Partially announced in late July (Gross Margin and EBITDA), interim results show no particular surprise and confirm the operational turnaround of the group, signing of the new management. EBIT amounted to € 1 M (€ +1.6 M) and the Net Income before goodwill to € 0.2 M (€ +2 M). In contrast, the Net Income is penalized by higher amortization of goodwill following the acquisition of metapeople.
As we already mentioned, in a tough macroeconomic context, the group's activity was sustained. Netbooster has particularly benefited from the rise of its high value added offerings (AdExchange and social networks). The profound transformation operating for more than a year and all the restructuring actions start to operate. They also allowed Netbooster to recover a positive operating cash flow with 0.34 M €. Finally, the cash position is healthy with € 8.8 M at 30 June.
Despite an tighter interactive advertising market, which has seen its growth slowdown significantly in H1 (in France: 6% vs. 11% in 2011 according to SRI Cap Gemini e-pub observatory), Netbooster confirms its annual targets. Given the expected conclusion of major contracts and the traditional seasonality, the group is confident in its ability to show an increase in gross margin of 25% and an EBITDA/Gross Margin ratio of 11%. It appears to us as a minimum. Indeed, based on the proforma 2011 Gross Margin (€ 33.1 M), the target of € 34 M means an increase of only 2.9%. To us, we consider a 10% increase as more realistic. So, we expect an EBITDA / Gross Margin ratio of 11.7%.
Industry consolidation continues Publicis announced September 20 the launch of a takeover bid (for € 416 M) on the independent digital agency Lbi, listed on Amsterdam Stock Exchange (2 200 employees, turnover of € 197 M in 2011, EBITDA margin of 16.3%). The operation, according to consensus forecasts, enhances a target multiple of 10x EV / EBITDA. This is less than the recent similar transactions (range between 12x and 17x). Based on a 2012 EBITDA of € 4.2 M, Netbooster could be valued between € 39 M and € 68 M (between € 2.83 and € 4.83 per share).
Ultimately in addition to the speculative appeal, we are confident about the Group's ability to achieve its objectives and confirm our Buy Opinion with a target price adjusted to € 3.73 (vs € 3.43), 43.4% upside potential.