Since we initiated coverage early this month, the stock has jumped ~14%. The company has a diverse range of capabilities aimed at delivering complete (end-to-end) IT solutions for clients in order for them to reach their business objectives. EPD is a high growth stock and we expect the company to continue its growth momentum with sales, earnings and profit compound annual growth rates of 18%, 29% and 37% respectively. This will be underpinned by consolidating and extracting value from recent acquisitions as well as capitalizing on positive industry trends. Overall, we believe EPD is undervalued in light of its strong growth outlook, high proportion of contracted revenue, positive industry tail-winds and track record of execution. The stock is trading at substantial discounts to listed peers and we expect this valuation gap to narrow over time. While the company has not paid a dividend since October last year, we expect this to change in FY16 with the group’s debt to be driven lower by materially improved operating and free cash flow. Strong balance sheet is also supportive of further M&A. (VIEW LINK)



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