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Make it rain

In a fast-growing, fragmented Italian IT outsourcing market, WIIT is one of the leaders. With opportunities to pivot to larger clients, expand its product range and diversify into other markets, this nimble operator is shaping up well to ride the IT transformation of the coming decade. Living on Cloud Nine WIIT focuses on high-value-added services in cloud infrastructure (PaaS and SaaS), customised on-premise systems and other specialised IT solutions. This is a structurally growing market, as corporates aim to increase efficiency and lower IT costs/capex. Complexity and customisation help WIIT set good prices We expect WIIT to maintain its strong pricing power over the long term, thanks to its capacity to manage complexity (70 interlinked apps), presence in business critical applications, fragmented client base (450) and entry barriers (reputation, capital, customization, tech, switching costs). A market with massive catch-up potential With a client base comprising mainly Italian medium-sized enterprises, WIIT has a long runway to growth as its clients catch up with peers. Add in upselling of services following recent acquisitions and launch of new products linked to IoT and robotisation and we see 8% sales CAGR to 2030. MandA upside, whether predator or prey WIIT''s MandA strategy looks sound. Inside, we analyse its prospects of buying into international expansion and speeding up the roll-out of innovative applications and services to increasingly become a one-stop-shop for its customers. Further out, WIIT could also become a prey. Valuation range of EUR149 to EUR176 Our valuation range is based on a peer-multiple approach (average of 2020-22 EV/EBIT multiple points to EUR176) and on a DCF (EUR149, WACC at 7.1%, terminal growth at 3%). Risks include growing competition, changing technological trends, service quality

  • 11 Sep 20
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