CANCOM SE — Investor Presentation 2011

Aug 12, 2011

CANCOM AG Germany - IT Services

Buy (old: Buy)				12-August-11
	Price target: EUR 16.00	(old: EUR 16.00)	Tim Wunderlich Analyst
Price:	EUR 7.45	Next result:	Q3 2011: 10.11.11
Bloomberg:	COK GR	Market cap:	EUR 99.5 m	tim.wunderlich@ha-research.de
Reuters:	COKG.DE	Enterprise Value:	EUR 88.3 m	Tel.: +49 40 4143885 81

Release of strong final Q2 results

• Topic: CANCOM reported final Q2 '11 figures yesterday afternoon. No conference call scheduled. Preliminary results for sales, EBITDA and EBIT have already been released on July 29.

EUR	Q2 11	Q2 10	yoy	Q1 11	qoq	H1 11	H1 10	yoy
Sales	126.9	106.5	19%	124.6	2%	251.5	204.4	23%
EBITDA	6.1	2.8	118%	4.7	31%	10.8	5.9	83%
EBITDA margin	4.8%	2.6%	+ 2.2 pp	3.8%	+ 1.1 pp	4.3%	2.9%	+ 1.4 pp
EBIT	4.5	1.8	150%	3.1	45%	7.6	4.1	88%
EBIT margin	3.6%	1.7%	+ 1.9 pp	2.5%	+ 1.1 pp	3.0%	2.0%	+ 1.0 pp
Net profit	2.7	0.7	293%	1.7	61%	4.4	2.1	112%
Net margin	2.1%	0.6%	+ 1.5 pp	1.4%	+ 0.8 pp	1.7%	1.0%	+ 0.7 pp
EPS	0.26	0.07	290%	0.16	61%	0.42	0.20	111%

Source: Company data, Hauck & Aufhäuser.

• Figures: Q2 was a strong quarter with sales growing 19% y-o-y to € 127m carried by healthy IT demand from SMBs in Germany. In our view, organic growth should have been c. 14-15pp and external growth related to Plaut Managed Services c. 4-5pp. EBITDA rose almost 120% y-o-y to € 6.1m, equalling a 4.8% EBITDA margin (Q2 '10: 2.6%) due to scale on admin, marketing and logistics reflected in lower personnel (- 1.5pp y-o-y) and other operating expenses (-0.8pp y-o-y).
• Outlook: CANCOM did not issue a guidance on the FY '11, merely expecting "sales and earnings growth y-o-y". While growth rates should normalise in H2 given a tougher base, H&A FY '11 estimates currently imply no more than 3% y-o-y sales growth and 8% y-o-y EBITDA growth for H2 '11. Hence, despite a possible soft patch in global economic growth, risks to our estimates are seen to lie rather on the upside than on the downside especially against the backdrop of CANCOM's excellent progress in higher-margin services such as Cloud Computing.
• News flow should be driven by at least one acquisition prior to year end. In our view, CANCOM has the financial clout to snap up a target with annual sales of up to € 100m which would supply significant synergies in procurement, admin and logistics.
• Valuation remains very attractive: the stock trades at merely 3.5x EBITDA '11E and at a 40% discount to Bechtle on EV/EBITDA '11E. Remains a BUY with a PT of € 16.00 based on DCF.

Y/E 31.12 (EUR m)	2007	2008	2009	2010	2011E	2012E	2013E
Sales	300.1	364.1	422.5	549.3	530.1	564.0	589.4
Sales growth	13 %	21 %	16 %	30 %	-3 %	6 %	5 %
EBITDA	8.0	8.8	10.4	19.2	25.0	27.7	29.0
EBIT	6.2	5.4	7.0	13.7	19.0	21.2	22.4
Net income	4.7	2.7	5.1	7.9	11.4	13.0	14.1
Net debt	6.2	3.9	-3.5	-1.5	-11.3	-22.4	-34.4
Net gearing	17.2 %	9.9 %	-8.0 %	-3.0 %	-18.8 %	-31.6 %	-41.7 %
Net Debt/EBITDA	0.8	0.4	0.0	0.0	0.0	0.0	0.0
EPS fully diluted	0.45	0.36	0.49	0.87	1.10	1.25	1.35
CPS	0.40	1.03	0.71	1.24	0.90	1.35	1.44
DPS	0.00	0.00	0.15	0.15	0.22	0.25	0.27
Dividend yield	0.0 %	0.0 %	1.5 %	1.5 %	2.3 %	2.6 %	2.8 %
Gross profit margin	28.8 %	29.1 %	27.5 %	27.6 %	29.1 %	29.4 %	29.5 %
EBITDA margin	2.7 %	2.4 %	2.5 %	3.5 %	4.7 %	4.9 %	4.9 %
EBIT margin	2.1 %	1.5 %	1.6 %	2.5 %	3.6 %	3.8 %	3.8 %
ROCE	10.6 %	8.5 %	10.3 %	17.7 %	21.2 %	21.2 %	20.2 %
EV/sales	0.4	0.3	0.2	0.2	0.2	0.1	0.1
EV/EBITDA	13.4	12.0	9.3	5.1	3.5	2.8	2.2
EV/EBIT	17.4	19.5	13.9	7.2	4.6	3.6	2.9
PER	20.8	36.6	19.9	12.8	8.8	7.7	7.2
Adjusted FCF yield	5.3 %	5.0 %	6.6 %	11.7 %	18.0 %	23.1 %	28.8 %

Source: Company data, Hauck & Aufhäuser Close price as of: 11.08.2011

Source: Company data, Hauck & Aufhäuser

High/low 52 weeks:	11.40 / 6.74
Price/Book Ratio:	1.3
Relative performance (TecDAX):
3 months	-2.3 %
6 months	-9.3 %
12 months	9.9 %

Changes in estimates

		Sales	EBIT	EPS
2011	old:	530.1	19.0	1.10
	∆	-	-	-
	old:	564.0	21.2	1.25
2012	∆	-	-	-
2013	old:	589.4	22.4	1.35
	∆	-	-	-

Key share data:

Number of shares: (in m pcs)	10.4
Authorised capital: (in € m)	4.0
Book value per share: (in €)	5.8
Ø trading volume: (12 months)	60,000

Major shareholders:

Free Float	85.2 %
JP Morgan	4.9 %
AGI	3.0 %
Stefan Kober	2.5 %
Raymond Kober	2.5 %
Klaus Weinmann	1.9 %

Company description:

CANCOM is Germany's 3rd largest independent system house operating a scalable eCommerce business.