WOOD Flash – Logo Yazilim: recent newsflow supportive of our investment case
Over the past couple of weeks, we have witnessed a series of positive newsflow items for Logo, which is supportive of our BUY rating. In this flash note, we summarise some of these recent developments and comment on their implications for our Logo investment thesis. In our comprehensive report, dated 2 November, we lifted our earnings estimates and PT (to TRY 160.0/share, from TRY 71.1/share) significantly, on our expectations of an improved operating performance in 2024E. Although the stock price is up 20% since our PT upgrade, Logo’s shares still trade at undemanding EV/EBITDA and P/E multiples of 5.0x and 7.8x, respectively, at deep discounts to its global enterprise application software (EAS) peers (trading in a range of 15-20x on the consensus 2024E EBITDA and NI forecasts). Considering Logo’s prominent position in the Turkish enterprise applications software (EAS) market, its strong growth characteristics (supported by long-term secular drivers) and its FCF generative business model (and its net cash position and share buyback programme), we believe the current stock price represents an unjustified valuation anomaly that should disappear, in our view.Logo Yazilim Sanayi ve Ticaret AS is a Turkey-based company engaged in the development of computer operation systems, business application software, database structures, multimedia software, as well as in the provision of technical support and service, and training. The Company's products are offered in eight units: Small and Medium Enterprises (SME) products, Enterprise Resource Planning (ERP) products, Java products, Vertical solutions, Integration products, Human Resources (HR) products, Business Intelligence solutions, Mobile solutions and LOGO keys. Its products and services are used in a range of industries, such as distribution, machine and automotive spare parts, marine, packaging, retailing, cement, glass, steel, furniture, telecommunication, information technology (IT), tourism and textile. The Company has business partners in Azerbaijan, Egypt, Georgia, Germany, India, Iran, Iraq, Kazakhstan, Kyrgyzstan, Kosovo, Kuwait, Libya, Russia, Sudan, Syria, Turkmenistan, and the Unit
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