18.06.2018 - Equity Research Report (english) // buy

Research Report (Anno) – SYGNIS AG - 18.06.18 - english

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Unternehmen: SYGNIS AG
Branche: Biotechnologie-Pharma
Rating: buy
Kurs bei Erstellung in €: 1,42
Kursziel in €: 3,30
Mögl. Interessenskonflikt gem. §34b Abs.1 WpHG und FinAnv: 4;5a;6a;7;10;11

Strong sales growth and EBITDA break-even achieved in the last quarters, continued dynamic (inorganic organic) growth expected, SYGNIS serves high-growth future markets

In the past reporting periods, SYGNIS AG has achieved substantial progress. The finally completed integration of the companies acquired in 2016 and 2017, Expedeon Ltd., C.B.S. Scientific and Innova Biosciences, is particularly worthy of mention, as a result of which a significant expansion of the product range was achieved, as well as a related development of the distribution channels. During the course of product expansion, SYGNIS AG, which originally specialised in the areas of DNA/RNA sample enrichment and analysis, has succeeded in covering both of the important sub-areas of Life Sciences (genomics and proteomics), as well as supplementing the product range with the protein marking field. In addition, the Company also covers the area of immunodiagnostics and should be able to address the high-volume areas of laboratory diagnostics (point of care) and clinical diagnostics (hospital).

Due to the inorganic and organic (introduction of new products, new OEM deals etc.) growth, sales revenues climbed substantially in the FY 2017 to €7.80 million (PY: €1.79 million), which meant that the company fulfilled its own guidance (€7 – 8 million). The high sales dynamics also continued in the first quarter of 2018, with sales growth to €2.31 million (Q1 2017: €1.37 million), so that a sustainable increase in the sales level is evident from this.

The circumstance due to which SYGNIS AG achieved a positive EBITDA for the first time of €0.05 million in the fourth quarter of 2017 and in the following first quarter of 2018 is particularly worthy of mention. With the publication of the annual report for the 2016 financial year, the SYGNIS management held out the prospect of exactly this scenario of a first-time break-even in the fourth quarter of 2017. However, on a full-year basis for 2017, the EBITDA continued to be in the negative range, at €-2.46 million (PY: €-3.21 million).

According to the company, with sales revenues in the amount of €13 – 14 million, in the current financial year 2018, the EBITDA break-even should also be achieved on a full-year basis. In the company guidance, TGR Biosciences, which was acquired in the second quarter of 2018, is also included for the first time. The newly acquired company also has considerable overlaps with the SYGNIS product world, with its protein capturing products, and therefore goes hand-in-hand with high synergy potential. TGR Biosciences reports annual sales revenues of €3.6 million and operates clearly in break-even, with an EBITDA of €1.4 million. In 2018, TGR will be included in the SYGNIS Group for a total of eight months.

Analogously to the company forecast, we anticipate dynamic sales development as well as sustainable achievement of break-even on an EBITDA basis from the current financial year 2018. In addition to the broader sales basis, the reduction of operating costs following the completed integration of the acquired new companies is noteworthy. Based on this, the substantially higher sales level, which we expect, should also lead to a rising level of earnings.

Within the scope of our adapted DCF valuation model, we have calculated a fair enterprise value in the amount of €171.30 million (previously: €153.14 million). Broken down over the greater number of shares following the capital increase carried out for the TGR acquisition, this results in a unchanged target price of €3.30 (previously: €3.30). Based on the current share price of €1.42, we are maintaining our BUY rating. 


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