17. May 2021 | 10:29 CET
Aspermont, SAP, Square - "Digital transformation" megatrend as a snack for the portfolio!
Paper tigers are threatened with extinction, and the threat is called digitalization. The simple definition of digitization (the conversion of analog formats into digital formats and their processing or storage in a digital system) conceals countless individual cases and, in total, the far-reaching upheaval of entire industries and sectors of the economy. In the following, we present three companies that are all profiting from the megatrend. Here are the yield drivers for your portfolio.
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ISIN: AU000000ASP3 , DE0007164600 , US8522341036
ASPERMONT LIMITED - Harvest time has begun
The extensive transformation of a business model does not happen overnight. Of course, a favorable outcome is desirable, but this is anything but certain. Aspermont can be described as a success story. The Company is the market leader with its two longest-serving regular publications for the mining sector, Mining Journal and Mining Magazine. The transition from print to media took time. The successes of the digital transformation strategy can now be reaped.
As a global B2B service provider whose success is based on the publications mentioned, the huge database of more than 7 million selected contacts in management positions is a crucial asset. The highly scalable service spectrum as XaaS (Anything as a Service) primarily comprises "content." In addition, cross-selling leverages commercial success. In October 2020, in response to the travel and contact restrictions of the Corona pandemic, Aspermont created a new division, Virtual Event & Exhibition (VEE). After just a few months, this new division generated more than AUD 1 million. Aspermont has succeeded in acquiring more than 100 new business customers for the VEE platforms, even outside the focus industries, including high-profile companies such as Dassault, Hexagon, S&P, Olympus, SAP and Honeywell. They do not just book one or two-day events but are committed through twelve-month contracts and often request additional services from the product universe.
Aspermont is debt-free. In the first half of the current fiscal year, which ended in March, the Australians achieved a 22% increase in subscription revenues to more than AUD 4 million thanks to growing customers. In our view, the revenue potential of Aspermont's business model is just beginning. Scaling and cross-selling still leave significant room to grow. The current market value is around AUD 58 million. Analysts rate the stock as a doubler at this level.
SAP SE - Ironing out the price dip: work in progress
With a current market capitalization of EUR 140 billion, the DAX-listed Company is the third-largest software group in the world after Microsoft and Oracle. SAP recognized the potential of the digital transformation early on and purposefully developed robust, standalone cloud solutions such as SAP S4/HANA, but has also always been open to cross-platform applications. Therefore, it is possible to connect SAP cloud computing solutions via open interfaces even with third-party installations such as Google, AmazonWebServices or Microsoft Azure. This openness is an essential argument for many customers and a success factor for the Germans.
Last fall, the share price collapsed to below EUR 100 but is now trading above this mark again at EUR 114. At that time, the share price slide was triggered by the fact that the originally issued targets had been cashed in. A few days ago, at the Annual General Meeting, CEO Klein emphasized the correctness of the strategic decisions made. Focusing even more intensely on cloud services and accepting high investments for this was the right thing to do in the long term in the interests of customers, despite the short-term negative impact on the balance sheet and the share price. "We cannot sacrifice the success of our customers and our growth potential in order to optimize our margins in the short term," Klein emphasized.
The software company based in Walldorf near Heidelberg, Germany, earned EUR 5.28 billion last year, 57% more than the year before. The dividend increased by EUR 0.27 to EUR 1.85. The Company has announced that it will be massively stepping up its cloud business over the next few years - by 2025, the share should already be 85%.
SQUARE INC - For now, no more appetite for Bitcoin
Square Inc. is a financial service and mobile payment company based in San Francisco, California. It was launched in 2009 by, among others, the go-getting Twitter founder Jack Dorsey. Organically and through many acquisitions, the Company has grown rapidly and is now valued at around USD 95 billion. When Square went public in 2015, it was valued at just USD 2.9 billion. The share has corrected almost 30% in recent weeks. However, analysts continue to maintain their positive assessment of the share and formulate an average price target of USD 275.
The Company's basic idea was to offer a simple payment option for customers at merchants by linking software and hardware products. That is, mobile devices and computing devices should be transformed into payment and point-of-sale solutions. The goal is to build an entire "merchant ecosystem." With the launch of the Cash App several years ago, the Company has taken a significant step. Square is equally a big proponent of cryptocurrencies and invested heavily in Bitcoin in recent months. A few days ago, however, Square now surprisingly announced that it currently had no plans to invest more in Bitcoin.