SAP shares are up 50% since my €82 buy conviction call in 2018! – The Property Chronicle
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SAP shares are up 50% since my €82 buy conviction call in 2018!

The Macro View

I had recommended SAP shares at €82 in the Gulf financial press in early 2018 as its then CEO Bill McDermott committed the firm to the digital transformation of the UAE at Dubai’s World Government Summit. I published a second article on August 7, 2019 tilted “German software colossus SAP shares will more than double by 2023!”. The shares were €104 in Frankfurt on August 7, 2019. SAP closed at €123.40 last night, boosted by its excellent third quarter earnings update and new co-CEO management structure. So far, my strategy idea for my fellow investors and friends in the Gulf to accumulate SAP shares at €82 has been fabulously profitable. Danke schön SAP!

Is the strategic valuation rerating story at SAP over? No, it has barely begun even though the shares are up 50% from my original €82 recommended buy levels. Why? One, SAP plans to triple cloud revenues to €15 billion on projected total revenues of €35 billion in 2023. SAP’s cloud revenue growth rate is faster than Oracle, Workday and even So I believe (ich glaube ja LOL!) it will achieve this milestone. Two, SAP operating margins bottomed in 2018 and will rise 1% per annum till 2023, an invariable precursor to a valuation rerating. Three, SAP has become a serial acquirer of some of Silicon Valley’s most exciting software startups, from Ariba to Concur to Qualtrics and Callidus, spending $44 billion since 2005. Four, SAP’s business model is leveraged to the most exciting frontiers of enterprise software X data, a paradigm shift in business intelligence solutions. There is no doubt in my mind that SAP Qualtrics could boost a $3 billion annual revenue run rate one day – go Provo, Utah!

The Macro View

About Matein Khalid

Matein Khalid

Matein Khalid is Chief Investment Officer and Partner at Asas Capital. He is responsible for global investment strategies, merchant banking, and the development of the multi-family office investment platform, advising ultra-high net worth royal and family offices in the UAE on global equities markets and foreign exchange.

Articles by Matein Khalid

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