CREALOGIX Group — Growth drivers remain in place

CREALOGIX (SW: CLXN)

Last close As at 27/03/2024

124.50

0.00 (0.00%)

Market capitalisation

174m

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Research: TMT

CREALOGIX Group — Growth drivers remain in place

H1 organic revenue growth was 8% and management expects growth to accelerate in H2. Hence, the group remains on target for 10% organic growth in FY18. In January CREALOGIX announced that it was acquiring Innofis, a Barcelona-based digital banking peer, to expand its core digital banking business into the lucrative Middle Eastern markets. As well as expanding the group’s geographical coverage, the acquisition broadens its product offering and creates an opportunity to grow the employee base in a significantly lower-cost market. We will review our forecasts after a prospectus is published for the Innofis acquisition later this month.

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TMT

CREALOGIX Group

Growth drivers remain in place

Interim results

Software & comp services

26 March 2018

Price

CHF173

Market cap

CHF206m

Net cash (CHFm) at 31 December 2017

15.4

Shares in issue

1.19m

Free float

32%

Code

CLXN

Primary exchange

Switzerland

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(1.7)

28.6

63.2

Rel (local)

3.5

30.9

53.8

52-week high/low

CHF100.0

CHF81.0

Business description

CREALOGIX Group provides digital banking technology solutions to banks, wealth managers and other financial services companies. The company’s suite of solutions includes online and mobile banking, digital payments, digital learning and security.

Next events

Prospectus

Late March 2018

Final results

September 2018

Analysts

Richard Jeans

+44 (0)20 3077 5700

Katherine Thompson

+44 (0)20 3077 5730

CREALOGIX Group is a research client of Edison Investment Research Limited

H1 organic revenue growth was 8% and management expects growth to accelerate in H2. Hence, the group remains on target for 10% organic growth in FY18. In January CREALOGIX announced that it was acquiring Innofis, a Barcelona-based digital banking peer, to expand its core digital banking business into the lucrative Middle Eastern markets. As well as expanding the group’s geographical coverage, the acquisition broadens its product offering and creates an opportunity to grow the employee base in a significantly lower-cost market. We will review our forecasts after a prospectus is published for the Innofis acquisition later this month.

Year
end

Revenue (CHFm)

PBT*
(CHFm)

EPS*
(CHF)

DPS
(CHF)

P/E
(x)

Yield
(%)

06/16

63.3

2.2

1.65

0.00

105.1

N/A

06/17

74.9

5.0

2.67

0.50

64.9

0.3

06/18e

82.3

8.1

5.24

1.00

33.0

0.6

06/19e

89.7

10.5

6.89

1.50

25.1

0.9

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Interim results: Organic growth was 8% h-o-h

Revenue grew by 11%, or 8% at constant currencies, to CHF39.7m, reflecting weakness in the CHF. CREALOGIX has been benefiting from a number of growth drivers including PSD2 and Germany has been very strong, while the UK has been rebounding after the Brexit vote. EBITDA rose by 6% to CHF4.4m, reflecting a 50bp decline in margin, mainly due to a temporary increase in IT freelancers to cope with the project delivery backlog in Germany. Operating cash flow swung to a CHF2.1m outflow from a CHF2.0m inflow, mainly because of a sharp increase in payables. This was due to the timing of projects and most is expected to reverse in H2.The group finished CY17 with cash of CHF30.4m and CHF15.0m of convertible bonds, for net cash of CHF15.4m. As the share price is well above the bonds conversion price, the bonds have been actively converting.

Guidance and forecasts: Review after prospectus

CREALOGIX maintained its mid-term guidance with annual sales growth of more than 20%, EBITDA of more than 15%, product sales of 70%+ of the total and international sales of 70%+. For FY18, CREALOGIX now expects 15% revenue growth, including a six-month contribution from Innofis, and at least a 10% EBITDA margin. We will review our forecasts after more details of the Innofis acquisition are revealed when the prospectus is published, which is expected to be on 28 March. Limited information has been provided on the Innofis deal as yet, including the price. However, we know that Innofis has been growing consistently in double digits and generated revenues of c CHF10m in the year to December 2017. Given the size of the deal, CREALOGIX is required to produce a prospectus.

Valuation: Innofis deal solidifies the investment case

The acquisition creates a range of opportunities for management to accelerate revenue growth and boost margins. The stock trades on 33.0x our existing pre-deal earnings in FY18e, which falls to 25.1x in FY19e and to 22.2x in FY20e.

