German/Austrian small/mid-caps

Transcription

BERENBERG EQUITY RESEARCH
German/Austrian
small/mid-caps
Gunnar Cohrs, CFA
Analyst
+44 20 3207 7894
[email protected]
Anna Patrice, CFA
Analyst
+44 20 3207 7863
[email protected]
8 October 2013
Cross-Sector
For our disclosures in respect of section 34b of the German Securities Trading Act (Wertpapierhandelsgesetz – WpHG) and
our disclaimer please see the end of this document.
Please note that the use of this research report is subject to the conditions and restrictions set forth in the disclosures and
the disclaimer at the end of this document.
German/Austrian Small/Mid-Caps
Cross-Sector
Table of contents
Germany/Austria: small and mid-caps.................................................................................... 5
Valuation matrix ...................................................................................................................... 8
Germany and Austria .............................................................................................................. 10
Recovery expectations trigger market re-rating ...................................................................... 12
Companies
ADVA Optical Networking SE ......................................................................................... 19
Agrana Beteiligungs AG ................................................................................................... 20
Aixtron SE ........................................................................................................................ 21
alstria office REIT AG ...................................................................................................... 22
AMAG Austria Metall AG ................................................................................................. 23
ANDRITZ AG .................................................................................................................. 24
Aurelius AG ...................................................................................................................... 25
Axel Springer AG .............................................................................................................. 26
Bauer AG .......................................................................................................................... 27
BayWa AG ........................................................................................................................ 28
Bechtle AG ....................................................................................................................... 29
Bilfinger SE ...................................................................................................................... 30
Brenntag AG ..................................................................................................................... 31
Carl Zeiss Meditec AG...................................................................................................... 32
Celesio AG ........................................................................................................................ 33
CEWE Stiftung & Co KGaA ............................................................................................. 34
CompuGroup Medical AG ................................................................................................ 35
CTS Eventim AG .............................................................................................................. 36
Delticom AG ..................................................................................................................... 37
Deutsche Annington Immobilien SE ............................................................................... 38
Deutsche EuroShop AG ................................................................................................... 39
Deutsche Wohnen AG ...................................................................................................... 40
Deutz AG .......................................................................................................................... 41
Dialog Semiconductor plc ................................................................................................ 42
DIC Asset AG ................................................................................................................... 43
Drägerwerk AG & Co KGaA ............................................................................................. 44
Drillisch AG ...................................................................................................................... 45
Dürr AG ............................................................................................................................ 46
ElringKlinger AG .............................................................................................................. 47
Evotec AG ........................................................................................................................ 48
Fielmann AG .................................................................................................................... 49
freenet AG......................................................................................................................... 50
Fuchs Petrolub SE ............................................................................................................ 51
GAGFAH SA .................................................................................................................... 52
GEA Group AG................................................................................................................. 53
Gerresheimer AG .............................................................................................................. 54
Gerry Weber International AG .......................................................................................... 55
Grenkeleasing AG ............................................................................................................. 56
GSW Immobilien AG ........................................................................................................ 57
Hamborner REIT AG....................................................................................................... 58
Hawesko Holding AG ...................................................................................................... 59
Hochtief AG ..................................................................................................................... 60
Hugo Boss AG .................................................................................................................. 61
Jenoptik AG ...................................................................................................................... 62
Jungheinrich AG ............................................................................................................... 63
Kapsch TrafficCom AG .................................................................................................... 64
KION Group AG .............................................................................................................. 65
Klöckner & Co SE ............................................................................................................ 66
Kontron AG ...................................................................................................................... 67
Krones AG ........................................................................................................................ 68
KUKA AG ......................................................................................................................... 69
3
Cross-Sector
LEG Immobilien AG ........................................................................................................ 70
Leifheit AG ....................................................................................................................... 71
Lotto24 AG ....................................................................................................................... 72
MAN SE ........................................................................................................................... 73
Mayr-Melnhof Karton AG ................................................................................................. 74
MIFA Mitteldeutsche Fahrradwerke AG .......................................................................... 75
MTU Aero Engines Holding AG ...................................................................................... 76
Nemetschek AG ............................................................................................................... 77
NORMA Group AG .......................................................................................................... 78
OSRAM Licht AG ............................................................................................................. 79
Palfinger AG ..................................................................................................................... 80
Patrizia Immobilien AG .................................................................................................... 81
Pfeiffer Vacuum Technology AG ...................................................................................... 82
ProSiebenSat.1 Media AG ................................................................................................. 83
PSI AG .............................................................................................................................. 84
QSC AG ............................................................................................................................ 85
RATIONAL AG ............................................................................................................... 86
Rheinmetall AG ................................................................................................................ 87
RHI AG ............................................................................................................................ 88
Rhön-Klinikum AG ........................................................................................................... 89
RIB Software AG .............................................................................................................. 90
Rosenbauer International AG ........................................................................................... 91
Sartorius AG ..................................................................................................................... 92
Schoeller-Bleckmann AG .................................................................................................. 93
SGL Carbon SE ................................................................................................................ 94
Sky Deutschland AG ......................................................................................................... 95
Software AG ...................................................................................................................... 96
STADA Arzneimittel AG................................................................................................... 97
STRATEC Biomedical AG ............................................................................................... 98
Ströer Media AG ............................................................................................................... 99
Südzucker AG ................................................................................................................. 100
Süss Microtec AG ........................................................................................................... 101
Symrise AG ..................................................................................................................... 102
TAG Immobilien AG ...................................................................................................... 103
TAKKT AG ..................................................................................................................... 104
Telekom Austria Group .................................................................................................. 105
Tipp24 SE ....................................................................................................................... 106
Tomorrow Focus AG ...................................................................................................... 107
Tom Tailor Holding AG ................................................................................................. 108
United Internet AG ......................................................................................................... 109
Verbund AG .................................................................................................................... 110
Vossloh AG ...................................................................................................................... 111
VTG AG .......................................................................................................................... 112
Wacker Neuson SE ......................................................................................................... 113
Wienerberger AG ............................................................................................................ 114
Wirecard AG ................................................................................................................... 115
Wüstenrot & Württembergische AG ............................................................................... 116
Xing AG .......................................................................................................................... 117
zooplus AG ..................................................................................................................... 118
Zumtobel AG .................................................................................................................. 119
Disclosures in respect of section 34b of the German Securities Trading Act
(Wertpapierhandelsgesetz – WpHG) .................................................................................... 120
Contacts: Investment Banking ............................................................................................. 139
4
Cross-Sector
Germany/Austria: small and mid-caps
The origins of Berenberg Equities
Before developing into a pan-European all-cap house, Berenberg was
recognised as one of the top research providers for German small and
mid-caps. Today, Berenberg covers almost all of the key German
small/mid-cap companies, and also offers among the broadest coverage
of Austrian companies. With our longstanding experience and large
coverage universe, we are ideally positioned to help investors pick out
hidden champions in this space. In this note, our third cross-sector
report focusing on German and Austrian small and mid-caps, we provide
insight on 101 companies and identify our current top ideas.
Top ideas
Bechtle AG (Buy; PT EUR48.50; 28% upside)
Bechtle is a full-service IT provider with a highly defensible market
position in Germany. The market is highly fragmented and Bechtle is the
second-largest player with a market share of 2%, roughly on a par with
number one player (Computacenter Germany) and three times bigger
than number three player (Cancom).
Bechtle’s key differentiating factors are its levels of service, process
know-how and reliability it offers. It therefore places significant emphasis
on these, employing 2,700 service personnel and providing a wide range
of pre- and post-sale services. Bechtle has made c50 small acquisitions
since its IPO in 2000, but the market remains highly fragmented. We
believe that Bechtle offers substantial growth potential, both organic and
inorganic, given its strong balance sheet and plans for further market
consolidation. Following Bechtle’s significant investments in new
personnel and thus future growth, its margin has been slightly depressed
over the last few quarters. In the long term, margin expansion should be
driven by the sale of more high value-add services to customers. In the
short term, we expect Bechtle to improve its margin, supported by
increased productivity on the part of new employees. This margin
expansion should provide a near-term catalyst for the stock. The
valuation of 11.3x 2014 earnings is, in our view, not justified. Our DCFbased target price of EUR48.50 suggests a fair valuation at 14.4x 2014
earnings, leaving c28% upside potential.
Bjoern Lippe, [email protected], tel: +44 20 3207 7845
CEWE Stiftung & Co KGaA (Buy; PT EUR47.50; 20%
upside)
8 October 2013
CEWE is among the few photo-printing companies that have overcome
the structural changes that have taken place in the industry and survived
the general shift from analogue to digital photo-finishing. Management
has a solid track record of identifying and monetising new trends, which
is evident in its leadership of the European photobook sector and the
digital photo-printing market, in which it has a market share of more
than 40%. In 2010, CEWE entered the web-to-print segment, and
strengthened its position there by acquiring Germany’s number three
player, Saxoprint, in 2012.
Gunnar Cohrs, CFA
5
Analyst
+44 20 3207 7894
[email protected]
Anna Patrice, CFA
Analyst
+44 20 3207 7863
[email protected]
Cross-Sector
The online segment is loss-making for the time being, and thus the company has
reported flat group EBIT and net profit for 2012, with little improvement
expected for 2013E. However, the company’s competitive edge in photo-printing
and its high brand awareness are set to support market share gains in this growing
segment. We therefore expect a 30% sales CAGR 2012-2017E in online printing
and positive EBIT by 2015E with a 25% contribution to group earnings by 2017E.
This is not yet reflected in consensus or in valuation: a) our EPS estimates are 4%
ahead of consensus for 2014E and 10% ahead of consensus for 2015E; b) our
SOTP valuation indicates that online printing is worth EUR9.5 per share, while the
core business is worth EUR38 per share versus the current share price of EUR38.
CEWE’s upcoming capital markets day on 16 October will focus on online
printing, which is set to be a catalyst for share price outperformance.
Anna Patrice, [email protected], tel: +44 20 3207 7863
Gerresheimer AG (Buy; PT EUR54.00; 20% upside)
Gerresheimer is one of the leading players in healthcare packaging. After a
prolonged period of investment to enhance its product offering (insulin pens and
RTF syringes) we believe Gerresheimer is about to embark a period of accelerated
top-line growth and margin expansion. As the company comes out of its
investment phase, there should be a significant improvement in balance sheet
returns (its ROIC should rise from c9/10% to above the mid-teens), which we
believe will trigger a re-rating in the stock and finally drive a warranted premium to
other packaging peers. In the meantime, Gerresheimer may be tempted to bid for
the Rexam Healthcare Plastics business (recently put up for sale). If this is the case,
and Gerresheimer is successful in clinching the deal at a fair price, this could be
transformational for the company. We view the Rexam opportunity as upside
potential to the base case investment case for Gerresheimer.
Scott Bardo, [email protected], tel: +44 20 3207 7869
Tipp24 SE (Buy; PT EUR68.00; 43% upside)
Tipp24 operates a highly profitable secondary lottery (it has a UK betting licence
on the outcome of the German “6 from 49” lottery) which has been unsuccessfully
challenged in the past by the German regulator. While it bears minimal regulatory
risk at present, such risk will, in our view, be eliminated with the move to the UK.
Given that most customers are presumably German and the company has not
been allowed to advertise in Germany so far, the business is unlikely to grow in
terms of active customers.
A price increase of 33% introduced by the original lottery in May 2013 and
replicated by Tipp24 is likely to be the only source of growth for some time.
Additional medium-term growth is likely to come from Tipp24’s recently acquired
stake in Geonomics, which holds a UK licence for a geo-based lottery. Sector
experts have labelled geo lotteries as the key innovation in the lottery industry; we
believe that, in the medium term, the new game will be able to match the revenues
and margins of the current business. The move of headquarters from Hamburg to
London at the end of this year (although the company will retain its German stock
listing) is very positive news for shareholders as it increases the likelihood that the
company will pay a dividend next year. There is EUR140m of cash, excluding
client money, at the Tipp24 subsidiary MyLotto24 UK Ltd, which to a large extent
it can pay out. A weaker Q3 (which it will report on 7 November) due to the new
businesses increased costs (as already announced with the full-year guidance for
6
Cross-Sector
2013), a jackpot payout of EUR6.8m (announced in September) and a pleasant
summer with lower internet activity could be a good entry point into the stock.
Valuation with a cash adjusted P/E 2014 of 7x and a free cash flow yield of 10%
looks attractive. Our price target of EUR68 is based on DCF.
Gunnar Cohrs, [email protected], tel: +44 20 3207 7894
United Internet AG (Buy; PT EUR35.00; 25% upside)
United Internet is the second-largest German residential broadband provider in
Germany with operations in mobile since 2010. A period of reinvestment has
rejuvenated the company’s national 1&1 brand which is among the fastest-growing
mobile and broadband providers in Germany today. We believe a combination of
subscriber growth, improving profitability and lower start-up investments should
yield double-digit growth in EBITDA, earnings and free cash flow over the next
few years. In the near term, we expect subscriber profitability to surprise to the
upside leading to consensus earning upgrades for 2014 and 2015. Low leverage
also leaves room for surprise on shareholder returns. Valuation-wise, UTDI looks
expensive trading on 20x 2014 estimates but not in relation to the growth on offer
of a CAGR 2014-17 of 23%. Our DCF-based SOTP value for the business is
EUR35, which would imply a price earnings ratio falling to 15x 2015 and 25%
upside potential.
Usman Ghazi, [email protected], tel: +44 20 3207 7824
Zumtobel AG (Buy; PT EUR14.50; 20% upside)
Zumtobel is Europe’s leading professional lighting manufacturer, producing
luminaires under the Zumtobel and Thorn brands in the Lighting division, and
under the Tridonic brand in the Components division. After many quarters of
restructuring and the negative effects of the LED transition, the company has
turned a corner. LED growth in the Components division is now more than
offsetting the decline in conventional products, while the benefits of economies of
scale and lower input prices are starting to show through.
Past restructuring efforts support ongoing margin improvements throughout the
group despite a lacklustre market, which would provide further upside is European
construction recovery boosts volumes. Previous management has done well to
strengthen the balance sheet, improve cash flow generation and reduce working
capital. Q2 results in December should provide a positive catalyst as we believe 1)
the new CEO will announced his targets and strategic plan for the group, and 2)
the strong seasonality which is not fully appreciated by investors in our view, is
likely to result in an exaggerated share price reaction as performance continues to
improve as it did in Q1. The share is trading on 0.5x EV/sales versus a long run
EBIT margin expectation of 6.5%. Our EUR14.5 price target is based on a
blended average of multiple-based, SOTP and DCF valuation methodologies and
provides 20% upside with scope to reach EUR17.7 in FY 2016 (50% upside).
William Mackie, [email protected], tel: +44 20 3207 7837
7
Cross-Sector
Valuation matrix
Name
Lotto24
Kapsch TrafficCom
Tipp24 SE
Suss Microtec
MIFA
RHI
RIB Software
DIC Asset
Nemetschek
Bechtle
Tom Tailor
BayWa
United Internet
Deutsche Wohnen
GAGFAH
alstria office
CEWE COLOR
Gerresheimer
Zumtobel
Drägerwerk
TAG Immobilien
Pfeiffer Vacuum
Rhön-Klinikum
Deutsche Annington
Tomorrow Focus AG
Evotec
Sartorius
PATRIZIA
Gerry Weber
LEG Immobilien
Hamborner REIT AG
Carl Zeiss Meditec
ADVA AG Optical Networking
Mayr-Melnhof Karton
Drillisch
BAUER
Jungheinrich
QSC AG
Leifheit
Deutsche EuroShop
TAKKT AG
Hugo Boss
Wirecard
Palfinger
AGRANA
Wüstenrot & Württembergische
PSI AG
Rosenbauer
AMAG Austria Metall
Bilfinger Berger
GSW Immobilien
Sky Deutschland AG
OSRAM
Andritz
Hawesko
Suedzucker
RATIONAL
Norma
STADA
Fielmann
GEA
Jenoptik
Aixtron
Dialog Semiconductors
Current rating
Price target
(trading
currency)
Price
(trading
currency)
Buy
Buy
Buy
Buy
Buy
Buy
Buy
Buy
Buy
Buy
Buy
Buy
Buy
Buy
Buy
Buy
Buy
Buy
Buy
Buy
Buy
Buy
Buy
Buy
Buy
Buy
Buy
Buy
Hold
Buy
Buy
Hold
Hold
Buy
Buy
Hold
Hold
Buy
Hold
Buy
Buy
Hold
Buy
Buy
Hold
Hold
Buy
Hold
Hold
Buy
Buy
Buy
Buy
Buy
Hold
Hold
Hold
Buy
Buy
Hold
Hold
Hold
Hold
Hold
8.50
56.00
68.00
9.40
8.50
33.00
7.70
10.30
57.00
48.50
20.00
45.00
35.00
16.00
11.80
11.30
47.50
54.00
14.50
110.00
10.50
107.00
22.70
22.50
4.60
4.00
92.00
8.50
34.00
48.00
8.25
25.00
5.20
92.00
20.00
21.00
49.00
4.90
33.00
35.00
16.00
102.00
28.00
30.00
100.00
16.00
12.90
62.00
22.00
84.00
34.00
7.60
37.00
46.50
42.00
22.50
225.00
36.00
40.00
81.50
31.50
12.00
12.00
14.50
4.09
37.10
47.50
6.91
6.30
24.70
5.84
7.90
44.50
38.00
15.88
35.92
27.95
12.90
9.53
9.35
39.45
44.86
12.08
92.55
8.85
90.96
19.32
19.19
3.95
3.44
79.25
7.42
29.71
41.95
7.25
21.98
4.57
81.50
17.77
18.79
43.85
4.39
29.62
31.44
14.50
92.78
25.52
27.40
91.71
14.78
11.92
57.50
20.42
78.28
31.69
7.09
34.85
44.00
39.75
21.31
215.15
34.46
38.43
78.70
30.55
11.67
11.74
14.28
Potential Abs. perf Market
in %
3M
cap. (m) in
EUR
Div.
yield
2013
P/BV
2014
ROCE
2013
EV/
Sales
2013
EV/
EBIT
2013
P/E
2013
EBIT CAGR 13margin 15e EBIT
2013
107.87%
50.94%
43.16%
36.09%
34.92%
33.60%
31.80%
30.43%
28.09%
27.63%
25.94%
25.28%
25.22%
24.08%
23.88%
20.86%
20.42%
20.37%
20.08%
18.85%
18.64%
17.63%
17.53%
17.25%
16.46%
16.28%
16.09%
14.57%
14.44%
14.42%
13.87%
13.77%
13.76%
12.88%
12.58%
11.79%
11.74%
11.62%
11.41%
11.34%
10.34%
9.94%
9.72%
9.49%
9.04%
8.29%
8.22%
7.83%
7.74%
7.31%
7.31%
7.21%
6.17%
5.68%
5.66%
5.58%
4.58%
4.48%
4.09%
3.56%
3.13%
2.87%
2.21%
1.54%
0.0%
1.5%
0.0%
0.0%
0.0%
3.0%
2.4%
4.4%
2.6%
2.5%
0.0%
1.9%
2.9%
2.6%
0.0%
5.6%
3.8%
1.6%
0.6%
1.0%
4.5%
4.4%
1.3%
3.5%
1.1%
0.0%
1.4%
0.0%
2.9%
4.2%
6.2%
2.0%
0.0%
2.8%
7.3%
1.9%
2.2%
2.3%
5.2%
3.8%
2.2%
3.6%
0.4%
2.4%
3.9%
2.0%
2.5%
2.1%
2.9%
3.7%
3.1%
0.0%
0.0%
2.2%
4.3%
4.2%
3.3%
2.4%
2.0%
3.7%
2.1%
1.3%
0.0%
0.0%
5.1
1.8
1.8
0.9
1.5
1.4
1.4
0.6
2.9
1.5
1.6
1.2
0.5
1.0
0.9
0.9
1.7
2.4
1.4
1.8
1.0
2.8
2.5
1.1
1.5
2.4
1.6
1.0
3.1
1.0
1.1
2.3
1.3
1.3
n.m.
0.6
1.5
2.6
1.5
1.3
2.3
7.5
4.0
2.2
1.1
0.4
2.4
1.9
1.1
1.6
1.0
10.8
1.5
3.7
3.9
1.2
7.9
2.6
1.9
5.3
2.2
1.6
2.4
2.2
n.m.
n.m.
18.7%
n.m.
12.0%
15.7%
5.8%
3.2%
19.9%
15.0%
6.6%
5.7%
49.2%
5.3%
4.4%
4.4%
15.4%
9.6%
2.8%
20.2%
4.2%
19.7%
5.6%
4.5%
11.4%
0.6%
14.7%
7.5%
24.4%
4.1%
3.5%
32.6%
14.2%
14.0%
22.1%
6.7%
11.2%
6.0%
8.3%
5.0%
18.6%
36.1%
12.7%
13.6%
10.1%
n.m.
4.8%
15.8%
9.0%
10.4%
5.0%
n.m.
15.0%
12.6%
25.5%
13.7%
42.1%
18.3%
13.5%
31.6%
11.6%
10.3%
n.m.
14.1%
27.9
1.1
1.5
0.8
0.7
0.9
2.5
14.8
2.0
0.3
0.7
0.2
1.6
14.3
13.2
15.4
0.5
1.4
0.4
1.0
14.1
1.7
1.1
13.8
1.1
3.9
1.2
23.3
1.5
9.3
14.2
1.6
0.5
0.7
2.9
0.7
n.m.
1.3
0.7
18.4
1.2
2.7
5.8
1.2
0.6
n.m.
1.1
0.7
1.1
0.5
15.3
4.2
0.7
0.7
0.8
0.8
4.8
1.9
1.8
2.6
1.2
1.2
2.5
1.2
n.m.
n.m.
6.6
n.m.
11.6
7.2
11.9
26.3
10.9
8.7
14.7
16.8
9.7
19.5
21.7
19.7
9.5
12.7
27.5
10.2
23.6
10.4
22.1
22.6
12.2
n.m.
7.7
13.3
12.4
24.1
28.2
10.9
7.7
7.5
14.3
11.8
n.m.
23.0
12.0
21.1
9.6
14.5
25.6
11.7
7.7
n.m.
36.3
9.4
12.5
9.9
19.6
n.m.
10.0
15.0
12.9
6.9
17.2
11.6
12.5
15.7
11.7
13.0
n.m.
11.2
n.m.
n.m.
15.9
n.m.
16.3
9.8
29.8
7.8
18.2
13.3
16.4
13.9
13.9
19.4
15.5
16.2
13.4
16.7
29.9
12.6
16.2
16.9
23.7
20.1
20.6
91.4
19.0
9.0
19.1
15.5
14.5
19.9
14.2
13.1
17.1
9.9
13.6
26.9
17.1
15.5
10.9
19.5
34.2
13.6
8.0
10.5
70.9
11.7
12.2
14.4
21.0
n.m.
14.6
24.9
19.6
6.8
24.4
16.1
13.4
24.3
16.3
14.6
n.m.
16.3
n.m.
-2.3%
23.3%
-5.5%
5.8%
12.0%
21.4%
51.3%
18.2%
3.8%
4.7%
1.4%
11.9%
73.1%
68.9%
75.8%
5.7%
11.1%
1.6%
9.4%
57.5%
16.5%
5.2%
38.8%
9.6%
1.4%
14.9%
26.9%
12.3%
38.5%
48.8%
14.5%
5.9%
9.1%
20.6%
5.9%
7.5%
5.7%
5.8%
87.2%
12.9%
18.6%
22.7%
10.5%
7.7%
n.m.
3.0%
7.0%
9.0%
4.6%
82.9%
-4.0%
6.9%
4.5%
6.0%
12.4%
27.8%
16.5%
14.7%
16.6%
10.1%
9.4%
-7.1%
10.8%
-18.2%
-0.8%
9.2%
-6.3%
6.6%
-8.0%
27.8%
4.0%
-9.5%
4.0%
-7.9%
-5.9%
24.6%
0.4%
8.9%
10.8%
12.7%
3.0%
45.8%
-5.2%
6.6%
10.3%
8.7%
12.2%
0.3%
32.4%
1.0%
-12.9%
-11.8%
8.7%
2.0%
-16.4%
27.2%
0.5%
32.4%
1.5%
28.6%
52.1%
9.0%
1.6%
22.4%
8.1%
16.4%
17.9%
-12.5%
4.8%
-18.0%
9.5%
-7.8%
7.8%
4.2%
17.5%
26.1%
4.4%
-2.6%
-14.6%
4.7%
15.3%
12.6%
-3.3%
8.2%
31.7%
-3.5%
41.7%
8
82
482
398
132
62
984
224
361
428
798
384
1,237
5,465
2,178
2,057
738
259
1,409
521
1,644
1,157
898
2,670
4,303
230
405
676
425
1,364
2,223
330
1,787
223
1,636
871
322
1,491
544
141
1,696
951
6,532
2,867
969
1,302
1,359
187
391
720
3,455
1,601
6,218
3,649
4,569
357
3,541
2,446
1,098
2,303
3,305
5,880
668
1,183
962
-7.6%
n.m.
28.2%
n.m.
14.3%
-2.6%
13.5%
2.5%
21.2%
10.8%
38.5%
13.2%
5.8%
3.3%
1.3%
1.5%
12.7%
14.5%
94.8%
13.5%
5.6%
12.1%
-18.5%
1.3%
18.0%
325.7%
13.3%
n.m.
15.6%
9.7%
4.6%
9.8%
59.3%
6.0%
33.4%
14.3%
12.7%
42.0%
13.7%
0.9%
7.2%
14.9%
27.8%
16.1%
-10.9%
n.m.
68.7%
9.1%
23.1%
9.6%
3.6%
n.m.
16.4%
28.2%
13.0%
-11.6%
10.8%
12.2%
12.2%
7.9%
8.5%
20.0%
n.m.
28.1%
Cross-Sector
Name
Vossloh
VTG
Brenntag
KUKA
Hochtief
MTU
Xing
freenet
Symrise
Axel Springer
DEUTZ
Delticom
CTS Eventim
Klöckner & Co
ElringKlinger
CompuGROUP
Rheinmetall
Aurelius AG
MAN
Fuchs Petrolub
Grenkeleasing
Ströer Out-of-Home Media AG
Krones
Schoeller-Bleckmann Oilfield
Celesio
zooplus AG
Stratec
Kion
ProSieben Sat.1
Wienerberger
Software AG
Wacker Neuson
Kontron
Verbund
Dürr
Telekom Austria
SGL Carbon
Current rating
Price target
(trading
currency)
Price
(trading
currency)
Sell
Hold
Hold
Hold
Hold
Hold
Buy
Hold
Hold
Hold
Buy
Hold
Hold
Hold
Hold
Hold
Hold
Hold
Sell
Hold
Hold
Hold
Hold
Hold
Hold
Sell
Hold
Sell
Sell
Sell
Sell
Sell
Hold
Sell
Hold
Sell
Sell
65.00
15.50
121.00
33.00
62.00
69.00
82.00
18.00
32.00
42.00
6.50
40.50
32.00
9.30
30.00
17.00
40.00
23.00
80.89
54.00
61.00
11.40
57.00
76.00
15.00
44.00
28.00
24.00
27.60
10.90
21.00
9.00
4.00
12.80
42.50
4.20
14.00
64.06
15.35
120.20
32.91
61.89
69.00
82.09
18.09
32.16
42.82
6.69
42.00
33.52
9.84
31.89
18.20
43.18
24.84
88.28
59.01
67.00
12.56
62.96
85.50
17.07
50.60
32.24
27.91
32.18
12.79
25.10
10.82
4.84
16.57
55.67
6.25
28.41
Potential Abs. perf Market
in %
3M
cap. (m) in
EUR
Div.
yield
2013
P/BV
2014
ROCE
2013
EV/
Sales
2013
EV/
EBIT
2013
P/E
2013
EBIT CAGR 13margin 15e EBIT
2013
1.47% -10.9%
0.98%
10.8%
0.67%
-1.5%
0.29%
-4.6%
0.18%
16.0%
0.00%
-7.2%
-0.11% 65.3%
-0.47%
2.2%
-0.50% -2.5%
-1.90% 27.9%
-2.84% 28.2%
-3.57% 11.0%
-4.53%
8.2%
-5.47% 16.0%
-5.93% 18.2%
-6.59% -7.3%
-7.36% 19.1%
-7.41% 23.3%
-8.37%
4.5%
-8.49% -0.2%
-8.96% -3.7%
-9.24% 56.0%
-9.47% 12.3%
-11.11% 4.5%
-12.13% 10.6%
-13.04% 25.8%
-13.15% 1.3%
-13.99% 18.2%
-14.22% -4.6%
-14.78% 39.9%
-16.33% 0.2%
-16.78% 9.4%
-17.27% 41.4%
-22.75% 15.3%
-23.66% 12.7%
-32.84% 24.1%
-50.72% 27.9%
3.3%
2.5%
2.0%
0.9%
2.6%
2.0%
1.2%
8.3%
2.7%
4.0%
0.0%
4.4%
2.2%
0.0%
1.5%
1.9%
4.1%
2.8%
0.4%
2.7%
1.2%
0.0%
1.7%
2.2%
2.2%
0.0%
1.7%
1.4%
4.7%
0.9%
2.2%
3.2%
4.1%
6.0%
2.1%
0.8%
0.0%
1.6
1.1
2.6
2.8
1.7
2.6
6.3
1.8
3.5
2.1
1.4
7.9
6.3
0.6
2.6
4.0
1.1
1.1
2.1
2.1
1.9
1.8
2.1
2.9
1.3
6.5
3.3
1.6
8.9
0.7
2.0
0.8
0.9
1.5
3.3
1.8
3.1
9.5%
6.2%
10.2%
15.8%
11.0%
12.3%
26.1%
11.0%
15.3%
7.8%
7.8%
39.5%
26.8%
0.9%
18.5%
16.5%
4.9%
15.0%
3.7%
38.6%
n.m.
5.0%
15.5%
19.6%
9.1%
5.6%
18.6%
10.3%
18.2%
1.6%
15.2%
8.2%
5.0%
6.5%
20.5%
5.3%
0.7%
0.8
1.4
0.8
0.6
0.3
1.3
4.7
0.9
2.4
1.6
0.7
1.1
2.5
0.2
1.9
2.5
0.6
0.9
1.1
1.0
n.m.
1.6
0.7
2.8
0.2
0.8
2.9
0.9
3.3
1.0
2.2
0.8
0.4
3.2
0.8
1.8
2.0
10.8
14.9
12.8
9.8
8.3
14.2
24.7
9.8
14.8
12.0
16.7
15.7
12.1
54.2
14.9
13.7
16.1
6.3
35.3
6.1
n.m.
27.7
10.1
12.0
12.1
n.m.
19.0
9.9
12.0
59.0
10.8
10.0
13.3
15.4
10.8
20.3
n.m.
16.2
20.2
17.4
17.1
21.5
17.3
40.1
10.7
18.8
16.5
18.6
22.2
21.5
n.m.
20.7
18.8
20.2
10.5
n.m.
19.0
20.6
20.7
15.1
16.5
15.7
n.m.
23.7
18.5
18.0
n.m.
13.2
11.7
22.5
17.5
15.8
20.5
n.m.
7.6%
9.6%
6.3%
6.4%
3.6%
8.8%
18.9%
8.9%
16.3%
13.0%
4.3%
6.9%
20.8%
0.4%
12.9%
18.6%
3.7%
6.9%
3.1%
17.1%
n.m.
5.7%
6.4%
23.0%
1.9%
0.7%
15.2%
9.1%
27.1%
1.7%
20.4%
8.5%
3.2%
21.1%
7.7%
9.0%
0.8%
Source: Berenberg, 8 October 2013
9
834
328
6,190
1,116
4,422
3,588
457
2,316
3,795
4,231
809
497
1,609
981
2,021
903
1,647
787
12,977
2,094
917
614
1,959
1,365
3,178
308
382
2,754
6,858
1,503
2,103
759
269
5,757
1,926
2,766
2,367
6.9%
8.0%
6.2%
7.3%
2.3%
13.5%
51.1%
7.7%
8.0%
5.1%
37.6%
16.8%
8.4%
138.3%
15.0%
13.7%
44.6%
10.0%
69.0%
1.9%
n.m.
26.8%
11.3%
7.9%
9.6%
132.1%
16.6%
8.0%
3.7%
84.9%
2.0%
8.4%
86.2%
-22.5%
1.8%
7.4%
228.9%
Cross-Sector
Germany and Austria
The long-awaited European recovery has led to solid stock market performance
and a re-rating with MDAX trading at almost 20% premium to its historical P/E.
However, the German mid-cap universe is still an attractive market for the
following reasons.
● Favourable macro environment: There is solid growth potential in Germany,
with economic sentiment improving at a higher pace than the rest of Europe
and positive momentum with earnings upgrades coming through as opposed to
slight downgrades elsewhere. There have been few surprises and the stable
political environment supports Germany’s safe-haven status.
● High-quality mid-cap businesses: The companies in our coverage universe
are focused on their niche segments and therefore are market leaders, able to
gain market share in fragmented markets or profit from new trends and
structural changes by developing their markets.
Looking at the sector’s valuation, earnings expectations are positive. However, the
companies that attended our Munich conference in September remained cautious
about the outlook, and Q3 results might prove to be a mixed bag, revealing a
disappointing pace of growth. Precise stock picking is, therefore, more important
than ever in these markets, which are characterised by expanded and converted
multiples, coupled with the absence of short-term catalysts.
In this note, we have combined our German and Austrian small and mid-cap
universes, comprising a total of 101 companies, and have screened the stocks
according to the following criteria:
● a Buy recommendation with upside of more than 10% to the current price;
● strong earnings growth over the next three years; and
● significant catalysts for the stock over the next few months.
Based on these criteria, we have chosen the following six top picks from our
universe that offer more defensive growth or have stock-specific growth drivers
and are unlikely to suffer negative surprises linked to slower-than-expected growth
going into Q3 results – Bechtle, CEWE, Gerresheimer, United Internet, Zumtobel
and Tipp24. We expect a weak set of results for the latter, but this is a result of
company-specific issues that its management has already highlighted. We believe
that these stocks either offer robust non-cyclical growth (Gerresheimer, United
Internet, Tipp24) or we expect them to benefit from an improved macro
environment reinforced by stock-specific growth drivers (Bechtle, CEWE,
Zumtobel).
The next edition of our German/Austrian mid-cap product is planned for April
2014. Meanwhile, we will continue to publish updates to our list in a newsletter
every month.
Reviewing the selection of top picks chosen for the last German/Austrian note,
which were chosen based on the same criteria as above, we can identify a share
price performance of +26%, which represents a 12.7ppt outperformance
compared with the average increase of our German and Austrian small and midcap coverage universe of 13.2% since April 2013. In particular, Sky Deutschland
and STADA contributed to this strong performance with share price increases of
76% and 26% respectively.
10
Cross-Sector
Performance of old top picks since selection in
April 2013
0%
10%
20%
30%
40%
50%
60%
70%
Best/worst five performers since our publication
in April 2013
80%
-40.0% -20.0% 0.0%
20.0% 40.0% 60.0% 80.0% 100.0% 120.0%
Xing
LEG Immobilien
Deutz
Sky Deutschland
Hugo Boss
QSC
Stroer Media
CompuGroup
Suedzucker
PSI
STADA
Vossloh
Andritz
Sky Deutschland
AMAG
Source: Bloomberg, , closing price of 3 October 2013 compared with closing price of 8 April 2013, CompuGroup - until 23 July, downgrade to Hold on 24
July, Hugo Boss – until 25 September, downgrade to Hold on 26 September
11
Cross-Sector
Recovery expectations trigger market re-rating
Despite political uncertainties, Syria, the US shutdown and political instability in
Italy, leading indicators show that, across the world, positive sentiment continues
to gain momentum – and Europe is not an exception to this. Eurozone
manufacturing keeps growing modestly, although the pace of expansion eased a
little in September. There is little noticeable difference between core and crisis
countries, with the PMI index staying above 50 since July 2013 for Germany, as
well as for Spain, Italy and the eurozone as a whole.
Germany is set to benefit from a) improving domestic demand, because consumer
confidence and the employment rate are high, while inflation expectations are low;
and b) improving macro conditions in its main export countries. Furthermore,
German mid-cap companies still generate almost 70% of sales outside their
domestic market and so will benefit from global macro development.
Eurozone and German economic sentiment index
PMI index indicates growth ahead
EU economic sentiment
Germany
PMI Manfucturing Germany
China Manufactruing PMI
Source: Bloomberg
Underlying expansion is there, but short-term momentum is mixed
Underlying expansion is accelerating, but our economists expect moderate headline
growth in Q3 and Q4 2013E. This corresponds closely with corporate comments
from our Munich conference, where companies said they were optimistic about FY
2014E but did not expect significant improvement in the short term. The Q3 2013
results season is, therefore, unlikely to be an earnings upgrade event.
Indeed, current consensus estimates paint a similar picture, with downgrades/flat
EPS estimates for the current fiscal year (ESP FY1). For the next fiscal year,
consensus expects flat development for most of the indices. That said, consensus
earnings expectations are already above the pre-crisis year also for most of the
indices.
12
ISM Manfucturing US
04/13
11/12
06/12
01/12
08/11
03/11
10/10
05/10
12/09
07/09
02/09
06/13
10/12
02/12
06/11
10/10
02/10
06/09
10/08
02/08
06/07
10/06
02/06
06/05
10/04
02/04
06/03
10/02
02/02
06/01
10/00
02/00
60
09/08
70
04/08
80
11/07
90
06/07
100
01/07
110
08/06
120
03/06
65.0
60.0
55.0
50.0
45.0
40.0
35.0
30.0
25.0
130
Cross-Sector
Earnings estimates (EPS FY1), 2005-ytd
250
MDAX
DAX
S&P 400
Midcap
200
150
S&P 500
100
SDAX
50
ATX
FTSE 250
0
Aug 05 Aug 06 Aug 07 Aug 08 Aug 09 Aug 10 Aug 11 Aug 12 Aug 13
-50
Source: Bloomberg
Earnings estimates (EPS FY2), 2005-ytd
250
MDAX
DAX
S&P 400
Midcap
200
150
S&P 500
SDAX
100
ATX
50
FTSE 250
0
Aug 05 Aug 06 Aug 07 Aug 08 Aug 09 Aug 10 Aug 11 Aug 12 Aug 13
Source: Bloomberg
Germany as a safe haven
A strong labour market, healthy gains in consumer incomes, a solid fiscal position
and political continuity have secured Germany’s safe-haven status. Indeed,
domestic demand is likely to be the key GDP driver in the mid-term, while an
improving macro environment is set to accelerate Germany’s export growth.
Germany, therefore, seems as a safe bet in times of macro volatility and political
instability, but its exports will also benefit when Europe picks up.
The charts below prove that, for Germany, the theory that domestic demand
drives GDP growth holds true. Indeed, net exports are set to decline because of an
increase in imports, and thus GDP is set to be driven by domestic demand (private
consumption and imports). However, this decline in net exports is a result of a rise
in imports that has outpaced solid export performance and is not caused by poor
export performance.
13
Cross-Sector
Of our top picks, Bechtle, CEWE, Tipp24, United Internet are set to benefit from
this improving private consumption and significant exposure to the domestic
market.
Germany – driven by domestic demand, yoy growth (%)
6.0
4.0
2.0
0.0
-2.0
-4.0
-6.0
1Q91
1Q92
1Q93
1Q94
1Q95
1Q96
1Q97
1Q98
1Q99
1Q00
1Q01
1Q02
1Q03
1Q04
1Q05
1Q06
1Q07
1Q08
1Q09
1Q10
1Q11
1Q12
1Q13
1Q14E
-8.0
Real GDP
Priv Consumption
Net exports
Source: Factset, Berenberg
Private consumption and net export, EURm
340.0
330.0
320.0
310.0
300.0
290.0
280.0
270.0
260.0
250.0
Net export split: export and import, EURm
50
400.0
40
350.0
300.0
30
250.0
20
200.0
10
150.0
100.0
0
50.0
-10
Priv Consumption
1Q91
1Q92
1Q93
1Q94
1Q95
1Q96
1Q97
1Q98
1Q99
1Q00
1Q01
1Q02
1Q03
1Q04
1Q05
1Q06
1Q07
1Q08
1Q09
1Q10
1Q11
1Q12
1Q13
1Q14E
1Q91
1Q92
1Q93
1Q94
1Q95
1Q96
1Q97
1Q98
1Q99
1Q00
1Q01
1Q02
1Q03
1Q04
1Q05
1Q06
1Q07
1Q08
1Q09
1Q10
1Q11
1Q12
1Q13
1Q14E
0.0
Net exports
Exports
Source: Factset, Berenberg, Private consumption on left hand side and net
export and right hand side
Source: Factset, Berenberg
German companies are, therefore, well positioned to benefit from European
recovery, yet also offer a buffer because of the solid domestic demand. It is no
surprise that German stocks have fared better than their international peers in
terms of consensus upgrades. And it is worth noting that it is the German mid-cap
stocks (MDAX) that have seen steady earnings upgrades since Q2 2013 for 2014E.
The chart below further demonstrates the resilience and growth potential of
German companies and, in particular, the mid caps – the MDAX stands out
because of its consistent earnings upgrades since the start of 2013.
14
Imports
Cross-Sector
Earnings revision, EPS FY1
Earnings revision, EPS FY2
15
15
10
10
5
5
0
0
-5
-5
-10
-10
DAX
A
MDAX
FTSE 250
B
C
S&P 400 Midcap
A = 1 Jan 2013 - 29 Mar 2013
FTSE 100
D
S&P 500
DAX
C = 29 Mar 2013 - 28 Jun 2013
D =1Sep 2013 - 3 Oct 2013
B = 28 Jun 2013 - YTD
A
MDAX
B
FTSE 250
C
S&P 400 Midcap
A = 1 Jan 2013 - 29 Mar 2013
B = 28 Jun 2013 - YTD
Source: Bloomberg
Moreover, the German mid-cap universe offers some of the highest earnings
growth potential over the next two years, with a 20% CAGR 2012-15E.
Estimated earnings 2012-15E CAGR
25%
23%
20%
20%
15%
15%
13%
12%
10%
10%
5%
0%
FTSE 250
MDAX
S&P 400
Midcap
DAX
STOXX 600
S&P 500
Source: Bloomberg
Multiples expansion
Earnings upgrades look modest compared with market performance and,
consequently, so does the multiples expansion. While markets do not trade at all
high levels, the P/E ratios are well above their historical 10-year averages. While
MDAX and SDAX have seen the strongest re-ratings, the overall European stock
market (STOXX 600) trades an all-time high with most sectors seeing current PER
ratios well above their historical averages, as illustrated in the charts below.
15
FTSE 100
C = 29 Mar 2013 - 28 Jun 2013
D =1Sep 2013 - 3 Oct 2013
D
S&P 500
Cross-Sector
Trading at a premium to historical 10-year average, PE FY2
25
20
15
10
5
0
DAX
MDAX
SDAX
MinMin/Max
Max
FTSE 250
S&P 400
Midcap
Average
Current
S&P 500
Source: Bloomberg
Trading at a premium to 10-year historical average, PE FY2, STOXX 600 sectors
Average
Source: Bloomberg
Indeed, while the German mid-cap universe is skewed towards capital goods and
industrial engineering, we see limited upside potential for this sector, with most of
our stocks on a Hold recommendation. For example, Deutz has had a fantastic
performance this year, with its share price almost doubling. However, during our
Munich conference, management was downbeat on end-markets, relying on
market share wins to drive the recent order intake strength.
Media is another sector that has re-rated. Out of the top five performers within
Berenberg’s German and Austrian mid-cap universe, three are media players (Xing,
Sky Deutschland and Ströer). Sky Deutschland has seen a 76% share price increase
since we chose it as our top pick.
16
Market
Financial services
Transport and leisure
Insurance
Real Estate
Autos and parts
Retail
Media
Current
Personal and household
Min/Max
Min
Max
Food and beverages
Chemicals
Healthcare
Industrial goods and
services
Construction and
materials
Telecommunications
services
Utilities
Oil & gas
Technology
Basic resources
40
35
30
25
20
15
10
5
0
Cross-Sector
The re-rating of cyclical sectors leads us to be more cautious in choosing our top
picks, so we prefer companies that show a mostly defensive growth profile or
belong to those sectors that have not seen excessive re-rating (Gerresheimer in
healthcare; United Internet and Bechtle in telecoms and IT services). We also
expect consensus upgrades for Zumtobel as we believe margin expansion potential
is not yet reflected in consensus estimates, and thus we believe that valuation is still
appealing.
Earning estimates not conservative
The multiples expansion and high valuation could be justified by upgrades, as
usually the sell-side is late in identifying turning points. However, earnings
estimates do not look particularly conservative, neither in terms of expected
margin progression nor in terms of expected earnings growth:
● profitability (EBIT margin) to reach the pre-crisis level (DAX, FTSE 250) or
even exceed it (MDAX, S&P 500); and
● earnings growth over the next two years (2012-15E) to be significantly above
historical growth rates (2004-2012).
EBIT margin is expected to reach or even exceed pre-crisis levels
20%
15%
10%
5%
0%
DAX
MDAX
SDAX
S&P 400 Midcap
S&P 500
Source: Bloomberg
Earnings growth expectations do not look conservative
25%
CAGR
2004-12
3 Year
CAGR
CAGR
2004-12
3 Year
CAGR
CAGR
2004-12
3 Year
CAGR
20%
15%
10%
5%
0%
EPS
Sales Sales Sales
EBIT EBIT EBIT
EPS
EPS
CAGR 2004-12 3 Year CAGR CAGR 2004-12 3 Year CAGR CAGR 2004-12 3 Year CAGR
DAX
MDAX
FTSE 250*
S&P 400 Midcap S&P 500
Source: Bloomberg , FTSE250 – 2003-2012
17
Cross-Sector
Back to stock picking
Careful stock picking is not only essential in uncertain and volatile times, but also
during stock market rallies to avoid disappointment on unsustainable expectations.
We believe that the German mid-cap market provides significant opportunities for
investors to pick high-quality companies that offer one or several of the following:
● a focus on niche markets within which they are the leaders (CEWE,
Gerresheimer, United Internet);
● a defensive growth profile (Gerresheimer, Tipp24);
● innovative products and, therefore, structural growth in new emerging-market
segments (CEWE, Tipp24, Zumtobel);
● family ownership and its concordant focus on long-term, sustainable and
profitable growth (CEWE);
● hidden gems that are not well known to the market (Bechtle, CEWE, Tipp24).
We believe our top picks will outperform the market because they offer significant
upside potential and:
● have defensive but solid growth (Gerresheimer, with 12% EPS CAGR 2012-
15E, United Internet);
● are active players in consolidating fragmented markets (Bechtle);
● benefit not only from the improving macro environment but also competitive
advantages that support market share gains (Bechtle); or
● have track records in identifying and monetising new trends (CEWE and its
new commercial online printing division, Tipp24 with its geo-based lottery,
Zumtobel with LED).
Berenberg top picks – solid growth profile and upside potential
PT
Bechtle
CEWE
Gerresheimer
Tipp24
United Internet
Zumtobel
48.50
47.50
54.00
68.00
35.00
14.50
Upside
28%
20%
20%
43%
25%
20%
EPS
EPS growth
PER
EPS 3Y
FY1
FY2
FY3
FY1
FY2
FY3
FY1
FY2
FY3
CAGR
PEG
2.87
2.94
2.69
3.00
1.05
0.40
3.37
3.31
3.12
4.06
1.42
0.70
3.60
3.85
3.63
4.92
2.02
1.18
6%
2%
5%
-10%
49%
4%
17%
13%
16%
36%
35%
74%
7%
16%
16%
21%
42%
69%
13.3
13.4
16.7
15.9
26.6
29.9
11.3
11.9
14.4
11.7
19.7
17.2
10.6
10.3
12.4
9.7
13.8
10.2
10.1%
10.1%
12.3%
13.8%
42.2%
44.8%
1.1
1.2
1.2
0.8
0.5
0.4
Source: Berenberg estimates, Bloomberg
18
Cross-Sector
ADVA Optical Networking SE
Hold
Absolute rating system
Current price
Price target
EUR 4.61
EUR 5.20
8 October 2013
● Company overview: Founded in 1994, ADVA develops,
04/10/2013 XETRA Close
EUR 225 m
ADAG
ADV GY
Market cap
Reuters
Bloomberg
Shares outstanding (m)
Daily trading volume
Y/E 31.12, EUR m
48
219,871
2012
Sales
2013E
2014E
2015E
330
337
370
407
EBITDA
28
26
38
58
EBIT
22
20
32
51
Net profit
17
13
20
34
-56
-69
-85
-107
EPS (reported)
0.35
0.28
0.43
0.71
EPS (recurring)
0.39
0.32
0.46
0.73
Y/E net debt
DPS
0.00
0.00
0.00
-
EBITDA margin
8.4%
7.6%
10.3%
14.2%
EBIT margin
6.6%
5.9%
8.6%
12.5%
Dividend yield
0.0%
0.0%
0.0%
0.0%
17.8%
14.2%
22.6%
38.1%
FCF yield
5.0%
5.8%
7.0%
10.3%
EV/sales
0.5
0.5
0.4
0.3
EV/EBITDA
6.1
6.1
3.7
2.0
EV/EBIT
8.1
8.7
4.7
2.4
12.0
14.3
10.1
6.3
ROCE
PER
●
●
Non-institutional shareholders:
EGORA Group 18.1%
●
Ali Farid Khwaja, CFA
+44 20 3207 7852
[email protected]
●
Sales and EBIT margin development
500
Business segment overview
14.0%
10.0%
300
8.0%
200
6.0%
4.0%
100
EBIT margin
12.0%
400
Sales (EUR)
manufactures and sells optical and ethernet-based networking
solutions to telecommunications carriers and enterprises. It
generated EUR330m in revenues in 2012 (up by 6.2% yoy),
of which 30% were from its Enterprise Networks and
Ethernet Access segments respectively and 40% came from
its Carrier Infrastructure business segment. The company has
headquarters in Munich, Atlanta and Shenzen.
Quality: ADVA is a niche player operating in a challenging
industry. The overall profitability of the sector has been
eroded by the entry of Chinese companies as well as by
depressed telecoms operator capex. ADVA is one of the few
companies in the sector which has been able to maintain
profitable growth even during the economic downturn. The
company has a healthy balance sheet with net cash of around
EUR40m by end-H1 2013. We think this, along with a
profitable business model and its focused product portfolio,
are key differentiators which will allow ADVA to gain from
the eventual consolidation in the sector. ADVA has a 20%
market share in fibre ethernet access devices (it is the global
leader) and a 10% market share in EMEA metro WDM
(Wavelength-division Multiplexing) equipment market.
Growth: We are modelling a c7.3% CAGR growth in
revenues over 2012-15. Key growth drivers are increased
spending by telecoms operators on optical-related wireline
infrastructure and by corporates in areas like ethernet access.
Some structural trends – ie the growth in data centres,
increased data traffic on networks, LTE deployments and
smartphone penetration – are driving growth in the sector.
Macroeconomic conditions remain challenging; however,
there are early signs of a pick-up in spending by carriers and
corporates. We also expect ADVA to make acquisitions,
especially in the US, which could help to accelerate growth.
Valuation: Our price target of EUR5.2 is based on 12x next
year’s P/E. The stock is trading at 9.5% below our price
target. ADVA trades on a steep discount to its US peers like
Ciena and Infinera.
Share catalysts: These would include new large contract
wins and market share gain in the US.
Carrier
Infrastructure
40%
Enterprise
Networks
30%
2.0%
0
0.0%
11
12
13E
Sales (EUR)
Source: Company data, Berenberg
14E
15E
EBIT margin
Ethernet
Access 30%
19
Cross-Sector
Agrana Beteiligungs AG
8 October 2013
●
14
1,439
●
2016E
3,103
3,142
EBITDA
318
277
277
284
EBIT
237
188
188
195
Net profit
149
115
115
121
Y/E net debt
479
433
387
338
EPS (reported)
10.52
8.13
8.12
8.54
EPS (recurring)
11.53
8.13
8.12
8.54
3.60
3.60
3.60
3.60
10.4%
8.9%
8.9%
9.0%
EBIT margin
7.7%
6.0%
6.1%
6.2%
Dividend yield
3.8%
3.8%
3.8%
3.8%
10.1%
7.6%
7.5%
7.7%
FCF yield
0.3%
0.5%
0.5%
0.5%
EV/sales
0.6
0.6
0.6
0.5
EV/EBITDA
5.8
6.5
6.3
6.0
EV/EBIT
7.8
9.6
9.3
8.7
PER
8.1
11.5
11.5
11.0
●
Z&S Holding 75.5%
James Targett, CFA
+44 20 3207 7873
[email protected]
Fintan Ryan
+44 20 3465 2748
[email protected]
EU versus world white sugar price (EUR per tonne)
2,000
6.0%
1,500
4.0%
1,000
2.0%
500
Sales (EURm)
2016E
2015E
2013
2014E
2012
2011
2010
2009
2008
2007
0.0%
2006
0
404
350
EU average white sugar price
EU reference price
Operating profit margin (%)
Source: European Commission, Datastream
20
World white sugar price
Jul-13
2,500
719
Sep-13
8.0%
May-13
3,000
750
700
650
600
550
500
450
400
350
300
Jan-13
Mar-13
10.0%
Nov-12
3,500
Jul-12
Sep-12
ROCE
●
May-12
EBITDA margin
Jan-12
DPS
Mar-12
2015E
3,122
Nov-11
2014E
3,066
Jul-11
2013
Sales
Sep-11
Y/E 28.02, EUR m
May-11
Jan-11
Mar-11
EUR 100.00
04/10/2013 Vienna Close
Market cap
EUR 1,331 m
Reuters
AGRV
Bloomberg
AGR AV
Nov-10
EUR 93.75
CEE, one of the largest manufacturers of food starch in
Europe, and the largest bioethanol supplier in Austria and
Hungary. It is the global market leader in fruit preparations
and a leading producer of juice concentrates in Europe. It is
a 75%-owned subsidiary of Südzucker AG.
Quality: Agrana has diversified away from low-volumegrowth, quota-driven EU sugar beet processing into sugar
refining, food starch and bioethanol operations in CEE, and
global fruit juice and preparation operations (in the US,
China and Russia). Emerging markets now account for over
40% of sales and are growing through Fruit division
exposure and should be a driver of future growth.
Growth: After peaking Sugar profitability in FY 2012-13,
declining EU sugar prices from October 2013, uncertainty
about the industry structure and pricing in the run-up to
(and aftermath of) EU quota abolition in 2017 (as well as
Sugar and Starch input costs) all weigh on the stock (and
profits) currently. However, expansion in Starch capacity
and growth in Fruit sales and profits (from global demand
for yoghurt) should support longer-term growth. Sugar
accounted for 50% of profits in FY 2013, and as such we
expect an 30% EPS decline in FY 2014 (Sugar profits down
by 50%) and a broadly stable FY 2015. Agrana has 28% of
the EU isoglucose quota, which is likely to be a growth area
post-2017.
Valuation: 11.5x calendar 2014 P/E appears cheap, but
given limited liquidity and mid-term earnings risks (-10%
three-year EPS CAGR), it seems appropriate at this time.
The 3.8% dividend yield (with a comfortable 44% payout
ratio) provides downside support at these levels. Our
EUR100 price target is derived from an average of our peer
multiple (EUR97), SOTP (EUR99) and DCF (EUR106) fair
values.
Share catalysts: Guidance for the EU sugar price for the
2014 Sugar Marketing Year (from October) will be key to
sentiment, although late contract negotiations mean we
expect little colour at the H1 results (due 10 October).
Ultimately, concerns about lower sugar prices over the next
12+ months will be a headwind for sentiment and forecasts.
