CREALOGIX — Update 23 March 2016

CREALOGIX (SW: CLXN)

Last close As at 19/04/2024

124.50

0.00 (0.00%)

Market capitalisation

174m

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Research: TMT

CREALOGIX — Update 23 March 2016

CREALOGIX

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Written by

TMT

CREALOGIX

The revenue ramp up begins

Software

QuickView

23 March 2016

Price

CHF82.00

Market cap

CHF88m

Share price graph

Share details

Code

CLXN

Listing

Switzerland

Shares in issue

1.07m

Business description

CREALOGIX provides digital banking technology solutions to banks, wealth managers and other financial services companies. The company’s suite of solutions includes online and mobile banking, digital payments, digital learning and security.

Bull

Heavily invested and fully tested product.

Leveraging Swiss-gained IP and know-how into the global marketplace.

Elaxy deal provides a route into the potentially highly lucrative German market.

Bear

Significant losses in FY15.

Does not pay a dividend.

Small free float (30%).

Analysts

Richard Jeans

+44 (0)20 3077 5700

Katherine Thompson

+44 (0)20 3077 5730

CREALOGIX’s front-end banking applications have gained strong credence in the Swiss market, where the group’s core online/mobile applications are in exclusive use in 11 of the top 30 Swiss banks. CREALOGIX is now expanding the opportunity globally, primarily targeting the UK, Germany and Austria as well as the nascent Asian market. The group has returned to EBITDA profitability and in our view is well positioned to benefit from attractive business drivers as traditional banks are forced to update their technology to maintain competitiveness against nimble fintechs entering the space.

Digital banking in strong growth phase

Digital banking is in a major growth phase globally, boosted by the advent of smartphones and tablets; smartphones are expected to take 80% of the banking market by 2020 (AT Kearney). This is driving increasing spend on front-end systems and CREALOGIX expects the front-end system spend to rise to c 50% of banks total spend within five years, from c 20% at present and c 5% traditionally.

Acquisition of ELAXY from Fiducia & GAD IT

In October 2015, CREALOGIX announced a long-term commercial agreement with Fiducia & GAD IT, the IT-service provider to the German Volksbank and Raiffeisenbank associations. The deal, which also involves CREALOGIX acquiring 80% of ELAXY Financial Software & Solutions and 20% of ELAXY Business Solution & Services, provides CREALOGIX with an established route to the German banking market, which otherwise would be more difficult to break into.

H116 results: Returning to positive EBITDA

H1 revenues jumped 16% to CHF27.9m while EBITDA swung to CHF0.1m from a loss in the prior period. This reflects the previously announced actions the group has taken to accelerate sales while reducing costs. The group ended the period with CHF10.0m of net cash, which is after CHF2.7m of acquisition liabilities.

Forecasts and valuation: No consensus numbers yet

The group is budgeting for FY16 revenues of c CHF54m (excluding ELAXY). However, CREALOGIX already has c 87% of these revenues in the bag. The ELAXY deal has expanded the pipeline significantly to stand at c CHF63m. CREALOGIX is aiming for 20%pa+ medium-term revenue growth and if it can boost margins to c 10% in the process, we believe there is significant scope for upside.

Historical financials

Year
end 30 June

Revenue
(CHFm)

EBITDA
(CHFm)

EPS
(c)

DPS
(c)

P/E
(x)

Yield
(%)

FY14

50.1

1.7

(1.44)

0.0

N/A

N/A

FY15

49.3

(10.6)

(9.65)

0.0

N/A

N/A

H115

24.0

(6.3)

(5.47)

0.0

N/A

N/A

H116

27.9

0.1

(1.26)

0.0

N/A

N/A

Source: Company accounts

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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

Wellington +64 (0)48 948 555

Level 15, 171 Featherston St

Wellington 6011

New Zealand

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

Wellington +64 (0)48 948 555

Level 15, 171 Featherston St

Wellington 6011

New Zealand

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