Update: Unpriced growth opportunity
The key takeaway from CENIT’s Q1 results was the strong growth in proprietary software sales (up 25% year-on-year). We have previously highlighted this as one of the key catalysts for earnings growth, and while one quarter’s strength does not make a trend, it is certainly a promising start. Proprietary software currently only accounts for 14% of total revenue, and its strong growth was partially offset by an 8% decline in consultancy services (42% of Q115 revenue); however, its higher margin helped contribute to an impressive 10.7% y-o-y EBIT growth. We have not changed our estimates, but a continuation of this trend could lead to a substantial increase in earnings for the year.Cenit is a holding company, engaged in the IT services and consulting industry. Co. provides all types of services in the field of introducing and operating information technology and to sell and market information technology software and systems. Co. has two business divisions: Product Lifecycle Management (PLM) and Enterprise Information Management (EIM). The PLM segment focuses on industrial customers and the corresponding technologies. Its industry focus is on the automotive, aerospace, mechanical engineering and shipbuilding industries. The Enterprise Information Management (EIM) segment focuses on the customer segment of trade and commerce, banks, insurance firms and utilities.
Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisors and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting.
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