两步前进，一步后退

FY26 FY2712.114.13.64.28.59.91.01.09.510.99.811.3-3%-4% Charles Brennan * | Equity Analyst44 (0) 20 7548 4140 | cbrennan@jefferies.comShimoni Agarwal * | Equity Associate+44 (0)20 7029 8192 | shimoni.agarwal@jefferies.comHannes Leitner * | Equity Analyst44 (0) 20 7548 4712 | hleitner@jefferies.comMarco Maglioli * | Equity Analyst+44 (0)20 7029 8626 | mmaglioli@jefferies.com Company DescriptionSAPSAP (“Systeme, Anwendungen und Produkte in der Datenverarbeitung" or "Systems, Applications and Products in Data Processing") was foundedby five former IBM employees in 1972. They developed a mainframe program for payroll and accounting. In 1973, they released its firstcommercial product, SAP R/98, which utilized centralized data storage architecture. The company moved its headquarters to its current locationin Walldorf, Germany in 1976. In 1979, it released SAP R/2, which expanded the system’s functionality into manufacturing areas such as materialsmanagement and production planning. In 1992, SAP released SAP R/3, which was based on a client/server architecture (database, applicationserver and client GUI). This product became the market share leader in the enterprise resource planning (ERP) market in the late 90s. Thecompany offers a number of cloud-based products and is currently in the midst of transitioning its core software portfolio from being largelyon-premise based, into the cloud, with the HANA database providing the foundation for all of its offerings. SAP is the fourth largest softwarecompany in the world, after Microsoft, Oracle and IBM.Company Valuation/RisksSAPOur price target is based on peer avg. CY26E FCF yield after expensing share-based payment. Key risks include: (1) lower than expected cloudgrowth and less resilient than expected demand that leads to revenue downgrade, (2) worse than expected cost controls that lead to lowerprofits, (3) lower than expected cash flows given lower profit and worse than expected working capital control.CapgeminiWe value Capgemini using IT Services peer group multiples on a December FY26E FCF yield. Risks to our price target include lower-than-expectedIT services spending, higher-than-expected wage inflation, and Altran acquisition integration risks.International Business Machines CorporationOur $265 PT is based on a DCF analysis and implies a 25x earnings multiple on CY26E GAAP EPS est. Key risks include: 1) any excessive declinesin IBM's traditional businesses; 2) automation replacing the need for more professional services; 3) migration risk from IBM mainframes; 4)restructuring disruption risk; 5) competitive risk; and 6) currency risk.Analyst Certification:I, Charles Brennan, certify that all of the views expressed in this research report accurately reflect my personal views about the subject security(ies) andsubject company(ies). I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations orviews expressed in this research report.I, Shimoni Agarwal, certify that all of the views expressed in this research report accurately reflect my personal views about the subject security(ies) andsubject company(ies). I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations orviews expressed in this research report.I, Hannes Leitner, certify that all of the views expressed in this research report accurately reflect my personal views about the subject security(ies) andsubject company(ies). I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations orviews expressed in this research report.I, Marco Maglioli, certify that all of the views expressed in this research report accurately reflect my personal views about the subject security(ies) andsubject company(ies). I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations orviews expressed in this research report.Registration of non-US analysts:Charles Brennan is employed by Jefferies International Limited, a non-US affiliate of Jefferies LLC and is not registered/qualified as a research analyst with FINRA. This analyst(s) may not be an associated person of Jefferies LLC, a FINRA member firm, and therefore maynot be subject to the FINRA Rule 2241 and restrictions on communications with a subject company, public appearances and trading securities held bya research analyst.Registration of non-US analysts:Shimoni Agarwal is employed by Jefferies International Limited, a non-US affiliate of Jefferies LLC and is not registered/qualified as a research analyst with FINRA. This analyst(s) may not be an associated person of Jefferies LLC, a FINRA member firm, and therefore maynot be subject to the FINRA Rule 2241 and restrictions on communications with a subject company, public appearances and trading securities held bya research analyst.Registra