Gemalto: H1 sales above estimates but disappointing marginsNEUTRAL, Fair Value EUR83 (+12%)
Gemalto posted H1 sales above our estimate and that of the consensus: Payment, M2M, Security and e-Government outperformed and more than offset the disappointment on the SIM business and related services sales in the US (mainly due to the Softcard mobile payment service closing). Regarding profitability, H1 PFO was in line with our estimate and slightly below consensus but IFRS current EBIT and net profit were well below expectations. As we expected, management reiterated its annual PFO guidance (double-digit growth) towards its 2017 target of over EUR660m. Waiting for the conference call today at 3pm (Paris time), we maintain our Neutral rating and FV of EUR83.