U.S. business trajectory remains flat for now
​After lagging figures of PA Power Automation AG (ISIN DE0006924400, Entry Standard, PPA GR) in the first half of 2016 we had strongly anticipated fueled growth in the U.S. in H2 due to the retrofit business. However, it has become evident that PA will not meet these expectations in 2016 which has led us to adjust our projections. Thus, we now expect sales of €7.3 mln for the fiscal year and estimate the EBIT at €0.8 as opposed to €1.2 mln. which we had previously anticipated. As a result of the decrease in revenue EBIT will drop at a disproportionately high level since the company’s high margin sales within its U.S. software business are affected. Now it is PA’s turn to realize the generally high market potential in this region. In light of our adjusted estimates we reduce our target price to €2.45. At the same time, we see some potential for an increase in PA’s share price in the future. Hence, we rate the share as “Holdâ€.
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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