May 18, 2024

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Two groups lay down “secret” rocket fuel.

Two groups lay down “secret” rocket fuel.

Written by the Apostle Menthos

The announcement of the 2023 results by Intrakat (INKÁT) calls for special attention to those data that show the development of the group. How quickly the shape and sizes change. Or in simple terms what it turns into.

Just be careful not to fall like schoolgirls into the pit of comparison between the €800 million capital on the Greek Stock Exchange board and the €3 million net profit. The “smart money” that invested and continues to invest in Intrakat shares that led them to this market value is not looking to 2023 at all, but to what seems to be shaping up in the coming years.

In any case, management has been suggesting to analysts and investors since last summer that its main goal is to turn the year from losses to profitability. Turn the steering wheel 180 degrees. Then the price was just over 2.30 euros and then it rose to 5.64 euros. So the data the market is seeing on Intrakat has been different and appears to have something to do with the fact that throughout 2023, Exarchou and his management team have been putting in the fuel to launch the group into the next five years with their very aggressive strategic moves. Years. Only movements in which the three variants appear are currently available. Representative, PPC, Romania. Soon others will be revealed.

Strategic deals started and can be seen gradually taking shape in the financial statements with the group achieving a huge increase in total assets where from €425.8 million in 2022 they were found in 2023 by +235% higher to €1.427 billion. Consolidated turnover was also particularly dynamic, reaching EUR 412 million against EUR 225 million in 2022, registering an 83% increase with total consolidated profits of EUR 40 million from EUR 18 million in 2022, boosted by 122%.

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At the same time, the group has significantly improved its capital structure and liquidity. In particular, consolidated equity amounted to EUR 162 million compared to EUR 60 million in 2022, strengthened by 168%, while net borrowing decreased by 3.4% to EUR 123 million. A significant increase of €100 million was recorded in the Group's cash reserves, which stood at €125 million compared to €25 million at the end of 2022, while consolidated net operating cash flows were significantly strengthened and reached €77 million. From 15 million euros in 2022.

But what puts the bullish stamp on growth in the coming years for Intrakat, as we all know that 2023 will be a strong transition year going forward, is a new all-time high in backlog of signed and contracted work, which has almost tripled to €4.9 billion from €1.3 billion in 2022 with the strategic acquisition of Actor adding €2.7 billion to Intrakat's existing backlog.

Chartically, the stock continues to show upward moves with strong buy pillars such as those at €2.90, €3.75 and €5. The planning target after the required planning push in the area of ​​5 to 4.75 euros results in 6.20 euros.

I keep going with it Austriacard Holdings (AGAC) She also took on an important new digital technology project, undertaking the pivotal project to transform the public health system by digitizing 197 million pages and images, including medical files, Million euros in revenue.

The news may have passed the 'some' in small print, but the group has aggressively entered into almost all the digitization projects in the state with money from the Recovery Fund (RRF). In fact, the total project backlog has now exceeded €80 million, meaning it has already received annual revenues of between €25 and €30 million from this year to 2026.

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Of course, nothing is over yet as there are still dozens of digital transformation projects in the public sector and not only that, Austriacard can still capture a significant share of deals, well in excess of €130 million.

However, a great asset to the group's growth is that it started implementing similar projects in Romania and Austria where it has had a strong presence and recognition for many years. For example, Austriacard has acquired health cards and driving licenses in Austria. Didn't you know? So this is where I found out.

Projects that are just starting since these countries have lagged behind in digitalization projects through EU funds. Believe it or not, Greece moved quickly and was the first in these programs through the Rapid Response Mechanism.

Therefore, the projects that began to emerge in these two countries have a higher budget compared to Greece, a fact that gives special interest to the group's subsequent moves in the digitalization competitions. You are of course aware that by partnering between these two countries in financing the development of digital skills, the revenues that can flow to Austriacard are able to double the already backlog of €80 million that exists in Greece.

But be careful as these revenues have a significant profit margin (>20%) for the group, which significantly increases the group's total EBITDA alongside other revenue segments such as payment and identification solutions, smart cards, card personalization and enterprise secure data management. The financial sector includes the public private sector and the public sector.

The high profit margin has been largely contributed to the two strategic acquisitions made by Austriacard in recent years to improve its expertise in digital services. We are talking about the Romanian company Nextdocs and the Cypriot company Cloudfin, which are active in software and system for document management, automatic identification, physical archiving, digital recording using machine learning and interaction with enterprise resource planning (ERP) systems. Therefore, by using document digitizing machines, costly manual work is reduced to a minimum, which increases the profitability ratio on revenue.

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The opportunity to get into the stock at these price levels could be great all the way, given that they understand absolutely nothing about what Austriacard's large technology group can develop, and remain significantly behind compared to the rest of the listed technology groups. It also lagged behind the market movement during the past twelve months, recording an increase of +8%, while the general index achieved a return of +42%.

Of course, I encountered the same 'phenomenon' in the sector's other stock values ​​(Profile, Performance, Real Advisory) when we first highlighted them, citing their great potential for growth. And then they thought about it. Now of course not a word.

Chartically, the stock shows that it is preparing to test the resistance area at €6.80 for the second time. A bullish convolution of the area in question will initially open the upward path to the 7.70-8 EUR level or up to +25% of the current cheap potential price levels.


* Apostolos Manthos is responsible for technical analysis and investment strategy