Last close As at 05/08/2026
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Research: TMT
EQS delivered a strong Q120, with revenues 21% up on Q119 (adjusted for the ARIVA disposal) to €8.35m. With stable personnel and other expenses and reduced use of contractors year-on-year as the main COCKPIT investment phase tails off, the group has posted a third consecutive quarter of EBITDA profit (to €0.8m). COVID-19 prompted a step up in demand for audio and video webcasts, as well as an increase in corporate news flow. New clients attracted by these offerings should be a good source of cross- and up-selling opportunities. Guidance (and our forecast) are unchanged.
EQS Group |
Driving from the COCKPIT |
Q1 results |
Software & comp services |
18 May 2020 |
Share price performance
Business description
Next events
Analysts
EQS Group is a research client of Edison Investment Research Limited |
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EQS delivered a strong Q120, with revenues 21% up on Q119 (adjusted for the ARIVA disposal) to €8.35m. With stable personnel and other expenses and reduced use of contractors year-on-year as the main COCKPIT investment phase tails off, the group has posted a third consecutive quarter of EBITDA profit (to €0.8m). COVID-19 prompted a step up in demand for audio and video webcasts, as well as an increase in corporate news flow. New clients attracted by these offerings should be a good source of cross- and up-selling opportunities. Guidance (and our forecast) are unchanged.
Year end |
Revenue (€m) |
PBT* |
EPS* |
DPS |
EV/EBITDA |
P/E |
Yield |
12/18 |
36.2 |
0.7 |
0.31 |
0.0 |
N/A |
N/A |
N/A |
12/19 |
35.4 |
(0.3) |
(0.31) |
0.0 |
54.6 |
N/A |
N/A |
12/20e |
37.2 |
(0.3) |
(0.25) |
0.0 |
39.7 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Building recurring revenues
The rate of recurring revenue stood at 74% in Q1 and at 76% for larger German clients on SaaS contracts. Newly agreed annually recurring revenues of €1.4m were realised in the period, a figure that had risen to €1.8m by end April and which compares to management’s full year target of €4.5–5.5m. 90 new clients had been brought on board by end April, against an FY20 target of 320–400. Overall revenue growth is running slightly ahead of the 10–20% outlined for the year, giving some comfort on forecasts. Demand for webcasts has grown 55% over Q119, while news flow was up 24% as corporates dealt with lockdowns. Growth has picked up in other operating territories, with the UK moving EBITDA positive and progress made in the French and US markets, with the latter obviously particularly important. The group had net debt (excluding leases) of €5.2m at end March, compared to €5.8m at end FY19.
Economic sensitivities
The impact of COVID-19 to date has been broadly positive, with a relatively straightforward transition to remote working and a corporate sector more open to digitisation of procedures. As has been the case for many other B2B providers, though, the sales cycle for larger retained contracts and projects is slower than hoped. The number of IPOs has also ground to a halt. If the resulting downturn proves long-lasting, there may be an increased risk of clients struggling to pay.
Valuation: Starting to close the discount
Having fallen from a high of €80.5 in late February post the publication of preliminary 2019 figures down to €50 on 19 March, EQS’s share price has since recovered and outstripped that previous high. This suggests that investors may now be pricing in a less pronounced impact from the coronavirus pandemic on the company’s business. With EBITDA not a useful metric due to the distorting impact of IFRS 16, peer comparison for now can predominantly be done on EV/sales, on which basis EQS trades at around a third below larger peers.
Exhibit 1: Financial summary
€k |
2017 |
2018 |
2019 |
2020e |
||
Year end 31 December |
IFRS |
IFRS |
IFRS |
IFRS |
||
INCOME STATEMENT |
||||||
Revenue |
|
|
30,355 |
36,210 |
35,367 |
37,200 |
Cost of Sales |
0 |
0 |
0 |
0 |
||
Gross Profit |
30,355 |
36,210 |
35,367 |
37,200 |
||
EBITDA |
|
|
2,350 |
239 |
2,546 |
3,500 |
Operating Profit (before amort. and except.) |
|
|
1,042 |
(1,299) |
(2,441) |
20 |
Amortisation of acquired intangibles |
(696) |
(821) |
(743) |
(821) |
||
Exceptionals |
0 |
0 |
0 |
0 |
||
Share-based payments |
