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New management team to shape new era

The most recent rights issue of MAX21 AG (ISIN DE000A0D88T9, Entry Standard, MA1 GY) that occurred in May 2016 entailed a capital infusion of roughly €4.5 million net. The fresh capital has been used for the redemption of shareholder loans and for the further advancement of its two core holdings pawisda and LSE. With the accomplished streamlining of the company structure and the focus on the areas of “digital/hybrid post” and “internet security and authentication”, MAX21 AG has entered the next phase of its corporate evolution.

In order to pave the way for accelerated market penetration major changes in management were implemented at all instances in the past months. New CEOs and managing directors of distribution and marketing have been appointed both for pawisda and LSE.

In H1/2016, 38 million business letters were sent via pawisda solutions which is about 63% of the number of letters sent in full FY 2015, indicating a strong upward trend in mail traffic activity. This leaves pawisda with a market penetration of less than 1%, hence the company faces enormous growth potential. Since pawisda operates in a market at introduction stage, customer base growth could remain at 40 to 50 percent throughout the next years.

In its report for half year 2016 MAX21 posted T€760 in revenues which is an increase of 8% compared to short fiscal year 2015 (July – Dec 2015). On operating level revenues of LSE in H1/2015 were already above revenues of full FY 2014/15. Comparison on quarterly basis indicates that revenues of both LSE and pawisda declined in Q2 by 25% (QoQ). According to Management, this is in part due to the company’s heavy focus on restructuring and business development before it will now concentrate its resources fully on distribution and sales activities.

The cornerstone for a turnaround has been placed with the strategic realignment and heavy restructuring.In the next 12 months it will turn out whether this will translate into figures. Mainly in light of the lagging pawisda business we have reduced our fair value to € 2.44. The high forecast uncertainty is reflected in our applied Cost of Capital of 15%. Based on the current share price we rate the stock as BUY.