The competitive dynamics and investment in sugar
processing capacity up to and after 2017 will determine
longer-term winners (and losers).
Jul-10
Price target
Sep-10
Current price
May-10
Jan-10
Mar-10
Hold
● Company overview: Agrana is a leading sugar processor in
Cross-Sector
Aixtron SE
Hold
Current price
Price target
EUR 11.91
EUR 12.00
●
04/10/2013 Frankfurt Close
Market cap
EUR 1,191 m
Reuters
AIXGn
Bloomberg
AIXA GR
101
853,474
●
Y/E 31.12, EUR m
2012
Sales
2013E
2014E
2015E
228
327
442
504
EBITDA
-116
-6
66
100
EBIT
-132
-23
51
83
Net profit
-145
-15
38
61
Y/E net debt
-206
-189
-196
-241
EPS (reported)
-1.44
-0.15
0.37
0.59
EPS (recurring)
-1.44
-0.15
0.37
0.59
0.00
0.00
0.00
0.00
EBITDA margin
-50.8%
-1.9%
14.9%
19.7%
EBIT margin
-58.1%
-7.1%
11.5%
16.4%
0.0%
0.0%
0.0%
0.0%
-26.3%
-4.8%
9.7%
14.2%
FCF yield
-5.4%
-1.9%
0.4%
3.6%
EV/sales
3.6
2.5
1.8
1.6
EV/EBITDA
-
-
12.3
8.1
EV/EBIT
-
-
16.0
9.8
PER
-
-
32.5
20.2
DPS
Dividend yield
ROCE
●
●
CAMMA 7.6%
+44 20 3207 7852
[email protected]
●
Order intake still at trough levels
700
40.0%
250
600
20.0%
200
500
0.0%
400
EBIT margin
Sales (EUR)
8 October 2013
Company overview: Aixtron, based in Germany, is the
second-largest manufacturer of MOCVD (Metal Organic
Chemical Vapour Deposition) equipment used for making
semiconductors such as LEDs. The company has a global
market share of around 35%, second to US-based Veeco,
which has around a 58% share of a duopoly market structure.
MOCVD machines produced by Aixtron are used for making
LEDs, which have applications in TVs, mobile phones, cars
and general lighting. Aixtron is trying to diversify away from
LED and also sells machines that are used in the manufacture
of power electronics, DRAM memory, OLEDs and also new
materials such as graphene and carbon-nanotubes.
Quality: While the industry generally has high barriers to
entry, the MOCVD industry is facing a steep slump in
demand. Given its high fixed-cost base (opex of EUR100m),
Aixtron made losses in 2012 and we expect the company to
make a further loss in 2013. The industry is cyclical and the
next cycle is expected to be driven by the adoption of LEDs
in general lighting. While there are early signals of pick-up in
demand for LEDs, there is still no visibility on the timing of
a recovery in terms of order intake. Aixtron is expected to
continue to operate in a challenging environment until the
LED companies start the next wave of investments in
MOCVD equipment.
Growth: Aixtron’s revenue growth is dependent on capital
spending by LED companies. This investment has been
cyclical. The first cycle was driven by an increase in demand
for LED driven by adoption in mobile phones, the second
one by TV demand, and now the adoption of LED in general
lighting is expected to be the next growth driver.
Valuation: Given the cyclical nature of the business, our
valuation is based on a through-the-cycle approach. We
model demand for 2,200 MOCVD machines over 2013-16,
ASP of EUR1.5m, a 45% market share for Aixtron, a gross
margin of 43% and EUR100m of opex. We also expect
Aixtron to generate around EUR130m in non-LED sales in
the mid-term. This leads to a normalised EPS of EUR0.84.
Applying a target multiple of 14x leads to a EUR12 price
target.
Share catalysts: These would include signs of recovery in
terms of order intake.
-20.0%
300
-40.0%
200
100
-60.0%
0
-80.0%
11
12
13E
Sales (EUR)
14E
150
100
50
15E
0
EBIT margin
Order intake (€m)
21
Cross-Sector
alstria office REIT AG
8 October 2013
Buy
Current price
Price target
EUR 9.38
EUR 11.30
Market cap
EUR 741 m
Reuters
AOXG
Bloomberg
AOX GY
79
81,000
● Company overview: alstria is the largest German REIT that
focuses on offices and owns a portfolio of EUR1.6bn. The
regional focus is on Hamburg followed by Stuttgart and the
Rhine-/Ruhr-region in western Germany. The company is
internally managed and has also internalised all key functions
such as asset management and project development. The
strategic focus is on buy-to-let.
● Quality: alstria follows a defensive strategy which is reflected
in total vacancy rates of 11%, of which 3.9% is made up of
ongoing development projects. The main tenants are the City
of Hamburg (30%) and Daimler AG (15%), followed by
Bilfinger Berger (4%) and Siemens (4%). The average
remaining lease term is 6.9 years. Due to low gearing levels
(53% loan-to-value), income predictability is above-average.
● Growth: The company’s rather cautious investment policy in
Y/E 31.12, EUR m
2012
2013E
2014E
previous years has paid off in terms of stable portfolio values
and also stable NAV/share. In particular, alstria bought two
mid-sized office portfolios in 2011 and 2012 that both had
shorter lease terms and higher vacancy rates than its existing
portfolio. Alstria has also been able to re-let some of its
properties, even though the average vacancy rate in the
German office market is still relatively high.
2015E
Total revenues
104
107
109
111
Net rents
101
104
106
108
EBIT (inc revaluation
net)
78
88
95
97
EBIT (excl revaluation)
80
81
82
84
Net profit (reported)
40
52
62
67
Funds From
Operations (FFO)
44
46
50
54
● Valuation: Recently, alstria strengthened its debt profile by
EPS reported
0.51
0.60
0.71
0.77
FFO per share
0.55
0.52
0.57
0.62
signing a new syndicated loan of EUR544m for seven years
with four mortgage banks on favourable terms. This has
reduced its risk profile further, and is why we regard current
valuation levels with a 14% discount to net asset value and a
5.9% dividend yield as undemanding.
DPS
0.50
0.52
0.55
0.58
NAV per share
10.51
10.85
10.87
11.13
NNAV per share
10.51
10.85
10.87
11.13
19.4
19.7
19.5
19.1
6.0%
5.6%
6.1%
6.6%
EV/EBITDA
FFO yield
P/FFO
16.8
17.9
16.3
15.1
Dividend yield
5.4%
5.5%
5.9%
6.2%
P/NAV per share
-12%
-14%
-14%
-16%
P/NNAV per share
-12%
-14%
-14%
-16%
Net gearing
99%
101%
101%
98%
Loan-to-value (LTV)
54%
54%
53%
52%
Implied yield
6.5%
6.5%
6.6%
6.7%
● Share catalysts: A reduction of the portfolio’s vacancy rate
would still be the main catalyst, and we would expect some
further improvement, particularly over the next year. We
would also expect alstria to look somewhat more actively into
investment opportunities following its successful debt
extension.
CGI Partners 7%, CNP Assurances 5%
Kai Klose, CIIA
+44 20 3207 7888
[email protected]
Estelle Weingrod
+44 20 3207 7931
[email protected]
120
95.0%
100
90.0%
80
85.0%
60
80.0%
40
75.0%
20
0
Geographical split
Hamburg
Stuttgart
Rhineland
Rhur
Berlin
Munich
Saxony
Hanover
Others
EBIT-margin in %
Rents in EUR
Rental income and EBIT margin development
70.0%
10
11
12E
13E
Total rental income
14E
15E
EBIT margin
22
Cross-Sector
AMAG Austria Metall AG
8 October 2013
Hold
Current price
Price target
EUR 20.65
EUR 22.00
● Company overview: AMAG manufactures downstream
aluminium products (rolled and cast) from recycled scrap, as
well as primary aluminium, at its site in Ranshofen and
through its share in Canadian smelter Alouette. Both
production assets are industry-leading in terms of cost
efficiency and the technological sophistication of its output.
More than 50% of AMAG’s product portfolio comprises
speciality products.
EUR 717 m
AMAV
AMAG AV
Market cap
Reuters
Bloomberg
35
25,757
● Quality: AMAG’s high level of operating profitability and
stability compared to industry averages are, in our view,
supported by: 1) its technological leadership in scrap
recycling; 2) its focus on high value-added products in its
downstream business; and 3) low exposure to LME prices
due to hedging.
● Growth: The metal division has been suffering from the
Y/E 31.12, EUR m
2012
2013E
2014E
2015E
Sales
820
788
865
937
EBITDA
134
120
148
164
EBIT
83
71
91
107
Net profit
71
59
73
82
Y/E net debt
26
83
117
92
EPS (reported)
2.02
1.68
2.08
2.32
EPS (recurring)
2.02
1.68
2.08
2.32
DPS
0.60
0.60
0.70
0.80
EBITDA margin
16.4%
15.2%
17.1%
17.5%
EBIT margin
10.2%
9.0%
10.6%
11.4%
2.9%
2.9%
3.4%
3.9%
11.2%
9.0%
11.0%
12.1%
FCF yield
5.2%
-4.9%
-1.8%
6.8%
EV/sales
1.0
1.1
1.1
0.9
EV/EBITDA
6.1
7.3
6.2
5.4
9.9
12.4
10.0
8.3
10.1
12.1
9.8
8.8
Dividend yield
ROCE
EV/EBIT
PER
decline in the aluminium price. However, the strong
performance of the rolling division in recent quarters, based
on the large share of high value-add speciality products, has
been a mitigating factor. Despite a challenging year ahead, we
see strong growth potential in the medium term with a large
expansion programme under way which should increase
capacity in the Ranshofen plant by 50% by the end of 2014.
A 50% capacity expansion is also planned at Alouette, with a
decision on the timing expected in the next few months.
While we do not include it in our estimates at this stage, this
should provide strong upside to our medium-term numbers.
● Valuation: For our valuation of the company, we use a DCF
model. This, in our view, best captures the expected value
accretion of the capacity expansion while accounting for the
fact that AMAG is less dependent on price development than
other producers. With an EV/EBITDA of 6.2x on our 2014
estimates, AMAG is trading at a premium to other
aluminium producers and in our view is therefore fully
valued.
B&C Industrieholding 29.9%
Raiffeisenlandesbank 16.5%
AMAG Arbeitnehmer Privatstiftung 11.1%
Oberbank 5%
● Share catalysts: A positive catalyst for the stock could be a
Bjoern Lippe
+44 20 3207 7845
[email protected]
decision on the expansion of Alouette. On the negative side,
any negative newsflow concerning the European automotive
industry, a key end-market for AMAG’s downstream
products, could put pressure on the share price.
14.0%
130%
12.0%
800
10.0%
600
8.0%
400
6.0%
4.0%
200
120%
EBIT margin
Sales (EUR)
1,000
Share price since IPO versus LME price
110%
100%
90%
80%
2.0%
0
70%
0.0%
10
11
12
Sales (EUR)
13E
14E
60%
04/11 07/11 10/11 01/12 04/12 07/12 10/12 01/13 04/13 07/13
15E
EBIT margin
LME Aluminium
Source: Bloomberg, Berenberg
23
AMAG
Cross-Sector
ANDRITZ AG
8 October 2013
Buy
Current price
Price target
EUR 44.60
EUR 46.50
Market cap
EUR 4,040 m
Reuters
ANDR.VI
Bloomberg
ANDR AV
Y/E 31.12, EUR m
104
177,000
2012
Sales
2013E
2014E
2015E
5,177
5,898
6,222
6,376
EBITDA
419
414
526
565
EBIT
334
265
375
436
Net profit
244
184
267
307
-1,029
-909
-1,169
-1,431
EPS (reported)
2.35
1.77
2.57
2.95
EPS (recurring)
2.41
2.12
2.76
3.11
DPS
1.27
0.97
1.46
1.77
EBITDA margin
8.1%
7.0%
8.5%
8.9%
EBIT margin
6.5%
4.5%
6.0%
6.8%
Dividend yield
3.1%
2.5%
3.8%
4.6%
15.6%
12.6%
15.2%
15.8%
FCF yield
3.3%
8.1%
7.7%
8.9%
EV/sales
0.7
0.6
0.6
0.6
EV/EBITDA
8.9
9.4
7.4
7.0
EV/EBIT
10.4
11.4
8.6
8.0
PER (cash adj)
17.6
19.6
14.2
11.6
Y/E net debt
ROCE
CEO (Certus) 29%
Management, others 2%
Benjamin Glaeser
+44 20 3207 7918
[email protected]
Alexander Virgo
+44 20 3207 7856
[email protected]
 Company overview: ANDRITZ is an engineering
conglomerate that builds and services large-scale plants for
hydropower, pulp and paper processing, and steel production.
Its portfolio of activities is complemented by specialty niches
as such environmental-oriented machinery products. The
company has leading global positions in all its activities. That
said, external growth has always provided an important pillar
of growth in the past and should continue to do so in the
future. Further, on the back of its extraordinary positioning
and the nature of its business, ANDRITZ enjoys a continuous
negative working capital position of more than EUR1bn.
 Quality: As it operates in a number of oligopolistic markets
such as hydro power and pulp and paper machinery, we believe
ANDRITZ’s market positions are well protected. With the
acquisition of Schuler, the company has found a way to use its
balance sheet more effectively, adding a good margin business
to its metals division. With a strong order book in hydro and
pulp and paper, ANDRITZ has high visibility on 2013 and
even 2014.
 Growth: We believe current output levels are protected by
recurring, smaller project demand in ANDRITZ’s largest endmarkets as well as by the EUR7.6bn order book. Growth
beyond these levels will in our view mostly relate to large-scale
order intake. The potential pipeline for large-scale hydro and
pulp and paper projects amounts to more than EUR5bn over
the next 24 months, with ANDRITZ claiming a 40-60% share
in these markets.
 Valuation: Our price target is based on an average of DCF
and target multiples. At 8.6x FY14 EV/EBITA and 14.2x cash
adjusted P/E, valuation still appears reasonable compared to
sector averages. Further, a FY14 FCF yield 7.7% and a
dividend yield of 3.8% are attractive among our coverage
universe.
 Share catalysts: Next to its October capital markets day,
which will focus on Schuler, we would consider the strongest
catalyst to be large-scale order wins in pulp and paper and
hydro. Mid-term, we see the separate listing of Metso’s Valmet
business (the pulp and paper competitor) planned for January
2014 as a first step to easing price competition in the market.
6,000
Sales (EUR)
6,000
8.0%
6.0%
5,000
4,000
4.0%
3,000
2,000
2.0%
1,000
5,000
EBIT margin
7,000
Segment order development
FEED & BIOFUEL
4,000
SEPARATION
3,000
METALS
2,000
PULP & PAPER
1,000
0
0.0%
10
11
12
Sales (EUR)
13E
14E
HYDRO
0
15E
2004 2005 2006 2007 2008 2009 2010 2011 2012
EBIT margin
24
Cross-Sector
Aurelius AG
8 October 2013
Hold
Current price
Price target
EUR 24.65
EUR 23.00
● Company overview: Aurelius is an industrial holding based
in Germany. It currently has a portfolio of 18 companies and
specialises in acquiring, at low prices, companies that are in
“special” situations and have clear development potential
through operational restructuring.
EUR 725 m
AR4G
AR4 GY
Market cap
Reuters
Bloomberg
Y/E 31.12, EUR m
2013E
2014E
2015E
1,261
1,649
1,915
2,141
108
173
190
212
EBIT
32
115
123
139
Net profit
93
120
127
142
EBITDA
Y/E net debt
restructuring and has already sold several restructured
portfolio companies for a high multiple on invested cash. For
example, last year Aurelius sold Schabmüller after five years
and an initial investment of EUR4.2m for EUR72m. Aurelius
also has a strong track record in sourcing deals in any market
conditions. It acquired five companies in both 2008 and
2009, and a further seven in 2007, before the crisis. As a
buyer of restructuring cases, appropriate risk management is
a key factor. Aurelius limits risk by adhering to a strict policy
to pay low multiples, acquiring its targets through German
GmbH holding companies with a liability limited to
EUR25,000.
32
70,000
2012
Sales
● Quality: The company has a proven track record in
-75
-109
-138
-172
EPS (reported)
3.28
3.77
4.02
4.49
EPS (recurring)
2.02
2.37
2.71
3.17
DPS
1.37
0.70
0.85
1.00
EBITDA margin
8.5%
10.5%
9.9%
9.9%
EBIT margin
2.5%
6.9%
6.4%
6.5%
Dividend yield
6.0%
3.1%
3.7%
4.4%
ROCE
5.6%
15.0%
12.5%
12.3%
FCF yield
-11.3%
-1.1%
3.7%
5.4%
EV/sales
0.5
0.4
0.3
0.3
EV/EBITDA
5.9
3.8
3.4
2.9
EV/EBIT
19.7
5.8
5.2
4.4
PER
11.3
9.7
8.4
7.2
● Growth: We estimate that Aurelius has around EUR150m of
cash not tied up in operating businesses. In our view, this is a
very solid base for strong further expansion and also
provides a substantial safety net for any unexpected costs.
After having acquired two business so far this year as well as
announcing one further acquisition which is still waiting for
anti-trust approval, we expect several further acquisitions.
However, over the next few years, we also expect Aurelius to
sell on average three companies each year, thereby making
room in the portfolio as well as generating investable capital
through the sale of successfully restructured companies.
● Valuation: We value Aurelius using a sum-of-the-parts
model of the underlying EBITDA of the current portfolio
(excluding any bargain purchase income and other one-off
effects) and arrive at a price target of EUR23.00.
Management 40%
of which 32% CEO and 8% Gert Purkert (Executive Board
Member)
● Share catalysts: The Aurelius share price has always been
Bjoern Lippe
+44 20 3207 7845
[email protected]
driven by transactions and we believe that any good
acquisition, and especially a profitable sale, can act as a
catalyst for the stock. For 2013, we expect two further
acquisitions, and two sales.
Deal flow each year since IPO
2,500
25.0%
2,000
20.0%
15.0%
1,500
10.0%
1,000
5.0%
500
Year
2013*
2012
2011
2010
2009
2008
2007
2006
EBIT margin
Sales (EUR)
0.0%
0
-5.0%
10
11
12
Sales (EUR)
13E
14E
15E
EBIT margin
Acquisitions
3
5
1
4
5
5
7
5
Sales/Bankruptcies
1
2
1
4
4
2
1
0
Total
35
15
average p.a.
4.4
1.9
*so far this year, one still awaiting anti-trust approval
25
Cross-Sector
Axel Springer AG
8 October 2013
Hold
Current price
Price target
EUR 42.10
EUR 42.00
● Company overview: Axel Springer is a leading consumer
publisher in Germany and eastern Europe which is
successfully managing the transition to digital. With nearly
40% of 2012 operating profit coming from the group’s digital
marketing, classified and portal businesses, and following the
sale of its regional newspaper businesses, the split between
traditional print and online has now shifted in the latter’s
favour. The company is restructuring its newspaper
publishing activities.
EUR 4,168 m
SPRGn
SPR GY
Market cap
Reuters
Bloomberg
99
214,000
● Quality: While print is under pressure, Axel Springer still
owns some of the leading newspapers globally, including
titles such as Die Welt and Bild, as well as some of the leading
newspapers in CEE. As far as its digital business is
concerned, the group operates the leading European
performance marketing business (Xanox), the number one
online property sites in Belgium and France and the world’s
leading women’s portal (Aufeminin.com).
Y/E 31.12, EUR m
2012
Sales
2013E
2014E
2015E
3,311
3,335
2,923
3,002
EBITDA
628
582
601
630
EBIT
444
434
454
480
258
Net profit
235
230
244
Y/E net debt
-450
-177
468
693
EPS (reported)
2.38
2.33
2.46
2.60
EPS (recurring)
3.00
2.60
2.83
2.97
DPS
1.70
1.70
1.80
2.00
EBITDA margin
19.0%
17.4%
20.6%
21.0%
EBIT margin
13.4%
13.0%
15.5%
16.0%
Dividend yield
4.0%
4.0%
4.3%
4.8%
ROCE
8.5%
7.8%
9.3%
9.9%
FCF yield
8.9%
8.5%
9.3%
9.1%
EV/sales
1.5
1.5
2.0
2.0
EV/EBITDA
7.8
8.8
9.6
9.6
EV/EBIT
11.0
11.8
12.8
12.5
PER
14.0
16.2
14.9
14.2
● Growth: With print declining at mid- to high single digits,
Axel Springer relies on its digital activities to drive top-line
growth. Overall, we forecast low single-digit revenue growth
for the group (excluding the impact of acquisitions and
disposals). Meanwhile, we expect margin growth, given the
shift in the business mix towards the more profitable digital
activities. Overall, we forecast a 6% average EPS growth
2013-2016.
● Valuation: At mid-teens P/E multiples, we believe that the
mix of declining and fast growing assets is adequately
reflected. In our view, Axel Springer is fairly valued at current
levels, particularly given the challenges it may face in 2014
and 2015.
● Share catalysts: The entry of Schibsted into the French
Trust (Friede Springer 90%) 51.5%
Friede Springer 7.0%
online property classifieds market in 2014 could be taken
negatively. So could further acceleration of Xing’s progress
in the online recruitment market in Germany. On the plus
side, a high valuation for Deutsche Telekom’s Scout 24 could
provide positive valuation read-across to SPR’s online
businesses.
Sarah Simon
+44 20 3207 7830
[email protected]
Emma Coulby
+44 20 3207 7821
[email protected]
3,400
3,300
3,200
3,100
3,000
2,900
2,800
2,700
2,600
H1 2013 revenue split
20.0%
15.0%
10.0%
5.0%
3%
12%
EBIT margin
Sales (EUR)
39%
14%
11
12
Sales (EUR)
13E
14E
Newspapers
National
Magazines
National
Print
International
0.0%
10
Digital Media
15E
EBIT margin
31%
26
Services/
Holding
Cross-Sector
Bauer AG
8 October 2013
Hold
Current price
Price target
EUR 19.00
EUR 21.00
● Company overview: Bauer is one of Europe’s largest
EUR 368 m
B5AG
B5A GY
Market cap
Reuters
Bloomberg
17
49,000
●
●
Y/E 31.12, EUR m
2012
Sales
2013E
2014E
2015E
1,344
1,390
1,455
1,532
163
176
189
205
EBIT
71
82
93
107
Net profit
24
33
42
52
Y/E net debt
611
591
571
544
EPS (reported)
1.42
1.90
2.43
3.02
EPS (recurring)
1.42
1.90
2.43
3.02
DPS
0.30
0.35
0.40
0.50
EBITDA
EBITDA margin
12.1%
12.6%
13.0%
13.4%
EBIT margin
5.3%
5.9%
6.4%
7.0%
Dividend yield
1.5%
1.6%
1.9%
2.3%
ROCE
5.9%
6.7%
7.5%
8.4%
FCF yield
19.9%
8.0%
8.2%
10.9%
EV/sales
0.7
0.7
0.7
0.6
EV/EBITDA
6.1
5.8
5.3
4.7
EV/EBIT
13.9
12.4
10.6
9.0
PER
13.6
11.3
8.8
7.1
●
Bauer family 48.2%
●
Felix Wienen
+44 20 3207 7915
[email protected]
Benjamin Glaeser
+44 20 3207 7918
[email protected]
producers of specialist foundation equipment (c40% of sales),
such as drilling rigs and trench-cutters, and a leading provider
of foundation-related construction services (c40% of sales). In
resources (c20% of sales), Bauer offers well-drilling services
and related equipment. Specialist construction enjoys structural
growth as the complexity of large infrastructure projects rises.
Quality: The company’s competitive quality is embedded in
its unique process expertise and scale. Firstly, with its global
network of more than 110 subsidiaries in 70 countries, Bauer is
one of the few companies worldwide that is able to execute
large infrastructure projects on a global scale. Secondly, the
best-in-class and often customised equipment meets its
customers’ need for large and powerful, yet easy-to-transport
machines.
Growth: Bauer benefits from the continuous urbanisation in
emerging countries, which fuels demand for alternative
means of transport (eg subways and railways) and thus
demand for construction and equipment business. In
addition, a high level of pent-up demand and refurbishment
investment in Europe and the Americas should support midterm growth. Resources underperforms in 2013E in terms of
profit contribution due to a lack of follow-on contracts, but
the mid-term outlook in this division remains intact.
Valuation: The key downside to Bauer’s investment case is
the low utilisation in the Equipment division in conjunction
with a relatively short visibility of just about three months
versus 10 months in the construction division. The 50% yoy
decline in Equipment EBIT at the H1 2013 results highlights
the resistance among Bauer’s customers and negative product
mix. While a volume recovery in this division could result in
healthy positive operating leverage, we remain cautious about
the short term given the low visibility. We recommend to
Hold the stock with a price target of EUR21 based on a
blended average of DCF and multiples.
Share catalysts: A sustained recovery in Bauer’s Equipment
division constitutes the key catalyst for the stock. Generating
double-digit margins before 2011, rising production volumes
should benefit profitability in this division which dropped to
6.5% in 2012. However, visibility is low and product mix is
unfavourable for the moment, as confirmed by the profit
warning in early August.
Sales (EUR)
1,500
10.0%
2,000
8.0%
1,500
6.0%
1,000
4.0%
500
2.0%
0
EBIT margin
2,000
Sales and order development
1.40x
1.20x
1.00x
0.80x
0.60x
0.40x
0.20x
0.00x
1,000
500
0
0.0%
10
11
12
Sales (EUR)
13E
14E
15E
EBIT margin
Order intake
27
Sales
Book-to-bill
Cross-Sector
BayWa AG
8 October 2013
Buy
Current price
Price target
EUR 36.67
EUR 45.00
● Company overview: BayWa is a diversified international
trading group comprising three key business segments:
Agriculture, Building Materials and Energy. While BayWa has
a track record of low growth and low returns, this has been in
the process of changing since Klaus Josef Lutz became CEO
in 2008. He is giving the company a comprehensive facelift
and has already made some significant changes.
Market cap
EUR 1,267 m
Reuters
BYW6
Bloomberg
BYW6 GY
34
44,467
Y/E 31.12, EUR m
2012
Sales
10,576
15,232
15,831
16,454
EBITDA
307
325
380
393
EBIT
187
209
259
268
97
89
133
140
Net profit
Y/E net debt
2013E
2014E
● Quality: There have been many positive changes at BayWa
recently, which have improved the quality of the business. In
2012, BayWa sold 50% of its underperforming DIY business
unit to Hellweg Group. It will reduce its remaining stake over
the next few years to focus on business units with higher
returns. Furthermore, BayWa entered the renewable energy
business in 2009 and this sub-segment has contributed
margins much higher than the group average. Most
importantly, however, BayWa is selling parts of its extensive
real estate portfolio to finance growth which is freeing up
significant hidden reserves.
2015E
1,450
1,696
1,675
1,630
EPS (reported)
2.88
2.59
3.86
4.07
EPS (recurring)
1.96
2.59
3.86
4.07
DPS
0.65
0.70
0.80
0.90
EBITDA margin
2.9%
2.1%
2.4%
2.4%
EBIT margin
1.8%
1.4%
1.6%
1.6%
Dividend yield
1.8%
1.9%
2.2%
2.4%
ROCE
5.9%
5.7%
6.6%
6.6%
FCF yield
-0.6%
-0.9%
2.2%
3.9%
EV/sales
0.3
0.2
0.2
0.2
EV/EBITDA
10.6
10.9
9.3
9.0
EV/EBIT
17.5
16.9
13.7
13.1
PER
18.8
14.2
9.5
9.0
● Growth: Acquisitions are a key part of BayWa’s growth
strategy. In early 2012, BayWa took a 75% stake in Turners &
Growers, the largest domestic distributor of fresh fruit in
New Zealand. This acquisition complements BayWa’s
successful German fruit business. The most recent
acquisitions of Cefetra and Bohnhorst have expanded
BayWa’s presence in the value chain, moving the company
further into international trading, a market which is set to
benefit from increasing demand from Asia, the Middle East
and Africa. With these two acquisitions, BayWa has secured
access to key trading routes via the companies’ Baltic and
North Sea port facilities.
● Valuation: We value BayWa with a DCF model and calculate
a price target of EUR45. While valuation looks relatively high
based on multiples, it is important to highlight that on a 2014
P/E multiple, BayWa trades at a discount of over 40% to the
historical average forward P/E multiple of 16.6x.
Bay. Raiffeisen Beteiligungs AG 38%
Raiffeisen AgrarInvest GmbH 26%
Bjoern Lippe
+44 20 3207 7845
[email protected]
●
Share catalysts: While there are no immediate catalysts on
the horizon, we do believe that the market has not fully
appreciated the improving growth and ROCE profile and the
release of hidden reserves from the real estate sales.
EBIT 2013E by segment
20,000
2.0%
15,000
1.5%
10,000
1.0%
5,000
0.5%
0
18%
EBIT margin
Sales (EURm)
4%
58%
20%
0.0%
11
12
13E
Sales (EURm)
14E
15E
16E
EBIT margin
Agriculture
Building materials
Energy trading
Renewable energy
28
Cross-Sector
Bechtle AG
8 October 2013
Buy
Current price
Price target
EUR 38.00
EUR 48.50
● Company overview: Bechtle is a full-service IT provider
running an integrated business model consisting of IT system
houses (including IT managed services) and an IT ecommerce business.
Market cap
EUR 797 m
Reuters
BC8G
Bloomberg
BC8 GY
● Quality: The German IT system house market is highly
Y/E 31.12, EUR m
21
97,000
2012
Sales
EBITDA
2013E
2014E
2015E
2,097
2,228
2,362
2,504
102
109
118
121
EBIT
81
85
98
104
Net profit
57
60
70
75
Y/E net debt
-4
-55
-97
-138
EPS (reported)
2.69
2.86
3.35
3.58
EPS (recurring)
2.69
2.86
3.35
3.58
DPS
1.00
1.00
1.10
1.20
EBITDA margin
4.9%
4.9%
5.0%
4.8%
EBIT margin
3.8%
3.8%
4.1%
4.1%
Dividend yield
3.3%
2.6%
2.9%
3.2%
15.0%
15.0%
16.4%
16.1%
FCF yield
3.1%
9.1%
7.9%
8.0%
EV/sales
0.4
0.3
0.3
0.3
EV/EBITDA
7.9
6.9
6.1
5.6
EV/EBIT
10.0
9.0
7.3
6.5
PER
11.3
13.3
11.3
10.6
ROCE
fragmented. With a market share of c2%, Bechtle is the
number two company in this market. Bechtle differentiates
itself from its major competitors – small local system houses
– by offering a broad range of specialised IT knowledge and
proximity to the customer. With the increasing speed of
innovation in the IT segment, shorter product cycles and
trends such as cloud computing, it is increasingly difficult for
small system houses to provide specialised IT knowledge in
more than one area. By focusing on small and mid-sized
companies, Bechtle avoids competition from large
international system houses like Computacenter, which are
more focused on blue-chip companies.
● Growth: Bechtle benefits from the ongoing consolidation of
the German IT market and the unbroken growth in demand
for IT (driven by equipment replacement) coupled with the
increasing complexity of IT themes (ie cloud computing).
Bechtle is traditionally driven by its Vision strategies and has
set ambitious targets with its Vision 2020 of EUR5bn in sales
and an EBT margin of 5% by 2020. This target should be
reached by a further internationalisation of the e-commerce
segment, the enlargement of the product range and further
acquisitions within the system house segment. With the
company having grown on average by 14.3% over the last 10
years, this target seems challenging but feasible.
● Valuation: We value the stock using a DCF-model which
leads to a price target of EUR48.50.
Karin Schick 35.02%
● Share catalysts: Changes in the economic environment are
usually reflected in Bechtle’s results after 3-6 months and we
therefore expect that the recent improvements in key
economic indicators in Europe should become visible in
earnings during the next few months and drive the share
price. In addition, any further value-accretive acquisitions
could provide a catalyst for the stock.
Bjoern Lippe
+44 20 3207 7845
[email protected]
10 largest players in the fragmented market
3,000
5.0%
2,500
4.0%
2,000
3.0%
1,500
2.0%
1,000
1.0%
500
0
Rank
1
2
3
4
5
6
7
8
9
10
EBIT margin
Sales (EUR)
0.0%
10
11
12
Sales (EUR)
13E
14E
15E
EBIT margin
Name
Computacenter Germany
Bechtle
Cancom
Comparex
Allgeier
Fritz & Macziol
Arvato Systems
Dimension Data Germany
SVA System Vertrieb Alexander
Nextira One
29
2012 Revenue
1464
1434
529
479
335
314
273
200
186
174
Cross-Sector
Bilfinger SE
8 October 2013
Current price
Price target
EUR 77.73
EUR 84.00
Market cap
EUR 3,221 m
Reuters
GBFG.DE
Bloomberg
GBF GY
Y/E 31.12, EUR m
44
250,000
2011
Sales
2012
2013E
2014E
8,209
8,291
8,649
8,983
EBITDA
522
590
560
596
EBIT
361
417
394
436
Net profit
394
276
239
268
Y/E net debt
-660
-142
-400
-434
EPS (reported)
8.93
6.26
5.42
6.07
EPS (recurring)
4.99
6.03
5.42
6.07
DPS
3.40
2.80
2.90
3.10
EBITDA margin
6.4%
7.1%
6.5%
6.6%
EBIT margin
4.4%
5.0%
4.6%
4.9%
Dividend yield
4.7%
3.8%
4.0%
4.2%
11.2%
12.0%
10.4%
11.2%
EV/sales
0.3
0.5
0.4
0.4
EV/EBITDA
5.4
6.6
6.6
6.3
EV/EBIT
7.8
9.3
9.4
8.6
14.6
12.1
13.5
12.0
ROCE
PER
Bilfinger Berger 4.09% (treasury shares)
Benjamin Glaeser
+44 20 3207 7918
[email protected]
 Company overview: Bilfinger SE has evolved from an
international construction company into a leading engineeringdriven service group. The company provides service solutions
for industry, utilities, real estate and infrastructure. Its largest
exposure is in the process industry and in power generation,
where Bilfinger focuses on high pressure piping, boilers and
related maintenance service as well as overhaul. The group also
engages in facility and property management and has remaining
exposure in construction.
 Quality: Bilfinger is well positioned in its European service
markets with 60% of its business relating to maintenance
contracts (of 3-5 years in length, with a more than 90%
retention rate). Having acquired almost all of its service
exposure over the last decade, Bilfinger’s focus has been on
moderate valuation multiples and imminent earnings accretion.
After being run very decentralised Bilfinger is in the process of
creating a coherent group brand and escalating its cross-selling
potential for its multinational customers. Bilfinger has also
announced a restructuring programme which will eliminate a
middle layer of segment management and yield up to
EUR100m in annual cost savings from FY16.
 Growth: The group has decent exposure to structural growth
themes in energy markets (ie long-term demand, power plant
rehabilitation), the process industry (ie outsourcing,
multinational contracts) and construction (ie public/private
partnerships). Under its communicated five-year plan, output is
expected to grow to EUR11bn-12bn and net profit double
until 2016. These improvements will largely be driven by up to
EUR1bn in acquisitions, which Bilfinger is front-loading.
Together with further expansion in power and facility services,
Bilfinger is looking to broaden its geographical reach (ie in the
Middle East and India, and also in the US).
 Valuation: Following its reorientation, Bilfinger is still not
really valued on the multiples of its service peers (ie 13x P/E).
We value Bilfinger on an average of SOTP, DCF and target
multiples. The shares also offer a dividend yield of 4%, and the
company aims to distribute 50% of earnings annually.
 Share catalysts: Short-term a pick up in project business
within its industrial segment could also serve as a strong
catalyst (as it could considerably raise segment margins).
9,500
5.2%
8,500
4.6%
8,000
4.4%
4.2%
7,500
DPS in EUR
4.8%
EBIT margin
5.0%
9,000
Sales (EUR)
Dividend per share and payout development
4.0%
7,000
11
12
Sales (EUR)
13E
14E
80%
3.0
60%
2.0
40%
1.0
20%
0.0
3.8%
10
4.0
Payout ratio in %
Buy
0%
2001 2003 2005 2007 2009 2011
15E
EBIT margin
DPS
Bonus DPS
30
Payout ratio
Cross-Sector
Brenntag AG
8 October 2013
Hold
Current price
Price target
EUR 119.55
EUR 121.00
● Company overview: Brenntag is a third-party distributor of
industrial and speciality chemicals. With over 10,000 products
and a diverse supplier base, Brenntag offers one-stop-shop
solutions to about 160,000 customers. The company operates a
network from 400+ locations in 70 countries.
Market cap
EUR 6,163 m
Reuters
BNRGn
Bloomberg
BNR GR
● Quality: With a 6.9% share, Brenntag is market leader and one
Y/E 31.12, EUR m
Sales
of the few chemical distributors operating globally. Its business
model is also highly resilient thanks to a high degree of
diversification (in terms of geographical exposure, products
distributed and end-markets served); very limited exposure to
fluctuations in chemical prices (thanks to a proven ability to
pass these on swiftly to its clients); and a flexible cost structure.
52
40,558
2012
2013E
2014E
2015E
9,690
9,902
10,453
11,034
EBITDA
721
726
765
813
EBIT
588
587
621
663
Net profit
367
355
385
420
1,483
1,306
1,096
872
EPS (reported)
7.12
6.90
7.47
8.15
EPS (recurring)
7.12
6.90
7.47
8.15
DPS
2.40
2.41
2.74
3.01
EBITDA margin
7.4%
7.3%
7.3%
7.4%
EBIT margin
6.4%
6.3%
6.3%
6.4%
Dividend yield
2.6%
2.0%
2.3%
2.5%
10.9%
10.2%
10.6%
11.2%
FCF yield
6.1%
5.2%
5.4%
5.9%
EV/sales
0.6
0.8
0.7
0.6
EV/EBITDA
8.6
10.3
9.5
8.7
EV/EBIT
10.8
13.1
11.7
10.6
PER
12.8
17.3
16.0
14.7
Y/E net debt
ROCE
100% Free Float
Simon Mezzanotte
+44 20 3207 7917
[email protected]
 Growth: With the top five players holding less than 19% of
the global outsourced market, this relatively immature industry
is ripe for consolidation, and Brenntag is likely to capitalise on
this. Also, given the very low penetration (9%) of third-party
chemical distributors within the total addressable market,
outsourcing should continue to nudge up over the medium
term on the back of chemical producers needing to rationalise
their distribution and small and medium-sized chemical users
increasingly requiring flexibility.
● Valuation: The stock has risen by 20% in the last 12 months
while consensus FY 2014 EPS estimates have fallen by 5%.
Brenntag’s shares have therefore re-rated to 16.0x FY 2014
EPS, not too far from distribution peers (16.1x), which looks
fairly valued to us. The stock trades at a discount to the
business services sector of around 12%; we believe this is
justified considering lower EPS growth prospects at least for
the short to medium term (mid-single-digit EPS growth versus
9% for the sector). Our price target is derived from an average
of a DCF and peer multiples analysis.
● Share catalysts: After a disappointing March and April, when
organic growth in gross profit per day declined by 0.5% and
2.0% respectively, recent trends look more promising with June
and July up 1.8% and 2.4% respectively. The Q3 results on 6
November should in our view confirm whether this is the
beginning of a recovery or yet another false start.
12,000
6.4%
6.2%
6.0%
5.8%
5.6%
5.4%
5.2%
5.0%
4.8%
10,000
Sales in EUR
ROIC versus EBITDA/gross profit
8,000
6,000
4,000
2,000
0
10
11
12
Sales
EBIT-margin in %
25%
40%
20%
38%
15%
36%
10%
34%
5%
32%
0%
13E 14E
15E
EBIT margin
30%
09
10
11
ROIC
31
12
13E
14E
EBITDA/GP (RHS)
15E
Cross-Sector
Carl Zeiss Meditec AG
8 October 2013
Hold
Current price
Price target
EUR 21.98
EUR 25.00
● Company overview: Zeiss is a global leader in microsurgery
and ophthalmology, with dominant market positions in
cataract surgery, neurosurgery and eye diagnostics. These
conditions are correlated with age, so we see strong demand
for its market-leading products as the population of elderly
people continues to expand.
EUR 1,787 m
AFXG
AFX GY
Market cap
Reuters
Bloomberg
● Quality: We view Zeiss as a high-quality small cap healthcare
81
55,000
company. It enjoys dominant positions in structural growth
markets (opthalmology and microsurgery), has meaningful
opportunities to innovate, and has an under-appreciated
ability to expand into the service business and take share in
the lucrative intraocular lens (IOL) market. As a market,
opthalmology remains a product-driven industry, and in
many key markets Zeiss continues to lead advances.
● Growth: Zeiss has shown strong top-line growth with a 10%
2013E
2014E
2015E
862
895
953
1,022
EBITDA
141
148
160
177
EBIT
123
129
140
156
72
90
94
106
Y/E net debt
-346
-375
-431
-492
EPS (reported)
0.88
1.11
1.16
1.31
EPS (recurring)
0.88
1.11
1.16
1.31
DPS
0.40
0.44
0.43
0.48
EBITDA margin
16.3%
16.5%
16.8%
17.4%
EBIT margin
14.3%
14.5%
14.7%
15.3%
1.8%
2.0%
2.0%
2.2%
33.9%
32.6%
34.6%
37.0%
FCF yield
4.3%
3.5%
5.2%
5.4%
EV/sales
1.6
1.6
1.5
1.4
EV/EBITDA
10.0
9.5
8.8
8.0
EV/EBIT
11.5
10.9
10.1
9.0
PER
24.9
19.9
18.9
16.8
Carl Zeiss AG 65%
● Valuation: We rate Zeiss as a Hold with a EUR25 price
Scott Bardo
+44 20 3207 7869
[email protected]
target. We believe Zeiss should trade in line with other
European med-techs at c10.5x EBITDA, which supports our
price target. Our piece is supported by our DCF valuation of
EUR26.40.
● Share catalysts: The next key catalyst is the ESCRS
(European Society of Cataract & Refractive Surgeons) in
Amsterdam on 5 October. Following that, its FY 2013 results
are in December.
IOLs are high-growth and high-margin
0%
32
Q3 12/13
EBIT margin
Q2 12/13
Alcon IOLs
-5%
Q1 12/13
15E
Q4 11/12
Sales (EUR)
14E
Q3 11/12
13E
Q2 11/12
12
Q2 07/08
11
Q1 11/12
11.0%
10
Q4 10/11
0
5%
Q3 10/11
200
10%
Q2 10/11
12.0%
15%
Q1 10/11
13.0%
400
20%
Q4 09/10
14.0%
600
Surgical
Opthalmology
25%
Q3 09/10
800
30%
Q2 09/10
15.0%
Q1 09/10
1,000
35%
Q4 08/09
16.0%
Q3 08/09
1,200
EBIT margin
Sales (EUR)
Q2 08/09
ROCE
Q1 08/09
Dividend yield
Q4 07/08
Net profit
Q3 07/08
2012
Sales
Organic Growth
Y/E 31.12, EUR m
CAGR 2008-12, driven by successful product launches in
Microsurgery, strong double-digit growth in Asia-Pacific and
Latin America as well as some market share gains. While
growth from its Microsurgery division (c43% of sales) has
started to normalise at around 4-5%, we believe there
remains a good opportunity to continue to deliver doubledigit growth from its IOL business (c14% of sales) and
return to more acceptable mid- to high single-digit growth
rates in its core Opthalmic Systems business (43% of sales).
Zeiss should be well positioned to deliver c6-7% annual topline growth out to 2018, slightly outpacing the growth of the
broader Surgical Opthalmology market. Zeiss continues to
prioritise investments in R&D; however, despite this, with
scale effects we still see good prospects for a further c150200bp margin expansion out to 2018. Furthermore, there
remains a good opportunity for Zeiss to enhance its earnings
profile with targeted deployment of its meaningful cash pile
(2013E: EUR375m).
Cross-Sector
Celesio AG
8 October 2013
Hold
Current price
Price target
EUR 17.07
EUR 15.00
● Company overview: Celesio is a drug wholesaler and
EUR 3,178 m
CLSGn
CLS1 GY
Market cap
Reuters
Bloomberg
186
293,000
Y/E 31.12, EUR m
2012
Sales
22,271
2013E
21,312
2014E
21,757
22,235
EBITDA
580
543
585
620
EBIT
445
411
453
494
Net profit
207
185
221
252
Y/E net debt
1,801
1,756
1,651
1,542
EPS (reported)
-0.92
1.03
1.24
1.48
EPS (recurring)
1.04
1.09
1.30
1.48
DPS
0.35
0.38
0.46
0.52
EBITDA margin
2.6%
2.5%
2.7%
2.8%
EBIT margin
2.0%
1.9%
2.1%
2.2%
Dividend yield
2.1%
2.2%
2.7%
3.0%
ROCE
9.5%
9.1%
10.1%
10.9%
FCF yield
9.5%
8.1%
8.4%
8.9%
EV/sales
0.2
0.2
0.2
0.2
EV/EBITDA
8.1
9.2
8.5
8.0
EV/EBIT
11.2
12.1
11.0
10.1
PER
16.4
15.7
13.1
11.5
●
2015E
●
●
Franz Haniel & Cie. GmbH 50.0%
Scott Bardo
+44 20 3207 7869
[email protected]
●
Celesio’s market share progress in German wholesale
23,500
3.0%
18.0%
23,000
2.5%
17.5%
22,500
2.0%
22,000
1.5%
21,500
1.0%
21,000
Princing War related to AMNOG introduction
EBIT margin
Sales (EUR)
pharmacy operator present in 16 countries around the world.
As one of the largest players in the European market, it has
had to contend with fierce industry-wide regulatory and
competitive pressures since 2008. The difficult trading
environment has not abated, with pricing wars in French and
German wholesale and ongoing pressures in UK pharmacy
reimbursement.
Quality: The market needs convincing that Celesio can
execute on its growth strategy. The departure of CEO
Markus Pinger has not helped investor perception, and
Celesio now needs to deliver tangible evidence that key
initiatives such as the European Pharmacy Network (EPN)
can act to stabilise the group and add to growth thereafter.
Further complicating the investment case, Haniel, Celesio’s
majority shareholder, is reportedly contemplating whether to
sell part of its stake in the business or alternatively to enter
into a global procurement collaboration with other
international players. The outcome and timing of Haniel’s
decision is unknown, but press speculation suggests more
clarity in October.
Growth: Celesio has taken bold restructuring measures over
the last few years; however, so far these actions have only
allowed the company to absorb ongoing competitive and
regulatory pressures rather than return the business to
positive earnings growth. Dynamics in the German
pharmaceutical wholesale market need close monitoring and
will have a meaningful bearing on the near-term earnings
profile. For the longer term, growth initiatives, particularly
EPN, are paramount; however, at this stage there is only
limited evidence that these will deliver.
Valuation: We think under a sustainable high mid-single digit
earnings growth scenario, fundamental valuations could
support a share price in the high teens. On the flip side, only
stabilising earnings leads to fundamental valuations toward
EUR10. Until we gain more clarity on the trading
environment and Haniel’s intentions, we think shares will
remain in a holding pattern between both outcomes. We
maintain our Hold. Our EUR15 price target is based on the
shares trading on c11.5x 2014 earnings.
Share catalysts: These would include an update on Haniel’s
status (possibly in October), and Celesio’s Q3 results, due on
13 November.
17.0%
16.5%
16.0%
0.5%
20,500
20,000
15.5%
0.0%
10
11
12
Sales (EUR)
13E
14E
15E
15.0%
EBIT margin
14.5%
2005
Fresh pricing war
beings
German pharmacy backlash
following Celesio's acquisition
of DocMorris. Cooperative NOWEDA
and Sanacorp take share
2006
33
2007
2008
2009
2010
2011
2012
Cross-Sector
CEWE Stiftung & Co KGaA
Buy
Current price
Price target
EUR 38.74
EUR 47.50
8 October 2013
● Company overview: CEWE is among the few photo-printing
Market cap
EUR 254 m
Reuters
CWCG
Bloomberg
CWC GY
7
19,927
●
Y/E 31.12, EUR m
2012
Sales
2013E
2014E
2015E
504
529
563
595
EBITDA
66
68
73
79
EBIT
29
30
33
38
Net profit
19
19
22
25
Y/E net debt
18
7
-3
-14
EPS (reported)
2.88
2.94
3.31
3.85
EPS (recurring)
2.88
2.94
3.31
3.85
DPS
1.45
1.49
1.70
1.95
13.1%
12.9%
13.0%
13.4%
EBIT margin
5.7%
5.7%
5.9%
6.4%
Dividend yield
4.6%
3.9%
4.4%
5.0%
16.0%
15.4%
16.4%
17.6%
FCF yield
6.6%
8.3%
7.6%
8.7%
EV/sales
0.5
0.5
0.5
0.4
EV/EBITDA
3.7
4.1
3.7
3.3
EV/EBIT
8.3
9.3
8.1
6.8
10.9
13.2
11.7
10.1
EBITDA margin
ROCE
PER
●
●
27.4% Neumüller heirs
9.8% CEWE Color Holding AG
1.4% CEWE Management
Anna Patrice, CFA
+44 20 3207 7863
[email protected]
●
companies that have overcome the structural changes that have
taken place in the industry and survived the general shift from
analogue to digital photo-finishing. Management has a solid track
record in identifying and monetising new trends. This is evident
in its leadership of the European photobook sector and the
digital photo-printing market, in which it has a market share of
more than 40%. With its recent acquisition of Saxoprint, the
number three player in Germany, the company has strengthened
its new venture into the fast-growing commercial web-to-print
segment.
Quality: CEWE has leading market positions in the photofinishing and the photobook segments of 40% and 24%
respectively. This has led to cost advantages through economies
of scale in: a) marketing; b) R&D investment; and c)
competitive prices. This high level of competitive quality is
evidenced by CEWE’s solid ROCE of 16% in 2012, despite the
transformation from analogue to digital, and its investment in
online printing.
Growth: 5.6% sales and 10.3% EPS CAGR over 2012-15E are
driven by: a) the steady, but slowly growing, photo-finishing
segment, in which margins are improving thanks to favourable
product mix (increasing share of photobooks and photo gift
products); and b) expansion in online printing. The online
division is set to grow by 38% CAGR 2012-15E, supported by
the Saxoprint acquisition and investments in its expansion. The
online division should achieve break-even and contribute
profits for the first time by 2015E, and we expect margin
improvement to support 10% EBIT and EPS CAGR over
2012-15E. Over the long term, we expect the online division to
contribute 25% of group EBIT by 2017E.
Valuation: Our sum-of-the-parts approach indicates that
online printing is worth EUR12.0 per share, and values the core
business at EUR36.0. Therefore, the potential of online printing
is not yet reflected in the share price. The dividend yield of
more than 4% is also attractive, in our view.
Share catalysts: The capital markets day on 16 October, which
will focus on the online division, is set to bring deeper insights
of the business model and the upside it represents to CEWE.
8.0%
Sales (EUR)
600
6.0%
500
400
4.0%
300
200
2.0%
100
60
50
40
EBIT margin
700
EBIT split, EURm – online loss making for now
30
20
10
0
0
0.0%
11
12
13E
14E
Sales (EUR)
15E
-10
16E
2011
EBIT margin
2012
2013E 2014E 2015E 2016E 2017E
Photofinishing
34
Retail
Online
Cross-Sector
CompuGroup Medical AG
8 October 2013
Hold
Current price
Price target
EUR 18.20
EUR 17.00
● Company overview: CompuGroup Medical’s (CGM) core
●
EUR 903 m
COPMa
COP GY
Market cap
Reuters
Bloomberg
50
26,886
●
Y/E 31.12, EUR m
2012
2013E
2014E
2015E
Sales
457
465
494
514
EBITDA
105
97
112
122
EBIT*
94
85
100
110
Net profit
31
28
39
45
Y/E net debt
250
251
219
175
EPS (reported)
0.62
0.57
0.79
0.91
EPS (recurring)*
1.21
0.97
1.23
1.56
DPS
0.35
0.35
0.40
0.46
EBITDA margin
23.3%
21.2%
23.1%
24.1%
EBIT margin*
20.8%
18.6%
20.7%
21.7%
1.9%
1.9%
2.2%
2.5%
19.1%
16.5%
18.6%
19.7%
FCF yield
4.3%
5.4%
6.1%
7.0%
EV/sales
2.6
2.5
2.3
2.2
EV/EBITDA
11.2
12.0
10.1
8.9
EV/EBIT*
12.5
13.7
11.3
9.9
9.8
18.8
14.9
11.7
Dividend yield
ROCE*
PER*
●
*adjusted for non-recurring items and PPA
●
Gotthardt family 46.7%
Reinhard Koop 3.8%
Treasury shares 6.2%
Gunnar Cohrs, CFA
+44 20 3207 7894
[email protected]
Operating leverage: Quarterly personnel expenses
600
25.0%
65.0
500
20.0%
55.0
400
15.0%
300
10.0%
200
100
5.0%
0
0.0%
11
12
13E
14E
Sales (EUR)
15E
16E
EBIT margin
EBIT margin
Sales (EUR)
business is providing software solutions for practitioners,
dentists and hospitals.
Quality: Although differentiation via its software products is
limited, CGM has the largest customer base in Europe, with
250,000 doctors. This guarantees a high share of recurring
revenues and would be hard for a competitor to replicate
because healthcare professionals usually rely on only one
software product and are very reluctant to switch to another.
Growth: In the last eight years, CGM has grown by 24%
(CAGR 2003-12), of which 16% was via acquisitions and 8%
was organic. As doctors tend not to switch their software
vendor, the number of doctors the company serves has
grown via acquisitions. However, the high organic growth
rate in the same period indicates that a bigger organisation
could sell better and more products at a higher price. The
absence of large acquisition targets in Europe and currently
unattractive targets in the US will allow the company to focus
more on organic growth. There are upselling opportunities in
various European states, and the potential for adoption of
electronic health record (EHR) systems in the US. As roughly
20% of sales is R&D and essentially fixed (in the medium
term, all acquired software platforms will be migrated onto
one), operating leverage is high.
Valuation: The profit warning with Q2 results was a major
set back after a strong FY 2012. Even though most of the
issues appear to be one-offs, which have already been solved,
we have lowered the organic growth rate for the years to
come. Our EUR17 price target is based on DCF. Strongerthan-expected top-line growth and evidence that CGM is set
to achieve its long-term EBITDA margin target of 30%
would lead us to upgrade the stock to Buy again.
Share catalysts: In the long term, we see significant
potential for CGM in telematics. In autumn this year, two
pilot projects will start in Germany. In the long run, all
insured citizens will receive a patient card that doctors will
use to access the centrally stored patient data. This could lead
to EUR50m of additional revenue potential in Germany for
CGM and EUR25m recurring.
50.0%
48.0%
46.0%
44.0%
45.0
42.0%
35.0
40.0%
38.0%
25.0
36.0%
34.0%
15.0
5.0
Q2 2007
32.0%
Q2 2008
Q2 2009
Personnel expenses
35
Q2 2010
Q2 2011
Q2 2012
30.0%
Q2 2013
Personnel exp. as % of sales
Cross-Sector
CTS Eventim AG
8 October 2013
Hold
Current price
Price target
EUR 33.08
EUR 32.00
● Company overview: With its roots in the live entertainment
sector (three-fifths of sales and one-fifth of EBIT), CTS
Eventim has become the European market leader in ticketing
(which accounts for two-fifths of sales and four-fifths of
EBIT), with an estimated 112m tickets sold in 2012.
EUR 1,588 m
EVDG
EVD GY
Market cap
Reuters
Bloomberg
● Quality: Given its scale, both online and offline, and its
distribution power, CTS Eventim occupies the sweet spot in
the live entertainment value chain: all other participants
(artists, managers, promoters and venue operators) rely on a
vital link to end-customers’ wallets – that link is ticketing.
