Hans D’Haese Holding & portfolio companies Sell-side equity analyst Benelux What is the added value?
Luxembourg, 14/06/16 Holding & portfolio companies Added value Diversification – Risk – Return
Luxembourg, 14/06/16 Added value of holding & portfolio companies
Sector peculiarities Universe. What does this sector look like? Valuation. What is it worth? What’s the risk? How did it perform? What to do?
3 Luxembourg, 14/06/16 Holding & portfolio companies 1. Sector peculiarities
Luxembourg, 14/06/16 1 Added value of holding & portfolio companies Sector peculiarities Control • Economic interest leverage • Execute control with a diluted participation Diversification • From very well diversified… • … to single-asset companies Taxes • Exempt on capital gains • Most of dividends: no with-holding tax • Related costs to shareholdings fully tax deductible
5 Luxembourg, 14/06/16 Holding & portfolio companies 2. What does the sector look like?
Luxembourg, 14/06/16 2 Added value of holding & portfolio companies Universe
7 Luxembourg, 14/06/16 2 Added value of holding & portfolio companies Universe
Holding company Industrial group Portfolio company Singe-asset company
control diversification investment company anchorage
8 Luxembourg, 14/06/16 2 Added value of holding & portfolio companies Universe
Holding companies
GBL / CNP / … Sofina / Henex / … Compagnie du Bois Sauvage
• Business segments are organised within an independent firm (< > conglomerate) • Gradually shifting from controlling structure to investment company
9 Luxembourg, 14/06/16 2 Added value of holding & portfolio companies Universe
Diversified industrial groups
Ackermans & van Haaren Floridienne
• Financial vehicle, separate valuation of underlying businesses • Unrelated activities • Strategic view
10 Luxembourg, 14/06/16 2 Added value of holding & portfolio companies Universe
Portfolio companies
Luxempart Brederode Gimv Quest for Growth
• Financial point of view • Diversification • Private equity
11 Luxembourg, 14/06/16 2 Added value of holding & portfolio companies Universe
Single-asset companies
Financière de Tubize Heineken Holding KBC Ancora Pargesa Solvac
• Often family controlled • No diversification • Passive
12 Luxembourg, 14/06/16 Holding & portfolio companies 3. What is it worth?
Luxembourg, 14/06/16 3 Added value of holding & portfolio companies Valuation ASSETS = EQUITY + LIABILITIES
(Financial) Assets Equity
Cash Liabilities / Debt
14 Luxembourg, 14/06/16 3 Added value of holding & portfolio companies Valuation
Gross Asset Value: Sum-of-the-Parts analysis with separate valuations per asset, mix of:
• DCF • sector relative multiples method • (adjusted) book value, (+ retained earnings…) • acquisition value • share price • target price • EVCA rules …
15 Luxembourg, 14/06/16 3 Added value of holding & portfolio companies Valuation
Net asset value models GAV: adjustment for debts, cash, cash-equivalents
• Discount • Fair value
Recommendations • Changes in NAV forecasts • Management quality / track record / communication • Investment strategy • Valuations
