Main menu
Edison Group
  • Home
  • Sparks
  • Equities

    Equities

    View All Equities

    Equities by Sector

    YXT.com

    MCap

    USD127m

    Last close

    USD23.43

    ▲ 20.23 (632.19%)

    Northern Data Group

    MCap

    EUR486m

    Last close

    EUR7.56

    ▲ 2.33 (44.59%)

    Bodycote

    MCap

    GBP1,572m

    Last close

    GBP9.14

    ▲ −9.00 (−0.98%)

  • Sectors

    Sectors

  • Megatrends

    Megatrends

  • Thematics

    Thematics

    View All Thematics

    Latest

  • Audiovisual

    Audiovisual

    View All Audiovisual

    Latest

mVise — Focus on digital transformation and synergies

mVISE (DB: C1VX)

Last close As at 05/08/2026

—

— 0.00 (0.00%)

Market capitalisation

—

More on this equity

Research: TMT

mVise — Focus on digital transformation and synergies

In recent quarters mVISE has completed the acquisition of a consulting team from SHS Viveon and the sale of loss-making workforce management software business Just Intelligence (JI). These have increased mVise’s ability to derive synergies from within the group and its focus on its core business of digitisation transformation. In H118, helped by increased consulting rates, the group was also able to report a 78% y-o-y increase in revenue and 50% margin expansion leading to a 1.6x y-o-y increase in EBITDA. We see good grounds for a continuation of favourable results in H2. Currently, mVise shares trade at a 24% discount to its two most profitable consulting-oriented peers on FY2 EV/EBITDA multiples. We believe this shows strong upside potential given the group’s growing exposure to the much more highly rated software products segment.

Analyst avatar placeholder

Written by

TMT

mVise

Focus on digital transformation and synergies

Software and comp services

Scale research report - Update

18 September 2018

Price

€4.44

Market cap

€37m

Share price graph

Share details

Code

C1VX

Listing

Deutsche Börse Scale

Shares in issue

8.4m

Last reported net debt as at 30 June 2018

€8.6m

Business description

mVISE is a pioneer in German mobile software solutions with a large blue-chip client base, including Vodafone, Bosch and Deutsche Telekom. The group specialises in mobile business solutions, virtualisation and cloud computing, and security software. Consulting revenues, expanded by a recent team acquisition, act as a driver of additional revenues including own software sales.

Bull

■

mVISE is oriented to key growth areas of IoT, mobility, digitalisation, ADAS and security.

■

New strategy to boost margins via greater high-margin product sales and employee efficiency.

■

Recent acquisitions, particularly elastic.io, have boosted the group’s product offerings, supporting margin and earnings prospects.

Bear

■

High project-based consulting revenues lead to potential risk of skilled employee cost inflation.

■

Own-developed software product SaleSphere has not achieved expectations.

■

Debt levels have risen sharply in H118 with the acquisition of a consulting team from SHS Viveon.

Analyst

Anna Bossong

+44 (0)20 3077 5737

In recent quarters mVISE has completed the acquisition of a consulting team from SHS Viveon and the sale of loss-making workforce management software business Just Intelligence (JI). These have increased mVise’s ability to derive synergies from within the group and its focus on its core business of digitisation transformation. In H118, helped by increased consulting rates, the group was also able to report a 78% y-o-y increase in revenue and 50% margin expansion leading to a 1.6x y-o-y increase in EBITDA. We see good grounds for a continuation of favourable results in H2. Currently, mVise shares trade at a 24% discount to its two most profitable consulting-oriented peers on FY2 EV/EBITDA multiples. We believe this shows strong upside potential given the group’s growing exposure to the much more highly rated software products segment.

JI sale increases digitalisation focus and synergies

Exiting from the 78% stake in JI was a strategic step that has taken mVise out of the loss-making workforce management software business. This is a positive development as JI had low synergies with the rest of the business and diverted management time from the group’s strategic aims. As JI was loss making, the sale at end July should have an immediate positive impact on earnings.

Improved outlook for second half

We are positive on the outlook for seasonally strong and therefore important H2 earnings. We expect earnings to benefit from the sale of JI, reduced costs from integrating the SHS Viveon team, increasing sales traction at integration platform elastic.io, and the addition of new product features at SalesSphere. After a €4.6m increase in net financial debt to €8.6m in H1 following payment for the SHS Viveon acquisition and low seasonal H1 cash generation we see good prospects for a material drop in net debt helped by the deconsolidation of Just Intelligence.