48
20,012
● Growth: Online ticketing is the key growth driver for the
Y/E 31.12, EUR m
2012
2013E
2014E
2015E
Sales
520
580
600
624
EBITDA*
118
133
142
153
EBIT*
105
121
130
141
55
63
73
83
Y/E net debt**
-114
-155
-208
-262
EPS (reported)
1.15
1.31
1.53
1.73
EPS (recurring)
1.34
1.56
1.71
1.88
DPS
0.57
0.74
0.84
0.94
EBITDA margin*
22.7%
22.9%
23.6%
24.6%
EBIT margin*
20.3%
20.8%
21.6%
22.7%
1.7%
2.2%
2.5%
2.8%
24.9%
26.8%
27.0%
27.2%
FCF yield
6.1%
5.1%
5.6%
6.0%
EV/sales
2.8
2.5
2.3
2.1
EV/EBITDA*
12.5
10.8
9.8
8.7
EV/EBIT*
14.0
11.9
10.7
9.4
PER*
24.6
21.2
19.3
17.6
Net profit
Dividend yield
ROCE*
business. It currently generates seven times more revenue
than offline ticketing and will continue to grow by double
digits every year until it achieves a penetration of 80% of all
retail tickets (currently c50%). This migration from offline to
online ticketing drives the company’s earnings momentum.
CTS plans to launch a number of features in the few next
months to boost online ticketing. These include an
interactive seating map, a “reserve-for-a-friend” function,
tablet apps and secondary ticketing integrated with the
primary platform.
● Valuation: Valuation looks full with a PPA adjusted P/E
2014 of 19x for an EPS CAGR 2012-15 of 12%. This is 19%
above the long-term average and CTS trades at a premium to
its broader peer group (16x 2014 P/E). Based on DCF, we
derive a price target of EUR32. The recent share price
weakness is, in our view, due to profit taking after a good run
following the conclusion of arbitration with Live Nation (the
outcome was disappointing for CTS but it removed an
unpredictable one-off event from the stock).
*adjusted for legal costs for arbitration and PPA.**including ticket payments
already received for future events
● Share catalysts: Comparables will be much tougher in H2,
in particular in Q4. Our recent roadshow with management
confirmed that there are no imminent catalysts such as
acquisitions or cooperations. However, the future market will
be the US, where CTS is looking for cooperations/JVs with
content providers (promoters, venue operators). AEG is one
opportunity (although it controls only 10% of all tickets in
the US): it has to secure a new ticketing company next year
because it is not allowed to use Ticketmaster after 2014.
Klaus-Peter Schulenberg (CEO) 50.2%
Gunnar Cohrs, CFA
+44 20 3207 7894
[email protected]
25.0%
20.0%
500
400
15.0%
300
10.0%
200
5.0%
100
0
Total ticket
price
Revenues for
CTS Eventim
Sales (EUR)
600
EBIT margin
700
Business model for ticketing
12
13E
14E
Sales (EUR)
15E
Sales outlets
Internet
16E
EBIT margin
36
Ø ticket fee
€7
Distribution via…
0.0%
11
Ø ticket face value
€50
Ø €1 system fee
Ø €7 service fee
Cross-Sector
Delticom AG
8 October 2013
Hold
Current price
Price target
EUR 41.05
EUR 40.50
● Company overview: Delticom is Europe’s leading online
●
EUR 486 m
DEXGn
DEX GY
Market cap
Reuters
Bloomberg
12
18,900
●
Y/E 31.12, EUR m
2012
Sales
2013E
2014E
2015E
456
484
540
577
EBITDA
35
36
42
49
EBIT
33
33
39
45
Net profit
22
23
25
30
-43
22
20
17
EPS (reported)
1.87
1.96
2.13
2.51
EPS (recurring)
1.87
1.96
2.13
2.51
DPS
1.90
1.92
2.09
2.46
EBITDA margin
7.7%
7.3%
7.8%
8.4%
EBIT margin
7.2%
6.9%
7.2%
7.8%
Dividend yield
3.2%
4.7%
5.1%
6.0%
ROCE
44.8%
39.3%
37.6%
43.3%
FCF yield
12.4%
1.7%
4.8%
5.8%
EV/sales
1.0
1.1
0.9
0.9
EV/EBITDA
12.5
14.3
12.0
10.4
EV/EBIT
13.6
15.3
13.1
11.1
PER
31.3
20.9
19.2
16.3
Y/E net debt
●
Dr. Andreas Prüfer 27%
Rainer Binder 26%
EMH 4%
●
Stanislaus von Thurn und Taxis
+44 20 3465 2631
[email protected]
700
12.0%
26.2%
600
10.0%
26.0%
500
8.0%
400
6.0%
300
4.0%
200
EBIT margin
Sales (EUR)
tyre retailer, with an estimated market share of 80%. Through
its 100 websites, its 5m+ customers can choose from a broad
portfolio of replacement tyres.
Quality: Typically, Delticom, with its online presence,
benefits from significant cost advantages over traditional
“bricks and mortar” retail chains, which allows for an average
discount of c15%. Moreover, with its strong market position,
it has a significant advantage in terms of purchasing power in
comparison to other smaller online players. The European
replacement tyre market, which is worth EUR10bn annually,
provides ample growth opportunities. Delticom provides a
very solid dividend policy, paying out 100% of HGB net
profit since 2006. With the two founders owning a stake of
55%, we do not expect this policy to change soon.
Growth: Last month, Delticom acquired its most potent
competitor in the online tyre replacement market, Tirendo,
for EUR50m. The acquisition will boost Delticom’s top line
and will restore its margin prospects. Tirendo entered the
market in 2011 with an aggressive marketing strategy
targeting Delticom directly through a focused keyword
campaign. In addition, Tirendo offered low prices and
initiated high profile advertising campaigns which depressed
Delticom’s top-line growth and margins. The acquisition of
Tirendo will allow Delticom to profit from the positive
growth dynamic and will reduce margin pressure. We
estimate Tirendo’s sales at EUR30m, a figure depressed by
high marketing expenditure and low prices, and expect the
acquisition to add 2% to the top line this year and 7% next
year. We forecast that the sales CAGR13-16E will improve
from 5% to 8.4% and that the EBITDA CAGR13-16E will
increase from 8% to 15%.
Valuation: After the transfer of coverage and pricing in the
Tirendo acquisition, we still rate the stock as a Hold with a
price target of EUR40.50 derived from a DCF valuation on
the back of dampened European demand and a generally
blurry outlook.
Share catalysts: The Tirendo acquisition provides Delticom
with marketing expertise which we expect to feed through to
increased top-line growth. If the acquisition reduces margin
pressure faced by Delticom, this could prove to be a gamechanger in a business which has suffered from pricing and
marketing pressure.
Gross margin and EBITDA margin (2012-2016E)
8.0%
25.6%
7.5%
2.0%
25.4%
0
0.0%
25.2%
11
12
Sales (EUR)
13E
14E
8.5%
25.8%
100
10
9.0%
15E
7.0%
25.0%
EBIT margin
6.5%
2012
2013E
Gross profit margin
Source: Delticom, Berenberg
Source: Delticom, Berenberg
37
2014E
2015E
2016E
EBITDA margin (secondary)
Cross-Sector
Deutsche Annington Immobilien SE
Buy
Current price
Price target
EUR 19.31
EUR 22.50
largest listed owner of residential real estate in Germany, with
a portfolio of ~180,000 units externally valued at EUR10.4bn
as of March 2013. About 97% of the fair value is located in
western Germany and Berlin. DAIG’s largest exposure is to
NRW (46%), Germany’s most populous federal state, where
the population density is very high.
Market cap
EUR 4,329 m
Reuters
ANNGn
Bloomberg
ANN GR
224
54,611
8 October 2013
● Company overview: Deutsche Annington (DAIG) is the
● Quality: With the largest portfolio in the sector, DAIG can
benefit from strong operational leverage, leading to a high
level of efficiency and attractive organic growth rates,
supported by favourable financing costs and gearing levels.
Based on lfl rental growth and higher occupancy levels, and
despite the annual disposal of c4,500 units in total, the
company benefits from high income predictability. The
portfolio is of good/average quality.
● Growth: Having raised in-place rents by an annual average of
Y/E 31.12, EUR m
2012
Total revenues
2013E
2014E
1,161
1,144
1,145
1,146
Net rents
729
725
726
728
EBIT (incl. revaluation
net)
648
1,074
650
680
EBIT (excl.
revaluation)
442
443
450
455
172
610
378
416
Funds From
Operations (FFO)
162
214
270
281
-
2.72
1.69
1.86
1.26
EPS reported
FFO per share
-
0.95
1.20
DPS
0.00
0.67
0.85
0.88
NAV per share
0.00
16.93
17.38
18.04
NNAV per share
0.00
21.27
21.82
22.59
EV/EBITDA
14.1
22.4
21.8
21.3
FFO yield
-
4.9%
6.2%
6.5%
P/FFO
-
20.3
16.0
15.4
Dividend yield
-
3.5%
4.4%
4.6%
P/NAV per share
-
-9%
-12%
-15%
P/NNAV per share
Net gearing
2.3% on an lfl basis since 2010, with a reduction in the
overall vacancy rate to 3.9%, DAIG has shown a strong track
record in asset management. We would welcome it if organic
growth remained the primary focus in future, although the
current platform clearly enables DAIG to integrate new
assets smoothly.
2015E
-
-9%
-12%
-15%
224%
142%
134%
126%
Loan-to-value (LTV)
59%
51%
50%
49%
Implied yield
8.6%
5.5%
5.7%
5.8%
● Valuation: DAIG’s capital structure can be viewed as “best-
in-class” due to its diversity and a rating of BBB from S&P.
The stock became public in July at EUR16.50 and is now still
trading at a 12% discount to NAV 2013E. The company is
targeting a high payout ratio of 70% on FFO, as adjusted net
profit leads to a current dividend yield of 3.5%.
● Share catalysts: DAIG is planning to invest EUR150m a
year in its portfolio from 2013 as part of its modernisation
programme, which will support rental growth. However,
DAIG will have to refinance one of its remaining term loans
of EUR1bn.
Monterey Holdings 84.5%; Norges Bank 5.5%
Kai Klose, CIIA
+44 20 3207 7888
[email protected]
Estelle Weingrod
+44 20 3207 7931
[email protected]
67.0%
66.0%
65.0%
64.0%
63.0%
62.0%
61.0%
60.0%
59.0%
58.0%
Rents in EUR
730
728
726
724
722
720
10
11
12E
13E
Total rental income
14E
Other Western
Germany
7%
SchleswigHolstein and
Hamburg
6%
EBIT-margin in %
732
Geographical split
Berlin
8%
Bavaria and
BadenWurttemberg
14%
15E
EBIT margin
38
Hesse
16%
Eastern
Germany
3%
NRW
46%
Cross-Sector
Deutsche EuroShop AG
Buy
Current price
Price target
EUR 31.65
EUR 35.00
Market cap
EUR 1,707 m
Reuters
DEQGn
Bloomberg
DEQ GY
54
122,000
●
●
Y/E 31.12, EUR m
2012
2013E
2014E
2015E
Total revenues
214
192
194
196
Net rents
211
188
190
193
net)
190
183
184
184
181
164
166
167
122
108
109
108
86
109
111
113
EPS reported
2.35
2.00
2.02
2.01
FFO per share
1.66
2.02
2.06
2.10
DPS
1.20
1.20
1.25
1.25
NAV per share
24.50
23.26
23.52
24.13
NNAV per share
28.30
25.78
26.14
26.86
19.2
21.2
20.9
20.8
5.2%
6.4%
6.5%
6.6%
Funds From
Operations (FFO)
EV/EBITDA
FFO yield
P/FFO
19.1
15.6
15.3
15.1
Dividend yield
3.8%
3.8%
4.0%
4.0%
P/NAV per share
29%
36%
35%
31%
P/NNAV per share
12%
23%
21%
18%
134%
141%
139%
135%
Net gearing
Loan-to-value (LTV)
44%
44%
44%
43%
Implied yield
6.1%
5.4%
5.5%
5.5%
8 October 2013
overview: Deutsche EuroShop (DEQ) is
Germany’s largest retail property stock. The portfolio
consists of 19 shopping centres valued at about EUR3.7bn,
of which 16 are located in Germany, one in Poland, and one
each in Austria and Hungary. Its investment strategy is longterm orientated, with a “buy-and-hold-and-develop” strategy,
with property preferably in city centres or in locations which
are well connected to transport infrastructure.
Quality: DEQ has a broadly diversified tenant structure,
with the top 10 tenants representing 25% of total rents;
Metro Group and Douglas Group are the largest tenants.
Also, the lease structure is solid, with the standard lease being
for 10 years without break-up options. The weighted average
maturity of rental contracts is more than seven years; the
vacancy rate is 1%, and has been at this level for longer.
Growth: The company has always followed a cautious
acquisition strategy, but has a successful acquisitions track
record. The company’s cautious view on deals has paid off in
previous years, as reflected in stable portfolio values. We
welcome the fact that DEQ is considering extensions to its
existing malls and that it is consolidating its existing portfolio
by buying the remaining stakes in its existing malls. All
minimum rents are CPI-indexed.
Valuation: With a low loan-to-value ratio of 46% and a
weighted debt maturity of about seven years, DEQ has a
defensive debt profile. In addition, it benefits from attractive
earnings predictability, as reflected in its 35% premium to
NAV 2013E (3.8% dividend yield and 6.4% FFO yield for
2013E).
Share catalysts: DEQ is not at the vanguard of the industry
in terms of acquisitions. The existing portfolio is still showing
momentum after several refurbishments and extensions,
which will remain the main trigger in the future (in Hamburg,
Wuppertal and Gdansk). The market would also welcome a
higher dividend payout ratio.
● Company
●
●
Blackrock 3%; Hertie Foundation 3%
Kai Klose, CIIA
+44 20 3207 7888
[email protected]
Estelle Weingrod
+44 20 3207 7931
[email protected]
split
Geographical Geographical
split
250
87.5%
200
87.0%
86.5%
150
86.0%
100
85.5%
50
85.0%
0
Other , 10%
EBIT-margin in %
Rents in EUR
84.5%
10
11
12E
13E
Total rental income
14E
Germany, 90%
15E
EBIT margin
39
Cross-Sector
Deutsche Wohnen AG
8 October 2013
Buy
Current price
Price target
EUR 13.06
EUR 16.00
Market cap
EUR 2,206 m
Reuters
DWNG
Bloomberg
DWNI GY
169
245,000
 Company overview: Deutsche Wohnen is among the
largest owners of residential properties in Germany, with a
portfolio of ~80,000 units. The company is largely exposed
to the Berlin housing market (54%), followed by
Frankfurt/Rhine-Main and Hanover/Brunswick in LowerSaxony. We regard the portfolio structure in total as
favourable as it covers regions with solid economic and
demographic fundamentals.
 Quality: The portfolio is of good/average quality: 96% is
invested in core regions, there is high income predictability
(due in part to positive rent reversions), and it has low
vacancy rates of 2.6% in the core regions. In-place rents
have grown at a constant rate (~2.5%), which we expect will
continue. Deutsche Wohnen has indicated a rental upside of
more than 20% for the existing portfolio.
Y/E 31.12, EUR m
2012
2013E
2014E
2015E
Total revenues
270
384
396
403
Net rents
240
355
366
370
net)
313
367
408
392
193
259
271
276
145
179
211
198
68
112
126
135
EPS reported
1.15
1.06
1.25
1.17
FFO per share
0.54
0.66
0.74
0.80
DPS
0.21
0.33
0.37
0.40
NAV per share
11.01
11.82
12.72
12.85
NNAV per share
11.44
12.41
13.39
13.61
24.5
19.3
18.4
18.3
3.9%
5.1%
5.7%
6.1%
Funds From
Operations (FFO)
EV/EBITDA
FFO yield
P/FFO
25.9
19.7
17.6
16.4
Dividend yield
1.5%
2.5%
2.8%
3.1%
P/NAV per share
12%
-2%
-9%
-10%
P/NNAV per share
22%
5%
-2%
-4%
169%
141%
130%
132%
Net gearing
 Growth: Deutsche Wohnen offers an attractive
combination of internal and external growth, which in our
view is also reflected in the acquisition of 1,900 units in
Dresden and 7,800 units in Greater Berlin. In addition, the
company has made a public takeover bid for GSW, which is
still ongoing. For the combined entity, which would have
about 150,000 units at a portfolio value of EUR8.5bn,
Deutsche Wohnen estimates annual synergies of around
EUR25m and accretion of FFO per share/adjusted EPS.
Loan-to-value (LTV)
59%
56%
54%
53%
Implied yield
5.0%
7.0%
7.2%
7.2%
 Valuation: Deutsche Wohnen’s financial ratios are strong,
with a loan-to-value ratio of 56%, an average debt maturity
of 7.5 years and no major loans due before the end of 2015.
The company has also reduced the average cost of debt
further to 3.5%. The stock is currently trading at a 5%
premium to NAV 2013E, a FFO yield of 5.1% and a 2.5%
dividend yield for 2013E.
 Share catalysts: The rationale for this potential merger and
the profile of the combined entity seem compelling and also
Deutsche Wohnen’s EGM expect approved the issuance of
new shares. In principle, we regard the strategy of paying in
shares as intelligent, given that Deutsche Wohnen’s shares
have been trading at a premium to NAV. The threshold for
acceptance among the GSW shareholders is set at 75%.
MFS 5%; First Eagle Inv. 5%; Blackrock 5%
Kai Klose, CIIA
+44 20 3207 7888
[email protected]
Estelle Weingrod
+44 20 3207 7931
[email protected]
82.0%
80.0%
78.0%
76.0%
74.0%
72.0%
70.0%
68.0%
66.0%
64.0%
350
Rents in EUR
300
250
200
150
100
50
0
10
11
12E
13E
Total rental income
14E
Central Germany
4%
EBIT-margin in %
400
Geographical split
Other
12%
Rhine Valley
North
3%
Rhine Valley
South
5%
HanoverBraunschweigMagdeburg
Rhine-Main incl.
12%
Frankfurt/ Main
10%
15E
EBIT margin
40
Greater Berlin
54%
Cross-Sector
Deutz AG
8 October 2013
Buy
Current price
Price target
EUR 6.72
EUR 6.50
● Company overview: Deutz is the world’s number two non-
Market cap
EUR 543 m
Reuters
DEZG
Bloomberg
DEZ GY
121
2,084,402
●
●
Y/E 31.12, EUR m
Sales
2012
2013E
2014E
2015E
1,292
1,392
1,492
1,580
137
147
179
205
EBIT
39
60
89
114
Net profit
21
44
65
82
Y/E net debt
49
42
35
23
EPS (reported)
0.17
0.36
0.54
0.68
EPS (recurring)
0.17
0.36
0.54
0.68
DPS
0.00
0.00
0.00
0.00
10.6%
10.5%
12.0%
13.0%
EBIT margin
3.0%
4.3%
6.0%
7.2%
Dividend yield
0.0%
0.0%
0.0%
0.0%
ROCE
5.1%
7.8%
10.9%
13.0%
FCF yield
1.1%
1.5%
1.7%
2.3%
EV/sales
0.5
0.5
0.5
0.4
EV/EBITDA
5.2
5.1
4.1
3.5
EV/EBIT
18.4
12.3
8.2
6.2
PER
25.8
12.5
8.4
6.6
EBITDA
EBITDA margin
●
Volvo 25%
Same Deutz-Fahr 8.4%
●
Felix Wienen
+44 20 3207 7915
[email protected]
Alexander Virgo
+44 20 3207 7856
[email protected]
8.0%
1,500
6.0%
1,000
4.0%
500
2.0%
0
0.0%
Sales (EUR)
2,000
10
11
12
13E
Sales (EUR)
14E
15E
Quarterly sales and order development
EBIT margin
captive diesel engine producer. It offers standardised compact
engines (c78% of sales) and tailored engine solutions (c22% of
sales). The Deutz engine range covers capacities of below four
litres up to 16 litres (c5-580kW). Deutz caters to various endmarkets, the most important being mobile machinery (c35% of
sales) and agricultural equipment (c16% of sales). It also offers
spare parts, services and exhaust-gas after-treatment systems.
Quality: Deutz is the second-largest non-captive (OEM
independent) diesel engine manufacturer globally, enjoying
significant size and scale advantages over smaller peers. The
company also ranks among the very few players that are able to
offer, in addition to diesel engines, both internal and external
emission-reduction technology, which is a major differentiation
factor to peers.
Growth: Deutz is an early-cyclical company and we believe that
orders troughed in Q3 2012 while following quarters have
shown a sequential improvement in order intake. That said, we
expect a further sequential return of demand over the course of
2013. We are particularly positive about China (c30% of sales),
where Deutz currently outperforms a flat development in
construction equipment and truck market. Given the high
operating leverage inherent in Deutz’s business model, we
expect operating margins to progress from the 3% generated in
2012. However, the potential for profitability is currently
capped as higher amortisation from the capitalised R&D
spending for new engines and costs related to new product
introductions are realised in 2014/15.
Valuation: Our year-end price target of EUR6.50 is based on
the blended average of a DCF model and target multiples for
2015 discounted back to year-end 2013. Following the strong
performance of +92% ytd, the stock now trades on 14x
forward P/E, in-line with the sector average.
Share catalysts: Having troughed in H2 2012, we expect a
sustained positive order trend due to the introduction of new
engine models and recovering end-markets in China
(construction and trucks). However, we expect profit
contribution from these new orders to be capped as higher
costs related to new products hurt. As we focus on margins,
any positive surprise will be a strong catalyst for Deutz shares.
in EURm
500
450
400
350
300
250
200
150
100
50
0
Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1
EBIT margin
2008
2009
Order intake (left scale)
41
2010
2011
Sales (left scale)
2012
2013
Book-to-bill
1.60x
1.40x
1.20x
1.00x
0.80x
0.60x
0.40x
0.20x
0.00x
Cross-Sector
Dialog Semiconductor plc
Hold
Current price
Price target
EUR 14.32
EUR 14.50
EUR 1,250 m
DLGS
DLG GY
Market cap
Reuters
Bloomberg
65
499,117
●
Y/E 31.12, USD m
2012
2013E
2014E
2015E
Sales
774
902
1,083
1,258
EBITDA
124
137
173
205
EBIT
91
97
131
160
Net profit
62
63
88
111
Y/E net debt
-131
-184
-306
-464
EPS (reported)
0.96
0.97
1.36
1.71
EPS (recurring)
1.24
1.19
1.61
1.98
DPS
0.00
0.00
0.00
0.00
EBITDA margin
16.1%
15.1%
15.9%
16.3%
EBIT margin
11.8%
10.8%
12.1%
12.7%
-
-
-
-
16.2%
14.1%
15.1%
14.6%
FCF yield
5.2%
9.6%
16.3%
20.5%
EV/sales
1.4
1.2
0.9
0.6
EV/EBITDA
9.0
7.8
5.5
3.8
EV/EBIT
12.3
10.9
7.2
4.9
PER
15.6
16.3
12.0
9.8
Dividend yield
ROCE
●
RHJ International 6.96%
Kleinwort Benson Trustees 3.98%
Citrone Robert 5.36%
●
+44 20 3207 7852
[email protected]
●
13.0%
1,200
12.5%
1,000
12.0%
800
11.5%
600
11.0%
400
10.5%
200
10.0%
Sales (EUR)
1,400
0
9.5%
11
12
13E
Sales (EUR)
14E
EBIT margin
8 October 2013
overview: Dialog is a leading analog
semiconductor company listed in Frankfurt. The company
provides highly integrated innovative power management
(PMIC), audio and low-energy short-range wireless
technologies to mobile phone and tablet PC vendors. The
company is a key supplier of PMIC to Apple, and Apple
represents around 70% of Dialog’s revenues. Management is
trying to diversify its customer mix via 1) acquisition of iWatt
(a US-based producer of digital power control solutions), 2)
new design wins with customers like Samsung and Chinese
handset vendors, and 3) development of new products like
Bluetooth SMART chip and touch screen sensors.
Quality: Dialog is a well managed company with a dominant
position in the power management business. The company is
the sole supplier of PMIC chips to Apple, which reflects the
quality of its products. However, this also creates overexposure to Apple and leads to high concentration risk in the
business. The diversification measures are expected to
become more material by 2014. Until then, the key risk on
the business is from over-concentration on Apple. However,
Dialog has an excellent relationship with Apple and the
product it sells is very sticky. Consequently, the risk of losing
Apple as a customer, although real, is not imminent. We
expect Samsung to generate around 7% of group revenues in
2013. The company also has a strong balance sheet, with net
cash of cUSD164m.
Growth: Given the high exposure to Apple, Dialog’s growth
is very sensitive to Apple’s unit sales. However, we expect
other customers like Samsung and Chinese handset vendors
to contribute more to revenues in future. We are modelling a
18% CAGR revenue increase and a 21% earnings increase in
2012-15 driven by strong unit growth in smartphones and
tablets. Dialog will also structurally benefit from the launch
of innovative products like smart glasses and smart watches
as they increase the total addressable market for PMIC.
Valuation: We value Dialog at 14x P/E (2014 diluted EPS)
which is the high end of the sector average trading range of
12-14x. This leads us to a EUR14.5 price target.
Share catalysts: The key catalysts for upside will be stronger
sales of Apple’s product, new design wins – especially with
Samsung – and new product launches.
● Company
Dialog’s share price highly correlated with Apple’s
750
700
650
600
550
500
450
400
350
300
20
18
16
14
12
10
8
15E
EBIT margin
Apple
42
Dialog
Cross-Sector
DIC Asset AG
8 October 2013
Buy
Current price
Price target
EUR 7.90
EUR 10.30
● Company overview: DIC is among the larger German
commercial property companies with an own portfolio of
EUR1.8bn, which mainly comprises office space. The
regional focus is widely spread, but the largest region is
Rhine-Ruhr in western Germany with a 29% share of the
portfolio, followed by the Rhine-Main region with 21%. DIC
also manages real estate funds for third-parties and typically
keeps a 20% stake as co-investor. The historically larger
development pipeline has reduced in size in recent years, with
the MainTor project in Frankfurt the largest remaining one.
Market cap
EUR 367 m
Reuters
DAZG
Bloomberg
DIC GY
46
85,000
● Quality: We regard the portfolio quality as good/average
Y/E 31.12, EUR m
2012
2013E
2014E
2015E
Total revenues
133
130
131
134
Net rents
123
118
119
120
net)
69
67
68
70
69
67
68
70
12
14
15
16
Funds From
Operations (FFO)
45
46
49
50
EPS reported
0.26
0.30
0.32
0.36
FFO per share
0.98
1.01
1.07
1.10
DPS
0.35
0.35
0.37
0.40
NAV per share
14.99
14.89
15.07
14.95
NNAV per share
13.13
12.84
12.82
12.23
17.0
17.7
17.6
17.2
13.4%
12.6%
13.3%
13.7%
EV/EBITDA
FFO yield
P/FFO
and welcome that DIC was able to reduce vacancy rates
continuously from 14.3% in 2011 to 11.1% as of June this
year. The average lease term is relatively long at 5.1 years, and
the annual lease expiries of ~10% in 2014 and 2014 are
clearly manageable. The MainTor project is progressing
further after several building sections were sold before the
start of construction.
7.4
8.0
7.5
7.3
Dividend yield
4.8%
4.4%
4.6%
5.0%
P/NAV per share
-51%
-46%
-47%
-46%
P/NNAV per share
-44%
-37%
-37%
-34%
Net gearing
229%
219%
217%
218%
Loan-to-value (LTV)
71%
68%
68%
67%
Implied yield
7.1%
6.7%
6.8%
6.9%
● Growth: Previously, DIC has grown primarily in the funds
business, due to the rising demand from institutional
investors for indirect real estate. Given the increasing supply
of undermanaged office properties, we expect DIC also to
look more actively into selective acquisitions; the company is
well positioned in this respect due to its nationwide branch
network. The company has also reiterated its the target to
reduce vacancy rates to around 10% by year-end.
● Valuation: DIC is still trading at an above-average discount
to NAV of more than 30%, which we regard as too high
given the reduced risk profile of the company. Also, at
12.6%, the earnings yield looks attractive.
● Share catalysts: The main focus remains to reduce vacancy
rates further, but any further progress on the MainTor
project should also help the share price to recover.
DIC KGaA 39%; MSREF 7%; Solvia 5%
Kai Klose, CIIA
+44 20 3207 7888
[email protected]
Estelle Weingrod
+44 20 3207 7931
[email protected]
140
80.0%
120
70.0%
100
60.0%
50.0%
80
40.0%
60
30.0%
40
20.0%
20
Sector split
Sector split
Logictics / Residential
1%
Industrial
10%
EBIT-margin in %
Rents in EUR
Retail 19%
10.0%
0
0.0%
10
11
12E
13E
Total rental income
14E
Office 70%
15E
EBIT margin
43
Cross-Sector
Drägerwerk AG & Co KGaA
Buy
Current price
Price target
EUR 92.55
EUR 110.00
8 October 2013
● Company overview: Drägerwerk is an international player in
the fields of medical and safety technology. The company is
subdivided into two divisions: Dräger Medical and Dräger
Safety.
Market cap
EUR 1,399 m
Reuters
DRWG
Bloomberg
DRW3 GY
● Quality: Over the last 120 years, Drägerwerk has been a
pioneer in the fields of gas regulation and monitoring –
helping it to expand into lucrative, albeit diverse, niches
across the med. tech and safety industries. The Anaesthesia
and Ventilation Care divisions are the crown jewels within
the business, driving c50% of sales and c70% of profits for
the group by our estimates.
17
25,000
● Growth: Top-line growth in 2013 is likely to be relatively
Y/E 31.12, EUR m
2012
Sales
2013E
2014E
2015E
2,373
2,385
2,480
2,604
EBITDA
295
292
325
361
EBIT
230
224
256
289
Net profit
126
130
147
170
55
37
-63
-221
EPS (reported)
7.69
7.91
8.95
9.62
EPS (recurring)
7.15
7.36
8.32
9.62
DPS
0.92
0.97
2.25
2.40
12.4%
12.3%
13.1%
13.9%
EBIT margin
9.7%
9.4%
10.3%
11.1%
Dividend yield
1.0%
1.0%
2.4%
2.6%
22.7%
20.2%
22.2%
23.8%
FCF yield
7.1%
2.5%
7.9%
8.2%
EV/sales
0.9
0.9
0.8
0.8
EV/EBITDA
6.9
7.0
6.3
5.6
EV/EBIT
8.9
9.1
8.0
7.1
12.9
12.6
11.1
9.6
Y/E net debt
EBITDA margin
ROCE
PER
lacklustre (low single digits) with impacts from hospital
budget pressures in Europe, some modest competition in
Anaesthesia and, at the fringe, some evidence of scaled-back
infrastructure plans in emerging countries. Drägerwerk
continues to invest in R&D and its global marketing
infrastructure, and expects these investments to return the
business to more than 4% growth annually (the historical
norm for group). Management also sees scope to improve
EBIT margins by c200bp over the next five years – which we
also believe is eminently achievable. Profitability
improvements will be driven by salesforce efficiency
programmes, plans for more favourable product mix and
optimisation of the manufacturing process.
● Valuation: Our Buy recommendation and price target of
EUR110 per preference share is based on the stock trading
on 13x forward diluted earnings, which we do not view as
demanding given our expected 10% EPS CAGR out to
2018E. Our price target is supported by our DCF valuation
of EUR120.
Ordinary stock:
Dräger family 71% of voting rights
c44% economic rights
● Share catalysts: The Q3 results at the end of October will
be a catalyst for the shares, with focus on the order book into
the all-important fourth quarter. The Medica trade fair in
November has also historically proven to be share-pricesensitive; however, we are not expecting any ground-breaking
new product launches this year.
Scott Bardo
+44 20 3207 7869
[email protected]
2,700
2,600
2,500
2,400
2,300
2,200
2,100
2,000
1,900
Drägerwerk’s market-leading positions
45%
12.0%
40%
10.0%
6.0%
4.0%
2.0%
0.0%
10
11
12
13E
Sales (EUR)
14E
Market Share
8.0%
35%
EBIT margin
Sales (EUR)
30%
25%
20%
15%
10%
5%
0%
Anaesthesia
($850m)
15E
Ventilation
($1.1bn)
EBIT margin
44
Gas Detection
($2bn)
Respiratory
Patient Monitoring
Detection ($2bn)
($3.6bn)
Cross-Sector
Drillisch AG
8 October 2013
Buy
Current price
Price target
EUR 17.97
EUR 20.00
● Company overview: Drillisch is an online-only wholesaler
of mobile tariffs in Germany buying network capacity from
O2 and Vodafone and selling its own branded tariffs on these
networks. While it is the second-largest mobile service
provider after freenet AG, its market share of the Germany
mobile market stands at 1-2%. The company’s brands are
associated with price leadership in Germany.
Market cap
EUR 699 m
Reuters
DRIG
Bloomberg
DRI GY
49
200,000
● Quality: The key competitive advantage of Drillisch is that it
operates the lowest cost structure of all the mobile operators
in Germany. This enables it to keep prices lower than its
competitors. For instance, the company only sells its tariffs
online (thereby avoiding an expensive retail presence) and
avoids advertising its tariffs in mainstream media, instead
relying on favourable consumer/trade reviews and social
media of “headline-grabbing” cheap tariffs.
● Growth: We expect the company to nearly double EBITDA
Y/E 31.12, EUR m
2012
Sales
2013E
2014E
by 2015 (relative to 2012 levels) driven by growth in
subscribers and a changing subscriber mix to higher-margin
budget tariffs (defined as integrated voice/SMS and data
tariffs with a monthly commitment) as smartphone
penetration at the low end of the mass-market in Germany
gathers pace. Higher profitability on low capital expenditure
requirements and no debt afford an above-average return of
free cash flow to shareholders in dividends and buybacks.
2015E
324
283
298
336
EBITDA
56
69
89
112
EBIT
50
59
82
104
Net profit
24
170
56
72
Y/E net debt
113
-59
-56
-61
EPS (reported)
1.15
1.04
1.16
1.46
EPS (recurring)
1.15
1.04
1.16
1.46
DPS
1.30
1.30
1.30
1.30
EBITDA margin
17.4%
24.4%
30.0%
33.4%
EBIT margin
15.4%
20.6%
27.4%
31.0%
Dividend yield
8.8%
8.8%
8.8%
8.8%
ROCE
9.3%
22.1%
35.3%
26.4%
FCF yield
4.4%
4.8%
7.9%
8.3%
EV/sales
2.0
2.3
2.2
2.0
EV/EBITDA
11.8
9.6
7.4
5.9
EV/EBIT
13.3
11.3
8.1
6.4
PER
12.9
14.2
12.7
10.1
● Valuation: Our DCF-based price target is EUR20. The
shares look undervalued for a company delivering earnings
CAGR 2014-17 of 22%, trading on a dividend yield of 9%, a
price earnings multiple of 14x (excluding cash) and cash
earnings multiple of 12x. Versus the sector, the shares trade
on a 13% discount on EV/OpFCF of 9.6x (sector 11x).
● Share catalysts: We see three positive catalysts near-term
Treasury shares: 9.76%
Management: 7.32%
Supervisory board: 6.99%
including a re-levering of the balance sheet for a special
dividend or buyback, an upgrade of 2014 guidance, and
regulated MVNO access conditions imposed on Telefónica
Deutschland as a condition of merger approval with E+.
Usman Ghazi
+44 20 3207 7824
[email protected]
140
35.0%
30.0%
25.0%
20.0%
200
15.0%
10.0%
100
100
€m
300
11
12
Sales (EUR)
13E
14E
100
94
2.00x
113
92
1.50x
1.00x
80
0.50x
60
0.00x
-0.50x
20
0
-1.00x
2012
0.0%
10
88
116
40
5.0%
0
116
120
EBIT margin
Sales (EUR)
400
Low leverage and ample liquidity pave way for
special dividend or buyback in Q413
1Q13
2Q13
3Q13
4Q13
2013E
2014E
15E
Liquidity
EBIT margin
ND:EBITDA (x) - company defined
Source: Company data, Berenberg. Net debt excludes gross debt that is nonrecourse and hedged against company’s shares in freenet AG
45
Cross-Sector
Dürr AG
8 October 2013
Hold
Current price
Price target
EUR 55.84
EUR 42.50
● Company overview: Dürr is one of the leading global
Market cap
EUR 1,684 m
Reuters
DUEG
Bloomberg
DUE GY
35
131,000
●
Y/E 31.12, EUR m
2012
Sales
2013E
2014E
2015E
2,400
2,490
EBITDA
201
217
224
225
EBIT
177
191
197
198
Net profit
107
122
123
121
3
-31
-70
-147
EPS (reported)
3.10
3.52
3.56
3.48
EPS (recurring)
3.10
3.52
3.56
3.48
Y/E net debt
DPS
2,533 2,571
1.13
1.15
1.18
1.18
EBITDA margin
8.4%
8.7%
8.8%
8.8%
EBIT margin
7.4%
7.7%
7.8%
7.7%
Dividend yield
2.2%
2.4%
2.4%
2.4%
20.7%
20.5%
FCF yield
4.8%
5.4%
5.9%
6.0%
EV/sales
0.8
0.7
0.7
0.7
EV/EBITDA
9.5
8.4
8.0
7.6
EV/EBIT
10.8
9.5
9.0
8.6
PER
16.3
13.8
13.7
14.0
ROCE
●
19.7% 18.3%
●
Heinz Dürr GmbH 26.5%
Heinz und Heide Dürr Stiftung 3.5%
Management 1.1%
Benjamin Glaeser
+44 20 3207 7918
[email protected]
●
Felix Wienen
+44 20 3207 7915
[email protected]
equipment suppliers to the automotive industry. The company
is primarily known for providing paint shops for automotive
companies (c65% of sales). With a global market share of more
than 50%, Dürr is leading this field and is three times the size of
its peers Eisenmann (Germany) and Taikisha (Japan). This
enables the company to realise substantial economies of scale
and R&D advantages. Besides engineering services, it also
offers specialised machinery (c35% of sales). The product range
encompasses assembly and balancing systems, as well as
machinery for cleaning and filtration.
Quality: Dürr’s global-sourcing approach positions the
company to benefit from the rebound in demand in mature
markets, such as the US, and the ongoing automotive capex
spending in emerging markets. Since mid-2009, the book-to-bill
ratio has amounted to, on average, 1.3x. This in turn caused the
order book to grow to an all-time high of EUR2.4bn in Q2
2012, providing visibility of more than 12 months. The positive
order development is also reflected in the quality of the order
book’s margins. We therefore expect that Dürr will be able to
even slightly increase its record FY12 margin level.
Growth: Emerging markets remain in the focus of OEMs’
capex plans. Already today, c65% of incoming orders stem
from emerging markets. However, also in mature markets, the
high average age of installed capacity and OEM repositioning
especially in Europe are driving demand for more efficient paint
shops and, therefore, modernisation investments. Also with a
large installed base, Dürr has scope to grow the share of its
service business especially in emerging markets (eg 5% service
sales share in Asia versus 21% for the group).
Valuation: While historically Dürr has traded closely to order
intake levels, we believe the recent share price increase reflects
the decent cash generation and has changed margin profile of
the company. We value Dürr on an average of DCF and target
multiples.
Share catalysts: Stronger-than-expected order intake and
prove of further margin improvement (ie a higher service share
and evidence of better pricing in the order book) could serve as
the strongest catalysts, in our view. Further Dürr is looking at
potential mid-sized acquisitions.
Ageing installed capacity
3,000
10.0%
2,500
8.0%
2,000
6.0%
1,500
4.0%
1,000
2.0%
500
0
EBIT margin
Sales (EUR)
0.0%
10
11
12
Sales (EUR)
13E
14E
15E
EBIT margin
46
Cross-Sector
ElringKlinger AG
8 October 2013
Hold
Current price
Price target
EUR 32.84
EUR 30.00
● Company overview: ElringKlinger is the leading supplier of
EUR 2,081 m
ZILGn
ZIL2 GY
Market cap
Reuters
Bloomberg
63
115,000
●
Y/E 31.12, EUR m
2012
Sales
2013E
2014E
2015E
1,127
1,194
1,283
1,383
EBITDA
215
260
288
311
EBIT
136
154
182
204
86
98
118
134
Y/E net debt
260
200
136
77
EPS (reported)
1.36
1.54
1.87
2.12
EPS (recurring)
1.36
1.54
1.87
2.12
DPS
0.45
0.49
0.59
0.67
EBITDA margin
19.1%
21.7%
22.4%
22.5%
EBIT margin
12.1%
12.9%
14.2%
14.8%
1.4%
1.5%
1.8%
2.0%
18.0%
18.5%
19.6%
19.8%
1.6
Net profit
Dividend yield
ROCE
EV/sales
2.2
2.0
1.8
EV/EBITDA
11.3
9.1
8.0
7.2
EV/EBIT
17.9
15.3
12.6
11.0
PER
24.2
21.3
17.6
15.5
●
●
Lechler family 52.0%
●
Benjamin Glaeser
+44 20 3207 7918
[email protected]
Felix Wienen
+44 20 3207 7915
[email protected]
powertrain, transmission and exhaust system sealing and
shielding systems to the automotive industry. These include
metal gaskets, shielding components and plastic parts, but
also spare parts and whole exhaust treatment systems. In our
view, ElringKlinger provides high-quality, low-weight and
competitively-priced products, and is regarded as a
technological leader and a close partner to almost all the
major OEMs.
Quality: ElringKlinger largely enjoys market leading
positions (around 30-40%) and a relatively broad customer
base (its largest single OEM exposure is 15%). It has
historically been able to improve its market shares by offering
better technology at lower cost than its competitors (largely
Dana and Federal Mogul). Its competitive advantages thus lie
within its R&D capabilities and expertise in metal forming
and coating. These are, in our view, the main reasons why
ElringKlinger has achieved outstanding margins in the past
(up to 18%).
Growth: ElringKlinger has historically been able to
outperform global car production by c5%. This was in large
part driven by more stringent emission regulations and the
focus on fuel economy, which led to an increase in
ElringKlinger’s content sold into each car/truck. Currently,
we see the strongest benefit being the adoption of Euro 6 for
trucks, which creates incremental business for ElringKlinger’s
plastic in these engines. In additional, we see large market
potential in its exhaust treatment systems for use in trucks,
cars, ships, locomotives as well as construction and stationary
machinery.
Valuation: Our EUR30 price target is based on a blend of
DCF and target multiples. At 18x forward P/E and 12.6x
EV/EBIT, ElringKlinger’s share price is trading at a
premium to its historical averages and is implying strong midterm margin improvement.
Catalysts: We see the strongest short-term catalysts to be 1)
recovering car production in Europe, which would allow for
stronger profitability especially in ElringKlinger’s OE
business, and 2) further newsflow on orders (eg orders
regarding truck refits in the US) for its exhaust systems
within Hug, which could increase the market’s confidence in
the sustained commercial success of its technology.
16.0%
Sales (EUR)
14.0%
1,000
12.0%
10.0%
500
8.0%
0
2006 2007 2008 2009 2010 2011 2012
EBIT margin
1,500
Organic outperformance of global car
production
6.0%
10
11
12
Sales (EUR)
13E
14E
15E
EBIT margin
Global car production
(million units)
66.8 70.6 67.6 59.5 74.4 76.8 81.5
Elring sales (mEUR)
608
658
Car production growth
6%
-4% -12% 25%
3%
6%
1%
Organic sales growth
15% -2% -12% 37% 19%
9%
6%
Outperformance
9.5% 2.7% 0%
47
579
796 1,033 1,127 1,191
13% 16% 3.0% 4.2%
Cross-Sector
Evotec AG
Buy
Current price
Price target
EUR 3.47
EUR 4.00
Market cap
EUR 454 m
Reuters
EVTG
Bloomberg
EVT GY
131
600,000
8 October 2013
overview: Evotec is a drug discovery and
development company headquartered in Hamburg, with a
significant presence in the UK and the US. The business is split
into three areas, ranging from fee-for-service bespoke drug
discovery to investment in translational programmes at leading
academic research centres such as Harvard and Yale.
 Company
 Quality: Evotec differentiates itself by offering state-of-the-art
technology platforms alongside a proven drug discovery
business in locations close to key customers. This results in
active and integrated relationships with partners allowing the
company to gain market share in the R&D outsourcing market,
despite the rise of low-cost competitors in emerging markets.
 Growth: The growth of Evotec comes from the three legs of
Y/E 31.12, EUR m
Sales
2012
2013E
2014E
2015E
87
94
108
130
6
11
23
35
-3
1
13
23
2
1
11
20
-47
-57
-74
-100
EPS (reported)
0.02
0.01
0.09
0.16
EPS (recurring)
0.05
0.04
0.09
0.16
DPS
0.00
0.00
0.00
0.00
6.4%
11.5%
21.1%
26.8%
-3.7%
1.4%
11.6%
18.0%
EBITDA
EBIT
Net profit
Y/E net debt
EBITDA margin
EBIT margin
Dividend yield
0.0%
0.0%
0.0%
0.0%
-1.6%
0.6%
6.2%
10.7%
FCF yield
0.0%
0.0%
0.0%
0.0%
EV/sales
3.1
2.9
2.5
2.1
48.3
25.1
11.9
7.8
-
210.0
21.6
11.6
58.6
97.4
43.1
23.6
ROCE
EV/EBITDA
PER
Roland Oetker 13.4%
Alistair Campbell
+44 20 3207 7876
[email protected]
Charles Cooper
+44 20 3465 2637
[email protected]
 Valuation: Our SOTP valuation for Evotec values the base
drug discovery business at EUR4/share. This valuation includes
nothing for ongoing clinical studies – as a result, positive data
from any study would represent upside to our valuation. We
expect earnings CAGR of 41% between 2014 and 2018, and
with the shares currently trading on 43x 2014; we see 15%
upside to fair value.
 Share catalysts: Before the end of 2013, management has
committed to commercialise one Cure X initiative and start
three to five more Cure X/Target X programmes. Given that
the last partnership deal with Jannsen led to a 18% rally in the
shares, these are significant short-term catalysts. Longer-term,
we expect the results of the DiaPep277 and MAyflOwer RoAD
studies at the end of 2014 and early in 2015, either of which, if
successful would drive significant upside to the current share
price.
180
180
30%
160
160
25%
20%
120
100
15%
80
10%
60
5%
40
140
EBIT Margin
140
Sales in EUR
Base business revenues versus milestones/
upfronts
0
71
120
59
46
100
80
60
25
40
20
0%
20
Revenues (€m)
EV/EBIT
the business. Execute represents the company’s early stage drug
discovery business. This business grows through service and
development fees from an increasing number of pharma and
biotech companies seeking to reduce their fixed costs. Integrate
and Innovate represent the company’s pre-clinical and clinical
platforms. This business is highly profitable with significant
long-term upside depending on clinical success. This business
currently generates milestone income, which should increase in
size and frequency as development alliances mature.
55
21
22
67
72
2012
2013
31
77
83
90
97
2014
2015
2016
2017
0
-5%
2011
2010A 2011A 2012A 2013E 2014E 2015E 2016E 2017E
Sales
EBIT Margin
Base business (Evotec Execute)
48
Milestones / Upfronts / royaltuies
Cross-Sector
Fielmann AG
8 October 2013
Hold
Current price
Price target
EUR 78.86
EUR 81.50
● Company overview: Fielmann is the leading optician retailer
Market cap
EUR 3,212 m
Reuters
FIEG
Bloomberg
FIE GY
Y/E 31.12, EUR m
42
10,339
2012
Sales
2013E
2014E
●
2015E
1,107
1,156
1,216
1,285
EBITDA
215
226
238
257
EBIT
180
192
204
223
Net profit
126
136
146
161
Y/E net debt
-275
-300
-323
-351
EPS (reported)
3.01
3.24
3.48
3.85
EPS (recurring)
3.01
3.24
3.48
3.85
DPS
2.70
2.90
3.13
3.45
EBITDA margin
19.4%
19.5%
19.6%
20.0%
EBIT margin
16.3%
16.6%
16.8%
17.4%
3.7%
3.8%
4.0%
4.4%
30.8%
31.6%
32.3%
33.8%
FCF yield
4.6%
4.2%
4.4%
4.8%
EV/sales
2.5
2.5
2.4
2.3
EV/EBITDA
13.1
12.9
12.4
11.4
EV/EBIT
15.6
15.2
14.5
13.1
PER
24.3
23.6
22.4
20.3
Dividend yield
ROCE
●
●
Günther Fielmann 36.8%
Fielmann Familienstiftung 11.4%
Marc Fielmann 8.8%
Luise Sophie Fielmann 2.0%
●
Anna Patrice, CFA
+44 20 3207 7863
[email protected]
in Germany (its core market, accounting for c80% of group
sales), with close to 50% market share by volume. It benefits
from an integrated business model with c20% of its lenses
produced in-house. Prescription glasses (lenses and frames)
account for c85% of group sales, contact lenses for 11% and
hearing aids for just 2%.
Quality: Fielmann benefits from good brand awareness for
high-quality products sold at lower prices than its competitors’.
The company is the cost leader (it has a 50% market share by
volume but only 20% by value), given its integrated business
model and market leadership by volume and hence its scale
advantage. Nevertheless it still reports an impressive 80% gross
margin and a ROCE of greater than 30%. Its network of more
than 570 stores in Germany in prime locations is virtually
impossible to replicate, and thus entry barriers are high.
Growth: Steady 5% sales growth is supported by a) an ageing
population with an increasing need for eye correction, and
within this group an increasing share of more expensive
multifocal lenses (4-5x price of single vision glasses), b) market
share gains in still fragmented markets and store expansion,
although the latter is constrained by the lack of opticians, c)
expansion in the hearing aid market. Margin expansion is set to
drive a 8.5% EPS CAGR 2012-15E on the back of operating
leverage and increasing share of more profitable multifocals.
Personnel expenses (c40% of sales) is the key factor to watch,
as increasing employee numbers (and wages) has burdened
margin development in recent years and is the main risk.
Valuation looks expensive, but the stock trades at a slight
discount to its peer group; the 4% dividend yield is attractive
with an accumulating net cash position (10% of market cap).
Our price target of EUR81.50 is based on CFRoEV 2016E.
Share catalysts: Investors’ concern about limited operating
leverage and rising personnel costs have already resulted in
share price underperformance in 2012 and ytd 2013. An
improving macro should lead to a better top line driven by ASP
rather than mostly volumes and lead to margin progression and
a return to high single-digit EPS growth.
1,200
17.0%
1,000
Sales (EUR)
200
17.5%
800
16.5%
600
400
16.0%
200
180
EBIT margin
1,400
Increasing share of multifocal lenses, indexed
2004=100
160
140
120
100
0
15.5%
10
11
12
13E
Sales (EUR)
14E
80
15E
2004 2006 2007 2008 2009 2010 2011 2012 2013e
EBIT margin
Source: Company data
49
Cross-Sector
freenet AG
8 October 2013
Hold
Current price
Price target
EUR 18.13
EUR 18.00
● Company overview: As a mobile service provider, the freenet
Group has no network infrastructure of its own, but it markets,
under its own brands, the mobile services of the network
operators Deutsche Telekom, Vodafone, E+ and O2 in
Germany.
Market cap
EUR 2,266 m
Reuters
FNTGn.DE
Bloomberg
FNTN GY
● Quality: freenet has the largest independent sales and
distribution network comprising own shops and dealer
networks outside of the network operators. The group is
currently in the midst of extending its shop network by another
40% over 2013/14. Over the last few years, freenet’s
management deserves credit for successfully executing on a
turnaround plan that has stabilised the subscriber base and
profitability.
128
500,000
● Growth: freenet is in the final phase of the turnaround which
Y/E 31.12, EUR m
2012
Sales
2013E
2014E
2015E
3,089
3,271
3,340
3,376
EBITDA
358
356
360
365
EBIT
209
290
315
336
Net profit
173
217
242
264
Y/E net debt
451
414
373
328
EPS (reported)
1.35
1.69
1.89
2.06
EPS (recurring)
1.31
1.69
1.89
2.06
DPS
1.35
1.50
1.50
1.50
11.6%
10.9%
10.8%
10.8%
EBIT margin
6.8%
8.9%
9.4%
10.0%
Dividend yield
7.6%
8.5%
8.5%
8.5%
ROCE
7.6%
11.0%
11.9%
12.2%
FCF yield
10.0%
9.7%
10.1%
10.3%
EV/sales
0.9
0.9
0.8
0.8
EV/EBITDA
8.2
7.8
7.8
7.7
13.4
9.7
8.9
8.3
9.1
10.3
9.3
8.6
EBITDA margin
EV/EBIT
PER
involves a return to revenue growth. Managements hope to
over-compensate for the competitive pressure on mobile prices
by increasing sales of new products and services sold in the
shop network, such as smart-metering and smartphone
accessories. For the time being, this looks a distant possibility.
We expect freenet should be able to generate stable EBITDA
of EUR350m-355m and free cash flow of around EUR220m230m, allowing the company to return a safe and high dividend
per share of EUR1.5 per share.
● Valuation: freenet’s attraction lies in in its operational stability
in the context of a sector facing falling EBITDA and dividends.
Our price target of EUR18 is based on DCF. On P/E, the
shares looks cheap on 9.3x 2014 earnings primarily due to a low
tax rate that is aided by EUR280m of net tax losses that will
expire by 2020. Normalising for this, the shares are trading on
11x.
Drillisch AG 4.5%
● Share catalysts: We see few near-term catalysts for the shares.
Over the mid-term, an easing of price pressure in the German
mobile market after the deal between E+ and Telefónica
Deutschland would support our forecasts for mobile ARPU
stabilisation beyond 2014.
Usman Ghazi
+44 20 3207 7824
[email protected]
A safe dividend yield on low leverage
3,400
12.0%
3,300
10.0%
8.0%
3,200
6.0%
3,100
4.0%
3,000
1.8
1.6
EBIT margin
Sales (EUR)
1.4
11
12
Sales (EUR)
13E
14E
8.4%
8.4%
7.0%
1.1
6.0%
1.0
0.9
0.8
3.0%
2.0%
0.2
1.0%
0.0%
2012A
2013E
Net debt:EBITDA
50
4.0%
0.4
2011
5.0%
0.6
0.0
EBIT margin
9.0%
8.0%
0.8
15E
8.4%
1.3
1.0
0.0%
10
6.7%
8.4%
7.5%
1.2
2.0%
2,900
1.6
2014E
2015E
Dividend yield
2016E
Cross-Sector
Fuchs Petrolub SE
8 October 2013
Hold
Current price
Price target
EUR 59.01
EUR 54.00
● Company overview: Fuchs is the largest independent
producer of lubricants. It produces lubricants and technical
greases for a variety of applications including in the
automotive, industrial and engineering sectors. Fuchs is
currently expanding its production capacity in overseas
markets.
EUR 3,902 m
FPEG_p
FPE3 GY
Market cap
Reuters
Bloomberg
71
125,000
● Quality: Fuchs specialises in being a provider of customised
products for non-retail customers. Fuchs’ customers buy
large volumes for applications such as automotive first fillings
or metalworking uses. The company employs a highly skilled
salesforce that works closely with the customer to find
tailored solutions. Oil majors do not customarily engage in
this market, focusing instead on retail-grade lubricants. As the
technical sophistication of lubricants for professional
customers grows, these customers increasingly value Fuchs’
customer service.
