Kapsch TrafficCom confirmed at HOLD, TP EUR 12.50 - Profit warning for 2020/21
We confirm our HOLD recommendation for Kapsch TrafficCom, but lower our 12-month target price to EUR 12.50 from EUR 14.50 following today's profit warning. The company issued sales guidance for the current year of -15-20%, EBIT is seen negative in the double digits and no dividend will be paid. Component revenue declines following lower traffic volumes as well as more delays in tender processes and awarding contracts were the key drivers behind abandoning the earlier positive EBIT outlook. As the effects seem related to the COVID-19 pandemic, management does not expect to catch-up before the next financial year. We have cut our 2020/21e forecast and our target price accordingly, but keep the HOLD recommendation as the long-term drivers seem to remain intact and we expect more house-cleaning news flow to emerge in the next weeks until the 1H 20/21 earnings presentation on November 18, 2020.Kapsch TrafficCom is an international supplier of superior intelligent transportation systems (ITS). Co. subdivided into the following three segments: Road Solution Projects; Services, System Extensions, Components Sales; and Others. The segment Road Solution Projects relates to the installation of ITS solutions. The segment Services, System Extensions, Components Sales relates to the sale of services and components in the area of ITS solutions. The segment Others relates to non-core business activities conducted by Kapsch Components KG. In this segment, Co. offers engineering solutions, electronic manufacturing and logistics services to affiliated entities and third parties.
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