Strategic & Financial Analysis of Simcorp A/S

Jasenko Hadzic

Student thesis: Master thesis


Despite global financial crisis in 2008 that took the investment management industry with storm, one software vendor, SimCorp showed that it had the right ingredient to grow. In the analysed period of 2008-2015 our analysis shows that SimCorp was in fact able to capitalize on the turmoil that shook up the investment management industry. Our strategic analysis reveals that key factors part of this success were a combination of a strong management team, an inherent focus on innovation in its core product offering and a continuous investment in attracting and retaining skilled labour. This came through very clearly in the recent year of 2015 where the company experienced record revenue of EUR 277.9m. Moreover, the strategic analysis showed that the growth potential for SimCorp is immense, as approximately 89% of the investment industry still relies on old legacy systems, which are costly to maintain in a time where globalization, increased regulation and a squeeze on management fees is becoming more absolute for every day that goes. For SimCorp the biggest potential lies in North America, where the company only holds 4% of market share (compare to mature markets as the Nordics where SimCorp holds a market share of 66%. This very reason is also why the management of the company sees SimCorp future growth coming from North America, including two other designated growth markets, France and UK. Our financial analysis showed that SimCorp is highly effective in managing its cost, while having a sharp focus on organic growth and on investing in innovation (20% of yearly revenue in R&D). Moreover, in the analysed period, SimCorp has been in a positive financial trend, where both ROIC and ROE have been increasing. These stem due to the a low Net Borrowing Cost (NBC), an effective management of cost and a strong reoccurring revenue in the form of professional services revenue (31% of revenue in 2015) and maintenance revenue (44% of revenue in 2015). Moreover, the risk analysis made it evident that SimCorp has a low short-term and longterm liquidity risk, which allows one to conclude that SimCorp can be characterised as a financially healthy and solid company. Using the DCF model, we have estimated the value of SimCorp’s share price to be DKK 390.0 as of 22nd of February, 2016, which is 30% higher than the observed share price of SimCorp DKK 299 on the same date. Thus, using the models and assumptions made in this thesis, we conclude that SimCorp is undervalued and propose a “BUY”-recommendation of the share.

EducationsMSc in Applied Economics and Finance, (Graduate Programme) Final Thesis
Publication date2016
Number of pages132