Last close As at 05/08/2026
—
— 0.00 (0.00%)
Market capitalisation
—
Research: TMT
DATAGROUP recorded a strong H1, with revenue growth of 7.2% (pre IFRS 15 and 16 for comparison purposes), the bulk of which was organic, while the EBITDA margin expanded by 30bp to 12.0%. Adoption of the new accounting standards has made significant changes to the P&L. Notably, the company says that numerous large-scale orders have led to a positive order situation, particularly in the financial services sector – the order book stands at more than €200m in financial services alone. The group announced its 22nd post-IPO acquisition after the period end, which boosts its relatively weak position in the Rhine-Main region and adds competencies in containerised software solutions. While the shares have jumped by c 55% from their late December lows, the c 20x rating looks fair value given the bulging order book and attractive growth opportunities.
Written by
DATAGROUP |
Order book boosted by numerous large orders
IT services |
Scale research report - Update
31 May 2019 |
Share price graph
Share details
Business description
Bull
Bear
Analyst
|
||||||||||||||||||||||||||
DATAGROUP recorded a strong H1, with revenue growth of 7.2% (pre IFRS 15 and 16 for comparison purposes), the bulk of which was organic, while the EBITDA margin expanded by 30bp to 12.0%. Adoption of the new accounting standards has made significant changes to the P&L. Notably, the company says that numerous large-scale orders have led to a positive order situation, particularly in the financial services sector – the order book stands at more than €200m in financial services alone. The group announced its 22nd post-IPO acquisition after the period end, which boosts its relatively weak position in the Rhine-Main region and adds competencies in containerised software solutions. While the shares have jumped by c 55% from their late December lows, the c 20x rating looks fair value given the bulging order book and attractive growth opportunities.
H119 results: Top-line growth was 7.2%
H119 group revenue grew by 7.2% to €143.1m (pre-IFRS 15 and 16), while EBITDA rose 10.5% to €17.2m as the margin expanded by 30bp to 12.0%. After including the new accounting standards, revenue was €138.7m, EBITDA €20.4m. Operating cash flow was affected by a c €9m investment in hardware for the new NRW Bank transition project. Net debt was hit by the first-time adoption of IFRS 16, which added €18.6m from lease liabilities, and the group ended the period with net debt of €35.8m, up from €12.1m at end-September and €14.5m a year earlier.
Acquisition of UBL Informationssysteme
In April, the group announced the acquisition of UBL Informationssysteme, a multi-cloud and managed service provider, for an undisclosed amount. UBL develops and operates IT infrastructures and platforms for larger Mittelstand companies. This is the group’s 22nd acquisition since DATAGROUP came to the market in 2006. UBL, which is based near Frankfurt/Main, generated revenues of more than €20m in 2018, with double-digit EBITDA margins, and has more c 70 employees.
Valuation: Increasingly attractive after the drift back
DATAGROUP has a strong track record, high recurring revenues, a clear focus on the huge German Mittelstand sector and a rising number of key differentiators. The shares look fairly valued trading on c 20.1x FY20e EPS and c 7x EBITDA, given an outlook underpinned by a favourable business model supported by attractive business drivers, which also provide a compelling case for acquisitions.
|
Consensus estimates
Source: Refinitiv |
Edison Investment Research provides qualitative research coverage on companies in the Deutsche Börse Scale segment in accordance with section 36 subsection 3 of the General Terms and Conditions of Deutsche Börse AG for the Regulated Unofficial Market (Freiverkehr) on Frankfurter Wertpapierbörse (as of 1 March 2017). Two to three research reports will be produced per year. Research reports do not contain Edison analyst financial forecasts.
H119 results: Accounting changes give additional boost to EBITDA
H119 group revenue grew by 7.2% to €143.1m (pre-IFRS 15 and 16), the bulk of which was organic apart from a small impact from Almato, which contributed for the full period having been consolidated from January 2018. EBITDA (pre-IFRS 15 & 16) lifted by 10.5% to €17.2m as the margin expanded by 30bp to 12.0%. The adoption of IFRS 16 has reduced operating costs and increased depreciation and, to a smaller extent, the financial costs, as operating leases are now treated as a financial item. After applying the new accounting standards, revenue was €4.4m lower at €138.7m, as the standards have an impact on the date when revenue from a project, which has a transition and subsequent operating phase, can be recognised. For instance, no revenue is shown for large-scale projects that are still in the transition phase, even though a considerable amount of services is provided. EBITDA was €3.2m higher at €20.4m, boosting the margin by 270bp to 14.7%, primarily as operating costs switch to depreciation, which rose by €3.2m to €8.3m.
