Original-Research: Cenit AG (von GBC AG): BUY

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Original-Research: Cenit AG - from GBC AG

Classification of GBC AG to Cenit AG

Company Name: Cenit AG

ISIN: DE0005407100

Reason for the research: Research Comment

Recommendation: BUY

Target price: 20.55 EUR

Target price on sight of: 31.12.2024

Last rating change:

Analyst: Cosmin Filker, Marcel Goldmann

Q1 2024: Strong start to the current financial year; forecast confirmed;

price target and rating confirmed

 

CENIT AG has made a good start to the current fiscal year. With sales of EUR

50.55 million (previous year: EUR 43.42 million), the previous year's figure

was significantly exceeded by 16.4%. Even though inorganic effects

contributed to this increase, we assume that a significant part of the

sales growth is also of organic origin. The companies acquired in the past

financial year 2023 (mip, PI, ABC and CCE) were not yet or only partially

included in the first quarter of the previous year. According to our

calculations, the inorganic effect should amount to around EUR 4.0 million.

Adjusted, CENIT AG thus achieved organic sales growth of EUR 3.13 million or

7.2%. For the second time in a row, a new sales record was achieved on the

basis of the first quarter.

 

Based on the significant increase in sales, CENIT AG also reported a

significant improvement in EBIT to EUR 0.69 million (previous year: EUR 0.01

million), which corresponds to an EBIT margin of 2.4% (previous year:

0.0%). CENIT AG generated earnings after taxes of EUR 0.03 million (previous

year: EUR -0.07 million) despite a significant increase in financial

expenses.

 

Particularly noteworthy is the strong increase in operating cash flow to EUR

12.54 million (previous year: EUR 8.69 million), which contributed to an

increase in total cash flow to EUR 9.32 million (previous year: EUR 4.72

million). In addition to the increase in operating earnings, the operating

cash flow benefited from a significant decrease in working capital,

primarily due to a sharp rise in contract liabilities. This includes

payments received for services still to be rendered in the course of the

financial year. Cash flow should therefore 'normalise' again over the

course of the year.

 

As expected, CENIT's management has confirmed its guidance with the

publication of the Q1 figures. Sales of EUR 195 to EUR 202 million and EBIT of

EUR 11.7 to EUR 12.2 million are still expected. In terms of sales, the first

quarter is fully in line with the guidance with sales of EUR 50.55 million.

However, the generally higher contribution to sales in the second half of

the year must be taken into account here, meaning that the confirmed

guidance can be categorised as conservative. The distribution of earnings

also follows the seasonal distribution of sales, meaning that EBIT is

expected to rise in the following quarters, particularly towards the end of

the year. In this respect, Q1 EBIT is still of little significance for the

development of the year as a whole.

 

In view of the fact that Q1 was in line with expectations and the confirmed

guidance, we are sticking to our forecasts. As before, our estimates do not

include any inorganic effects, which nevertheless remain an integral part

of our corporate planning. In order to achieve the 'CENIT 2025' plan, we

anticipate two to three acquisitions per year, which should contribute

around EUR 40 to EUR 50 million to sales. By the beginning of 2025, the annual

sales level should thus be increased to between EUR 240 million and EUR 250

million. The company has cash and cash equivalents totalling EUR 33.62

million and therefore sufficient financial scope to implement its inorganic

growth strategy.

 

In light of our unchanged forecasts and the unchanged valuation model, we

are leaving our price target unchanged at EUR 20.55. The rating remains BUY.

 

You can download the research here:

http://www.more-ir.de/d/29751.pdf

Contact for questions

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Disclosure of potential conflicts of interest pursuant to Section 85 WpHG and Art. 20 MAR The company analysed above has the following potential conflict of interest: (5a,6a,7,11); A catalogue of potential conflicts of interest can be found at:

https://www.gbc-ag.de/de/Offenlegung.htm

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Date and time of completion of the study: 15/05/24 (12:24 pm)

Date and time of the first dissemination of the study: 15/05/24 (2:00 pm)

-------------------transmitted by EQS Group AG.-------------------

The issuer is solely responsible for the content of this research.

The result of this research does not constitute investment advice

or an invitation to conclude certain stock exchange transactions.

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