Original-Research: Vectron Systems AG - from GBC AG

Classification of GBC AG to Vectron Systems AG

Company Name: Vectron Systems AG


Reason for the research: Research Comment

Recommendation: BUY

Target price: 10.00 EUR

Target price on sight of: 31.12.2024

Last rating change:

Analyst: Cosmin Filker, Matthias Greiffenberger

Preliminary figures for 2023: Sales and earnings development in line with

expectations, rating: BUY


Vectron Systems AG (Vectron for short) published its preliminary figures

for the past fiscal year 2023 on 21 February 2024. With sales revenue of EUR

37.4 million (previous year: EUR 25.2 million), the company not only

significantly exceeded the previous year's figure by 48%, but also returned

to its growth path as expected. This figure was in the upper half of the

sales guidance, which forecast sales in a range of EUR 36.0 million to EUR 37.8

million. Our forecast (GBC estimate: EUR 38.6 million) was also almost



According to our calculations, Vectron sales increased by 11% to EUR 28.0

million (previous year: EUR 25.2 million). The main reason for the sales

growth in the Vectron division (POS systems and digital services) was the

further increase in recurring income by 53% to EUR 13.2 million (previous

year: EUR 8.6 million), which now accounts for 47% (previous year: 34%) of

total sales in this division. This clearly reflects the company's focus on

expanding its digital business in particular. Accordingly, Vectron has

outsourced hardware production to external partners. The sales of acardo

group AG (acardo), which was acquired on 1 January 2023, also contributed

to the overall increase in sales. According to our findings, the inorganic

contribution to sales is likely to have exceeded EUR10 million.


Thanks to the expansion of the digital business and the earnings

contribution of the acquired acardo, the turnaround was achieved with

EBITDA of EUR 3.0 million (previous year: EUR -3.9 million). At the same time,

the preliminary EBITDA was at the upper end of the guidance raised in

October, which had forecast EBITDA in a range of EUR 2.2 million to EUR 3.2

million. Our EBITDA estimate (GBC forecast: EUR 3.2 million) was also almost

achieved. EBITDA should be characterised by extraordinary income from the

reversal of provisions.


Even if this is a one-off effect, a disproportionately high improvement in

earnings should still be achieved in the current financial year 2024. On

the one hand, the expansion of the digital business will be accompanied by

higher margins. On the other hand, the cost-cutting measures introduced in

the hardware area are not expected to take full effect until 2024. The

expansion of the digital business and thus of recurring sales will also

make the company less dependent on external fluctuations in demand. Vectron

has not yet felt any negative effects from the VAT increase for the

catering industry. On the contrary, digital services are likely to be in

greater demand against the backdrop of staff shortages in the sector.


The acquisition of acardo should also make a significant contribution to

sales and earnings in the current 2024 financial year. The couponing

specialist announced the expansion of its couponing network by a further

3,500 stores at the beginning of the year, making it the largest check-out

couponing network in Germany. Against this backdrop, Vectron's guidance

should remain valid and we are maintaining our estimates for the financial

years 2024 and 2025.


As part of the DCF valuation model, we have determined a target price of EUR

10.00 (previously: EUR 10.10). The marginal reduction in the target price is

due to the increase in the risk-free interest rate and thus the weighted

cost of capital. On the other hand, we have raised the perpetual growth

rate by 0.5% due to inflation, which has had the effect of increasing the

price target. We continue to assign the BUY rating.


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Date (time) completion: 26.02.24 (10:15 am)

Date (time) first transmission: 26.02.24 (11:30 am)

-------------------transmitted by EQS Group AG.-------------------

The issuer is solely responsible for the content of this research.

The result of this research does not constitute investment advice

or an invitation to conclude certain stock exchange transactions.