Piteco - Rating is attractive despite 7-8% EPS cuts

Piteco traded broadly in line with management objectives, with 30 new contracts signed in FY17, up from 26 in FY16. Nevertheless, revenue and EBITDA came in below our forecasts, as the group lacked any large-size projects during the year, while Juniper Payments suffered on translation from the continued strength in the dollar. Recurring revenues grew by 5% organically and by 46% including Juniper, which is predominantly recurring revenues, and now represent 65% of the total. We have cut revenues by 5% and EPS by 7-8% in FY18 and FY19 mainly due to the weakness in services and the strong dollar. With Juniper trading in line with targets and management expecting the treasury business to return to its growth trend in FY18, we believe the shares are attractively priced on 12x our FY19e earnings.