Expedeon AG

26.11.2018 - Equity Research Report (english) // buy

Research Note - Expedeon AG - english

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Unternehmen: Expedeon AG
Branche: Industrie-Maschinenbau-Technologie-Automotive
Rating: buy
Kurs bei Erstellung in €: 1,01
Kursziel in €: 3,20
Mögl. Interessenskonflikt gem. §34b Abs.1 WpHG und FinAnv: 4;5a;6a;7;10;11

The clear upward trend in revenues already shown by Expedeon AG in previous quarters is also visible in the 2018 9-month figures. Revenues of EUR 9.28 million (previous year: EUR. 5.34 million) were significantly above the previous year, as expected. This stems from both organic growth (expansion of the product range, expansion of the client base, increased demand for Expedeon products, etc.) as well as the high level of acquisition activity in previous financial years. The acquisitions in 2016 of Expedeon Ltd. and C.B.S. Scientific were noteworthy, as was the acquisition of Innova Biosciences in 2017. Australian company TGR Biosciences was also acquired in the first half of 2018, but was only consolidated into the Group on 01/05/2018 and so had only a proportionate effect on Expedeon Group revenues. In line with the strong growth in revenue, the brake-even and therefore a slightly positive result was achieved for the first time in EBITDA. EBITDA therefore improved significantly to EUR 0.14 million (previous year: EUR -2.52 million).

On the basis of the half-year figures, Expedeon AG has confirmed the most recently upgraded forecasts. In addition, sales of between EUR 13 million and EUR 14 million are expected and, for the first time, a break-even in EBITDA. To achieve the revenue guidance, the Company would have to generate further revenues of between EUR 3.7 million and EUR 4.7 million in the last quarter of the year. Based on the quarter just ended (Q3 2018), in which revenues of EUR 3.66 million were achieved, the Company’s forecasts appear to be realistic. By contrast, our previous forecasts are somewhat too offensive, so we are anticipating a slight reduction to € 13.20 million (previously: € 13.91 million).

In addition, we are expecting the previously initiated growth trajectory to continue in the second half of the year. The ongoing launch of new products is helping to tap into new customers and markets. One example is the introduction of the TruePrimeTM apoptotic cell-free DNA amplification kit at the end of 2017. This liquid biopsy kit can be used to amplify circulating tumour DNA in fluid. This is therefore expected to become an important tool for oncological research and diagnostics. Further product launches and the leveraging of synergy effects should have a positive impact on revenue development. We therefore confirm our medium term sales and profit estimates.

The Company is well on the way to achieving its target of positive EBITDA for the full year. Against the backdrop of an expected increase in revenue and the complete consolidation of TGR earning contributions in the second half of the year, we see this as a very realistic target. Our expected EBITDA of € 0.52 million (previously: € 0.95 million) reflects the slightly lower sales expectations.

Based on the slightly reduced forecasts in our DCF-model we have determined new price target of EUR 3.20 (previously: EUR 3.30) per share. With a current price level of EUR 1.01, there is still abundant price potential and we therefore confirm our BUY rating.


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