SSH - Withdraws 2020 guidance due to COVID-19

SSH announced yesterday that it estimates the COVID-19 pandemic to negatively impact its outlook and thus it withdraws its guidance for the year 2020. We’ve clearly cut our estimates for 2020 and 2021. We note that estimating future performance now is exceptionally difficult, as the depth and length of the current crisis is unknown. Based on our lowered estimates and postponed turnaround, we lower our target price to 0.70€ (prev. 1.00€) but maintain HOLD recommendation.

Guidance for 2020 withdrawn due to COVID-19

SSH announced yesterday that as a result of the COVID-19 pandemic, operating conditions in their markets have deteriorated significantly. Large enterprises globally, including some of SSH’s customers, have already announced profit warnings or cost savings programs. SSH expects this to affect customer’s investment decisions and the timing of IT project deployments. Due to the continued uncertainty of the situation, SSH’s visibility into the scope and duration of these effects is limited. SSH notes, that they are pre-emptively preparing for the effects of this situation by systematically reducing operating expenses, although details regarding this were not given.

 Estimates cut; turnaround postponed further

After a challenging 2019, SSH was guiding for clear improvement. For the year 2020, SSH was expecting revenue growth of 10-15 percent and an improving EBIT (FY’19: -1.2 MEUR), but this guidance is now withdrawn. We’ve cut our sales estimates for 2020E and 2021E roughly -16%. We estimate 2020E sales to decline -5%, resulting in -1.0 MEUR operating loss, despite measures to lower opex. Due to lower sales estimates, we estimate profit turnaround to be pushed forward to 2021E.

 HOLD maintained with TP 0.70€ (prev. 1.00€)

We note that estimating future performance is now exceptionally difficult, as the depth and length of the current crisis is unknown. Based on our lowered estimates and postponed turnaround, we lower our target price to 0.70€ (prev. 1.00€) but maintain HOLD recommendation.

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