● Growth: Fuchs saw more than 5% annual revenue growth
Y/E 31.12, EUR m
2012
Sales
2013E
2014E
1,819
1,827
1,891
1,991
EBITDA
328
343
341
359
EBIT
293
312
307
324
Net profit
207
220
218
230
Y/E net debt
-135
-218
-290
-352
EPS (reported)
2.92
3.11
3.08
3.25
EPS (recurring)
2.92
3.11
3.08
3.25
DPS
1.30
1.60
1.90
2.10
EBITDA margin
18.0%
18.8%
18.0%
18.0%
EBIT margin
16.5%
17.1%
16.3%
16.3%
2.2%
2.7%
3.2%
3.6%
40.0%
38.6%
36.2%
36.6%
FCF yield
3.4%
4.2%
4.4%
4.6%
EV/sales
2.1
2.0
1.9
1.8
EV/EBITDA
11.6
10.8
10.7
10.0
EV/EBIT
12.6
11.9
11.8
11.1
PER
20.1
18.9
19.1
18.1
Dividend yield
ROCE
during the 2006-12 period. This is impressive given that the
lubricant market has been stagnant is recent years, and in
some segments has even shrunk. We believe the main growth
driver has been price increases as a result of raw materials
(mostly base oil, a crude oil derivative) inflation. Currently,
raw materials prices are falling, so that price increases will be
more difficult for Fuchs to achieve in the short term.
Ongoing investment into new facilities in emerging markets
will add volume growth. We forecast a sales CAGR of 3.1%
2012-15. Fuchs is very cash-generative, and will return
increasing dividends to its shareholders.
2015E
● Valuation: At 19x 2014 earnings on our numbers, we believe
Fuchs is fully valued. We estimate an EPS CAGR of 2%
2012-15, with sales growing at 3.1%. Our DCF-based price
target is EUR54.
Ordinary shares:
Fuchs family 51.73%
● Share catalysts: Fuchs’ main raw material is base oil, an
Free float across all shares: 68.2%
eventual derivative of crude oil. Base oil price movements
will therefore influence pricing of Fuchs’ products. Inflation
in the raw material chain is generally a positive catalyst.
John Klein
+44 20 3207 7930
[email protected]
Sales split by customer industry (volume, 2012)
2,000
17.0%
1,500
16.5%
1,000
16.0%
500
15.5%
0
15.0%
11
12
13E
Sales (EUR)
14E
15E
2%
31%
EBIT margin
17.5%
Sales (EUR)
2,500
44%
24%
16E
EBIT margin
Automotive oils
Industrial oils
Metalworking/greases
Process oils
51
Cross-Sector
GAGFAH SA
8 October 2013
Buy
Current price
Price target
EUR 9.63
EUR 11.80
● Company overview: GAGFAH is a pure residential player
with exposure only in Germany. Its largest exposure is
~20%, in Dresden, followed by Berlin. With ~144,000 units
valued at about EUR7.7bn, GAGFAH owns the secondlargest residential property portfolio among its listed peers.
We would regard the overall portfolio quality as average.
Following the appointment of a new CEO, the company is
set to spend more on capex and maintenance to improve
asset quality.
Market cap
EUR 2,079 m
Reuters
GFJG
Bloomberg
GFJ GY
216
663,000
● Quality: The current in-place rent, at EUR5.15/sqm, is close
to peers’ levels, whereas the current lfl rental growth is below
peers at 1.1% as of H1 2013. Also, vacancy rates are currently
higher, at 5.1%. The new management team is taking a
realistic view on structurally improving the entire portfolio by
reducing the maintenance backlog, with annual additional
investments of EUR50m forecast.
● Growth: By focusing more on core assets and by increasing
Y/E 31.12, EUR m
2012
2013E
2014E
Total revenues
601
584
591
592
Net rents
568
553
560
561
net)
340
372
375
379
353
337
342
346
43
117
124
133
Funds From
Operations (FFO)
109
133
159
169
EPS reported
0.22
0.54
0.57
0.61
FFO per share
0.56
0.61
0.74
0.78
DPS
0.00
0.00
0.20
0.50
NAV per share
10.60
10.27
10.67
11.07
NNAV per share
13.31
12.79
13.23
13.67
19.8
21.6
21.1
20.7
6.3%
6.4%
7.6%
8.1%
EV/EBITDA
FFO yield
P/FFO
the annual maintenance/capex to EUR14-16/sqm from the
previous EUR11/sqm, GAGFAH’s lfl rental growth should
rise to around 2.0% annually from only 1.1% currently. We
believe that a continuous improvement in rental growth and
occupancy levels are the main parameters for long-term
investors, which are areas in which the company still has to
deliver.
2015E
15.9
15.7
13.1
12.3
Dividend yield
0.0%
0.0%
2.1%
5.2%
P/NAV per share
-33%
-25%
-27%
-30%
P/NNAV per share
-33%
-25%
-27%
-30%
Net gearing
249%
231%
219%
209%
Loan-to-value (LTV)
65%
63%
62%
61%
Implied yield
8.1%
7.5%
7.7%
7.8%
● Valuation:
In our view, the recent share price
outperformance illustrates that the markets have taken the
company’s progress on deleveraging and the new
management as positive. We believe that the to-be-completed
extension of EUR900m of debt due in April 2014 is no
longer in doubt; not least since GAGFAH has successfully
extended around EUR3.0bn of debt in recent months.
However, valuations still show some scepticism, with a 25%
discount to NAV 2013E and a 6.4% FFO yield.
● Share
catalysts: The main catalyst would be an
improvement in operations, particularly higher lfl rental
growth. Also, a higher free float would be a catalyst, as
Fortress still owns a 48%.
Fortress 48%
Kai Klose, CIIA
+44 20 3207 7888
[email protected]
Estelle Weingrod
+44 20 3207 7931
[email protected]
640
70.0%
620
68.0%
600
66.0%
580
64.0%
560
62.0%
540
60.0%
520
58.0%
500
Geographical split
SchleswigHolstein
3%
EBIT-margin in %
Rents in EUR
Hamburg
6%
11
12E
13E
Total rental income
14E
Other
7%
Saxony
29%
BadenWürttemberg
7%
Berlin
11%
56.0%
10
Bavaria
3%
15E
Lower Saxony
14%
EBIT margin
52
North Rhine
Westphalia
20%
Cross-Sector
GEA Group AG
8 October 2013
Hold
Current price
Price target
EUR 30.72
EUR 31.50
● Company overview: Between 2004 and 2008, GEA
concentrated its activities by making c20 divestments in order
to improve business quality, transparency and visibility.
Today, GEA is one of the largest providers of machinery and
equipment for the food, beverage, process and energy
industries, with these end-markets contributing 55% to group
sales. GEA’s product offering encompasses centrifuges,
process equipment, valves, decanters and also the engineering
of entire lines and plants. Currently, GEA is looking to divest
its heat exchanger (HX) exposure, which accounted for 24%
of group EBIT in FY12.
Quality: Besides being a major manufacturer of food
processing machinery, GEA’s competitive quality resides in
its significant emerging-market exposure (currently 34%).
Further, GEA is in the process of increasing its food and
beverage exposure to 75% of sales (versus 55% at present)
while divesting underperforming, higher-risk businesses. In
light of its better cash generation, we do not rule out an
increase in the payout ratio over the medium term.
Growth: GEA is facing structural growth in a number of
markets, especially in the food processing industry. However,
growth in earnings will in our view be driven by divestment
of lower margin HX businesses and reinvestment into foodand beverage-related markets.
Valuation: Since the Q1 results, the share has re-rated ahead
of the sector. At 14x FY 2014 P/E and 10.6x EV/EBIT, on
our estimates it is trading close to post-crisis highs.
Furthermore, for the first time since before the crisis, GEA’s
consensus EV/sales is above levels implied by its operating
margin (1.2x versus 10%). GEA’s share price has risen by
25% ytd. It is now among the best-performing stocks in our
large cap universe. Our price target is based on an average of
2015 DCF and target multiples discounted back to year-end
2013.
Share catalysts: Our Hold rating reflects full valuation but
the company is also missing short-term catalysts. The HX
disposal and reinvestment of proceeds will likely be a threeto five-year process. As end-market development is pointing
to a very stable development, we further see downside than
upside risk for FY 2013 guidance.
EV/sales to operating margin points to fair
valuation
EUR 5,987 m
G1AG
G1A GY
Market cap
Reuters
Bloomberg
193
450,500
●
Y/E 31.12, EUR m
2012
Sales
2013E
2014E
2015E
5,720
5,841
6,074
6,341
EBITDA
600
713
767
825
EBIT
562
590
644
695
Net profit
314
360
418
462
Y/E net debt
325
110
-120
-410
EPS (reported)
1.69
1.87
2.17
-2.40
EPS (recurring)
1.54
1.95
2.17
2.40
DPS
0.55
0.66
0.80
0.84
10.5%
12.2%
12.6%
13.0%
EBIT margin
9.8%
10.1%
10.6%
11.0%
Dividend yield
2.3%
2.1%
2.6%
2.7%
EBITDA margin
ROCE
10.1%
11.6%
12.3%
12.6%
FCF yield
5.4%
5.8%
6.3%
7.6%
EV/sales
1.0
1.2
1.1
1.0
EV/EBITDA
9.3
9.8
8.9
7.9
EV/EBIT
10.0
11.9
10.6
9.4
PER
13.9
16.6
14.3
12.9
●
●
Kuwait Investment Office 8.3%
Benjamin Glaeser
+44 20 3207 7918
[email protected]
●
William Mackie
+44 20 3207 7837
[email protected]
12.0%
1.2x
12%
6,000
10.0%
1.0x
10%
0.8x
8%
8.0%
4,000
6.0%
3,000
4.0%
2,000
1,000
2.0%
0
0.0%
10
11
12
Sales (EUR)
13E
14E
Fwd EV/sales
5,000
0.6x
6%
First time since
pre-crisis trading
above marginimplied levels
0.4x
0.2x
0.0x
15E
2006 2007 2008 2009 2010 2011 2012 2013
EBIT margin
Fwd EV/sales
53
Exp margin
4%
2%
0%
Exp margin
7,000
EBIT margin
Sales (EUR)
Cross-Sector
Gerresheimer AG
8 October 2013
Buy
Current price
Price target
EUR 44.86
EUR 54.00
Market cap
EUR 1,409 m
Reuters
GXIG
Bloomberg
GXI GY
Y/E 31.12, EUR m
31
115,000
2012
Sales
2013E
2014E
longest-established healthcare packaging companies,
Gerresheimer remains a strong play on the increasing global
pharma consumption. The business has four main divisions:
Tubular Glass, Plastic Systems, Moulded Glass and Life
Science Research.
● Quality: Having been present in the pharma packaging
industry for over 150 years, Gerresheimer has established a
reputation for producing the highest-quality products. Clients
include Sanofi, Novo Nordisk and AstraZeneca, to name a
few. The importance of packaging in the approval process
means that Gerresheimer’s diversified client base is set to
remain loyal in the long term. However, Gerresheimer’s
investment case is not just a volume story. We believe the
company’s recent heavy investments in fast-growth markets
such as ready-to-fill syringes, insulin pens, diabetic blood
lancets and asthma devices will soon pay off, driving
accelerating top-line growth and margin expansion for the
group.
2015E
1,219
1,276
1,344
1,420
EBITDA
240
247
272
299
EBIT
132
142
164
186
70
77
93
110
Net profit
● Company overview: As one of the world’s leading and
Y/E net debt
377
403
345
272
EPS (reported)
2.02
2.26
2.71
3.22
EPS (recurring)
2.56
2.69
3.12
3.63
DPS
0.65
0.73
0.84
0.98
EBITDA margin
19.7%
19.4%
20.2%
21.1%
EBIT margin
13.1%
10.8%
11.1%
12.2%
Dividend yield
1.4%
1.6%
1.9%
2.2%
ROCE
9.7%
9.6%
11.0%
12.5%
FCF yield
4.3%
3.9%
6.2%
7.4%
EV/sales
1.5
1.4
1.3
1.3
EV/EBITDA
7.6
7.3
6.7
6.1
EV/EBIT
13.7
12.7
11.0
9.7
PER
17.5
16.7
14.4
12.4
Scott Bardo
+44 20 3207 7869
[email protected]
● Growth: Plastic Systems has the strongest growth potential
for the group over the next five years, largely owing to its
broad pipeline of insulin pens and asthma inhalers. We also
see opportunities for improvement in Tubular Glass – in
particular the profitability of ready-to-fill syringes. Margins
for syringes are currently c10% by our estimates, around 1415ppt lower than normalised margins for other products in
the division. This should not be the case, and management is
fully committed to closing the gap as soon as possible.
Finally, we think that M&A could enhance shareholder value
at Gerresheimer. Targets include emerging-market
opportunities (particularly in China and India) as well as
concentrated plastics investments in North America (See our
How could GXI look with Rexam? note, dated 22 August 2013).
● Valuation: Our target price of EUR54 is based on shares
trading on 17.5x 2014E or 15x 2015E adjusted EPS. This
valuation seems reasonable to us in this market given our
expectation of c13% EPS CAGR out to 2018E.
● Share catalysts: The Q3 results in early October are the next
meaningful catalyst. Shares will likely be sensitive to any
update on guidance as well as any status update on Rexam.
1,500
Group end-markets
14.0%
Others
5%
10.0%
1,000
8.0%
6.0%
500
4.0%
EBIT margin
Sales (EUR)
12.0%
Pharma &
Life
Science
83%
2.0%
0
0.0%
10
11
12
Sales (EUR)
13E
14E
15E
EBIT margin
54
Cosmetics
12%
Cross-Sector
Gerry Weber International AG
Current price
Absolute rating
system
Price target
EUR 30.35
EUR 34.00
Hold
● Company overview: Gerry Weber is an apparel retailer with a
Market cap
EUR 1,469 m
Reuters
GWIG
Bloomberg
GWI1 GY
Y/E 31.12, EUR m
46
165,926
2012
2013E
2014E
831
873
946
1,026
EBITDA
132
126
144
164
EBIT
116
106
123
141
79
72
84
99
-34
-74
-109
-149
EPS (reported)
1.72
1.56
1.83
2.15
EPS (recurring)
1.72
1.56
1.83
2.15
DPS
0.75
0.85
1.00
1.20
EBITDA margin
16.5%
14.8%
15.5%
16.3%
EBIT margin
14.5%
12.3%
13.2%
14.0%
2.4%
2.8%
3.3%
4.0%
30.0%
24.4%
25.9%
27.2%
FCF yield
1.6%
5.3%
5.3%
6.2%
EV/sales
1.8
1.6
1.4
1.3
EV/EBITDA
10.8
10.6
9.0
7.7
EV/EBIT
12.4
12.6
10.6
8.9
PER
18.4
19.5
16.6
14.1
Y/E net debt
Dividend yield
ROCE
●
2015E
Sales
Net profit
8 October 2013
●
●
Gerhard Weber 28.34%
Udo Hardieck 17.85%
Ralf Weber 2.99%
●
Anna Patrice, CFA
+44 20 3207 7863
[email protected]
focus on women aged over 45. Historically, it was a wholesale
player with a predominant focus on Germany. However, recent
own retail expansion and internationalisation have resulted in it
generating c40% of group sales outside Germany and via own
retail.
Quality: In a generally highly competitive apparel market,
Gerry Weber has found a niche with limited competition – ie
women aged over 45. It therefore benefits from both low
competition and a financially well-off customer group that
focuses on quality rather than just price. As a fashion follower,
Gerry Weber does not start trends, but it does stand out in
terms of operational excellence: a) its own cutting department
ensures consistent quality while being flexible in its ability to
change suppliers quickly if required; b) its IT system is
connected to more than 4,500 PoS, which enables it to analyse
and react to sell-through data; c) its RFID system is set to
provide more cross-selling opportunities in the future.
Growth: The 7.8% sales CAGR 2012-15E is driven by own
retail expansion (40% of group sales, 15% sales CAGR) and the
Wissmach acquisition with converted 170 Wissmach stores (out
of a total of c630 stores) into GW monolabel. Wholesale is set
to grow at 2.7% CAGR 2012-15E driven by its
internationalisation (Germany is its largest market with c60% of
sales). Increasing volumes and the shift to own retail is set to
support gross margin development, but the newly converted
Wissmach stores will dilute margins until 2015E and lead to a
6.8% EBIT CAGR over 2012-15E.
Valuation: Our DCF-based price target of EUR34 indicates
limited upside potential. We note limited visibility, with two
recent profit warnings driven by the challenging trading
environment and weak performance of Wissmach stores.
Share catalysts: A return to historical outperformance of the
German apparel market and margin progression should support
a re-rating of the stock. However, the current trading
environment is volatile and leaves little upside for positive
surprises in the short term.
Sales (EUR)
1,000
20.0%
1,000
15.0%
800
600
10.0%
400
5.0%
200
0
EBIT margin
1,200
Gerry Weber retail expansion affects profitability
0.0%
11
12
13E
Sales (EUR)
14E
15E
100%
800
80%
600
60%
400
40%
200
20%
0
16E
0%
2005
EBIT margin
2007
2009
Number of stores
55
2011 2013 E 2015 E
Share of mature stores
Cross-Sector
Grenkeleasing AG
8 October 2013
Hold
Current price
Price target
EUR 67.96
EUR 61.00
● Company overview: Grenkeleasing is a unique and highly
profitable company serving the small-ticket IT leasing market
in 26 countries with a focus on Europe. With an average
loan-loss ratio of 1.5% since 2000 and a ROE of 11.9% since
2007, the company has a strong earnings profile. The BBB+
rating from Standard & Poor’s, which Grenkeleasing has had
since 2003, helps facilitate access to the required financing.
EUR 967 m
GKLG
GLJ GY
Market cap
Reuters
Bloomberg
15
4,926
Y/E 31.12., EURm
2012 2013E 2014E 2015E
New Business
1,026
1,179
1,297
1,427
111
42
3.10
0.80
131
48
3.26
0.80
148
54
3.70
0.85
164
61
4.18
0.90
BPS
Dividend Yield
ROE
25.65
1.4%
12.1%
30.27
1.4%
10.8%
33.47
1.5%
11.1%
36.86
1.6%
11.3%
Equity ratio
Cost/income ratio
P/E
P/BV
14.9%
44.1%
15.2x
1.8x
16.3%
44.5%
17.5x
1.9x
16.0%
44.9%
15.4x
1.7x
15.8%
45.0%
13.6x
1.5x
Net Interest income
Net income
EPS reported
DPS
● Quality:
Aside from the robust earnings profile,
Grenkeleasing has a strong and highly defensible market
position underpinned by an internal scoring tool with an
extensive database of prior cases and a large network of loyal
retail partners which market the leasing contracts. In
addition, and importantly for a leasing company,
Grenkeleasing demonstrates strong risk management skills.
This is evidenced by a prudent expansion strategy, the
increasing regional diversification of the leasing portfolio, its
large number of independent retail partners and the strong
diversification of financing sources, which allow the
company to maintain sufficient liquidity.
● Growth: By far the strongest growth in new contracts
currently comes from southern Europe, where Grenkeleasing
can increasingly gain market share as banks move out of the
leasing business. In addition, the company is in the process
of testing markets such as Brazil and Turkey to prepare for
continued strong growth in future. We believe Grenkeleasing
will achieve an EPS CAGR of 10.4% until 2015.
● Valuation: The performance of the share price has been very
strong over the last few months despite a capital increase of
7.42% below the market price. We therefore currently see
limited upside in the stock. In order to incorporate some of
the company’s long-term growth and earnings potential, we
have used a residual income model and combined this with a
target P/BV multiple of 2.0x to reach a price target of
EUR61.
Grenke family 42.60%
Bjoern Lippe
+44 20 3207 7845
[email protected]
●
Share catalysts: As Grenkeleasing is growing continually
and consistently, there are no specific identifiable catalysts.
However, strong quarterly results usually serve as a catalyst
for the stock as proof of its positive development.
LLC and NII development
70
14.0%
60
12.0%
50
10.0%
40
8.0%
30
6.0%
20
4.0%
10
2.0%
0
0.0%
09
10
11
12 13E
Net income
14E 15E
ROE
Return on equity in %
Net income in EUR
Net income and ROE development
200
100.0%
160
80.0%
120
60.0%
80
40.0%
40
20.0%
0
07
08
09
10
Loan loss charge
56
11
12
13E 14E
Net interest income
0.0%
15E
LLC/NII
Cross-Sector
GSW Immobilien AG
8 October 2013
Buy
Current price
Price target
EUR 32.15
EUR 34.00
● Company overview: GSW is a pure residential player in the
Market cap
EUR 1,624 m
Reuters
GIBG
Bloomberg
GIB GY
51
92,000
●
●
Y/E 31.12, EUR m
2012
2013E
2014E
2015E
Total revenues
235
259
264
274
Net rents
210
239
243
253
net)
246
214
223
230
170
188
194
203
175
144
151
155
64
76
81
84
EPS reported
3.46
2.85
2.99
3.07
FFO per share
1.35
1.51
1.59
1.66
DPS
0.90
1.00
1.05
1.10
NAV per share
28.52
32.87
33.53
34.74
NNAV per share
30.21
34.67
35.33
36.55
20.1
19.5
19.3
18.7
4.2%
4.7%
5.0%
5.2%
23.7
21.3
20.2
19.4
2.8%
3.1%
3.3%
3.4%
P/NAV per share
6%
-7%
-9%
-12%
P/NNAV per share
6%
-7%
-9%
-12%
125%
136%
138%
135%
Funds From
Operations (FFO)
EV/EBITDA
FFO yield
P/FFO
Dividend yield
Net gearing
Loan-to-value (LTV)
57%
57%
57%
56%
Implied yield
6.1%
6.5%
6.5%
6.7%
●
●
MFS 10%, Government of Singapore 6%; CBRE Clarion 5%
Berlin market. With a portfolio of about 58,000 units, the
company benefits from its good insight into the Berlin
market, as well as from a good reputation as a long-termorientated local player in the German capital. It went public
in April 2011 and is a member of the German MDAX as well
as of relevant property stock indices such as EPRA.
Quality: The company benefits from low operational costs
and high income predictability, with stable income payments
(a payout ratio of 65%), a low vacancy rate (2.7%) and
increasing rents in accordance with rent tables for Berlin.
GSW was also successful in sourcing portfolios with the
purchase of 2,800 units for EUR201m in Berlin in August.
Growth: Since its IPO in April 2011 at EUR19/share, GSW
has shown strong momentum. In addition, the favourable
conditions in Berlin’s housing market have supported the
equity story quite well. We expect the positive trend of rising
rents to continue, and also look for lfl rental growth of
slightly above 2.0%.
Valuation: With solid debt ratios (a loan-to-value ratio of
~54% based on nominal debt fixed at less than 4%) and an
average debt duration of ~10 years, we regard GSW as an
attractive investment case, offering a combination of highincome predictability and stable dividend payments. The
stock is now trading at a 7% discount premium to NAV
2013E and at a dividend yield of 3.1%.
Share catalysts: Following the public takeover bid from
Deutsche Wohnen, we see the proposed merger as highly
rational, due to the regional overlap and GSW’s strong local
ties in Berlin. We regard GSW as the local market leader
among the institutional and privately-owned property
companies. The offer values GSW’s equity at EUR1.8bn,
implying a premium of 15% on the three-month volumeweighted average share price before the announcement of the
transaction, which also comes close to our fair value on a
standalone basis.
Kai Klose, CIIA
+44 20 3207 7888
[email protected]
Estelle Weingrod
+44 20 3207 7931
[email protected]
82.0%
81.0%
80.0%
79.0%
78.0%
77.0%
76.0%
75.0%
74.0%
73.0%
72.0%
71.0%
Rents in EUR
250
200
150
100
50
0
10
11
12E
13E
Total rental income
14E
100% Berlin
EBIT-margin in %
300
Geographical split
Others
37%
Spandau
21%
Reinickendorf
15%
Steglitz Zehlendorf
13%
15E
EBIT margin
57
Friedrichshain
/Kreuzberg
14%
Cross-Sector
Hamborner REIT AG
8 October 2013
Buy
Current price
Price target
EUR 7.18
EUR 8.25
● Company overview: Hamborner is focused on German
commercial properties and was converted into a REIT in
2010. The company is thus tax-exempt on a corporate level
and has to distribute a large part of its earnings to
shareholders. The portfolio now consists of 72 properties
located in 55 cities and has grown significantly in recent
years. The portfolio is split roughly one-third offices, a third
high-street retail and a third large-scale retailing.
Market cap
EUR 327 m
Reuters
HABG
Bloomberg
HAB GY
45
37,000
● Quality: As Hamborner only buys single properties, the
company’s earnings resilience is above-average: the average
lease term is seven years, less than 10% of leases expire
annually up to 2017, and the vacancy rate is at less than 2%.
Also the tenant mix is of good quality and includes wellknown companies like Edeka (15%), Kaufland (10%) and
OBI (6%). The company is aiming to sell more smaller
properties in non-core cities in order to enhance profitability.
● Growth: In 2007, Hamborner changed its strategy towards
Y/E 31.12, EUR m
2012
2013E
2014E
Total revenues
39
46
49
50
Net rents
37
45
48
49
net)
18
23
24
25
18
23
24
25
8
10
10
11
19
23
24
25
EPS reported
0.20
0.21
0.22
0.23
FFO per share
0.41
0.50
0.53
0.55
DPS
0.40
0.45
0.48
0.50
NAV per share
8.17
8.51
8.60
8.63
NNAV per share
7.84
8.20
8.25
8.27
EV/EBITDA
18.4
17.2
17.1
17.0
5.5%
6.9%
7.5%
7.7%
Funds From
Operations (FFO)
FFO yield
P/FFO
18.0
14.4
13.4
13.1
5.3%
6.2%
6.7%
7.0%
P/NAV per share
-8%
-16%
-17%
-17%
P/NNAV per share
-5%
-12%
-13%
-13%
Net gearing
78%
100%
114%
122%
Loan-to-value (LTV)
31%
38%
41%
43%
Implied yield
6.5%
7.1%
7.1%
7.1%
Dividend yield
real estate and started to grow substantially in terms of
acquisition of single assets with high occupancy levels. The
portfolio size has more than doubled to almost EUR700m as
of now. This is also reflected in earnings momentum and
Hamborner foresees a 20% increase in revenues for the
current fiscal year and a 25% increase in FFO as adjusted net
profit by 25%.
2015E
● Valuation:
Despite its below-average risk profile,
Hamborner still trades at a 12% discount to NAV. Also, the
current dividend yield of 6.2% is an attractive level in our
view, especially as the company has never cut the dividend
per share since its foundation in 1953.
●
Share catalysts: We expect Hamborner to maintain its
strategy with further acquisition of single properties, even
though the market has become more competitive. The
disposal of non-core assets at book value (particularly in
2014) will also lead to a more focused portfolio.
Ruffer 6%; Asset Value Investors 5%; Allianz GI 3%
Kai Klose, CIIA
+44 20 3207 7888
[email protected]
Estelle Weingrod
+44 20 3207 7931
[email protected]
58.0%
50
Rents in EUR
Sector split
60.0%
56.0%
40
54.0%
30
52.0%
50.0%
20
48.0%
10
Large-scale
retail, 36%
High-street/
retailing,
36%
EBIT-margin in %
60
Sector split
46.0%
0
44.0%
10
11
12E
13E
Total rental income
14E
Office /
other, 28%
15E
EBIT margin
58
Cross-Sector
Hawesko Holding AG
8 October 2013
Hold
Current price
Price target
EUR 40.00
EUR 42.00
● Company overview: Hawesko is the largest wine distributor
in Germany within the premium wine segment (EUR1bn),
and is active in the retail (283 Jacques Wein-Depot outlets),
wholesale and mail order segments. It is exposed
predominantly to Germany (89% of group sales as of FY
2012), but is expanding in Sweden with its mail order
business and in Switzerland with its wholesale business.
EUR 359 m
HAWG
HAW GY
Market cap
Reuters
Bloomberg
9
4,000
● Quality: Hawesko is the market leader in the premium wine
segment in Germany across all distribution channels – retail,
wholesale and mail order – 1.5-4x bigger than its closest
peers in relevant segments thanks to its focus on premium
wine. This scale and distribution reach has allowed Hawesko
to negotiate exclusive distribution contracts for well-known
wine houses in Germany. Thus, while its position in its home
market is very strong, the company is expanding in
neighbouring countries and in the online segment,
consolidating what is a highly fragmented market.
Y/E 31.12, EUR m
2012
Sales
2013E
2014E
2015E
449
476
502
533
EBITDA
33
35
39
43
EBIT
26
28
33
36
Net profit
23
18
22
24
Y/E net debt
10
9
-6
-11
EPS (reported)
2.51
2.02
2.40
2.63
EPS (recurring)
2.01
2.02
2.40
2.63
DPS
1.65
1.69
1.84
1.95
EBITDA margin
7.4%
7.4%
7.8%
8.0%
EBIT margin
5.8%
6.0%
6.5%
6.8%
Dividend yield
4.4%
4.2%
4.6%
4.9%
23.5%
25.5%
30.1%
32.3%
FCF yield
3.2%
6.1%
8.5%
6.1%
EV/sales
0.8
0.8
0.7
0.7
EV/EBITDA
11.1
10.5
9.0
8.2
EV/EBIT
14.2
13.0
10.8
9.6
PER
18.5
19.8
16.7
15.2
ROCE
● Growth: A 6% sales CAGR over 2012-15E is driven by a)
steady market growth with the trend moving towards more
premium wine, b) market share gains in the domestic market,
c) expansion in Sweden and Switzerland, supported by the
acquisition of Vogel Vins in 2013 (with estimated sales of
EUR8m). Margin expansion towards the mid-term target of
7% follows a dilutive impact of an expansion phase in 201012 and supports a 9% EPS CAGR over 2012-15E.
● Valuation: Valuation looks expensive on first sight at more
than 16x P/E 2014E. However, the dividend yield of more
than 4% is attractive, while the high quality and stable growth
justifies its premium rating in our view. Limited upside to our
EUR42 price target, based on CFRoEV 2015E, leads to a
Hold rating.
Alexander Margaritoff 30%
Tocos GmbH 29.5%
Augendum Vermögensverwaltung GmbH 5%
● Share catalysts: Following a weak H1 2013, we expect an
acceleration in sales and earnings in H2 2013E which should
be supported by easing comps and integration of recently
acquired companies. However, current trading seems to be
mixed, and we would use any further share price weakness as
an entry point.
Anna Patrice, CFA
+44 20 3207 7863
[email protected]
7.0%
Sales (EUR)
500
6.5%
400
300
6.0%
200
5.5%
100
0
20%
15%
10%
EBIT margin
600
Outperforming domestic wine market, yoy
growth
5%
0%
-5%
-10%
2000
5.0%
10
11
12
Sales (EUR)
13E
14E
15E
2002
2004
2006
2008
2010
Total German wine market growth
EBIT margin
Hawesko domestic sales growth
Source: Company data
59
2012
Cross-Sector
Hochtief AG
8 October 2013
Hold
Current price
Price target
EUR 61.63
EUR 62.00
● Company overview: Hochtief is engaged in construction
services, real estate development and airport and social
infrastructure concessions. It has a c56% stake in Leighton
Holdings, Australia’s largest listed contractor. ACS, a Spanish
construction company, owns c49% of Hochtief. Its main
markets are Australia (48% of revenue), Asia (13%), the
Americas (27%) and Germany (9%).
EUR 4,403 m
HOTG
HOT GY
Market cap
Reuters
Bloomberg
71
204,639
● Quality: Following weak performance in 2011-2012, driven
by poor risk management on construction projects,
Hochtief’s new management team is carrying out an
extensive cost-saving and restructuring programme.
Management is reducing unnecessary management layers,
simplifying reporting structures and aligning remuneration
policies to cash-based targets, in order to cut costs and
improve risk management. We expect this to lead to margin
improvement and less volatile earnings in 2013-2015.
● Growth: We forecast a c15% EPS CAGR 2013-2015 driven
Y/E 31.12, EUR m
2012
Sales
25,528
26,374
26,471
27,018
EBITDA
2013E
2014E
1,680
1,687
1,680
1,743
EBIT
761
949
952
993
Net profit
158
291
235
245
Y/E net debt
944
1,030
1,151
1,287
EPS (reported)
2.15
4.07
3.40
3.53
EPS (recurring)
1.76
2.88
3.66
3.79
DPS
1.00
1.58
2.01
2.09
EBITDA margin
6.6%
6.4%
6.3%
6.5%
EBIT margin
3.0%
3.6%
3.6%
3.7%
Dividend yield
2.4%
3.7%
4.8%
4.9%
ROCE
8.9%
11.0%
10.5%
10.5%
FCF yield
0.9%
-1.5%
3.6%
3.0%
EV/sales
0.3
0.3
0.3
0.3
EV/EBITDA
3.9
4.8
4.8
4.8
EV/EBIT
8.5
8.5
8.5
8.4
24.1
22.4
17.6
17.0
PER
mainly by management’s cost-saving and restructuring
programme. In addition, we expect Hochtief’s end-markets in
Europe and the US to recover over this period. However, we
are slightly concerned that growth at Leighton could
disappoint consensus expectations, driven by a reduction in
spending in the mining and resources sector.
2015E
● Valuation: Our EUR62 price target is based on a sum-of-
the-parts methodology. Hochtief is trading on 17.6x 2014
EPS which we think fairly reflects the potential for EPS
growth as management’s cost and restructuring programme is
executed.
● Share catalysts: Management is planning a sale or
partnership strategy for its real estate assets which have a
gross carrying value of around EUR1.4bn. This could be a
potential catalyst for the share price although we expect this
is more likely to occur in 2014.
Chris Moore
+44 20 3465 2737
[email protected]
Robert Muir
+44 20 3207 7860
[email protected]
30,000
4.0%
25,000
3.0%
20,000
2.0%
15,000
1.0%
10,000
0.0%
5,000
0
Book-to-bill ratio
Hochtief versus peers: rolling 12-month book-tobill ratio
EBIT margin
Sales (EUR)
11
12
Sales (EUR)
13E
14E
1.2
1.1
1.0
0.9
Q4
2011
-1.0%
10
1.3
15E
EBIT margin
Q1
Q2
2012 2012
Skanska
Balfour Beatty
60
Q3
2012
Q4
Q1
2012 2013
Hochtief
VINCI
Q2
2013
Cross-Sector
Hugo Boss AG
8 October 2013
Hold
Current price
Price target
EUR 93.25
EUR 102.00
● Company overview: Hugo Boss is a leading brand in the male
Market cap
EUR 6,197 m
Reuters
BOSG_p
Bloomberg
BOSS GY
36
90,000
●
Y/E 31.12, EUR m
Sales
2012
2013E
2014E
2015E
2,346
2,472
2,667
2,887
EBITDA
525
558
632
726
EBIT
433
459
520
605
Net profit
307
335
382
448
Y/E net debt
141
86
9
-125
EPS (reported)
4.37
4.75
5.42
6.36
EPS (recurring)
4.37
4.75
5.42
6.36
DPS
3.12
3.33
3.79
4.45
EBITDA margin
22.4%
22.6%
23.7%
25.2%
EBIT margin
18.5%
18.6%
19.5%
21.0%
4.1%
3.8%
4.1%
4.8%
37.4%
36.1%
37.8%
40.0%
FCF yield
6.7%
8.2%
9.3%
12.0%
EV/sales
2.3
2.6
2.5
2.2
EV/EBITDA
10.4
11.3
10.5
8.9
EV/EBIT
12.6
13.8
12.7
10.7
PER
17.4
18.5
17.2
14.7
Dividend yield
ROCE
●
Red & Black Holding GmbH 56%
●
Anna Patrice, CFA
+44 20 3207 7863
[email protected]
●
premium apparel segment. Since its takeover by Permira, and
following the installation of a new management team in 2008, it
has reduced its European exposure from 73% of sales in 2007
to 60% by 2012 and increased the share of own retail (from
26% of sales in 2007 to 49% by 2012). Primarily a men’s brand
(88% of group sales), Hugo Boss intends to expand in the
women’s wear segment (12% of group sales), with changes in
its organisational structure and in management.
Quality: Hugo Boss has a strong brand image for high-quality
and elegant European designs, especially in the formal wear
that it successfully leverages on its casual wear, which now
accounts for c50% of group sales. Its high level of efficiency in
logistics, production and distribution makes it one of the
highest-achieving companies among its peer group in terms of
profitability. Its management team has a good track record of
expanding into own retail, improving brand image (China) and
own retail efficiency, and as a result is driving profitable growth
with an improved ROIC of 37% by 2012 (2010: 30%).
Growth: Own retail expansion (including a c6% increase in the
number of stores over 2012-2015E), mid-single-digit lfl sales
growth and further internationalisation (in Asia, the Americas
and eastern Europe) are set to drive a 7% sales CAGR 20122015E. A 13% EPS CAGR 2012-2015E is supported by
operating leverage, improving operational efficiencies and an
increasing number of mature stores in its network. The
company’s mid-term targets of EUR3bn in sales and a 25%
recurring EBITDA margin are achievable despite the
slowdown in Asia and upside potential could come via a)
franchise takeovers (15% of group sales), and b)
premiumisation of its product offering with the integration of
Boss Selection (a luxury line, 3% of group sales) into Boss
Black (67% of group sales).
Valuation: upside potential is limited following share price
outperformance and a narrower discount gap to the peer
group, with Hugo Boss trading at 17-18x P/E versus luxury
and large cap retailers’ P/E of 18-20x. Our EUR102.0 price
target is DCF-based.
Share catalysts: Improving sentiment towards Europe has
supported share price outperformance. Upgrades are now
necessary to support it, but are unlikely before 2014E.
Sales split by channel and region (EURm)
● .
3,000
25.0%
2,000
20.0%
1,500
●
Sales (EUR)
2,500
2,000
15.0%
1,500
10.0%
1,000
5.0%
500
0
EBIT margin
3,500
1,000
500
0
0.0%
10
11
12
13E
Sales (EUR)
14E
Retail
15E
EBIT margin
Wholesale
2007
61
Asia/
Pacific
2012
Americas
2015E
Europe
Cross-Sector
Jenoptik AG
8 October 2013
Hold
Current price
Price target
EUR 11.72
EUR 12.00
● Company overview: Jenoptik is a specialist producer of
EUR 671 m
JENG
JEN GY
Market cap
Reuters
Bloomberg
57
82,543
●
Y/E 31.12, EUR m
2012
Sales
2013E
2014E
2015E
585
616
666
719
EBITDA
72
81
95
108
EBIT
55
58
71
83
Net profit
50
46
58
68
Y/E net debt
96
75
15
-40
EPS (reported)
0.88
0.80
1.01
1.19
EPS (recurring)
0.88
0.80
1.01
1.19
DPS
0.15
0.15
0.15
0.15
12.4%
13.2%
14.3%
15.0%
EBIT margin
9.4%
9.4%
10.7%
11.6%
Dividend yield
2.5%
1.3%
1.3%
1.3%
10.3%
10.3%
11.6%
12.3%
FCF yield
6.3%
4.6%
10.4%
9.7%
EV/sales
0.8
1.2
1.0
0.9
EV/EBITDA
6.1
9.3
7.3
5.9
EV/EBIT
8.1
13.1
9.7
7.7
PER
6.8
14.6
11.6
9.8
EBITDA margin
ROCE
●
ECE Industriebetiligungen 25.02%
Varis 5.33%
Templeton Investment Council: 3.11%
+44 20 3207 7852
[email protected]
●
●
Diversified business model
14.0%
6%
12.0%
600
10.0%
8.0%
400
6.0%
4.0%
200
11%
29%
EBIT margin
Sales (EUR)
800
lasers and optical systems used in end-markets such as
semiconductor equipment, automotives, medicine and
defence. The company was founded in 1846 in Jena by Carl
Zeiss. It has a strong IP portfolio, long-held relationships
with customers and deep expertise in these sectors arising
from its prior affiliations with Carl Zeiss. Besides selling
lasers, laser systems, optics and solutions, Jenoptik also
manufactures various components and systems for defencerelated industries, industrial metrology components and
traffic light monitoring systems. Germany is its biggest endmarket, responsible for 35% of group sales (H1 2013), but
management has executed well to diversify into Asia-Pacific
and the US, which now contribute 12% and 21% of sales
respectively.
Quality: The main feature of Jenoptik’s business model is its
diversified nature in terms of product portfolio and
geographical exposure. Technology-wise, Jenoptik’s core
strength lies in optics, since it originated as a part of Carl
Zeiss group. The quality of Jenoptik’s optics products is
evident from the fact that many of its customers, such as
ASML, use it as a single-source supplier. In most of its
business segments, end-markets are fragmented. In lasers,
Jenoptik has a less than 1% market share and competes with
companies such as Coherent, Cymer and Roth and Rau.
Jenoptik is a global leader in cameras for traffic monitoring
and control solutions. The company has consistently
exceeded its financial guidance in the last two years.
Growth: Jenoptik is a stable, steady growth business. A
diverse product portfolio and end-market exposure means
that when one market segment is weak it is often
compensated by stronger demand from another vertical. We
expect Jenoptik to maintain a steady growth profile and are
modelling a 7% CAGR revenue growth and 11% earnings
growth over 2012-15E. Key growth drivers are demand from
the automotive, semiconductor equipment, transportation
and defence sectors.
Valuation: Our price target is based on 13x next year’s P/E,
which is slightly higher than a 1x PEG ratio.
Share catalysts: Our estimates are ahead of consensus and
management guidance. We think the company can beat its
FY 2013 targets and raise FY 2017 guidance.
12%
23%
20%
2.0%
0
0.0%
11
12
13E
Sales (EUR)
14E
15E
EBIT margin
Automotive & machine construction
Security and defense
Aviation & traffic
Semiconductor
Medical technology
Others
62
Cross-Sector
Jungheinrich AG
Hold
Current price
Price target
EUR 44.28
EUR 49.00
EUR 1,533 m
JUNG_p
JUN3 GY
Market cap
Reuters
Bloomberg
Y/E 31.12, EUR m
34
40,000
2012
Sales
2013E
2014E
2015E
2,229
2,317
2,463
2,628
EBITDA
325
362
397
430
EBIT
150
175
195
222
Net profit
110
110
126
145
Y/E net debt
-183
-177
-219
-270
EPS (reported)
3.24
3.23
3.71
4.28
EPS (recurring)
3.24
3.23
3.71
4.28
DPS
0.86
0.96
1.12
1.30
14.6%
15.6%
16.1%
16.4%
EBIT margin
6.7%
7.5%
7.9%
8.4%
Dividend yield
3.5%
2.2%
2.6%
3.0%
10.3%
11.2%
11.7%
12.5%
FCF yield
0.8%
2.6%
5.4%
8.6%
EV/sales
0.4
0.7
0.6
0.5
EV/EBITDA
2.6
4.2
3.7
3.3
EV/EBIT
5.6
8.7
7.6
6.5
PER
7.7
14.0
12.1
10.5
EBITDA margin
ROCE
Ordinary shares:
Lange and Wolf families 100%
Preference shares
Free-float of 100%
Felix Wienen
+44 20 3207 7915
[email protected]
8 October 2013
 Company overview: Jungheinrich is the third-largest global
manufacturer of forklift trucks and with a market share of
c24% ranks second in Europe (c90% of sales). The company
specialises in warehouse equipment (ie high-rack lift trucks)
and logistics solutions (ie fork lifts and counterbalanced
trucks) and provides corresponding after-sales service. It
complements its product portfolio with a large rental fleet
(c26,000 units across Europe) and financing solutions for
new vehicle sales, thereby boosting the group’s turnover.
● Quality: One of Jungheinrich’s differentiating characteristics
is the company’s broad, direct distribution network, which
introduces high barriers of entry to the market. Through its
branches and with more than 3,600 technicians, Jungheinrich
serves the repair and maintenance needs of its large installed
base (c950,000 vehicles). This after-sales business (c30% of
group revenues) is highly profitable, generating margins of
c11% compared to c7% at group level. Furthermore, the
offered financing options for new vehicle purchases seem to
be highly valued by customers as the leasing rate of c40%
indicates. From a financial perspective, the company benefits
from a sound balance sheet with a stable equity ratio of c45%
(adjusted for leasing business; c30% including leasing).
● Growth: Jungheinrich will outgrow the sluggish European
forklift market in 2014/15 due to production increases at
new plants, market share gains from an improved product
portfolio and the good prospects for its logistics systems
segment. The recently opened plant in China will expand
capacity to 10,000 units and potentially lead to a doubling of
revenues in China to EUR120m by 2015. After years of
double-digit growth in logistics systems, this business has
reached critical mass at 25% of new equipment sales. Crossselling benefits and a sustainable competitive advantage over
peers will support revenue generation even in a stagnant
European forklift market.
● Valuation: Jungheinrich’s stock has performed strongly at
+50% ytd and has hence been re-rated to 14x P/E 2013E
versus the 10.4x historical average. While we see further longterm potential in the business case, the stock seems fairly
valued and we recommend to Hold with a price target of
EUR49. We value the company on an average of 2015 DCF
and target multiples discounted back to year-end 2013.
● Share catalysts: Despite no immediate catalysts in sight,
Jungheinrich continues to do well operationally and offers a
fundamentally sound investment case.
Sales split by product type
10.0%
2,500
8.0%
Sales (EUR)
3,000
2,000
6.0%
1,500
4.0%
1,000
2.0%
500
0
EBIT margin
0.0%
10
11
12
Sales (EUR)
13E
14E
15E
EBIT margin
New trucks
Rental
63
Used equipment
Service
Cross-Sector
Kapsch TrafficCom AG
8 October 2013
Buy
Current price
Price target
EUR 37.14
EUR 56.00
● Company overview: Kapsch is a family-owned business
EUR 453 m
KTCG
KTCG AV
Market cap
Reuters
Bloomberg
13
8,273
●
Y/E 31.03, EUR m
2012
Sales
2013E
2014E
2015E
550
489
608
663
EBITDA
61
35
66
91
EBIT
42
15
54
77
Net profit
21
19
30
45
Y/E net debt
99
47
72
44
EPS (reported)
1.62
1.28
2.31
3.44
EPS (recurring)
1.62
1.28
2.31
3.44
DPS
0.60
0.54
0.58
0.86
11.0%
7.1%
10.9%
13.8%
EBIT margin
7.7%
3.1%
8.9%
11.5%
Dividend yield
1.6%
1.4%
1.6%
2.3%
11.4%
4.1%
13.0%
16.2%
FCF yield
-10.0%
13.6%
-2.7%
8.5%
EV/sales
0.8
0.9
0.8
0.7
EV/EBITDA
7.6
13.2
7.0
5.1
EV/EBIT
10.9
30.1
8.5
6.0
PER
22.9
28.9
16.1
10.8
EBITDA margin
ROCE
●
Kapsch-Group Beteiligungs GmbH 64%
Capital Research 4.5%
+44 20 3207 7852
[email protected]
●
●
Sales (EUR)
600
500
400
600.0
30.0%
10.0%
500.0
25.0%
400.0
20.0%
300.0
15.0%
200.0
10.0%
100.0
5.0%
5.0%
300
200
0.0%
100
0
-5.0%
10
11
12
13
Sales (EUR)
14E
15E
EBIT margin
Recurring revenues
15.0%
EBIT margin
700
based in Austria. It is a market leader in the provision of
intelligent transportation systems (ITS) used for toll
collection, urban access management and traffic safety and
security. Kapsch is one of the few companies which provide
complete turnkey solutions (for hardware, and for managing
long-term tolling contracts). The company has around 280
references in 41 countries. Kapsch currently manages c10
long-term electronic toll collection contracts.
Quality: Kapsch has key reference accounts and landmark
deals in almost all regions globally: it is the operator of EZPass, the largest e-tolling contract in the US and is carrying
out large projects in South Africa, Austria, the Czech
Republic, Poland, Australia and Chile. It is also the only
company which has the technology platform for e-tolling via
both GPS via satellites and via dedicated short range
communications (DSRC). Its long-term contracts give
Kapsch recurring revenues with high profitability. Around
60% of the group revenues are recurring in nature. However,
the business has been hurt over the past 18 months due to
the delay in initiation of the toll-collection system in South
Africa and earlier by operating issues in Poland. The Polish
issue was later resolved but South African still lingers. In
South Africa, the initiation of an e-tolling system (which
Kapsch implemented) was delayed due to political
opposition. This meant that the company was incurring costs
and not generating any recurring revenues from the project.
The delay led to Kapsch making a loss in FY 2013. While the
South African project is scheduled to start soon, this issue
has highlighted the inherent operating risks in the business,
especially those involved in dealing in emerging markets.
Growth: Growth is driven by large, long-term contracts
awarded by governments. A typical contract would be
EUR200m-300m in size and would last around 10 years. The
timing of contracts is often uncertain. Consequently, growth
is often lumpy, taking a step up when the company wins a
large contract. The underlying ITS industry is expected to
grow by around 10% annually and is EUR12bn in size.
Valuation: Kapsch is trading on 16x next year’s P/E and our
price target of EUR56 is based on DCF.
Share catalysts: These would include new contract wins and
the start of the South African contract.
0.0
0.0%
2007
2008
2009
2010
2011
2012
Services, Sys Ext & Component Sales €m
64
2013
2014E 2015E
EBITmargin
Cross-Sector
KION Group AG
8 October 2013
Sell
Current price
Price target
EUR 28.00
EUR 24.00
● Company overview: KION is a global leader in the production
and after-sales service for forklift trucks. With sales of EUR4.5bn
(2012; ex-LHY) and a global market share of 15% (34% in
Europe), it is the global number two in industrial trucks, after
Toyota Material Handling. Besides new equipment at c58% of
sales, the company also offers rental trucks (c9.5%) and used
equipment (c5%). A large installed base of c1m forklift trucks is
the key driver for the group’s stable and defensive maintenance
and repair revenues that contribute c25% to the group.
Market cap
EUR 2,824 m
Reuters
KGX
Bloomberg
KGX GR
99
160,000
● Quality: At c142,000 produced trucks in 2012, KION benefits
Y/E 31.12, EUR m
2012
Sales
2013E
2014E
2015E
4,727
4,575
4,789
5,032
EBITDA
747
767
830
879
EBIT
438
415
453
484
Net profit
159
149
188
218
1,790
844
743
642
EPS (reported)
-
1.51
1.90
2.21
EPS (recurring)
-
1.51
1.90
2.21
DPS
-
0.38
0.57
0.77
15.8%
16.8%
17.3%
17.5%
EBIT margin
-
9.1%
9.4%
9.6%
Dividend yield
-
1.3%
2.0%
2.7%
11.4%
10.3%
10.7%
11.0%
FCF yield
-
6.3%
11.3%
16.8%
EV/sales
-
0.9
0.9
0.8
EV/EBITDA
-
5.4
4.9
4.5
EV/EBIT
-
10.1
9.0
8.2
PER
-
19.0
15.0
12.9
Y/E net debt
EBITDA margin
ROCE
from significant economies of scale in production and
procurement. This is further multiplied via a platform assembly
strategy. A wide after-sales network of own and third-party
distributors with more than 12,800 multi-skilled service staff
serve as the backbone for KION’s after-sales business. This
spare parts and after-sales service network is highly profitable,
generating margins significantly above the group level of 9%.
Furthermore, KION offers leasing solutions for new equipment
purchases which generally come with attached service contracts.
● Growth: With a market share of 34% in Europe (80% of sales),
KION is geared to a recovery in the European truck market
where volumes trend 25% below pre-crisis peaks. While large
markets have rebounded, Spain, Italy and other smaller countries
continue to lag. Low utilisation has extended truck lifecycles
during the crisis in these markets and we see no significant need
for replacement before 2015/16.
● Valuation: Since its IPO, the stock has performed broadly in line
with peers although it now trades at a slight premium to the
sector on 15x P/E 2014E. The 47% shareholding of
KKR/Goldman Sachs provides a further near-term risk and we
recommend to Sell with a price target of EUR24 based on the
average of a DCF and target multiples.
GS/KKR 47%
Weichai Power 30%
Management 5%
●
Felix Wienen
+44 20 3207 7915
[email protected]
Benjamin Glaeser
+44 20 3207 7918
[email protected]
Share catalysts: We are 16%/15% below a very broad
Bloomberg consensus net profit estimates and thus see downside
risk. The company will collect and distribute an updated
consensus with Q3 results in November which could result in
earnings downgrades.
12.0%
5,000
10.0%
Sales (EUR)
6,000
4,000
8.0%
3,000
6.0%
2,000
4.0%
1,000
2.0%
0
Sales split by product type
EBITA adj margin
Sales and EBITA adj margin development
0.0%
10
11
12
13E
Sales (EUR)
14E
15E
New trucks
Service
EBIT margin
65
Rental
Used equipment
Other
Cross-Sector
Klöckner & Co SE
8 October 2013
Hold
Current price
Price target
EUR 9.95
EUR 9.30
● Company overview: Klöckner is the largest independent
steel distributor in the European and North American market
combined. The majority of customers are small companies
which cannot source steel directly from steel mills and rely on
distributors such as Klöckner. Its average order size is around
EUR2,000 and its customer base is c170,000-strong.
Market cap
EUR 935 m
Reuters
KCOGn
Bloomberg
KCO GY
Y/E 31.12, EUR m
100
1,019,615
2012
Sales
2013E
2014E
6,656
7,210
7,428
62
132
218
251
EBIT
-103
27
112
154
Net profit
-195
-36
43
72
400
318
310
231
EPS (reported)
-1.95
-0.36
0.43
0.72
EPS (recurring)
-1.18
-0.24
0.43
0.72
0.00
0.00
0.00
0.00
0.8%
2.0%
3.0%
3.4%
-1.4%
0.4%
1.6%
2.1%
0.0%
0.0%
0.0%
0.0%
-3.1%
0.9%
3.7%
5.3%
FCF yield
9.8%
9.7%
0.8%
7.9%
EV/sales
0.2
0.2
0.2
0.2
23.8
10.7
6.5
5.3
-14.2
52.5
12.7
8.7
-7.5
-39.5
21.7
13.0
Y/E net debt
DPS
EBITDA margin
EBIT margin
Dividend yield
ROCE
EV/EBITDA
EV/EBIT
PER
significantly by decreasing steel prices. It cannot hedge
against these effects. An order period of 6-8 weeks followed
by an inventory turnover period of 60 days means that when
steel prices decline rapidly, as seen in 2011, windfall losses
will occur. The company then has to sell steel at levels far
below the purchase price. However, Klöckner has a strong
underlying balance sheet with large unused cash resources
from a capital increase in 2011, and can thus absorb the
negative results. Following extensive restructuring and
operating efficiency improvements, Klöckner is well
positioned to benefit from a better macro-economic situation
in Europe.
2015E
7,377
EBITDA
● Quality: Klöckner is highly cyclical and has been affected
● Growth: Klöckner generates around 63% of its sales in
Europe, and the overcapacity and price competition in the
market has therefore put a squeeze on margins. Klöckner will
thus struggle to reach its EBITDA margin target of 6% in the
foreseeable future. While we believe the bottom has been
reached, we do not expect a sustainable recovery until 2014.
Despite the negative market environment, Klöckner has a
solid financial position and will increasingly be looking to
acquire higher valued-add businesses.
● Valuation: We value the company using an average through-
cycle sector multiple of 6.5x which we apply to our 2014
EBITDA estimate which leads to a price target of EUR9.30.
Hold.
Interfer Holding: 7.82%
● Share catalysts: A catalyst for the stock could be any value-
Bjoern Lippe
+44 20 3207 7845
[email protected]
accretive acquisition. In addition, a sustainable positive trend
in steel prices should allow the company to maintain a more
stable earnings profile and thus have a positive effect on the
share price.
