CLARANOVA Initiation of coverage | BUY, EUR12 | Inherently Technological
CLARANOVA Initiation of coverage | BUY, EUR12 | Inherently TechnologicalAfter its creation as a pure physical software distributor, a strategic repositioning was successfully carried out in 2013 making Claranova a diversified technology group in fast-growing technology sectors. Sales and margin growth opportunities are therefore attractive over the MT and should drive the stock’s rebound after a temporary phase of “tech fatigue”. Upside potential for the re-rating is quite significant given two other catalysts that are not included in our valuation: 1/ the gradual arrival of anchor investors to support the simplification of Claranova’s shareholding structure, and 2/ future monetisation of its most-developed asset PlanetArt (i.e. IPO, partial or total sale to financial or strategic investors). As such, we are initiating Claranova with a Buy rating and a TP of EUR12, implying material upside of 159%.
• A diversified tech group with an appealing sales and margin growth outlook. Claranova operates in three major tech sectors: e-commerce (PlanetArt), software (Avanquest) and IoT (myDevices). These three divisions boast high sales growth and margin improvement potential, as indicated by our forecasts for a 2022-25 CAGR of ~11% for sales and ~25% for EBITDA, which factor in no contribution from future acquisitions
• NAV materially above current share price levels. Claranova’s diversified portfolio strategy requires an SOTP approach. We have deliberately retained cautious organic growth assumptions, as well as a significant 20% holding company discount, to underscore Claranova’s unmerited discount. Indeed, our valuation comes out at EUR12/share, representing 159% upside vs. the current share price. As an illustration, we estimate that PlanetArt (EUR370m) and Avanquest (EUR328m) are worth more than Claranova’s market cap (EUR210m).
• Two powerful levers on top of Claranova’s attractive growth profile: Beyond the temporary “tech fatigue” that has placed the entire consumer tech sector under pressure since this summer, we are convinced the share’s rerating will also be driven by two other levers: 1/ the growing presence of institutional investors within Claranova’s shareholding structure, as evidenced by the entry of Heights Capital Management and Ophir AM this summer, and 2/ asset monetisation. On that front, PlanetArt would be the most obvious choice. Any proceeds would be returned to shareholders through share buybacks, or reinvested in new businesses
Avanquest Software and its subsidiaries are engaged in manufacturing and distributing of communication software. Co. markets its communication software through Original Equipment Manufacturer (OEM) agreements signed with international modem, computer and cellular phone vendors. Co. also sells its communication software "in shops" through a network of Resellers and, currently, on its Web sites. In addition to the software, Co. provides customers with the software medium (floppy disks or CD-ROM), and an electronics User Guide and online help, included with the product. Co.'s Customer Service department can also provide clients with technical assistance for its products.
Since 1996, Bryan, Garnier & Co has been growing with an absolute conviction that the investment banking landscape would experience a major revolution: most of the large local generalist banking groups will disappear to the benefit of a handful of global powerhouses, and an emerging group of independent, highly specialised boutique investment banks.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.