Underperform rating and EPS forecasts unchanged. The revenues realTech posted (+30% to EUR 12.3 mn) were in line with our projection (EUR 12.1 mn). EBIT came in at EUR -0.5 mn, which was higher than we had expected (EUR -0.9 mn), while net income (EUR -0.5 mn) was shy of the EUR -0.3 mn we had predicted.
The turnaround will take some time yet.
Software licensing revenues (+22% yoy) were a disappointment, since realTech plans to focus more on the product side of the business. The backdrop to the weak licensing revenues is the delayed rollout of the new product theGuard! 2.0. On the other hand, the consulting business (+29%) developed very well. The hosting business, in contrast, contributed 1.6% to revenues and developed as we had expected.
Valuation:
Based on our peer group analysis, realTech is valued at an EV/EBITDA multiple for 2002 of 7.0 versus the average of 6.3, and the stock price therefore had downside potential of 10%. Our DCF Model supports this calculation with a fair value that is also 10% below the current stock price of EUR 17.00. We are therefore confirming our Underperform rating.