6,000
4.0%
700
3.0%
650
2.0%
4,000
1.0%
0.0%
2,000
0
10
11
12
Sales (EUR)
13E
14E
600
EBIT margin
Sales (EUR)
8,000
Steel prices (in EUR/t)
550
500
450
-1.0%
400
-2.0%
350
2010
15E
EBIT margin
2011
N. Europe HRC
Source: Bloomberg, Berenberg
66
2012
S. Europe HRC
2013
US HRC
Cross-Sector
Kontron AG
8 October 2013
Hold
Current price
Price target
EUR 4.84
EUR 4.00
● Company overview: Kontron is a global market leader for
EUR 269 m
KBCG
KBC GY
Market cap
Reuters
Bloomberg
56
125,649
●
Y/E 31.12, EUR m
2012
Sales
2013E
2014E
2015E
547
558
586
621
-8
8
23
37
EBIT
-32
2
17
30
Net profit
-33
0
12
21
Y/E net debt
-13
-7
-24
-23
EPS (reported)
-0.59
0.00
0.21
0.38
EPS (recurring)
-0.59
0.00
0.21
0.38
0.04
0.04
0.04
0.04
EBITDA margin
-1.4%
1.4%
4.0%
5.9%
EBIT margin
-5.9%
0.3%
3.0%
4.9%
0.8%
0.8%
0.8%
0.8%
-9.2%
0.5%
6.0%
10.5%
EBITDA
DPS
Dividend yield
ROCE
FCF yield
-
-
-
-
EV/sales
0.5
0.5
0.4
0.4
6.9
EV/EBITDA
-32.9
35.4
10.7
EV/EBIT
-8.0
171.7
14.5
8.4
PER
-8.2
993.3
22.8
12.8
●
Warburg Pincus 18.62%
Triton III 12.3%
+44 20 3207 7852
[email protected]
●
●
700
8.0%
6.0%
4.0%
2.0%
0.0%
-2.0%
-4.0%
-6.0%
-8.0%
Sales (EUR)
600
500
400
300
200
100
0
10
11
12
13E
Sales (EUR)
14E
Revenue by business segments (Q2 2013)
17%
EBIT margin
the production of specialist embedded microcomputer
systems used in devices like slot machines, industrial
equipment and vehicles (railways, aircraft and cars). The
global market for these embedded computers is cUSD4.5bn
and is fragmented, with Kontron, Emerson and GEFanuc
controlling c30% of the market with around a 10% share
each. The company has been in restructuring mode for the
past 18 months. Two private equity companies, Triton and
Warburg Pincus, hold a 31% stake in the company. The new
CEO, Mr Rolf Schwirz, is in the process of hiring a new
management team and restructuring the organisation.
Restructuring will involve closures of some plants,
rationalisation of product portfolio and aligning the business
to focus on growth areas and markets. The management
intends to generate costs savings of EUR40m per annum by
2016 through the restructuring plans.
Quality: While Kontron still has a dominant position in its
end-market, its business has been suffering over the past 18
months due to a multitude of factors. Firstly, it was hurt by
fiscal austerity measures in Europe, as around 15% of group
revenues came from European public entities. Secondly,
increased
competitive
intensity
in
areas
like
telecommunications damaged the margins in those sectors.
Thirdly, the company has struggled in its attempts to expand
geographically, especially in Asia. The current management
team believes that in the past the company has placed too
little focus on integrating the businesses it acquired and that
this created an inflated cost base.
Growth: Kontron is currently a “special situation” case in
our view. The company is in deep restructuring, a process
which includes a complete management overhaul. Given the
situation, there is limited visibility on the mid- to long-term
growth profile of the business. We are modelling for around
4.3% annualised growth in revenues over 2012-15.
Management is guiding for flat revenues in 2013. We think
once it has gone through these much-needed but difficult
restructuring steps, it will be a good acquisition target.
Valuation: Our price target of EUR4 is based on 1x tangible
book value.
Share catalysts: Key catalysts would include further clarity
on restructuring plans and evidence of these steps generating
some return.
22%
21%
21%
19%
15E
EBIT margin
Industrial
Communications
Multimarket
Kontron Ventures
67
Military/Avionics/Rail
Cross-Sector
Krones AG
Hold
Current price
Price target
EUR 63.15
EUR 57.00
Market cap
EUR 1,958 m
Reuters
KRNG.DE
Bloomberg
KRN GY
Y/E 31.12, EUR m
31
44,830
2012
Sales
EBITDA
EBIT
Net profit
2013E
2014E
2015E
2,664
2,771
2,826
2,883
169
259
279
299
92
179
200
221
67
130
145
160
Y/E net debt
-133
-239
-270
-296
EPS (reported)
2.22
4.17
4.67
5.15
EPS (recurring)
2.22
4.17
4.67
5.15
DPS
0.75
1.05
1.15
1.30
EBITDA margin
6.3%
9.3%
9.9%
10.4%
EBIT margin
3.5%
6.4%
7.1%
7.7%
Dividend yield
1.6%
1.7%
1.8%
2.1%
ROCE
8.5%
15.5%
16.7%
19.3%
FCF yield
1.3%
6.6%
3.4%
3.3%
EV/sales
0.4
0.7
0.6
0.6
EV/EBITDA
7.1
7.0
6.4
5.9
EV/EBIT
13.0
10.1
8.9
7.9
PER
18.5
15.1
13.5
12.2
8 October 2013
overview: Krones is the world’s leading
manufacturer of equipment and complete lines in process
technology, filling, bottling, canning, labelling and packaging of
beverages and food, and also in chemicals, pharmaceuticals and
cosmetics (90% of its sales are linked to the food and beverage
sector).
● Company
● Quality: In its niche, Krones holds a 25% global market share,
and is the global market leader, enjoying size and scale
advantages over its peers. Its dense global sales and distribution
network, as well as its high market shares in the emerging
markets (especially China) are another differentiation factor to
peers. We expect management to deliver on its promises and
turn around the two underperforming divisions (Process
Technology and KOSME), which is expected to lead to
sequential margin progression over the course of the next few
quarters.
● Growth: After years of strong growth in beverage capex
(breweries, milk processing), we expect a normalisation in the
next few years. Previous growth rates had been in part driven
by pent-up demand after under-investment from Krones’
beverage clients during the crisis. Further, we believe Krones
will be more selective on growth in order to counter
profitability concerns in a still depressed price environment.
● Valuation: Our price target of EUR57 is based on an average
of DCF and target multiples. On a forward P/E of 15x, the
stock trades at post-crisis highs, in our view suggesting a fair
valuation at the current share price level. Our more cautious
view and Hold rating is supported by EV/sales of 0.7x versus
an EBT margin of c6%.
● Share catalysts: We see the clearest catalyst in the quarterly
Kronseder family 53.7%
proof of management’s ability to turn around the loss-making
divisions. Further commentary on price improvements for
components or full bottling lines would be beneficial as market
prices have not seen an improvement from crisis levels.
Benjamin Glaeser
+44 20 3207 7918
[email protected]
3,000
Sales (EUR)
70
10.0%
8.0%
2,500
2,000
6.0%
1,500
4.0%
1,000
2.0%
500
0
5
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
60
50
EBIT margin
3,500
Price and consensus EPS development
40
30
20
10
0
0.0%
10
11
12
Sales (EUR)
13E
14E
15E
EBIT margin
Stock Price
68
EPS
Cross-Sector
KUKA AG
8 October 2013
Current price
Price target
EUR 32.92
EUR 33.00
Market cap
EUR 1,135 m
Reuters
KU2G.DE
Bloomberg
KU2 GY
34
120,400
●
Y/E 31.12, EUR m
2012
Sales
2013E
2014E
2015E
1,739
1,828
1,922
1,980
EBITDA
139
144
158
169
EBIT
110
117
127
135
56
65
73
93
-43
-47
-65
-110
EPS (reported)
1.64
1.92
2.14
2.74
EPS (recurring)
1.64
1.92
2.14
2.74
DPS
0.25
0.30
0.40
0.55
EBITDA margin
8.0%
7.9%
8.2%
8.5%
EBIT margin
6.3%
6.4%
6.6%
6.8%
Dividend yield
0.7%
0.9%
1.2%
1.6%
16.8%
15.8%
15.2%
16.8%
FCF yield
3.5%
1.1%
2.7%
5.3%
EV/sales
0.7
0.6
0.6
0.6
EV/EBITDA
8.5
8.2
7.3
6.6
EV/EBIT
10.7
10.0
9.1
8.2
PER
20.4
17.4
15.6
12.2
Net profit
Y/E net debt
ROCE
●
●
Grenzebach Maschinenbau 24.4%
Wyser-Pratte 4.7%
Rinvest 1.8%
Benjamin Glaeser
+44 20 3207 7918
[email protected]
●
Felix Wienen
+44 20 3207 7915
[email protected]
solutions for the automation of industrial production processes.
In terms of its automotive and general industry robotics
business (around 40% of sales), the company operates in a
global oligopoly and is Europe’s market leader. In addition, in
its systems business (around 60% of sales), it is the number two
supplier of body-in-white production lines in Europe as well as
in the US. KUKA’s quality in our view stems from its
technological leadership which builds on above-average R&D
investments (around 10% of Robotics division sales) and
knowledge transfer between its divisions.
Quality: The company benefits from OEMs (75% of its sales
are to the automotive industry) moving into emerging markets
leading to increased utilisation in the Robotics division.
Likewise, the more late-cyclical systems business (lead times of
9-12 months) has also improved profitability sharply and is
running at close to full utilisation. Stronger growth in highermargin general industry robots (driven by new product
introductions) should have positive mix effects mid-term. The
largest risk we see is currently from the strong yen devaluation
which benefits KUKA’s largest competitors Fanuc and
Yaskawa. Due to agreed pricing in the order backlog, this will,
however, only have an effect in 2014 at the earliest.
Growth: KUKA is investing in production in Europe and
China, targeting total capacity of 25,000 robots. It is addressing
general industry clients with lower payload robots which
increase its addressable market by c20%. While automotive
capex will not continue to expand at the rate of recent years, we
expect further growth in the next few years also to come from
the overhaul/renewal of existing Western market capacity.
Valuation: At 15x forward P/E, KUKA is trading at a
premium to our SMID cap industrials universe. Further, at
EV/sales of 0.6x versus operating margins of 6.4%, the share
appears fairly valued. Our price target is based on a blend of
DCF, SOTP and target multiples.
Share catalysts: Large scale automotive orders appear to be
the strongest immediate catalyst, in our view. A long speculated
deconsolidation of KUKA’s systems division (which could
warrant a rerating of the remaining business) appears less likely
in the short term.
6.0%
1,500
4.0%
1,000
2.0%
500
0
KUKA share price
2,000
Sales (EUR)
40
8.0%
EBIT margin
2,500
EPS consensus finding a plateau
0.0%
10
11
12
Sales (EUR)
13E
14E
2.5
2
30
1.5
20
1
0.5
10
0
0
15E
-0.5
2009
EBIT margin
2010
Price
69
EPS consensus
Hold
● Company overview: KUKA specialises in providing advanced
2011
2012
12m fwd EPS
2013
Cross-Sector
LEG Immobilien AG
8 October 2013
Buy
Current price
Price target
EUR 41.95
EUR 48.00
● Company overview: LEG owns around 90,000 apartments
in North Rhine-Westphalia (NRW), Germany’s most
populous federal state and also a region of high population
density, which also contributes 22% of Germany’s total
GDP. It is among the largest real estate players in NRW. The
company benefits from a predictable rental income stream
with some further upside potential.
Market cap
EUR 2,219 m
Reuters
LEGn
Bloomberg
LEG GR
53
560,000
● Quality: Having raised in-place rents by 2.3% annually
within a four-year period to end-H1 2103 and reduced
vacancy rates to 3.0% as of H1 2013, LEG has shown a
strong track record in portfolio management, considering the
fairly high number of rent-restricted units. With this, the
company has outperformed the underlying markets, which
also reflects its experienced management. We expect LEG to
continuously realise the upside in its portfolio, which is
under-rented by ~13% compared to market levels.
● Growth: Following its recent IPO, LEG has the right
Y/E 31.12, EUR m
2012
2013E
2014E
Total revenues
500
525
560
570
Net rents
500
522
558
567
net)
310
313
260
332
190
202
239
243
-17
92
122
129
Funds From
Operations (FFO)
137
143
161
167
EPS reported
5.20
3.51
2.46
3.78
FFO per share
2.58
2.71
3.04
3.15
DPS
0.41
1.76
1.98
2.05
NAV per share
39.38
40.76
42.11
42.84
NNAV per share
44.72
46.09
47.39
48.09
20.0
21.5
19.8
20.1
FFO yield
-
6.5%
7.3%
7.5%
P/FFO
-
15.5
13.8
13.3
Dividend yield
-
4.2%
4.7%
4.9%
P/NAV per share
-
-9%
-12%
-13%
P/NNAV per share
-
-9%
-12%
-13%
113%
117%
120%
125%
EV/EBITDA
Net gearing
platform in place to undertake external growth. Following the
recent acquisition of 2,200 units – which will contribute
around EUR1m to FFO I in 2013, LEG reiterated its target
to buy ~10,000 units by 2014. Of the 20,000 units currently
under review, some potential deals are “at advanced stages of
due diligence”.
2015E
Loan-to-value (LTV)
48%
49%
50%
51%
Implied yield
5.6%
5.0%
5.5%
5.5%
● Valuation: From a balance sheet perspective, LEG ticks the
relevant boxes with an average debt maturity of 11.5 years
based primarily on mortgages, an average cost of debt of
3.3%, no large expiries in the short term and a broadly
diversified group of lending banks. In combining sustainable
and predictable growth with “best-in-class” financial ratios
(low LTV at 48%) and payout levels, we regard LEG as an
attractive play, not least in the current low-yield environment.
The stock is now trading at a 9% discount to NAV 2013E
and a dividend yield of 4.2%.
●
Whitehall 41%; Perry Capital 9%; CBRE Clarion 4%
Share catalysts: Catalysts include i) portfolio acquisitions
and ii) Whitehall and Perry Capital to reduce their 50% stake.
Kai Klose, CIIA
+44 20 3207 7888
[email protected]
Estelle Weingrod
+44 20 3207 7931
[email protected]
580
45.0%
40.0%
35.0%
30.0%
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
Rents in EUR
560
540
520
500
480
460
440
10
11
12E
13E
Total rental income
14E
Geographical split
EBIT-margin in %
North
Rhine
Westphalia
100%
15E
EBIT margin
70
Cross-Sector
Leifheit AG
8 October 2013
Hold
Current price
Price target
EUR 29.60
EUR 33.00
● Company overview: Leifheit is a leading German player in
EUR 141 m
LEIG
LEI GY
Market cap
Reuters
Bloomberg
5
2,191
●
Y/E 31.12, EUR m
2012
Sales
2013E
2014E
2015E
224
223
231
239
EBITDA
21
19
21
23
EBIT
15
13
15
17
Net profit
9
8
10
11
-33
-41
-41
-41
EPS (reported)
1.98
1.73
2.03
2.32
EPS (recurring)
1.78
1.73
2.03
2.32
DPS
1.50
1.55
1.70
2.09
EBITDA margin
9.5%
8.7%
9.2%
9.7%
EBIT margin
6.5%
5.8%
6.5%
7.0%
Dividend yield
6.1%
5.2%
5.7%
7.1%
ROCE
9.5%
8.3%
9.4%
10.6%
FCF yield
-1.1%
8.8%
5.4%
6.3%
EV/sales
0.7
0.7
0.7
0.7
EV/EBITDA
7.1
8.0
7.3
6.7
EV/EBIT
10.3
12.0
10.5
9.3
PER
13.8
17.1
14.6
12.8
Y/E net debt
●
●
Home Beteiligungen: 50.3%
MKV Verwaltungs: 10.0%
Joachim Loh: 6.6%
Leifheit: 5.0%
●
Anna Patrice, CFA
+44 20 3207 7863
[email protected]
the niche sub-segments of durable consumer goods, such as
drying racks, ironing boards, floor and window cleaning
systems, kitchen goods and scales. It operates via two
divisions: Brand (80% of group sales) and Volume (20%).
Following the disposals of the Bathroom Furnishing, Ladder
and Bin businesses, and termination of the Dr Oetker licence
agreement, the company is focused on its two main brands –
Leifheit and Soehnle – within its Brand division, which is the
main growth driver of the company, while the Volume
division is the cash cow.
Quality: The company’s tight focus on core segments and
innovation has resulted in brand recognition for quality
products, durability and convenience, and leading market
positions (the number one in laundry and wellbeing in
Germany, and the number two in cleaning). The disposal of
non-core activities, its optimised production and logistical
structure, as well as optimised product portfolio led to an
improvement in ROCE from 2% in 2009 to 9% by 2012.
Growth: Exposure to western Europe leads to low singledigit top-line growth driven by a) market share gains in
Europe following the launch of an e-commerce channel and
a PoS excellence programme in February 2013, b) expansion
in key emerging markets, with clearly defined plan for Russia
and Poland in the short term and China and Turkey in the
mid-term. With its cost structure optimised and well
controlled, we expect operating leverage (with 50% of costs
being fixed) and the gross margin improvement to lead to the
targeted 8% in the mid-term.
Valuation is demanding at 14.6x P/E versus a 13x historical
average and a 12x peer group P/E. That said, the net cash
position accounts for almost 25% of the market cap and the
dividend yield of more than 5% is attractive. The limited
upside to our EUR33.0 CFRoEV 2014E-based price target
results in a Hold rating.
Share catalysts: Management changes at the board level and
a focus on key categories and countries within the
organisation are set to support earnings growth. New midterm targets to be released in November are likely to be a
positive catalyst, although the short-term outlook is subdued.
8.0%
Sales (EUR)
240
6.0%
230
220
4.0%
210
2.0%
200
190
Eastern
Europe
9%
EBIT margin
250
Sales split (EURm): exposure to mature markets
11
12
Sales (EUR)
13E
14E
Germany
43%
Central
Europe
28%
0.0%
10
Rest
5%
15E
France
15%
EBIT margin
71
Cross-Sector
Lotto24 AG
8 October 2013
Buy
Current price
Price target
EUR 4.01
EUR 8.50
● Company overview: Having been spun off from Tipp24 in
Market cap
EUR 80 m
Reuters
LO24n
Bloomberg
LO24 GR
20
47,771
●
●
Y/E 31.12, EUR m
2012
Sales
2013E
2014E
2015E
0
3
8
17
EBITDA
-4
-15
-17
-13
EBIT
-4
-15
-17
-13
Net profit
-3
-10
-12
-10
-11
-11
5
18
EPS (reported)
-0.15
-0.52
-0.62
-0.51
EPS (recurring)
-0.15
-0.52
-0.62
-0.51
0.00
0.00
0.00
0.00
EBITDA margin
-4573.1%
-597.3%
-202.3%
-75.9%
EBIT margin
-4603.2%
-598.5%
-202.6%
-76.2%
0.0%
0.0%
0.0%
0.0%
-27.2%
-45.7%
-54.8%
-50.9%
FCF yield
-4.2%
-17.3%
-20.5%
-16.5%
EV/sales
741.3
27.3
10.1
5.8
EV/EBITDA
-16.2
-4.6
-5.0
-7.7
EV/EBIT
-16.1
-4.6
-5.0
-7.6
PER
-22.0
-7.7
-6.4
-7.9
Y/E net debt
DPS
Dividend yield
ROCE
●
●
Oliver Jaster, 33.29%
Jens Schumann, 5.07%
Management, 0.65%
Gunnar Cohrs, CFA
+44 20 3207 7894
[email protected]
Registered customers (in thousands; accumulated)
120
50
0.0%
40
-1000.0%
30
-2000.0%
20
-3000.0%
40
10
-4000.0%
20
-5000.0%
0
0
12
13E
14E
15E
Sales (EUR)
16E
97
100
EBIT margin
Sales (EUR)
2012, the former leader in the German online lottery market,
Lotto24 has a first-mover advantage in Germany because it is
equipped with a) Tipp24’s IT infrastructure; b) Tipp24’s
marketing know-how; and c) sufficient financial resources to
invest significantly in marketing (compared with smaller
competitors).
Quality: As the product is undifferentiated (ie the same draw
and the same prizes each time) it is critical, in our view, that
Lotto24 gains a large customer base as quickly as possible.
Lotto24 has proven its competitive edge by being among the
first private companies to be granted a licence to broker
lottery tickets online (for five years) and to advertise on the
web (for two years). Its large financial resources will enable
Lotto24 to invest significantly in marketing (compared with
its smaller competitors) in order to grow its customer base.
Growth: At the end of June, Lotto24 had 97,000 customers.
We expect much stronger growth in H2, given the
continuation of TV and online activities (many of the new
partnerships and affiliated websites were only activated
during the course of Q2). On 24 July, Lotto24 also launched
its search-engine marketing on Google and went live with its
first AdWords campaigns.
Valuation: We value the company based on DCF with a
price target of EUR8.50. Lotto24 is a start-up with all the
risks and opportunities which that entails (eg strong growth
potential in an untapped market, start-up losses, further
capital needs and a changing competitive landscape). At
present, we prefer Tipp24 to Lotto24 due to the former’s
established customer base, which makes it less vulnerable to
new market participants.
Share catalysts: In September, Lotto24 issued 5.988m new
shares at EUR3.00 in a rights offering. It will mainly use the
gross proceeds of cEUR18m to fund customer growth. We
believe the amount will be insufficient to achieve break-even.
Jumbo Interactive recently announced its entry into the
market. We see Jumbo as a serious competitor to Lotto24
given its 13 years of experience in Australia and a cash
position net of customer funds of AUD17m.
80
60
44
30
6
Q.II 12
17E
11
Q.III 12
EBIT margin
72
Q.IV 12
Q.I 13
Q.II 13
Cross-Sector
MAN SE
8 October 2013
Sell
Current price
Price target
EUR 88.11
EUR 80.89
● Company overview: MAN effectively has three main segments.
Around 55% of revenues come from a European/global
truck/bus business (H113 EBIT margin: 0.8%), around 25%
from power engineering (including diesel engines for ships) and
around 20% from trucks/buses in Latin America, mainly in
Brazil and marketed under the VW brand (H113 EBIT margin:
6.8%). MAN has around a 17% share of the European truck
market (GVW over 6 tonnes) after 8M 2013, but this is down by
c100bp yoy. Its share in Germany is c29% but it lost some 200bp
of share in the first seven months of 2013. In Brazil, MAN has a
c27% share of the over GVW 6 tonnes truck market.
Market cap
EUR 12,013 m
Reuters
MANG
Bloomberg
MAN GY
147
268,434
● Quality: The peak EBIT margin was 12.2% in FY07 but end-
Y/E 31.12, EUR m
2012
Sales
15,772
15,750
16,800
17,500
1,087
1,003
1,655
1,880
EBIT
623
490
1,180
1,400
Net profit
177
127
628
796
EBITDA
Y/E net debt
2013E
2014E
markets are weak and MAN had a one-off charge of EUR290m
in H113 as a result of unexpected costs (including overrun
penalties) on projects in its power engineering/power plant
business. We assume a group EBIT margin in 2013E of 3.1%:
with no one-offs and a recovery, this should rise to 8.0% in
2015E.
2015E
3,932
3,869
3,709
3,511
EPS (reported)
3.05
3.69
5.56
6.90
EPS (recurring)
1.20
0.86
4.27
5.41
DPS
1.00
0.38
1.74
2.20
EBITDA margin
6.9%
6.4%
9.9%
10.7%
EBIT margin
4.0%
3.1%
7.0%
8.0%
Dividend yield
1.2%
0.5%
2.1%
2.7%
ROCE
4.9%
3.7%
9.0%
10.4%
FCF yield
-6.5%
1.6%
1.7%
3.5%
EV/sales
1.0
1.0
1.0
0.9
EV/EBITDA
15.2
16.3
9.7
8.4
EV/EBIT
26.5
33.4
13.6
11.3
PER
26.8
22.1
14.7
11.9
● Growth: 2013 is a tough year with the European heavy truck
market down by 8% after eight months. MAN has lost share ytd
in Europe and Brazil. Orders in Europe were however up yoy in
July and August and are probably up in Q3. We expect growth in
the truck markets in Europe and Brazil each year in 2014-16E.
Pricing has stabilised in Europe but in Brazil, MAN and others
are still struggling to pass on the c10% price hike needed to
compensate for the higher cost Euro 5 truck changed from Euro
3 at start of 2012.
● Valuation: VW has made an offer of EUR80.89/share for the
c25% of MAN ordinary shares it does not already own (same
offer for MAN prefs). This is c8% below the current price.
Shareholders can either take this or accept EUR3.07 a share,
theoretically to perpetuity – a 3.5% dividend yield. The offer will
close after all legal disputes on the valuation are resolved – some
have already been tabled and these may last years. Investors will
receive notice of when the offer will close. We see little upside
potential and we advocate investors sell the shares in the market
(close as of 27 September: EUR88.0). We believe VW prefs offer
a 3.8% 2014E dividend yield and c4.9% on 2015E.
Volkswagen 75.03%
Adam Hull
+44 20 3465 2749
[email protected]
● Share
catalysts: MAN’s profits are of relatively little
significance. Of more importance are the legal cases to some
degree, and any dramatic change in VW’s perceived ability to pay.
MAN H1 2013 revenue and EBIT by segment
10.0%
4,000
17,000
8.0%
3,500
16,000
6.0%
15,000
4.0%
14,000
2.0%
13,000
0.0%
10
11
12
Sales (EUR)
13E
14E
15E
EBIT margin
EBIT margin
Sales (EUR)
4,500
18,000
(2) Lat Am Trucks 6.8% EBIT
margin, below recent years due to
higher cost Euro 5 trucks but should
rise in 2014-15E
3,000
(1) 55% of
H113 revs but
only €35m
EBIT in as
EBIT margin
only 0.8%
2,500
2,000
1,500
1,000
100
50
0
-50
-100
-150
-200
500
0
-250
MAN Truck and Bus (ex
LatAm)
MAN Lat Am Trucks
H113 revs, columns left axis (€m)
H113 EBIT, line right axis (€m)
(3) Power Engineering had
€193m loss in H1 2013
150
73
MAN Power Engineering
Cross-Sector
Mayr-Melnhof Karton AG
8 October 2013
Buy
Current price
Price target
EUR 82.10
EUR 92.00
● Company overview: Mayr-Melnhof Karton (MMK) is
an integrated producer of cartonboard and packaging for
fast-moving consumer goods (FMCG). With no exposure
to the ailing paper industry – unlike its peers – its
business focus is more favourable to MMK than to most
of its direct industry peers. We believe its highly
defensible returns (a 20% cash adjusted ROCE) are based
on its scale, focus on price over volume and expansion
into higher-margin boards.
EUR 1,771 m
MMKV
MMK AV
Market cap
Reuters
Bloomberg
20
15,000
● Quality: Due to its strong exposure to volume FMCG’s
2011
Sales
2012
2013E
2014E
2014E
1,960
1,952
1,980
2,029
2,029
EBITDA
255
252
273
289
289
EBIT
171
166
180
196
196
Net profit
118
119
125
137
137
Y/E net debt
-216
-184
-359
-443
-443
EPS (reported)
5.89
5.91
6.24
6.81
6.81
EPS (recurring)
5.89
5.91
6.24
6.81
6.81
DPS
2.10
2.25
2.25
2.40
2.40
13.0%
12.9%
13.8%
14.3%
14.3%
EBIT margin
8.7%
8.5%
9.1%
9.7%
9.7%
Dividend yield
2.4%
2.6%
2.5%
2.7%
2.7%
14.1%
13.0%
14.0%
14.2%
14.2%
FCF yield
-
2.4%
8.3%
8.2%
-
EV/sales
0.8
0.8
0.7
0.7
0.7
EV/EBITDA
6.4
6.1
5.4
4.8
4.8
EV/EBIT
9.5
9.1
8.2
7.1
7.1
15.1
14.8
14.2
13.0
13.0
EBITDA margin
ROCE
PER
● Growth: We see most growth potential for MMK in the
continued expansion of its Packaging business into
emerging markets. In addition to its acquisition strategy,
MMK is investing in green and brownfield projects in
order to increase its footprint in target markets. Since
2000, Packaging has grown by a CAGR of 6% while the
Cartonboard division’s output was largely stable.
● Valuation: Our EUR92 price target is DCF-based and
reflects the margin stability and sustainable growth of the
business. At a forward EV/EBIT 7.9x, MMK is trading
at a slight discount to historical averages.
59% family owned
Bjoern Lippe
+44 20 3207 7845
[email protected]
● Share catalysts: The share has proven very defensive,
without major movements based on quarterly results.
Newsflow of larger acquisitions would be the clearest
catalyst in the short term, also as they would allow for a
more efficient use of the large net cash position.
Continued efficiency gains
10.0%
2,000
9.5%
1,900
9.0%
1,800
8.5%
1,700
8.0%
1,600
7.5%
10
11
12
Sales (EUR)
13E
14E
800
Capacity in kg
2,100
EBIT margin
Sales (EUR)
EBIT margin
1.6
700
1.5
600
1.4
500
400
15E
1.7
1.3
2005 2006 2007 2008 2009 2010 2011
Capacity per Employee in Karton
74
Capital turn
Y/E 31.12, EUR m
demand for cartonboard and folding boxes is very stable
and its performance is largely tied to GDP development.
Growth above the European GDP rate will, in our view,
be driven by further expansion into emerging economies,
as the potential for market share gains in developed
Europe are limited. The company has a spotless M&A
track record following a cautious but very sustainable
approach to entry into new markets. After consolidating
much of the European packaging industry, MMK has set
its focus on emerging markets in Latin America, eastern
Europe and Turkey. A substantial net cash position lends
MMK flexibility.
1.2
Capital turnover
Cross-Sector
MIFA Mitteldeutsche Fahrradwerke AG
Buy
Current price
Price target
EUR 6.60
EUR 8.50
8 October 2013
overview: MIFA is the largest bicycle
manufacturer in Germany in terms of volume, producing
every fourth bicycle sold in Germany (a total of 546,000
bicycles in 2012). Its product portfolio ranges from comfort
and sports bicycles to electric bicycles. Until 2012, MIFA was
mainly active as a white-label producer for large food/nonfood retail chains such as Aldi and Metro. However, since
2012, it has broadened its product range by acquiring highpremium brands (such as Grace and Steppenwolf) to address
the independent dealer market.
● Company
Market cap
EUR 68 m
Reuters
FW1G
Bloomberg
FW1 GF
10
41,167
● Quality: MIFA’s product quality does not make it stand out
Y/E 31.12, EUR m
2012
Sales
2013E
2014E
2015E
111
134
140
149
EBITDA
6
10
11
12
EBIT
3
8
9
10
Net profit
1
4
5
5
40
28
26
25
EPS (reported)
-0.23
0.39
0.48
0.56
EPS (recurring)
0.13
0.39
0.48
0.56
DPS
0.00
0.00
0.00
0.00
EBITDA margin
5.7%
7.6%
8.0%
8.1%
EBIT margin
2.6%
5.8%
6.6%
6.8%
Dividend yield
0.0%
0.0%
0.0%
0.0%
ROCE
4.0%
12.0%
13.3%
14.1%
FCF yield
-31.1%
-8.5%
4.2%
3.0%
EV/sales
0.9
0.7
0.7
0.6
EV/EBITDA
15.9
9.2
8.2
7.5
EV/EBIT
34.9
12.0
9.9
8.9
PER
55.1
17.1
13.8
11.9
Y/E net debt
from its competition, but its production process is one of the
most cost-efficient in Europe. It is the only company in the
world that has a fully automated process for fitting spokes to
wheels. Manufacturing is concentrated on one site and the
company produces five bicycles per minute, giving MIFA a
clear advantage compared with its competitors. It has labour
costs of around EUR18 per bicycle, which is significantly
below other competitors’, including Chinese imports.
● Growth: The strategic move to add high-premium brands to
its portfolio will not only raise MIFA’s average bicycle prices
but will also help to address a completely new customer
group that is willing to pay for better quality/design (the
“Apple generation”). Moreover, as Grace is also the producer
of the Smart electric bicycle (for the car producer Daimler),
MIFA has entered the growing electric bicycles sector with a
brand that appeals to younger people. This will differentiate it
in a market that has so far been dominated by demand from
older people. MIFA aims to double its sales to EUR200m by
2016.
● Valuation: We value the stock based on DCF deriving a
price target of EUR8.50. 14x P/E 2014E does not look
expensive for a double-digit growth profile.
Carsten Maschmeyer, 28.05%
Peter Wicht, 24.53%
AFM Holding GmbH, 3.87%
● Share catalysts: Expansion in the electric bicycle market is
Anna Patrice, CFA
+44 20 3207 7863
[email protected]
the major driver for both the top and bottom line and
newsflow on development of the Smart electric bicycle will in
our view be a major share driver.
Number of e-bikes sold in Germany and Europe
200
8.0%
150
6.0%
100
4.0%
50
2.0%
0
0.0%
10
11
12
Sales (EUR)
13E
14E
1,200,000
1,000,000
EBIT margin
Sales (EUR)
800,000
600,000
400,000
200,000
0
15E
2005 2006 2007 2008 2009 2010 2011 2012
EBIT margin
Germany
Europe
Source: German Two-Wheeler Industry Association (ZIV)
75
Cross-Sector
MTU Aero Engines Holding AG
Hold
Current price
Price target
EUR 69.00
EUR 69.00
manufacturer. The group designs, develops, manufactures
and markets commercial and military engine modules and
components. MTU is also the world’s largest independent
provider of commercial aero engine maintenance services
(MRO). The group hold strong positions on Airbus and
Boeing aircraft. MRO accounts for 37% of sales; Military
accounts for 12% and Commercial 51%.
EUR 3,395 m
MTXGn
MTX GY
Market cap
Reuters
Bloomberg
8 October 2013
● Company overview: MTU is Germany’s leading aero engine
51
138,291
● Quality: MTU holds defined risk- and revenue-sharing
Y/E 31.12, EUR m
2012
Sales
2013E
2014E
2015E
3,379
3,740
4,039
4,397
EBITDA
445
484
544
604
EBIT
300
330
379
426
Net profit
174
202
235
266
Y/E net debt
458
484
484
484
EPS (reported)
4.61
4.52
5.03
5.50
EPS (recurring)
3.43
3.98
4.63
5.25
DPS
1.24
1.41
1.64
1.85
13.2%
12.9%
13.5%
13.7%
EBIT margin
8.9%
8.8%
9.4%
9.7%
Dividend yield
2.0%
2.1%
2.4%
2.8%
ROCE
13.2%
12.3%
13.4%
19.3%
FCF yield
-3.9%
1.7%
2.1%
2.2%
EV/sales
1.2
1.2
1.1
1.0
EV/EBITDA
9.3
9.3
8.3
7.5
EV/EBIT
13.8
13.6
11.9
10.6
PER
13.1
14.8
13.3
12.2
EBITDA margin
positions on key engine types with leading aero engine
OEMs, which create powerful barriers to entry. Its main
competences are in turbines and compressors. Important
engines that will drive growth are the GP7000 (22.5%), the
V2500 (16%) and the GEnx (6.6%). Spares demand from the
rising installed base of engines creates profitable revenue
stream supporting margin expansion. Military revenues are
driven by MTU’s close relationship with the German air
force, while the outlook for the MRO business is
underpinned by rising flying activity and overhaul capabilities
in Europe and China.
● Growth: The civil aerospace industry is a growth sector,
driven by increased flying activity globally. Due to good
platform exposure and rising end-markets, MTU aims to
double revenue between 2013 and 2020. While Military is
likely to be flat, this should be offset by a c10% CAGR at
MRO and a c12% CAGR at Civil over the coming seven
years. In the medium term, as mix improves, MTU aims to
lift operating margins from 8% in 2013 into the 12-14%
range.
● Valuation: Following the 20%+ cut to 2014 EPS forecasts,
MTU’s valuation appears fully up with events, in our view. At
1.2x EV/sales for a current year 8-9% adjusted EBITA
margin, the shares continue to discount growth and margin
recovery. Our price target is based on an average of 2015
DCF and target multiples discounted back to year-end 2013.
Treasury shares 2.6%
William Mackie
+44 20 3207 7837
[email protected]
● Share catalysts: Following the Q2 2013 profit warning,
MTU must assure investors that the group is back on track
for 10%+ margins. The first update will be the company’s
capital markets day on 26 November.
Geographic split
12.0%
4,000
11.5%
Sales (EUR)
5,000
11.0%
3,000
10.5%
2,000
10.0%
1,000
EBIT margin
9.5%
0
9.0%
2010 2011 2012 2013E 2014E 2015E
Sales (EUR)
EBIT margin
Europe
Germany
Asia/Pacific
ROW
76
Americas
Cross-Sector
Nemetschek AG
8 October 2013
Buy
Current price
Price target
EUR 45.02
EUR 57.00
● Company overview: Nemetschek is a leading European
provider of building information modelling (BIM) software for
the architecture, engineering and construction (AEC) sector.
Nemetschek company comprises 11 brands, which operate
independently in the market and serve more than 300,000
customers in 142 countries. While its focus is on the design
phase of construction projects with its flagship applications
ArchiCAD, Allplan and Vectorworks, it also offers services for
the later stages of such projects.
Market cap
EUR 435 m
Reuters
NEKG
Bloomberg
NEM GY
10
6,189
● Quality: Our positive stance is based on our top-down analysis,
Y/E 31.12, EUR m
2012
Sales
2013E
2014E
2015E
175
189
208
230
EBITDA
41
45
51
57
EBIT
29
34
44
50
Net profit
19
24
31
35
-42
-55
-78
-102
EPS (reported)
2.35
2.86
3.32
3.80
EPS (recurring)
1.96
2.44
3.20
3.67
DPS
1.15
1.15
1.20
1.37
EBITDA margin
23.3%
24.0%
24.6%
24.9%
EBIT margin
16.6%
18.2%
21.2%
21.9%
Y/E net debt
Dividend yield
2.5%
2.7%
3.0%
3.2%
19.0%
19.9%
21.9%
21.3%
FCF yield
7.0%
5.9%
8.1%
8.5%
EV/sales
2.2
2.1
1.9
1.7
EV/EBITDA
9.6
8.7
7.7
6.9
EV/EBIT
13.5
11.5
8.9
7.8
PER
19.2
15.8
13.6
11.9
ROCE
which suggests that the construction industry will gain
momentum and that the digitisation trend will continue to
grow. Besides dramatic efficiency gains for the construction
industry, the implementation of BIM also serves the secular
trend of sustainable construction. We expect an increased level
of IT capex within the construction industry, used for
replacement/update investments of existing 2D/3D CAD
solutions, which will lead to increasing, high single-digit growth.
This is especially true for the under-penetrated European
market. Our bottom-up approach further reveals that
Nemetschek’s open-platform strategy gives the company an
advantageous starting position versus competitor Autodesk’s
focus on its closed ecosystem to successfully penetrate markets.
● Growth: There was lighter licence growth in both quarters of
H113 than both consensus and we expected, which was only
partially offset by stronger maintenance growth as Vectorworks
and Maxon implemented the offering of maintenance contracts
later than the group’s other brands. As a result, the top line was
up by only 4.8% yoy, with licences and maintenance up 0.7%
and 9% respectively, which led to a guidance adjustment to the
lower end of 6-9% on the Q2 call.
● Valuation: Currently trading at 13.6x our 2014E adjusted
Nemetschek family: 53.6%
earnings and on 1.9 x EV/2013E sales, we believe that
Nemetschek is undervalued on the basis of its long-term free
cash flow generation potential.
Sebastian Grabert
+44 20 3207 7834
[email protected]
● Share catalysts: These would include 1) M&A activities
expected in the course of 2013 (US/Asia), 2) after the
announcement of the collaboration of Nemetschek’s Maxon
with Adobe, possible collaboration with another larger software
vendor in H2 or beyond, 3) CABR Technology in China – next
candidate for the OpenBIM initiative
250
25.0%
200
20.0%
150
15.0%
100
10.0%
50
5.0%
0
0.0%
11
12
13E
Sales (EUR)
14E
Geographical split
Germany
EBIT margin
Sales (EUR)
Austria
Switzerland
Rest of the world
15E
EBIT margin
77
Cross-Sector
NORMA Group AG
8 October 2013
Buy
Current price
Price target
EUR 35.21
EUR 36.00
● Company overview: NORMA Group is the largest producer
of joining components such as clamps, connectors and
thermoplastic fluid systems for the automotive industry (c55%
of sales) and other industrial applications. From its product
portfolio of around 35,000 products, c1.1bn units were sold last
year to approximately 10,000 clients in more than 80 countries.
NORMA’s distribution channels vary by division: in the
Engineered Joining Technology division (c66% of sales), tailormade joining products are directly distributed to customers,
while Distribution Services (c34% of sales) offers more
standardised products through wholesalers and other
independent distributors.
Quality: While NORMA’s products might appear trivial at first
glance, they are often mission-critical components for the
group’s customers, despite only making up a fraction of the
total end-product value (usually 0.1-0.5%). Being the largest
supplier in its mostly fragmented, niche markets, NORMA
achieves market shares of 5-15%, making it more than twice the
size of its closest peer.
Growth: We anticipate that NORMA will be able to regain
growth momentum in 2014 and beyond, driven by 1) tightening
emission regulation (especially the introduction of Euro 6
regulations); 2) the continuation of the group’s expansion into
new geographies (ie Asia-Pacific, Brazil) and end-markets; and
3) further consolidation of its highly fragmented niche market
(there is the potential to add more than 2% pa to top-line
growth, which is not reflected in our estimates).
DCF and target multiples. Despite better margins, returns and
M&A track record NORMA continues to trade at a discount to
through cycle average valuation of ElringKlinger. With close to
double digit organic growth over the next two years and
EBITDA margins north of 20% NORMA deserves a further
rerating in our view.
Share catalysts: We see the strongest further catalyst in
improving European car production which is not reflected in
consensus estimates and would thus lead to earnings upgrades.
While we do not expect large scale acquisitions NORMA’s
value accretive small scale M&A activity leaves further upside to
market estimates.
Market cap
EUR 956 m
Reuters
NOEJ.DE
Bloomberg
NOEJ GY
32
75,500
●
Y/E 31.12, EUR m
2012
2013E
2014E
2015E
Sales
605
649
718
773
EBITDA
121
133
149
164
EBIT
94
107
122
135
Net profit
57
64
77
86
Y/E net debt
174
127
58
43
EPS (reported)
1.78
2.01
2.41
2.71
EPS (recurring)
1.91
2.14
2.54
2.84
DPS
0.70
0.83
0.96
1.08
EBITDA margin
20.0%
20.5%
20.8%
21.2%
EBIT margin
15.6%
16.5%
16.9%
17.4%
3.7%
2.8%
3.2%
3.6%
17.1%
18.3%
19.4%
20.1%
FCF yield
5.6%
8.5%
6.1%
7.1%
EV/sales
1.3
1.7
1.4
1.3
EV/EBITDA
6.6
8.2
6.9
6.2
8.4
10.2
8.5
7.6
10.0
14.0
11.8
10.5
Dividend yield
ROCE
EV/EBIT
PER
●
●
Management c.3%
Benjamin Glaeser
+44 20 3207 7918
[email protected]
●
Felix Wienen
+44 20 3207 7915
[email protected]
20.0%
Sales (EUR)
800
600
400
15.0%
Engineered Joining Technology
- direct sales -
Distribution Services
- indirect sales -
10.0%
Tier / JIT suppliers
Large general distributors, direct trade
5.0%
200
EBIT margin
1,000
One product – two ways to market
Large specialised distributors
Small/medium general vs. specialised distributors
0
0.0%
10
11
12
13E
Sales (EUR)
14E
Industrial OEMs
15E
EBIT margin
78
Industrials customers, wholesalers, tradesmen, DIY
Cross-Sector
OSRAM Licht AG
8 October 2013
Buy
Current price
Price target
EUR 34.85
EUR 37.00
● Company overview: OSRAM is the only pure-play global
lighting company, holding the number one or number two
positions in most markets, with a portfolio of traditional
lighting products and solutions complemented by a leading
portfolio of LED chips and packages. OSRAM is present
along the lighting value chain, with well balanced revenues
spread between EMEA (41%), the Americas (35%) and AsiaPacific (24%). The group’s 39,000 employees are split
between four divisions: Lamps & Components (LC; 49%),
Opto Semiconductors (OS; 16%), Speciality Lighting (SP;
25%) and Luminaires & Solutions (L&S; 10%).
Market cap
EUR 3,068 m
Reuters
OSR
Bloomberg
OSR GY
105
0
● Quality: OSRAM is a world-leading lighting company and
Y/E 31.12, EUR m
2012
Sales
2013E
2014E
2015E
5,400
5,314
5,446
5,629
EBITDA
659
634
699
781
EBIT
238
369
426
500
-392
48
211
319
270
14
-177
-568
EPS (reported)
-
0.47
2.02
3.06
EPS (recurring)
-
2.38
2.85
3.48
DPS
-
0.00
0.81
1.22
12.2%
11.9%
12.8%
13.9%
4.4%
6.9%
7.8%
8.9%
-
0.0%
2.8%
4.2%
ROCE
11.7%
15.0%
15.9%
16.2%
FCF yield
-6.5%
2.9%
5.2%
8.4%
EV/sales
-
0.6
0.5
0.4
EV/EBITDA
-
4.9
4.2
3.2
EV/EBIT
-
8.4
6.8
5.1
PER
-
12.3
10.2
8.4
Net profit
Y/E net debt
EBITDA margin
EBIT margin
Dividend yield
has close distributor relations. OSRAM is the global number
one supplier of automotive lighting products and systems
and a global leading producer of high power LED chips and
components. Group profitability is driven by c15% margins
within Speciality Lighting and 13%+ margins within LED.
Group margin development will hinge on turnaround at
Lamps & Luminaires.
● Growth: The lighting market is expected to grow at a 4%
CAGR 2011-2020, driven by rising demand for solid state
lighting (SSL), which will more than offset lower demand for
traditional lighting. OSRAM’s mix of SSL (25%), green
(47%) and basic (28%) technologies means that the company
should be able to at least grow inline with the market.
● Valuation: At 0.5x EV/sales and 10x P/E for 2014, versus a
target margin of more than 8%, through-the-cycle, OSRAM
remains good value. Our 2013 target price of EUR37 is
derived from a 2015 objective discounted to year-end 2013.
We use target multiples and DCF to reach the 2015 valuation
target.
Siemens 17%
Siemens pension fund 2.5%
● Share
catalysts: Over the next 12 months, share
performance will hinge on success executing the EUR1bn
cost savings programme. FY 2013 results in early November
will see OSRAM set out 2014 objectives for the first time,
creating a framework for 2014 earnings expectations.
William Mackie
+44 20 3207 7837
[email protected]
Split of value by division
14.0%
5,000
12.0%
Sales (EUR)
10.0%
4,000
8.0%
3,000
6.0%
2,000
4.0%
1,000
L&S 5%
L&C 23%
EBIT margin
6,000
SP 50%
2.0%
0
0.0%
10
11
12
Sales (EUR)
13E
14E
15E
OS 22%
EBITA margin adj.
79
Cross-Sector
Palfinger AG
8 October 2013
Buy
Current price
Price target
EUR 27.95
EUR 30.00
● Company overview: Palfinger is an international manufacturer
of hydraulic lifting, loading and handling systems. Its core
products are knuckle-boom cranes, in which the company has a
global market share of more than 35% and ranks as the global
market leader. In order to decouple from its dependence on the
construction industry, management has embarked on an
external growth path directed towards internationalisation and
product diversification, with the latter process now considered
complete. Since 2007, more than EUR240m in sales have been
acquired via M&A, primarily in truck-mounted lifting platforms
and in the US. In 2010, Palfinger entered the marine cranes
market through two takeovers. With the diversification strategy
concluded, management’s focus is now on internationalisation.
Market cap
EUR 829 m
Reuters
PALF.VI
Bloomberg
PAL AV
35
245,709
● Quality: Palfinger is a significant player in truck-mounted
Y/E 31.12, EUR m
2012
Sales
2013E
2014E
2015E
935
999
1,068
1,127
EBITDA
94
133
148
163
EBIT
68
105
125
142
Net profit
40
71
84
93
Y/E net debt
225
219
214
208
EPS (reported)
1.14
2.01
2.36
2.63
EPS (recurring)
1.14
2.01
2.36
2.63
DPS
0.38
0.66
0.78
0.87
EBITDA margin
10.0%
13.3%
13.9%
14.4%
EBIT margin
7.3%
10.5%
11.7%
12.6%
Dividend yield
2.3%
2.5%
2.9%
3.2%
10.4%
13.6%
14.6%
15.3%
FCF yield
1.7%
4.9%
5.5%
6.0%
EV/sales
0.9
1.2
1.1
1.1
EV/EBITDA
9.3
9.1
8.2
7.4
EV/EBIT
12.8
11.6
9.7
8.5
PER
15.1
13.4
11.4
10.3
ROCE
cranes, and enjoys a dominant 35% global market share in
knuckle-boom cranes. Its dense sales and service network and
long-standing customer relationships allow it to stand out
against peers. Margins would greatly benefit from a pick-up in
European and North American construction, with both
businesses having considerable operating leverage.
● Growth: Palfinger should be able to grow its business in the
next few years due to its highly diversified product portfolio
and its increasing exposure to emerging markets, especially
China. Its JV with Sany Heavy Industries for truck-mounted
cranes in China is targeted to double in size in each of the next
three to four years. In addition to China, India and Brazil also
present significant growth opportunities for the company.
● Valuation: Our price target of EUR30 is based on an average
of DCF and target multiples. On EV/sales of 1x versus an
EBIT margin of 12% in 2014E, and on consensus forward P/E
of 14x versus an historical average of around 16x, the stock
does not appear overly expensive.
Palfinger family 65%
Treasury shares 1%
Benjamin Glaeser
+44 20 3207 7918
[email protected]
● Share catalysts: Next to the announcement of large
acquisitions (eg in Russia, and in the marine space), we see
improvement in European and North American construction
markets as the clearest catalyst for Palfinger. Further, the
historical correlation between new truck registrations and
Palfinger sales is more than 90%.
Felix Wienen
+44 20 3207 7915
[email protected]
EU truck registrations versus sales
1,200
14.0%
1,000
12.0%
10.0%
800
8.0%
600
6.0%
400
4.0%
200
EBIT margin
Sales (EUR)
2.0%
0
0.0%
10
11
12
13E
Sales (EUR)
14E
15E
EBIT margin
80
Cross-Sector
Patrizia Immobilien AG
8 October 2013
Buy
Current price
Price target
EUR 7.42
EUR 8.50
● Company overview: Patrizia is a real estate investment
house and is offering a broad range of services. The focus
has shifted from own properties towards asset and funds
management for third-parties. Currently, AuM amount to
EUR10.2bn, up from EUR2.7bn in 2010. About EUR0.6bn
of this figure is the company’s own portfolio (which consists
of ~5,300 apartments), EUR4.9bn is managed for thirdparties and EUR4.7bn is made up of co-investments. All of
Patrizia’s key functions are managed in-house. While it has
broadened its regional diversification on a pan-European
basis in recent years, almost 80% of assets are still located in
Germany.
Market cap
EUR 426 m
Reuters
P1ZGn
Bloomberg
P1Z GY
63
78,000
● Quality:
Y/E 31.12, EUR m
2012
Total revenues
2013E
2014E
196
204
170
Net rents
43
31
19
net)
45
55
37
45
55
37
25
42
36
Funds From
Operations (FFO)
44
47
49
EPS reported
0.44
0.74
0.63
FFO per share
0.77
0.82
0.85
DPS
0.00
0.00
0.00
NAV per share
6.10
6.82
7.56
NNAV per share
6.51
7.24
7.98
EV/EBITDA
17.4
12.4
13.3
11.9%
11.1%
11.4%
FFO yield
P/FFO
Dividend yield
P/NAV per share
P/NNAV per share
Net gearing
The quality of Patrizia’s remaining ~5,300
apartments is high,, which is reflected in average disposal
prices of up to EUR2,500/sqm for single apartments with
disposal margins of more than 20%. The company is aiming
to sell its own portfolio by 2015 and will pay down the
majority of its remaining corporate debt. The proceeds will
also be invested in co-investments with institutional
investors, in which Patrizia typically takes a stake of 5-10%
and acts as asset manager.
8.4
9.0
8.8
0.0%
0.0%
0.0%
6%
9%
-2%
-1%
3%
-7%
156%
97%
49%
Loan-to-value (LTV)
68%
62%
42%
Implied yield
5.0%
4.3%
3.4%
● Growth: The change of Patrizia’s business model towards an
asset manager/co-investor began in earnest in 2012 following
the acquisition of a EUR1.4bn residential portfolio from
state-owned bank LBBW, and continued, also in 2012, with
the EUR2.5bn GBW residential portfolio. Accordingly, AuM
reached the company target of EUR10bn two years earlier
than initially expected.
● Valuation: Currently, Patrizia is trading at a ~20% premium
to NAV, while NAV includes only half of the portfolio at
market value. The company has distributed its dividend in
shares rather than in cash for the last two fiscal years.
●
First Capital Partner 52%; Axa 3%
Share catalysts: The short-term trigger will be the update
on the full-year guidance expected with the 9M results on 7
November.
Kai Klose, CIIA
+44 20 3207 7888
[email protected]
Estelle Weingrod
+44 20 3207 7931
[email protected]
Regional split
250.0%
Rents in EUR
60
200.0%
50
40
150.0%
30
100.0%
20
50.0%
10
0
Regensburg 4%
Hanover 5%
EBIT-margin in %
70
Geographical split
11
12E
Total rental income
13E
Munich 31%
Hamburg 8%
Berlin 8%
0.0%
10
Dresden 2%
Leipzig 11%
14E
EBIT margin
81
Cologne /
Düsseldorf 22%
Cross-Sector
Pfeiffer Vacuum Technology AG
Buy
Current price
Price target
EUR 90.96
EUR 107.00
1950 and headquartered in Asslar, Germany, is one of the
leading global suppliers in the field of vacuum pump
technology. With products ranging from turbo and backing
pumps to leak detectors and vacuum chambers, the company
has one of the most integrated and complete portfolios in
this area. Its products and services are offered worldwide via
more than 30 sales and distribution centres.
Market cap
EUR 861 m
Reuters
PV
Bloomberg
PFV GY
8 October 2013
● Company overview: Pfeiffer Vacuum (PFV), founded in
10
38,600
● Quality: With a wide-ranging product portfolio, a global set-
up and as the largest listed player in this niche, PFV has a
unique opportunity to gain exposure to this growing industry.
Furthermore, PFV (pre-adixen) has been characterised by
over-the-cycle operating margins north of 20% (peak 2007:
27%). On the back of its sustainable, above-average profit
profile as well as a sound balance sheet (and an equity ratio of
more than 60%), the company has historically paid out 75%
of its net earnings.
Y/E 31.12, EUR m
2012
Sales
2013E
2014E
2015E
461
478
497
519
EBITDA
87
99
112
119
EBIT
68
79
92
99
Net profit
45
53
63
67
-18
-55
-84
-110
EPS (reported)
4.58
5.40
6.35
6.83
EPS (recurring)
4.58
5.40
6.35
6.83
DPS
3.45
4.05
4.75
5.10
EBITDA margin
19.0%
20.7%
22.7%
23.0%
EBIT margin
14.7%
16.5%
18.6%
19.1%
4.2%
4.6%
5.4%
5.8%
17.2%
19.7%
21.8%
22.9%
FCF yield
5.8%
7.0%
7.7%
8.1%
EV/sales
1.7
1.6
1.5
1.4
6.1
Y/E net debt
Dividend yield
ROCE
EV/EBITDA
8.7
7.9
6.7
EV/EBIT
11.3
9.9
8.1
7.3
PER
17.9
16.2
13.7
12.8
● Growth: PFV’s exposures in industrial applications, science
and R&D are largely defensive with relatively stable, GDPlinked growth over the years. Following the acquisition of
adixen at the end of 2010, roughly 35% (formerly c10%) of
the group’s sales are exposed to the semiconductor industry.
This makes the business more cyclical but also opens the
door to what is already the largest, and expected to be the
fastest, growing market for vacuum technology.
● Valuation: We currently rate PFV as a Buy with a price
target of EUR107 based on a blend of DCF and target
multiples. At a dividend yield of more than 4%, PFV is one
of the highest yielding stocks in our SMID cap industrials
universe.
