The Q2/2001 revenue figure remained unchanged at a 31% increase to EUR 14.2 mn, about 6% down on our estimate, and , at EUR 0.2 mn, net earnings turned out significantly poorer than the EUR 0.9 mn we projected. We have reduced our revenue estimate for the 2001 financial year slightly from EUR 62.0 mn to EUR 61.1 mn and have lowered our EPS estimate from EUR 0.42 to EUR 0.37.
Product business involving software licenses was down on expectations. At EUR 1.4 mn, revenues from the higher-margin software licensing business were about 30% short of our estimate, even posting an 8% decline compared with the same quarter last year. The Company managed to largely make up for the poor product business with good performance in ist consulting business in the currently favorable SAP environment. Due to this breakdown of revenues, the gross margin did, however, drop from 41% in Q2/2000 to 35% in Q2/2001. We expect to see a modest improvement in the gross margin in the course of the year as product sales pick up thanks to a stepped-up campaign to market the new theGuard! Suite.
Valuation: Based on our peer-group analysis, REALTECH is trading at a 2002 EV/EBITDA multiple of 4.5 compared with an average of 5.1. This would give the stock 13% upside potential at the moment. Our DCF model produces 24% upside potential to fair value. Given that our target level for the NEMAX 50 index currently works out to upside potential of more than 70%, we reaffirm our Underperform rating for REALTECH.
by Friederike Herkommer
