Investment Case All for One Group: The SAP S4/HANA conversion to last until 2027

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Carlsquare ER Investment_case_All for One Group 26 April 2021

We see great possibilities for All for One Group to increase its revenues as the S4/HANA conversion projects materialize at a higher pace from 2022. There is a 22 percent share price potential for the stock up to our Base case of EUR 75.3.

Market leader in the DACH region for SAP solutions

With some 2,500 clients in Germany, Austria, and Switzerland out of which some 1,000 are core SAP licenses driven, and a fourth market in Poland on its way, All for One Groups challenge now is to migrate its SAP customers from the old SAP R3 to the new S4/HANA platform. If successful, this project will guarantee a high occupancy rate for All for One Group´s consultants with a work peak anticipated in 2023 and 2024.

New offerings to top All for One Group´s revenue growth

All for One Group has developed four lines of business offerings (segment: LOB) and three further CORE segments offerings, all offerings provide customers with add-on services. An increasing amount of data is being collected and processed out of data from customers´ operations. These seven offerings add revenue streams and earnings to All for One Group.

Alliance provides an opportunity to serve clients around the world

To deliver its services on a global basis, All for One Group has been co-founder and part of the United VARs alliance since 2006. It includes 50 SAP partners in 100 countries. This means that All for One Group obtains global on-site support to implement SAP ERP systems at its German industrial companies’ worldwide factories, for example. This is good as ERP systems are often locally adapted.

An increased share of recurring revenue justifies a higher valuation

All for One Group´s recurring revenue has increased by 12 percent per year since 2012/13 to make up 52 percent of total income in 2019/20. The largest growth is found in Cloud Services & Support, which have seen a 14 percent CAGR since 2012/13. An increased share of recurring revenues also provides higher predictability and thereby justifies a higher valuation of All for One Group.

Covid restrictions extend decisions to convert to SAP S4/HANA

With the Covid pandemic ongoing, we see that industrial customer need more time to make the decision to invest digitalized business models. The goal of completing the S4/HANA conversion has been postponed by SAP from 2025 to 2027. Customer segments that have benefited from the pandemic, such as e-commerce and the packaging industry, have been more eager to invest in enhanced IT solutions.

Valuation of the All for One Group stock in three scenarios

We value All for One Group in our base case-scenario to EUR 75.3 per share by combining a DCF valuation model and a multiple valuation model. This corresponds to a 21 percent share price potential. In our bear- and bull-scenarios, the value per share is EUR 61.3 and EUR 89.3, respectively.

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