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Weak margin in Q3 leads to reduced EBIT guidance, sales growth remains sound

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The surprisingly significant deterioration in "EBIT before M&A" margin in Q3 (0.3% vs. 5.4% in Q3 20/21) led to a reduction in EBIT guidance for the current fiscal year. Measures to counter the margin decline due to pandemic/sickness, inflation, sales mix (less licensing business) and macro uncertainties have already been initiated. On a positive note, while geopolitical uncertainty is causing project delays, demand and order intake remain strong and the sales outlook raised in Q2 thus remains valid. We have adjusted our estimates on the margin side, especially for 21/22, as burdening factors such as pandemic-related high sickness absence and geopolitical uncertainties should be temporary. Inflation-related cost increases should be able to be passed on with a time lag. With an EV/Sales below 1, a resilient growth path (digitalization, SAP S/4HANA migration, cloud transformation) and a share of recurring revenues of over 50%, the All for One Group share (EV/Sales 21/22: 0.52) still appears attractively priced to us.

Our price target for the All for One Group share, equally based on DCF valuation and peer group analysis, is €85.30. We reiterate our “Buy” rating.