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H1 organic revenue growth was 8% and management expects growth to accelerate in H2. Hence, the group remains on target for 10% organic growth in FY18. In January CREALOGIX announced that it was acquiring Innofis, a Barcelona-based digital banking peer, to expand its core digital banking business into the lucrative Middle Eastern markets. As well as expanding the group’s geographical coverage, the acquisition broadens its product offering and creates an opportunity to grow the employee base in a significantly lower-cost market. We will review our forecasts after a prospectus is published for the Innofis acquisition later this month.
Written by
CREALOGIX Group |
Growth drivers remain in place |
Interim results |
Software & comp services |
26 March 2018 |
Share price performance
Business description
Next events
Analysts
CREALOGIX Group is a research client of Edison Investment Research Limited |
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H1 organic revenue growth was 8% and management expects growth to accelerate in H2. Hence, the group remains on target for 10% organic growth in FY18. In January CREALOGIX announced that it was acquiring Innofis, a Barcelona-based digital banking peer, to expand its core digital banking business into the lucrative Middle Eastern markets. As well as expanding the group’s geographical coverage, the acquisition broadens its product offering and creates an opportunity to grow the employee base in a significantly lower-cost market. We will review our forecasts after a prospectus is published for the Innofis acquisition later this month.
Year |
Revenue (CHFm) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
06/16 |
63.3 |
2.2 |
1.65 |
0.00 |
105.1 |
N/A |
06/17 |
74.9 |
5.0 |
2.67 |
0.50 |
64.9 |
0.3 |
06/18e |
82.3 |
8.1 |
5.24 |
1.00 |
33.0 |
0.6 |
06/19e |
89.7 |
10.5 |
6.89 |
1.50 |
25.1 |
0.9 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Interim results: Organic growth was 8% h-o-h
Revenue grew by 11%, or 8% at constant currencies, to CHF39.7m, reflecting weakness in the CHF. CREALOGIX has been benefiting from a number of growth drivers including PSD2 and Germany has been very strong, while the UK has been rebounding after the Brexit vote. EBITDA rose by 6% to CHF4.4m, reflecting a 50bp decline in margin, mainly due to a temporary increase in IT freelancers to cope with the project delivery backlog in Germany. Operating cash flow swung to a CHF2.1m outflow from a CHF2.0m inflow, mainly because of a sharp increase in payables. This was due to the timing of projects and most is expected to reverse in H2.The group finished CY17 with cash of CHF30.4m and CHF15.0m of convertible bonds, for net cash of CHF15.4m. As the share price is well above the bonds conversion price, the bonds have been actively converting.
Guidance and forecasts: Review after prospectus
CREALOGIX maintained its mid-term guidance with annual sales growth of more than 20%, EBITDA of more than 15%, product sales of 70%+ of the total and international sales of 70%+. For FY18, CREALOGIX now expects 15% revenue growth, including a six-month contribution from Innofis, and at least a 10% EBITDA margin. We will review our forecasts after more details of the Innofis acquisition are revealed when the prospectus is published, which is expected to be on 28 March. Limited information has been provided on the Innofis deal as yet, including the price. However, we know that Innofis has been growing consistently in double digits and generated revenues of c CHF10m in the year to December 2017. Given the size of the deal, CREALOGIX is required to produce a prospectus.
Valuation: Innofis deal solidifies the investment case
The acquisition creates a range of opportunities for management to accelerate revenue growth and boost margins. The stock trades on 33.0x our existing pre-deal earnings in FY18e, which falls to 25.1x in FY19e and to 22.2x in FY20e.
Exhibit 1: Financial summary
CHF'000s |
2015 |
2016 |
2017 |
2018e |
2019e |
2020e |
|
Year end 30 June |
Swiss GAAP |
Swiss GAAP |
Swiss GAAP |
Swiss GAAP |
Swiss GAAP |
Swiss GAAP |
|
PROFIT & LOSS |
|||||||
Revenue |
|
49,307 |
63,317 |
74,858 |
82,345 |
89,707 |
