EVS announced yesterday it has recently signed two major contracts in Europe.
One contract for around € 3m is for the upgrade from SD to HD of a newsroom production system for an existing customer in Russia and the second for around € 3.5m for new equipments (to be included in OB and sport center facilities) dedicated to sport production in a Western European country. EVS indicated that they will both be delivered and invoiced in 2013, while underlying maintenance contracts are not included in those amounts as they should still be received.
EVS highlighted that these two significant contracts were anticipated and do not change the outlook for 2013 as communicated by EVS end February 2013 end repeated in at its Investor Day half March.
We reiterate we liked EVS focused new growth strategy –set out on this Investor Day- that next to the € 350m Sports market (EVS is #1 with 33% market share) EVS’ intention is to grow into the € 1.3 bn Entertainment, News & Media (ENM) market where EVS is ranked roughly number 5 with 2% market share. In Sports the expected market growth has a 2013-16 CAGR of 4 to 5% while for ENM this is between 0 and 5%. After 2016 the CAGR for both is between 3 and 10%. EVS aim is to outperform this market growth by a factor of 2 to 3 times with growth at “premium” EBIT margins.
We maintain our Accumulate rating and € 54 (68,79 USD, 1,19%) Price as set in our 16 page Company Note of 3 March 2013 titled “New market-focused strategy and vision” as we see strong long term intrinsic growth divers for EVS (1. demand for more engaging productions at increasingly higher picture quality; 2. growth in programs and more live; and 3. striving for more efficiency and productivity).