Rubean AG
Germany | Technology | MCap EUR 20.2m
9 May 2023
2023 starts off on a positive note; hyper- scaling is set to start now
What's it all about?
Rubean AG issued a press release yesterday announcing a strong start to the new financial year. The news caused some confusion as it was merely the English translation of a press release issued at the end of April. In any case, Rubean appears to be on track to meet its financial targets for 2023 with increasing orders and additional customer wins. As a result, we believe that hyper-scaling of revenues could start as early as this year. In this context, management also reaffirmed its guidance of EUR 2m in revenues, which effectively represents a 2.5x year-on-year increase. In addition, Rubean announced the successful completion of a 10% capital increase, bringing in much-needed funds to bridge the gap before becoming cash-flow positive in 2024E (eAR). We reiterate our BUY rating with an unchanged PT of EUR 12.00.
IMPORTANT. Please refer to the last page of this report for "Important disclosures" and analyst(s) certifications.
UPDATE
BUY (BUY) | |
Target price | EUR 12.00 (12.00) |
Current price | EUR 6.75 |
Up/downside | 77.8% |
MAIN AUTHOR
Thomas Wissler t.wissler@alsterresearch.com +49 40 309 293-58
alsterresearch.com
This research is the product of AlsterResearch, which is registered with the BaFin in Germany.
AlsterResearch
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Rubean AG
Germany | Technology | MCap EUR 20.2m | EV EUR 19.2m
BUY (BUY) | Target price | EUR 12.00 (12.00) | MAIN AUTHOR |
Thomas Wissler | |||
Current price | EUR 6.75 | ||
Up/downside | 77.8% | t.wissler@alsterresearch.com | |
+49 40 309 293-58 |
'23 starts off on a positive note; hyper-scaling is set to start now
2023 starts with rising order situation Rubean has made a good start to the new financial year. In recent months, the company has received orders from various sectors for the implementation of its mobile payment software solution 'PhonePOS'. In this segment, Rubean sells indirectly via partners such as BBVA, Sparkassen or Global Payments. In the UK, for example, the company says it is preparing to launch the solution for a major fundraising organization. On the other hand, Rubean's B-to-Bsolution "GetPAYD" targets corporate customers via direct sales in the logistics, retail and hospitality sectors, which also saw an increase in orders.
Hyper-scalingstarts in 2023 With its existing customers and the newly won customers, Rubean is likely to start hyper-scaling as early as 2023, as customers begin to appreciate and perceive the company's smart payment solutions. As a result, management also reiterated its FY23 guidance of at least EUR 2m in sales - which would effectively mean a 2.5x yoy increase in sales. To put this into perspective, it should be noted that BBVA alone aims to sell 300K licenses by 2024, which alone would be good for around EUR 2.5m in annual recurring sales. Adding the potential of all other existing customers therefore underlines the significant hyper-scaling potential for Rubean in the coming years and most importantly its ability to become cash positive as early as 2024E.
Source: Company data, AlsterResearch | |
High/low 52 weeks | 7.95 / 4.40 |
Price/Book Ratio | 26.9x |
Ticker / Symbols | |
ISIN | DE0005120802 |
WKN | 512080 |
Bloomberg | R1B:GR |
Changes in estimates
Successful capital increase In addition Rubean announced that it has successfully completed a 10% capital increase. The company raised EUR c. 1.6m through a private placement. The share capital therefore increased by 0.271m shares to 2.99m. The funds will be used to grow the business in Germany and abroad and which should therefore help to bridge the gap before getting cash flow positive by 2024E (eAR).
Conclusion Although the development of the new payment software and the establishment of structures and partnerships has been challenging and somewhat frustrating for investors due to the moderate share price performance, we believe Rubean is well on track to achieving its operational breakthrough soon. Also, the share price seem to have found a bottom, with the stock up c. 25% since the beginning of the year. We therefore confirm our BUY rating with unchanged PT of EUR 12.00.
