Edison Investment Research - Txt (TXT) TXT e-solutions - Cheleo acquisition drives upgrades

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Edison Investment Research

Katherine Thompson

TXT e-solutions - Cheleo acquisition drives upgrades

TXT reported H118 revenue growth of 6% y-o-y; investments in R&D and sales and marketing ahead of this growth rate resulted in margin pressure in H118. TXT has completed the acquisition of a majority stake in Cheleo and we have factored this into our forecasts from 1 August. The combination of slightly lower growth forecasts for TXT Next, a one-off tax credit and the higher margin growth of Cheleo results in normalised EPS upgrades of 16% in FY18e and 24% in FY19e. After paying for Cheleo, we estimate the company has funds of more than â‚¬70m to invest in accretive acquisitions in the transportation and fintech markets.

06/08/2018 6 EN

Underlying

Txt

TXT e-solutions SpA is an Italy-based company engaged in the information and communication technologies (ICT) market. It provides software and services-based solutions to enterprises. The Company structures its business into two main segments: TXT Perform and TXT Next. In the TXT Perform segment, it designs and develops software and IT solutions for fashion and luxury, specialty retail, consumer packaged goods (CPG) and discrete manufacturing sector. Through the TXT Next segment, the Company offers system integration and IT services to such sector as aerospace and defense, high-tech manufacturing, and banking and finance. It operates through subsidiaries: TXT e-solutions Ltd, the United Kingdom; TXT e-solutions GmbH, Germany; TXT e-solutions SL, Spain; TXT e-solutions Sarl, France; Maple Lake Ltd, Canada and Maple Lake Australia Pty Ltd, Australia amd PACE Aerospace Engineering and Information Technology GmbH.

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IT0001454435 Italy

Provider

Edison Investment Research

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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Analysts

Katherine Thompson

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TXT e-solutions - Cheleo acquisition drives upgrades

TXT e-solutions S.p.A: 1 director

TXT e-solutions - Termination of coverage

TXT e-solutions - Termination of coverage

Topps Tiles - Accelerating growth through Q125

Baillie Gifford US Growth Trust - A unique high-growth strategy meriting support

Greggs - More challenging environment in H224

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