Update on SARE S.A. after 9M/16 results
Despite model adjustments, our 12-months PT (80% DCF, 20% peer-group-based fair value) for SARE of PLN 28.10 and the BUY rating remain unchanged. As the 9M/16 results showed stronger top-line growth but higher shares of deprecation and personnel expenses than we had expected, we have increased our sales forecasts and lowered the margin estimates for 2016. This also affects our forecasts for the following years. In our view, SARE remains an interesting investment opportunity due to its cash-generating business model, which should allow it to pay out attractive dividends in the long run. As main risk factors, we see strong competition and foreign expansion. SARE’s German subsidiary has so far not generated any revenues and reported a net loss of PLN 71k for 9M/16. However, although the German market is challenging, we believe that it will likely sign first contracts with clients in H1/17E.​
Digitree Group SA, formerly Sare SA, is a Poland-based holding company engaged in the digital marketing industry. The Company provides software solutions, as well as e-marketing services and sales support in the domestic market and internationally. It organizes activities into six segments, based on the operations of the Group companies. SARE offers tools for implementing integrated and targeted communication via e-mail and mobile channels. INIS and JU specialize in e-mail marketing campaigns. Salelifter, Adepto and Cashback Services are engaged in database building, lead generation, financial intermediation and cashback services. VideoTarget provides solutions in the area of video advertising. Sales Intelligence provides marketing tools and software for the e-commerce market. Fast White Cat specializes in creating online shops.
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