Last close As at 05/08/2026
EUR15.00
— 0.00 (0.00%)
Market capitalisation
EUR709m
Research: TMT
Tinexta’s Q319 results confirmed trends from earlier in the year: improving momentum for its largest business unit, Digital Trust, given structural growth drivers of digital security, and weak growth for its least important division, Credit Information & Management, due to macro sensitivity. Q3 is typically a seasonally less important quarter (23% of annual revenue in FY18) ahead of a more important Q4 (29% of annual revenue in FY18). Our forecasts for FY19 and FY20 are unchanged, as is our valuation. Our DCF-based valuation of €14.6/share offers c 25% upside from the current price.
Tinexta |
Encouraging signs for Q419 |
Q319 results |
Professional services |
19 November 2019 |
Share price performance
Business description
Next events
Analysts
Tinexta is a research client of Edison Investment Research Limited |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||
Tinexta’s Q319 results confirmed trends from earlier in the year: improving momentum for its largest business unit, Digital Trust, given structural growth drivers of digital security, and weak growth for its least important division, Credit Information & Management, due to macro sensitivity. Q3 is typically a seasonally less important quarter (23% of annual revenue in FY18) ahead of a more important Q4 (29% of annual revenue in FY18). Our forecasts for FY19 and FY20 are unchanged, as is our valuation. Our DCF-based valuation of €14.6/share offers c 25% upside from the current price.
Year end |
Revenue (€m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/17 |
174.8 |
30.5 |
0.46 |
0.14 |
24.5 |
1.2 |
12/18 |
238.7 |
48.6 |
0.74 |
0.23 |
15.2 |
2.0 |
12/19e |
257.0 |
52.6 |
0.78 |
0.26 |
14.4 |
2.3 |
12/20e |
271.4 |
58.3 |
0.86 |
0.28 |
13.1 |
2.5 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Q319: Improving momentum at Digital Trust
Tinexta’s Q319 results, typically a seasonally less important quarter for the group, highlighted improving momentum at Digital Trust. Group organic revenue declined by 2.5% y-oy, within which Digital Trust grew by 11.2%, improving from 10% in H119. Management points to a strong pipeline for the TOP and GoSign products, which is driving the growth and enhanced margin (30.8% versus 28.2% in Q318). Innovation & Marketing Services reported a 10% y-o-y decline in revenue, which reflects a strong comparative in Q318, the lumpy nature of the businesses and the difficulties of completing bureaucratic requisites to certify projects as complete during the summer months. Management expects these issues to be less important in Q419. The economic slowdown is affecting Credit Information & Management, especially demand from financial institutions, such that the division’s revenue declined organically by c 14% y-o-y. Acquisitions in this business unit continue to perform well, contributing an improved profitability in Q319. Year-to-date, group organic revenue growth is 3.5% and organic adjusted EBITDA growth is 5.4%.
Forecasts for FY19 and FY20 maintained
Management has reiterated guidance for FY19: revenue of over €250m (a 4.7% increase versus 2018) and EBITDA of €68–70m (growth of 2.7–6.1% versus 2018). This implies a Q419 revenue decline of 1.5%; this looks too conservative given the growth profile of Digital Trust and the expected improvement for Innovation & Marketing Services in Q419. As a result, our forecasts remain ahead of management’s guidance by c 2–3%.
Valuation: Recent share price weakness
Following recent share price weakness, there is c 25% upside to our DCF-based valuation of €14.60 per share, which is unchanged since our update at the interims, given no change to our forecasts. The EV/EBITDA valuation for FY19e and FY20e is 9.2x and 8.3x, respectively.
Exhibit 1: Financial summary
€000s |
2016 |
2017 |
2018 |
2019e |
2020e |
||
Year end 31 December |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||
INCOME STATEMENT |
|||||||
Revenue |
|
|
146,920 |
174,790 |
238,701 |
257,036 |
271,398 |
Cost of Sales |
0 |
0 |
0 |
0 |
0 |
||
Gross Profit |
146,920 |
174,790 |
238,701 |
257,036 |
271,398 |
||
EBITDA |
|
|
29,274 |
40,630 |
65,959 |
72,355 |
80,058 |
Normalised operating profit |
|
|
18,447 |
28,959 |
50,999 |
54,272 |
60,473 |
Amortisation of acquired intangibles |
0 |
(1,861) |
0 |
0 |
0 |
||
Exceptionals |
(1,029) |
0 |
(2,849) |
0 |
0 |
||
Share-based payments |
0 |
0 |
0 |
0 |
0 |
||
Reported operating profit |
