Order intake (+24.7%) leads the way, sales (+10.8%) show double-digit growth for the third year in a row
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Frequentis AG's (ISIN ATFREQUENT09, General Standard, FQT GY) 2023 business figures are convincing - especially in terms of order intake and revenue growth. EBIT also slightly exceeded our expectations. However, the EBIT margin fell to 6.2% (2022: 6.5%) due to major multi-year orders acquired in 2023, which often do not deliver positive margins in the start-up phase. The EBIT margin is also expected to be around 6% in 2024, but above the pre-corona level. We are raising our sales expectations for 2024ff slightly in each case but are becoming somewhat more cautious with regard to the margin. In view of our new price target and the fact that the Frequentis share price has fallen in recent months, contrary to the market trend, we are changing our investment recommendation from "Hold" to "Buy". The capital market appears to view the company as a "rather defensive stock" due to the high proportion of sales to the public sector and the associated low sensitivity to economic trends.
Our DCF analysis suggests a value per share of € 35.82 and the peer group analysis based on 2024, 2025 and 2026 yields an average value per share of € 32.40. Equal weighting of both approaches returns a fair value per Frequentis share of € 34.11. Our fair value thus exceeds the current share price by 28.7% entailing a "Buy" rating based on our valuation scheme.
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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