High growth in recurring revenue
At first sight, revenue growth of 3% at Group level may look like a clear drop in growth momentum. However, the 14% growth in strategically significant recurring revenues puts the picture into perspective. There was merely a clear drop in licence revenues (which are volatile by nature) for the first time after several strong years. The shift from one-off licence revenues to recurring cloud revenue is desirable from a strategic viewpoint but the impact may have been compounded by cyclical issues in Q1. Digitization pressure on SMEs will remain a central growth driver for years, so All for One Steeb should be able to report organic growth even in an economic downturn. In view of this, a 18/19e EV/sales multiple of around 0.7 makes the share seem relatively cheap.
Our price target for the All for One Steeb share, equally based on DCF valuation and peer group analysis, is €70.60. We 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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