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Allgeier SE — Earnings Release 2012
Jul 6, 2012
28_rns_2012-07-06_823c1c70-097c-4289-bd42-71cb0e74f010.pdf
Earnings Release
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Allgeier Holding SE
Recommendation: BUY (BUY)
Risk: MEDIUM (MEDIUM) Price target: EUR 19.00 (19.00)
Allgeier and EASY SOFTWARE would form a very strong player in the ECM sector
- Takeover bid: Allgeier has announced the decision to make a voluntary public tender offer to the shareholders of EASY SOFTWARE AG at a price of EUR 4.00 per share in cash. Compared to the volume-weighted average Xetra price of General Standard-listed EASY SOFTWARE over the past 90 days before the announcement (EUR 3.4089/Bloomberg), this represents a premium of 17.3%. On basis of the offer price and EASY's 2012E figures (see CBSR estimates on page 2), we calculate an EV/EBITDA multiple of 3.6 and an EV/EBIT multiple of 6.5, which appears appropriate in our view. The unusually high difference between both multiples is due to EASY's high amortisations of capitalised software development costs. The offer is subject to the attainment of a 75% minimum acceptance quota. The attainment will mainly depend on the two major shareholders Manfred Wagner (~27%) and Global Derivative Trading GmbH (~25%).
- Win-win situation: With a market share of 17.9%, EASY SOFTWARE AG is clearly the leading DMS/ECM software provider in Germany (source: ama). Bundling Allgeier's product and solutions in the fields of ERP, ECM and business solutions with those of EASY SOFTWARE would create a very strong unit with great revenue and earnings potential. The ECM strategies of both companies are rather complementary. While Allgeier primarily serves bigger companies, EASY has a very broad customer base in the SME segment. EASY's partner distribution network and Allgeier's strong direct sales also complement each other well.
- New estimates: On 23 May, Allgeier had already announced the takeover of b+m Informatik AG which offers IT consulting and customised business solutions with special expertise in the financial sector and other industries. While we still do not incorporate the takeover of EASY SOFTWARE in our estimates before completion of the takeover, we do increase our sales and earnings estimates due to the b+m consolidation (about EUR 12m in annual sales) as from 1 June 2012. On basis of an unchanged price target of EUR 19.00, we maintain our BUY recommendation.
| Y/E Dec 31, EUR m | 2009 | 2010 | 2011 | 2012E | 2013E | 2014E |
|---|---|---|---|---|---|---|
| Sales | 223.5 | 308.7 | 378.8 | 446.5 | 497.4 | 537.1 |
| EBITDA | 14.4 | 18.1 | 22.3 | 28.9 | 34.3 | 36.9 |
| EBITA | 12.8 | 15.6 | 19.0 | 24.8 | 28.5 | 32.1 |
| EBIT | 8.0 | 11.0 | 12.0 | 18.5 | 22.5 | 26.6 |
| Net result | 5.2 | 8.3 | 4.4 | 10.2 | 13.1 | 15.9 |
| Basic EPS | 0.60 | 0.99 | 0.52 | 1.20 | 1.54 | 1.87 |
| Adjusted EPS | 0.98 | 1.18 | 1.27 | 1.72 | 2.03 | 2.32 |
| CPS | 1.36 | 0.85 | 2.34 | 2.07 | 2.68 | 3.03 |
| DPS | 0.50 | 0.50 | 0.50 | 0.50 | 0.50 | 0.50 |
| EBITDA margin | 6.5% | 5.9% | 5.9% | 6.5% | 6.9% | 6.9% |
| EBITA margin | 5.7% | 5.1% | 5.0% | 5.6% | 5.7% | 6.0% |
| EBIT margin | 3.6% | 3.6% | 3.2% | 4.2% | 4.5% | 4.9% |
| EV/EBITDA | 7.7 | 6.2 | 5.0 | 3.9 | 3.2 | 3.0 |
| EV/EBIT | 13.9 | 10.1 | 9.3 | 6.0 | 4.9 | 4.2 |
| P/E | 18.0 | 10.8 | 20.5 | 8.9 | 7.0 | 5.7 |
| Source: CBS Research AG, Allgeier Holding AG |
06 July 2012
Short company profile:
Allgeier Holding SE, headquartered in Munich, is one of the leading IT consultancy and service companies in the German-speaking countries. With their units IT Solutions, IT Services & Recruiting, and Project Solutions, Allgeier offers a comprehensive range of services from the initial concept through implementation to the operation of IT landscapes. Allgeier's operational subsidiaries have >2,500 employees as well as >1,400 freelance experts serving some 3,000 customers in virtually all sectors.
