Attractive long-term growth prospects: Citadel

Robert Frost

The Citadel Group (ASX:CGL) re-rated after providing a positive operational update which included new contract wins with law enforcement agencies and a sensible, earnings accretive acquisition. The acquired company, Kapish, is an Australian software and services company specialising in document and records management solutions, a complementary adjacency to CGL’s existing core knowledge management offering. Although relatively small, we forecast that the acquisition is earnings-per-share accretive (+10%), strategically sensible and increases CGL’s proportion of recurring revenue contracts. CGL has attractive long-term growth prospects underpinned by a robust pipeline of organic managed services opportunities and a balance sheet that would support further complementary M&A activity. (VIEW LINK)


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