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Gold/Mining/Energy : BCE Emergis - global e-commerce -- Ignore unavailable to you. Want to Upgrade?

To: Factfinder who wrote (1137)	12/29/1999 8:40:00 AM
From: sPD	Read Replies (1) \| Respond to of 1341

BCE Emergis in Financial Post's Hot Stock profile today Page URL: nationalpost.com Wednesday, December 29, 1999 BCE Emergis should cash in on deal with sister firms Stock targets raised: Analysts applaud firm's ability to extend its reach Thomas Hirschmann - Financial Post BCE Emergis Inc.'s (IFM/TSE) stock has surged 450% this year, and a pair of contract announcements has bolstered analyst confidence that the run is going to continue right into the new year. Parent BCE Inc. said last week that BCE Emergis, Bell Canada and Ariba Inc. had signed a five-year agreement under which BCE Emergis will provide Bell Canada and its subsidiaries with a business-to-business corporate exchange marketplace and e-procurement solution. The deal is the first electronic procurement deal for BCE Emergis since it partnered with Ariba in October. "Bell Canada alone makes more than $4-billion in purchases annually and that number increases considerably when you take into account the transactions made by our various subsidiaries," said Jean Monty, president and chief executive of BCE Inc., which also owns Bell Canada. "This first agreement with Bell Canada will enable BCE Emergis to position itself at the forefront of the electronic marketplace and e-procurement business in Canada." Ralph Garcea, an analyst at Scotia Capital Markets, agreed with that statement, turning out a report applauding the Bell Canada deal. Walking through the numbers, Mr. Garcea says that with Bell Canada expecting 7,000 suppliers to be connected to the business-to-business marketplace by the end of the fifth year of the contract, it could represent annual cost savings of 10% to 15% on purchases for Bell Canada. With an estimated savings per transaction of $100, a 15% cost savings implies a volume of six million transactions annually. Mr. Garcea assumes an average fee of $2.50 per transaction, and, taking it to its logical conclusion, expects that the contract could mean $15-million in annual revenue for BCE Emergis from Bell Canada alone. Mr. Garcea says that the Bell Canada contract provides leverage for BCE into the electronic procurement realm where companies are commanding high sales multiples. As of last Wednesday, red-hot U.S. e-procurement company Commerce One Inc. (CMRC/NASDAQ), which has seen its stock rise 1,476% since its initial public offering on July 1, was trading at 189 times next fiscal year's earnings before its three-for-one stock split on Monday. That figure will have risen significantly with Commerce One's stock being driven up 234% since the split. PurchasePro.com Inc. (PPRO/ NASDAQ) was trading at 157.7 times forward sales as of last Wednesday. In comparison, BCE Emergis is trading at 16.6 times next year's sales estimates. The shares closed on Friday at $76.55. There is also the likelihood, according to Mr. Garcea, that the suppliers using the Bell Canada e-procurement solution may be inclined to turn to BCE Emergis if they plan to set up a similar process for purchasing supplies. Mr. Garcea went on to speculate that given the relationship between parent BCE and SBC/ Ameritech, a similar contract could be possible with the U.S. company. And with SBC's operating expenses five times higher than BCE's, a contract could represent annual revenue of $75-million to BCE Emergis. Mr. Garcea upped his price target to $80 a share from $72 with a "strong buy" rating after the Bell announcement. He had raised the stock to a "strong buy" less than two weeks ago, and at that time had lifted his one-year target to $72 a share from $53, when the company signed a two-year renewable contract with Swisscargo, the cargo division of SAirGroup. Rajiv Das, an analyst at CIBC World Markets Inc., wrote in a report that the Swisscargo deal strengthens BCE Emergis' position in the air cargo business and gives it more leverage to work with major carriers in all modes of transport. Swisscargo generates about 3.5 million transactions a year, and BCE Emergis will be paid from 30½ to $1.20 a piece. That could mean as much as $2.4-million a year in revenue for the company, and although it's a small contract, it demonstrates BCE Emergis' ability to extend its reach deeper into the transportation industry, says Mr. Das. He expects the company to pursue similar agreements with other carriers. Mr. Das says a key to revenue growth for BCE Emergis is to increase its trading communities and drive up transaction volumes. And even though the shares of BCE Emergis have more than quadrupled this year, Mr. Das sees a lot more upside. He recently raised his target price to $100 from $60, calling for an additional 66% upside. Mr. Das expects the company to earn 5½ a share in cash earnings in fiscal 1999 and 57½ in fiscal 2000. As for basic earnings per share, the company is expected to beak even this year, earn 43½ a share in fiscal 2000 and 83½ in 2001, according to a survey conducted by First Call Corp. BCE EMERGIS INC.: CEO: Brian Edwards Ticker: IFM Listed: Toronto Stock Exchange Head office: 1155 Rene-Levesque Blvd. W, Suite 2250, Montreal, Quebec, H3B 4T3 Telephone: (514) 868-2200 www.emergis.com