16 Luxembourg, 14/06/16 3 Added value of holding & portfolio companies Valuation – discount/premium
• Competing private equity Listed PE
• Active investment approach Active management track-record
• Equity stories Private equity investments
• NAV enhancing strategies Improving disclosure – neutralisation of costs
• Control multipliers Control vehicles – weak discounts
17 Luxembourg, 14/06/16 3 Added value of holding & portfolio companies Valuation – creating shareholder value
• Investment strategy
• Discount to reported NAV
• Spot NAV estimate
• Target NAV estimate
• Dividend yield
18 Luxembourg, 14/06/16 Holding & portfolio companies 4. What is the risk?
Luxembourg, 14/06/16 4 Added value of holding & portfolio companies
Risk Versus “the market”
Beta < 1
Example for largest 3 Belgian • (Ackermans & van Haaren, GBL, Sofina)
• and 2 Luxembourg cies (Luxempart and Brederode)
20 Luxembourg, 14/06/16 Source: Degroof Petercam, Bloomberg, Company data 4 Added value of holding & portfolio companies
Risk Liquidity
Company name Listed % NAV Net cash % NAV Ackermans & van Haaren 42% 1% Bois Sauvage 32% -8% Brederode 51% 1% Financiere de Tubize 107% -7% GBL 94% -1% Gimv 4% 26% Heineken Holding 100% NA KBC Ancora 110% -10% Luxempart 58% 12% Quest for Growth 60% 15% Sofina 45% 8% Solvac 103% -3% TINC 0% 18%
21 Luxembourg, 14/06/16 Source: Degroof Petercam, Bloomberg, Company data 4 Added value of holding & portfolio companies
Risk Diversification vs. asset concentration
Company name Largest sector exposure in % NAV Largest asset exposure in % NAV Ackermans & van Haaren Financials 63% Delen Inv. 31% Bois Sauvage Consumer goods 45% UBCM-Neuhaus 46% Brederode Health Care 10% Sofina 6% Financiere de Tubize Health Care 107% UCB 100% GBL Basic Materials 24% Imerys 18% Gimv Financials 15% itho daalderop 5% Heineken Holding Consumer goods 100% Heineken 100% KBC Ancora Financials 110% KBC Group 100% Luxempart Financials 38% SES 17% Quest for Growth Technology 26% Kiadis Pharma 5% Sofina Financials 41% Danone 9% Solvac Industrials 103% Solvay 100% TINC Financials 82% NA NA
22 Luxembourg, 14/06/16 Source: Degroof Petercam, Bloomberg, Company data Holding & portfolio companies 5. What is the return?
Luxembourg, 14/06/16 5 Added value of holding & portfolio companies
Return Economic return + gross dividend reinvested Company name 1 year 3 years 5 years 10 years 1990-now Ackermans & van Haaren 5% 21% 13% 9% Bois Sauvage 9% 7% 7% 3% Brederode 3% 16% 15% 8% Financiere de Tubize * -2% 18% 17% 8% 13% GBL -8% 6% 5% 2% 9% Gimv 9% 9% 4% 5% Heineken Holding * 19% 18% 17% 12% KBC Ancora * -13% 25% 16% -4% Luxempart 4% 15% 11% 11% Quest for Growth 1% 13% 8% 4% Sofina -1% 13% 9% 7% 10% Solvac * -34% -8% -2% 2% 6% TINC 2%
Holding companies (average) 3% 12% 9% 6% 9% Single-asset companies (average) * -7% 13% 12% 4% 10%
24 Luxembourg, 14/06/16 Source: Degroof Petercam, Bloomberg, Company data 5 Added value of holding & portfolio companies
Return Share price return + gross dividend reinvested Company name 1 year 3 years 5 years 10 years 1990-now Ackermans & van Haaren -4% 22% 14% 10% 13% Bois Sauvage 11% 17% 13% 5% 10% Brederode 8% 20% 17% 7% 10% Financiere de Tubize * -2% 17% 17% 5% 13% GBL 5% 12% 8% 3% 9% Gimv 27% 16% 9% 8% Heineken Holding * 19% 20% 18% 13% KBC Ancora * -6% 30% 21% -6% Luxempart 4% 13% 12% 10% Quest for Growth 2% 19% 15% 5% Sofina 18% 20% 13% 8% 11% Solvac * -25% -2% 1% 1% 8% TINC 4%
Holding companies (average) 8% 17% 13% 7% 11% Single-asset companies (average) * -3% 16% 14% 3% 10% DJ EuroSTOXX50 Return Index -13% 5% 6% 2% N.A.
