Original-Research: KPS AG (von GBC AG): Buy



Original-Research: KPS AG - von GBC AG

Einstufung von GBC AG zu KPS AG

Unternehmen: KPS AGISIN: DE000A1A6V48

Anlass der Studie: Research Update Empfehlung: Buy Kursziel: 12.00 EUR Kursziel auf Sicht von: 30.09.2021 Letzte Ratingänderung: - Analyst: Matthias Greiffenberger, Cosmin Filker

Guidance withdrawn nevertheless, still undervalued.

At EUR 94.22 million (previous year: EUR 91.29 million) in the first half of 2019/20, sales were in line with expectations and a slight growth of 3.2% (previous year: 3.3%) was achieved despite the corona crisis. The reason for the nevertheless positive sales trend was an increased investment in marketing and sales offensives. This enabled the company to decouple itself from the general negative economic trend. The BDU business climate index quoted by the company fell by 29.9 points to 70.4 points, although KPS AG as a service provider in the digitization industry should generally be less affected by the general business climate.

The corona crisis nevertheless affected KPS AG to some extent, which led to the suspension of some projects. According to the management, however, this does not mean a loss of sales, but a postponement to a later date. In addition, KPS AG was already optimally positioned to implement the social distancing regulations well before the corona crisis. Remote workstations via VPN are being used more and more and, even before the crisis, remote solutions were already being used extensively for the rollout of digitalisation solutions.

The pausing of the transformation projects is reflected in the segment report. At EUR 84.95 million (previous year: EUR 85.08 million), the Transformation Consulting segment remained at the level of the previous year. The growth driver was thus the Products/Licenses segment, which was very dynamic with growth of 27.8% to EUR 8.55 million (previous year: EUR 5.55 million).

At EUR 13.05 million (previous year: EUR 13.23 million), EBITDA for the first half of 2019/20 was almost at the same level as in the previous year. Due to the first-time application of IFRS 16, there was a cash-neutral positive earnings effect of EUR 2.5 million. In addition, higher earn-out provisions of EUR 1.1 million (previous year: EUR 0.7 million) were formed due to the better than expected development of the Spanish subsidiary ICE Consultants Europe S.L. As a result of the corona crisis, general value adjustments of EUR 0.8 million were recorded, which also had an effect on earnings. Adjusted for the above-mentioned effects, EBITDA amounted to EUR 12.5 million (previous year: EUR 13.9 million) and was thus 10.1% below the adjusted figure for the previous year.

On the cost side, the cost of materials rose in particular due to the acquisition of software for a customer project, increasing by 8.1% to EUR 34.84 million (previous year: EUR 32.24 million). This led to an increase in the cost of materials ratio from 35.3% to 37.0%. Pure external services remained almost constant at around EUR 31 million. At EUR 33.87 million (previous year: EUR 33.76 million), personnel expenses also remained at the previous year's level.

Thus, despite the corona crisis, a stable revenue and earnings performance was reported for the first half of 2019/20.

On April 27, 2020, the company published that the guidance for the current fiscal year 2019/20 will be withdrawn. Previously, the guidance had provided for revenues in the amount of EUR 181-191 million and EBITDA of EUR 28-36 million. On the one hand, despite the corona crisis, additional projects and customers were won, but on the other hand, some projects were paused and the further development of new and existing customers can no longer be planned by the management. Against the background of the current development and the presumably longer sales cycles, combined with pauses in existing projects, we expect a slight decline in sales and earnings. The guidance issued leaves a lot of room for interpretation, but we nevertheless assume that the majority of existing projects will be continued and that there will only be a slight decline in sales in the current 2019/20 financial year. We expect sales revenues to decline by 3.9% to EUR 173.60 million (previous year: EUR 180.66 million) in the current financial year 2019/20 and to increase again by 4.0% to EUR 180.54 million in the financial year 2020/21.

Against the background of higher expenses for sales offensives in combination with ongoing projects, there should only be a slight decline in sales. We assume that the corona crisis will also be used to some extent as a driver for digitization campaigns, as home office solutions have been used more frequently and online retailing has also benefited from this development. KPS should benefit from this in the medium term as a pan-European provider for transformation projects.

With the withdrawal of the guidance, we expect a significant decline in earnings to reflect a conservative scenario. On the one hand, the management does not expect any further earn-out burdens; on the other hand, increased use could be made of sales initiatives to represent medium-term sales growth.

Due to the short-term burdens from the corona crisis, we are forecasting a decline in EBITDA to EUR 15.50 million for the current 2019/20 financial year (previous year: EUR 22.55 million), and to EUR 15.12 million for the 2020/21 financial year.

Against the background of the reduced forecast, we are lowering our price target to EUR 12.00 (previously: EUR 13.20) and continue to assign a Buy rating due to the still very high upside potential of 98.7%.

Die vollständige Analyse können Sie hier downloaden: http://www.more-ir.de/d/21149.pdf

Kontakt für Rückfragen Jörg Grunwald Vorstand GBC AG Halderstraße 27 86150 Augsburg 0821 / 241133 0 research@gbc-ag.de ++++++++++++++++

Offenlegung möglicher Interessenskonflikte nach § 85 WpHG und Art. 20 MAR Beim oben analysierten Unternehmen ist folgender möglicher Interessenkonflikt gegeben: (5a,7,11); Einen Katalog mölicher Interessenkonflikte finden Sie unter:

http://www.gbc-ag.de/de/Offenlegung.htm +++++++++++++++

Date and time of completion of the study: 29.06.2019 (11:00) - German Version: 24.06.2020 (17:00)

Date and time of first transmission: 30.06.2019 (09:30) - German Version: 25.06.2020 (09:30)

Validity of the price target: until max. 31.12.2021

übermittelt durch die EQS Group AG.

Für den Inhalt der Mitteilung bzw. Research ist alleine der Herausgeber bzw. Ersteller der Studie verantwortlich. Diese Meldung ist keine Anlageberatung oder Aufforderung zum Abschluss bestimmter Börsengeschäfte.


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