Frequentis confirmed at BUY, TP EUR 19 - Crisis tailwinds confirmed
Remarkable operating results and a stellar order intake confirmed our hopes for not only resilience during the crisis, but even benefits in the seasonally weak first half of the year. Management confirmed the stable to increasing order intake and sales outlook for 2020e and hinted at another 50% of travel cost savings in 2H, with virtualisation of training and site acceptance having a savings potential of 10-15% in the long run. Thus, we have become more optimistic on profitability, in particular for 2020e, but also the years ahead. Nevertheless, considering the deposit write-down and lower peer multiples, we have lowered our target price to EUR 19 from EUR 22 but confirm our BUY recommendation.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.
The Institutional Equity Research team of Raiffeisen Bank International AG covers 85 stocks from Austria, Central & Eastern Europe with sell-side research and thus levers our local broker status with excellent company relationships. For corporates in Austria, CEE and Western Europe, we offer co-sponsored research, which includes research coverage and marketing activities to investors. Additionally, through our Spotlight Research product we also shed light on leading European small and micro-caps, seeking greater visibility with investors.
The Institutional Equity Research team consists of roughly 15 analysts, both in Vienna and the CEE countries. Our analysts provide long-standing sector expertise in tandem with profound local market know how and a sectoral approach across the entire region.
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