TXT e-solutions

MI: TXT

€125.4m market cap

€9.64 last close

TXT e-solutions provides IT, consulting and R&D services to aerospace, aviation, automotive, banking and finance customers.

Investment summary

Strong organic revenue growth in Q318 combined with the recent Cheleo acquisition resulted in revenue growth of 18.6% y-o-y, a normalised EBITDA margin of 10.0% (+80bp y-o-y) and a normalised EBIT margin of 5.8% (down 240bp due to higher depreciation from the capitalisation of leases). The company has started deploying the proceeds of the TXT Retail disposal, with the first two deals adding software solutions to the services-led Banking and Finance business. We expect the company to make further accretive acquisitions across both businesses.

Y/E Dec
Revenue (€m)
EBITDA (€m)
PBT (€m)
EPS (fd) (c)
P/E (x)
P/CF (x)
2016A 33.1 4.3 4.0 27.1 35.6 10.6
2017A 35.9 3.5 3.0 18.6 51.8 947.8
2018E 39.8 4.3 2.6 19.0 50.7 28.1
2019E 44.9 5.8 4.5 27.7 34.8 23.0
Last updated on 21/02/2019
Industry outlook

TXT Next is a beneficiary of the trend to outsource elements of IT and engineering, which gives the customer greater flexibility on cost and better access to specialist skills. Its main focus is on the aerospace and aviation market, where the rapid pace of innovation, combined with increasing regulation, drives growth in R&D. It also serves the Italian banking market, where the emergence of fintech companies is driving innovation, and regulation is increasing the need for software quality assurance.

Last updated on 21/02/2019
Sector
TMT
Share price graph
Balance sheet
Forecast net cash (€m) 69.6
Forecast gearing ratio (%) N/A
Price performance
%
1m
3m
12m
Actual 2.7 25.2 (8.2)
Relative* (0.2) 15.8 3.0
52-week high/low €13.5/€7.7
*% relative to local index
Key management
Alvise Braga Illa Chairman
Marco Guida CEO
Paolo Matarazzo CFO