Rising Defense Demand And Flexible Employee Benefits Will Drive Long-Term Upside Potential

Catalysts

About Brockhaus Technologies

Brockhaus Technologies is a technology holding company focusing on scalable, high-margin platforms and niche market leaders such as Bikeleasing and IHSE.

What are the underlying business or industry changes driving this perspective?

• The ongoing shift toward flexible employee benefits and mobility solutions is expanding demand for Bikeleasing’s multi-benefit platform, supporting higher recurring revenue and a broader, more resilient top line.
• Digitalization of HR and benefits administration is accelerating adoption of Probonio’s SaaS offering, which should steadily increase software fees and lift group EBIT margins as the user base of activated employees scales.
• Growing corporate and public sector focus on sustainable transport and micromobility in Europe and the United States, including the partnership with Ridepanda, opens additional geographies and customer segments, creating upside for medium term revenue growth.
• Rising global defense and security spending is structurally increasing demand for IHSE’s high margin KVM solutions, which is already visible in the improving product mix and is expected to support gross margin expansion and earnings quality.
• Cost optimization measures at IHSE and the normalization of elevated growth investments at Bikeleasing, combined with a low leverage ratio of around 1 times EBITDA, position the group for operating leverage, improving net margins and free cash flow as revenue scales.

Assumptions

How have these above catalysts been quantified?

• Analysts are assuming Brockhaus Technologies's revenue will grow by 11.8% annually over the next 3 years.
• Analysts assume that profit margins will increase from -27.2% today to 3.3% in 3 years time.
• Analysts expect earnings to reach €9.8 million (and earnings per share of €0.97) by about December 2028, up from €-58.4 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting €17.2 million in earnings, and the most bearish expecting €0.0 thousand.
• In order for the above numbers to justify the price target of the analysts, the company would need to trade at a PE ratio of 48.8x on those 2028 earnings, up from -2.8x today. This future PE is greater than the current PE for the DE Electronic industry at 41.1x.
• Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 9.86%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• The broader economic and consumer downturn, combined with subdued investment appetite in EMEA and APAC, is already weighing on IHSE revenue and could persist longer than expected, limiting top line growth and constraining earnings recovery.
• Bikeleasing’s transformation into a multi-benefit and international platform requires materially higher personnel and marketing spend at a time when adjusted EBITDA and EBIT are already down more than 25 percent year over year. This could structurally compress net margins and delay any improvement in earnings.
• Distortions in the bicycle market, such as aggressive retail discounting and blocked corporate customers due to deteriorating credit scores in Germany, reduce the number of newly leased bikes and shift revenue toward lower margin resale proceeds. This pressures segment gross margin and revenue visibility.
• IHSE’s growing reliance on defense, which now accounts for roughly 45 percent of revenue, increases exposure to procurement cycles, political budgets and project shifts. Any slowdown or cancellation in defense projects could quickly drag on revenue and operating margins.
• The international expansion strategy, including the minority stake in Ridepanda in a structurally less favorable U.S. benefits market without salary sacrifice mechanisms, may fail to scale sufficiently or generate expected synergies. This could limit revenue diversification and leave group earnings more dependent on a challenging core German speaking market.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The analysts have a consensus price target of €34.5 for Brockhaus Technologies based on their expectations of its future earnings growth, profit margins and other risk factors.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of €50.0, and the most bearish reporting a price target of just €24.0.
  
• In order for you to agree with the analysts, you'd need to believe that by 2028, revenues will be €300.0 million, earnings will come to €9.8 million, and it would be trading on a PE ratio of 48.8x, assuming you use a discount rate of 9.9%.
  
• Given the current share price of €15.55, the analyst price target of €34.5 is 54.9% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.