SAP: (BUY, Fair Value EUR114 vs. EUR112 (+15%)) Feedback from Sapphire Now 2018: will the Suite win again in CRM? We reiterate our Buy rating and uptick our DCF-derived fair value to EUR114 from EUR112 on recent fx moves. From 5th to 7th June, SAP is holding its Sapphire Now 2018 users’ conference in Orlando. The key takeaways from the analysts’ meeting and discussions with SAP and key members of the ecosystem were that: 1) the launch of C/4HANA is much more than simple CRM rebranding; 2) there is room for sustainable strong cloud revenue growth; 3) margin turnaround is confirmed.
Item 5: KPMG, Berlin, is proposed as auditor for the current financial year. We have no concerns over the ratio of non-audit/audit fees. However, we note that KPMG has audited the Company since the financial year 2002 which exceeds our maximum acceptable term of office of 10 years or 20 years in case an audit tender has taken place after the initial engagement period, which has not been disclosed by the Company. We consider a longer term of office may impair the auditor's independence. We therefore recommend opposing the re-election of KPMG as auditor.
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