Valuation: Good 12-month catalysts for rerating

On current prospective 2019 EV/EBITDA multiple of 8.9x, mVise trades at a 24% discount to the average of its most profitable consulting-oriented peers, Capgemini and Addesso. We see a strong case for the stock trading at a premium to the consulting sector reflecting its exposure to the higher-rated software product sector and the synergy benefits of its exposure to both areas. Likely strong H2 results, sales expansion at elastic.io and falling group net debt are likely share catalysts.

Consensus estimates

Year
end

Revenue
(€m)

EBITDA (€m)

PBT (€m)

EPS

(€)

EV/EBITDA
(x)

P/E (x)

Yield
(%)

12/16

7.9

1.2

0.4

0.05

38.0

88.8

0.0

12/17

14.8

2.0

0.3

0.15

22.8

29.6

0.0

12/18e

24.3

3.8

1.8

0.15

12.0

29.6

0.0

12/19e

29.2

5.1

3.3

0.29

8.9

15.3

0.0

Source: mVISE, SMC Research

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.

H118 results: Record post-IPO operating result

Helped by the addition of consulting revenues from the acquisition of SHS Viveon, H118 revenues grew 73% y-o-y to €9.2m and outflanked employee cost growth of 61%. The result was a reduction in the employee share of revenues from 63% of H117 to 59%. Helped by this and similar operational gearing-led improvements in material cost ratios, the EBITDA margin expanded from 4.8% in H117 to 7.2%, enabling group EBITDA to grow 161% y-o-y to €0.66m.

Key factors in the strong EBITDA performance were:

■

Increases in day rates in the consulting business arising from high levels of capacity utilisation, helped by the acquisition of SHS Viveon in Southern Germany in late February with the addition of 40 new advisers. Other factors in consulting were strong growth in new customer numbers and demand for managed services.

■

Intense marketing of and the addition of new features to SalesSphere, the digital sales platform, which led to increased downloads and expressions of interest in the product.

■

A major client win (unnamed) for the integration platform elastic.io, arising from the partnership with Israeli software vendor, Magic Software.

Exhibit 1: mVise interim results summary

 €m

H117

H118

Chg

H217

Year end 31 December

HGB

HGB

% y-o-y

HGB

Income statement

Revenue

5.34

9.23

72.8

9.44

Employee costs

(2.67)

(4.31)

61.2

(3.35)

Material costs

(1.03)

(2.62)

155.2

(1.92)

EBITDA

0.25

0.66

161.0

1.70

EBITDA margin

4.8%

7.2%

 

18.0%

EBIT

(0.53)

0.04

(107.0)

1.07

EBIT margin

(9.9%)

0.4%

 

11.4%

Profit before tax (as reported)

(0.64)

(0.15)

(77.2)

0.95

Net income after minorities (as reported)

0.12

(0.11)

(189.6)

1.19

EPS (as reported) (€)

0.02

(0.01)

(131.0)

0.13

Cash flow

 

 

 

 

Net cash from ops before WC movements

0.25

0.63

150.8

(0.25)

Net cash from operating activities

(0.55)

(0.06)

(88.8)

0.65

Net cash from investing activities

(2.88)

(4.10)

42.7

(0.87)

Net cash from financing activities

3.32

1.72

(48.2)

2.58

Net cash flow

(0.11)

(2.45)

2,186.9

2.35

Net cash (debt)*

(3.75)

(8.61)

129.8

(3.98)

Source: Company, Edison Investment Research. Note: *Net debt excludes ‘other liabilities’, which at end-2017 totalled €3.67m and included the obligation to pay SHS Viveon €3.2m for the consulting team acquisition.

Cash flow/balance sheet

Cash flow from operations before working capital changes increased from €252k in H117 to €632k in H118 helped by the growth in operating profit during the period. Total investment outflows were boosted by the acquisition of SHS Viveon, which gave rise to a €3.2m cash outflow on asset acquisitions, boosting overall investment outflows to €4.1m from €2.9m. Investment in plant and equipment remained flat in both periods at around €0.9m.

Group net debt increased by €4.6m to €8.6m in the first half of the year, principally due to the payment of €3.2m to SHS Viveon for the consulting team acquisition, which had been included in other liabilities in the balance sheet at the end of 2017. We expect net debt levels to fall during H218 with sale of JI, reflecting both the removal of its debt from the consolidated balance sheet on 31 July and the addition of proceeds from the sale (the magnitude of both its debt and the proceeds of the sale are not yet reported).

