Future investments underpin solid organic growth
​At present, investors in All for One Steeb AG (ISIN DE0005110001, Prime Standard, A1OS GY) seem to be paying a lot of attention to the relationship between general sales growth (15/16: +10%) and the development of recurring sales (+7%). Due to the high strategic importance of recurring sales, this is comprehensible, but it is too short-term in our view: the strategic growth history of managed cloud services/maintenance is intact. The organic growth of 7% is clearly above the growth of the IT services market in Germany (16e: +2.7%). The All for One Steeb share price development in 2016 (-29%) has resulted in a favorable share price compared over several years while maintaining good growth prospects (growth through SAP S/4HANA, up-selling, outsourcing trend, industry 4.0) at the same time. In the short to medium term, strategic future investments (e.g. in employee training, expansion of the cloud service portfolio, development of own SAP S4/HANA industry solutions) are likely to dampen margins slightly. We see this as an opportunity to gradually increase positions in the share as the price will gain momentum again by new margin expansions at the latest. DCF and peer evaluation show significant potential, so we are raising our target price. We calculate a fair value of €68.00 and reiterate our Buy rating.
All for One Steeb is a SAP service provider for the midmarket. Co.'s range of product and services include consulting, the sale of software licenses, outsourcing and IT services. Co.'s products and services provide customer support extends from management and technology consulting, software licenses, industry solutions, and optimization projects to software maintenance, outsourcing and managed services from Co.'s data centers' private cloud, and also covers all enterprise processes. Co.'s portfolio also encompasses add-on solutions and services for the SAP Enterprise Resource Planning Human Capital Management platform and SAP SuccessFactors.
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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