23. April 2021 | 07:15 CET
IBM, Revez, Bechtle: Returns thanks to digital transformation
Digitization is here to stay. A recent study by PWC shows, 44% of those surveyed agree that digitization will soon encompass all areas of life. Even if there is rightly a need for discussion in some areas, the trend is intact. The next step will be to digitize the German bureaucracy - an urgently needed step at the latest after the pandemic. Supporting the states and municipalities in this are companies such as IBM. We explain how investors can profit from digitization.
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ISIN: US4592001014 , SGXE83751573 , DE0005158703
IBM: Major contract as a burden?
The US company IBM has a big name. Perhaps this is another reason why many public authorities choose the Company as the first contact for everything to do with digitization. In Germany, IBM is to implement electronic prescriptions, making the healthcare system more straightforward and transparent. The contract certainly means an image gain for IBM. But it is not yet clear whether IBM's digitization efforts will end up with only winners - encrusted structures and data protection have already turned many a tiger into a bedside rug in Germany. In other respects, too, things are not going well for IBM. After 9 months, sales recently fell by 4% to USD 53.3 billion. Only the Cloud & Cognitive Software division saw an increase. All other divisions are suffering.
The infrastructure division is to be spun off into a separate company, to be called Kyndryl - 90,000 employees could then soon no longer work for IBM but a subsidiary. It is doubtful to what extent such measures will help the mood in the group. Given a large number of construction sites in various divisions and the few bright spots, IBM is currently uninteresting for investors - despite or perhaps because of the large order from the German healthcare sector.
Bechtle: With Swabian power through the pandemic
The Swabian IT Company Bechtle also works closely with public authorities. The system house with its hardware and software store successfully serves customers from public authorities and small and medium-sized businesses. Bechtle has been growing organically for years and is present mainly in German-speaking countries. Despite the pandemic, sales have continued to rise in recent quarters. The share price dipped a little in the wake of the second wave of infection but is already recovering. On a one-year horizon, the stock has gained just under 30%. There is still room for around 10% for the stock to reach its highs. While cautious investors continue to wait, experienced investors can already get their foot in the door at Bechtle.
Asian pearl Revez growing steadily
It can also be worthwhile to be positioned in the Revez share. The Singapore-based company is fully committed to the digital revolution, offering solutions for the public sector and offerings for the tourism, energy, industry and logistics sectors, and media, communications, and virtual events. Revez is also active in the cybersecurity space, announcing a distribution agreement with Israeli specialist Imvision in early April to make data interfaces (API) more secure. "Forward-looking companies need to look at APIs not just as a piece of technology but should build their business models and operational strategies around them. Imvision's AI-based, self-learning architecture creates a new level of digital asset protection for every customer and creates transparency across the API technology stack," said Victor Neo, CEO of Revez.
Revez's stock has been moving sideways for months on the Singapore stock exchange and Germany, even though the entire Company is valued at only about EUR 26 million, targeting gross margins between 45 and 65% and has steadily increased its revenues over the years. Revez is planning to grow increasingly inorganically because of its positive cash flows and has already been buying on a smaller scale in recent months. The 2020 figures also read positively, with revenue up 17.9% on 2019 to SGD 6.6 million. While the absolute numbers are not yet significant, Revez operates in many interesting areas and is positioned promisingly in Asia. The goal of enabling digital transformation sounds like a promising business area. For investors, it may be worth keeping the stock in mind.