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The digital innovator at the POS; Initiate with BUY

 

mic’s has weathered stormy seas with a history that has been anything but bright. A new management however has started to clear the deck, with hefty restructurings and a quasi dissolvement of the old business model, which virtually left mic as a stock listed shell company. In our view, a reverse IPO of Freiburg, Germany based Pyramid however is likely to set the sail towards a much brighter future. That said, with an installed base of more than 40K digital kiosk systems and 1m server worldwide, the new mic instantly will become the #1 kiosk system manufacturer for the retail and hospitality sector. In fact, with blue chip clients such as McDonald’s, Edeka or Lidl, mic is the digital innovator at the point of sale (POS), helping customers to cut costs (i.e. efficiency gains) whilst at the same time improving its service offering to end consumers through convenience, connectivity and digitalization.

 

In this heterogenous and fragmented market place, the new mic focuses on niche applications with lower order quantities, higher degree of customization and lucrative verticals such as the retail and hospitality sector, thereby avoid low-cost competition from China. In addition, mic differentiates itself by being an asset light player with limited own assembly facilities and best of breed component sourcing, allowing for

- a customer centric organization with problem solving capabilities…

- … at competitive pricing in a deflationary environment,…

- … technological “best of breed” leadership and…

- … ultimately time-to-market due to its lean and agile value chain

 

Not only since Covid-19, demand for self ordering kiosk systems is growing fast. In fact, CAGR growth of above 13% (19-23E) is translating into a highly visible and lucrative (adj. ROCE above 30% p.a.) project pipeline of more than EUR 200m – almost 3x covering 2021 sales expectations. Self help measure such as a ramp-up of its own sales force as well as external growth is likely to facilitate even disproportionate growth going forward.

 

None of the above is currently reflected in mic’s current share price, which is why we initiate coverage with a BUY recommendation and a PT of EUR 4.00, yielding an upside potential of 100% for investors who now join the stock market debut of the “new mic AG”.

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