ComArch has reported signing a PLN 6.9m contract in consortium with MegaBit and 7 Technologies with the Warsaw sewage company for hardware and software delivery necessary to create a GIS database. This IT solution should enable the sewage company to more effectively conduct maintenance and repair of the sewage system.
Our view:
We believe the news should have a neutral trading impact as it was released yesterday during the session. Although we do not expect the margins on this contract to be high, due to expected by us substantial contribution from third party software, we believe it opens for ComArch the area of GIS-related services. The GIS (Geographic Information System) market is said to be a potential one, especially in terms of state owned companies or public administration companies having large networks. ComArch is not the only Polish IT company struggling to get a foothold on this market, the list of its competitors encompasses: ComputerLand, Emax, ABG Ster-Projekt, SPiN and Techmex. We reiterate our Buy rating for ComArch with a fair value estimate at PLN 145.2 per share.