Research, Charts & Company Announcements
Research Tree provides access to ongoing research coverage, media content and regulatory news on KEYWARE TECHNOLOGIES-REGR. We currently have 5 research reports from 1 professional analysts.
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Authorisations somewhat offset terminals, better than expected cash generation
24 Nov 16
Keyware released its Q3 16 results, with revenues reaching €3,988k, corresponding to a 23.7% decrease sequentially but to a 10.1% growth yoy. Terminals came in at €2,170k (-16% yoy), and Authorisations at €1,818k (+75.3% yoy). The gross margin reached 56.2%, up 200bp sequentially and down 900bp yoy on a comparable basis (i.e. due to the new Interchange Fee Regulation), and the operating margin at 15.6% (down 820bp yoy). Profit before taxes came in at €897k, for a net result of €532k, impacted by significant deferred tax charges. The company announced on 30 September 2016 the acquisition of a 40% stake in Magellan SAS, for a total of €4m funded via shares (€1m) and debt (€3m). There is an option to acquire the remaining shares for a total of €6m between 1 January 2017 and 30 June 2018.
EPS downgrade offset by stronger cash flows (Keyware)
24 Nov 16
EPS downgrade offset by stronger cash flows EPS CHANGE CHANGE IN EPS2016 : € 0.21 vs 0.23 -9.30% 2017 : € 0.28 vs 0.27 +3.63% Following the Q3 results, we have downgraded our top-line forecasts for 2016 to account for the transitory weakness in the Terminals business, resulting in a c. 10% cut. However, the profitability should be maintained following a better than expected gross margin in Authorisations. CHANGE IN DCF€ 2.89 vs 2.58 +11.7% The DCF valuation is driven up by a strong improvement in WCR needs, due to a better management of the trades & lease receivables which allowed for a greater cash flow generation.
Solid H1 despite a relative weakness in Terminals
06 Sep 16
Keyware released its Q2 16 results, with revenues reaching €5,230k, corresponding to 30.1% growth sequentially and 5.1% yoy. Terminals came in at €2,567k (-11.1% sequentially, -21.7% yoy), and Authorisations at €2,663k (+135.2% sequentially, +56.9% yoy). Gross margin reached 54.2%, down 90bp on a comparable basis (i.e. due to the new Interchange Fee Regulation), and operating margin 20% (down 90bp yoy). Profit before taxes came in at €1,297k, for a net result of €1,116k. The company also announced that it would distribute a dividend for the first time, for a total amount of €424k, corresponding to €0.02 per share. The dividend was paid on 24 August.
EPS upgrade (2016: +6.0%, 2017: +4.4%) (Keyware)
06 Sep 16
EPS CHANGE CHANGE IN EPS2016 : € 0.23 vs 0.22 +5.97% 2017 : € 0.27 vs 0.26 +4.42% Following the H1 results, we have upgraded our forecasts. The EPS benefit from the increase in both the top-line (massive increase in the Authorisations business) and in the bottom-line (Authorisations’ operating margin up to c.10% from 3% previously), slightly offset by the lower than expected profitability in the Terminals business (c.31% vs. 33%).
Initiation of coverage.
15 Jun 16
Keyware, created in 1996 and listed since 2000, is an independent Network Service Provider operating almost entirely in Belgium, with a current market cap of €34m. The company provides payment terminals and associated services to merchants, as well as the implementation of various payment schemes through these terminals, thanks to partnerships with the main acquirers operating in the country (Paysquare, Sixpay, Worldline, EMS…). Keyware can be considered as the tip of an iceberg, as it provides the entry point (namely the payment terminal) to a complex chain of players which constitutes, in the end, the ecosystem of the electronic transaction industry. The dynamism of this industry is a deep-rooted trend in the European Union and in particular Belgium (with the notable exception of Germany, which still favours cash transactions), as a certain number of factors are driving up the number of electronic transactions, such as the rise of new types of payment solutions (smartphones and NFC through electronic wallets like Apple Pay, or electronic meal vouchers), the dynamism of e-commerce (+14.3% in Europe in 2014), or the increasing restrictions on the use of cash in transactions as a way of fighting the shadow economy. The company benefits from an increasing installed base of terminals (c. 17,000 at 31 December 2015, +13% organically vs. the previous year), which represents most of its revenues through its Terminals business line. However, this installed basis will be leveraged in the Authorisations business, which provides acquiring services to the merchants. Here we see the biggest potential for operating profit upside, given the transition from a shared revenues model to a brokering model, whereby the company buys the transaction from the acquirer at a floor price and sells it on to the customer at a discretionary price, thus leading to a substantial rise in revenues for the same number of transactions. The end of the transition is expected by the end of 2018. In addition, the company will see a mechanical increase in the number of transactions through its increasing installed basis of terminals. The challenge lies in the success of its own acquiring services, which generate higher margins compared to external providers such as EMS or Worldline. The trend is very positive, with own acquiring rising from 16.5% in 2010 to 77.1% in 2015.