0 |
0 |
0 |
0 |
||
Reported operating profit |
346 |
(2,120) |
(3,184) |
(801) |
||
Net Interest |
(302) |
1,954 |
2,094 |
(300) |
||
Joint ventures & associates (post tax) |
17 |
0 |
0 |
0 |
||
Exceptionals |
0 |
0 |
0 |
0 |
||
Profit Before Tax (norm) |
|
|
757 |
655 |
(347) |
(280) |
Profit Before Tax (reported) |
|
|
61 |
(166) |
(1,090) |
(1,101) |
Reported tax |
(634) |
913 |
(322) |
(330) |
||
Profit After Tax (norm) |
507 |
439 |
(449) |
(364) |
||
Profit After Tax (reported) |
(573) |
747 |
(1,412) |
(1,431) |
||
Minority interests |
0 |
20 |
121 |
142 |
||
Discontinued operations |
0 |
0 |
0 |
0 |
||
Net income (normalised) |
507 |
439 |
(449) |
(364) |
||
Net income (reported) |
(573) |
767 |
(1,291) |
(1,289) |
||
Average Number of Shares Outstanding (m) |
1,372 |
1,435 |
1,435 |
1,435 |
||
EPS - normalised (€) |
|
|
0.37 |
0.31 |
(0.31) |
(0.25) |
EPS - normalised fully diluted (c) |
|
|
36.97 |
30.62 |
(31.32) |
(25.34) |
EPS - basic reported (€) |
|
|
(0.42) |
0.53 |
(0.90) |
(0.90) |
Dividend per share (c) |
0.00 |
0.00 |
0.00 |
0.00 |
||
Revenue growth (%) |
16.5 |
19.3 |
(2.3) |
5.2 |
||
Gross Margin (%) |
100.0 |
100.0 |
100.0 |
100.0 |
||
EBITDA Margin (%) |
7.7 |
0.7 |
7.2 |
9.4 |
||
Normalised Operating Margin (%) |
3.4 |
(3.6) |
(6.9) |
0.1 |
||
BALANCE SHEET |
||||||
Fixed Assets |
|
|
34,914 |
41,219 |
43,827 |
41,819 |
Intangible Assets |
26,662 |
37,293 |
32,008 |
30,110 |
||
Tangible Assets |
2,048 |
2,241 |
8,824 |
8,714 |
||
Investments & other |
6,203 |
1,685 |
2,995 |
2,995 |
||
Current Assets |
|
|
12,536 |
7,250 |
6,004 |
7,421 |
Stocks |
0 |
0 |
0 |
0 |
||
Debtors |
4,458 |
5,030 |
3,751 |
3,945 |
||
Cash & cash equivalents |
6,374 |
1,308 |
1,184 |
2,406 |
||
Other |
1,703 |
912 |
1,069 |
1,069 |
||
Current Liabilities |
|
|
(11,559) |
(14,330) |
(14,590) |
(14,686) |
Creditors |
(1,101) |
(1,472) |
(1,848) |
(1,944) |
||
Tax and social security |
(290) |
(129) |
(46) |
(46) |
||
Short term borrowings |
(5,986) |
(6,961) |
(7,173) |
(7,173) |
||
Other |
(4,183) |
(5,768) |
(5,524) |
(5,524) |
||
Long Term Liabilities |
|
|
(6,526) |
(6,013) |
(9,238) |
(9,238) |
Long term borrowings |
(3,946) |
(3,475) |
(7,481) |
(7,481) |
||
Other long term liabilities |
(2,581) |
(2,538) |
(1,757) |
(1,757) |
||
Net Assets |
|
|
29,363 |
28,125 |
26,003 |
25,316 |
Minority interests |
1,922 |
420 |
(34) |
(526) |
||
Shareholders' equity |
|
|
31,286 |
28,545 |
25,969 |
24,790 |
CASH FLOW |
||||||
Op Cash Flow before WC and tax |
1,431 |
3,106 |
4,318 |
2,870 |
||
Working capital |
(818) |
1,270 |
1,061 |
(99) |
||
Exceptional & other |
2,011 |
(1,646) |
(2,794) |
631 |
||
Tax |
(872) |
(135) |
(188) |
(330) |
||
Net operating cash flow |
|
|
1,752 |
2,595 |
2,397 |
3,072 |
Capex |
(3,482) |
(5,441) |
(3,120) |
(1,500) |
||
Acquisitions/disposals |
(3,148) |
(5,115) |
4,888 |
0 |
||
Net interest |
(104) |
0 |
0 |
0 |
||
Equity financing |
7,859 |
0 |
0 |
0 |
||
Dividends |
0 |
0 |
0 |
0 |
||
Other |
(3,140) |
1,792 |
(4,408) |
(350) |
||
Net Cash Flow |
(263) |
(6,169) |
(243) |
1,222 |
||
Opening net debt/(cash) |
|
|
2,240 |
3,556 |
9,127 |
13,469 |
FX |
(386) |
75 |
53 |
0 |
||
Other non-cash movements |
(667) |
522 |
(4,153) |
0 |
||
Closing net debt/(cash) |
|
|
3,556 |
9,127 |
13,469 |
12,247 |
Source: Company accounts, Edison Investment Research
|
|
Research: Healthcare
Laboratorios Farmacéuticos ROVI (ROVI) reported Q120 operating revenue of €101.0m (+23% y-o-y), driven by strong growth both in the speciality pharmaceutical business (+24% to €88.2m) and in the toll manufacturing business (+19% to €12.7m). Top-line growth has, in part, benefited from COVID-19 related stockpiling across all divisions. As a result of operating leverage, EBITDA increased by 68% to €20.0m in Q120 reflecting a 530bp improvement vs Q119. Sales of low molecular weight heparin (LMWH) products (Becat and Hibor) increased by 43% to €53.9m; sales have benefited from increased heparin use for hospitalised COVID-19 patients during the quarter and this could be a source of further uplift in subsequent quarters. ROVI is maintaining FY20 guidance of mid-single-digit growth in total operating revenues, but in light of these results, this seems conservative. The MAA for DORIA has now been filed with the EMA (January 2020); we forecast launch in 2021. We value ROVI at €1.53bn.