On 16th of January, Netgem, a French company, specialized in internet television (IPTV),released its Q4 revenue : 23,5 MEUR in 2013  +2% vs 2012. For the full year 2013 revenues is same as 2012: 81,3 MEUR.

2013 is a turnaround year for Netgem. 

In the past, Netgem used to have almost one customer (SFR phone company), which accounted to 87% of 2009 revenues. SFR contract was stopped and Netgem had to develop new customers for international markets.

From 2009 to 2013 share of international went from 4% to 77% with a total turnover shrinking from 146MEUR to 81,3MEUR.

For the first time in 4 years, revenues stopped to decrease in 2013.

In term of perspective Netgem confirmed its commitment to double international revenues from 2011 to 2014, in 2014 International revenues should be minimum 92MEUR, almost 30MEUR growth against 2013.

Netgem is now on track to grow after 5 years of deep changes in its customer’s basis.

 

Moreover profitability of Netgem during those years of deep changes has been keeps at the highest standards:  ROE&ROCE higher than 16% from 2009 to 2012: it means that Netgem succeeded to chase new customers with a good level of profitability.

Company is debt free with a substantial cash pile. Valuation doesn't look so cheap :

PE=15,8, P/B=1,9, EV/EBITDA=5,6

Anyway FCF generation is important around 0,3 EUR/share, which give without any growth, an EV of 0,3/0,14=2,1EUR/share (with 14% of Cost of Capital).

On Top of this, there is 50,9 MEUR  of Cash by end of H1 2013 or 1,35EUR/Share

A very conservative target of Share price should be 3,45 EUR/Sh, 20% upside against the current price. 

 

I am shareholder of Netgem,

 

Best regard

Denis

 

 

 

 

 

 

 

 

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