November 13th, 2019 | 07:07 CET
CENIT COMPLEMENTS IBM AND SAP - SALES INCREASE
CENIT AG, based in Stuttgart, has been successfully active as a leading consulting and software specialist for the optimization of business processes in the fields of Digital Factory, Product Lifecycle Management (PLM), SAP PLM, Enterprise Information Management (EIM), Business Optimization & Analytics (BOA) and Application Management Services (AMS) for over 25 years. Standard solutions from strategic partners such as DASSAULT SYSTEMES, SAP and IBM are supplemented by CENIT's own established software developments. These include the FASTSUITE product family for software solutions in the digital factory sector, cenitCONNECT for processes related to SAP PLM, cenitSPIN as a powerful PLM desktop, CENIT ECLISO for efficient information management and ECM system monitor for monitoring IBM ECM applications.
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Author:
Mario Hose
ISIN:
DE0005407100
Table of contents:
Author
Mario Hose
Born and raised in Hannover, Lower Saxony follows social and economic developments around the globe. As a passionate entrepreneur and columnist he explains and compares the most diverse business models as well as markets for interested stock traders.
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INTERNATIONAL PLAYER FROM GERMANY
CENIT AG is represented worldwide at 17 locations in six countries with more than 750 employees according to its own statements. These employees work for customers in the automotive, aerospace, mechanical engineering, tool and mould making, financial services, retail and consumer goods industries, among others.
SALES UP ON PREVIOUS YEAR
The third quarter of 2019 is also in line with CENIT AG's business development to date, which was characterized by slight sales growth. Overall, sales revenues climbed slightly by 2.3% from EUR 123.31 m to EUR 126.16 m in the first nine months of 2019, whereby it should be emphasized that the return to the growth course was successful with particularly high-margin sales of proprietary software.
According to estimates by analysts at GBC Research, the dip in sales in the past financial year with own software sales of EUR 11.31 million compared with EUR 10.46 million in the same period of the previous year was thus completely closed.
THIRD-PARTY SOFTWARE AS SALES FOUNDATION
Although somewhat less dynamic, but coming from a significantly higher level, third-party software sales increased by 3.5% year-on-year from EUR 75.62 million to EUR 78.23 million. Following the acquisition of KEONYS, the largest reseller of Dassault software, in 2017, CENIT AG recorded a sustained increase in third-party software sales.
STRONG FOURTH QUARTER EXPECTED
With the publication of the 9-month figures, the CENIT management has confirmed the previous sales guidance, according to which sales revenues are expected at the previous year's level of EUR 170 million. In order to achieve this goal, the company would have to generate sales revenues of EUR 43.84 million in the fourth quarter.
In view of the fact that this is by far the strongest quarter within the financial year, GBC believes that this target can be achieved very well. For comparison: in the last quarter of the previous year, CENIT AG had generated sales of EUR 46.68 million.
GBC RESEARCH CONFIRMS RATING
However, CENIT's management has reduced its previous EBIT forecast downwards. While EBIT of around EUR 10 million was previously forecast, EBIT of EUR 8 - 10 million is now expected. Burdens from the expansion of the sales team as well as sales of proprietary software, which are still slightly below expectations, have made the original target appear too optimistic.
On the basis of the slightly reduced earnings forecasts for 2019 and the resulting adjusted DCF valuation model, the experts at GBC have determined a new price target of EUR 19.85 from EUR 20.30 previously. Despite a slight reduction in the price target, the CENIT share, at the current share price of EUR 13.40, offers high price potential according to analysts and therefore they continue to award the BUY rating.
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