Mobotix’s five-year plan aims for minimum revenues of €100m by FY23 at an EBIT margin of c 12%, which management notes represents an average annual revenue growth rate of around 9.3% and a profit per share of c €0.64 by FY23. The key growth driver is a new camera platform for decentralised IoT applications. Its embedded processor will carry out data analysis, including AI-based deep learning algorithms in situ, for improved cybersecurity and GDPR compliance. It enables the development of plug-in software apps, creating a recurring revenue stream from software sales. The first product in the range will be launched later in 2019. Mobotix is also expanding the complementary MOVE camera range for centrally managed solutions to address large-scale projects.
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Going beyond human vision
Mobotix’s five-year plan aims for minimum revenues of €100m by FY23 at an EBIT margin of c 12%, which management notes represents an average annual revenue growth rate of around 9.3% and a profit per share of c €0.64 by FY23. The key growth driver is a new camera platform for decentralised IoT applications. Its embedded processor will carry out data analysis, including AI-based deep learning algorithms in situ, for improved cybersecurity and GDPR compliance. It enables the development of plug-in software apps, creating a recurring revenue stream from software sales. The first product in the range will be launched later in 2019. Mobotix is also expanding the complementary MOVE camera range for centrally managed solutions to address large-scale projects.
Strong improvement in performance in H119
Sales grew 11.6% year-on-year during H119 to €35.4m. This included €2.4m (€0.6m H118) from development work for Konica Minolta and a 5.6% rise in sales of video security systems and software. Sale of components to contract manufacturers were slightly higher than the prior year (€1.2m vs €1.0m). EBIT rose by €3.1m to €2.3m, helped by improved sales and higher levels of inventory to support the introduction of a new ERP (enterprise resource planning) system, giving an EBITDA margin (on total operating performance) of 6.6%. The group moved from €0.7m loss after tax in H118 to €1.5m profit after tax.
Investing heavily in software
The development of software applications is key to future growth, providing a differentiator and a vehicle for generating high-margin recurring revenues, so the company is growing its software development team. Consequently, although management expects sales to increase in H219 compared with H119, it expects FY19 EBIT in the range of €1.4–1.8m.
Valuation: Software-based premium
The shares have picked up from a low of €7.05 in December and are now trading on prospective EV/EBITDA and P/E ratios that are at a premium to our sample of German companies in the electronic equipment and instruments segment. Management’s expectation that software apps delivering high-margin recurring revenues will drive Mobotix’s EBIT margin to 12% by FY23 (which is at the upper end of the FY19 sample range) potentially justifies this premium.
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Consensus estimates
Source: Company data, Refinitiv |
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MLP Group is a financial services company focusing on finance advisory services for private clients, companies and institutional investors. Key products include pensions, asset and risk management and real estate and insurance brokering. MLP has grown organically and through acquisition, buying specialised finance companies to diversify and expand revenue. In September 2019, MLP acquired 75.1% of DEUTSCHLAND Immobilien’s shares, expanding its real estate activities. MLP’s historic acquisitions have a good track record. That said, increasing expenditure resulted in a 20bp drop in EBIT margin from H118 to H119. Management is confident of continuing organic revenue growth and that targeted investments will lay the foundation for future profit growth.