Original-Research: Cenit AG (von GBC AG): BUY
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Original-Research: Cenit AG - from GBC AG
Classification of GBC AG to Cenit AG
Company Name: Cenit AG
ISIN: DE0005407100
Reason for the research: Research Report (Anno)
Recommendation: BUY
Target price: 20.55 EUR
Target price on sight of: 31.12.2024
Last rating change:
Analyst: Cosmin Filker, Marcel Goldmann
Sales and earnings in line with expectations; "CENIT 2025" confirmed and
further growth expected for 2024; Acquisitions to take place shortly
With total annual sales of EUR 184.72 million (previous year: EUR 162.15
million), CENIT AG slightly exceeded both its own guidance (approx. EUR 180
million) and our previous estimates (EUR 181.61 million). The company
benefited in particular from the high level of M&A activity in recent
financial years, which continued in the 2023 financial year with the
acquisition of three new companies. The new companies contributed EUR 7.84
million to total sales for the first time, meaning that inorganic growth
accounted for 4.8% of the total sales increase of 13.9%. However, organic
growth of 9.1% also benefited from a base effect, as ISR, which was
acquired in the 2022 financial year, was included for the full year for the
first time in 2023.
As the new companies, particularly ISR with the highest sales, generate
their sales primarily in the area of consulting and services, consulting
sales rose particularly strongly by 33.5% to EUR 74.38 million (previous
year: EUR 55.72 million). At the same time, sales of third-party software
rose by 5.2% to EUR 92.70 million (previous year: EUR 88.14 million). By
contrast, sales of own software fell slightly to EUR 16.79 million (previous
year: EUR 17.71 million), which is mainly due to the ongoing transformation
towards SaaS sales. At the end of the transformation, sales will be easier
to plan, which is already the case at CENIT AG with a recurring sales share
of 53.5%.
The strong increase in sales is also reflected in a significant improvement
in EBIT to
EUR 9.22 million (previous year: EUR 6.31 million). This would have been even
higher, but was offset by M&A-related extraordinary expenses (EUR 0.64
million) and increased PPA amortisation. In addition, personnel expenses
rose sharply as a result of acquisitions, but also due to salary increases
and inflation compensation payments. Despite the increase in EBIT, earnings
after taxes were down on the previous year at EUR 4.50 million (previous
year: EUR 6.28 million). This is primarily due to higher interest expenses.
On the one hand, outstanding bank liabilities increased significantly in
preparation for the inorganic growth. On the other hand, the financial
result included write-downs on financial instruments.
The Management Board of CENIT expects an increase in sales in the range of
EUR 195 million to EUR 202 million for the current 2024 financial year and
anticipates an improvement in the EBIT margin to 6.0% (previous year:
5.0%). At the same time, the 'CENIT 2025' plan was confirmed, according to
which an increase in total sales to EUR 300 million and an increase in the
EBIT margin to at least 8% is to be achieved by 2025. To this end, two to
three acquisitions are to be made each year. Although the company is in
advanced negotiations regarding an acquisition, we have not yet included
this in our estimates. We therefore expect sales of EUR 200.42 million and
EBIT of EUR 12.01 million for the current 2024 financial year. This growth
should be achieved solely through the full-year inclusion of the companies
acquired in 2023. We forecast sales growth of 8.0% in each of the following
years and expect a gradual increase in the EBIT margin. However, due to the
lack of inorganic growth in our planning, this is below the expectations of
'CENIT 2025'.
As part of our DCF valuation model, we have determined a target price of EUR
20.55 (previously: EUR 20.90). We continue to assign a BUY rating.
You can download the research here:
http://www.more-ir.de/d/29379.pdf
Contact for questions
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Offenlegung möglicher Interessenskonflikte nach § 85 WpHG und Art. 20 MAR Beim oben analysierten Unternehmen ist folgender möglicher Interessenkonflikt gegeben: (5a,6a,7,11); Einen Katalog möglicher Interessenkonflikte finden Sie unter:
https://www.gbc-ag.de/de/Offenlegung.htm
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Date and time of completion of the study: 10.04.2024 (3:50 pm)
Date and time of the first dissemination of the study: 11.04.2024 (9:30 am)
-------------------transmitted by EQS Group AG.-------------------
The issuer is solely responsible for the content of this research.
The result of this research does not constitute investment advice
or an invitation to conclude certain stock exchange transactions.
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