1.25 million at year end.

HB Corporate is forecasting full year revenues of £7.5 million, pre-tax profits of £0.58 million and a reduction in net debt to £0.87 million. For 2010, revenues are forecast to rise to £9 million, with pre-tax profits of £1.04 million and group debt reduced to just £0.19 million, putting Symphony Environment on a 2010 P/E of 3.6.

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