97,090 |
Gross Profit |
37,017 |
51,693 |
59,695 |
67,198 |
74,814 |
82,428 |
|
EBITDA |
|
(10,555) |
3,696 |
7,304 |
9,879 |
12,170 |
13,983 |
Adjusted Operating Profit |
|
(11,815) |
2,264 |
5,916 |
8,579 |
10,920 |
12,783 |
Amortisation of acquired intangibles |
(1,616) |
(2,634) |
(1,799) |
(1,799) |
(1,799) |
(1,799) |
|
Exceptionals |
0 |
0 |
0 |
0 |
0 |
0 |
|
Operating Profit |
(13,431) |
(370) |
4,117 |
6,780 |
9,121 |
10,984 |
|
Associates |
(837) |
517 |
(21) |
250 |
263 |
276 |
|
Net Interest |
95 |
(630) |
(936) |
(750) |
(650) |
(100) |
|
Profit Before Tax (norm) |
|
(12,557) |
2,151 |
4,959 |
8,079 |
10,532 |
12,959 |
Profit Before Tax (Statutory) |
|
(14,173) |
(483) |
3,160 |
6,280 |
8,733 |
11,160 |
Tax |
3,899 |
(130) |
(1,751) |
(2,192) |
(2,876) |
(3,551) |
|
Profit After Tax (norm) |
(8,658) |
2,021 |
3,208 |
5,887 |
7,657 |
9,407 |
|
Profit After Tax (Statutory) |
(10,274) |
(613) |
1,409 |
4,088 |
5,858 |
7,608 |
|
Minority interest |
0 |
(270) |
(360) |
(198) |
(108) |
(58) |
|
Net income (norm) |
(8,658) |
1,751 |
2,848 |
5,689 |
7,549 |
9,349 |
|
Net income (Statutory) |
(10,274) |
(883) |
1,049 |
3,890 |
5,750 |
7,550 |
|
Average Number of Shares Outstanding (m) |
1.06 |
1.06 |
1.07 |
1.09 |
1.09 |
1.20 |
|
EPS - normalised (CHF) |
|
(8.13) |
1.65 |
2.67 |
5.24 |
6.89 |
7.80 |
EPS - Statutory (CHF) |
|
(9.65) |
(0.83) |
0.98 |
3.58 |
5.25 |
6.30 |
Dividend per share (CHF) |
2.00 |
0.00 |
0.50 |
1.00 |
1.50 |
2.00 |
|
Gross Margin (%) |
75.1 |
81.6 |
79.7 |
81.6 |
83.4 |
84.9 |
|
EBITDA Margin (%) |
(21.4) |
5.8 |
9.8 |
12.0 |
13.6 |
14.4 |
|
Op Margin (before GW and except.) (%) |
(24.0) |
3.6 |
7.9 |
10.4 |
12.2 |
13.2 |
|
BALANCE SHEET |
|||||||
Fixed Assets |
|
20,371 |
28,910 |
26,430 |
24,401 |
22,564 |
20,924 |
Intangible assets and deferred tax |
14,115 |
21,004 |
18,119 |
16,320 |
14,521 |
12,722 |
|
Tangible Assets |
1,869 |
1,595 |
1,385 |
1,155 |
1,117 |
1,276 |
|
Investments & pensions |
4,387 |
6,311 |
6,926 |
6,926 |
6,926 |
6,926 |
|
Current Assets |
|
28,217 |
48,275 |
52,495 |
60,847 |
67,792 |
78,161 |
Stocks |
3,447 |
3,661 |
3,419 |
3,761 |
4,097 |
4,434 |
|
Debtors |
11,633 |
17,119 |
15,301 |
16,831 |
18,336 |
19,845 |
|
Cash |
10,815 |
27,495 |
33,775 |
40,255 |
45,358 |
53,882 |
|
Current Liabilities |
|
(19,183) |
(24,752) |
(24,219) |
(26,546) |
(50,716) |
(31,253) |
Creditors |
(19,183) |
(24,752) |
(24,219) |
(26,546) |
(28,879) |
(31,253) |
|
Short term borrowings |
0 |
0 |
0 |
0 |
(21,837) |
0 |
|
Long Term Liabilities |
|
(2,723) |
(27,331) |
(25,191) |
(22,043) |
(206) |
(206) |
Long term borrowings |
0 |
(24,141) |
(24,005) |
(21,837) |
0 |
0 |
|
Other long term liabilities |
(2,723) |
(3,190) |
(1,186) |
(206) |
(206) |
(206) |
|
Net Assets |
|
26,682 |
25,102 |
29,515 |
36,660 |
39,434 |
67,626 |
CASH FLOW |
|||||||
Operating Cash Flow |
|
(4,503) |
1,281 |
9,735 |
10,291 |
12,618 |
14,469 |
Net Interest |
91 |
5 |
(616) |
(750) |
(650) |
(100) |
|
Tax |
(269) |
(144) |
(1,273) |
(1,178) |
(2,181) |
(2,844) |
|
Capex |
(1,018) |
(486) |
(862) |
(1,070) |
(1,211) |
(1,359) |
|
Acquisitions/disposals |
(4,158) |
(9,350) |
(346) |
0 |
(2,387) |
0 |
|
Financing |
925 |
1,504 |
(215) |
1,890 |
0 |
21,837 |
|
Dividends |
(2,126) |
0 |
0 |
(534) |
(1,086) |
(1,642) |
|
Net Cash Flow |
(11,058) |
(7,190) |
6,423 |
8,648 |
5,103 |
30,360 |
|
Opening net debt/(cash) |
|
(21,724) |
(10,815) |
(3,354) |
(9,770) |
(18,418) |
(23,521) |
Other |
149 |
(271) |
(7) |
0 |
0 |
0 |
|
Closing net debt/(cash) |
|
(10,815) |
(3,354) |
(9,770) |
(18,418) |
(23,521) |
(53,882) |
Source: CREALOGIX (historics), Edison Investment Research (forecasts)
|
|
QEX’s operations are gaining momentum, as illustrated by the recent upward revision of three out of four key operating milestone (KOM) targets set by the company. Management now expects sales turnover to reach at least NZ$30m, assisted by the strong Chinese New Year season, good performance of both the Australian operations and QEX’s Chinese subsidiary, Shanghai Ditu International Freight Forwarder (Ditu), as well as a solid sales outlook for March. The Australian daigou market looks promising, as exhibited by the significant interest in AuMake’s newly opened daigou hub in Sydney.