Sales | EBIT | EPS | ||||||||||
2022P | old | 0.8 | -4.6 | -1.75 | ||||||||
∆ | 0.0% | na% | na% | |||||||||
2023E | old | 2.5 | -2.5 | -0.94 | ||||||||
∆ | 0.0% | na% | na% | |||||||||
2024E | old | 5.0 | 0.6 | 0.12 | ||||||||
∆ | 0.0% | 0.0% | -9.1% |
Key share data | |
Number of shares: (in m pcs) | 2.99 |
Book value per share: (in EUR) | 0.25 |
Ø trading volume: (12 months) | 500 |
Rubean AG | 2019 | 2020 | 2021 | 2022P | 2023E | 2024E | Major shareholders | |||||
Sales | 0.4 | 0.5 | 0.7 | 0.8 | 2.5 | 5.0 | ||||||
Growth yoy | 40.1% | 10.0% | 45.6% | 23.3% | 194.1% | 100.0% | Founders | 11.0% | ||||
EBITDA | -0.9 | -1.4 | -3.9 | -4.3 | -2.5 | 0.8 | Management & staff | 7.0% | ||||
EBIT | -1.2 | -1.6 | -4.1 | -4.6 | -2.5 | 0.6 | BMK Holding GmbH | 15.0% | ||||
Net profit | -1.3 | -1.7 | -4.2 | -4.8 | -2.6 | 0.3 | CCV | 30.0% | ||||
Net debt (net cash) | 1.5 | 0.8 | -1.2 | 4.1 | 4.9 | 4.8 | Free Float | 37.0% | ||||
Net debt/EBITDA | -1.6x | -0.6x | 0.3x | -0.9x | -2.0x | 5.6x | ||||||
EPS recurring | -1.08 | -1.05 | -1.60 | -1.75 | -0.86 | 0.11 | Company description | |||||
DPS | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | Rubean AG is a Germany-based Fintech | |||||
Dividend yield | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | that develops software for banks and | |||||
Gross profit margin | 78.0% | 70.4% | 57.9% | 60.0% | 80.0% | 90.0% | online payment companies. It develops | |||||
EBITDA margin | -213.0% | -288.8% | -567.3% | -503.7% | -100.0% | 17.0% | the payment acceptance | solution | ||||
EBIT margin | -284.6% | -347.5% | -594.4% | -538.4% | -99.3% | 13.0% | ||||||
phonePOS, which turns smartphones | ||||||||||||
ROCE | -183.8% | -143.7% | -459.0% | -2,437.1% | -186.3% | 21.3% | ||||||
into merchant terminals at the point of | ||||||||||||
EV/EBITDA | -23.6x | -15.3x | -4.9x | -5.7x | -10.4x | 31.4x | ||||||
sale (POS). Rubean partners with the | ||||||||||||
EV/EBIT | -17.7x | -12.7x | -4.7x | -5.4x | -10.5x | 41.1x | ||||||
German saving banks "Sparkassen" as | ||||||||||||
PER | -6.3x | -6.4x | -4.2x | -3.9x | -7.9x | 60.2x | ||||||
well as BBVA and Global Payments. | ||||||||||||
FCF yield | -3.8% | -16.7% | -14.3% | -28.0% | -9.5% | 3.4% | ||||||
Source: Company data, AlsterResearch; historic numbers are pro-forma consolidated
AlsterResearch
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Investment case in six charts
Business model PhonePOS | Market potential |
Customers | 2024E sales by white label channel in % |
Sales development in EURm | Major shareholder (after capital measures) |
CCV 30%
Free Float 37%
BMK Holding
GmbH
15%
Management | Founders |
& staff | 11% |
7%
Source. Company data; AlsterResearch
AlsterResearch
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Acquisition of intellectual property
The chart below displays the IP Rubean has acquired from CCV and integrated into the group.
Accepptance vs. Monitoring Server
Source: AlsterResearch
AlsterResearch
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SWOT Analysis
Strength
- 20 years of track record of working at the neuralgic interfaces of large banks, enabling them to connect with all kinds of legacy banking peripherals
- Software know-how which conforms to the most demanding quality and safety standards
- Very close partnership with EU market leader CCV
- Significant research and development initiatives of EUR 14m occurred during the last 5 years
-
Powerful white label clients with the German Savings Bank organization
"Sparkassen", Global Payments and BBVA - Accredited with PCI SSC, the global head organization that develops standards and defines common security levels
- Accredited with Deutsche Kreditwirtschaft the head organization of the issuing institutes in Germany…
- … as well as with the two major credit card institutes - Visa and Mastercard
- Talented and well incentivized management and employees
Weaknesses
- Relatively "small fish in a large pond"
- Lack of a real international footprint
- Dependency on a few large white label banking partner
- Still loss making
Opportunities
- Increasing the share-of-wallet with own B2C Micro Merchant solution
- International expansion
- Potential takeover candidate
- Covid-19induced structural change in payment behaviour of clients - card payments increasingly substitute cash payments - even for smaller amounts, could drive additional growth
- Potential future growth financing via capital markets- no banks needed
Threats
- Currently, Rubean's App only runs on Android systems. Apple could remain a closed shop
- Execution risks of building up the necessary organizational structure
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Disclaimer
Rubean AG published this content on 19 May 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 19 May 2023 08:39:07 UTC.