● Share catalysts: Considering the weak performance of
Legg Mason 4.95%
Hakuto 3.48%
Sun Life 3.15%
PFV’s semiconductor exposure, a rebound in end-market
demand would serve as the strongest catalyst for the share
(expected end of this or beginning of next year). With better
utilisation in acquired adixen (largely semi-conductor
exposure), PFV would in our view quickly show the cost base
and efficiency improvements achieved in the business.
Benjamin Glaeser
+44 20 3207 7918
[email protected]
Felix Wienen
+44 20 3207 7915
[email protected]
EPS and DPS development
600
30.0%
500
25.0%
400
20.0%
300
15.0%
200
10.0%
100
5.0%
0
0.0%
10
11
12
Sales (EUR)
13E
14E
4.75 7.0%
5.00
4.50
4.05
4.00
3.15
3.50
EBIT margin
Sales (EUR)
3.00
2.50
3.35
2.90
3.15
3.45
2.45
2.50
2.00
1.50
1.35
1.00 0.50 0.56 0.56 0.70
0.50
0.00
15E
0.90
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013E2014E
EBIT margin
82
6.0%
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
Cross-Sector
ProSiebenSat.1 Media AG
8 October 2013
Sell
Current price
Price target
EUR 31.91
EUR 27.60
● Company overview: ProSiebenSat.1 is a leading commercial
broadcaster in Germany, with adjacent content and digital
operations. The company is controlled by KKR and Permira,
although they have begun the process of selling down their
holding in the company.
Market cap
EUR 6,800 m
Reuters
PSMG_p
Bloomberg
PSM GY
● Quality: ProSiebenSat.1 has held its audience share at the
c30% level over the last few years, delivering mass market
programming such as The Voice. RTL remains the key
competitor, with a similar market position. Besides free-to-air
broadcasting, the group’s diversifications include online
games publishing (on a pan-European basis), content (global)
and various digital ventures.
109
781,000
● Growth: ProSiebenSat.1 has set clear targets for revenues in
Y/E 31.12, EUR m
2012
Sales
2013E
2014E
2015E
2,373
2,587
2,715
2,859
EBITDA
745
788
810
849
EBIT
624
702
722
757
Net profit
329
376
414
448
1,907
1,501
1,376
1,268
EPS (reported)
1.54
1.76
1.94
2.10
EPS (recurring)
1.67
1.79
1.97
2.13
Y/E net debt
DPS
5.60
1.50
1.70
1.80
EBITDA margin
31.4%
30.5%
29.8%
29.7%
EBIT margin
26.3%
27.1%
26.6%
26.5%
Dividend yield
29.4%
4.7%
5.3%
5.6%
ROCE
14.2%
18.2%
22.5%
23.7%
FCF yield
7.7%
12.2%
12.7%
13.4%
EV/sales
2.6
3.2
3.0
2.9
EV/EBITDA
8.1
10.6
10.2
9.6
EV/EBIT
9.7
11.9
11.5
10.8
11.4
17.8
16.2
15.0
PER
2015, which include the benefit of acquisitions, particularly in
digital, where it has been expanding in the commerce and
travel segments. While the core free-to-air television business
is likely to grow at low single digits, digital is growing at
double-digit rates. Meanwhile, we expect margins to trend
down to the high 20s due to a change in mix (digital is less
profitable).
● Valuation: While recognising that ProSiebenSat.1 includes
digital businesses at a relatively early stage of development,
we consider multiples to be very high given that this is not a
question of trough margins – the company has never been
more profitable! In our view, broadcasters face medium-term
pressure on growth due to a shift of video advertising away
from TV and towards online. We expect a de-rating as a
result. We use a DCF valuation.
● Share catalysts: On the plus side, we expect the
forthcoming capital markets day to be positively received, as
management will formally confirm an increase in revenue
targets for 2015 (already anticipated by the market). On the
negative side, we expect to see further placing of shares by
KKR and Permira as they exit the stock. In addition, we
expect to see increasing signs that online video is taking
revenue from TV.
Lavena 33% (KKR/Permira)
Treasury 3%
Sarah Simon
+44 20 3207 7830
[email protected]
Emma Coulby
+44 20 3207 7821
[email protected]
3,500
27.5%
3,000
27.0%
2,500
26.5%
2,000
26.0%
1,500
25.5%
1,000
500
25.0%
0
24.5%
10
11
12
Sales (EUR)
13E
14E
4%
Broadcasting
Germanspeaking
18%
EBIT margin
Sales (EUR)
Digital &
Adjacent
15E
78%
EBIT margin
83
Content
Production &
Global sales
Cross-Sector
PSI AG
8 October 2013
Buy
Current price
Price target
EUR 11.92
EUR 12.90
Market cap
EUR 187 m
Reuters
PSAGn
Bloomberg
PSAN GY
● Company overview: PSI provides process control software
●
16
16,500
●
Y/E 31.12, EUR m
2012
Sales
2013E
2014E
2015E
181
189
200
212
EBITDA
17
10
21
21
EBIT
13
6
16
16
9
3
12
12
-24
-22
-26
-29
EPS (reported)
0.60
0.17
0.77
0.74
EPS (recurring)
0.60
0.17
0.77
0.74
DPS
0.30
0.30
0.38
0.37
EBITDA margin
9.4%
5.2%
10.4%
9.7%
EBIT margin
7.1%
3.0%
8.2%
7.5%
Dividend yield
1.9%
2.5%
3.2%
3.1%
ROCE
10.9%
4.8%
13.3%
12.4%
FCF yield
-1.7%
1.3%
4.9%
4.5%
0.9
Net profit
Y/E net debt
EV/sales
1.5
1.1
1.0
EV/EBITDA
15.8
20.9
9.6
9.6
EV/EBIT
20.7
36.3
12.2
12.3
PER
27.0
70.9
15.6
16.2
●
17.8% RWE
8.1% Harvinder Singh
●
Margaret Paxton
+44 20 3207 7934
[email protected]
William Mackie
+44 20 3207 7837
[email protected]
for electricity grids, industrial manufacturers and other
infrastructure customers. The company is currently
transitioning to a product-based, licence-driven model,
enabled by gradually shifting software to a single platform.
Once completed, it believes margins could reach 20% EBIT.
Quality: PSI’s Electricity business competes with large
conglomerates such as Siemens and ABB which are often
unable to allocate the attention required to maintain a
technological leadership; it is unsurprising therefore that PSI
has a c90% market share of the electrical grid in Germany.
In more fragmented markets, PSI competes with smaller pure
players and in areas where it can demonstrate product
innovation and efficiency advantages, such as in the metals
business, and can achieve a number one position. Due to its
ability to cut customer costs by improving efficiency, PSI is
largely protected from cyclical factors.
Growth: PSI grew at a 7% CAGR and expanded its margins
by 230bp in 2008-2012. Progress towards a higher margin
software business will be a slow process in our view, and
historically overestimated by the market. Disappointments
have therefore overshadowed the stock. Following the
September profit warning, since which expectations have
been completely reset for 2013 to 2015, removing any hope
of improvements in their electricity business, we believe the
risk has shifted heavily to the upside and the risk of further
disappointment is limited.
Valuation: We believe the current share price is at a base
following a more than 15% de-rating since the profit
warning. Our EUR12.9 price target is based on 2015
forecasts and discounted back two years (12% upside) to
2013; a 2014 price target implies 20% upside. The share price
looks attractive despite rebased expectations with good scope
for positive surprise.
Share catalysts: There are no obvious near-term catalysts;
however, upside potential in the electricity business could
come from German energy policy changes, large expected
Russian contracts and follow-on contracts from current and
previous R&D expenditure (note PSI does not capitalise
R&D).
Sales split
250
10.0%
200
8.0%
150
6.0%
100
4.0%
50
2.0%
0
Infra
Mgmt
14%
EBIT margin
Sales (EUR)
0.0%
10
11
12
Sales (EUR)
13E
14E
15E
Prod'n
Mgmt
51%
EBIT margin
84
Energy
Mgmt
35%
Cross-Sector
QSC AG
8 October 2013
Buy
Current price
Price target
EUR 4.41
EUR 4.90
● Company overview: Over 2009-2013, QSC has been in
transition as it repositions itself as an integrated telecoms and
ICT services and cloud computing company for the German
Mittelstand. Well-timed acquisitions have increased the group’s
competence and higher contract values provide evidence of the
transformation. The group look well placed to return to growth
and benefit from the take-up of “desktop virtualisation and
mobility in the workplace” trends and “big data” solutions for
German regional utilities.
EUR 514 m
QSCG
QSC GY
Market cap
Reuters
Bloomberg
124
280,000
● Quality: QSC differentiates its ICT offerings from those of
system integrators and pure software vendors by: a) leveraging
its reputation and existing customer relationships in the
German Mittelstand; and b) merging its experience in managing
secure telecoms networks with the acquired ICT expertise to
create ICT outsourcing solutions comprising platforms and
applications delivered over the internet.
Y/E 31.12, EUR m
2012
Sales
2013E
2014E
2015E
481
455
465
481
EBITDA
78
78
84
96
EBIT
25
26
37
53
Net profit
19
20
29
43
Y/E net debt
55
45
18
-13
EPS (reported)
0.14
0.16
0.23
0.35
EPS (recurring)
0.14
0.16
0.23
0.35
DPS
0.09
0.10
0.12
0.13
16.2%
17.1%
18.2%
20.0%
EBIT margin
5.1%
5.7%
7.9%
11.0%
Dividend yield
2.2%
2.4%
2.9%
3.1%
ROCE
6.0%
6.0%
8.0%
10.5%
FCF yield
3.8%
4.7%
7.9%
8.8%
EV/sales
1.0
1.0
1.0
1.0
EV/EBITDA
8.4
8.4
5.7
5.0
EV/EBIT
19.0
17.9
12.8
8.9
PER
29.4
25.4
17.9
11.9
EBITDA margin
● Growth: With “growth areas” in the form of ICT services and
provision of broadband connectivity to SMEs now accounting
for 60% of revenues and 70% of gross profits, we expect the
company to return to revenue and profitability growth in 2014.
We forecast revenue growth of around 2% in 2014, accelerating
to 6-7% by 2017. The free cash flow CAGR 2013-17 is higher
at around 20% due to a shift in the revenue mix and cost
savings.
● Valuation: Our DCF-based price target is EUR4.90. QSC
shares look expensive on 18x 2014 earnings. However, with
depreciation abnormally high relative to capex, we prefer to
look at the cash earnings multiple. This stands at 13x 2014E
versus a three-year forward free cash flow CAGR 2014-17 of
12%. In addition, QSC’s under-geared balance sheet allows
room for buybacks and/or M&A to improve earnings and the
cash yield.
Gerd Eickers 25.07%
Dr Bernd Schlobohm 12.48%
● Share catalysts: Positively, QSC is in the second round of
Usman Ghazi
+44 20 3207 7824
[email protected]
bidding for two large IT contracts that would yield upside to
our price target if won. The M&A buzz around the sector has
increased and will support QSC. Negatively, Q4 2013
consensus revenues/EBITDA look respectively 2/6% too high
to us.
14
12.0%
480
10.0%
460
8.0%
440
6.0%
420
4.0%
400
2.0%
380
0.0%
10
11
12
Sales (EUR)
13E
14E
13
12
11
12
EBIT margin
Sales (EUR)
500
Cash earnings multiple looks undemanding for
growth on offer
10
10
8
8
8
6
4
2
0
15E
2014
EBIT margin
FCF CAGR% (3 yr forward)
85
2015
2016
Cash earnings multiple
Cross-Sector
RATIONAL AG
8 October 2013
Hold
Current price
Price target
EUR 216.25
EUR 225.00
● Company overview: RATIONAL is the leading global
Market cap
EUR 2,581 m
Reuters
RAAG.DE
Bloomberg
RAA GY
11
8,000
●
Y/E 31.12, EUR m
2012
2013E
2014E
2015E
Sales
435
478
521
570
EBITDA
130
140
154
171
EBIT
123
133
146
163
94
100
111
123
Y/E net debt
-141
-168
-192
-222
EPS (reported)
8.23
8.82
9.73
10.84
EPS (recurring)
8.23
8.82
9.73
10.84
Net profit
DPS
5.70
7.00
7.50
8.50
EBITDA margin
29.9%
29.4%
29.6%
30.1%
EBIT margin
28.2%
27.8%
28.1%
28.6%
3.0%
3.1%
3.3%
3.7%
44.7%
42.1%
41.9%
42.5%
FCF yield
4.0%
3.6%
4.1%
4.6%
EV/sales
5.6
5.1
4.6
4.1
EV/EBITDA
18.8
17.2
15.5
13.8
EV/EBIT
19.9
18.2
16.3
14.5
PER
23.0
25.7
23.3
20.9
Dividend yield
ROCE
●
●
Siegfried Meister 64%
Walter Kurtz 8%
Benjamin Glaeser
+44 20 3207 7918
[email protected]
●
Felix Wienen
+44 20 3207 7915
[email protected]
supplier of thermal cooking devices, specifically combisteamers, to restaurants, fast-food chains, hotels and
institutional customers. In a highly consolidated industry, in
which the five biggest suppliers account for 85% of the market,
RATIONAL’s product and technological leadership has
resulted in a market share of 55%. More than half of the
group’s revenues are generated from its key product, the
SelfCooking Center, which offers the most advanced
technology in its niche market of combi-steamers.
Quality: Strengthened by the company’s dominant position and
the substantial value-add for the customer (ie the reduction in
raw materials, energy and preparation time required; see below),
RATIONAL is characterised by strong top-line growth at
sustainable, high-profit margins. Since 2000, the company
managed to achieve an average operating margin of c25%,
peaking at 30.2% in 2010 (and troughing at 18.8% in 2011).
Due the highly profitable but at the same time asset-light
production process, RATIONAL generated a superior ROCE
of 42.1% in 2013. The company is a sound dividend payer, with
a payout ratio of 70-80% and a yield of above 3%.
Growth: While RATIONAL’s addressable market consists of
c2.5m kitchens worldwide, only 8% of these currently use the
company’s equipment. Resulting penetration rates outside
Europe stand at 10% only (Europe: c50%), providing the
company with ample room to continue its remarkable growth
of a 9% CAGR 2000-12. Furthermore, with c84% of
RATIONAL’s clients being recurring customers, the company
benefits from a highly loyal client base as well as mega trends
such as a rising middle class and a growing population.
Valuation: Our EUR225 price target is based on an average of
DCF and target multiples. At 23x FY 2013 P/E RATIONAL
has the highest valuations in our industrials coverage universe;
however, with double-digit organic growth and high margins, it
also has an equally unique high growth/high return set-up.
Share catalysts: With consensus already fully reflecting the
company’s mid-term guidance and stretched valuation, we see
limited share price catalysts apart from quarterly results. Midterm new key accounts (especially in fast food chains) could
present the clearest upside to expectations.
Short payback times of RATIONAL equipment
31.0%
500
30.0%
29.0%
400
28.0%
300
27.0%
200
26.0%
100
25.0%
0
Meat
EBIT margin
Sales (EUR)
Input
600
Fat/Oil
Energy
24.0%
10
11
12
13E
Sales (EUR)
14E
15E
EBIT margin
Employees
Savings potential
Calculation
Extra income
Significantly lower loss during the
frying process leading to avr. 22%
less raw materials required
Raw materials of €6,000/month;
raw materials for same level of
output with the SelfCooking
Centre €4,680
€1,320/month
Will essentially be needless and
thus be reduced by 95%
Raw materials of €175/month; raw
materials for same level of output
with the SelfCooking Centre €9
€166/month
Avr. consumption 6,300 kWh=
A modern control mechanism will
€630/month; energy required with
enable on avr. 60% lower enery
the SelfCooking Centre 2,520 kWh
consumption
= €252/month
€378/month
Time saving due to pre-cooking,
150 min/day = 70hrs/month x
CareControl, cooking at night, etc.
avr. hourly salary of €23
Potential savings (minus depreciation of €374/month over 5 years)
Per month
Per Year
After ten years
86
€1,610/month
€ 3,100
€ 37,200
€ 372,000
Cross-Sector
Rheinmetall AG
8 October 2013
Hold
Current price
Price target
EUR 43.02
EUR 40.00
● Company overview: Rheinmetall is a leading player in the
Market cap
EUR 1,381 m
Reuters
RHMG.DE
Bloomberg
RHM GY
38
292,100
●
Y/E 31.12, EUR m
2012
Sales
2013E
2014E
2015E
4,704
4,688
4,896
5,084
EBITDA
477
372
507
560
EBIT.
301
174
306
364
Net profit
190
81
163
199
Y/E net debt
98
185
67
-120
EPS (reported)
4.98
2.14
4.26
5.22
EPS (recurring)
4.98
2.14
4.26
5.22
DPS
1.80
1.75
1.90
1.77
10.1%
7.9%
10.3%
11.0%
EBIT margin
6.4%
3.7%
6.3%
7.2%
Dividend yield
4.6%
4.8%
5.2%
4.9%
ROCE
8.6%
4.9%
8.3%
9.5%
FCF yield
7.6%
-1.3%
11.3%
15.9%
EV/sales
0.5
0.6
0.6
0.5
EV/EBITDA
5.3
6.3
5.4
4.7
EV/EBIT
8.3
16.1
8.9
7.2
PER
7.8
19.7
9.9
8.1
EBITDA margin
●
●
Treasury stock 3.3%
Benjamin Glaeser
+44 20 3207 7918
[email protected]
Felix Wienen
+44 20 3207 7915
[email protected]
●
global automotive parts and defence systems market. The
company’s automotive business, contributing 45% to group
EBIT, supplies engine blocks, pistons, pumps, bearings and
emission control systems for both cars and commercial
vehicles. The defence business, contributing 55% to group
EBIT, engages in the design and manufacturing of various
weapons systems and is best known for its armoured vehicles
and munitions systems.
Quality: Despite the challenging macro environment, the
automotive division has benefited greatly from earlier
restructuring efforts, positioning the division in high-margin
businesses that continue to benefit from increasingly stringent
emission standards. The defence division has a strong order
book of EUR6.4bn albeit with relatively long duration. With
initiated restructuring measures and recovery in higher margin
munitions markets, Rheinmetall is looking to improve segment
margins to 10% in FY 2015.
Growth: In the medium term, Rheinmetall has good visibility
from its defence order-book. As most of the current larger
orders (ie Leo2 for Qatar, Puma and Australian RMMV) will
start having a more meaningful contribution in FY15, utilisation
rates and margins are expected to improve strongly that year.
On the automotive side, stricter emissions standards (eg Euro
6) are benefiting the segment’s truck business. Further, we
expect the European car markets to trough in FY 2013 and
production to provide a tailwind for the segment from next
year.
Valuation: Our target price of EUR40 is based on a blend of
DCF and target multiples. Rheinmetall remains one of the
cheapest stocks among our industrial coverage. However,
margin improvement from moving parts in restructuring,
ammunition recovery and better project execution will not
show their full benefit before FY 2015. In light of recent
disappointments, we do not believe investors are willing to give
Rheinmetall the benefit of the doubt for now.
Share catalysts: In the shorter term, we see a pick-up in
European auto production as the clearest catalyst for
Rheinmetall. On the defence side, additional orders should only
be of marginal benefit due to the already high level of backlog.
Ammunition orders key for defence profitability
6,000
10.0%
5,000
8.0%
4,000
6.0%
3,000
4.0%
2,000
2.0%
1,000
0
EBIT margin
Sales (EUR)
0.0%
10
11
12
Sales (EUR)
13E
14E
15E
EBIT margin
87
Cross-Sector
RHI AG
8 October 2013
Buy
Current price
Price target
EUR 24.79
EUR 33.00
● Company overview: RHI is a world-leading producer of
refractory products. These are heat-resistant materials used in
the smelting process that require temperatures of above
1,200°C. More than half of RHI’s revenue is from steel, with
12% from the cement industry and the remainder from glass
and non-ferrous metal producers. Refractories are produced
in the form of bricks, mixes and lining and are made of rocklike raw materials (such as magnesite).
EUR 1,045 m
RHIV
RHI AV
Market cap
Reuters
Bloomberg
40
42,772
● Quality: The company has been investing in a variety of
cost-saving measures – particularly backward integration. A
dead-burned magnesia production site in Turkey was opened
recently as well as a new fusion plant in Norway. The high
level of backward integration at RHI secures its gross
margins, as raw materials account for 70% of the production
costs of a fireproof brick while the world market (and price)
of the raw materials is controlled by China.
● Growth: Organic growth potential remains small as the
Y/E 31.12, EUR m
2012
Sales
2013E
2014E
1,836
1,846
1,914
1,970
EBITDA
230
297
272
284
EBIT
168
222
198
210
Net profit
113
143
139
146
Y/E net debt
421
299
206
104
EPS (reported)
2.85
3.59
3.49
3.67
EPS (recurring)
2.79
2.52
3.49
3.67
DPS
0.75
0.75
0.75
0.75
12.6%
16.1%
14.2%
14.4%
EBIT margin
9.1%
12.0%
10.3%
10.7%
Dividend yield
3.9%
2.9%
3.0%
3.0%
ROCE
12.5%
15.7%
13.6%
13.5%
FCF yield
-0.7%
14.4%
14.1%
15.1%
EV/sales
0.8
0.9
0.8
0.7
EV/EBITDA
6.6
5.6
5.6
5.0
EV/EBIT
9.1
7.5
7.7
6.7
PER
7.0
10.4
7.1
6.8
EBITDA margin
process of winning a new customer is very complex and
given the strong overcapacity in the European steel market,
RHI’s most important end-market is not growing. However,
markets such as India, where steel consumption per capita is
still very low in comparison to more developed countries and
where, at the same time, competition is low and margins
high, pose an interesting opportunity. Indeed, RHI recently
bought Indian company Orient, a local refractories supplier,
establishing a better local presence there.
2015E
● Valuation: On the basis of 2014 P/E, RHI is trading 40%
below both its European peers and its Brazilian competitor
Magnesita. This confirms our view that the market has not
yet realised the value RHI has been creating – and will be
able to create – through margin improvements. It supports
our DCF-based price target of EUR33 and our Buy
recommendation.
MS Private Foundation >25%
FEWI Beteiligungs GmbH >10%
Raiffeisen Bank International >5%
● Share catalysts: Due to the limited growth potential in
Europe, we expect RHI to invest in new growth markets
such as India but also to improve its production network by
producing locally in important markets such as the US. Any
news on such investments should prove a catalyst for the
share price.
Bjoern Lippe
+44 20 3207 7845
[email protected]
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
14.0%
12.0%
2,000
10.0%
1,500
8.0%
1,000
6.0%
4.0%
500
EBIT margin
Sales (EUR)
2,500
Annual magnesia production (in tonnes)
2.0%
0
0.0%
10
11
12
Sales (EUR)
13E
14E
15E
EBIT margin
Source: US Geological Survey Mineral Commodity Summaries 2012
88
Cross-Sector
Rhön-Klinikum AG
8 October 2013
Buy
Current price
Price target
EUR 19.32
EUR 22.70
● Company overview: Rhön-Klinikum is a leading private
Market cap
EUR 2,669 m
Reuters
RHKG
Bloomberg
RHK GY
138
1,291,000
●
●
Y/E 31.12, EUR m
2012
Sales
2013E
2014E
2015E
2,865
3,049
1,049
1,088
EBITDA
290
301
117
152
EBIT
150
159
66
105
90
97
13
90
Y/E net debt
798
-1,226
-239
-227
EPS (reported)
0.65
0.70
0.09
0.65
EPS (recurring)
0.65
0.81
0.50
0.65
DPS
0.45
0.26
13.75
0.20
10.1%
9.9%
11.1%
14.0%
EBIT margin
5.2%
5.2%
6.3%
9.7%
Dividend yield
2.3%
1.3%
71.2%
1.0%
ROCE
5.7%
5.6%
3.2%
8.9%
FCF yield
0.0%
2.1%
-1.4%
0.3%
EV/sales
1.2
1.1
3.3
3.2
EV/EBITDA
12.1
11.7
30.2
23.2
EV/EBIT
23.3
22.1
52.8
33.3
PER
29.8
23.9
39.0
30.0
Net profit
EBITDA margin
●
Münch family 12.50%
Asklepios Kliniken 5.01%
Ludwig Georg Braun 5.00%
Fresenius SE & Co KgaA 5.00%
●
Tom Jones
+44 20 3207 7877
[email protected]
operator of acute care hospitals in Germany. It is currently in
the process of divesting c65% of its clinic portfolio in a
EUR3.07bn sale to Fresenius SE. The new look Rhön will
have 10 hospitals across five sites, 5,300 beds and cEUR1bn
in revenues. It will continue to focus on high-end and
speciality care.
Quality: Rhön has had a tough time in recent years with
operational issues at Horst Schmidt Klinik (HSK) as well as
political and union opposition to restructuring at university
hospitals in Gieβen and Marburg (UKGM). This led to the
resignation of the CEO and CFO late last year. Despite this,
we think Rhön is a high-quality operator, with expertise in
high-end, specialised care. A new structure with fewer
hospitals should allow it to focus on turning around UKGM.
Growth: The hospitals Rhön is retaining are all relatively
high-end facilities, being either maximum care or university
hospitals. This creates a unique entity within German
healthcare. Fresenius SE has essentially taken Rhön’s network
of standard acute care facilitates, leaving Rhön to run the
more complex high-end facilities. We think this leaves scope
for the new structure to drive revenue growth of c4% CAGR
2014-17. In addition, cost savings should help drive EBIT
margin expansion in excess of 300bp by 2017.
Valuation: We value Rhön in two steps. First we look at the
gross dividend post the Fresenius SE deal of EUR1.9bn.
Fully taxed at 25%, we get to a value of EUR10.35 net per
share. We then put the remaining business on a 10x 2015
EV/EBITDA multiple or EUR12.35 per share. This multiple
is the halfway point between what we see as a fair ex-growth
multiple of 8x and the 12x take-out multiple Fresenius SE is
paying for two-thirds of Rhön’s existing business. This gets
us to a total share value of EUR22.70.
Share catalysts: Long-term, the key catalyst will be Rhön
achieving or upgrading its 14% 2015 EBITDA margin target,
primarily by effecting a turnaround at UKGM. Near-term, all
focus will be on the closing of the deal. Anti-trust approval is
due in Q4 2013. In addition, bid speculation on the stub
remaining after the Fresenius SE deal is likely to further
support the shares.
3,500
12.0%
3,000
€0.0bn
10.0%
2,500
8.0%
2,000
6.0%
1,500
4.0%
1,000
0
11
12
Sales (EUR)
13E
14E
€3.0bn
RHÖN
New RHÖN
0.0%
10
€2.0bn
Asklepios
Asklepios
2.0%
500
€1.0bn
Helios
Helios "New"
EBIT margin
Sales (EUR)
German private hospital revenues pre- versus
post-deal
Sana
Sana
15E
EBIT margin
Other
Other
Today
89
Tomorrow
€4.0bn
€5.0bn
€6.0bn
Cross-Sector
RIB Software AG
8 October 2013
Buy
Current price
Price target
EUR 5.97
EUR 7.70
● Company overview: RIB is a software company that focuses
Market cap
EUR 232 m
Reuters
RSTAG
Bloomberg
RSTA GY
Y/E 31.12, EUR m
●
38
18,814
2012
2013E
2014E
2015E
Sales
39
58
70
79
EBITDA
16
18
21
23
EBIT
12
12
15
16
9
9
11
12
-78
-76
-78
-79
EPS (reported)
0.17
0.18
0.23
0.25
EPS (recurring)
0.17
0.18
0.23
0.25
DPS
0.08
0.14
0.15
0.16
EBITDA margin
40.9%
31.3%
30.0%
28.7%
EBIT margin
Net profit
Y/E net debt
30.2%
21.4%
21.2%
20.2%
Dividend yield
1.3%
2.3%
2.5%
2.7%
ROCE
5.6%
5.8%
6.9%
7.1%
FCF yield
5.9%
6.4%
7.0%
7.3%
EV/sales
3.9
2.7
2.2
1.9
EV/EBITDA
9.6
8.5
7.3
6.8
EV/EBIT
13.0
12.4
10.3
9.6
PER
26.3
25.1
20.5
19.2
●
●
-
Sebastian Grabert
+44 20 3207 7834
[email protected]
●
on the construction industry. Its newly developed iTWO
software enables contractors to standardise processes,
improve workflow and thus generate significant cost savings.
iTWO bridges the gap between CAD software and ERP
systems using a fully integrated approach.
Quality: We appreciate the operational strength as well as the
advanced unique technology offered by iTWO, which in our
view leaves point solution vendors behind (eg Glodon,
Vicosoft). We believe the risk/reward profile has become
more attractive for investors given the higher visibility on
deal-closing and an improving win rate. We are also optimistic
about the new set-up after the acquisitions of MC², US Cost,
Project Centre and German Cosinus over the last 12 months,
which have added more sales and consultant capacities
worldwide. RIB has managed to generate positive FCF and
has constantly achieved high earnings quality, with a cash
conversion of around 1.5 for both FY11 and FY12.
Growth: iTWO’s addressable market within the construction
industry is potentially many times greater than that of CAD
software as it provides dynamic integration between design,
estimating, scheduling, progress and finance on a single
screen. These are functions used by many other employees in
addition to designers. We believe that iTWO will benefit from
increased IT spending by the construction industry, which
needs to improve productivity. Compared with the auto or
the aero industries, construction has been a chronic underinvestor in IT and has been particularly slow to embrace the
virtualisation of the production process.
Valuation: Trading on a 15x cash adjusted P/E ratio 2014E,
the stock’s valuation is compelling, even assuming a more
conservative top-line growth (eg 20% pa) than management’s
long-term guidance suggests. Our price target is
EV/NOPAT-based.
Share catalysts: These would include 1) the shortening of the
decision-making process of phase I clients transitioning to
phase II (POC and more product labs), 2) the general
availability of iTWO on Project Centre’s SaaS platform to
ultimately increase the company’s TAM, 3) successful leverage
of the newly created sales platform, especially in the US. In
addition, the transition of a US client from a phase I deal to a
phase II deal could have a strong signalling effect.
100
35.0%
30.0%
25.0%
60
20.0%
40
15.0%
10.0%
20
Germany
EBIT margin
80
Sales (EUR)
Geographical split
EMEA
APAC
5.0%
0
Others
0.0%
11
12
13E
Sales (EUR)
14E
15E
EBIT margin
90
Cross-Sector
Rosenbauer International AG
Hold
Current price
Price target
EUR 57.10
EUR 62.00
8 October 2013
● Company overview: Rosenbauer, founded in 1866 and
EUR 378 m
RBAV
ROS AV
Market cap
Reuters
Bloomberg
Y/E 31.12, EUR m
2012
Sales
●
7
2,500
2013E
2014E
2015E
645
716
777
754
EBITDA
48
59
69
69
EBIT
39
50
59
59
Net profit
31
34
40
40
Y/E net debt
94
72
50
10
EPS (reported)
4.54
4.93
5.94
5.95
EPS (recurring)
4.54
4.93
5.94
5.95
DPS
1.20
1.20
1.60
1.60
EBITDA margin
7.4%
8.3%
8.8%
9.2%
EBIT margin
6.0%
7.0%
7.6%
7.9%
Dividend yield
2.9%
2.2%
2.9%
2.9%
ROCE
14.3%
15.8%
17.7%
17.0%
FCF yield
-4.7%
8.9%
8.8%
14.4%
EV/sales
0.6
0.6
0.6
0.5
EV/EBITDA
7.8
7.7
6.3
5.7
EV/EBIT
9.7
9.1
7.3
6.6
PER
9.0
11.3
9.3
9.3
●
●
Rosenbauer Beteiligungsverwaltung GmbH 51%
●
Felix Wienen
+44 20 3207 7915
[email protected]
Benjamin Glaeser
+44 20 3207 7918
[email protected]
headquartered in Leonding (Austria), is the world’s leading
provider of fire-fighting vehicles (c80% of sales) and
corresponding equipment. It claims a 17% worldwide market
share in a rather concentrated market, with 11 production
facilities and a dealer presence in 150 countries.
Quality: Rosenbauer operates an integrated business model
that serves all the needs of its key customers – fire-fighters.
The product range is broad, including vehicles (eg day-to-day
municipal and also highly specialised airport vehicles),
components (eg portable or truck-mounted pumps) and
equipment (eg helmets). Rosenbauer is the only player able to
produce vehicles that comply with both US NFPA and
European DIN standards, which is a crucial factor in winning
international tender offers. Financially, the group benefits
from a solid order backlog of EUR682m in H1 2013
(providing visibility until mid-2015) as well as its conservative
balance sheet with an equity ratio of 36% in H1 2013 and no
goodwill.
Growth: With its global presence (c55% of sales are outside
Europe), Rosenbauer takes advantage of structural drivers in
emerging markets such as infrastructure investment (ie the
EUR245m and EUR126m orders from Saudi Arabia in
2011/2013), as well as replacement demand in developed
countries. Heightened security awareness of natural and
terrorist disasters further fuel demand for Rosenbauer’s
products around the globe.
Valuation: We value the stock on a blended average of a
DCF and target multiples resulting in our price target of
EUR62. Advancing 24% ytd, the stock has shown a solid
performance and now trades close to all-time highs. The
upside to our price target at 9% is therefore limited at
present.
Share catalysts: Over the next year, Rosenbauer will focus
on executing its strategy 2015. While the revenue target of
cEUR720m by 2015 seems achievable given the solid order
backlog, production efficiency has to improve. Targeting
above 8% margins by 2015 compared to historical peaks of
8.3% in 2010 and a 7.2% operating margin in 2012,
production logistics need to be optimised. As Rosenbauer
executes on its strategy, any update regarding profitability will
be taken positively.
100%
10.0%
800
8.0%
600
6.0%
400
4.0%
200
2.0%
0
80%
11
12
Sales (EUR)
13E
14E
Asia &
Oceania
70%
60%
NAFTA
50%
40%
Arab world
30%
0.0%
10
Other
countries
90%
EBIT margin
Sales (EUR)
1,000
Sales development by geography
20%
15E
Western &
Eastern
Europe
10%
0%
EBIT margin
2006
2007
2008
2009
91
2010
2011
2012
Cross-Sector
Sartorius AG
8 October 2013
Buy
Current price
Price target
EUR 79.25
EUR 92.00
● Company overview: Sartorius is a global market leader in
single-use equipment used to manufacture biologic drugs and
vaccines – providing both equipment (bioreactors), and
consumables (ie PVC bags, tubing and sensors). The
company also has strong market share positions in other
laboratory product markets such as scales, pipettes, lab
consumables and lab services.
Market cap
EUR 1,383 m
Reuters
SATG_p
Bloomberg
SRT3 GY
9
12,535
● Quality: The single-use equipment produced by Sartorius for
drug manufacturing offers a number of benefits over classic
re-usable systems, including significant cost savings (c30-40%
over the product life), greater capacity flexibility and lower
contamination risk. In addition, the biologic drugs market is
significantly outgrowing the wider pharma market. Given
Sartorius’s strong market position, innovation leadership and
brand value, we believe the company is well placed to capture
a growing share of a growing market.
Y/E 31.12, EUR m
2012
2013E
2014E
Sales
846
898
955
1,020
EBITDA
161
178
199
221
EBIT
121
134
153
172
49
62
75
88
Y/E net debt
304
266
208
140
EPS (reported)
2.71
3.66
4.42
5.18
EPS (recurring)
3.70
4.17
4.89
5.66
DPS
0.94
1.10
1.22
1.41
EBITDA margin
19.0%
19.8%
20.8%
21.6%
EBIT margin
14.3%
14.9%
16.0%
16.9%
1.2%
1.4%
1.5%
1.8%
ROCE
12.9%
14.7%
16.3%
17.7%
FCF yield
-1.4%
10.3%
13.4%
15.0%
EV/sales
2.1
1.9
1.8
1.7
EV/EBITDA
10.8
9.8
8.8
7.9
EV/EBIT
14.4
13.0
11.4
10.1
PER
21.4
19.0
16.2
14.0
Net profit
Dividend yield
 Growth: In our view, the structural trends driving
Sartorius’s business will be sufficient to drive a revenue
CAGR of 6.6% from 2013-18E. In addition, we believe
Sartorius can expand EBITA margins by 400bp over the
next five years. We expect this to be driven by a high
incremental gross margin on consumable products (given
the high degree of fixed cost, and ample capacity to support
top-line growth), operational leverage particularly on the
SG&A line, as well as favourable product and geographic
mix (rapidly growing single use technology and improved
penetration in the lucrative North American market).
2015E
● Valuation: Our Buy recommendation is based on our view
that Sartorius is well placed in a structural growth market.
Our target price is at the mid-point of our DCF valuation of
EUR94 and SOTP valuation of EUR91. On a P/E basis, this
equates to a 2014 multiple of 19x or c16x 2015E, which we
do not view as overly demanding given our expected c15%
EPS CAGR out to 2018E.
Preferred shares:
91% free float
9% treasury stock
Ordinary shares:
50% executor of Sartorius estate
30% Bio-Rad Laboratories
9% treasury stock
7% Sartorius Family
● Share catalysts: The company reports its Q3 results on 21
October. Outside of this, shares will likely be sensitive to any
newsflow on the disposal of the Industrial Weighing business
(unlikely by year-end).
Scott Bardo
+44 20 3207 7869
[email protected]
1,000
Sales (EUR)
€130
20.0%
15.0%
800
600
10.0%
400
5.0%
200
0
€120
€110
EBIT margin
1,200
Sartorius versus Stedim share price
€100
€90
€80
€70
€60
€50
0.0%
10
11
12
Sales (EUR)
13E
14E
15E
EBIT margin
Sartorius
92
Stedim
Cross-Sector
Schoeller-Bleckmann AG
8 October 2013
16
21,300
●
2015E
162
157
172
180
EBIT
120
116
129
135
76
83
87
95
Net profit
Y/E net debt
35
17
-3
-51
EPS (reported)
4.76
5.18
5.44
5.93
EPS (recurring)
4.89
5.18
5.44
5.93
DPS
1.50
1.84
1.95
2.12
EBITDA margin
31.6%
31.2%
31.8%
31.7%
EBIT margin
23.5%
23.0%
23.8%
23.7%
2.0%
2.1%
2.2%
2.4%
22.6%
19.6%
20.0%
19.2%
FCF yield
3.5%
2.9%
2.9%
4.9%
EV/sales
2.5
2.8
2.6
2.4
EV/EBITDA
7.8
9.1
8.1
7.5
EV/EBIT
10.5
12.3
10.9
10.1
PER
15.6
17.0
16.2
14.8
Dividend yield
ROCE
●
●
BIH AG 31.0%
Benjamin Glaeser
+44 20 3207 7918
[email protected]
●
Alexander Virgo
+44 20 3207 7856
[email protected]
Rig counts not showing improvement yet
30.0%
500
25.0%
400
20.0%
300
15.0%
200
10.0%
100
5.0%
0
100%
60%
20%
-20%
-60%
Q1 07
600
EBIT margin
Sales (EUR)
0.0%
10
11
12
Sales (EUR)
13E
14E
15E
NAm rig count growth YoY
Horiztl rig count growth YoY
EBIT margin
93
Q3 13
568
EBITDA
Q1 13
541
Q3 12
2014E
503
Q1 12
2013E
512
Q3 11
2012
Sales
Q1 11
Y/E 31.12, EUR m
Q3 10
Q1 10
EUR 76.00
Market cap
EUR 1,219 m
Reuters
SBOE.VI
Bloomberg
SBO AV
overview:
Schoeller-Bleckmann
(SBO),
headquartered in Ternitz (Austria), specialises in high-precision
components for the oil services industry, enabling the operators
to perform directional drilling. The company’s drill string
components division (around 65% of sales) operates in a
comparatively consolidated market, in which SBO claims a 5060% market share and is consequently positioned as the global
number one player. Moreover, the company’s high-performance
drilling engines as well as other drilling components and the
associated services also have respective 50-80% market shares,
depending on the product.
Quality: SBO’s distinctive quality stems from its technological
leadership, along with the company’s strong customer
orientation and the customisation of its products. Due to its
superior market share as well as the necessity of its products,
customers are willing to pay a premium. This has ultimately
resulted in SBO achieving operating margins typically above
20%, provided volumes are at a healthy level.
Growth: As easily accessible oil reserves have become limited,
more complex and advanced drilling procedures are required
for the exploration of new oilfields. Thus, we expect: 1) a trend
from conventional, vertical drilling towards horizontal and
directional drilling to increase; as well as 2) the trend from
onshore to offshore drilling to continue. With this in mind,
SBO, as the world’s number one supplier within this niche, is
ideally positioned to benefit from the rising need for oil and gas
and the above-mentioned trends towards more complex
exploration procedures.
DCF and target multiples. Due to the high operating profits
and ROCE (peak of 28% in 2006), SBO typically trades at a
premium to our industrial mid-cap universe. However at close
to 17x forward P/E and 11x EV/EBIT, Schoeller is trading at
above through-cycle averages.
Share catalysts: The most immediate catalyst for Schoeller
would be a pick-up in US rig counts, which have so far not seen
the expected recovery. Also, as with recent months, sharp
movements in oil prices (taken as an indicator for future capex
spent) could serve as a catalyst for Schoeller.
Q3 09
EUR 87.13
● Company
Q1 09
Price target
Q3 08
Current price
Q1 08
Q3 07
Hold
Cross-Sector
SGL Carbon SE
8 October 2013
Sell
Current price
Price target
EUR 27.99
EUR 14.00
● Company overview: SGL is one of the world’s leading
Market cap
EUR 1,977 m
Reuters
SGCG
Bloomberg
SGL GY
71
96,484
●
Y/E 31.12, EUR m
2012
Sales
2013E
2014E
2015E
1,709
1,630
1,705
1,920
EBITDA*
240
96
181
233
EBIT*
154
14
98
146
7
-304
18
58
Y/E net debt
420
491
503
518
EPS (reported)
0.09
-3.64
0.21
0.69
EPS (recurring)
1.18
-0.95
0.38
0.84
DPS
0.20
0.00
0.00
0.20
14.0%
5.9%
10.6%
12.1%
EBIT margin*
9.0%
0.8%
5.7%
7.6%
Dividend yield
0.7%
0.0%
0.0%
0.7%
ROCE
7.2%
0.7%
5.5%
8.0%
-2.6%
-2.9%
-0.6%
-0.8%
Net profit
EBITDA margin*
FCF yield
EV/sales
1.8
1.7
1.6
1.5
EV/EBITDA*
12.9
29.2
15.5
12.2
EV/EBIT*
20.0
207.2
28.8
19.4
PER
23.7
-29.3
73.7
33.4
●
●
*adjusted for one-offs
SKion GmbH 26.9%
BMW 15.7%
Voith AG 9.1%
Volkswagen AG 8.2%
●
Gunnar Cohrs, CFA
+44 20 3207 7894
[email protected]
producers of graphite and carbon fibre products, operating in
a very focused market. The Performance Products division
(PP; ~55% of sales) produces graphite electrodes and
cathodes for the production of steel and aluminium. Its
Graphite Material & Systems division (GMS; ~29%)
produces parts and materials for the chemicals and energy
industries, and for companies active in semiconductors and
metallurgy. In contrast to PP, the success of this segment
depends on product innovations. The Carbon Fibres &
Composites division (CFC; ~16%) not only focuses on the
upstream
business
(the
production
of
carbon
fibres/composite materials), but also downstream (composite
components for aircraft, wind rotor blades and auto parts).
Quality: SGL can rely on high market barriers due to
significant capex requirements, high-temperature process
technology and materials expertise, and scale advantages,
backed by a market share of more than 20% in the core
business – graphite electrodes. Although there is significant
growth potential, the CFC segment has not generated much
in the way of returns so far.
Growth: For its largest unit – PP – SGL depends on the steel
or aluminium cycle. SGL is well-placed in the energyefficiency, alternative energies and light construction markets.
Forward integration into the market for aircraft and rotor
blades, and joint ventures for components in the automotive
industry (BMW, Benteler, Brembo), are promising, but the
former two in particular have consistently missed earnings
targets and forced significant write-downs.
Valuation: The sale of stakes by large shareholders (see chart
below) is unlikely, in our view, but so is a break-up of the
company. On fundamentals, we derive a price target of
EUR14 (CFRoEV 2015E) and thus there still seems to be a
significant takeover premium in the share price.
Share catalysts: Management has announced a cost-savings
programme (SGL2015) but has not published any details in
terms of timing, associated costs and benefits. Its plans
include the closure of one or two high-cost graphite
electrodes plants.
Shareholder structure
2,000
10.0%
8.0%
1,500
6.0%
1,000
4.0%
500
2.0%
0
0.0%
11
12
13E
Sales (EUR)
14E
15E
Free float,
40.10%
EBIT margin
12.0%
Sales (EUR)
2,500
Skion
GMBH,
26.90%
BMW,
15.70%
16E
Volkswagen,
8.20%
EBIT margin
Voith AG,
9.10%
94
Cross-Sector
Sky Deutschland AG
8 October 2013
Buy
Current price
Price target
EUR 7.08
EUR 7.60
● Company overview: SkyD is the leading premium pay-TV
provider in Germany and Austria, distributing over satellite,
cable and IPTV. The company has long-term agreements
with major content providers including the Bundesliga, the
Champions League, Hollywood Studios and local German
content providers. It offers traditional subscription to various
programming tiers, as well as enhanced services such as HD,
Personal Video Recorder and mobility.
Market cap
EUR 6,209 m
Reuters
SKYDn
Bloomberg
SKYD GY
877
0
● Quality: Over the last few years, SkyD has invested heavily
in upgrading its product and in customer service. In the past,
the company had a poor reputation on both fronts, but this
has changed following substantial investment in the business,
and materially enhanced management, including the CEO,
who previously ran the customer business of BSkyB in the
UK. As a result, customer recommendation has increased
significantly – 40% of SkyD customers now come via this
route.
Y/E 31.12, EUR m
2012
Sales
2013E
1,333
EBITDA
2014E
2015E
1,552
1,901
2,223
-51
33
222
441
EBIT
-125
-57
118
328
Net profit
-195
-120
57
252
611
336
124
0
EPS (reported)
-0.23
-0.13
0.06
0.27
EPS (recurring)
-0.23
-0.13
0.06
0.27
0.00
0.00
0.00
0.00
EBITDA margin
-3.8%
2.1%
11.7%
19.8%
EBIT margin
-9.4%
-3.7%
6.2%
14.7%
0.0%
0.0%
0.0%
0.0%
-17.7%
-8.1%
15.2%
34.1%
FCF yield
0.8%
1.6%
4.4%
7.8%
EV/sales
2.0
4.2
3.5
2.9
Y/E net debt
DPS
Dividend yield
ROCE
EV/EBITDA
-52.3
199.6
30.3
14.6
EV/EBIT
-21.4
-115.6
57.2
19.7
PER
-11.3
-55.1
115.8
26.2
● Growth: SkyD has a huge market opportunity – with
premium pay-TV having a penetration of less than 9% in
Germany compared with over 30% in other European
markets and as much as 60% in the UK, we see substantial
potential in customer numbers and, as customers trade up to
more premium offers, in ARPU. We forecast that the
company will generate a revenue CAGR of 18% between
2012 and 2015.
● Valuation: 2013 is the first year of EBITDA profitability,
making valuation dependent on medium and long term
forecasts. Given the substantial opportunity, we focus on
DCF to determine our price target, and see fair value at up to
EUR10, depending on the perception of risk profile. In our
view, SkyD is now a lower risk proposition than BSkyB.
21st Century Fox: 54.8%
● Share catalysts: Focus will be on subscriber net additions,
ARPU and EBITDA in the coming quarters. There is also
potential for Fox, which owns 55% of the company, to make
a bid for full control.
Sarah Simon
+44 20 3207 7830
[email protected]
Robert Berg
+44 20 3465 2680
[email protected]
Sales (EUR)
2,000
20.0%
200
10.0%
150
0.0%
EBIT margin
2,500
Quarterly net subscriber additions
100
1,500
-10.0%
1,000
-20.0%
50
-30.0%
0
-40.0%
-50
500
0
-50.0%
10
11
12
Sales (EUR)
13E
14E
-100
15E
Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1
08 08 09 09 10 10 11 11 12 12 13
EBIT margin
95
Cross-Sector
Software AG
8 October 2013
Sell
Current price
Price target
EUR 25.32
EUR 21.00
● Company overview: Software AG is one of the leading
Market cap
EUR 2,127 m
Reuters
SOWG
Bloomberg
SOW GY
Y/E 31.12, EUR m
84
296,545
2012
Sales
2013E
2014E
2015E
1,047
985
1,005
1,012
EBITDA
280
235
245
242
EBIT
248
201
209
209
Net profit
165
129
133
134
Y/E net debt
-56
79
-45
-168
EPS (reported)
2.21
1.90
2.04
2.02
EPS (recurring)
2.21
1.90
2.04
2.02
DPS
0.51
0.56
0.62
0.68
EBITDA margin
26.7%
23.8%
24.4%
24.0%
EBIT margin
23.7%
20.4%
20.8%
20.7%
2.0%
2.2%
2.4%
2.7%
17.1%
15.2%
14.4%
13.1%
FCF yield
7.8%
8.2%
8.3%
8.3%
EV/sales
2.0
2.1
2.1
2.0
EV/EBITDA
7.4
8.8
8.4
8.5
EV/EBIT
8.3
10.3
9.9
9.9
11.5
13.3
12.4
12.6
Dividend yield
ROCE
PER
●
●
●
29% Software AG Stiftung
Daud Khan
+44 20 3465 2638
[email protected]
●
European software companies. It has expanded from its core
business of mainframe database software to take advantage
of the opportunity within business process software
infrastructure (BPE). It has achieved this mainly through the
acquisitions of webMethods in 2006 and IDS Scheer in 2009.
Quality: In our view, Software is one of the best financially
managed companies in Europe, with strong operating cash
conversion and a tightly controlled cost structure that has led
to consistently good margin performance. However, we
remain cautious about a quick return to normalised growth
because the company was late in positioning itself as a cloud
player among its peers. While BPE is the largest revenue
contributor (47% of revenue), the Enterprise Transaction
Systems (ETS) division remains the biggest contributor
(60%) to profits. ETS’s contribution to profits continues to
decline and, despite BPE’s revenue growth, its profit
contribution is flat/declining. If growth stalls in BPE, it is
inevitable that profitability will be affected.
Growth: We believe expectations for 20-30% licence growth
in FY13 are unachievable following the revenue weakness in
Q2 of Software’s BPE division. We have examined the
licence gross margin (defined as revenue less cost of sales,
less R&D and S&M) and compared the BPE business with
that of its nearest competitor, Tibco. We find the ratios are in
line; hence the increased level of investment made by
Software has only closed the underinvestment gap with its
peer. Any attempt to improve the licence margin (ie cut
costs) will lead to a revenue growth trade-off.
Valuation: Our price target (EUR21) is based on adjusted
10x 2014E earnings. However, we recognise that optically the
stock looks cheap, with EV/maintenance revenue of less
than 5x, and that Q3 licence revenue in BPE will likely
recover. Nevertheless, we believe there is too much
uncertainty and volatility to favour Software over similaryielding stocks in more predictable sectors.
Share catalysts: These would include an increase of
Terracotta’s reach to establish itself as an industry platform
for Big Data and delivery of the results the company has
hoped for (eg a doubling of revenues in 2013 yoy and growth
to a EUR100m+ business in the mid-term).
Trailing 12-month segment result
1,100
24.0%
23.0%
1,050
22.0%
1,000
21.0%
950
20.0%
900
19.0%
11
12
13E
Sales (EUR)
14E
260
240
220
200
180
160
140
120
100
EBIT margin
25.0%
Sales (EUR)
1,150
Q4 10 1Q 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13
BPE
15E
EBIT margin
96
ETS
Cross-Sector
STADA Arzneimittel AG
8 October 2013
Buy
Current price
Price target
EUR 38.43
EUR 40.00
Market cap
EUR 2,171 m
Reuters
STAGn
Bloomberg
SAZ GY
59
366,000
2012
Sales
2013E
2014E
2015E
1,838
2,001
2,174
2,298
EBITDA
368
405
462
497
EBIT
270
294
341
370
86
162
198
223
1,177
1,374
1,294
1,168
EPS (reported)
1.46
2.74
3.34
3.77
EPS (recurring)
2.50
2.87
3.47
3.90
DPS
0.50
0.77
0.94
1.05
EBITDA margin
20.0%
20.2%
21.3%
21.6%
EBIT margin
14.7%
14.7%
15.7%
16.1%
1.4%
2.1%
2.6%
2.9%
13.1%
13.5%
14.2%
14.7%
FCF yield
8.0%
7.1%
9.1%
11.6%
EV/sales
2.0
1.8
1.7
1.6
EV/EBITDA
10.0
9.1
8.0
7.4
EV/EBIT
13.6
12.5
10.8
9.9
PER
15.3
13.4
11.1
9.9
Net profit
Y/E net debt
Dividend yield
ROCE
generics company (and the sixth-largest globally). It has had to
contend with strong competitive pressures in its domestic
markets as well as austerity-related pressures in several other
key European territories.
● Quality: In response to ongoing pressures in its core business,
Y/E 31.12, EUR m
● Company overview: STADA is Germany’s third-largest
STADA was quick to reduce its domestic generics exposure,
and through a series of acquisitions and organic growth
initiatives it managed to build a strong presence in emerging
Europe, particularly in Russia and other CIS countries.
Furthermore, the quality of its group offering has been
enhanced considerably over the last three years. Around a
third of sales and c50% of group profits now stem from
branded/ over-the-counter (OTC) products. This business is
accompanied by strong customer loyalty, allowing for stable
growth prospects and a good degree of pricing elasticity. The
company continues to grow out its OTC strategy, most
recently acquiring the private UK company Thornton & Ross,
which will add to earnings from Q4 2013.
● Growth: We believe STADA can deliver c8-9% top-line
growth over the coming few years, driven by continued strong
business in Russia (+15-20% annually), stabilisation/modest
growth in western Europe and some positive effects from
business integration (including Thornton & Ross). With
respect to the bottom line, STADA continues to reiterate its
target of EUR215m net income in 2014E – suggesting over
20% earnings growth from 2013E. Its restructuring initiatives
have now concluded and management also envisages some
structural improvements in corporate taxation which should
become apparent next year.
● Valuation: Our EUR40 price target is based on the shares
trading on c12x 2014E P/E (c8x forward EV/EBITDA). We
view this as appropriate given the higher-quality OTC mix for
the business, as well as considering the opportunities and risks
to our forecast 12% EPS CAGR out to 2018.
Doctors and Pharmacists: 12%
Scott Bardo
+44 20 3207 7869
[email protected]
● Share catalysts: The company’s capital markets day is on 10
October and its Q3 results are on 13 November.
2,500
16.5%
2,000
16.0%
15.5%
1,500
15.0%
1,000
14.5%
500
14.0%
0
13.5%
10
11
12
13E
Sales (EUR)
14E
Branded products have grown to equivalence in profit
contribution
50%
EBIT margin
Sales (EUR)
46%
40%
30%
20%
21% 20%
24%
26%
33%
28%
10%
15E
EBIT margin
0%
2007A
2008A
2009A
Share of branded products in sales
27%
26%
37%
36%
33%
97
2010A
2011A
Share of branded products in adjusted EBIT
2012A
Cross-Sector
STRATEC Biomedical AG
8 October 2013
Hold
Current price
Price target
EUR 32.24
EUR 28.00
● Company overview: STRATEC is a leading provider of
dedicated analyser systems for the diagnostics industry. We
believe the OEM market for the diagnostics industry will be
worth more than USD3bn by 2016E. Supporting this
expansion will be continued global growth of the sector (+56% pa), as well as a strong shift towards outsourcing
solutions as the main IVD players focus resources on
developing a test menu to maximise returns.
