SIQ -10.91%: A poor day for the novated leasing and salary packaging business, missing out on renewing the contract for one of their top 20 clients, the Department of Education & Training in Victoria. There had been a competitive tender and the award was given to their competitor, Maxxia which is owned by McMillan Shakespeare (MMS). The exclusive contract currently has approximately 4,000 novated leases and 9,000 salary packages that would be transitioned to Maxxia. SIQ say that it will have no material impact on FY22 revenue and will impact revenue by less than 5% in FY23. MMS also said the financial impact would not be material. While it’s a blow for SIQ, they have retained all top 20 clients that fell due in 2021 and the bulk of those that fell in FY22. More importantly for the share price today was their guidance saying that 1H22 revenue and EBITDA would be inline with H1 2021. The market had factored in growth of ~8%, so a contract loss + an unrelated downgrade to boot, hence the weakness in the shares. MMS also finished lower, down -3.59%.
MM is reviewing our SIQ holding in the Income Portfolio
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