17,418 |
27,098 |
48,150 |
54,272 |
60,473 |
||
Net Interest |
(1,042) |
1,523 |
(2,520) |
(2,408) |
(2,986) |
||
Joint ventures & associates (post tax) |
13 |
4 |
106 |
770 |
847 |
||
Exceptionals |
0 |
0 |
0 |
0 |
0 |
||
Profit Before Tax (norm) |
|
|
17,418 |
30,486 |
48,585 |
52,634 |
58,334 |
Profit Before Tax (reported) |
|
|
16,389 |
28,625 |
45,736 |
52,634 |
58,334 |
Reported tax |
(4,784) |
(8,420) |
(12,629) |
(15,264) |
(16,917) |
||
Profit After Tax (norm) |
12,334 |
21,519 |
35,169 |
37,370 |
41,417 |
||
Profit After Tax (reported) |
11,605 |
20,205 |
33,107 |
37,370 |
41,417 |
||
Minority interests |
(51) |
(78) |
(588) |
(598) |
(663) |
||
Discontinued operations |
0 |
0 |
0 |
0 |
0 |
||
Net income (normalised) |
12,283 |
21,441 |
34,581 |
36,772 |
40,756 |
||
Net income (reported) |
11,554 |
20,127 |
32,519 |
36,772 |
40,755 |
||
Basic average number of shares outstanding (m) |
37 |
46 |
47 |
47 |
47 |
||
EPS - basic normalised (€) |
|
|
0.33 |
0.46 |
0.74 |
0.78 |
0.86 |
EPS - diluted normalised (€) |
|
|
0.33 |
0.46 |
0.74 |
0.78 |
0.86 |
EPS - basic reported (€) |
|
|
0.31 |
0.43 |
0.70 |
0.78 |
0.86 |
Dividend (€) |
0.09 |
0.14 |
0.23 |
0.26 |
0.28 |
||
Revenue growth (%) |
18.3 |
19.0 |
36.6 |
7.7 |
5.6 |
||
Gross Margin (%) |
100.0 |
100.0 |
100.0 |
100.0 |
100.0 |
||
EBITDA Margin (%) |
19.9 |
23.2 |
27.6 |
28.1 |
29.5 |
||
Normalised Operating Margin |
12.6 |
16.6 |
21.4 |
21.1 |
22.3 |
||
BALANCE SHEET |
|||||||
Fixed Assets |
|
|
216,369 |
275,773 |
305,579 |
362,148 |
354,563 |
Intangible Assets |
200,690 |
260,630 |
270,536 |
315,362 |
310,785 |
||
Tangible Assets |
7,050 |
8,287 |
8,232 |
19,975 |
16,967 |
||
Investments & other |
8,629 |
6,856 |
26,811 |
26,811 |
26,811 |
||
Current Assets |
|
|
116,238 |
125,844 |
143,406 |
139,448 |
178,430 |
Stocks |
1,001 |
2,072 |
1,344 |
1,447 |
1,528 |
||
Debtors |
50,948 |
80,285 |
86,321 |
92,952 |
98,145 |
||
Cash & cash equivalents |
60,431 |
36,987 |
35,136 |
24,444 |
58,152 |
||
Other financial assets |
4,311 |
8,186 |
8,186 |
8,186 |
|||
Other |
3,858 |
2,189 |
12,419 |
12,419 |
12,419 |
||
Current Liabilities |
|
|
(89,792) |
(102,868) |
(194,356) |
(210,984) |
(213,028) |
Creditors |
(33,185) |
(47,725) |
(93,905) |
(97,290) |
(99,334) |
||
Tax and social security |
(1,481) |
(6,125) |
(704) |
(704) |
(704) |
||
Short term borrowings |
(36,947) |
(21,723) |
(97,380) |
(110,623) |
(110,623) |
||
Other |
(18,179) |
(27,295) |
(2,367) |
(2,367) |
(2,367) |
||
Long Term Liabilities |
|
|
(119,246) |
(155,535) |
(109,085) |
(124,085) |
(124,085) |
Long term borrowings |
(100,839) |
(123,800) |
(70,667) |
(85,667) |
(85,667) |
||
Other long term liabilities |
(18,407) |
(31,735) |
(38,418) |
(38,418) |
(38,418) |
||
Net Assets |
|
|
123,569 |
143,214 |
145,544 |
166,527 |
195,880 |
Minority interests |
187 |
537 |
3,757 |
4,355 |
5,018 |
||
Shareholders' equity |
|
|
123,756 |
143,751 |
149,301 |
170,882 |
200,898 |
CASH FLOW |
|||||||
Net operating cash flow |
|
|
20,038 |
32,151 |
43,405 |
54,512 |
60,758 |
Capex |
(5,745) |
(6,486) |
(13,095) |
(13,000) |
(12,000) |
||
Acquisitions/disposals |
(36,993) |
(61,072) |
(33,182) |
(46,652) |
0 |
||
Net interest |
(1,017) |
(1,526) |
(1,441) |
(2,408) |
(2,986) |
||
Equity financing |
48,179 |
1,078 |
1,080 |
0 |
0 |
||
Dividends |
(3,820) |
(6,977) |
(12,067) |
(16,389) |
(12,064) |
||
Other |
1,076 |
4,219 |
(3,866) |
0 |
0 |
||
Net Cash Flow |
21,718 |
(38,613) |
(19,166) |
(23,937) |
33,708 |
||
Opening net debt/(cash) |
|
|
48,369 |
71,003 |
104,225 |
124,726 |
163,661 |
FX |
0 |
0 |
0 |
0 |
0 |
||
Other non-cash movements |
(44,352) |
5,391 |
(1,335) |
(14,998) |
0 |
||
Closing net debt/(cash) |
|
|
71,003 |
104,225 |
124,726 |
163,661 |
129,953 |
Source: Company accounts, Edison Investment Research
|
||||||||||||
|
||||||||||||
Research: Consumer
Q319 results were dominated by previously announced accounting irregularities in the Mexico, Panama and Colombia divisions. These have been confirmed as one off and confined to H119 but, as a direct result, management has lowered FY19 EBITDA guidance by c €10m to €250–255m (pre-IFRS 16). As a positive, the Spanish division is developing strongly, with encouraging momentum in online. Codere’s focus is now on refinancing the senior notes and rebuilding trust with the investment community. We have lowered our FY19 EBITDA by 8.7% and our FY20 EBITDA by 8.0%. The stock is very illiquid and trades at 4.2x EV/EBITDA for FY20e, which is at a deep discount to peers.