Original-Research: SYZYGY AG - von GBC AG
Einstufung von GBC AG zu SYZYGY AG
Unternehmen: SYZYGY AG
Anlass der Studie: Research Note
Kursziel: 9.60 EUR
Kursziel auf Sicht von: 31.12.2021
Analyst: Cosmin Filker; Marcel Goldmann
Visible revenue growth of foreign subsidiaries; German SYZYGY companies with positive trend; new record Q1 EBIT achieved; forecasts and price target of EUR9.60 confirmed; Rating: BUY
In the first quarter of 2021, SYZYGY AG generated moderate revenue growth of 0.9% with total revenue of EUR15.06 million (previous year: EUR14.93 million). Although the company still has a low growth dynamic, there is a clear trend reversal after the previous periods were characterised by declining turnover. This trend reversal is particularly a result of the strong growth in revenues of their international subsidiaries. In Great Britain and the USA, an increase in turnover of 34.4% was achieved by expanding business with existing customers, which can be seen as a clear sign of a sustainable trend reversal. This contrasts with a slight decline in domestic sales of -2.9%. After SYZYGY AG's being characterised by strong revenue declines in Germany from the second quarter of 2020 onwards, a catch-up trend is visible here. In the last three quarters of 2020, the average decline in revenue was -8.5% and, thus, a weakening of this trend can be seen in the first quarter of 2021.
The slight increase in turnover of 0.9 % contrasts with a significant improvement in EBIT of 42.8 % to EUR 1.57 million (previous year: EUR 1.10 million), so that the EBIT margin rose significantly to 10.4 % (previous year: 7.4 %). In a Q1 comparison, the EBIT level reached marks a new record.
With the publication of the Q1 figures for 2021, SYZYGY management has confirmed the guidance published in their 2020 annual report. Thus, for the current financial year 2021, an increase in revenue of around 10% and an EBIT margin in the high single-digit percentage range are still expected. The Q1 figures provide a good basis for both the revenue guidance and the achievement of the EBIT forecast. Even though only a moderate increase in turnover was achieved, it is important to bear in mind that in the previous year, the second and third quarters in particular were affected by the restrictions in connection with the corona pandemic, so that a significant increase in turnover can be expected in these quarters.
The company can currently see that the pandemic-related restraint seems to have been overcome and is observing an increase in customer enquiries. In addition, the turnaround achieved by the international companies should continue on the basis of budget increases with existing clients as well as an increase in new client business. As was observed in the first quarter, the turnover dynamics of the German companies should be lower against this background, but this is also due to the base effect of the higher revenue level.
In terms of earnings, SYZYGY AG has already exceeded its target for the full year 2021. For the remainder of the year, the forecast increases in sales and the fact that marketing and sales costs are expected to remain low (no more face-to-face events) should contribute to the disproportionate EBIT development.
We confirm our forecasts for the current financial year and continue to expect an increase in revenue of 10 % to EUR 61.07 million in 2021. We maintain this dynamic in our forecasts for the coming financial years. Our EBIT forecast of EUR 6.09 million, which is also unchanged, corresponds to an expected EBIT margin of 10.0 % and should be easily achievable in view of the Q1 value. We also assume further improvements in profitability for the following years.
As our estimates remain unchanged, we confirm our price target of EUR 9.60 per share. At the current share price of EUR 6.10 we continue to give the rating BUY.
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Date (time) completion german version: 06.05.21 (3:08 pm) Date (time) first transmission german version: 07.05.21 (09:30 am)
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