CANCOM SE — Earnings Release 2010

Apr 22, 2010

INSTITUTIONAL EQUITY RESEARCH COMPANY ALERT

COMPANY Company Alert CANCOM IT Systeme

Results Initial View: Preliminaries beat expectations

HIGHLIGHTS

• ß Sales growth pushed by acquisitions
• ß Profitability increased strongly
• ß EPS guidance again increased
• ß Valuation still very low compared with closest competitor

Cancom announced impressive key figures for the first quarter of the current year. Sales increased by 9% to EUR 115m, whereas the main part is due to consolidation effects. Organic growth should be approx. 3%. However, earnings increased significantly due to top line growth in combination with a lower increase of the cost base. With an EBITDA of EUR 3m Cancom pushed operating earnings by 76.5% compared to Q1/09. We were already optimistic but the announced figures even exceeded our forecast (see table below). Additionally, the management increased the guidance. EPS 2010 is expected to reach 0.60 EUR (old: > 0.50 EUR, LBBWe 0.53 EUR) and EPS 2011e 0.70 EUR (old: > 0.60 EUR, LBBWe: 0.64 EUR). We will update our already optimistic estimates when the full Q1 report will be released.

If we compare the key figures of Cancom with the preliminary Q1 figures of Bechtle then Cancom shows clearly a stronger growth. The same is true for the full year estimates. Taking this into account we believe that a PER of under 10 (2010e) for the Cancom share is by far too low compared with the Bechtle PER of 13.8 (2010e, with old EPS forecast). We do not rule out that Cancom should be traded with a discount compared to Bechtle due to the lower profitability and the weaker balance sheet structure, but a discount of close to 30% is unjustifiable in our view. Therefore, we stick to our buy recommendation.

in EUR m	Q1/2010	LBBW E	Consensus
Sales	115.0	117.00	n.a.
EBIT	2.2	1.26	n.a.
Net profit	n.a.	0.71	n.a.
EPS (in EUR)	n.a.	0.07	n.a.
Source: CANCOM IT Systeme, LBBW Research

CLOSING PRICE (2010-04-21): 5.40 EUR
EXPECTED PERFORMANCE: 24.1%
MARKET CAPITALIZATION: 56.11 EUR m
ENTERPRISE VALUE: 52.78 EUR m
NUMBER OF SHARES: 10.39 m
FREE FLOAT: 78.0 %
INDEX (WEIGHT): Tech All Share (0.17 %)
AVG. DAILY TRADEVOL.: 98,489
ISIN: DE0005419105
SECTOR: IT Services
KEY DATA (DEC)	2009	2010E	2011E
Sales (EUR m)	422.5	495.0	519.8
EBITDA (EUR m)	10.4	12.7	14.5
EBIT (EUR m)	7.0	8.9	10.5
Net profit (EUR m)	5.1	5.5	6.7
FCF (EUR m)	3.2	3.1	3.6
FCF yield	7.9 %	5.5 %	6.5 %
EPS (EUR)	0.49	0.53	0.64
DPS (EUR)	0.15	0.25	0.30
EV / Sales (x)	0.1	0.1	0.1
EV / EBITDA (x)	3.6	4.2	3.6
EV / EBIT (x)	5.3	5.9	5.0
P / E (x)	8.0	10.1	8.4
P / BV (x)	0.92	1.17	1.08
Dividend yield	3.8 %	4.6 %	5.6 %

+++ Reuters: COKG +++ Bloomberg: COK GY ++ + Current Price (XETRA (Germany); 2010-04-22; 01:10 pm)......5.68 EUR

PRICE PERFORMANCE

Source: CANCOM IT Systeme, LBBW Research, Thomson Reuters

+49 711 127-42775 Thomas.Hofmann@LBBW.de

INSTITUTIONAL EQUITY RESEARCH COMPANY ALERT

Appendix-1 1/2

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LBBW Research Rating-Systematics (absolute share rating system)

Rating definitions:			Percentage of companies within this rating category
Buy:	Based on a time horizon of up to 12 months, we recommend that investors	Buy:	49,2%
	buy the stock.
Sell:	Based on a time horizon of up to 12 months, we recommend that investors	Sell:	12,6%
	sell the stock.
Hold:	We take a neutral view on the stock and, based on a time horizon of up to	Hold:	35,7%
	12 months, do not recommend either a Buy or Sell.
Under review:	The rating is currently updated.	Under review:	1,7%
Suspended:	The evaluation of the company is currently not feasible.	Suspended:	0,8%

Notes: Rating definitions prior to 6th April, 2009 were:

Buy: The price potential of the share is at least 10%. Hold: The price potential of the share is between 0% and 10%. Sell: A negative price performance of the share is expected. Ratings relate to a time horizon of up to 6 months.

For disclosures pertaining to recommendations or estimates made on securities research, please see the most recently published company report or visit our website at http://www.lbbw.com/disclosures

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	Am Hauptbahnhof 2
70173 Stuttgart
Phone	+49 711 127-25200
Fax	+49 711 127-25299

London Branch 201 Bishopsgate GB-London EC2M 3UN Phone +44 20 7826-8158 Fax +44 20 7826-8095

EQUITY SALES	Stuttgart/Mainz