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Original-Research: Cenit AG - from GBC AG

07.11.2024 / 10:01 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
result of this research does not constitute investment advice or an
invitation to conclude certain stock exchange transactions.

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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: EUR 22.00
Target price on sight of: 31.12.2025
Last rating change:
Analyst: Cosmin Filker, Marcel Goldmann

9M 2024: Sales benefit from inorganic growth, earnings weighed down by
one-off effects, guidance and our forecasts reduced, price target lowered to
EUR22.00, Rating: BUY

Both organic and inorganic effects contributed to the 13.6 % increase in
CENIT AG's revenue to EUR151.43 million (previous year: EUR133.31 million) in
the first nine months of 2024. The companies CCE GmbH (acquired on 3 January
2024) and Analysis Prime LLC (acquired on 17 July 2024), which were acquired
in the current financial year 2024 alone, have contributed revenue of EUR7.52
million since joining the group. Adjusted for the contributions of the two
companies and for the base effect of the companies acquired in the previous
year, which are now included for the full reporting period, organic growth
was 4.3 %, close to the company's target of 5.0 %.

The increase in sales revenue was offset by a decline in EBIT to EUR3.97
million (previous year: EUR4.60 million) and thus in the EBIT margin to 2.6%
(previous year: 3.5%). This is mainly due to the acquisition-related
expenses and the associated sharp increase in depreciation on acquired
assets. While depreciation increased by EUR1.36 million, the acquisition costs
amounted to EUR0.82 million. In addition, there was a negative one-off effect
(EUR0.87 million) from the deconsolidation of the Japanese subsidiary.
Adjusted for the special effects, CENIT AG would have achieved an increase
in EBIT to EUR4.67 million (previous year: EUR3.95 million).

Despite the significant decline in EBIT, CENIT AG again generated a high
cash flow from operating activities of EUR9.91 million (previous year: EUR8.50
million). This covered a significant portion of the purchase price for the
two corporate acquisitions (EUR13.96 million). Together with the repayment of
bank liabilities, the company continues to have sufficient cash and cash
equivalents of EUR12.18 million.

In the run-up to the publication of the nine-month report, CENIT's
management adjusted its forecast. On the sales side, the contribution of the
acquired Analysis Prime was included in the guidance for the first time,
with the company expecting sales of EUR 205 - 210 million (previously: EUR 197 -
202 million). However, adjusted for the inorganic effect, this corresponds
to a slight reduction in the guidance, as the originally expected revenue
contribution of Analysis Prime of USD 11.5 million (EUR10.6 million) would
have led to a new guidance of EUR207.6 - 212.6 million. According to the
company, this is due to the current weak demand from the automotive and
aerospace industries, which is likely to lead to lower demand for single
licences in the fourth quarter of 2024. However, delays in the start of the
Analysis Prime order have also led to a reduction in revenue expectations at
this company. The expected gross profit loss of around EUR7m coincides with
extraordinary expenses that have already been incurred and higher
depreciation (PPA depreciation), meaning that the company expects EBIT to
fall to between EUR8.0m and EUR8.5m.

We are adjusting our forecasts to the new guidance and, on this basis, are
reducing our forecasts for the coming financial years. The full-year
inclusion of Analysis Prime, the cost-cutting measures introduced and the
absence of one-off effects should lead to a revenue increase and a
significant improvement in the EBIT margin in the coming financial year
2025. This trend should continue into 2026. On the basis of the adjusted
forecasts, we have set a new price target of EUR22.00 (previously: EUR24.15). We
continue to issue a BUY rating.

You can download the research here: http://www.more-ir.de/d/31203.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: 07/11/24 (08:21 am)
Date and time of the first dissemination of the study: 07/11/24 (10:00 am)

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2024405 07.11.2024 CET/CEST

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