01.04.2020 KPS AG DE000A1A6V48
Original-Research: KPS AG (von GBC AG): Buy
Original-Research: KPS AG - von GBC AG
Einstufung von GBC AG zu KPS AG
Unternehmen: KPS AG
Anlass der Studie: Research Report (Anno)
Internationalization is successfully continued. Margins slightly under pressure due to earn-outs.
In the past financial year 2018/19, revenues increased by 4.9% to EUR 180.66 million (previous year: EUR 172.22 million). While revenues with the largest customer declined, this effect was more than offset by new business with existing and new customers. In particular, the acquisitions made proved to be very successful and the share of sales outside Germany rose by 79.5% from EUR 42.9 million to EUR 77.0 million. This reflects the good implementation of the internationalization strategy.
At the same time, a disproportionately high improvement in earnings was achieved and EBITDA rose by 12.6% to EUR 22.55 million (previous year: EUR 20.02 million). The very good operating development of the acquisitions made had a profit-minimizing effect due to agreed earn-out payments. A further EUR 4.8 million in earn-outs were paid out. Adjusted for this effect, EBITDA amounted to EUR 27.31 million, which corresponds to an EBITDA margin of 15.1%. Thus, the high margins of the past would almost be reached again.
In terms of the balance sheet, the company is still in an excellent position with an equity ratio of 45.2% (30.09.2018: 46.5%) and net debt of EUR 7.72 million (30.09.2018: EUR 12.12 million).
The first quarter of 2019/20 developed in line with the guidance and KPS is showing a stable development. Revenues increased by 0.7% to EUR 44.7 million (previous year: EUR 44.4 million) and EBITDA fell by 10.4% to EUR 5.9 million (previous year: EUR 6.6 million), which corresponds to a reduction in the EBITDA margin from 14.9% (Q1 18/19) to 13.2% (Q1 19/20). This development is mainly due to the earn-out payments to ICE Consultants.
In the medium term, the three-pillar strategy should take effect and solid sales growth should be achieved. This includes internationalization, innovation and industrialization. Currently, there are still declining sales with the largest customer, which limits sales growth. The guidance therefore envisages conservative sales growth of 0.2% - 5.7% (EUR 181 - 191 million). The guidance includes the expectation that new projects can be acquired in addition to the existing projects. In the context of the corona crisis, we consider the acquisition of new projects to be difficult and have issued a conservative forecast. However, the forecasts are subject to a high degree of uncertainty due to the corona virus. We expect sales to increase to EUR 181.84 million in the current financial year 2019/20, and sales of EUR 190.93 million in the financial year 2020/21. We also expect a slight improvement in margins, especially through the industrialisation of the consulting approach, the focus on employee acquisition in countries with lower wage levels and the increased use of our own employees instead of freelancers. The earnings guidance is for EBITDA between EUR 28 to 36 million, but the first-time application of lease accounting in accordance with IFRS 16 should result in a cash-neutral positive earnings effect of EUR 3.80 million. Adjusted for the IFRS 16 effect, the guidance is EUR 24.20 to 32.20 million. We expect a slight improvement in earnings and anticipate EBITDA of EUR 24.02 million in the current financial year 2019/20 and EUR 25.51 million in the financial year 2020/21.
Based on our DCF model, we have reduced our price target to EUR 13.00 (previously: EUR 13.20) and assign a Buy rating.
Die vollständige Analyse können Sie hier downloaden: http://www.more-ir.de/d/20409.pdf
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