Kapsch TrafficCom confirmed at HOLD, TP EUR 17 - Timing the hockey-stick effect of top line recovery is hard
Kapsch TrafficCom expects a decent growth in revenues, albeit from a low base, and a low single-digit EBIT margin for 2021/22 following a year of digesting impairments, cost overruns and restructuringThe mid-term Strategy 2027 is ambitious, with a revenue target of more than EUR 1 bn and an EBIT margin north of 10%, but visibility is low at the moment and we rather stick to mid-single digit growth for now while acknowledging the strong earnings potential once material revenue growth kicks in. Timing, however, is key and hard to do right now
We confirm our HOLD recommendation and raise our price target to EUR 17 (EUR 12.50) as lower risk free rates, peer rerating and a shift in horizon more towards 2022 outpaces lower earnings forecasts
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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