Profile, a software developer and vendor that covers fintech, banking and investment management, is identified in brokers research as a company likely to make a series of bolt-on acquisitions. However the company itself seems well positioned to be a target in a sector with high M&A activity.
The fintech space has seen strong M&A appetite, especially from established players which bid for smaller companies or start-ups with the aim to acquire value-added technology.
Katerina Zaharopoulou of Eurobank Equities Research says: “Given its solid balance sheet and net cash position, Profile is well positioned for value-adding strategic acquisitions ahead, if such opportunities arise.
“The company could acquire as much as three to four companies in the next two to three years ie €2.5m sales per annum each and a 25%-28% EBITDA margin. Assuming a 75% cash conversion rate (in line with historical numbers), these acquisitions could lead on our numbers to an incremental €2-2.5m per annum cash flow.”
Eurobank’s analyst says that bolt-on acquisitions by Profile could add another 30% on top of the target price which implies that there is significant scope for synergies with competitors.
Capitalisation at around €40m classifies it at the low end of SMEs: size not too small, and at the same time it should not pose much of a burden on an acquirer’s balance sheet.
Despite its share price having risen around 180% in the course of last twelve months, the company trades at significant discount to its peers in terms of EV/EBITDA.
One factor for the discount is the fact that the company is listed on the Athens stock exchange and has suffered through association to Greece’s financial woes. However, 65% of its revenues come from abroad and the company’s international orientation added to strong organic growth at 22%.