Strong Q4 - PT reached
As in the previous year, the company was able to achieve a very good final quarter:
- the Direct segment (via internet) continued its positive development.
- but the Trading segment, which had been problematic before, also delivered good results in Q4 (September 30).
In the Trading segment, however, it has to be taken into account that Magix has the highest deliveries in Q3 because of the Christmas business These deliveries are already booked in earning to some extent under the consideration of an estimated number of returns. As a result, the company has a certain "margin for play" in the respective quarter. In the last year the company had to report charges from the booking of returns, as deliveries were high in the subsequent quarters. These deliveries can be necessary for distribution-related tactical reasons. A similar burden might occur in the first quarters of 2011/12 as well. However, deliveries and rates of return should usually be based on historical figures and should therefore not lead to a high need for correction. The company expects good Christmas business.
All in all, the estimates can be raised on the back of the strong quarter.
The company will release detailed information on the preliminary unaudited figures of FY 2010/2011 on November 21, 2011. The annual report will be published on January 31, 2012.
The new estimates result in a higher PT of EUR 6.70 (6.00). However, the share has already reached this level as a result of a very good development since coverage was initiated (April 27, 2011). Thus, the rating is now adjusted to Hold (old: Buy).
MAGIX is a leading international provider of software, online services and digital content for multimedia communication. The company is very successful in Germany, the most important European markets but also in the USA. The majority of revenues are generated from the sale of software with roughly half of it being sold online and the other half through retail channels.
Magix differentiates from competitors mainly because of the following factors:
- Innovative strength: more than 15 years in the market as well as more than thousand awards worldwide are proof of the company's innovative strength. Today, Magix is market leader for multimedia software in Europe.
- Retail position: long-standing contacts in retail provide for a stable positioning ("shelf space") in this segment..
- Internet business & community: Magix will presumably market roughly half of its products via its own internet presence in 2011/12. Therefore, the company has very attractive customers who mostly buy their products directly via the company's own internet portals..
- Loyal customer group: a major part of the customers (ca. 50%) has an age of 45+. These customers are characterised by their brand loyalty and an aboveaverage income.
- New products: Magix can afford the high expenses for research and development and will continue to be among the innovative leaders of the sector going forward, which supports the competitive position