Dr. Kalliwoda

Francotyp Postalia Holding AG - Potential growth ahead spurred on by ACT

∎ The ACT strategy launched by the end of 2016 by the Management and Supervisory Boards will become one of the driving forces behind revenue growth in the near future. According to ACT, FP is following a three step approach. Attack in its core franking machine business, in order to gain a greater market share. Secondly, the company will guide the customer from the analogue into the digital world, developing and offering customer friendly added value solutions, based on its core competencies and assets. In addition, FP prepares to enter new markets apart from its present reach and to transform itself into a dynamic digital product and solutions company as well as.
∎ The Tixi acquisition as well as the rollout of FP Sign (through partnership with e.g. Bundesdruckerei, and Landwehr Computer und Software GmbH and Simpressive), is a manifestation of FP’s swift transformation into a digital solution provider. The (Studies +) project is also a highly strategic endorsement of FP technology into a European wide market.
∎ The recent stock price development has led to a 50% decrease since the 52w high in summer 2017. Currently, FP stock is trading at (TTM) 13x earnings (EBIT)and 2.2x Book value. Furthermore, our DCF appraisal at €8 per share is a clear assertion that FP is undervalued and will outperform in the future. We are aware of the fact that the price target of €8.00 significantly exceeds the current average targets. This study, obviously, is the first to actually calculate assumptions for these new digital business models. Our assumptions are more conservative than those presented by the company and our model is not taking into account a possible acquisition projected by the company for the period after 2020. It was considered, however, to apply a discount in view of the early stage of the new digital products and the incumbent risks of the transformation process. Therefore, we decided to apply a target price of €6.50.

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