Strategic Revenues advancing – Group break-even in 2019 quite achievable
On August 29, MAX21 AG (ISIN DE000A0D88T9, Basic Board, MA1 GY) reported its semi-annual results and held a phone conference the following day.
Compared to previous year, sales revenues on group level increased by 14.5% to 3.5 mln; adjusted for revenues of NECDIS, which has been sold during the previous period, top line even improved by approx. 30%. In combination with cost savings in personnel and by streamlining internal processes, advancements clearly became evident also on operating level with a significant improvement of EBITDA to T€-540 (H1/17: €-2.3 mln).
Both subsidiaries, Binect and KeyIdentity, showed clear improvements in their strategic revenues which in sum grew by 140% to €1.3 mln. The relevant key performing indicators for corporate management are life time value (LTV) and monthly recurring revenue (MRR):
Binect: Total mail volume increased by 15% to 55.3 mln, which is in line with our projection for the full year of 112 mln. Top line growth is largely attributable to mailings via the services the company provides on its own profit & loss account (strategic revenues) and which is reported separately from click charge per letter model with Deutsche Post AG (E-POST BUSINESS BOX). With 43 newly acquired clients, the LTV of the strategically relevant client base increased from €0.9 to 2.7 mln. The company´s EBITDA remained positive and is reported at T€189.
KeyIdentity: Compared to last year´s period, the LTV of contracts increased from €1.9 to €3.2 mln, largely due to the acquisition of a large client (Basler Versicherungen). Along with a rise in the overall number of contracts from 288 at year end to 323, MRR increased from €53 ths. to €88 ths. On a short term horizon the company targets at advancing this KPI to T€100 or more.
The company raises its EBITDA guidance on group level from a maximum negative figure of €-2.5 mln to €-1.5 mln and expects break-even on group level in 2019. Our model suggests that this target is achievable. Management is confident that no corporate measure will be necessary until its operating target will be reached.
Based on the H1 report we have updated our fundamental valuation. and calculate a fair value of €1.79 per share. We reiterate our “Buy” rating.
Max 21 AG, formerly MAX21 Management und Beteiligungen AG, is a Germany-based technology holding that specializes in the areas of information security and digital communications. Among others, the Company holds interests in Binect GmbH and KeyIdentity GmbH. Binect GmbH is a provider of encrypted communication, and develops software that allows or collect and coordinate e-mails from various platforms. In cooperation with Deutsche Post AG, Binect GmbH offers a hybrid business communication and postal distribution solution, including printing, enveloping, franking and delivery. KeyIdentity GmbH provides digital access and identity security solutions. It is a supplier of the LinOTP Product Suite, which is used in adaptive multi-factor authentication.
Since 2007, BankM AG (Frankfurt am Main, Germany) is the partner of small and medium-sized enterprises and specializing in capital market financing with its experienced, interdisciplinary team. SME customers benefit from individual service and rapid access to selected investors that fit their needs. BankM's services include capital market advisory, arranging IPOs and capital increases for equity financing, debt advisory and debt capital mediation, designated sponsoring and research as well as M&A, hereby specializing in the identification of suitable strategic partners in China.
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