25 Luxembourg, 14/06/16 Source: Degroof Petercam, Bloomberg, Company data 5 Added value of holding & portfolio companies
Return Average return per annum: selection vs. the market (Europe)
3 BEL & 2 LUX
26 Luxembourg, 14/06/16 Source: Degroof Petercam, Bloomberg, Company data 5 Added value of holding & portfolio companies
Return Average excess-return per annum selection vs. the market (Europe)
3 BEL & 2 LUX
27 Luxembourg, 14/06/16 Source: Degroof Petercam, Bloomberg, Company data 5 Added value of holding & portfolio companies
Return Average excess-return per annum selection vs. the market (Belgium)
3 BEL & 2 LUX
28 Luxembourg, 14/06/16 Source: Degroof Petercam, Bloomberg, Company data 5 Added value of holding & portfolio companies
Return Cumulated historical share price return, gross dividend reinvested – in %
GBL Until \ In 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2006 11% 2007 -2% -12% 2008 -24% -31% -22% 2009 -12% -21% -10% 16% 2010 -13% -22% -11% 14% -1% 2011 -26% -33% -25% -3% -16% -15% 2012 -9% -18% -7% 19% 3% 4% 23% 2013 5% -5% 7% 38% 20% 21% 42% 16% 2014 16% 4% 18% 52% 31% 33% 56% 27% 10% 2015 34% 20% 36% 75% 52% 53% 80% 47% 27% 16% 2016 34% 20% 37% 76% 52% 54% 81% 47% 27% 16% 0%
29 Luxembourg, 14/06/16 Source: Degroof Petercam, Bloomberg, Company data 5 Added value of holding & portfolio companies
Return Cumulated historical share price return, gross dividend reinvested – in %
Brederode Until \ In 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2006 22% 2007 18% -3% 2008 -29% -42% -40% 2009 -6% -23% -21% 33% 2010 5% -14% -11% 48% 12% 2011 12% -8% -5% 59% 20% 7% 2012 32% 8% 11% 87% 41% 26% 17% 2013 41% 16% 20% 100% 51% 35% 26% 7% 2014 73% 41% 46% 145% 85% 65% 54% 31% 22% 2015 99% 63% 69% 183% 113% 90% 78% 51% 41% 15% 2016 114% 76% 81% 204% 129% 105% 91% 63% 51% 24% 7%
30 Luxembourg, 14/06/16 Source: Degroof Petercam, Bloomberg, Company data 5 Added value of holding & portfolio companies
Return Cumulated historical share price return, gross dividend reinvested – in %
Luxempart Until \ In 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2006 5% 2007 39% 33% 2008 38% 32% -1% 2009 47% 40% 6% 6% 2010 61% 53% 15% 16% 9% 2011 64% 56% 18% 19% 11% 2% 2012 81% 72% 30% 31% 23% 13% 10% 2013 97% 87% 41% 42% 34% 22% 20% 9% 2014 137% 125% 70% 71% 61% 47% 44% 31% 20% 2015 163% 150% 88% 90% 78% 63% 60% 45% 33% 11% 2016 178% 164% 99% 101% 89% 73% 69% 53% 41% 17% 6%
31 Luxembourg, 14/06/16 Source: Degroof Petercam, Bloomberg, Company data Holding & portfolio companies 6. What to do?
Luxembourg, 14/06/16 6 Added value of holding & portfolio companies
Why? To do: GBL • Portfolio mutation
• Shift from yield to growth
• Increase private equity exposure
• Re-rating ongoing
Professional shareholder with focused portfolio
33 Luxembourg, 14/06/16 Source: Degroof Petercam, Bloomberg, Company data 6 Added value of holding & portfolio companies
To do: Key market data Market cap, EUR bn 12.21 Local index BEL20 GBL Free float 46% BEL20 member Yes figures Free float Mcap, EUR bn 5.64 Next AGM Apr-17
Daily avg. no. trad. sh. 12 mth 114,179 Velocity 25.9% Daily avg. trad. vol. 12 mth, EUR m 8.3 5yr avg economic return 4.6% Performance 5d -0.4% Divid. yld (trail. 12m) 3.8% Performance 30d 2.5% 5yr avg hist. discount -25.0% Performance 90d 6.7% 12m avg hist. discount -21.3%
34 Luxembourg, 14/06/16 Source: Degroof Petercam, Bloomberg, Company data 6 Added value of holding & portfolio companies
85 -40% 150
To do: 80 -30% 120
75
GBL -20% 90 70 evolution 65 -10% 60 60 0% 30 55 07 08 09 10 11 12 13 14 15 16 17 Jun 15 Aug 15 Oct 15 Dec 15 Feb 16 Apr 16 Jun 16
GBL BEL20 (rebased) Pargesa (EUR - rebased) discount stock (EUR) NAVps (EUR)
-30% 90
85 85
-25% 80 78 75 74
-20% 70
65
60 -15% Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16
Shaded: TP range applying 3-yr end-of- NAV (discount)/premium 52 weeks rolling avg +/- 2 * St Dev Target… month historical min/max discount on
35 Luxembourg, 14/06/16 Source: Degroof Petercam, Bloomberg, Company data 6 Added value of holding & portfolio companies
Why? To do: Brederode • «Skin in the game» management
• Excellent track-record
• Listed confort names
• Privaty equity: top funds
• Diversification
Listed: stock picking – undervalued, offering best profitability and growth Private equity: returns significantly in excess of those achievable on the stock market.
