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CANCOM SE — Earnings Release 2013
Mar 19, 2014
71_rns_2014-03-19_411aa6f6-c3af-49cc-8582-f7306679d83d.pdf
Earnings Release
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CANCOM
(TecDAX, Software/IT)
| Buy | Last Rating | Share data: Bloomberg: |
COK GR | FY End: 31.12. in EUR m |
CAGR (12-15e) |
2012 | 2013e | 2014e | 2015e |
|---|---|---|---|---|---|---|---|---|---|
| EUR 42.00 | Last PT | Reuters: ISIN: |
COKG DE0005419105 |
Sales EBIT Net income |
12.5 % 30.6 % 39.5 % |
558.1 20.7 11.5 |
613.4 24.4 16.4 |
760.7 32.5 21.7 |
795.0 46.0 31.1 |
| Market Snapshot: Market cap: |
EUR m 534.9 |
EPS DPS |
25.0 % 0.0 % |
1.09 0.35 |
1.39 0.35 |
1.48 0.35 |
2.13 0.35 |
||
| Price | EUR 36.60 | No. of shares (m): | 14.6 | EV / Sales EV / EBIT |
0.2 x 4.7 x |
0.7 x 18.2 x |
0.6 x 14.7 x |
0.6 x 9.7 x |
|
| Upside | 14.8 % | EV: Freefloat MC: Ø Trad. Vol. (30d; EUR): |
478.2 513.5 4.22 m |
P / E | 11.0 x | 26.3 x | 24.7 x | 17.2 x |
Final figures confirm preliminaries; Acquisition of DIDAS
CANCOM has released final figures confirming preliminary published sales and EBITDA figures.
| CANCOM - Q4 2013 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Figures in EUR m | Q4/13 | Q4/13e | Q4/12 | yoy | 2013 | 2013e | 2012 | yoy |
| Sales | 196.3 | 195.9 | 151.3 | 29.8% | 613.8 | 613.4 | 558.1 | 10.0% |
| Gross profit margin |
52.9 27.0% |
56.6 28.9% |
42.9 28.3% |
23.5% | 186.5 30.4% |
190.2 31.0% |
165.5 29.7% |
12.7% |
| EBITDA margin |
10.6 5.4% |
10.5 5.4% |
7.8 5.2% |
35.1% | 33.4 5.4% |
33.3 5.4% |
28.1 5.0% |
19.0% |
| EPS in EUR | 0.27 | 0.39 | 0.32 | -15.6% | 1.23 | 1.39 | 1.09 | 12.8% |
Sources: CANCOM (historical data), Warburg Research (estimates)
- 2013 organic growth was 6.7%. The increasing service business had a positive impact on the gross margin which rose by 0.6 percentage points to 30.4%. The improvement in the EBITDA margin also reflects a higher share of cloud service revenues.
- EPS fell short of our expectations as depreciation and amortisation from recent acquisitions had a stronger than anticipated negative impact on the bottom line.
- By the end of 2013, cash equivalents amounted to EUR 77.7m
- As a result of the strong EBITDA growth in 2013, the dividend proposal will be raised to EUR 0.40 per share (from EUR 0.35 last year). This increase underpins the continuation of a strong operative development: January and February were above previous year's level.
- Along with the figures, CANCOM announced the planned acquisition of DIDAS. The services company which also addresses the cloud business will be purchased from the listed peer Allgeier. In 2013, DIDAS generated revenues of EUR 56m and an EBITDA of EUR 1.8m. According to an Allgeier release, the price is in line with current market multiples. We assume that with this acquisition CANCOM aims to gain access to potential AHP Private Cloud customers that come with EBITDA margins of c. 40%.
- Given the recent acquisitions, most recently DIDAS Business Services GmbH, as announced yesterday, management expects "gross profit and EBITDA for the Group to increase substantially" in 2014.
- A web conference is scheduled for 3 p.m. CET. Comment will follow
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DISCLOSURE ACCORDING TO §34B (1) OF THE GERMAN SECURITIES TRADING ACT (WHPG) AND THE ORDINANCE ON THE ANALYSIS OF FINANCIAL INSTRUMENTS (FINANV)
The valuation underlying the investment recommendation for the company analysed here is based on generally accepted and widely used methods of fundamental analysis, such as e.g. DCF Model, Free Cash Flow Potential, Peer Group Comparison or Sum of the Parts Model. The result of this fundamental valuation is modified to take into consideration the analyst's assessment as regards the expected development of investor sentiment and its impact on the share price.