EUR 378 m
SBSG
SBS GY
Market cap
Reuters
Bloomberg
12
9,500
● Quality: STRATEC has a reputation for strong client
Y/E 31.12, EUR m
2012
Sales
2013E
2014E
2015E
122
131
146
164
EBITDA
21
24
28
33
EBIT
18
20
23
27
Net profit
14
16
18
21
Y/E net debt
-5
-5
-20
-40
EPS (reported)
1.19
1.38
1.57
1.80
EPS (recurring)
1.19
1.36
1.55
1.77
DPS
0.50
0.55
0.63
0.72
EBITDA margin
17.5%
18.4%
19.5%
19.9%
EBIT margin
14.4%
15.2%
16.1%
16.5%
1.6%
1.7%
1.9%
2.2%
18.0%
18.6%
19.6%
20.4%
FCF yield
0.1%
1.5%
5.2%
7.3%
EV/sales
3.1
2.9
2.6
2.3
EV/EBITDA
17.5
15.5
13.2
11.5
EV/EBIT
21.2
18.8
16.0
13.8
PER
27.0
23.4
20.6
18.0
Dividend yield
ROCE
delivery having up until recently never had a contract
cancelled. It has longstanding relationships with eight leading
IVD companies with which it has lengthy contracts. These
contracts by their nature provide some barriers to entry.
Initially, orders are for capital goods but later on, the
replacement parts business (c20% sales) can service the
installed base. While this can be “lumpy” business on a
quarter-by-quarter basis, it grows with the installed base and
is very profitable. Thus STRATEC has decent barriers to
entry with its major customers.
● Growth: Despite a recent downgrade in full-year guidance
due to the cancellation of a major contract, STRATEC
continues to have attractive growth opportunities with the
ability to drive a mid-teens EPS growth profile over the
coming five years. We forecast an EPS CAGR 2013-18 of
16%. That said, the company needs to deliver on guidance
this year, and start showing tangible evidence that it can
execute on its strategy before we can get too excited.
● Valuation: While we believe STRATEC offers attractive
growth prospects, investors need to be convinced that the
cycle of earnings downgrades has ended. Our price target of
EUR28 would have the stock trading on c18x 2014E, which
looks fair to us given both the risks and opportunities.
Hermann Leistner (CEO) 42.9%
● Share catalysts: Following a downgrade in full-year
guidance at the Q2 results, investors will be looking for
reassurance at the Q3 results on 30 October that the cycle of
downgrades has indeed ended. The company is also expected
to announce two sizeable contracts in the coming months.
Scott Bardo
+44 20 3207 7869
[email protected]
200
20.0%
150
15.0%
100
10.0%
50
5.0%
0
0.0%
Historical valuation
35.0x
10
11
12
13E
Sales (EUR)
14E
Forward PE
EBIT margin
Sales (EUR)
30.0x
25.0x
20.0x
15.0x
10.0x
15E
5.0x
EBIT margin
0.0x
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
98
Cross-Sector
Ströer Media AG
Hold
Current price
Price target
EUR 12.60
EUR 11.40
8 October 2013
overview: Ströer is the leading outdoor
advertising company in Germany, with a c50% market share,
and now the third-largest online advertising network in the
country, as measured by unique users. It is also the leading
outdoor advertising company in Turkey and in Poland.
Ströer generates revenues from the sale of outdoor and
online advertising to agency and corporate buyers. Margins
vary by division – while outdoor generates EBITDA margins
of over 20%, online has high single digit profitability and will
not materially exceed 10%.
● Company
EUR 616 m
SAXG
SAX GY
Market cap
Reuters
Bloomberg
49
0
● Quality: Ströer has invested in a new digital offering within
Y/E 31.12, EUR m
2012
Sales
2013E
2014E
2015E
561
635
709
747
EBITDA
99
106
121
131
EBIT
34
36
50
58
Net profit
-3
4
14
21
319
345
315
273
EPS (reported)
-0.06
0.09
0.29
0.43
EPS (recurring)
0.54
0.61
0.69
0.82
DPS
0.00
0.00
0.00
0.00
17.7%
16.7%
17.0%
17.5%
EBIT margin
6.1%
5.7%
7.1%
7.8%
Dividend yield
0.0%
0.0%
0.0%
0.0%
ROCE
4.4%
5.0%
6.7%
8.0%
FCF yield
2.4%
2.5%
5.1%
7.3%
EV/sales
1.4
1.6
1.4
1.3
EV/EBITDA
7.8
9.5
8.1
7.1
EV/EBIT
22.7
27.7
19.5
16.0
PER
17.8
20.8
18.4
15.3
Y/E net debt
EBITDA margin
its outdoor division – the Out of Home (OOH) Channel.
This is a premium offering focused on transport locations
(train stations) and shopping malls. The upgrade of its more
traditional billboard business is ongoing, however, and, in
our view, requires further investment. The digital business is
new to the company and has been created through the
purchase of a number of online ad sales businesses and
technology platforms.
● Growth: The German advertising market is broadly stable,
and we do not expect it to show dynamic growth, although it
should benefit from the recovering economy. Outdoor is
taking share of the market, but more slowly than anticipated,
given the slow upgrade of inventory. Online is the fastest
growing part of the market, albeit growth is unlikely to be
more than mid single digits in 2012. Overall, we forecast
5.5% organic growth in 2014, boosted by online underlying
expansion of 10%.
● Valuation: While recognising that Ströer is exposed to
cyclical upside, we do not expect strong growth in the
German outdoor advertising market, which is the key driver
of earnings. Therefore we believe that valuation looks full at
the present time, at 8.1x 2014 EV/EBITDA, 18.4x P/E and
a free cash flow yield of 5%. We note that leverage remains
quite high at 3.2x net debt/EBITDA for 2013E.
Dirk Stroer: 25.3%
Udo Muller: 28.2%
Sarah Simon
+44 20 3207 7830
[email protected]
●
Robert Berg
+44 20 3465 2680
[email protected]
Share catalysts: The key to Ströer’s valuation will be
earnings upgrades, we believe. These will require strongerthan-expected advertising revenue growth in the outdoor
advertising segment.
25.0%
20.0%
600
15.0%
400
10.0%
200
5.0%
0
3%
EBIT margin
Sales (EUR)
800
9%
Germany
17%
Turkey
Online
Other
0.0%
10
11
12
Sales (EUR)
13E
14E
15E
71%
EBIT margin
99
Cross-Sector
Südzucker AG
8 October 2013
●
204
333,736
●
2016E
735
Net profit
593
445
430
408
Y/E net debt
570
467
373
176
EPS (reported)
2.91
2.18
2.10
2.00
EPS (recurring)
3.11
2.18
2.10
2.00
DPS
0.90
0.90
0.90
0.90
EBITDA margin
15.8%
13.2%
13.0%
12.7%
EBIT margin
12.4%
9.8%
9.6%
9.3%
3.3%
4.2%
4.2%
4.2%
13.7%
9.3%
8.8%
8.4%
FCF yield
0.1%
0.0%
0.0%
0.0%
EV/sales
1.0
0.8
0.8
0.8
EV/EBITDA
6.1
6.3
6.0
6.0
EV/EBIT
7.8
8.5
8.2
8.2
PER
8.8
9.8
10.2
10.7
Dividend yield
ROCE
●
SZVG 52%
ZSG 10%
James Targett, CFA
+44 20 3207 7873
[email protected]
●
Fintan Ryan
+44 20 3465 2748
[email protected]
EU versus world white sugar price (EUR per tonne)
10,000
14.0%
12.0%
8,000
10.0%
6,000
8.0%
4,000
6.0%
4.0%
2,000
2.0%
Sales (EURm)
2016E
2015E
2014E
2013
2012
2011
2010
2009
2008
0.0%
2007
0
750
700
650
600
550
500
450
400
350
300
719
404
350
EU average white sugar price
EU reference price
Operating profit margin (%)
Source: European Commission, Datastream
100
World white sugar price
Jul-13
760
Sep-13
780
May-13
974
Jan-13
Mar-13
1,011
EBIT
Nov-12
1,036
Jul-12
1,056
Sep-12
1,248
May-12
7,932
EBITDA
Jan-12
7,950
Mar-12
2015E
7,969
Nov-11
2014E
7,879
Jul-11
2013
Sales
Sep-11
Y/E 28.02, EUR m
May-11
Jan-11
Mar-11
EUR 22.50
Market cap
EUR 4,376 m
Reuters
SZUG
Bloomberg
SZU GY
Nov-10
EUR 21.43
in Europe and manufacturer of food ingredients, bioethanol,
starch, frozen foods and fruit preparations. It has a c75% stake in
Agrana which represents its starch, fruit preparation/juice
concentrates and CEE sugar activities.
Quality: EU sugar made up 73% of (record) FY 2013 profits and
although management has talked about investments outside of
Europe and new product areas (eg fruit preparation), Südzucker
remains highly exposed to falling (and volatile) EU sugar prices
and commodity prices such as bioethanol outputs as well as grain
and sugar beet input costs. From a volume perspective,
Südzucker is well positioned to benefit from the abolition of EU
sugar quotas in 2017, although further investment is likely to be
required and the ultimate outcome will depend on the
competitive dynamics of other EU producers.
Growth: FY 2014 is a challenging year for Südzucker, with
operating profits guided down 15% yoy to EUR828m, although
we expect nearer EUR780m. Despite management’s outlook for
“stable” sugar pricing, our industry sources suggest quota
contracts for the 2013/2014 Sugar Marketing Year are closer to
cEUR650 per tonne (from cEUR720-750 currently). Combined
with higher input costs, we expect Sugar division profits to fall by
25% in FY 2014. In addition, higher starch and bioethanol input
costs and the (short-term) effect of the Ensus acquisition at
CropEnergies means group profits could fall by 20%. The Fruit
division should see good sales and profit momentum driven by
demand for yoghurt preparations and emerging markets. We
expect further, sugar-driven, profit declines in FY 2015.
Valuation: The stock is down 32% ytd and now trades on 10.2x
calendar 2014 P/E. Although optically cheap, we believe this is
appropriate considering the three-year -14% EPS CAGR and the
uncertainty involving the industry outlook following the abolition
of the EU sugar quotas. The 4.2% dividend yield provides
downside support at these levels. Our EUR22.50 price target is
derived from an average of our peer multiple (EUR24.40), SOTP
(EUR20.80) and DCF (EUR22.20) fair values.
Share catalysts: Guidance for the EU sugar price for the 2014
Sugar Marketing Year (from October) will be key to sentiment,
although late contract negotiations mean we expect little colour
at the H1 results (10 October). Ultimately, concerns about lower
sugar prices over the next 12+ months will be a headwind for
sentiment and forecasts, continuing until greater visibility exists
on the implications of 2017 quota abolition for Südzucker.
Jul-10
Price target
Sep-10
Current price
May-10
Jan-10
Mar-10
Hold
● Company overview: Südzucker AG is a leading sugar processor
Cross-Sector
Süss Microtec AG
8 October 2013
Buy
Current price
Price target
EUR 6.88
EUR 9.40
● Company overview: Süss is a leading supplier of equipment
and process solutions for the semiconductor and LED
industry. It focuses primarily on the mid- and back-end of the
semiconductor fabrication process, supplying equipment
which is used in packaging and MEMS manufacturing
processes. It also supplies photomask cleaning tools used in
the front-end semiconductor fabrication process.
Market cap
EUR 147 m
Reuters
SMHNn
Bloomberg
SMHN GY
Y/E 31.12, EUR m
19
102,309
2012
2013E
2014E
164
153
188
215
EBIT
12
-8
19
29
8
-8
13
20
-26
-5
-7
-21
EPS (reported)
0.49
-0.40
0.67
1.04
EPS (recurring)
0.41
-0.04
0.67
1.04
Y/E net debt
DPS
0.00
0.00
0.00
0.00
EBIT margin
7.2%
-5.5%
9.9%
13.7%
Dividend yield
0.0%
0.0%
0.0%
0.0%
ROCE
7.5%
-6.0%
9.6%
13.1%
EV/sales
0.6
0.9
0.8
0.7
EV/EBIT
7.7
-10.2
7.5
4.8
15.8
nm
10.4
6.6
PER
benefit from back-end cycle recovery and 3D packaging
trends. With its Tamarack Scientific acquisition in 2012, it has
established a more comprehensive product portfolio than
those of its competitors Ultratech, Tokyo Electron and EVG.
We believe its ability to supply a full range of
product/solutions has given Süss a competitive edge. Its
expertise in 3D bonder technology and the strong
relationship it has with the leading international Integrated
Device Manufacturer (IDM) will give it significant revenue
growth potential once 3D chip packaging becomes the
mainstream solution to new chips, which is expected to be in
2016.
2015E
Sales
Net profit
● Quality: We believe the company is well positioned to
● Growth: We expect growth to be driven by the lithography
segment between 2013 and 2015, before 3D bonder revenue
starts to grow. We forecast a 10% CAGR top-line growth
from 2012 to 2015, driven by back-end order recovery. We
are expecting the company’s operating margin to improve to
13.7% in 2015 due to an increased top line, a better pricing
environment and better margins due to a new Tamarack
order and cost saving plans.
● Valuation: Our EUR9.4 price target is based on a 14x P/E
Tammy Qiu
+44 20 3465 2673
[email protected]
on 2014 adjusted EPS of EUR0.67. The 14x P/E is at the
mid-point of the historical 11-18x multiple applied in the
middle of the order recovery cycle.
Share catalysts: We believe a catalyst for the share could be
the next quarter’s earnings announcement on 7 November,
and that any positive comments related to the back-end order
trend recovery and pricing environment could be positive for
the stock.
●
Segment margin trend
250
15.0%
200
10.0%
150
5.0%
100
0.0%
50
-5.0%
0
30%
20%
10%
0%
-10%
-20%
-30%
-40%
-50%
-60%
EBIT margin
Sales (EUR)
-10.0%
10
11
12
Sales (EUR)
13E
14E
2011
15E
EBIT margin
Lithography
2012
Bonder
101
2013E
2014E
2015E
Photo mask equipment
Cross-Sector
Symrise AG
8 October 2013
Hold
Current price
Price target
EUR 32.09
EUR 32.00
● Company overview: Symrise is the fourth-largest player in
the flavours and fragrances market (after Givaudan,
Firmenich and IFF), with c10% share of the global market.
Symrise is the global leader in oral care products; it is fully
backwardly integrated into the key raw material – synthetic
menthol.
EUR 3,660 m
SY1G
SY1 GY
Market cap
Reuters
Bloomberg
118
775,000
● Quality: Symrise is well positioned to serve the flavour and
fragrance business and enjoys a solid reputation in this space,
mainly due to the company’s consistent operational
performance. This is driven by a strong customer base, split
as follows: 33% – top 10 accounts; 34% – regional clients;
and 33% – local clients. This well balanced customer base
minimises dependency and increases stability, enabling the
company to service very different groups efficiently. Symrise
is the number one player, with a particularly strong position
in (sweet) flavours.
● Growth: Symrise has increased its market share in emerging
Y/E 31.12, EUR m
2012
Sales
2013E
2014E
1,734
1,863
1,957
2,054
EBITDA
338
400
423
453
EBIT
252
304
329
355
Net profit
158
202
220
240
Y/E net debt
442
318
190
51
EPS (reported)
1.34
1.71
1.87
2.03
EPS (recurring)
1.34
1.71
1.87
2.03
DPS
0.62
0.85
0.93
1.02
EBITDA margin
19.5%
21.5%
21.6%
22.0%
EBIT margin
14.5%
16.3%
16.8%
17.3%
2.0%
2.8%
2.9%
3.2%
13.1%
15.3%
15.7%
16.1%
FCF yield
4.0%
4.8%
5.1%
5.6%
EV/sales
2.6
2.3
2.2
2.0
EV/EBITDA
13.2
10.9
10.3
9.3
EV/EBIT
17.7
14.3
13.2
11.9
PER
23.2
18.1
17.2
15.8
Dividend yield
ROCE
markets up to 48% (from 39% in 2007) thanks to doubledigit growth in Latin America and Asia. New business in
fragrances and oral care, coupled with fast-growing demand
for its fine fragrances, personal care and processed food and
beverages products have led to an expansion in
infrastructure. Growth in the flavours and fragrances market
is estimated at 2-3% over the last five years and Symrise has
outperformed the market by c3-4% in this period. We expect
Symrise to continue to outperform the market by 2-3% as we
expect sales growth of 5.8% for 2012-2015. It has managed
to register an organic sales CAGR of 6% and EBITDA
growth of 6% for 2006-2012. Driven by product mix
improvement, we believe Symrise can deliver stronger
EBITDA growth of 15% for 2012-2015.
2015E
● Valuation: Our price target of EUR32 per share is DCF-
Jaideep Pandya
+44 20 3207 7890
[email protected]
● Share catalysts: Symrise is one of the leaders in menthol,
derived. We think that current valuation of the company is
already factoring robust sales growth assumptions and are
concerned about potential slowdown of growth in 2014 due
to tough comparables.
where it has expanded capacity recently – but so will
competitors. We believe capacity additions and price
developments should be monitored by investors. Consumers
sentiment and spend are macro catalysts.
Geographical sales split
2,000
17.0%
1,500
16.0%
1,000
15.0%
500
14.0%
0
13.0%
10
11
12
Sales (EUR)
13E
14E
12%
49% EAME
EBIT margin
18.0%
Sales (EUR)
2,500
North America
22%
Asia Pacific
Latin America
17%
15E
EBIT margin
102
Cross-Sector
TAG Immobilien AG
8 October 2013
Buy
Current price
Price target
EUR 8.85
EUR 10.50
● Company overview: Primarily exposed to the German
residential market (87%), as well as office properties (13%),
TAG’s portfolio has now reached ~70,000 units following
two major portfolio acquisitions. This is now a reasonable
portfolio size, at which scale effects and an improvement in
profitability have already become visible despite the increase
in regional diversification.
Market cap
EUR 1,207 m
Reuters
TEGG
Bloomberg
TEG GY
131
225,000
● Quality: With vacancy rates currently standing at 9.3%, TAG
benefits from the potential to decrease vacancies within the
residential portfolio further, especially in Salzgitter (~12% of
TAG’s residential portfolio), where the vacancy rate is high at
~20%. The quality of the residential portfolio is broadly
average, with regional exposure now primarily to eastern
Germany.
● Growth: The portfolio has grown rapidly, from around 5,000
Y/E 31.12, EUR m
2012
2013E
2014E
2015E
Total revenues
366
265
272
276
Net rents
192
255
265
271
net)
303
198
248
258
273
152
164
170
190
109
146
156
40
71
90
98
EPS reported
2.00
0.84
1.12
1.19
FFO per share
0.30
0.55
0.69
0.75
DPS
0.25
0.40
0.50
0.55
NAV per share
8.69
8.56
9.11
9.27
NNAV per share
9.62
9.52
10.19
10.48
Funds From
Operations (FFO)
EV/EBITDA
FFO yield
P/FFO
13.1
23.7
22.0
21.5
3.2%
5.9%
7.5%
8.1%
31.3
16.9
13.4
12.4
2.6%
4.3%
5.4%
6.0%
P/NAV per share
-5%
-6%
-12%
-15%
P/NNAV per share
-1%
-3%
-9%
-12%
208%
217%
204%
204%
Loan-to-value (LTV)
60%
61%
60%
59%
Implied yield
5.3%
7.0%
7.3%
7.3%
Dividend yield
Net gearing
units, since Rolf Elgeti became CEO in 2009. Following the
acquisition of two portfolios (DKBI and TLG), TAG has
taken a step back this year to focus on integrating both
portfolios. The CEO seems optimistic, however, about
acquiring up to 10,000 units by year-end. The company’s
focus is on existing regions, which should increase TAG’s
profitability further. We expect the trend of higher occupancy
as well as rent levels to continue in the coming years.
● Valuation: We expect TAG to have slightly higher gearing
levels than its relevant peers (its loan-to-value is 63%),
although its average debt maturity is long at around nine
years. TAG’s dependence on single banks is quite low and it
currently has an average cost of debt of 4.1%. TAG is now
trading at a discount to NAV 2013E of ~6% and offers a
4.3% dividend yield.
● Share catalysts: Falling vacancy rates and rising rental levels
are the main operational triggers. In addition, up to 10,000
units are expected to be acquired by year-end. The disposal of
selected residential portfolios also remains on the table.
Ruffer 15%; Flossbach von Storch Invest 12%; Sun Life 10%
Kai Klose, CIIA
+44 20 3207 7888
[email protected]
Estelle Weingrod
+44 20 3207 7931
[email protected]
200.0%
180.0%
160.0%
140.0%
120.0%
100.0%
80.0%
60.0%
40.0%
20.0%
0.0%
Rents in EUR
250
200
150
100
50
0
10
11
12E
13E
Total rental income
14E
North Rhine
Westphalia
8%
EBIT-margin in %
300
Geographical split
Salzgitter
11%
ThuringiaSaxony
42%
Hamburg
region
18%
Greater Berlin
21%
15E
EBIT margin
103
Cross-Sector
TAKKT AG
8 October 2013
Buy
Current price
Price target
EUR 14.50
EUR 16.00
● Company overview: TAKKT is one of the leading players
Market cap
EUR 843 m
Reuters
TTKG
Bloomberg
TTK GY
66
31,285
●
Y/E 31.12, EUR m
2012
2013E
2014E
2015E
Sales
940
1,007
1,058
1,115
EBITDA
134
143
153
163
EBIT
120
130
137
149
67
71
81
91
Y/E net debt
325
258
182
103
EPS (reported)
1.02
1.08
1.24
1.39
EPS (recurring)
1.15
1.33
1.39
1.53
DPS
0.32
0.33
0.37
0.42
EBITDA margin
14.2%
14.2%
14.5%
14.7%
EBIT margin
12.8%
12.9%
13.0%
13.4%
3.2%
2.5%
2.9%
3.2%
ROCE
21.3%
18.6%
18.8%
19.9%
FCF yield
10.0%
9.3%
10.2%
10.9%
EV/sales
1.1
1.1
1.0
0.9
EV/EBITDA
7.6
8.0
6.9
6.0
EV/EBIT
8.5
8.8
7.7
6.6
PER
8.7
9.7
9.2
8.4
Net profit
Dividend yield
●
●
Franz Haniel & Cie. GmbH 50.3%
Bjoern Lippe
+44 20 3207 7845
[email protected]
●
in the B2B durables market, selling products such as plant
and warehouse equipment, packaging solutions and display
articles from third-party vendors to businesses in both
Europe and the Americas. Around 55% of revenues are
generated in Europe, the remainder stem from the TAKKT
America division. Across all subsidiaries, TAKKT operates in
more than 25 countries, offering over 200,000 products to
more than 3m customers.
Quality: Over the years, TAKKT has developed a highly
scalable multi-channel network covering all major marketing
channels. In this way, TAKKT has developed a reputation
for reliability and high-quality products, with global
businesses among its client list. TAKKT also has a strong
track record of generating significant amounts of cash, gained
through high-quality earnings. This is demonstrated by the
average ROCE of 18.4% and average EBITDA margin of
12.6% that it has delivered over the past 10 years.
Growth: Although TAKKT has historically been able to
keep relatively stable margins due to its high-quality business
model, it is exposed to cyclical trends. During the first half of
2013, TAKKT was exposed to a number of negative external
trends which led to an organic decline. However, we expect a
recovery during the second half. With Berenberg economists
forecasting a eurozone recovery and US GDP growth of
c2.5% in 2014, TAKKT is poised to benefit from its cyclical
exposure. We thus expect revenue growth of c4.9% for 2014
onwards. In addition, TAKKT plans to grow on average by
5% through acquisitions.
Valuation: Despite the strong recent performance of the
stock, it still trades at a 22% discount to its peer group on the
basis of 2014 EV/EBITDA while generating a higher margin
than the peer group on average. We value TAKKT using a
DCF model and reach a price target of EUR16.00.
Share catalysts: Since TAKKT is a cyclical company, a
positive or negative change in economic factors could prove
a catalyst for the stock. At the same time, TAKKT follows an
expansion strategy and has a good track record of value-add
acquisitions. The announcement of any further acquisition
could also be a catalyst for the stock.
1,200
Free cash flow generation
120.0
15.0%
100.0
800
10.0%
600
400
5.0%
EBIT margin
Sales (EUR)
1,000
80.0
60.0
40.0
200
0
11
12
Sales (EUR)
13E
14E
82
95
70
88
97
104
20.0
0.0%
10
66
0.0
15E
2009
EBIT margin
2010
2011
104
2012 2013E 2014E 2015E
Cross-Sector
Telekom Austria Group
8 October 2013
Sell
Current price
Price target
EUR6.25
EUR4.20
Market cap
EUR2,809m
Reuters
TELA.VI
Bloomberg
TKA AV
442
0
 Company overview: Telekom Austria (TKA) is the
incumbent telecoms operator in Austria and has built up an
enviable mobile market share position in several CEE
countries through a period of deal-making over 2005-2007.
Lately it has been acquiring broadband assets in CEE to
bundle wireline services to its mobile portfolio. The two largest
shareholders in the company are the Austrian government,
which owns 28.4%, and América Móvil, which has recently
amassed a direct and indirect stake of 25.9%.
 Quality: A combination of a depressed macro environment
and currency devaluations in CEE, and hyper competition in
the domestic mobile market on an inflexible cost base, has
resulted in a significant decline in profitability over the past few
years.
Y/E 31.12, EURm
2012
2013E
2014E
2015E
Sales
4,330
4,216
4,120
4,101
EBITDA
1,456
1,311
1,253
1,262
EBIT
491
379
362
438
Net profit
131
135
113
172
3,249
3,681
3,523
3,377
EPS (reported)
0,23
0.27
0.10
0.23
EPS (recurring)
0.30
0.31
0.25
0.39
DPS
0.05
0.05
0.05
0.05
EBITDA margin
33.6%
31.1%
30.4%
30.8%
EBIT margin
Y/E net debt
11.4%
9.0%
8.8%
10.7%
Dividend yield
0.8%
0.8%
0.8%
0.8%
ROCE
7.8%
5.3%
5.1%
6.1%
FCF yield
19.4%
18.7%
17.2%
17.8%
EV/sales
1.7
1.8
1.9
1.9
EV/EBITDA
5.3
5.9
6.2
6.1
EV/EBIT
17.0
21.6
28.3
22.2
PER
21.5
20.8
25.0
16.3
OeIAG: 28.4%
America Movil (direct and indirect): 25.9%
 Growth: Given an inflexible cost base, revenues must inflect
for EBITDA to stabilise. We do not think this is realistic in the
near term due to continued aggression by Hutchison in the
Austrian mobile market and regulatory pressures on voice
termination and roaming rates in CEE. We expect revenues to
decline by 2% in 2014 (after 2.6% in 2013) leading to an
EBITDA decline of 4%.
 Valuation: The shares are expensive on most metrics trading
on 20x earnings (sector 10-12x), an EV/2014 EBITDA of 6x
and (sector 5.5-5.8x) and EV/OpFCF of 13x (sector 11-12x).
This is despite one of the weakest balance sheets in the sector
with net debt/EBITDA at 2.6x (including the hybrid bond
issuance in the debt). The premium valuation has been driven
by M&A speculation which we believe will disappoint as a
result of which the shares should fall back to trading at a sector
discount on above-average risk to estimates from competition,
regulatory pressures and currency risks.
 Share catalysts: In the near term, there is a risk of a rights
issue at TKA to fund potentially higher than expected costs for
the spectrum auction and the acquisition of a cable asset in
Serbia.
Usman Ghazi
+44 20 3207 7824
[email protected]
4,600
14.0%
3.0x
12.0%
2.5x
Sales (EUR)
10.0%
4,400
8.0%
4,200
6.0%
4.0%
4,000
EBIT margin
4,800
Leverage is too high
11
12
Sales (EUR)
13E
14E
2.7
2.2
2.5
2.0
1.5x
1.0x
0.5x
-
0.0%
10
2.3
2.0x
2.0%
3,800
2.8
2.8
2.4
2013
15E
2014
2015
Net Debt:EBITDA (co defined)
EBIT margin
Net Debt:EBITDA (ad.for hybrid and provision)
105
2016
Cross-Sector
Tipp24 SE
8 October 2013
Buy
Current price
Price target
EUR 47.50
EUR 68.00

Company overview: Tipp24 was the leading broker for
online lottery tickets in Germany (c60% market share) until
online lottery was banned in Germany in 2009. Since then,
Tipp24 has increasingly focused on its business abroad,
operating secondary lotteries through its UK subsidiary
MyLotto24 (including bookmaker risk) that boosted
revenues by 95% in 2009.

Quality: Operating secondary lotteries is a high-margin
(more than 40%) and highly cash-generative business
(operating cash flow of cEUR28m). Cash flows in this
business are sustainable, we believe, as with last year’s
introduction of the CAT bond, Tipp24 has managed to
bring the risk of large jackpots under control. We expect
Tipp24 to pay dividends on an annual basis from 2014.

Growth: Revenues should experience an uplift following a
33% price increase in the “6 out of 49” lotto in May 2013.
However, apart from this effect, growth is limited for
Tipp24’s traditional secondary lottery business because the
company is not allowed to advertise in Germany. Therefore
Tipp24 has recently acquired a stake in Geonomics, which
holds a UK licence for a geo-based lottery. Instead of a
combination of numbers, lottery players choose a square on
a map, such as one containing their house. Sector experts
have labelled it as a key innovation in the lottery industry. In
addition, Tipp24 is aiming to offer online lottery platforms
as white label solutions to state lotteries. We expect it to
focus on North America, where online lotteries have always
been forbidden but where regulation has shown signs of
softening since 2011.
Market cap
EUR 398 m
Reuters
TIMGn
Bloomberg
TIM GY
Y/E 31.12, EUR m
8
24,000
2012
Sales
2013E
2014E
2015E
143
145
151
154
EBITDA
63
40
53
62
EBIT
56
34
46
56
Net profit
41
25
34
41
Y/E net debt
-132
-174
-210
-218
EPS (reported)
4.87
2.99
4.07
4.92
EPS (recurring)
3.17
2.99
4.07
4.92
DPS
0.00
0.00
4.09
4.38
EBITDA margin
44.5%
27.8%
35.0%
40.5%
EBIT margin
39.5%
23.2%
30.5%
36.0%
0.0%
0.0%
8.6%
9.2%
37.3%
18.7%
21.1%
23.5%
FCF yield
5.4%
6.8%
8.9%
10.8%
EV/sales
1.7
1.5
1.3
1.2
EV/EBITDA
3.9
5.6
3.6
2.9
EV/EBIT
4.4
6.6
4.1
3.2
11.4
15.9
11.7
9.7
Dividend yield
ROCE
PER
*includes client funds of approximately EUR16m
Oliver Jaster 24.99%
Marc Peters 4.82%
Jens Schumann 4.45%
 Valuation: Trading cheaply at 4.1x 2014 EV/EBIT, we
believe the expected dividend payments are so far not
reflected in the share price. We value the stock based on
DCF, deriving a price target of EUR68, which implies an
upside potential of more than 40%.

Gunnar Cohrs, CFA
+44 20 3207 7894
[email protected]
Share catalysts: The announcement of a dividend payment
after the relocation to the UK should be the major catalyst
but positive newsflow on the recent re-launch of GeoSweep
(now GeoLotto) should also drive the share price.
Legal status in US
160
50.0%
155
40.0%
150
30.0%
145
20.0%
140
10.0%
135
130
EBIT margin
Sales (EUR)
0.0%
11
12
13E
Sales (EUR)
14E
15E
16E
EBIT margin
106
Cross-Sector
Tomorrow Focus AG
8 October 2013
Buy
Current price
Price target
EUR 3.99
EUR 4.60
● Company overview: Tomorrow Focus (TFA) is one of
Market cap
EUR 233 m
Reuters
TFAG
Bloomberg
TFA GR
●
Y/E 31.12, EUR m
58
11,333
2012
Sales
2013E
2014E
2015E
152
198
229
253
EBITDA
28
27
32
35
EBIT
20
19
23
26
Net profit
15
11
14
14
Y/E net debt
16
-6
-10
-15
EPS (reported)
0.28
0.19
0.24
0.25
EPS (recurring)
0.18
0.19
0.24
0.25
DPS
0.06
0.04
0.05
0.05
EBITDA margin
18.9%
14.1%
14.5%
14.5%
EBIT margin
13.4%
9.6%
10.5%
10.6%
1.7%
1.0%
1.3%
1.3%
13.9%
11.4%
12.6%
13.1%
FCF yield
3.9%
1.5%
4.7%
4.9%
EV/sales
1.5
1.2
1.0
0.9
EV/EBITDA
8.1
8.4
7.0
6.2
EV/EBIT
11.5
12.3
9.6
8.5
PER
20.2
20.8
16.6
16.3
Dividend yield
ROCE
●
Burda GmbH 59%
Management Board 0.6%
Supervisory Board 5.2%
●
+44 20 3465 2631
[email protected]
●
Germany’s leading internet technology companies. Its business
activities are split into three segments: e-commerce (including
online travel and online dating (75%)), online advertising (16%)
and B2B digital services (6%). German consumer publisher
Burda owns 59% of TFA.
Quality: TFA has gradually transformed from a provider of
professional journalistic content into a business that earns an
increasing share of its revenues from commissions levered on
transactions on its travel, matchmaking and health portals.
Through its flagship website HolidayCheck (45m unique users
pa), TFA operates the largest online holiday booking and rating
website in the German-speaking region, with a focus on the sale
of package holidays from large tour operators. A revenuesharing model is in place and we estimate that TFA keeps 11%
of the total transaction volume as a booking fee. TFA also runs
ElitePartner, the leading matchmaking website in Germany.
TFA’s advertising revenue is in structural decline and has been
reduced by the sale of parts of the business. The segment
accounted for 18% of 2012 revenue (24% in 2011).
Growth: The shift from an advertising to a transaction-based
model has led to sales growth (a 18% CAGR 2008-12) and
earnings expansion (a 23% CAGR 2008-12). TFA has made
significantly investments to expand its travel segment
internationally by completing three European acquisitions in
2012. We expect to see further acquisitions in the mid-term and
believe TFA will grow its online travel operations organically. It
invested roughly EUR50m in its travel operations last year,
which will help maintain its positive momentum and increase
internationalisation. We still see significant potential in the UK,
where the online share of packaged tour bookings is 50%. We
also expect to see a consolidation of the matchmaking market,
which we believe will help ElitePartner gain new customers.
Valuation: We retain our Buy rating and EUR4.60 price target,
which is based on DCF valuation. The upside is based on good
growth momentum and a shift towards the better margin
transactions business and cost-efficient user-generated content.
Share catalysts: The continued reorientation away from
professionalised content towards user-generated and hybrid
content verticals and transaction-based business will support
share price growth. Content acquisitions in growth areas (ie
automotive) and additions in the health space could act as share
catalysts.
EBITDA segment development
45
300
14.0%
250
12.0%
35
10.0%
30
200
8.0%
150
6.0%
100
4.0%
40
EBIT margin
Sales (EUR)
25
20
15
10
5
50
2.0%
0
0
0.0%
-5
10
11
12
Sales (EUR)
Source: Company, Berenberg
13E
14E
15E
-10
2009
2010
Transaction
EBIT margin
107
2011
2012
Advertising
2013E
2014E
Technologies
2015E
Cross-Sector
Tom Tailor Holding AG
8 October 2013
Buy
Current price
Price target
EUR 15.77
EUR 20.00
● Company overview: Tom Tailor (TT) is an apparel retailer
that focuses on a young, mid-priced customer group through
its Tom Tailor Denim and Tom Tailor Casual brands, and on
over 45s through its recently acquired Bonita brand (40% of
group sales). Historically exposed to wholesale (c60% of
group sales prior to acquiring Bonita, and c30% after) and
Germany (more than 60% of group sales), it is now also
expanding its own retail.
Market cap
EUR 381 m
Reuters
TTIGn
Bloomberg
TTI GY
24
34,000
● Quality: In the intensely competitive young fashion segment,
Y/E 31.12, EUR m
2012
Sales
2013E
2014E
2015E
630
894
969
1,046
EBITDA
67
95
119
141
EBIT
28
42
63
80
0
6
31
44
Net profit
Y/E net debt
248
232
196
152
EPS (reported)
0.01
0.27
1.28
1.80
EPS (recurring)
0.78
0.97
1.64
2.16
DPS
0.00
0.00
0.00
0.54
10.6%
10.6%
12.3%
13.5%
EBIT margin
4.4%
4.7%
6.5%
7.7%
Dividend yield
0.0%
0.0%
0.0%
3.4%
ROCE
6.3%
6.6%
9.8%
11.8%
FCF yield
-7.8%
4.6%
9.5%
11.4%
EV/sales
0.9
0.7
0.6
0.5
EV/EBITDA
8.9
6.5
4.9
3.8
EV/EBIT
21.4
14.6
9.1
6.6
PER
18.2
16.3
9.6
7.3
EBITDA margin
TT stands out with its focus on PoS, creating a premium feel
but maintaining competitive prices. Being a fashion follower,
it benefits from lean business processes, with production lead
times varying from five weeks (for “hot” items) to the
standard 23-26 weeks, and monthly collections. Bonita
benefits from limited competition in its customer group.
However, it lags behind its peers in terms of product design
and development processes, and has thus reported negative
lfl sales development in the last few years.
● Growth: 18% sales CAGR 2012-2015E is driven by: a)
integration of Bonita (acquired in summer 2011, 40% of
group sales); b) own-retail expansion, with plans for 100 new
stores per year; and c) internationalisation and further
Wholesale expansion, ie the launch of the Polo Team brand.
We expect cost optimisation programmes (in-house sourcing,
incorporation of Bonita into in-house sourcing) and an
increase in the share of mature stores within the own-retail
network to drive margin improvement: we expect the
EBITDA margin to increase from 10.6% in FY 2012 to
13.5% by 2015E. Improving cash flow and, consequently,
decreasing net debt and financial charges are set to support
EPS CAGR of 40% over 2012-2015E.
Bonita 24.9%
Management 2.0%
● Valuation: At 10x P/E 2014E, the stock trades at a 30%
discount to its peers. Our price target of EUR20.00 is based
on CFRoEV 2014E and implies 27% upside potential.
Anna Patrice, CFA
+44 20 3207 7863
[email protected]
● Share catalysts: Earlier-than-expected Bonita improvement,
with signs of positive lfl sales growth already in Q3 2013E,
and a return to margin expansion should be major share
catalysts.
Sales versus EBITDA CAGR 2009-12/2012-15E
30%
1,000
8.0%
25%
800
6.0%
600
4.0%
400
200
2.0%
0
0.0%
11
12
13E
Sales (EUR)
14E
15E
EBIT margin
10.0%
Sales (EUR)
1,200
20%
15%
10%
5%
0%
16E
CAGR 2009-2012
EBIT margin
Sales
108
CAGR 2012-2015
EBITDA
Cross-Sector
United Internet AG
8 October 2013
Buy
Current price
Price target
EUR27.95
EUR35.00
● Company overview: United Internet is the second-largest
German residential broadband provider in Germany with
operations in mobile since 2010. In addition, the company has a
sizeable online business in 10 countries with 60% of revenues
derived from web-hosting for the mass-market and the
remaining 40% from online advertising and premium email
services.
Market cap
EUR5,508m
Reuters
UTDI.DE
Bloomberg
UTDI GY
Y/E 31.12, EURm
194
280,000
2012
Sales
2013E
2014E
2,668
3,028
3,341
EBITDA
344
399
502
636
EBIT
233
303
412
567
Net profit
108
202
275
390
Y/E net debt
257
314
284
33
EPS (reported)
0.70
1.05
1.42
2.02
EPS (recurring)
0.70
1.05
1.42
2.02
DPS
0.30
1.40
0.60
0.80
13.6%
14.9%
16.6%
19.0%
EBIT margin
9.7%
11.4%
13.6%
17.0%
Dividend yield
1.1%
5.0%
2.1%
2.8%
37.4%
39.1%
53.7%
49.2%
FCF yield
3.4%
3.9%
5.5%
6.9%
EV/sales
2.3
2.0
1.8
1.6
EV/EBITDA
16.6
13.6
10.8
8.5
EV/EBIT
23.2
17.8
13.1
9.5
PER
40.1
26.9
19.9
14.0
ROCE
the company’s national 1&1 brand which is among the fastest
growing mobile and broadband providers in Germany today. In
addition, by primarily selling online, the company’s cost base is
lean allowing it to price its products aggressively versus the
competition which tend to have additional costs related to
expensive brick-and-mortar retail presence. In the online
business, United Internet is the second-largest global web
hosting provider positioned for the mass-market after
GoDaddy, allowing it scale benefits to differentiate versus
competition in terms of quality of service and brand advertising.
2015E
2,397
EBITDA margin
● Quality: In telecoms, a period of reinvestment has rejuvenated
● Growth: We believe a combination of subscriber growth
improving profitability and lower start-up investments should
yield double-digit growth in EBITDA, earnings and free cash
flow over the next few years. We estimate a revenue CAGR
2014-17 of 8% translating into earnings and free cash flow
CAGRs of 23% and 18% respectively.
● Valuation: On price earnings, United Internet looks expensive
trading on 20x 2014 estimates but not in relation to the growth
on offer of a CAGR 2014-17 of 23%. Our DCF-based SOTP
value for the business is EUR35.
● Share catalysts: In the near term, we expect subscriber
profitability to surprise to the upside leading to consensus
earning upgrades for 2014 and 2015. Low leverage also leaves
room for surprise on shareholder returns. Over the mid-term, a
de-merger of the telecoms and applications business is also a
prospect.
Ralph Dommermuth (CEO) 43.8%
Usman Ghazi
+44 20 3207 7824
[email protected]
Wassil El Hebil
+44 20 3207 7862
[email protected]
Low leverage raises prospect for special dividend
3,000
15.0%
2,000
10.0%
1,000
5.0%
0
11
12
Sales (EUR)
13E
14E
0
1.6
0
-50
-100
1.2
1.0
0
-32
-52
1.4
-118
-134
-150
-200
0.8
-250
0.6
-300
0.4
0.2
0.0%
10
0
1.8
EBIT margin
20.0%
Sales (EUR)
4,000
-350
-340
0.0
15E
-400
2007
EBIT margin
2008
2009
2010
Share buybacks (Eurm)
109
2011
2012
2013E
Net Debt:EBITDA
2014E
Cross-Sector
Verbund AG
8 October 2013
Sell
Current price
Price target
EUR 16.63
EUR 12.80
● Company overview: Verbund is an Austrian electricity
company involved in electric generation, transmission and
distribution. It is one of the largest European hydro producers
(over 80% of its production). It is active within central Europe,
predominantly in Austria and Germany. Verbund is listed on
the Austrian stock exchange and is 57%-owned by the Austrian
government.
Market cap
EUR 5,892 m
Reuters
VERB.VI
Bloomberg
VER AV
347
221,937
● Quality: Verbund’s key expertise is in electricity generation
which accounts for 94% of its EBITDA. Both hydro output
and power prices are key to profitability. Its strength in hydro
output, which is both clean and low-cost, places Verbund ahead
of competitors on the cost curve.
● Growth: Verbund’s recent growth has been industry-driven and
Y/E 31.12, EUR m
2012
2013E
2014E
2015E
Sales
3,174
3,205
3,159
3,223
EBITDA
1,234
1,050
835
790
EBIT
900
676
451
406
Net profit
339
329
229
191
3,312
3,997
4,015
3,846
EPS (reported)
1.12
0.95
0.66
0.55
EPS (recurring)
1.12
0.95
0.66
0.55
DPS
0.60
1.00
0.33
0.27
EBITDA margin
38.9%
32.7%
26.4%
24.5%
EBIT margin
28.4%
21.1%
14.3%
12.6%
Dividend yield
3.5%
5.9%
1.9%
1.6%
ROCE
8.1%
6.5%
4.4%
3.9%
FCF yield
0.8%
4.2%
5.7%
4.9%
EV/sales
3.1
3.3
3.3
3.2
EV/EBITDA
8.0
10.0
12.6
13.1
EV/EBIT
10.9
15.6
23.4
25.6
PER
15.1
17.9
25.7
30.9
Y/E net debt
has been predominately organic. The business is split into three
core segments: Electricity, Grid and Equity Interests &
Services. We expect profitability in Electricity to decline to 2015
due to a declining power prices and lower hydro output. We are
forecasting considerable growth in EBITDA for the Grid
business of up to 200% by 2017, although Grid currently only
represents 7% of EBITDA.
● Valuation: There is a distinct anomaly between our SOTP
DCF and DDM, both suggesting upside, and our P/E and
dividend yield, both suggesting downside. This reflects the
Verbund story: a great set of long-term assets but plagued by
many short-term issues. Verbund is trading at a 22% P/E
2013E premium to the sector, although it is delivering a -24%
EPS CAGR 2013E-2015E against the sector’s 6%. Our blended
valuation implies downside against the current share price. We
have a price target of EUR12.80.
● Share catalysts: We see four main catalysts to drive the shares:
1) power price development, where we see little chance of a
significant recovery in the foreseeable future. We believe the
recent rise in the German power price has been driven by hopes
of German energy reform which we think are some way off
(negative); 2) hydro output, we assume a wetter-than-average
2013 before returning to the long-term average (positive); 3) gas
contract renegotiations in Italy solving the structural problems
facing Sorgenia (positive); and 4) fixing the losses coming from
the French gas-fired electricity turbines (positive). Overall we
believe that the first catalyst will be the dominant driver of the
share price.
Republic of Austria (56.99%); Wiener Stadtwerke
(11.53%); EVN AG (11.53%); TIWAG (5.59%)
Lawson Steele
+44 20 3207 7887
[email protected]
Andrew Fisher
+44 20 3207 7937
[email protected]
Oliver Salvesen
+44 20 3207 7818
[email protected]
German baseload power (EUR/MWh)
4,000
25.0%
20.0%
3,000
15.0%
2,000
10.0%
75
70
65
EBIT margin
30.0%
Sales (EUR)
5,000
60
55
50
1,000
5.0%
45
0
0.0%
40
10
11
12
Sales (EUR)
13E
14E
15E
35
Sep/09
EBIT margin
Mar/10
Sep/10
2011
Mar/11
2012
110
Sep/11
2013
Mar/12
2014
Sep/12
2015
Mar/13
Cross-Sector
Vossloh AG
8 October 2013
Sell
Current price
Price target
EUR 63.56
EUR 65.00
● Company overview: Vossloh supplies components for the
global rail infrastructure market, particularly in Europe. This
business, which provides fastening and switch systems, as well
as rail services, accounts for around 60% of group sales over
the cycle. Moreover, Vossloh is renowned for its transportation
business (c40% of sales), the prime focus of which is on
producing diesel-electric and diesel-hydraulic locomotives. The
group has a workforce of around 5,000 employees, and is
present in more than 30 countries with 90 companies,
distributors and strategic alliances.
Market cap
EUR 897 m
Reuters
VOSG.DE
Bloomberg
VOS GY
12
28,100
● Quality: Vossloh enjoys relatively high market shares in its rail
Y/E 31.12, EUR m
2012
Sales
2013E
2014E
2015E
1,243
1,298
1,342
1,383
139
139
156
163
EBIT
98
98
107
112
Net profit
59
51
57
58
EBITDA
Y/E net debt
205
204
213
176
EPS (reported)
4.56
3.89
4.34
4.44
EPS (recurring)
5.34
3.96
4.42
4.52
DPS
2.00
2.10
2.20
2.40
11.1%
10.7%
11.6%
13.6%
EBIT margin
7.9%
7.6%
8.0%
10.9%
Dividend yield
2.7%
2.8%
2.9%
3.2%
ROCE
9.4%
9.5%
10.1%
10.0%
FCF yield
12.5%
5.2%
3.2%
5.9%
EV/sales
0.9
0.9
0.8
0.8
EV/EBITDA
8.1
8.1
7.3
6.7
EV/EBIT
11.5
11.5
10.6
9.8
PER
14.0
18.9
16.9
16.5
EBITDA margin
infrastructure division (c30%). We see a good opportunity for
growth of Vossloh’s large order book in its Transportation
segment. However, margins will continue to be affected due to:
1) overcapacity in European infrastructure and commoditisation
of its products in China (resulting in loss of market share); 2)
strong growth in Transportation leading to negative mix effects;
3) a delay in certain projects.
● Growth: Historically largely exposed to replacement demand in
Europe, Vossloh has over the last few years been more
involved in new rail network construction in emerging markets.
This has led to increased volatility of the business but also
increased growth opportunities. Vossloh sees its best prospects
to be in public transport infrastructure and freight transport in
North America. While pricing remains an issue in infrastructure
markets, the Transportation unit is benefiting from its large
order book.
● Valuation: The stock trades at a P/E 2014E of 17x, which is a
premium to the historical average of c14x. We value Vossloh on
an average of DCF and target multiples.
Vossloh family 34%
Thiele Heinz Hermann 25.1%
Treasury shares 10%
● Share catalysts: After its recent profit warning, the share has
given up part of the premium related to takeover speculation by
its large shareholder, Mr Thiele. In light of missing earnings
momentum, we believe only an (in our view unlikely) attempt to
increase his stake further or a larger acquisition will serve as a
catalyst for the share in the short term.
Benjamin Glaeser
+44 20 3207 7918
[email protected]
Margaret Paxton
+44 20 3207 7934
[email protected]
Shareholder structure
12.0%
1,350
10.0%
Sales (EUR)
1,400
1,300
8.0%
1,250
6.0%
1,200
4.0%
1,150
2.0%
1,100
EBIT margin
Freefloat
31%
Treasury
shares
10%
0.0%
10
11
12
Sales (EUR)
13E
14E
15E
EBIT margin
111
Mr
Thiele
25%
Familiy
34%
Cross-Sector
VTG AG
8 October 2013
Hold
Current price
Price target
EUR 14.79
EUR 15.50
● Company overview: VTG is a European market leader in
railcar hire and rail logistics. The company owns Europe’s
largest private wagon fleet with more than 53,000 wagons
(1,000 different types). The company specialises in tank
container wagons for the transport of hazardous goods (eg
oil, gas and chemicals) but the fleet also includes simple
flatbed wagons. In addition, VTG provides logistics solutions
in its rail logistics and tank container logistics divisions,
which contributed 4% and 6% to group EBITDA in 2012.
EUR 305 m
VT9G
VT9 GY
Market cap
Reuters
Bloomberg
21
14,800
● Quality: Due to the limited availability of rail wagons in
Y/E 31.12, EUR m
2012
2013E
2014E
2015E
Sales
767
792
821
850
EBITDA
174
183
194
201
69
76
84
88
9
16
21
24
Y/E net debt
699
743
775
792
EPS (reported)
0.41
0.76
0.99
1.12
EPS (recurring)
0.41
0.76
0.99
1.12
DPS
0.37
0.39
0.41
0.43
22.7%
23.1%
23.6%
23.7%
EBIT margin
9.0%
9.6%
10.2%
10.4%
Dividend yield
2.6%
2.7%
2.9%
3.0%
ROCE
5.8%
6.2%
6.7%
7.0%
FCF yield
-23.3%
3.2%
7.1%
12.3%
EV/sales
1.4
1.4
1.4
1.4
EV/EBITDA
6.1
6.0
5.9
5.7
EV/EBIT
15.5
14.6
13.6
13.1
PER
35.2
18.7
14.4
12.7
EBIT
Net profit
EBITDA margin
Europe, VTG enters long-term contracts with clients
(average length: three years), making the business model
relatively stable. Thus, the utilisation rate in the railcar
division only fell from 94% to 87% peak to trough between
Q2 2008 and Q1 2010, resulting in a sales and earnings
reduction of 5% and 12% respectively in 2009. This dynamic
also highlights the high barriers to entry in this market, with a
payback period of c11 years for new wagons, limited
production capacities and established customer relationships.
● Growth: VTG benefits from the structurally growing
European rail industry, which is characterised by the
liberalisation of rail networks and increasing freight volumes
due to globalisation and rising fuel costs. The company also
acts as a consolidator within its niche by acquiring existing
fleets that grant access to new customers and markets
(especially in the US where the firm owns c4,200 wagons but
targets a fleet of 10,000 within three years).
● Valuation: Based on a blended average of a DCF model and
target P/E, EV/EBITDA and P/B multiples, we derive a fair
value of EUR15.50. While the stock should be a relative
outperformer on the back of its defensive business model,
upside is limited at current and we recommend to Hold.
Compagnie Européene de Wagons 52%
VTG Management 2.7%
● Share catalysts: The recently announced joint venture with
Felix Wienen
+44 20 3207 7915
[email protected]
Kuehne + Nagel will provide scale and end-market
diversification to VTG’s rail logistics division, which is
currently burdened by low volumes in agro and lacks endmarket diversification. Given implementation costs in 2014E,
this JV will become EPS-accretive as of 2015E.
+44 20 3465 2631
[email protected]
VTG’s wagon utilisation
11.0%
800
10.5%
Sales (EUR)
1,000
10.0%
600
9.5%
400
9.0%
EBIT margin
Wagons
60,000
100%
50,000
90%
40,000
200
8.5%
20,000
0
8.0%
10,000
10
11
12
Sales (EUR)
13E
14E
80%
30,000
15E
70%
60%
0
2007
EBIT margin
2008
2009
Waggons
112
50%
2010
2011
2012 2013E
Waggons in use
Utilisation rate
Cross-Sector
Wacker Neuson SE
8 October 2013
Sell
Current price
Price target
EUR 10.99
EUR 9.00
● Company overview: Wacker Neuson is a leading global
Market cap
EUR 770 m
Reuters
WACGn
Bloomberg
WAC GY
Y/E 31.12, EUR m
Sales
70
30,200
2012
2013E
2014E
●
2015E
1,092
1,183
1,273
1,365
EBITDA
142
158
168
177
EBIT
85
101
110
118
Net profit
54
65
71
77
Y/E net debt
209
209
199
195
EPS (reported)
0.77
0.93
1.02
1.10
EPS (recurring)
0.77
0.93
1.02
1.10
DPS
0.30
0.35
0.35
0.40
13.0%
13.4%
13.2%
13.0%
EBIT margin
7.8%
8.5%
8.6%
8.7%
Dividend yield
2.7%
3.2%
3.2%
3.6%
ROCE
7.5%
8.2%
8.7%
9.0%
FCF yield
-12.0%
3.8%
4.7%
3.9%
EV/sales
0.9
0.9
0.8
0.7
EV/EBITDA
7.3
6.4
6.0
5.7
EV/EBIT
12.2
10.1
9.2
8.5
PER
14.6
11.9
10.8
10.0
EBITDA margin
●
●
Wacker family 33.1 %
Neunteufel family 30.0 %
Executive board 1.1 %
Felix Wienen
+44 20 3207 7915
[email protected]
Benjamin Glaeser
+44 20 3207 7918
[email protected]
●
manufacturer of light construction equipment (c37% of sales;
such as soil and asphalt compaction and demolition equipment)
and compact machinery (c42% of sales; loaders, excavators and
handlers) used in the agricultural, landscaping, construction and
industrial sector. The company also offers rental, spare parts
and repair services (21% of sales) to small and medium-sized
builders.
Quality: In its fragmented niche for light and compact
equipment, Wacker Neuson operates an integrated business
model that encompasses a very broad product range (more than
300 different product categories) under three strong brands,
serving all its key customers’ needs. Driven by its stable R&D
budget (3% of sales on average), the group’s products are
considered as innovative (more than 600 patents) and high
quality, and come with a strong brand. Similarly, the balance
sheet is conservative with an equity ratio of 65% at H1 2013.