36 Luxembourg, 14/06/16 Source: Degroof Petercam, Bloomberg, Company data 6 Added value of holding & portfolio companies
To do: Key market data Market cap, EUR bn 1.13 Local index BEL20 Brederode Free float 38% BEL20 member No
figures Free float Mcap, EUR bn 0.43 Next AGM May-16 Daily avg. no. trad. sh. 12 mth 4,664 Velocity 5.8% Daily avg. trad. vol. 12 mth, EUR m 0.2 5yr avg econ. return 14.7% Performance 5d -3.0% Divid. yld (trail. 12m) 1.7% Performance 30d -3.3% 5yr avg hist. discount -30.3% Performance 90d -1.4% 12m avg hist. discount -24.6%
37 Luxembourg, 14/06/16 Source: Degroof Petercam, Bloomberg, Company data 6 Added value of holding & portfolio companies
42 -60% 60 To do: 40 -50% 50 -40% 40 38 Brederode -30% 30 36 -20% 20
evolution 34 -10% 10
32 0% 0 Jun 15 Aug 15 Oct 15 Dec 15 Feb 16 Apr 16 Jun 16 07 08 09 10 11 12 13 14 15 16 17
Brederode BEL20 (rebased) Discount stock (EUR) NAVps (EUR)
-40% Top-5 largest listed holdings EUR m % GAV
Sofina 83.3 5.6% -35% Unilever 65.4 4.4% -30% Nestle 53.8 3.6%
-25% Samsung Electronics 53.5 3.6%
Novartis 53.1 3.6% -20%
-15% Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Listed assets EUR m % NAV
NAV (discount)/premium 52 weeks rolling avg +/- 2 * St Dev 760.4 51.0%
38 Luxembourg, 14/06/16 Source: Degroof Petercam, Bloomberg, Company data 6 Added value of holding & portfolio companies To do: Luxempart
the company
next…
39 Luxembourg, 14/06/16 Source: Degroof Petercam, Bloomberg, Company data 6 Added value of holding & portfolio companies
To do: Key market data Market cap, EUR bn 0.85 Local index LuxX Luxempart Free float 35% LuxX member Yes
figures Free float Mcap, EUR bn 0.30 Next AGM Apr-17 Daily avg. no. trad. sh. 12 mth 3,976 Velocity 6.1% Daily avg. trad. vol. 12 mth, EUR m 0.1 5yr avg econ. return 10.9% Performance 5d -1.0% Divid. yld (trail. 12m) 3.0% Performance 30d -1.6% 5yr avg hist. discount -34.2% Performance 90d 7.1% 12m avg hist. discount -36.0%
40 Luxembourg, 14/06/16 Source: Degroof Petercam, Bloomberg, Company data 6 Added value of holding & portfolio companies
38 -50% 60
To do: 36 -40% 45
34 Luxempart -30% 30 32 -20% 15 evolution 30
28 -10% 0 Jun 15 Aug 15 Oct 15 Dec 15 Feb 16 Apr 16 Jun 16 07 08 09 10 11 12 13 14 15 16 17
Luxempart BEL20 (rebased) discount stock (EUR) NAVps (EUR)
-45% 50
-40% 45 44.5
41.0 -35% 40 38.4
-30% 35
-25% 30
-20% 25 Jul 14 Oct 14 Jan 15 Apr 15 Jul 15 Oct 15 Jan 16 Apr 16 Jul 16 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17
Shaded: TP range applying 5-yr historical Target price NAV (discount)/premium 52 weeks rolling avg +/- 2 * St Dev min/max discount on target NAV
41 Luxembourg, 14/06/16 Source: Degroof Petercam, Bloomberg, Company data Added value of holding & portfolio companies
