Air traffic control centers around the world use communication solutions from Frequentis.
Nevertheless, the name of the Viennese technology forge says something to only a few.
This may also have something to do with the low free float and the scant attention paid by analysts.
Michael Seiser
Business correspondent for Austria and Hungary based in Vienna.
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The majority of the shares are controlled by Hannes Bardach, the company's former CEO.
The share was issued three years ago at EUR 18.
The price is now around ten euros higher.
But Frequentis is an important niche player.
After all, the communication and control solutions that dominate the world market also make a decisive contribution to security in Germany.
Four air traffic control centers of Deutsche Flugsicherung and more than twenty regional and international towers in Germany are equipped with Frequentis systems for voice communication.
In recent years, these have protected more than 200 million passengers a year on their flights.
Still on course for growth.
In addition, Frequentis has equipped Deutsche Bahn operations centers and signal boxes with communication systems on a large scale in Germany, which ensure the safety of passengers.
The flood disaster in North Rhine-Westphalia and Rhineland-Palatinate also showed how important fast and effective communication systems are.
They are a decisive criterion when it comes to saving human lives.
Specialists like Frequentis come into play to digitally network and integrate the communication systems.
The Austrian company has specialized in safety-critical communication solutions.
As the business figures show, the group, whose customers also include security institutions from all over the world, is still on the growth path.
The specialist has overcome the consequences of the Corona crisis and worked profitably in the past financial year.
Air traffic was still affected by restrictions.
However, thanks to constant growth in the core business and successful acquisitions, management was able to catch up after the loss in 2020.
The Executive Board attributed the leap in earnings to the stable core business and company acquisitions and the expansion of the product portfolio.
In the previous year, units of the listed American company L3Harris Technologies were taken over.
Most recently, a majority stake in the Italian company Regola, which produces command and control systems, was acquired.
Frequentis is also involved in the promising drone business.
A drone management system from the Austrians is already in use in Norway.
The management cites forecasts that in five or ten years drones will be the main users of regulated airspace and may even overtake helicopters.
The order books are also bulging.
Increasing profitability is still the goal.
It is unclear whether further acquisitions will follow this year.
These are part of the corporate strategy anyway.
The management calculates indirect effects of the Ukraine war: In the affected regions, however, the business share is less than one percent, the company reports.
In other words, one is not directly economically affected by the war, or only slightly so.
Analysts also like how cautiously management reacts to supply chain problems.
The stocking of components has been doubled to two years.
In addition, a multi-supplier strategy is used.
In this way, project postponements can be almost completely ruled out, praises M-Bank.
With a market share of around 30 percent, Frequentis claims to be the world market leader for voice communication systems for air traffic control.
The ground-based infrastructure for calls between controllers and pilots or between controllers in various control centers will be supplied.
In addition to its division for safety-critical flight communication, the high-tech group also offers communication and information systems for control centers in the police, fire brigade, rescue services, shipping and railways.
From the point of view of Daniel Großjohann, analyst at M-Bank, comparable companies are primarily medium-sized technology providers from Europe who, like Frequentis, generate a high proportion of sales with the public sector.
This makes these companies less sensitive to the economy than other technology groups.
According to Großjohann, some companies – such as Saab and SRT Marine Systems – are market companions or competitors in some areas, while others such as Ceotronics have a more complementary product portfolio.
Others such as IVU and Init (innovation in traffic systems SE) supply other areas of the public sector with their hardware and software systems.
The M-Bank sees the fair price of the share at 34.21 euros.
Teresa Schinwald from Raiffeisen Bank International cites working in attractive growth markets with very high market barriers as an advantage.
The fact that the higher-margin service business is being expanded is also seen as a plus.
Reference is also made to the strong research and development activities.
Recent backlog growth provides good visibility for upcoming sales and earnings trends.
Low investment requirements allow for a stable inflow of funds.
An interesting admixture for investors with a sense for future-oriented technology.