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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
TECHNOLOGY
Rating: A1/A+
- •SAP report after the close – company-provided consensus is looking for revenue +9.2% with cloud revenue +25.2%, software licenses revenue -24.9% and software support revenue -3%. Op Profit is seen +24.2% with an operating margin of 22% (19.3%/19.1% in Q223/Q124).
- •Q1 results were strong with revenue +9%, non-IFRS operating profit +19% (though the IFRS-compliant one recorded a loss due to a EUR 2.2bn restructuring provision) with FY guidance confirmed incl. cloud & software revenue +8-10%, non-IFRS op profit +17-21% and FCF around -31%. All figures constant FX.
- •SAP equity has underperformed slightly since then at +6% vs. +10% for SX8P; spreads trade in a tight range against other high-rated tech peers though their EUR 31s have underperformed by ~10bp vs. IBM and Apple since end-June.
- •In early June SAP agreed to buy WalkMe for USD 1.5bn in cash; scheduled to close in Q3 – Q1 saw a net liquidity position of EUR 5.6bn so there is plenty of room below the 0.5x leverage target for such deals.
- •Hard not to like the credit given it’s cloud-driven top line revenue growth, expanding margins, improving cash gen and strong net cash position though it trades expensive even within the AA/A-rated TMT universe.
- •Moody’s upgraded in March and S&P last July. S&P are looking for a strengthening in business position on the SaaS transition, accelerating topline growth and meaningful expansion of EBITDA and FOCF margins to upgrade – all of these are occurring though the timetable for an upgrade is unclear, as is the extent to which SAP will prioritise M&A in the interim.
- •Post-CMD bullet (June); https://marketnews.com/sap-equity-the-best-eurig-performer-post-cmd
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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