Exhibit 1: Financial summary

CHF'000s

2015

2016

2017

2018e

2019e

2020e

Year end 30 June

Swiss GAAP

Swiss GAAP

Swiss GAAP

Swiss GAAP

Swiss GAAP

Swiss GAAP

PROFIT & LOSS

Revenue

 

49,307

63,317

74,858

82,345

89,707

97,090

Gross Profit

37,017

51,693

59,695

67,198

74,814

82,428

EBITDA

 

(10,555)

3,696

7,304

9,879

12,170

13,983

Adjusted Operating Profit

 

(11,815)

2,264

5,916

8,579

10,920

12,783

Amortisation of acquired intangibles

(1,616)

(2,634)

(1,799)

(1,799)

(1,799)

(1,799)

Exceptionals

0

0

0

0

0

0

Operating Profit

(13,431)

(370)

4,117

6,780

9,121

10,984

Associates

(837)

517

(21)

250

263

276

Net Interest

95

(630)

(936)

(750)

(650)

(100)

Profit Before Tax (norm)

 

(12,557)

2,151

4,959

8,079

10,532

12,959

Profit Before Tax (Statutory)

 

(14,173)

(483)

3,160

6,280

8,733

11,160

Tax

3,899

(130)

(1,751)

(2,192)

(2,876)

(3,551)

Profit After Tax (norm)

(8,658)

2,021

3,208

5,887

7,657

9,407

Profit After Tax (Statutory)

(10,274)

(613)

1,409

4,088

5,858

7,608

Minority interest

0

(270)

(360)

(198)

(108)

(58)

Net income (norm)

(8,658)

1,751

2,848

5,689

7,549

9,349

Net income (Statutory)

(10,274)

(883)

1,049

3,890

5,750

7,550

Average Number of Shares Outstanding (m)

1.06

1.06

1.07

1.09

1.09

1.20

EPS - normalised (CHF)

 

(8.13)

1.65

2.67

5.24

6.89

7.80

EPS - Statutory (CHF)

 

(9.65)

(0.83)

0.98

3.58

5.25

6.30

Dividend per share (CHF)

2.00

0.00

0.50

1.00

1.50

2.00

Gross Margin (%)

75.1

81.6

79.7

81.6

83.4

84.9

EBITDA Margin (%)

(21.4)

5.8

9.8

12.0

13.6

14.4

Op Margin (before GW and except.) (%)

(24.0)

3.6

7.9

10.4

12.2

13.2

BALANCE SHEET

Fixed Assets

 

20,371

28,910

26,430

24,401

22,564

20,924

Intangible assets and deferred tax

14,115

21,004

18,119

16,320

14,521

12,722

Tangible Assets

1,869

1,595

1,385

1,155

1,117

1,276

Investments & pensions

4,387

6,311

6,926

6,926

6,926

6,926

Current Assets

 

28,217

48,275

52,495

60,847

67,792

78,161

Stocks

3,447

3,661

3,419

3,761

4,097

4,434

Debtors

11,633

17,119

15,301

16,831

18,336

19,845

Cash

10,815

27,495

33,775

40,255

45,358

53,882

Current Liabilities

 

(19,183)

(24,752)

(24,219)

(26,546)

(50,716)

(31,253)

Creditors

(19,183)

(24,752)

(24,219)

(26,546)

(28,879)

(31,253)

Short term borrowings

0

0

0

0

(21,837)

0

Long Term Liabilities

 

(2,723)

(27,331)

(25,191)

(22,043)

(206)

(206)

Long term borrowings

0

(24,141)

(24,005)

(21,837)

0

0

Other long term liabilities

(2,723)

(3,190)

(1,186)

(206)

(206)

(206)

Net Assets

 

26,682

25,102

29,515

36,660

39,434

67,626

CASH FLOW

Operating Cash Flow

 

(4,503)

1,281

9,735

10,291

12,618

14,469

Net Interest

91

5

(616)

(750)

(650)

(100)

Tax

(269)

(144)

(1,273)

(1,178)

(2,181)

(2,844)

Capex

(1,018)

(486)

(862)

(1,070)

(1,211)

(1,359)

Acquisitions/disposals

(4,158)

(9,350)

(346)

0

(2,387)

0

Financing

925

1,504

(215)

1,890

0

21,837

Dividends

(2,126)

0

0

(534)

(1,086)

(1,642)

Net Cash Flow

(11,058)

(7,190)

6,423

8,648

5,103

30,360

Opening net debt/(cash)

 

(21,724)

(10,815)

(3,354)

(9,770)

(18,418)

(23,521)

Other

149

(271)

(7)

0

0

0

Closing net debt/(cash)

 

(10,815)

(3,354)

(9,770)

(18,418)

(23,521)

(53,882)

Source: CREALOGIX (historics), Edison Investment Research (forecasts)

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Pty Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2018 Edison Investment Research Limited. All rights reserved. This report has been commissioned by CREALOGIX Group and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Investment Research Pty Ltd (Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd (AFSL: 427484)) and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.
Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2018. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Pty Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2018 Edison Investment Research Limited. All rights reserved. This report has been commissioned by CREALOGIX Group and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Investment Research Pty Ltd (Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd (AFSL: 427484)) and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.
Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2018. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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