Operations only slightly affected by pandemic, one-off effect impacts financial result
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In the first half of 2020, Frequentis AG (ISIN ATFREQUENT09, General Standard, FQT GY) was able to keep revenues almost at the same level (-0.1%) and showed significant improvements in EBITDA (€ 6 mln vs. € 2.4 mln in H1/19), EBIT (€ -1 mln vs. € -3.9 mln in H1/19) and incoming orders (+28.8%). The fraud scandal involving Commerzialbank Mattersburg, on the other hand, had a one-off negative impact on the financial result of about € 31 mln; the after-tax result is thus burdened by about € 23.2 mln when taking the tax effect into account. Frequentis has engaged a team of lawyers to protect the interests of the company in the best possible way. In our valuation (for reasons of caution) we have not taken into account any proceeds from possible compensation. We expect an (absolute) order intake in H2 to be similar to that in H1 (approx. € 172 mln) and therefore, due to a very comfortable order backlog (30.6.20: € 445 mln), a sales growth of approx. 4% (to € 316 mln in FY 2020) seems realistic to us.
Based on our DCF and Peer Group analysis we calculate a Fair Value of € 25.00 and reiterate our “Buy” rating.
Frequentis AG is an Austria-based supplier of communications and information systems, diversifying its activities into two business segments: ATM (Air Traffic Management) business segment, which includes ATM Civil, including Information Management, and Defense business fields, and PST (Public Safety & Transport) business segment, which includes Public Safety, Public Transport and Maritime business fields. As of December 31, 2010, the Company had seven wholly owned subsidiaries in the area of Sales & Operations, four wholly owned subsidiaries and one majority owned subsidiary, as well as one affiliate, APUS Software GmbH, in the area of Software, and two wholly owned, one majority owned, one minority owned, as well as one affiliate, 3T Communications AG, in the area of Services. The Company's subsidiaries are located in the United States, the United Kingdom, Canada, Australia, Germany, Singapore, Slovak Republic, Romania, and the Czech Republic.
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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