Celfin maintains buy recommendation for Sonda

Thursday, July 7, 2011

Financial services firm Celfin Capital has modified its forecast for Chilean IT systems integrator Sonda, maintaining its buy recommendation and increasing its 12-month, DCF-based target price to 1,533 pesos per share.

The new target price indicates potential stock price upside of 17.9%, and a total return of 20.4%, which includes the company's estimate of a 2.5% yield, Celfin said in a research report.

The firm expects earnings per share to grow 25.3% this year, an additional 27.2% in 2012 and 27.2% in 2013. Ebitda is expected to grow 26.5% in 2011, 24.9% in 2012 and 20.7% in 2013.

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This growth is due to stable revenue and cash flow and a very solid, un-leveraged balance sheet, which allow Sonda to easily raise capital to fund its expansion, Celfin said.

According to the report, Brazil will grow to 36% of total Ebitda by 2013, though Chilean operations are expected to remain the biggest contributor, with 56%.

Celfin forecasts Sonda to see organic growth with a CAGR of 12% over the next three years.

"We expect the acquisitions made in Brazil (Telsinc, Softeam and Kaizen), Mexico (NextiraOne) and Argentina (Ceitech) to enable Sonda to cross-sell to new clients, improving overall revenues and margins in Latin America," the report reads.

Use this link to see the full report.