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Original-Research: Cenit AG - from GBC AG

05.08.2024 / 13:01 CET/CEST
Dissemination of a Research, transmitted by EQS News - a service of EQS
Group AG.
The issuer is solely responsible for the content of this research. The
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Classification of GBC AG to Cenit AG

Company Name: Cenit AG
ISIN: DE0005407100

Reason for the research: Research Comment
Recommendation: BUY
Target price: 24.15 EUR
Target price on sight of: 31.12.2025
Last rating change:
Analyst: Cosmin Filker, Marcel Goldmann

1st HY 2024: Acquisition of Analysis Prime is value-enhancing, HY figures in
line with expectations, price target raised to EUR24.15 (previously: EUR20.55),
rating: BUY

In the first six months of the current business year, CENIT AG once again
achieved significant sales growth of 6.7% to EUR 93.36 million (previous year:
EUR 87.47 million). Following sales growth of 16.4% in the first quarter of
the current financial year, sales growth in the second quarter remained in
the double-digit range at 10.8%.

Despite the increase in sales, CENIT AG recorded a decline in EBIT to EUR 2.01
million (previous year: EUR 2.62 million). Adjusted for acquisition-related
expenses (acquisition of CCE and acquisition of Analysis Prime) and the
disposal of CENIT Japan, which contributed EUR 0.87 million to EBIT in the
previous year, CENIT AG would have achieved an EBIT increase of 33.2% to EUR
2.62 million (previous year: EUR 1.97 million).

On 17 July 2024, CENIT announced the acquisition of 60% of the shares in the
US company Analysis Prime LLC. Founded in 2018, the company has a total of
72 employees and is active in the field of planning and analysing
business-critical processes based on SAP architecture. The company has a
high degree of specialisation and is able to call up high daily rates for
consulting and implementation.

A provisional base price of USD 14.31 million was agreed for the acquisition
of 60% of the shares. The final purchase price and the variable components
will not be determined until Analysis Prime has presented its interim
financial statements. For the current 2024 financial year, CENIT AG expects
a pro rata sales contribution of USD 11.50 million and EBIT of USD 2.70
million.

Analysis Prime has recorded strong sales growth in recent financial years
and has a highly scalable business model. With this acquisition, CENIT AG is
increasingly entering the US market, which is accompanied by corresponding
cross-selling potential. For example, the ISR consulting business, which
covers the infrastructure area in the SAP Analytics environment in
particular, can be transferred to the USA. In the opposite direction, the
Analysis Prime business is to be transferred to Europe. In the USA, the
newly acquired company is the market leader in its field and an important
partner for SAP.

CENIT's Management Board has confirmed the previous forecast in its
half-year report. Sales of EUR 195 million to EUR 202 million and EBIT of EUR
11.70 million to EUR 12.20 million are still expected for the current
financial year.

These forecasts do not yet include the recently acquired Analysis Prime.
According to the company, the new company is expected to contribute sales of
USD 11.50 million and EBIT of USD 2.70 million in 2024. This is a pro rata
temporis figure, as the company will only be included in the CENIT scope of
consolidation from 1 August 2024. The expected EBIT contribution from
Analysis Prime also does not include any M&A-related expenses or
amortisation of acquired intangible assets (PPA). According to the Executive
Board, Analysis Prime is not expected to contribute to earnings in 2024
after taking these expenses into account. We only expect to see a visible
jump in earnings from the following financial year.

For the current 2024 financial year, we therefore expect sales of EUR 211.12
million (previously: EUR 200.42 million) and an unchanged EBIT of EUR 12.01
million (previously: EUR 12.01 million). With sales growth of 5.0%, we expect
an acquisition-related sales contribution of EUR 24.21 million (2025) and EUR
25.43 million (2026) and are raising our sales forecasts accordingly. We
expect PPA amortisation of EUR 3.0 million and an acquisition-related EBIT
contribution of EUR 2.21 million (2025) and EUR 2.87 million (2026). We have
adjusted our earnings forecasts accordingly.

As part of the DCF valuation model, we assume a constant shareholding of
60%. In addition to the provisional base purchase price of USD 14.31 million
(EUR 13.31 million), a variable earn-out could become due in 2025. We
anticipate an additional purchase price of EUR 2.89 million. We have
determined a new target price of EUR 24.15 (previously: EUR 20.55). Adjusted for
the price target-increasing rollover effect, this results in a price target
of EUR22.14, which we categorise as value-enhancing for the acquisition of
Analysis Prime. We confirm our BIY rating.

You can download the research here: http://www.more-ir.de/d/30369.pdf

Contact for questions:
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Disclosure of potential conflicts of interest pursuant to Section 85 WpHG
and Art. 20 MAR The company analysed above has the following potential
conflict of interest: (5a,6a,7,11); A catalogue of potential conflicts of
interest can be found at:

https://www.gbc-ag.de/de/Offenlegung.htm
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Date and time of completion of the study: 05/08/24 (08:52 am)
Date and time of the first dissemination of the study: 05/08/24 (1:00 pm)

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1960711 05.08.2024 CET/CEST

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