Exhibit 1: Key H1 figures
€000s |
H118 |
H119 |
Change % |
H119 |
Without |
Including IFRS 15&16 |
|||
Revenues |
133,513 |
143,076 |
7.2 |
138,722 |
Services & maintenance |
109,115 |
119,029 |
9.1 |
114,674 |
Trade |
24,335 |
23,977 |
(1.5) |
23,977 |
Other |
63 |
70 |
11.1 |
71 |
Own work capitalised |
350 |
302 |
(13.7) |
302 |
Total revenues |
133,863 |
143,378 |
7.1 |
139,024 |
Material expenses/purchased services |
(39,260) |
(42,956) |
9.4 |
(39,184) |
Gross profit |
94,603 |
100,422 |
6.2 |
99,840 |
Personnel expenses |
(66,193) |
(71,099) |
7.4 |
(70,577) |
Other income |
1,867 |
2,630 |
40.9 |
2,630 |
Other expenses |
(14,707) |
(14,745) |
0.3 |
(11,478) |
EBITDA |
15,570 |
17,208 |
10.5 |
20,415 |
Depreciation from PPA |
(1,975) |
(1,852) |
(6.2) |
(1,852) |
Other depreciation |
(4,949) |
(5,144) |
3.9 |
(8,335) |
EBIT |
8,646 |
10,212 |
18.1 |
10,228 |
Financial result |
(1,353) |
(970) |
(28.3) |
(1,122) |
EBT |
7,293 |
9,242 |
26.7 |
9,106 |
Taxation |
(2,277) |
(2,989) |
31.3 |
(2,946) |
Net income |
5,016 |
6,253 |
24.7 |
6,160 |
Average number of shares (000's) |
8,331 |
8,331 |
0.0 |
8,331 |
EPS (€) |
0.60 |
0.75 |
24.7 |
0.74 |
Source: DATAGROUP
Notably, DATAGROUP says that numerous large-scale orders have led to positive order situation, particularly in the financial services sector. Since the beginning of FY19, the group has signed multi-year contracts with companies across a range of industries which have volumes in the mid-single to double-digit million euros range. It says that demand in the financial services sector has been particularly strong. Having won the tenders for the full-service outsourcing of IKB Deutsche Industriebank and for the operation of the IT infrastructure services of BayernInvest, a five-year contract was signed with Bankhaus Lampe. This contract has a volume in the double-digit million euros. As a result, the order book amounts to over €200m in the financial services sector alone.
Outside financial services, DATAGROUP won the public tender for the reallocation of service desk and onsite services of the ARD broadcasting stations. The framework contract agreed with the German regional public broadcasting agencies, Deutsche Welle and Deutschlandradio has a term of at least four years and a volume in the double-digit million euros. With effect from 1 March 2019, DATAGROUP is responsible for the operation of the entire SAP environment as a managed service for a well-known German automotive manufacturer. The range of services includes the operation of some 160 SAP instances on the customer infrastructure, including critical production systems. The contract also covers consulting services on SAP S/4HANA and innovative topics such as SAP Cloud Platform.
During H1, the number of the group’s CORBOX contracts increased by 20 to 165. In addition, 23 existing contracts have been extended and the range of services for nine customers has been expanded. CORBOX is the group’s core IT services offering – a flexible, all-in-one-solution for carefree IT operations. CORBOX is a cloud-enabling platform, in which DATAGROUP integrates third-party cloud solutions such as Microsoft and Amazon Web Services, enriches them with additional services and combines them with its own cloud and outsourcing services.
Operating cash flow was affected by a c €9m investment in hardware for the transition project of the new landmark NRW Bank contract. This investment was reflected in working capital, but will reverse out in H2 as it moves from inventories to financial assets at the end of the transition phase of the contract.
Net debt was hit by the first-time adoption of IFRS 16, which added €18.6m from lease liabilities, and the group ended the period with net debt of €35.8m, up from €12.1m at end-September and €14.5m a year earlier.
Due to the positive developments in H1 and the acquisition of UBL, management now expects FY19 revenue of more than €300m and EBITDA of over €38.5m (prior to adoption of IFRS 15 and 16). After application of IFRS 15 and 16, management expects revenue of more than €295m and EBITDA of more than €45m.
|
||||||||
|
||||||||
Following TransContainer’s strong Q1 results, with adjusted revenues growing by more than 30% y-o-y, we have further increased our forecasts for FY19–20 (revenue up 6–9%). The growth in Q1 was boosted by increased sales to customers located outside Russia. We have increased our valuation to RUB7,100/share on the back of higher forecasts.