30.01.2015 | Austria
Energy revolution: S&T is vigorously muscling in
Wirtschaftsblatt, 30.1.2015EBIDTA growth of 20 per cent in the first nine months of 2014, dividends for the first time in the company's history, a central position in the Smart Grid market and impressive projects in the pipeline: it's hard not to like S&T at the moment.
Only rarely have we been as hard on any stock as on that of S&T. In view of the formerly available quarterly figures, we were horrified at the beginning of 2011. The days of the Viennese IT service provider seemed numbered. At the same time, the company controlling S&T today was eagerly writing its success story: Linz-based Quanmax AG (formerly Gericom) became a talking point on account of growth figures and had long been active in the sphere of cloud computing that is so important today; in 2011 Quanmax took over the majority of S&T, finally merging with the company in 2012.
On stock exchange forums, Frankfurt-listed Quanmax was discussed by only a few. Anyone with guts at that time would buy for around € 0.60, sticking out rises and falls, holding today, under the name of S&T, a paper at approx. € 3.25. Most recently, S&T properly stepped on the accelerator in October 2014, with the price rising by almost 40 per cent within a few weeks. The background was a Smart Energy contract amounting to US$ 20 million - the biggest so far in the company's history.
The increase from a little over € 2.50 to over € 3.50 set a benchmark which the stock has striven to achieve without success ever since. At present, there is a downward trend again towards a barrier of € 3.18. From our point of view, however, the powerful development is based on conditions that make the share attractive in the long run.
There is a dividend (€ 0.06) for the first time in 2014. It is true that S&T has no profit-related benchmark, but: "It will always be the same as or higher than in the previous year", promises CEO Hannes Niederhauser. He holds a share of 14.9 per cent, and apart from a basic salary of € 500 lives on the dividend. At the same time, the perspective of 420,000 stock options was held out to the management in 2014 (term of four years, value € 0.3622). The interest of the management in the share price is likely to be ensured.
The course is set: the European Union requires that 80 per cent of households are equipped with intelligent electricity meters (Smart Meters) by 2019. "A € 40 billion market", according to Niederhauser, who entered the market only one year ago. A total of 200 million meters are required to meet the EU quota. Four million of the currently installed twelve million Smart Meters originate from S&T.
The Appliances sector, which Smart Energy is part of, grew by 66 per cent as compared to six per cent for S&T overall. The EBITDA margin is 17 per cent (group: six per cent). In view of all this, investments in M&A are not very likely in the near future: "I do not need any acquisitions, owing to Smart Grid we can quickly grow organically", Niederhauser says in the Wirtschaftsblatt interview. The unprofitable hardware, on the other hand, will be reduced considerably. The motto: "No hardware without service."
At the same time, margins are meant to be increased further by expanding cloud services. In the security sphere, as much as half of the sales is accounted for by cloud services (e.g. virtual firewalls). "This has resulted in a very nice increase of margins. And I do not have to dispatch a little box any longer," says Niederhauser. "Our best salesman was Edward Snowden. We have equipped three countries with the "Steel Cloud" that does not leave the country," Niederhauser comments the new need for
security. At the moment, pilot projects for potential contracts in the amount of € 3 billion are running at S&T.