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February 1st, 2022 | 11:11 CET

SAP, Kleos Space, Software AG - Big growth predicted!

  • Space
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Data is an extremely important raw material in today's world and is already referred to as the new gold. Big Data, the evaluation and processing of large amounts of data using artificial intelligence, will become increasingly important in the coming years, both in society and the capital markets. The next step is the collection of big data through satellite-based earth observation. In the future, this is expected to be beneficial to humanity in terms of security, pollution, and economics. Innovative companies relying on this technology are in a huge growth market.

time to read: 3 minutes | Author: Carsten Mainitz
ISIN: SAP SE O.N. | DE0007164600 , KLEOS SPACE CDI/1/1 | AU0000015588 , SOFTWARE AG NA O.N. | DE000A2GS401

Table of contents:

    Kleos Space - Mission Part 3 launches

    Founded in Australia and now headquartered in Luxembourg, Kleos Space, a data-as-a-service company, is valued by government agencies worldwide for providing independent, commercially available intelligence data that improves maritime and land safety. Private companies such as security services or insurance companies are also among the target audience, as Kleos Space detects and geolocates radio frequency transmissions from space to improve the identification of hidden and illegal activities.

    The Company achieves this by using nanosatellites. These are launched into space in a pack of four per cluster to scan the Earth for radio frequency signals for geolocation. These are then processed using algorithms developed in-house to create data packets. The packets are delivered via API to government and commercial analytics and intelligence facilities worldwide and made available to decision-makers. Kleos Space is paid through a subscription model, ensuring recurring payments. As a result, the business becomes highly scalable. More than 160 customers from the public and private sectors have already been acquired, including 30 clients from the US government.

    Two clusters of four satellites are already in orbit, with the third now scheduled to launch in April, where the satellites will be part of SpaceX's Transporter 4 mission. The fourth cluster, the Observer Mission (KSF3), is planned for June 2022. In the medium term, there should be around 20 clusters of Kleos Space in space to optimize data quality down to the smallest corner of the Earth.

    Recently, Kleos Space received a contract for data analysis from Advanced Ground Information Systems. AGIS simultaneously processes up to 200,000 sensor messages in real-time to provide command, and control communications capabilities to the US military, government and emergency responders. The C5ISR (Command, Control, Communications, Computers, Cyber, Intelligence, Surveillance and Reconnaissance) system enables data interoperability between US and NATO C5ISR systems to create a common operational picture. Under the contract, AGIS will have access to Kleos' Guardian Locate data product for evaluation purposes.

    Kleos Space is impressively on course for expansion and, with a market capitalization of AUD 116 million or the equivalent of around EUR 73 million, still has plenty of future potential. Kleos Space CEO Andy Bowyer will provide more detail on the Company's development at the International Investment Forum (IIF) on February 17, 2022. Registration for the virtual event is free.

    SAP - Significantly punished

    Investors acknowledged the final figures for the past financial year and the forecasts for 2022 with sell-offs. At first glance, this is also justified. The Walldorf-based Company announced a free cash flow (FCF) target of EUR 4.5 billion for 2022, which was significantly below analysts' forecasts. In the previous year, an FCF of EUR 5.01 billion was achieved.

    In the long term, despite the sell-off, it can nevertheless be seen that the cloud business, on which CEO Klein intends to focus, is gaining momentum. SAP aims to generate at least EUR 22 billion in cloud revenue by 2025. In the fourth quarter, growth here had accelerated to 28%. Cloud revenue for the year as a whole was almost EUR 10 billion.

    Opinion was divided in the analyst camp. US investment bank Goldman Sachs lowered its price target for SAP from EUR 147 to EUR 139 after the figures but left its rating at "Buy". The experts at DZ Bank also lowered their price target from EUR 123 to EUR 115 and see a hold position in the software group. SAP looks back on a strong final quarter, but patience is required in the long term, wrote analyst Armin Kremser.

    Software AG - Growth to increase

    Software AG also wants to accelerate. In the current fiscal year, both product revenue is forecast to be 7% to 11% higher in constant currency compared to an increase of just 3% in 2021, and the group's adjusted operating margin (EBITA) is expected to improve 20% to 22%. The Darmstadt-based Company has also maintained its targets for 2023, which envisage an increase in Group sales, including services, to EUR 1 billion.

    Similar to SAP, analysts are showing restraint. US bank JPMorgan lowered its price target for Software AG from EUR 45 to EUR 40 and left its rating at "Neutral." Warburg Research reiterated its "Hold" rating as well as its price target of EUR 38.

    Data is the gold of the future. In terms of society's security, satellite-based systems are likely to play an increasingly important role. Kleos Space already has a broad customer base and should achieve significant scaling effects by expanding its clusters. The share price should also benefit significantly from this. With the cloud, SAP is also banking on a profitable business in the long term.

    Conflict of interest

    Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") may hold shares or other financial instruments of the aforementioned companies in the future or may bet on rising or falling prices and thus a conflict of interest may arise in the future. The Relevant Persons reserve the right to buy or sell shares or other financial instruments of the Company at any time (hereinafter each a "Transaction"). Transactions may, under certain circumstances, influence the respective price of the shares or other financial instruments of the Company.

    In addition, Apaton Finance GmbH is active in the context of the preparation and publication of the reporting in paid contractual relationships.

    For this reason, there is a concrete conflict of interest.

    The above information on existing conflicts of interest applies to all types and forms of publication used by Apaton Finance GmbH for publications on companies.

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    Apaton Finance GmbH offers editors, agencies and companies the opportunity to publish commentaries, interviews, summaries, news and the like on These contents are exclusively for the information of the readers and do not represent any call to action or recommendations, neither explicitly nor implicitly they are to be understood as an assurance of possible price developments. The contents do not replace individual expert investment advice and do not constitute an offer to sell the discussed share(s) or other financial instruments, nor an invitation to buy or sell such.

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    Der Autor

    Carsten Mainitz

    The native Rhineland-Palatinate has been a passionate market participant for more than 25 years. After studying business administration in Mannheim, he worked as a journalist, in equity sales and many years in equity research.

    About the author

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