Original-Research: KPS AG - von GBC AG

Einstufung von GBC AG zu KPS AG

Unternehmen: KPS AG
ISIN: DE000A1A6V48

Anlass der Studie: Research Report (Update)
Empfehlung: Buy
Kursziel: 12.50 EUR
Letzte Ratingänderung:
Analyst: Matthias Greiffenberger, Cosmin Filker

Acquisition costs put a strain on the current financial year; Long-term
forecast remains positive; Target price: EUR 12.50; Rating: Buy

In the first half of 17/18, the company's revenue increased by 6.7% to EUR
88.37 million (previous year: EUR 82.83 million). One reason for the
increase in revenue was an extensive software deal with a sales volume of
between EUR 7 and 8 million. In addition, the acquisitions of ICE
Consultants Europe, Infront Consulting & Management and Envoy Digital made
a valuable revenue contribution of EUR 7.17 million. Overall, the company
continues to benefit from the megatrend of digitisation and has clear
competitive edges with the pronounced industry focus on trade and
logistics, as well as with the rapid transformation method.

In the first half of 2017/18 the company's EBIT were EUR 7.51 million
(previous year: EUR 12.49 million). This resulted in an adjustment of the
EBIT-guidance for the full year, which was originally between EUR 23 and 26
million, and being adjusted to between EUR 16 and 20 million. This
development occurred from project start-up costs and higher depreciations
due to acquisitions. As part of the purchase price allocation of ICE
Consultants Europe, Infront Consulting & Management, and Envoy Digital,
intangible assets were recognised on the balance sheet. The intangible
assets relate primarily to customer relationships and orders on hand. This
resulted in higher M&A-related depreciations of EUR 1.45 million. Personnel
expenses also increased by 19.7% to EUR 30.85 million (previous year: EUR
25.77 million). In our opinion, the build-up of an extensive workforce is
extremely positive, since operating growth in the area of transformation
consultancy is only possible through staff. For example, the company can
gradually replace freelancers with in-house staff and potentially make cost
savings. In addition, the company has gained good access to the Spanish
labour market with the ICE acquisition. Wages are lower in Spain than in
Germany, which is expected to lead to a long-term margin improvement for

Against the backdrop of the semi-annual figures, we adjusted our sales
forecast to EUR 170.00 million for FY 2017/18 and to EUR 185.08 million for
FY 2018/19. Historically, the company has been able to achieve double-digit
growth levels and has generally exceeded the guidance. The company remains
in an attractive growth market with the megatrend of digitisation, and,
with the industry focus on trade and logistics as well as the rapid
transformation method, it should possess valuable competitive edges. At the
same time, the company is pressing ahead with the geographical expansion in
Europe and the USA. We assume that the company will return to historical
growth levels in the medium to long term.

With the adjustment of the EBIT guidance, we have adjusted our EBIT
forecast to EUR 16.26 million for FY 17/18 and EUR 26.29 million for FY
18/19. In the short term, we are expecting the PPA depreciations and the
higher project start-up costs to place a burden on earnings. In the medium
to long term, the historical EBIT margins of over 15% are expected to be
reached. We assume that with the switch from freelancers to in-house
employees, earnings improvements should be possible, and the
industrialisation of the consulting approach should help in this respect.

On the basis of our DCF model, we have calculated a fair value of EUR 12.50
per share (previously: EUR 16.60). The target price adjustment is based on
the adjusted forecasts for the next two years and an increase in the beta
factor. Due to the comparatively high dependence on major customers, we are
now assuming higher cost of equity. Nevertheless, we retain our long-term
revenue and margin estimates and assume that KPS is well positioned in
terms of operations.

Die vollständige Analyse können Sie hier downloaden:

Kontakt für Rückfragen
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86150 Augsburg
0821 / 241133 0
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