Outlook

The group was able to report a more than doubling in order backlog to over €7m over the June 30 level of €3.1m. The bulk of the backlog arose in the professional services side, reflecting the addition of SHS Viveon’s backlog, while the product area backlog totalled a lower €0.6m.

Management anticipates that the order backlog will be boosted in favour of the product portfolio this year, reflecting anticipated growth in demand for the sales digitalisation platform SalesSphere and elastic.io products.

The sale of JI will result in deconsolidation of its results from end July 2018. We understand that it made losses at the EBITDA and net levels in H1, with the net loss reported as €31,000. As a result, the sale of the business should be positive for H2 results and should have a positive impact on net debt balances. The agreement to keep the sale price confidential means the impact on the balance sheet is not yet quantifiable, but we understand the stake was sold with all the existing debt remaining in the company.

With the increase in demand evident in H118, management plans to recruit more consulting staff to replace the use of consultants, which should help reduce the share of revenue taken by employee expenses.

Valuation

mVise does not fit neatly into a single peer group. Its consulting operations have similarities with consulting-oriented firms such as Capgemini and Addesso while its product sales give it similarities to the software developer segment. The latter trades at substantially higher multiples than the consulting sector as can be seen in Exhibit 2.

Exhibit 2: mVise valuation table

Price*

Market cap

Sales

EBITDA margin

EV/Sales

EV/ EBITDA

P/E

Div yield

Name

m ($)

FY1 (m)

FY1 (%)

1FY (x)

FY2 (x)

FY1 (x)

FY2 (x)

FY1 (x)

FY2 (x)

last (x)

mVise

4.32

42.5

24

15.6

1.9

1.5

11.9

8.8

29.4

14.9

0.0

Peers consulting orientation

 

 

 

SHS Viveon

4.0

10

N/A

0.0

0.6

0.5

N/A

17.5

neg.

133.3

0.0

Adesso

65.4

474

359

8.1

1.1

1.0

14.1

12.9

26.7

24.1

0.6

Capgemini

107.7

21,170

13,098

14.2

1.6

1.5

11.0

10.1

17.9

16.1

1.6

Consulting peer median

 

 

6,729

8.1

1.1

1.0

12.5

12.2

22.3

24.1

0.6

Peers product orientation

 

 

 

 

 

 

 

 

 

 

 

Magic Software Enterprises

9.0

439

288

N/A

1.4

1.3

N/A

N/A

15.2

10.5

2.4

Atlassian Corp - Class A

90.5

21,369

1,157

26.7

18.4

14.6

69.1

52.8

122.5

99.6

0.0

Invision AG

17.4

46

14

8.1

2.6

2.3

32.0

19.6

124.4

46.7

0.0

Product peer median

 

 

350

8.1

8.3

6.4

50.6

52.8

122.5

46.7

0.0

All peer median

 

 

359

8.1

1.5

1.4

13.3

12.9

26.7

22.7

0.3

mVISE premium to consulting median 

 

 

62.2

48.1

(5.2)

(27.5)

31.6

(38.2)

(100.0)

mVISE premium to product median 

 

 

(77.5)

(75.9)

(76.5)

(83.2)

(76.0)

(68.1)

N/A

mVISE premium to median

 

 

 

 

24.1

10.0

(10.7)

(31.6)

9.9

(34.5)

(100.0)

Source: Bloomberg, Thomson Reuters. Note: *Reporting currency. Priced at 17 September 2018.

We see significant synergistic and cross-selling advantages in the combination of the consulting and product portfolio. As a result, we believe there is a strong case for mVise to trade at a premium to the consulting sector because of its exposure to the higher multiple software product industry. To this we would also add its superior EBITDA margins (see comparison in Exhibit 2), which give greater earnings security.

At present, looking at prospective FY1 EV/EBITDA multiples mVise trades broadly in line with Adesso and Capgemini, which are the higher margin, more profitable stocks in the consulting sector, and well below the multiples of the software product peers.

We see potential for stock upside on a 12-month view based on:

■

Expectation of mVise having above-average earnings growth based on current consensus expectations (as can be seen in the P/E multiple changes between FY1 and FY2).

■

Our expectations of increasing market recognition in the market of the orientation of mVise towards product sales over the next 12 months as sales ramp up at elastic.io and SalesSphere.

■

The potential influence of trade sale multiples on the sum-of-the parts valuation of the group. For example, in March of this year Salesforce agreed to acquire Mulesoft, an integration platform as a service (PaaS) operator, similar to elastic.io for $6.5bn. The sale valued Mulesoft on a high 22x trailing revenue multiple. While we believe this high multiple significantly derives from Mulesoft’s strong market position and early mover advantage, the implications for elastic.io’s contribution to the group valuation in future years would be significant even at much lower implied multiples.

