London, UK, 1 November 2017

Edison issues outlook on CREALOGIX Group (CLXN)

CREALOGIX's strong momentum in FY17 reflects buoyant digital transformation trends across the European banking sector, notably in Germany, and the benefits of the group's recent heavy investment to extend the product offerings into wider international markets. Results outstripped expectations, leading us to upgrade our revenue forecasts by 6-7%, while EBITDA rises by 23% in FY18 and 11% in FY19. Given the attractive industry dynamics, and with CREALOGIX ideally positioned to capitalise, the shares look attractive on c 17x our FY20 EPS.

Following several years of heavy investment, CREALOGIX has established a highly attractive software proposition for banking sector digital transformation and the key components are in place to underpin strong revenue growth. Our DCF model suggests a valuation of CHF199-271 (WACC ranging from 8-10%, 10% CAGR over 10 years and 15% operating margins), which indicates significant upside potential.

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