Growth: Despite the global macroeconomic weakness of recent
years and Wacker Neuson’s high exposure to Europe and the
US (c73% and 23% of sales respectively), the group historically
achieved a significant top-line growth of 10% CAGR in 200612. However, the European market for compact equipment
(c42% of sales) is set for a second year of decline. Following
strong momentum in 2010/11 at +15%/20% respectively, the
market is expected to decline by 15% in 2013 according to Off
Highway industry research. Despite this, Wacker guides for
another year of double-digit growth. This will largely be driven
by a further ramp-up of the production JV with Caterpillar as
well as continued product expansion of the group’s dealer
network in the Americas and an increased presence in Latin
America.
Valuation: Given the weak demand in Wacker Neuson’s core
markets and the deterioration in profitability, we see downside
risk to 2013 guidance. Trading on 11x P/E 2014E, this does
not seem to be reflected in consensus and we recommend to
Sell the stock with a price target of EUR9. Our price target is
based on an average of 2015 DCF and target multiples
discounted back to year-end 2013.
Share catalysts: While demand for construction equipment is
solid in the US, Europe is sluggish. This could result in a cut to
2013 guidance with Q3 results.
1,500
Mini-excavator market declines in 2012/13E
60%
14.0%
40%
10.0%
1,000
8.0%
6.0%
500
4.0%
0
10
11
12
Sales (EUR)
13E
14E
EBIT margin
Sales (EUR)
12.0%
20%
0%
-20%
2.0%
-40%
0.0%
-60%
2009
15E
2010
Wacker Neuson CE sales growth
EBIT margin
2011
2012
CE Europe sales growth
Mini ex Europe sales growth
Source: Company data, Off Highway Research, Berenberg
113
2013E
Cross-Sector
Wienerberger AG
8 October 2013
Sell
Current price
Price target
EUR 13.04
EUR 10.90
● Company overview: Wienerberger is the largest global
Market cap
EUR 1,539 m
Reuters
WBSV
Bloomberg
WIE AV
118
248,634
●
Y/E 31.12, EUR m
2012
Sales
EBITDA
EBIT
2013E
2014E
2015E
2,356
2,690
2,790
2,936
246
256
306
368
158
31
46
96
-70
-34
10
64
Y/E net debt
1,310
1,220
1,119
985
EPS (reported)
-0.61
-0.29
0.09
0.54
EPS (recurring)
-0.48
-0.29
0.09
0.54
0.12
0.12
0.12
0.19
10.4%
9.5%
11.0%
12.5%
EBIT margin
1.3%
1.7%
3.5%
5.4%
Dividend yield
0.9%
0.9%
0.9%
1.4%
ROCE
1.4%
1.6%
3.5%
5.9%
FCF yield
7.0%
8.9%
9.7%
11.8%
0.9
Net profit
DPS
EBITDA margin
EV/sales
1.2
1.0
1.0
EV/EBITDA
11.5
10.8
8.7
6.9
EV/EBIT
90.9
59.8
27.5
16.0
-27.1
-45.2
147.9
24.2
PER
●
Dodge & Cox - 10.2%; Vanguard Group Inc - 2.34%;
BZ WBK AIB Towarzystwo - 2.17%
●
Robert Muir
+44 20 3207 7860
[email protected]
●
Michael Watts
+44 20 3207 7928
[email protected]
manufacturer of clay products used in the building industry. The
group is also a leading producer of plastic pipes in Europe.
Accordingly, in 2013, we estimate it will generate ~30% of
revenue from its Pipes business, with the rest from the sale of
facing bricks, clay blocks, roof tiles and pavers. We estimate that
c90% of the group’s business is carried out in Europe, of which
one-third is in eastern Europe, with the remainder in western,
central and northern Europe.
Quality: As the largest global manufacturer of clay products,
Wienerberger typically benefits from more modern and costeffective production facilities combined with a larger production
footprint relative to local peers. This generally allows the
company to both flex its cost base by mothballing but also to reopen facilities quickly should the market recover. By having a
more efficient cost base, the group is also able to gain market
share, as has happened recently in some central European
geographies.
Growth: At its half-year trading update, the company reduced
2013 operating EBITDA guidance by EUR20m to ~EUR260m,
citing an unrecoverable weather impact. This compares with the
group’s own mid-term EBITDA target of EUR605m, an
increase of over 130%. The biggest driver of recovery is
expected to be the European brick and tile business, where an
increase of over EUR200m in EBITDA is required to deliver
group targets. At its recent capital markets day, management
hinted that price/cost neutral operating gearing would average
around 35-40% of incremental volume-driven revenues in this
division. This magnitude of gearing would therefore require an
increase in European residential volumes of ~40% from the last
reported levels in 2012. For the stock to be good value at
current levels we would need to see this growth delivered in
2016 our earlier. This is simply too optimistic in our view.
Valuation: On the basis of our 2015 estimates, we value
Wienerberger at EUR10.9, which reflects a combination of
DCF, combined with through-cycle average EV/sales,
EV/EBITDA and P/E ratios.
Share catalysts: Wienerberger’s recovery remains contingent
the pace of recovery in European residential construction. Up or
downside surprise in housing activity will therefore be the main
driver of performance.
Mid-term EBITDA targets are highly dependent on
a recovery in European residential construction
Target EBITDA - €m
8.0%
3,000
6.0%
Sales (EUR)
2,500
2,000
4.0%
1,500
1,000
2.0%
500
0
EBIT margin
3,500
Bricks & Tiles
Pipelife (proforma)
Other Pipes & Pavers
North America
Holding
Total
2012 Actual Target
183
78
18
10
-15
274
0.0%
11
12
13E
Sales (EUR)
14E
15E
16E
EBIT margin
114
Change
% Uplift
Prior Peak
400
100
40
65
217
22
22
55
510
90
36
66
605
331
118%
28%
123%
565%
NA
121%
702
Cross-Sector
Wirecard AG
8 October 2013
Buy
Current price
Price target
EUR 25.60
EUR 28.00
Market cap
EUR 2,775 m
Reuters
WDIG
Bloomberg
WDI GY
112
295,795
● Company overview: Wirecard is a leading international
provider of electronic payment and risk management
solutions. Worldwide, Wirecard supports over 14,000
companies from a wide range of industry segments, helping
them automate their payment processes and minimise cases
of default. Wirecard Bank operates as a credit card acquirer
and also provides innovative solutions in the fields of
corporate banking, pre-paid and co-branded cards, and
account products for both businesses and private customers.
● Quality: Wirecard is the market-leading payment processor
in the European e-commerce market with a market share of
more than 20%. It is the only processor with a banking
licence, allowing Wirecard to act as the merchant acquirer
and thus offering clients a one-stop solution. Despite the fact
that transaction fees are declining, through operating leverage
and its outstanding growth profile, Wirecard has been able to
keep margins stable on a high level.
Y/E 31.12, EUR m
2012
2013E
2014E
2015E
Sales
395
483
609
755
EBITDA
109
127
161
199
94
109
142
179
EBIT
Net profit
73
84
110
138
-21
-65
-140
-236
EPS (reported)
0.66
0.75
0.97
1.23
EPS (recurring)
0.66
0.75
0.97
1.23
DPS
0.10
0.11
0.14
0.18
EBITDA margin
27.7%
26.3%
26.5%
26.4%
EBIT margin
23.7%
22.7%
23.3%
23.7%
0.5%
0.4%
0.5%
0.7%
13.7%
12.7%
14.4%
15.5%
FCF yield
1.6%
2.6%
3.1%
4.1%
EV/sales
4.3
5.6
4.3
3.4
EV/EBITDA
15.7
21.3
16.3
12.8
EV/EBIT
18.3
24.8
18.6
14.2
PER
23.7
33.1
25.3
20.1
Y/E net debt
Dividend yield
ROCE
MB Beteiligungsgesellschaft mbH: 6%
● Growth: Wirecard has consistently delivered high growth,
with a 2006-2012 sales CAGR of 30%. We believe it will be
able to continue to deliver high growth, and anticipate a
2012-2015 sales CAGR of 24.2%. Wirecard is not only
growing through its existing customers with the European ecommerce market, which is growing by around 12% pa, but
also is able to win new customers constantly, and these two
factors alone drive growth rates to close to 20% on an
ongoing basis. This is complemented by growth from
acquisitions as well as from mobile payment (from 2014
onwards).
● Valuation: We base our valuation for Wirecard on a
conservative DCF model, which leads us to a price target of
EUR28.
● Share catalysts: We expect a number of acquisitions in Asia
over the next few years, which could be positive catalysts for
the stock, provided that they are value-accretive. Since the
exact potential of mobile payment for Wirecard is difficult to
gauge, any positive news on the impact on its earnings
(expected from 2014 onwards) could provide a strong catalyst
for the stock.
Bjoern Lippe
+44 20 3207 7845
[email protected]
25.0%
Digital Goods
Sports betting / Poker
/ Downloads / Music
and Software / Apps /
SaaS
24.5%
600
24.0%
23.5%
400
23.0%
22.5%
200
EBIT margin
Sales (EUR)
800
Transaction volumes by industry
26.2%
31.2%
22.0%
0
21.5%
10
11
12
Sales (EUR)
13E
14E
42.6%
15E
EBIT margin
115
Travel &
Transportation
Airlines / Hotel chains
Travel sites / Tour
operators
Cruise lines / Ferries
Car rental and
transportational
companies
Consumer Goods
Distance trade (mail
order)
Brick-and-mortar shops
All sales channels - in
each case physical
products
Cross-Sector
Wüstenrot & Württembergische AG
Hold
Current price
Price target
EUR 14.84
EUR 16.00
Market cap
EUR 1,365 m
Reuters
WUWGn
Bloomberg
WUW GR
Y/E 31.12, EUR m
92
4,079
2012
2013E
2014E
●
2015E
Net income
235
138
190
227
EPS
2.4
1.4
2.0
2.3
Dividend per share
0.5
0.3
0.3
0.3
Net asset value per
share
35
36
38
40
ROE (%)
8.1
4.0
5.4
6.2
P/E
6.1
10.6
7.6
6.4
Dividend yield (%)
3.4
2.0
2.0
2.0
Price / net asset value
(%)
43
41
39
37
8 October 2013
overview: Wüstenrot & Württembergische
(W&W) is a rare surviving example of bancassurance. It is
almost entirely focused on Germany, where it can trace its
insurance roots to 1828 and its banking origins to the early
20th century, when it played a major role in the introduction
of the Bauspar concept. Its customer base, strong brand and
history are all major assets. Recent expansion into the Czech
Republic offers longer-term growth prospects.
Quality: W&W’s Bauspar model has a lower risk of loan
losses compared with other banking models. However, it
relies on a constant ratio of savers-to-borrowers and low
interest rates are encouraging policyholders, locked into high
rates, not to complete the borrowing phase. Low interest
rates are also challenging the life insurance business, which
has offered long-duration guarantees. The non-life business,
in contrast, is enjoying improving conditions. We consider
W&W’s investment portfolio to be defensive but it also
offers policyholders and shareholders lower returns.
Growth: W&W’s history includes significant corporate
activity. Its organic growth has been restrained and is
currently not a priority. Longer-term, we forecast a growth
rate slightly in excess of GDP. Cross-selling opportunities
between the bank and insurance operations should be
possible. German non-life business is benefiting from rising
rates while life business is suffering from the low interest rate
environment. The economic headwinds have recently caused
W&W to initiate a major restructuring programme, which
will weigh on 2013 earnings. Overall, we expect little change
to underlying earnings.
Valuation: W&W trades at about a 30% discount to the
insurance sector. However, we believe that its problems
warrant a discount. The stock is also held back by a low
dividend yield and a low free float. We value W&W on an
RoEV/CoE basis.
Share catalysts: W&W has initiatives underway to improve
earnings and the company is a beneficiary of the recent rise
in interest rates, but we see little in the way of operational
catalysts. We do not consider all of the current shareholders
to be long-term holders and the best chance of realising the
full value of the company may be for the freefloat to
increase.
● Company
●
Wüstenrot Holding: 66.1%
Horus Finanzholding: 8.8%
Unicredit: 7.5%
Landeskreditbank: 5.0%
Swiss Re: 4.7%
●
Peter Eliot
+44 20 3207 7880
[email protected]
●
Earnings by division, EURm
Current shareholder structure
Freefloat, 7.9%
250
Swiss Re, 4.7%
Landeskreditbank, 5.0%
200
Unicredit, 7.5%
150
100
Horus
Finanzholding,
8.8%
50
0
2008
2009
Banking
2010
2011
Life & Health
2012
P&C
2013E
2014E
Wüstenrot
Holding, 66.1%
2015E
Other
116
Cross-Sector
Xing AG
8 October 2013
Buy
Current price
Price target
EUR 85.00
EUR 82.00
Market cap
EUR 473 m
Reuters
OBCGn
Bloomberg
O1BC GY
6
10,000
● Company overview: Xing is the leading professional social
network in Germany – similar to LinkedIn in other markets –
with 6.8m white collar workers registered in the DACH
market. The company monetises this user base through
membership fees, the provision of search and access to
recruiters, advertising (jobs and classical) and through
ticketing for professional events and conferences.
● Quality: Xing is clearly dominant in its market in terms of
user numbers, being around 2x the size of LinkedIn in the
DACH region. Over the last 18 months, it has invested in
new products designed to better serve its registered users,
and to facilitate active recruitment by both corporates and
headhunters. It is taking share of the classical job advertising
market as a result.
● Growth: Xing targets a doubling of its revenues between
Y/E 31.12, EUR m
2012
2013E
2014E
2015E
Sales
72
83
101
118
EBITDA
22
24
35
45
EBIT
14
16
26
36
Net profit
10
11
18
24
-59
-68
-85
-102
EPS (reported)
1.86
1.89
3.15
4.29
EPS (recurring)
2.40
2.05
3.29
4.43
Y/E net debt
DPS
0.56
1.00
1.60
2.20
EBITDA margin
30.5%
29.4%
34.9%
38.3%
EBIT margin
19.3%
18.9%
26.0%
30.3%
0.7%
1.2%
1.9%
2.6%
27.4%
26.1%
36.1%
39.8%
FCF yield
2.9%
2.7%
4.6%
5.6%
EV/sales
5.5
4.9
3.9
3.1
EV/EBITDA
18.0
16.6
11.0
8.2
EV/EBIT
28.5
25.8
14.8
10.4
PER
35.5
41.5
25.8
19.2
Dividend yield
ROCE
Burda Digital 52.4%
Sarah Simon
+44 20 3207 7830
[email protected]
2012 and 2016, and an increase in the margin as it regains
operating leverage and sees a return on the investment it has
made in new products. As a result, we see it delivering a 17%
CAGR in revenues over the 2012-2016 period, 24% in
EBITDA, 23% in adjusted EPS and 24% in FCF.
● Valuation: With nearly a quarter of its market capitalisation
in cash – our numbers do not incorporate any special
dividend – we look at Xing’s valuation on an unleveraged
basis. On 2014 and 2015, the stock trades on EV/EBITDA
of 9.1x and 6.7x, respectively, while unleveraged FCF yield is
6.8% for 2014 and 8.7% for 2015. We see fair value as well in
excess of EUR80 per share on a 12-month view.
● Share catalysts: We believe that the forthcoming Q3 and
Q4 results will confirm the trend for accelerating e-recruiting
revenue growth. The relaunch of Premium Club at the end of
October should also prove a catalyst if successful. In 2014,
we believe there is a high likelihood that the company will
pay a special dividend as we do not believe that it will be able
to reinvest all of this excess cash in M&A or organic growth.
Robert Berg
+44 20 3465 2680
[email protected]
35.0%
30.0%
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
-5.0%
Sales (EUR)
120
100
80
60
40
20
0
10
11
12
Sales (EUR)
13E
14E
6%
EBIT margin
140
27%
Premium Club
e-Recruiting
Events
66%
15E
EBIT margin
117
Cross-Sector
zooplus AG
8 October 2013
Sell
Current price
Price target
EUR 50.95
EUR 44.00
supplies retailer since 1999. The company is active in 24
European countries and is the market leader in high-volume
markets (Germany, France, the UK, the Netherlands, Italy
and Spain) that account for 85% of total European volume.
Market cap
EUR 310 m
Reuters
ZO1G
Bloomberg
ZO1 GY
Y/E 31.12, EUR m
6
100,000
2012
Sales
2013E
2014E
2015E
319
400
493
574
EBITDA
-2
3
9
16
EBIT
-3
3
8
15
Net profit
-2
2
5
10
Y/E net debt
-1
1
2
-2
EPS (reported)
-0.35
0.27
0.82
1.57
EPS (recurring)
-0.35
0.27
0.82
1.57
-
0.00
0.00
0.00
EBITDA margin
-0.6%
0.9%
1.8%
2.7%
EBIT margin
-0.8%
0.7%
1.6%
2.6%
0.0%
0.0%
0.0%
0.0%
ROCE
-5.5%
5.6%
12.3%
19.0%
FCF yield
-2.1%
-0.4%
-0.3%
-0.7%
EV/sales
1.0
0.8
0.6
0.5
DPS
Dividend yield
EV/EBITDA
-167.9
89.8
35.6
19.7
EV/EBIT
-120.8
113.7
39.3
20.9
-98.3
187.9
61.9
32.4
PER
● Company overview: zooplus has operated as an online pet
● Quality: zooplus is the market leader in the EUR22bn and growing
(c2% pa) European pet supplies market. The company has a good
track record of controlling costs and over the next few years will
reduce personnel, logistics, marketing and other expenses. The
investment case is grounded in consistent sales growth (CAGR
2013-17E: 14%), pricing improvement due to better procurement,
more own-branded products and cost efficiency.
● Growth: zooplus is a well-managed, cost-effective high-growth
company. Since 2008, it has pursued a strategy of revenue
maximisation through internationalisation and aggressive marketing
and pricing, delivering a sales CAGR 2008-13E of 38%. This
strategy suppresses earnings (EBITDA CAGR 2008-13E: 2.4%).
The company is now focusing on margin expansion. We believe
there is limited room to drive up the gross margin because of
increasing competition, product mix and pricing issues. This is seen
in customer preference for bulky pet food products (75% of sales),
which represent a sustained burden on the EBITDA margin
because of the high logistic costs incurred by zooplus. Even when
valuing the company at the upper range of what we believe is
feasible (70% EBITDA CAGR 2013-17E) and matching zooplus’s
ambitious sales guidance (2015 sales: EUR600m), the current
valuation over-estimates the returns on offer over the next few
years.
● Valuation: We value the stock on a DCF basis to reflect its longterm growth potential, deriving a price target of EUR44.00. We
think that the stock is over-valued at current share levels and that
the market is overly enthusiastic about sustainable margin
improvement; we therefore recommend the stock as a Sell.
● Share catalysts: If zooplus’s private label strategy to counter
margin erosion proves successful by reducing pricing pressures,
then zooplus should be able to grow earnings and support a higher
valuation. Margins are also depressed because of consumers’
preference for less profitable pet foodstuffs; if management can
successfully increase premiumisation, this could lead to a more
favourable product mix shift, providing upside.
Burda 50.04%
Management 12.28%
The Normad Investment Partnership 7.98%
+44 20 3465 2631
[email protected]
Margin development from 2007-2019E
40%
700
3.0%
600
2.0%
500
1.0%
400
0.0%
300
-1.0%
200
-2.0%
100
-3.0%
32%
0
-4.0%
31%
10
11
12
Sales (EUR)
13E
14E
8%
39%
6%
38%
EBIT margin
Sales (EUR)
37%
4%
36%
35%
2%
34%
0%
33%
-2%
30%
15E
-4%
2007 2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E 2018E 2019E
EBIT margin
Gross Margin (lhs)
118
EBITDA margin (rhs)
EAT margin (rhs)
Cross-Sector
Zumtobel AG
EUR 520 m
ZUMV
ZAG AV
43
110,000
●
2016E
76
94
133
144
EBIT
20
38
75
85
4
20
51
59
Y/E net debt
114
93
55
23
EPS (reported)
0.10
0.47
1.18
1.37
EPS (recurring)
0.40
0.70
1.18
1.37
DPS
0.07
0.14
0.47
0.55
EBITDA margin
6.1%
7.7%
10.5%
11.1%
EBIT margin
1.6%
3.1%
6.0%
6.5%
Dividend yield
0.8%
1.0%
3.0%
3.4%
ROCE
2.8%
5.4%
10.2%
10.9%
FCF yield
8.6%
8.0%
10.9%
12.3%
EV/sales
0.4
0.6
0.6
0.6
EV/EBITDA
6.9
8.0
5.9
5.2
EV/EBIT
27.5
19.7
10.3
8.8
PER
22.8
20.7
13.5
11.7
Net profit
●
●
Zumtobel family 35.3%
William Mackie
+44 20 3207 7837
[email protected]
●
Margaret Paxton
+44 20 3207 7934
[email protected]
LED sales growth by division
8.0%
1,250
6.0%
Sales (EUR)
1,300
1,200
4.0%
1,150
2.0%
1,100
0.0%
1,050
-2.0%
1,000
EBIT margin
70
30%
60
25%
50
11
12
Sales (EUR)
13
14E
15%
30
10%
20
10
5%
0
0%
-4.0%
10
20%
40
15E
LED Lighting
LED Comp
EBIT margin
119
Lighting LED %
Q4'13
1,299
EBITDA
Q3'13
1,259
Q2'13
2015E
1,220
Q1'13
2014E
1,244
Q4'12
2013
Sales
Q3'12
Y/E 31.12, EUR m
Q2'12
Market cap
Reuters
Bloomberg
Q1'12
EUR 14.50
Q4'11
Price target
EUR 12.10
Q3'11
Current price
Q2'11
Q1'11
Buy
8 October 2013
overview: Zumtobel is Europe’s leading
professional lighting manufacturer, producing luminaires
under the Zumtobel and Thorn brands in the Lighting
division, and under the Tridonic brand in the Components
division. The business is highly Eurocentric (78% of sales)
but the company is looking to expand in China and the US.
Like many peers, the company is having to manage the
transformation to LED which has posed a number of
uncertainties, particularly in its components business.
Although the European market continues to experience low
demand, self-help measures have improved profitability.
Quality: The key strategy value of the group lies in its
customer relationships, which should not be underestimated
in a highly fragmented market. Zumtobel is the stalwart of
the group, with growing market share, a strong brand
position and a direct sales approach attracting higher margins.
In conventional products, Tridonic operates in an oligopoly
(25% market share); with the shift to LED, however, it is
moving into a weaker competitive position with only a c5%
share. Nevertheless, management does have a sound strategy
to navigate this change. Thorn remains the laggard of the
group after more than a decade of underperformance; current
management has improved the situation, but we believe it will
take at least another three years to restructure the brand.
Growth: Components has been in decline since Q2 2012;
however, in Q1 2014 it returned to growth as LED sales
more than offset declines in traditional technologies.
Lighting’s growth has been more positive during this period
but has seen weakness in the past three quarters driven by the
Thorn business. The market has stabilised but would benefit
from a pick-up in European construction, Zumtobel’s most
important end-market.
Valuation: Using a blended average of DCF and multiplebased valuation methodologies, we reach our target price of
EUR14.5. In the longer run, we believe the share could be
worth EUR15.5 (SOTP); uncertainties persist but the Q1
2014 results demonstrated signs that profitability has passed
the low point.
Share catalysts: Q2 results will be reported on 10
December, and we believe they will continue to demonstrate
the benefits of past restructuring. Seasonally, Q2 is also the
group’s strongest quarter; the majority of group profits are
achieved in H1.
● Company
Comp LED %
Cross-Sector
Please note that the use of this research report is subject to the conditions and restrictions set forth in the
“General investment-related disclosures” and the “Legal disclaimer” at the end of this document.
For analyst certification and remarks regarding foreign investors and country-specific disclosures, please
refer to the respective paragraph at the end of this document.
Disclosures in respect of section 34b of the German Securities Trading Act
(Wertpapierhandelsgesetz – WpHG)
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Disclosures
no disclosures
no disclosures
5
5
no disclosures
no disclosures
1, 3
no disclosures
no disclosures
no disclosures
no disclosures
no disclosures
no disclosures
5
no disclosures
no disclosures
no disclosures
3, 5
no disclosures
1, 3, 5
no disclosures
no disclosures
no disclosures
no disclosures
no disclosures
5
3
no disclosures
3
no disclosures
no disclosures
5
no disclosures
no disclosures
no disclosures
no disclosures
no disclosures
no disclosures
no disclosures
5
5
no disclosures
no disclosures
no disclosures
no disclosures
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5
5
3
1, 2, 3, 5
120
Cross-Sector
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PSI AG
QSC AG
RATIONAL AG
Rheinmetall AG
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Wirecard AG
Xing AG
zooplus AG
Zumtobel AG
United Internet AG
(1)
(2)
(3)
(4)
(5)
1, 3
5
no disclosures
no disclosures
no disclosures
no disclosures
no disclosures
no disclosures
no disclosures
1, 3
5
no disclosures
no disclosures
no disclosures
5
3
no disclosures
3
no disclosures
3
no disclosures
no disclosures
5
no disclosures
no disclosures
no disclosures
3, 5
no disclosures
no disclosures
no disclosures
no disclosures
no disclosures
no disclosures
no disclosures
5
1, 3, 5
1, 3
2, 5
no disclosures
no disclosures
5
no disclosures
1, 3
no disclosures
no disclosures
no disclosures
3
no disclosures
no disclosures
3, 5
Joh. Berenberg, Gossler & Co. KG (hereinafter referred to as “the Bank”) and/or its affiliate(s) was Lead
Manager or Co-Lead Manager over the previous 12 months of a public offering of this company.
The Bank acts as Designated Sponsor for this company.
Over the previous 12 months, the Bank and/or its affiliate(s) has effected an agreement with this company
for investment banking services or received compensation or a promise to pay from this company for
investment banking services.
The Bank and/or its affiliate(s) holds 5% or more of the share capital of this company.
The Bank holds a trading position in shares of this company.
121
Cross-Sector
Historical price target and rating changes for ADVA Optical Networking SE in the last 12 months (full
coverage)
Date
10 December 12
24 September 13
Price target - EUR
5.00
5.20
Rating
Buy
Hold
Initiation of coverage
18 May 11
Historical price target and rating changes for Agrana Beteiligungs AG in the last 12 months (full
coverage)
Date
15 May 13
24 September 13
Price target - EUR
120.00
100.00
Rating
Hold
Hold
13 September 07
Historical price target and rating changes for Aixtron SE in the last 12 months (full coverage)
Date
18 January 13
26 September 13
Price target - EUR
9.00
12.00
Rating
Hold
Hold
23 February 11
Historical price target and rating changes for alstria office REIT AG in the last 12 months (full coverage)
Date
06 November 12
Price target - EUR
11.30
Rating
Buy
16 November 09
Historical price target and rating changes for AMAG Austria Metall AG in the last 12 months (full
coverage)
Date
18 January 13
05 August 13
Price target - EUR
24.00
22.00
Rating
Hold
Hold
02 November 11
Historical price target and rating changes for ANDRITZ AG in the last 12 months (full coverage)
Date
08 January 13
01 May 13
02 May 13
15 August 13
Price target - EUR
52.00
48.00
48.00
46.50
Rating
Hold
Hold
Buy
Buy
11 November 03
Historical price target and rating changes for Aurelius AG in the last 12 months (full coverage)
Date
29 October 12
10 December 12
04 February 13
18 March 13
07 May 13
28 May 13
03 July 13
15 August 13
Price target - EUR
45.00
46.00
55.00
61.00
68.00
22.67
23.00
23.00
Rating
Buy
Buy
Buy
Buy
Buy
Buy
Buy
Hold
22 June 11
Historical price target and rating changes for Axel Springer AG in the last 12 months (full coverage)
Date
08 November 12
07 March 13
08 August 13
Price target - EUR
38.00
35.00
42.00
Rating
Hold
Hold
Hold
18 June 10
Historical price target and rating changes for Bauer AG in the last 12 months (full coverage)
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01 May 13
Price target - EUR
21.00
Rating
Hold
122
07 February 07
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Historical price target and rating changes for BayWa AG in the last 12 months (full coverage)
Date
19 February 13
Price target - EUR
45.00
Rating
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06 October 11
Historical price target and rating changes for Bechtle AG in the last 12 months (full coverage)
Date
01 February 13
Price target - EUR
48.50
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Historical price target and rating changes for Bilfinger SE in the last 12 months (full coverage)
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Price target - EUR
Rating
28 November 11
Historical price target and rating changes for Brenntag AG in the last 12 months (full coverage)
Date
22 March 13
09 May 13
08 August 13
Price target - EUR
125.00
120.00
121.00
Rating
Hold
Hold
Hold
04 October 10
Historical price target and rating changes for Carl Zeiss Meditec AG in the last 12 months (full coverage)
Date
18 February 13
15 August 13
Price target - EUR
26.00
25.00
Rating
Buy
Hold
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Historical price target and rating changes for Celesio AG in the last 12 months (full coverage)
Date
28 November 12
15 April 13
19 August 13
Price target - EUR
14.50
16.00
15.00
Rating
Hold
Hold
Hold
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Historical price target and rating changes for CEWE Stiftung & Co KGaA in the last 12 months (full
coverage)
Date
02 April 13
04 July 13
Price target - EUR
42.00
47.50
Rating
Buy
Buy
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Date
15 October 12
01 February 13
11 February 13
24 July 13
06 August 13
Price target - EUR
17.00
20.00
22.00
21.00
17.00
Rating
Buy
Buy
Buy
Hold
Hold
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Historical price target and rating changes for CTS Eventim AG in the last 12 months (full coverage)
Date
15 April 13
16 May 13
13 August 13
Price target - EUR
30.00
30.00
32.00
Rating
Buy
Hold
Hold
27 January 04
Historical price target and rating changes for Delticom AG in the last 12 months (full coverage)
Date
23 January 13
17 September 13
Price target - EUR
34.50
40.50
Rating
Hold
Hold
123
24 April 08
Cross-Sector
Historical price target and rating changes for Deutsche Annington Immobilien SE in the last 12 months
(full coverage)
Date
30 August 13
04 October 13
Price target - EUR
21.50
22.50
Rating
Buy
Buy
30 August 13
Historical price target and rating changes for Deutsche EuroShop AG in the last 12 months (full coverage)
Date
05 December 12
29 April 13
Price target - EUR
34.00
35.00
Rating
Buy
Buy
03 September 04
Historical price target and rating changes for Deutsche Wohnen AG in the last 12 months (full coverage)
Date
14 May 13
Price target - EUR
16.00
Rating
Buy
16 November 09
Historical price target and rating changes for Deutz AG in the last 12 months (full coverage)
Date
15 October 12
12 November 12
25 March 13
Price target - EUR
3.30
4.00
6.50
Rating
Hold
Buy
Buy
02 February 04
Historical price target and rating changes for Dialog Semiconductor plc in the last 12 months (full
coverage)
Date
19 March 13
27 September 13
Price target - EUR
14.50
14.50
Rating
Buy
Hold
20 October 11
Historical price target and rating changes for DIC Asset AG in the last 12 months (full coverage)
Date
Price target - EUR
Rating
16 November 09
Historical price target and rating changes for Drägerwerk AG & Co KGaA in the last 12 months (full
coverage)
Date
06 November 12
23 January 13
Price target - EUR
95.00
110.00
Rating
Buy
Buy
18 April 12
Historical price target and rating changes for Drillisch AG in the last 12 months (full coverage)
Date
16 November 12
23 January 13
06 March 13
27 March 13
02 May 13
23 May 13
21 August 13
Price target - EUR
12.00
12.50
13.30
15.00
15.00
14.00
20.00
Rating
Buy
Buy
Buy
Buy
Hold
Hold
Buy
07 September 12
Historical price target and rating changes for Dürr AG in the last 12 months (full coverage)
Date
08 January 13
20 February 13
01 May 13
Price target - EUR
68.00
80.00
42.50
Rating
Hold
Hold
Hold
07 May 04
Historical price target and rating changes for ElringKlinger AG in the last 12 months (full coverage)
Date
15 March 13
08 October 13
Price target - EUR
25.00
30.00
Rating
Hold
Hold
124
11 June 03
Cross-Sector
Historical price target and rating changes for Evotec AG in the last 12 months (full coverage)
Date
Price target - EUR
Rating
19 January 12
Historical price target and rating changes for Fielmann AG in the last 12 months (full coverage)
Date
09 November 12
16 September 13
Price target - EUR
68.00
81.50
Rating
Hold
Hold
19 August 02
Historical price target and rating changes for freenet AG in the last 12 months (full coverage)
Date
07 November 12
10 December 12
01 March 13
02 May 13
Price target - EUR
14.00
15.50
16.10
18.00
Rating
Buy
Buy
Buy
Hold
28 May 10
Historical price target and rating changes for Fuchs Petrolub SE in the last 12 months (full coverage)
Date
09 November 12
03 April 13
25 July 13
Price target - EUR
51.00
58.00
54.00
Rating
Hold
Hold
Hold
03 February 04
Historical price target and rating changes for GAGFAH SA in the last 12 months (full coverage)
Date
05 February 13
15 May 13
11 July 13
16 September 13
Price target - EUR
9.50
11.00
11.00
11.80
Rating
Hold
Hold
Buy
Buy
16 November 09
Historical price target and rating changes for GEA Group AG in the last 12 months (full coverage)
Date
01 May 13
12 September 13
Price target - EUR
29.00
31.50
Rating
Buy
Hold
31 March 05
Historical price target and rating changes for Gerresheimer AG in the last 12 months (full coverage)
Date
15 January 13
15 February 13
22 August 13
Price target - EUR
44.00
50.00
54.00
Rating
Hold
Buy
Buy
30 September 08
Historical price target and rating changes for Gerry Weber International AG in the last 12 months (full
coverage)
Date
24 January 13
10 June 13
06 September 13
13 September 13
Price target - EUR
40.50
40.00
38.50
34.00
Rating
Hold
Buy
Buy
Hold
28 September 11
Historical price target and rating changes for Grenkeleasing AG in the last 12 months (full coverage)
Date
07 February 13
21 February 13
02 July 13
Price target - EUR
60.00
56.00
61.00
Rating
Buy
Hold
Hold
125
31 July 12
Cross-Sector
Historical price target and rating changes for GSW Immobilien AG in the last 12 months (full coverage)
Date
26 October 12
Price target - EUR
34.00
Rating
Buy
26 July 11
Historical price target and rating changes for Hamborner REIT AG in the last 12 months (full coverage)
Date
Price target - EUR
Rating
08 February 11
Historical price target and rating changes for Hawesko Holding AG in the last 12 months (full coverage)
Date
18 September 13
Price target - EUR
42.00
Rating
Hold
19 September 12
Historical price target and rating changes for Hochtief AG in the last 12 months (full coverage)
Date
12 December 12
04 March 13
15 May 13
06 June 13
26 September 13
Price target - EUR
51.00
59.00
65.00
59.00
62.00
Rating
Buy
Buy
Buy
Hold
Hold
19 April 12
Historical price target and rating changes for Hugo Boss AG in the last 12 months (full coverage)
Date
13 February 13
19 July 13
26 September 13
Price target - EUR
106.00
102.00
102.00
Rating
Buy
Buy
Hold
08 February 10
Historical price target and rating changes for Jenoptik AG in the last 12 months (full coverage)
Date
09 November 12
25 September 13
Price target - EUR
8.80
12.00
Rating
Buy
Hold
18 January 11
Historical price target and rating changes for Jungheinrich AG in the last 12 months (full coverage)
Date
08 January 13
01 May 13
19 September 13
Price target - EUR
28.00
31.00
49.00
Rating
Hold
Hold
Hold
16 April 03
Historical price target and rating changes for Kapsch TrafficCom AG in the last 12 months (full coverage)
Date
26 November 12
18 March 13
Price target - EUR
72.00
56.00
Rating
Buy
Buy
18 April 11
Historical price target and rating changes for KION Group AG in the last 12 months (full coverage)
Date
19 September 13
Price target - EUR
24.00
Rating
Sell
19 September 13
Historical price target and rating changes for Klöckner & Co SE in the last 12 months (full coverage)
Date
25 October 12
03 April 13
08 May 13
Price target - EUR
8.00
11.30
9.30
Rating
Hold
Hold
Hold
20 September 06
Historical price target and rating changes for Kontron AG in the last 12 months (full coverage)
Date
Price target - EUR
Rating
02 August 04
126
Cross-Sector
Historical price target and rating changes for Krones AG in the last 12 months (full coverage)
Date
13 November 12
22 March 13
01 May 13
Price target - EUR
50.00
55.00
57.00
Rating
Buy
Hold
Hold
10 October 02
Historical price target and rating changes for KUKA AG in the last 12 months (full coverage)
Date
08 January 13
11 March 13
01 May 13
Price target - EUR
29.00
32.00
33.00
Rating
Hold
Hold
Hold
16 September 04
Historical price target and rating changes for LEG Immobilien AG in the last 12 months (full coverage)
Date
14 March 13
13 May 13
Price target - EUR
46.50
48.00
Rating
Buy
Buy
14 March 13
Historical price target and rating changes for Leifheit AG in the last 12 months (full coverage)
Date
11 April 13
Price target - EUR
33.00
Rating
Hold
11 April 13
Historical price target and rating changes for Lotto24 AG in the last 12 months
Date
18 April 13
18 September 13
Price target - EUR
12.00
8.50
Rating
Buy
Buy
18 April 13
Historical price target and rating changes for MAN SE in the last 12 months (full coverage)
Date
15 October 12
31 October 12
05 December 12
11 January 13
01 May 13
Price target - EUR
65.00
60.00
77.00
95.00
80.89
Rating
Hold
Hold
Hold
Hold
Sell
14 April 09
Historical price target and rating changes for Mayr-Melnhof Karton AG in the last 12 months (full
coverage)
Date
Price target - EUR
Rating
15 June 11
Historical price target and rating changes for MIFA Mitteldeutsche Fahrradwerke AG in the last 12
months (full coverage)
Date
17 October 12
09 November 12
Price target - EUR
9.00
8.50
Rating
Buy
Buy
14 May 12
Historical price target and rating changes for MTU Aero Engines Holding AG in the last 12 months (full
coverage)
Date
04 December 12
21 February 13
29 July 13
27 September 13
Price target - EUR
75.00
75.00
72.00
69.00
Rating
Buy
Hold
Hold
Hold
30 July 07
Historical price target and rating changes for Nemetschek AG in the last 12 months (full coverage)
Date
25 January 13
28 May 13
Price target - EUR
45.00
57.00
Rating
Buy
Buy
127
12 September 12
Cross-Sector
Historical price target and rating changes for NORMA Group SE in the last 12 months (full coverage)
Date
06 November 12
08 January 13
03 April 13
01 May 13
16 July 13
Price target - EUR
23.00
25.50
28.50
29.00
36.00
Rating
Buy
Buy
Buy
Buy
Buy
24 May 11
Historical price target and rating changes for OSRAM Licht AG in the last 12 months
Date
09 July 13
01 August 13
Price target - EUR
35.00
37.00
Rating
Buy
Buy
09 July 13
Historical price target and rating changes for Palfinger AG in the last 12 months (full coverage)
Date
25 March 13
Price target - EUR
30.00
Rating
Buy
13 November 06
Historical price target and rating changes for Patrizia Immobilien AG in the last 12 months (full coverage)
Date
18 February 13
15 March 13
Price target - EUR
7.40
8.50
Rating
Buy
Buy
16 November 09
Historical price target and rating changes for Pfeiffer Vacuum Technology AG in the last 12 months (full
coverage)
Date
08 January 13
01 May 13
Price target - EUR
90.00
107.00
Rating
Hold
Buy
30 July 10
Historical price target and rating changes for ProSiebenSat.1 Media AG in the last 12 months (full
coverage)
Date
11 January 13
07 May 13
Price target - EUR
23.60
27.60
Rating
Hold
Sell
27 January 11
Historical price target and rating changes for PSI AG in the last 12 months (full coverage)
Date
08 January 13
03 April 13
01 May 13
26 September 13
Price target - EUR
17.50
17.70
17.00
12.90
Rating
Hold
Hold
Hold
Buy
16 November 10
Historical price target and rating changes for QSC AG in the last 12 months (full coverage)
Date
06 November 12
09 May 13
04 October 13
Price target - EUR
2.75
3.00
4.90
Rating
Buy
Buy
Buy
11 March 04
Historical price target and rating changes for RATIONAL AG in the last 12 months (full coverage)
Date
08 January 13
01 May 13
Price target - EUR
215.00
225.00
Rating
Hold
Hold
11 April 11
Historical price target and rating changes for Rheinmetall AG in the last 12 months (full coverage)
Date
08 January 13
01 May 13
Price target - EUR
45.00
40.00
Rating
Buy
Hold
128
10 April 03
Cross-Sector
Historical price target and rating changes for RHI AG in the last 12 months (full coverage)
Date
11 October 12
15 May 13
Price target - EUR
29.00
33.00
Rating
Buy
Buy
25 April 05
Historical price target and rating changes for Rhön-Klinikum AG in the last 12 months (full coverage)
Date
30 April 13
30 July 13
16 September 13
Price target - EUR
15.95
18.65
22.70
Rating
Hold
Hold
Buy
11 August 99
Historical price target and rating changes for RIB Software AG in the last 12 months (full coverage)
Date
28 August 13
Price target - EUR
7.70
Rating
Buy
16 March 11
Historical price target and rating changes for Rosenbauer International AG in the last 12 months (full
coverage)
Date
08 January 13
11 February 13
01 May 13
Price target - EUR
50.00
58.00
62.00
Rating
Hold
Buy
Hold
31 May 12
Historical price target and rating changes for Sartorius AG in the last 12 months (full coverage)
Date
31 October 12
19 April 13
29 August 13
Price target - EUR
80.00
85.00
92.00
Rating
Buy
Buy
Buy
19 September 12
Historical price target and rating changes for Schoeller-Bleckmann AG in the last 12 months (full
coverage)
Date
01 May 13
Price target - EUR
76.00
Rating
Hold
26 March 07
Historical price target and rating changes for SGL Carbon SE in the last 12 months (full coverage)
Date
05 November 12
18 February 13
18 March 13
18 April 13
28 June 13
Price target - EUR
21.00
18.00
19.00
18.00
14.00
Rating
Sell
Sell
Sell
Sell
Sell
04 September 03
Historical price target and rating changes for Sky Deutschland AG in the last 12 months (full coverage)
Date
14 November 12
16 January 13
28 June 13
07 August 13
Price target - EUR
5.40
5.15
6.40
7.60
Rating
Buy
Buy
Buy
Buy
07 December 10
Historical price target and rating changes for Software AG in the last 12 months (full coverage)
Date
05 June 13
Price target - EUR
21.00
Rating
Sell
129
05 January 10
Cross-Sector
Historical price target and rating changes for STADA Arzneimittel AG in the last 12 months (full
coverage)
Date
06 March 13
05 April 13
08 August 13
Price target - EUR
35.00
37.00
40.00
Rating
Buy
Buy
Buy
26 August 03
Historical price target and rating changes for STRATEC Biomedical AG in the last 12 months (full
coverage)
Date
25 October 12
11 March 13
05 August 13
Price target - EUR
37.00
36.00
28.00
Rating
Buy
Hold
Hold
23 November 10
Historical price target and rating changes for Ströer Media AG in the last 12 months (full coverage)
Date
11 February 13
03 October 13
Price target - EUR
9.20
11.40
Rating
Hold
Hold
03 November 10
Historical price target and rating changes for Südzucker AG in the last 12 months (full coverage)
Date
11 October 12
21 May 13
24 September 13
Price target - EUR
30.00
27.00
22.50
Rating
Hold
Hold
Hold
12 April 11
Historical price target and rating changes for Süss Microtec AG in the last 12 months (full coverage)
Date
22 July 13
Price target - EUR
9.40
Rating
Buy
22 July 13
Historical price target and rating changes for Symrise AG in the last 12 months (full coverage)
Date
06 November 12
03 April 13
15 April 13
Price target - EUR
25.00
31.00
32.00
Rating
Hold
Hold
Hold
21 July 10
Historical price target and rating changes for TAG Immobilien AG in the last 12 months (full coverage)
Date
26 February 13
08 May 13
Price target - EUR
9.90
10.50
Rating
Buy
Buy
29 May 08
Historical price target and rating changes for TAKKT AG in the last 12 months (full coverage)
Date
22 March 13
07 August 13
Price target - EUR
14.00
16.00
Rating
Hold
Buy
07 December 10
Historical price target and rating changes for Tipp24 SE in the last 12 months (full coverage)
Date
15 March 13
21 March 13
16 April 13
14 May 13
Price target - EUR
70.00
68.50
69.00
68.00
Rating
Buy
Buy
Buy
Buy
04 April 11
Historical price target and rating changes for Tomorrow Focus AG in the last 12 months (full coverage)
Date
15 January 13
28 January 13
20 September 13
Price target - EUR
4.70
5.00
4.60
Rating
Hold
Buy
Buy
130
15 February 11
Cross-Sector
Historical price target and rating changes for Tom Tailor Holding AG in the last 12 months (full
coverage)
Date
09 November 12
17 December 12
07 March 13
31 July 13
08 August 13
Price target - EUR
20.50
21.50
22.00
21.00
20.00
Rating
Buy
Buy
Buy
Buy
Buy
29 November 10
Historical price target and rating changes for Verbund AG in the last 12 months (full coverage)
Date
05 February 13
21 May 13
Price target - EUR
14.50
12.80
Rating
Sell
Sell
13 April 11
Historical price target and rating changes for Vossloh AG in the last 12 months (full coverage)
Date
01 May 13
Price target - EUR
65.00
Rating
Sell
23 June 11
Historical price target and rating changes for VTG AG in the last 12 months (full coverage)
Date
01 May 13
Price target - EUR
15.50
Rating
Hold
30 November 07
Historical price target and rating changes for Wacker Neuson SE in the last 12 months (full coverage)
Date
01 May 13
Price target - EUR
9.00
Rating
Sell
09 February 10
Historical price target and rating changes for Wienerberger AG in the last 12 months (full coverage)
Date
03 October 13
Price target - EUR
10.90
Rating
Sell
22 September 11
Historical price target and rating changes for Wirecard AG in the last 12 months (full coverage)
Date
22 January 13
12 February 13
23 July 13
16 September 13
Price target - EUR
18.00
25.00
27.50
28.00
Rating
Hold
Buy
Buy
Buy
21 February 06
Historical price target and rating changes for Wüstenrot & Württembergische AG in the last 12 months
(full coverage)
Date
17 October 12
19 June 13
Price target - EUR
20.00
16.00
Rating
Hold
Hold
17 October 12
Historical price target and rating changes for Xing AG in the last 12 months (full coverage)
Date
07 August 13
24 September 13
Price target - EUR
74.00
82.00
Rating
Buy
Buy
23 May 12
Historical price target and rating changes for zooplus AG in the last 12 months (full coverage)
Date
15 October 12
29 October 12
30 January 13
12 September 13
Price target - EUR
27.00
30.00
29.50
44.00
Rating
Sell
Sell
Sell
Sell
131
07 April 11
Cross-Sector
Historical price target and rating changes for Zumtobel AG in the last 12 months (full coverage)
Date
13 March 13
01 May 13
09 July 13
04 October 13
Price target - EUR
10.60
12.00
12.50
14.50
Rating
Hold
Buy
Buy
Buy
13 April 11
Historical price target and rating changes for Telekom Austria Group in the last 12 months (full coverage)
Date
29 October 12
25 February 13
18 June 13
Price target - EUR
5.00
4.50
4.20
Rating
Sell
Sell
Sell
02 September 11
Historical price target and rating changes for United Internet AG in the last 12 months (full coverage)
Date
14 November 12
26 November 12
03 June 13
08 October 13
Price target - EUR
18.00
20.00
26.00
35.00
Rating
Buy
Buy
Buy
Buy
23 October 03
Berenberg distribution of ratings and in proportion to investment banking services
Buy
Sell
Hold
41.59 %
18.71 %
39.70 %
57.14 %
10.71 %
32.14 %
Valuation basis/rating key
The recommendations for companies analysed by Berenberg’s Equity Research department are made on an
absolute basis for which the following three-step rating key is applicable:
Buy: Sustainable upside potential of more than 15% to the current share price within 12 months;
Sell:
Sustainable downside potential of more than 15% to the current share price within 12 months;
Hold: Upside/downside potential regarding the current share price limited; no immediate catalyst visible.
NB: During periods of high market, sector, or stock volatility, or in special situations, the recommendation system
criteria may be breached temporarily.
Competent supervisory authority
Bundesanstalt für Finanzdienstleistungsaufsicht -BaFin- (Federal Financial Supervisory Authority),
Graurheindorfer Straße 108, 53117 Bonn and Marie-Curie-Str. 24-28, 60439 Frankfurt am Main, Germany.
General investment-related disclosures
Joh. Berenberg, Gossler & Co. KG (hereinafter referred to as „the Bank“) has made every effort to carefully research
all information contained in this financial analysis. The information on which the financial analysis is based has been
obtained from sources which we believe to be reliable such as, for example, Thomson Reuters, Bloomberg and the
relevant specialised press as well as the company which is the subject of this financial analysis.
Only that part of the research note is made available to the issuer (who is the subject of this analysis) which is
necessary to properly reconcile with the facts. Should this result in considerable changes a reference is made in the
research note.
Opinions expressed in this financial analysis are our current opinions as of the issuing date indicated on this
document. The companies analysed by the Bank are divided into two groups: those under “full coverage” (regular
updates provided); and those under “screening coverage” (updates provided as and when required at irregular
intervals).
132
Cross-Sector
The functional job title of the person/s responsible for the recommendations contained in this report is “Equity
Research Analyst” unless otherwise stated on the cover.
The following internet link provides further remarks on our financial analyses:
http://www.berenberg.de/research.html?&L=1&no_cache=1
Legal disclaimer
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document does not claim completeness regarding all the information on the stocks, stock markets or developments
referred to in it.
On no account should the document be regarded as a substitute for the recipient procuring information for
himself/herself or exercising his/her own judgements.
The document has been produced for information purposes for institutional clients or market professionals.
Private customers, into whose possession this document comes, should discuss possible investment decisions with
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document.
This document is not a solicitation or an offer to buy or sell the mentioned stock.
The document may include certain descriptions, statements, estimates, and conclusions underlining potential market
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The Bank and/or its employees may hold, buy or sell positions in any securities mentioned in this document,
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Analyst certification
I, Ali Farid Khwaja, hereby certify that all of the views expressed in this report accurately reflect my personal views
about any and all of the subject securities or issuers discussed herein.
In addition, I hereby certify that no part of my compensation was, is, or will be, directly or indirectly related to the
specific recommendations or views expressed in this research report, nor is it tied to any specific investment
banking transaction performed by the Bank or its affiliates.
I, James Targett, hereby certify that all of the views expressed in this report accurately reflect my personal views
I, Kai Klose, hereby certify that all of the views expressed in this report accurately reflect my personal views about
any and all of the subject securities or issuers discussed herein.
I, Estelle Weingrod, hereby certify that all of the views expressed in this report accurately reflect my personal views
I, Bjoern Lippe, hereby certify that all of the views expressed in this report accurately reflect my personal views
I, Benjamin Glaeser, hereby certify that all of the views expressed in this report accurately reflect my personal views
133
Cross-Sector
I, Felix Wienen, hereby certify that all of the views expressed in this report accurately reflect my personal views
I, Sarah Simon, hereby certify that all of the views expressed in this report accurately reflect my personal views
I, Simon Mezzanotte, hereby certify that all of the views expressed in this report accurately reflect my personal
views about any and all of the subject securities or issuers discussed herein.
I, Scott Bardo, hereby certify that all of the views expressed in this report accurately reflect my personal views
I, Anna Patrice, hereby certify that all of the views expressed in this report accurately reflect my personal views
I, Gunnar Cohrs, hereby certify that all of the views expressed in this report accurately reflect my personal views
I, Stanislaus von Thurn und Taxis, hereby certify that all of the views expressed in this report accurately reflect my
personal views about any and all of the subject securities or issuers discussed herein.
I, Usman Ghazi, hereby certify that all of the views expressed in this report accurately reflect my personal views
I, Alistair Campbell, hereby certify that all of the views expressed in this report accurately reflect my personal views
I, John Klein, hereby certify that all of the views expressed in this report accurately reflect my personal views about
134
Cross-Sector
I, Chris Moore, hereby certify that all of the views expressed in this report accurately reflect my personal views
I, Adam Hull, hereby certify that all of the views expressed in this report accurately reflect my personal views about
I, William Mackie, hereby certify that all of the views expressed in this report accurately reflect my personal views
I, Margaret Paxton, hereby certify that all of the views expressed in this report accurately reflect my personal views
I, Sebastian Grabert, hereby certify that all of the views expressed in this report accurately reflect my personal views
I, Tom Jones, hereby certify that all of the views expressed in this report accurately reflect my personal views about
I, Daud Khan, hereby certify that all of the views expressed in this report accurately reflect my personal views
I, Tammy Qiu, hereby certify that all of the views expressed in this report accurately reflect my personal views
I, Jaideep Pandya, hereby certify that all of the views expressed in this report accurately reflect my personal views
I, Lawson Steele, hereby certify that all of the views expressed in this report accurately reflect my personal views
135
Cross-Sector
I, Peter Eliot, hereby certify that all of the views expressed in this report accurately reflect my personal views about
I, Wassil El Hebil, hereby certify that all of the views expressed in this report accurately reflect my personal views
I, Andrew Fisher, hereby certify that all of the views expressed in this report accurately reflect my personal views
I, Oliver Salvesen, hereby certify that all of the views expressed in this report accurately reflect my personal views
I, Robert Muir, hereby certify that all of the views expressed in this report accurately reflect my personal views
Remarks regarding foreign investors
The preparation of this document is subject to regulation by German law. The distribution of this document in other
jurisdictions may be restricted by law, and persons into whose possession this document comes should inform
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United Kingdom
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Third-party research disclosures
Company
Disclosures
Aixtron SE
ANDRITZ AG
Aurelius AG
Axel Springer AG
Bauer AG
BayWa AG
no disclosures
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136
Cross-Sector
Bechtle AG
Bilfinger SE
Brenntag AG
Celesio AG
CTS Eventim AG
Delticom AG
Deutsche Wohnen AG
Deutz AG
DIC Asset AG
Drillisch AG
Dürr AG
ElringKlinger AG
Evotec AG
Fielmann AG
freenet AG
Fuchs Petrolub SE
GAGFAH SA
GEA Group AG
Gerresheimer AG
Grenkeleasing AG
GSW Immobilien AG
Hamborner REIT AG
Hawesko Holding AG
Hochtief AG
Hugo Boss AG
Jenoptik AG
Jungheinrich AG
KION Group AG
Klöckner & Co SE
Kontron AG
Krones AG
KUKA AG
LEG Immobilien AG
Leifheit AG
Lotto24 AG
MAN SE
Nemetschek AG
NORMA Group SE
OSRAM Licht AG
Palfinger AG
PSI AG
QSC AG
RATIONAL AG
Rheinmetall AG
RHI AG
Rhön-Klinikum AG
no disclosures
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no disclosures
137
Cross-Sector
RIB Software AG
Sartorius AG
SGL Carbon SE
Sky Deutschland AG
Software AG
Ströer Media AG
Südzucker AG
Süss Microtec AG
Symrise AG
TAG Immobilien AG
TAKKT AG
Tipp24 SE
Tomorrow Focus AG
Verbund AG
Vossloh AG
VTG AG
Wacker Neuson SE
Wienerberger AG
Wirecard AG
Xing AG
zooplus AG
Zumtobel AG
United Internet AG
(1)
(2)
(3)
(4)
(5)
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Berenberg Capital Markets LLC owned 1% or more of the outstanding shares of any class of the subject
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ZURICH
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Jonathan Paterson
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140

German/Austrian small/mid-caps

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Berenberg Research Report as of November 28