| Share data: | |||
|---|---|---|---|
| Share price (EUR, latest closing price): | 10.70 | ||
| Shares outstanding (m): | 8.4 | ||
| Market capitalisation (EUR m): | 89.7 | ||
| Enterprise value (EUR m): | 111.2 | ||
| Ø daily trading volume (3 m., no. of shares): | 11,102 | ||
| Performance data: | |||
| High 52 weeks (EUR): | 13.20 | ||
| Low 52 weeks (EUR): | 9.26 | ||
| Absolute performance (12 months): | -16.9% | ||
| Relative performance vs. CDAX: | |||
| 1 month | -10.7% | ||
| 3 months | -10.2% | ||
| 6 months | -7.2% | ||
| 12 months | -2.6% | ||
| Shareholders: | |||
| Supervisory Board & Management Board: | 42% | ||
| Own shares: | 7% | ||
| Institutional investors: | 9% | ||
| Other free float: | 42% | ||
| Financial calendar: | |||
| 1H report: | 1 August 2012 | ||
| 9M report: | 10 November 2012 | ||
| Author: Martin Decot (Analyst) |
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| Close Brothers Seydler Research AG | |||
| Phone: +49 (0) 69-977 84 56 0 |
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| Email: [email protected] |
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| www.cbseydlerresearch.ag |
Please notice the information on the preparation of this document, the disclaimer, the advice regarding possible conflicts of interests, and the mandatory information required by § 34b WpHG (Securities Trading Law) at the end of this document. This financial analysis in accordance with § 34b WpHG is exclusively intended for distribution to individuals that buy or sell financial instruments at their own account or at the account of others in connection with their trading activities, occupation, or employment.
Possible impact of the acquisition of EASY SOFTWARE on Allgeier Group's P&L
EASY SOFTWARE had an extraordinarily strong year 2011 in terms of the Group's operating margin. However, EBIT was affected by an impairment charge on purchased software (EUR 1.2m) and further EUR 0.3m of extraordinary expenses which accrued in the context of the dismissal of the former CEO. Regarding 2012, we assume that EASY SOFTWARE will return to a similar EBIT margin level as the company had reached in 2010 (roughly 10%), which is not very high for a software company. We assume that EASY should be able to achieve some margin improvements from a combination with Allgeier.
In order to offer a rough impression of the P&L metrics of the intended takeover, we simply added our rough FY 2012 sales and earnings estimates for EASY EBIT margin of EASY SOFTWARE still shows room for improvement
Combined pro forma sales might exceed EUR 475m in 2012E
| EURm | EASY SOFTWARE 2010A |
EASY SOFTWARE 2011A |
EASY SOFTWARE 2012E* |
Allgeier Group 2012E* |
Sum Allgeier + EASY 2012E* |
|---|---|---|---|---|---|
| Sales | 24.9 | 27.0 | 29.2 | 446.5 | 475.7 |
| Gross margin | 21.3 | 24.2 | 25.0 | 189.3 | 214.3 |
| as % of sales | 85.3% | 89.6% | 85.7% | 42.4% | 45.0% |
| EBITDA | 4.8 | 5.9 | 5.3 | 18.5 | 23.8 |
| as % of sales | 19.3% | 21.9% | 18.2% | 4.2% | 5.0% |
| EBIT | 2.5 | 2.4 | 2.9 | 28.9 | 31.8 |
| as % of sales | 10.2% | 8.8% | 10.0% | 6.5% | 6.7% |
| Adjusted EBIT** | - | 3.9 | - | - | - - |
| as % of sales | 14.3% |
P&L key data of EASY SOFTWARE and potential impact of the takeover on the P&L of Allgeier Holding SE
SOFTWARE to our FY 2012 estimates for Allgeier (see table below).
*Estimates by CBS Research AG
**EBIT adjustment: impairment charge of EUR 1.2m and further extraordinary expenses of EUR 0.3m.
Implied takeover multiples
Due to the fact that EASYS SOFTWARE always receives the cash flow from its software maintenance contracts for the full year in advance, the Group's cash position was much higher at the end of 1Q 2012 (EUR 15.4m) than at the end of 2011 (EUR 6.5m). Since only the margin on the revenues from these contracts will remain in the company, we believe that it is more appropriate to take the year-end cash position for the calculation of the enterprise value. On basis of the offer price (EUR 4.00) and EASY SOFTWARE's financial debt (EUR 2.0m) and minority interest (carrying amount of EUR 1.8m), we calculate an EV of EUR 19.0m. Using our estimates for EASY's 2012E figures, we calculate an EV/EBITDA multiple of 3.6 and an EV/EBIT multiple of 6.5, which appears appropriate in our view. The unusually high difference between both multiples is due to EASY's high amortisations of capitalised software development costs.
