Logicom aims to boost sales, diversify revenue base

…Sharelink forecasts EUR 7.4 mln 2007E profit

 

Logicom Pcl (LOG), Cyprus’ leading IT company with an international presence is aiming to boost revenue by 35% and operating profits by 65% in 2007and at the same time improving the return on capital to 20%, while at the same time proceeding with a prudent expansion in order to diversify its revenue base.

Logicom CEO and Vice-Chairman Varnavas Irinarchos told the Company’s Annual General Meeting that while in the past most of the expansion and revenue was generated from the Middle East, Cyprus and Greece, the recent expansion drive into Europe has titled the balance with about 58% of revenue originating from Europe, which is set to rise when the company becomes fully operational in the new markets of Bulgaria, Romania and Hungary.

“We have successfully expanded into Italy, Turkey and Malta as the behest of CISCO Systems, and we are keen to reduce our reliance on any one region,” said Irinarchos.

Earlier, Logicom Chairman Adamos Adamides made an extensive and detailed analysis of the new goals of Logicom, which in addition to its extensive operations in Cyprus and Greece is also active in the UAE, Kuwait, Oman, Bahrain, Saudi Arabia, Jordan, Lebanon and Pakistan.

 

Debtor insurance

Adamides explained to shareholders that the debt collection problems faced in the UAE have been solved. The major case involving a CYP 1.3 mln debt is now being repaid in instalments but is accumulating interest, which is why there is no issue of making an additional provision.

For the second debt of CYP 750.000, the issue is now in the courts and half of the amount has already been provided in the books. For the third case, involving the amount of CYP 650.000, a court order has been secured in Dubai for the imprisonment of the debtor. The full amount has been provided for.

The Logicom Group has decided to insure its debtors with ‘Atradius Credit Insurance

N.V.

 

Sharelink forecasts

Sharelink Securities & Financial Services forecast Logicom revenue in 2007 at EUR363 mln compared to EUR248 mln in 2006. Operations abroad are estimated to contribute

EUR310 mln and operations in Cyprus EUR53 mln.

Based on the current conditions and the exchange rate between the Cyprus Pound and the US dollar and the Euro, Sharelink forecasts net profit after tax for 2007 at EUR7.4 mln, compared to EUR 5.5 mln in 2006. This implies a 2007F RoE of 20.2% compared to 17.1% in 2006.

Sharelink says its projections for 2007 are in line with Management’s targets presented within the “Cyprus Day in Greece” held in Athens on 24 April 2007.

“Our price target on the stock is maintained at €1.40/share,” said Sharelink. At this price the stock would be trading at a 2007F P/E of 11.7x, and a 2007F P/B multiple of 2.2x on a 2007F Return on Equity (RoE) of 20.2%.