Independent of the applied valuation methods, there is the risk that the price target will not be met, for instance because of unforeseen changes in demand for the company's products, changes in management, technology, economic development, interest rate development, operating and/or material costs, competitive pressure, supervisory law, exchange rate, tax rate etc. For investments in foreign markets and instruments there are further risks, generally based on exchange rate changes or changes in political and social conditions.
This commentary reflects the opinion of the relevant author at the point in time of its compilation. A change in the fundamental factors underlying the valuation can mean that the valuation is subsequently no longer accurate. Whether, or in what time frame, an update of this commentary follows is not determined in advance.
In accordance with § 5 (4) of the Ordinance on the Analysis of Financial Instruments (FinAnV) Warburg Research GmbH has implemented additional internal and organisational arrangements to prevent or to deal with conflicts of interest. Among these are the spatial separation of Warburg Research GmbH from M.M.Warburg & CO KGaA and the creation of areas of confidentiality. This prevents the exchange of information, which could form the basis of conflicts of interest for Warburg Research in terms of the analysed issuers or their financial instruments.
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All prices of financial instruments given in this financial analysis are the closing prices on the last stock-market trading day before the publication date stated, unless another point in time is explicitly stated.
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SOURCES
All data and consensus estimates have been obtained from FactSet except where stated otherwise.
Section 34b of the German Securities Trading Act in combination with the FinAnV requires an enterprise preparing a securities analysis to point out possible conflicts of interest with respect to the company that is the subject of the analysis. A conflict of interest is assumed, in particular, when the enterprise preparing the analysis …
| -1- | … or companies affiliated with this enterprise holds 5% or more of the share capital of the analysed company |
|---|---|
| -2- | … or companies affiliated with this enterprise were involved in the management of a consortium for a public offering of securities which are or whose issuer is the subject of this report within the last twelve months |
| -3- | … or companies affiliated with this enterprise manages the securities of the analysed company on the basis of an existing contract |
| -4- | … or companies affiliated with this enterprise over the previous 12 months has been providing investment banking services for the analysed company for which a compensation has been or will be paid. Warburg Research GmbH receives indirect remuneration from the investment banking activities of M.M.Warburg & CO KGaA. |
| -5- | … effected an agreement with the analysed company for the preparation of the financial analysis |
| -6- | … or companies affiliated with this enterprise regularly trade in shares or derivatives of the analysed company |
| -7- | … or the analyst responsible for this company has other important financial interests in relation to the analysed company such as e.g. the performance of mandates for the analysed company |
| Company | Disclosure | Link to the historical price targets and rating changes (last 12 months) |
|---|---|---|
| CANCOM | 5, 6 | http://www.mmwarburg.com/disclaimer/disclaimer_en/DE0005419105.htm |
INVESTMENT RECOMMENDATION
Investment recommendation: expected direction of the share price development of the financial instrument up to the given price target in the opinion of the analyst who covers this financial instrument.
| -B- | Buy: | The price of the analysed financial instrument is expected to rise over the next 12 months. | |
|---|---|---|---|
| -H- | Hold: | The price of the analysed financial instrument is expected to remain mostly flat over the next 12 months. |
|
| -S- | Sell: | The price of the analysed financial instrument is expected to fall over the next 12 months. | |
| "-" | Rating suspended: | The available information currently does not permit an evaluation of the company. |
WARBURG RESEARCH GMBH – RESEARCH UNIVERSE BY RATING
| Rating | Number of stocks | % of Universe |
|---|---|---|
| Buy | 91 | 46 |
| Hold | 90 | 45 |
| Sell | 16 | 8 |
| Rating suspended | 3 | 2 |
| Total | 200 | 100 |
WARBURG RESEARCH GMBH – ANALYSED RESEARCH UNIVERSE BY RATING …
… Looking only at companies for which a disclosure according to § 34b of the Germany Securities Trading Act and the FinAnV has to be made.
| Rating | Number of stocks | % of Universe |
|---|---|---|
| Buy | 74 | 50 |
| Hold | 64 | 44 |
| Sell | 7 | 5 |
| Rating suspended | 2 | 1 |
| Total | 147 | 100 |
PRICE AND RATING HISTORY CANCOM AS OF 19.03.2014
The chart has markings if Warburg Research GmbH changed its rating in the last 12 months. Every marking represents the date and closing price on the day of the rating change.
CANCOM
RESEARCH
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