d.d. 09/06/2016 BB Close Adj. (Disc.) Avg (disc) Market Degroof Target Company name Ticker price NAV /prem. /prem. cap. Petercam price EUR EUR to NAV % 5Y % EUR m rating (EUR) Ackermans & van Haaren ACKB 114.0 132.0 -13.7% -10.2% 3,817 Add 135.0 Bois Sauvage COMB 258.7 323.3 -20.0% -28.7% 435 Hold 250.0 Brederode BREB 38.5 53.0 -27.5% -30.3% 1,127 Buy 44.0 Financiere de Tubize TUB 57.1 96.4 -40.8% -40.6% 2,544 Add 66.0 GBL GBLB 75.6 93.2 -18.8% -25.0% 12,205 Hold 78.0 Gimv GIMB 52.5 46.3 13.3% -5.7% 1,335 Hold 50.0 Heineken Holding HEIO 73.1 82.5 -11.3% -13.8% 21,067 Add 77.0 KBC Ancora KBCA 35.6 47.7 -25.4% -32.2% 2,788 Hold 31.0 Luxempart LXMP 35.3 54.7 -35.5% -34.2% 846 Buy 41.0 Quest for Growth QFG 7.3 8.9 -17.4% -26.8% 111 Not rated NA Sofina SOF 121.8 150.3 -19.0% -32.8% 4,172 Add 125.0 Solvac SOLV 94.1 129.1 -27.1% -30.8% 2,011 Not rated NA TINC TINC 11.7 11.1 4.7% 2.1% 159 Add 11.9
42 Luxembourg, 14/06/16 Source: Degroof Petercam, Bloomberg, Company data Hans D’Haese Thank you Sell-side equity analyst
Luxembourg, 14/06/16 Financial Markets Place Sainte-Gudule 19 – 1000 Brussels Rue de l’Industrie 44 – 1040 Brussels De Entrée 238 A 7th floor – 1101 EE Amsterdam JPP Eurosecurities, 595 Madison Avenue – 38th floor – New York, 10022
ANALYSTS SALES Stefaan Genoe, Head of Research Telecom/Technology +32 2 229 6466 Gert Potvlieghe, Head of Sales +32 2 229 6659 Amal Aboulkhouatem Real Estate +32 2 229 6556 Sandra Aznar y Gil (Real Estate) +32 2 229 6208 Marcel Achterberg Technology/Services +31 20 573 5463 Bart Beullens +32 2 287 9180 Jean-Marie Caucheteux Real Estate +32 2 287 9920 Damien Crispiels (Real Estate) +32 2 287 9697 Junior Cuigniez Industrials/Shipping +32 2 229 6339 Quentin De Decker +32 2 287 9287 Fernand de Boer Retail/Food & Beverages +31 20 573 5417 Raymond de Wolff +31 20 573 5414 Nathalie Debruyne, CFA Chemicals +32 2 229 6578 Damien Fontaine +32 2 229 6562 Hans D’Haese Holding companies/Food & Bev. +32 2 287 9223 Laurent Goethals +32 2 287 9185 Bart Jooris Financials +32 2 287 9279 Pascal Magis +32 2 287 9781 Michael Roeg Media +31 20 573 5422 Charlotte Renson +32 2 400 3291 Luuk van Beek Energy/Engineering/Construction +31 20 573 5471 Jurgen Smits van Oyen +31 20 573 5413 Herman van der Loos, CFA Real Estate +32 2 229 6340 Jochen Vercauteren +32 2 229 6612 Roderick Verhelst, PhD Life Sciences +32 2 229 6682 JPP EUROSECURITIES MIDDLE OFFICE Simon Vlaminck +1 212 521 6735 Christophe Swinnen +32 2 229 6334 SALES TRADING Joost Ceulemans +32 2 229 6330 Sven Dhondt +32 2 229 6332 Hans de Jonge, Head of Sales Trading +31 20 573 5404 Katia Foy +32 2 229 6416 Pascal Burm +32 2 229 6617 Antoine Miest +32 2 229 6329 Patrick Coppens +32 2 229 6616 Hilde Van Den Bossche +32 2 229 6297 Veronique De Schoemaecker +32 2 229 6620 Kristof Joos +32 2 229 6387 ADMINISTRATION Frans van Wakeren +31 20 573 5407 Christel De Clerck +32 2 229 6308 Monique Gérard +32 2 229 6569 Tineke Hosselaer +32 2 229 6407 Alexandra Krauss +32 2 287 9797 Charlotte Mertens Roadshow Coordinator +31 20 573 5416
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