Taking a prudent road
28 Nov 16
As flagged in September, H1 2017 profit is indeed below LY; adj. PBT of £0.5m compares with £1.5m in H1 2016 as Trakm8 invests heavily in new technology and acquisition integration. Management remains confident in another very strong H2 performance and in particular is focused on closing a couple of large high-margin software-related sales which would see the group meeting the original FY 2017 expectations of £5.9m adj. PBT. However, should these fall outside the March year-end, profits are only likely to be in line with last year’s £3.9m, albeit on a growing revenue base. Prudence dictates we assume a worst-case scenario in our forecasts so that surprise is only in the upside – if the deals close in the year, the company will meet those original revenue and profit expectations.
A data-driven H1 raises expectations
05 Dec 16
The first reporting period under the new D4t4 Solutions brand saw the group (previously IS Solutions) deliver good growth, leaving it well on track to meet PBT forecasts in FY 2017, and we now increase FY 2018 forecasts. The business continues to flourish from its focus on data management and analytics, enabling its international blue-chip client base to gather and gain advantage from the mass of customer data available, utilising the leading-edge Celebrus solution. Industry analysts predict 12% CAGR for the BI & Analytics market through to 2020, and D4t4 is riding this wave of demand.
06 Dec 16
600 Group* (SIXH): Interim results: order book showing signs of improvement (CORP) | Real Good Food* (RGD): Commodity volatility impacts numbers (CORP) | Minds + Machines* (MMX): .vip goes live in China (CORP | Imaginatik* (IMTK): Interims (CORP) | iomart* (IOM): Quality business as usual (CORP) | Fulcrum (FCRM): Upgrades continue (BUY)
N+1 Singer - Morning Song 05-12-2016
05 Dec 16
RTHM is acquiring a profitable Canadian listed mobile specialist for equivalent of US$42.5m consideration in shares (88.235m). This helps adds to two growth vectors RTHM is targeting; (i) adds unique exclusive audience (10m unique) and (ii) Exclusive demand Yahoo and Facebook. The business has 15 premium and owned and operated apps which provide users with rewards for activity. The business is expected to deliver c$9m of EBITDA in FY18 including $2m of cost synergies. This equates to just 4.7x EV/EBITDA. This marks what we see the first step in RTHM activity to scale the business and deliver on margin potential (see our initiation notes). Our initial estimates for EPS revisions are very significant - for FY18 are 2.3 cents (currently 0.6) and for FY19 4.3 (currently 2.5). There is a call at 830 for investors and we will revise post this.
Joy of Techs
21 Nov 16
ICT evolution is driven by technological development as advances are made which both meet and shape customer requirements. Our 2011 note No such thing as a telco described the modern reality in that former ‘telcos’ now deliver varying elements of a range of managed services. We built on this theme last year, exploring in further detail their evolutionary paths, operating fundamentals, and cashflow yield similarities. In the consumer environment, demand for bundles of technology is complemented by demand for content. Across the pond, the mooted combination of AT&T and Time Warner typifies the bundled need of ‘pipe’ and content, since unbundled alternatives such as FaceTime and WhatsApp can be easier and clearer to chat over, and Amazon and Netflix are easier to watch anywhere. In the UK, BT’s defensive actions cover delivery, content and capabilities, acquiring EE yet also buying football rights. While TV was long ago added to triple play to become quad play, voice is now merely an app, and fixed and mobile seen as just dumb pipes: it's the content that will influence consumer choices. Growth of TV and film as well as music and gaming over IP leads to UK small cap opportunities. In context of the drive to maximise value from pipes and access by offering content and data, we look at some amongst the potential tech small cap beneficiaries: Amino*, Keyword Studios, ZOO Digital*, 7digital*, KCOM* and CityFibre*.
Quality business as usual
06 Dec 16
iomart's interims show delivery of continuing organic growth, complemented by targeted acquisitions to extend the strategic opportunities. Compared with peers exposed to project-based revenue, cloud services organic growth continued at 10% (comfortably within our expected 8-11% target range), with the evolution of margins as expected: the growing proportion of public cloud services mildly easing EBITDA margins but maintaining or even strengthening adjusted PBT margins, given the lack of related depreciation. With high quality recurring revenue at high margins, and (lower margin, lower recurring revenue) peer group exit valuations comfortably above iomart’s current valuation, the upside remains very clear. Target 360p reiterated.