Offer price appears appropriate
Research
Schillerstrasse 27 - 29 60313 Frankfurt am Main
Phone: +49 (0)69 – 977 8456-0
| Roger Peeters Member of the Board |
+49 (0)69 -977 8456- 12 [email protected] |
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|---|---|---|---|
| Martin Decot | +49 (0)69 -977 8456- 13 [email protected] |
Igor Kim | +49 (0)69 -977 8456- 15 [email protected] |
| Anna von Klopmann | +49 (0)69 -977 8456- 10 [email protected] |
Gennadij Kremer | +49 (0)69 – 977 8456- 23 [email protected] |
| Daniel Kukalj | +49 (0)69 – 977 8456- 21 [email protected] |
Ralf Marinoni | +49 (0)69 -977 8456- 17 [email protected] |
| Manuel Martin | +49 (0)69 -977 8456- 16 [email protected] |
Felix Parmantier | +49 (0)69 -977 8456- 22 [email protected] |
| Marcus Silbe | +49 (0)69 -977 8456- 14 [email protected] |
Veysel Taze | +49 (0)69 -977 8456- 18 [email protected] |
| Ivo Višić | +49 (0)69 -977 8456- 19 [email protected] |
Institutional Sales
Schillerstrasse 27 – 29 60313 Frankfurt am Main
Phone: +49 (0)69 – 9 20 54-400
| Raimar Bock Head of Sales |
+49 (0)69 -9 20 54-115 [email protected] |
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|---|---|---|---|
| Rüdiger Eich | +49 (0)69 -9 20 54-119 | Sule Erkan | +49 (0)69 -9 20 54-107 |
| (Germany, Switzerland) | [email protected] | (Sales-Support) | [email protected] |
| Dr. James Jackson | +49 (0)69 -9 20 54-113 | Klaus Korzilius | +49 (0)69 -9 20 54-114 |
| (UK) | [email protected] | (Benelux, Germany) | [email protected] |
| Stefan Krewinkel | +49 (0)69 -9 20 54-118 | Markus Laifle | +49 (0)69 -9 20 54-120 |
| (Execution, UK) | [email protected] | (Execution) | [email protected] |
| Michael Laufenberg | +49 (0)69 -9 20 54-112 | Bruno de Lencquesaing | +49 (0)69 -9 20 54-116 |
| (Germany) | [email protected] | (Benelux, France) | [email protected] |
| Christopher Seedorf | +49 (0)69 -9 20 54-110 | Janine Theobald | +49 (0)69 -9 20 54-106 |
| (Sales-Support) | [email protected] | (Austria, Germany) | [email protected] |
| Bas-Jan Walhof (Benelux) |
+49 (0)69 -9 20 54-105 [email protected] |
Disclaimer and statement according to § 34b German Securities Trading Act ("Wertpapierhandelsgesetz") in combination with the provisions on financial analysis ("Finanzanalyseverordnung" FinAnV)
This report has been prepared independently of the company analysed by Close Brothers Seydler Research AG and/ or its cooperation partners and the analyst(s) mentioned on the front page (hereafter all are jointly and/or individually called the 'author'). None of Close Brothers Seydler Research AG, Close Brothers Seydler Bank AG or its cooperation partners, the Company or its shareholders has independently verified any of the information given in this document.
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Close Brothers Seydler Research AG is a majority owned subsidiary of Close Brothers Seydler Bank AG (hereafter ´CBS´). However, Close Brothers Seydler Research AG (hereafter ´CBSR´) provides its research work independent from CBS. CBS is offering a wide range of Services not only including investment banking services and liquidity providing services (designated sponsoring). CBS or CBSR may possess relations to the covered companies as follows (additional information and disclosures will be made available upon request):
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In this report, the following conflicts of interests are given at the time, when the report has been published: d, f
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Recommendation System:
Close Brothers Seydler Research AG uses a 3-level absolute share rating system. The ratings pertain to a time horizon of up to 12 months:
BUY: The expected performance of the share price is above +10%. HOLD: The expected performance of the share price is between 0% and +10%. SELL: The expected performance of the share price is below 0%.
Recommendation history over the last 12 months for the company analysed in this report:
| Date | Recommendation | Price at change date | Price target |
|---|---|---|---|
| 13 March 2012 | BUY (Initiating Coverage) | EUR 11.80 | EUR 19.00 |
| 20 April 2012 | BUY | EUR 11.75 | EUR 19.00 |
| 10 May 2012 | BUY | EUR 11.60 | EUR 19.00 |
| 6 July 2012 | BUY | EUR 10.70 | EUR 19.00 |
Risk-scaling System:
Close Brothers Seydler Research AG uses a 3-level risk-scaling system. The ratings pertain to a time horizon of up to 12 months:
LOW: The volatility is expected to be lower than the volatility of the benchmark MEDIUM: The volatility is expected to be equal to the volatility of the benchmark HIGH: The volatility is expected to be higher than the volatility of the benchmark
The following valuation methods are used when valuing companies: Multiplier models (price/earnings, price/cash flow, price/book value, EV/Sales, EV/EBIT, EV/EBITA, EV/EBITDA), peer group comparisons, historical valuation approaches, discounting models (DCF, DDM), break-up value approaches or asset valuation approaches. The valuation models are dependent upon macroeconomic measures such as interest, currencies, raw materials and assumptions concerning the economy. In addition, market moods influence the valuation of companies. The figures taken from the income statement, the cash flow statement and the balance sheet upon which the evaluation of companies is based are estimates referring to given dates and therefore subject to risks. These may change at any time without prior notice.
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