SAP Looks to Add More China to its Growth

SAP (NYSE:SAP) is looking to China to fuel its growth in the coming years, especially in the ERP business, which generates a major portion of its revenues and constitutes nearly 37% of our $61.65 price estimate for SAP’s stock. SAP recently reported its Q2 earnings and revenue from its primary businesses continues to grow steadily while its new initiatives and products have performed well despite competition from Microsoft (NASDAQ:MSFT), Oracle (NASDAQ:ORCL) and Salesforce.com (NYSE:CRM).

China to Fuel SAP’s Growth

SAP currently has nearly 27% market share in the global ERP market. It is also seeing significant growth in the Asia Pacific region and reported revenues for the region (excluding Japan) that grew 14% year over year to €345 million in the last quarter.

Much of this growth came from China where the company has over 4,000 customers. SAP’s Business One ERP offering is aimed at small businesses and was quite successful in China. SAP Business Suite, which is targeted at large enterprises and corporations is also starting to gain traction in China as many global corporations that use SAP’s ERP offerings expand to China.

This week SAP announced that it would offer its MaxAttention premium support service in China signaling that it sees China as a huge potential market for growth in its ERP business. ^[1] The service includes creating customized solutions based on customer needs and creating embedded support teams. Software support services like MaxAttention are a major revenue driver for SAP with total revenue from software related services and support tallying €2579 million last quarter.

Check out our complete price analysis for SAP.

1. SAP Now Offering Premium Support Option in China, PC World, August 4, 2011. [↩]