Potential share price catalysts

In summary, we see the following as potential key catalysts for mVise shares:

■

potential strong earnings performance in H218;

■

reduction in debt from sale of Just Intelligence, arising from the proceeds from sale of and deconsolidation of debt;

■

expansion of digital product sales at elastic.io and SalesSphere in view of the potential for the market to apply premium sales multiples to the businesses.

Exhibit 3: Consensus financial summary

 €m

 

2016

2017

2018e

2019e

Year end 31 December

HGB

HGB

HGB

HGB

Income statement

 

 

 

Revenue

 

7.88

14.78

24.30

29.20

EBITDA

 

1.16

1.96

3.80

5.10

EBITDA margin

14.8%

13.2%

15.6%

17.5%

EBIT

 

0.46

0.54

2.00

3.40

EBIT margin

 

5.9%

3.7%

8.2%

11.6%

Profit before tax (as reported)

0.42

0.31

1.80

3.30

Net income after minorities (as reported)

0.63

1.31

1.40

2.70

 

 

 

 

 

 

EPS (as reported) (€)

0.05

0.15

0.15

0.29

Dividend per share (€)

0.00

0.00

0.00

0.00

 

 

 

 

 

 

Balance sheet

 

 

 

 

Total non current assets

5.23

14.19

7.80

8.80

Total current assets

1.72

4.57

8.30

12.30

Total assets

6.95

18.76

16.10

21.10

Total current liabilities

2.21

11.26

9.70

10.10

Total non-current liabilities

1.40

2.46

2.60

2.70

Total liabilities

3.61

13.72

12.30

12.80

Net assets

 

3.33

5.04

8.80

11.90

Net cash (debt)

(0.15)

(3.98)

(1.88)

1.62

 

 

 

 

 

 

Cashflow

 

 

 

 

Net cash from operating activities

1.16

0.05

3.40

4.80

Net cash from investing activities

(1.77)

(3.68)

(1.30)

(1.30)

Net Cash from financing activities

0.82

5.90

(0.10)

0.00

Net Cash Flow

0.21

2.27

2.00

3.50

Cash & cash equivalent end of year

0.27

2.54

4.539

8.039

Source: mVise, SMC Research

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 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
Any Information, data, analysis and opinions contained in this report do not constitute investment advice by Deutsche Börse AG or the Frankfurter Wertpapierbörse. Any investment decision should be solely based on a securities offering document or another document containing all information required to make such an investment decision, including risk factors.

Copyright 2018 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Deutsche Börse AG 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 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

This paragraph mark is needed to maintain formatting, please leave this text for the editors.

More on mVISE

View All

TMT

mVISE — Planning a game-changing acquisition

TMT

mVISE — Growth strategy 2.0

TMT

mVISE — Growth Strategy 2.0

TMT

mVISE — Resilience and product growth?

Latest from the TMT sector

View All TMT content

TMT

ZOO Digital — Rebuilt for a market that now pays for speed

TMT

IP Group — Interesting call option on anti-obesity programme

TMT

4imprint Group — Improved trading feeds through to upgrades

TMT

Filtronic — Foundations in place for growth

Acarix — Sales consistent in H1

Acarix’s H1 results show steady sales with eight systems and 800 disposable patches sold to June. These generated H1 revenues of SEK465k with gross profit of SEK349k, a 75% average margin. We now expect sales of just over SEK1m for the full year 2018 before hoped-for German reimbursement in 2019. A new commercial officer, Per Persson, has joined. We do not expect a US launch before 2022 and we assume a US trial starts in 2019. The indicative value remains SEK448m (SEK19.46/share). Additional clinical studies are ongoing.

Continue Reading
Cookie Policy Overview
Edison Group

This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping us understand which section of the website you find more interesting and useful. See our Cookie Policy for more information.

Strictly necessary and functional

These cookies are used to deliver our website and content. Strictly necessary cookies relate to our hosting environment, and functional cookies are used to facilitate social logins, social sharing and rich-media content embeds.

Advertising

Advertising Cookies collect information about your browsing habits such as the pages you visit and links you follow. These audience insights are used to make our website more relevant.

Performance

Performance Cookies collect anonymous information designed to help us improve the site and respond to the needs of our audiences. We use this information to make our site faster, more relevant and improve the navigation for all users.