H1 weak, good reasons for a much stronger second half
​Weaker than expected business in the non-European countries has resulted in a substantial decline in sales to €1.78 million (-34%) in H1 of PA Power Automation AG (ISIN DE0006924400, Entry Standard, PPA GR). While macroeconomic or political reasons are given for the development in China and Turkey, the US retrofit business failed to meet expectations because the local partner was behind in planning. Business in Europe (especially France) on the other hand developed well. The new PA 9000 series introduced to the market in June should develop traction in H2, and the increased proportion of software in overall revenue should strengthen margins. Nevertheless, the total annual revenue (€8.9 million) expected by us appears (after H1) hard to attain, so we are reducing our sales and earnings expectations. The result is a reduced target of €2.80. In view of this, we reduce our fair value to €2.80 per share. In light of the current price we adhere to our BUY rating.
PA Power Automation AG. PA Power Automation AG is a Germany-based developer, manufacturer and marketer of personal computer (PC)-based computer numerically controlled (CNC) software and systems. Its customers are mainly manufacturers of machine tools for waterjet cutting, laser cutting and plasma and oxy-fuel cutting. The Company's product portfolio comprises the PA 9000 series and the PA 8000 series, as well as related Input/Output (I/O) modules, panels, and software tools. The Company operates through its development and production subsidiary Power Automation GmbH and the distribution companies Power Automation France Sarl, Power Automation America Inc, and the joint venture Han's PA Automation Technology Co Ltd.
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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