Report
Daniel Grossjohann ...
  • Dr. Roger Becker

Book-to-bill ratio remains > 1; M&A sets strategic course

Note regarding MiFID II: This research report has been prepared by order of the issuer based on a contractual agreement and is being compensated for by the issuer. The research report has simultaneously been made publicly available to all interested persons. Hence, the receipt of this research report is to be regarded as a permitted insignificant non-monetary benefit according to § 64 para 7 sentence 2 No. 1 and 2 of the German Securities Trading Act (WpHG).

Frequentis AG (ISIN ATFREQUENT09, General Standard, FQT GY) has underlined the robustness of its business model with the 2020 figures presented. Revenue in the past fiscal year was € 299.4 million (previous year: €303.6 million), despite pandemic-related project delays, which we had somewhat underestimated. The significant outperformance of our EBIT expectation is notable - EBIT rose to €26.8 million in 2020 (2019: €17.2 million). However, this is likely due to temporary effects (less travel/trade fairs due to the pandemic) and cannot be carried forward into 2021 (EBIT margin 21e: 5-7%). Frequentis has made two strategic acquisitions in 2020 and intends to acquire parts of L3Harris - the product/solution portfolio is expanding, the company is increasingly becoming a software company. In our view, the capital market is still insufficiently pricing in this development (2021 EV/EBIT 15.6; median peer group 18.8); the Frequentis share therefore is still favourably priced.

Our DCF analysis results in a value per share of €21.46 and the peer group analysis based on 2021 and 2022 suggests an average value per share of €30.41. Equally weighting both approaches, the Fair Value per Frequentis share is €25.93. We reiterate our recommendation with “Buy”.

Underlying
Frequentis AG Wiener

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.

Provider
BankM Research
BankM Research

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.

Analysts
Daniel Grossjohann

Dr. Roger Becker

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