Benelux Preference List update
AEX Preference List update Price (08/09/2017): 518.82 Reuters: .AEX Strong mid‐cap performance Bloomberg: AEX The European stock market indices are up mid‐ to high‐single digit year‐to‐date. H/L 1 year: 536.26 ‐ 439.07 The STXE 600 price index is up 5.5% and the Euro Stoxx 50 price index is up 1 year perf.: 12.9% 6.7%, with the return index up 9.1%. Diff. with DJ E. Stoxx: ‐0.1% Despite the recent dollar weakness, earnings revisions have remained positive AEX (10 years) for European stocks in recent months. 600 550 Small caps were strong with the ESTX Mid up 14% ytd and the AMX in 500 450 Amsterdam up 18.7%. The AEX increased by 9.0% ytd. 400 350 The Belgian Bel20 increased by 10.8% and the Belgian All‐Share return index has 300 250 been a laggard with a 5.1% return, largely due to the presence of Total with a 200 150 17% weighting and down 9% ytd. 06 07 08 09 10 11 12 13 14 15 16 17 BEL 20 Excellent ytd Preference List performance Price (08/09/2017): 3,938.24 Our stock selection performed well both on the long and on the short side. Reuters: .BFX Our Outperformance List increased by 15.3% since the start of the year. Some of Bloomberg: BEL20 the main positive outlayers were Greenyard (+37% ytd), Melexis (+25% ytd), H/L 1 year: 4,041 ‐ 3,426 Galapagos (+38% ytd), ASML (+26% ytd) and Refresco (+13% ytd). 1 year perf.: 8.8% Diff. with DJ E. Stoxx: ‐4.2% In a rising market we had a particularly strong Underperformance selection with our Combined Long/short List even outperforming the long list with a ytd BEL20 (10 years) performance of 16.2%. Boskalis is down 14% ytd, D’Ieteren is down 11%, Post 5,000 NL down 16% and Vopak down21%. 4,500 4,000 3,500 Continued strong long term selection performance 3,000 2,500 After a weak performance in 2016, the 2017 selection performance again 2,000 supports our solid long term track record. 1,500 Our Outperformance List has recorded an average annual increase of 10.7% 06 07 08 09 10 11 12 13 14 15 16 17 since the start in 2005, versus 3.3% for the STXE 600. Equity Risk Premium Our Preference List, including about 30% shorts on average, has recorded an Europe annual gain of 11.3% in the same period
12.00
10.00 Updated List
8.00 6.00 Date of entry Outperformers Target price 4.00 Sept. 14, 2017 ABI 115.00 2.00 Sept. 14, 2018 AvH 155.00 0.00 17 15 13 11 09 07 05 03 01 99 97 95 93 91 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐2.00 Jan. 6, 2016 BAM Group 6.50 Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 1 1 1 1 1 1 1 1 1 1 1 1 1 1 Jan. 10, 2017 Barco 101.00 Sept. 14, 2017 Besi 65.00 Apr. 13, 2015 DSM 77.00
Jan. 10, 2017 Galapagos 96.00 Analyst: Nov. 21, 2016 Melexis 85.00
Stefaan Genoe Underperformers +32 2 662 8299 [email protected] Jan. 10, 2017 D'Ieteren 40.00 Jan. 10, 2017 PostNL 3.60 July 4, 2016 Vopak 35.00
1 EQUITY RESEARCH 13/09/2017
Table of contents
Selection Update ...... 3 Outperformers ...... 5 ABInBev ...... 5 Ackermans & van Haaren ...... 7 BAM Group ...... 9 Barco ...... 11 BESI ...... 13 DSM ...... 15 Galapagos ...... 17 Melexis ...... 19 Underperformers ...... 21 D’Ieteren ...... 21 Post NL ...... 23 Vopak ...... 25 Valuation tables ...... 27 2017 P/E ranking ...... 27 2017 EV/EBITDA ranking ...... 29 2017 EV/EBIT ranking...... 31 2017 Net debt/EBITDA ranking ...... 33 2017 FCF yield ranking ...... 35 2017 Dividend yield ranking ...... 37
2 EQUITY RESEARCH │ Preference List 13/09/2017
Selection Update
Selection performance 2017 ytd Our stock selection performed well in the first 8 months of the year both on the long and on the short side. We started the year with ASML, Corbion, Greenyard, BAM, DSM, Refresco, Melexis, Barco, Galapagos and RTL in the Outperformance List. In the Underperformance List we started the year with D’Ieteren, PostNL and Vopak. On March 8, we added Boskalis to the underperformers, on April 20 we took profit on ASML and on July 25 we did the same with Greenyard. Our Outperformance List increased by 15.3% since the start of the year. Some of the main positive outlayers were Greenyard (+37% ytd), Melexis (+25% ytd), Galapagos (+38% ytd), ASML (+26% ytd) and Refresco (+13% ytd). In a rising market we had a particularly strong Underperformance selection with our Combined Long/short List even outperforming the long list with a ytd performance of 16.2%. Boskalis is down 14% ytd, D’Ieteren is down 11%, Post NL down 16% and Vopak down21%.
Continued strong long term selection performance After a weak performance in 2016, the 2017 selection performance again supports our strong long term track record. Our Outperformance List has recorded an average annual increase of 10.7% since the start in 2005, versus 3.3% for the STXE 600. Our Preference List, including about 30% shorts on average, has recorded an annual gain of 11.3% in the same period
Exhibit 1 Outperformance List versus STXE 600
CAGR: 10.7% 400
350
300
250
200 CAGR: +3.3% 150
100
50 Last 31/12/2007 15/01/2010 04/11/2010 07/03/2011 09/01/2012 18/09/2012 09/04/2013 23/09/2013 02/04/2014 03/11/2014 08/06/2015 30/05/2016
Outpe rformance List Eurostoxx
Source: Degroof Petercam estimates
3 EQUITY RESEARCH │ Preference List 13/09/2017
New Selection We withdraw Corbion, RTL and Refresco from our current list and include ABI, AvH and Besi. We removed Refresco after the announcement on the acquisition of the Cott bottling activities. Firstly, the acquisition of Cott reduces the chances that PAI will launch a new proposal to takeover Refresco after the first proposal was turned down in April. Secondly, part of the Cott transaction will be refinanced by equity creating an overhang in the short term. Corbion announced the potential acquisition of the TerraVia assets, which filed for bankruptcy. If successful, Corbion would acquire the assets at a very attractive price and clearly below book value. However, it would also mean that Corbion would incur significant operational losses on the TerraVia assets in 2018 and beyond while it is unclear how quickly the TerraVia assets could turn positive and what the earnings potential is. Hence, too much uncertainty, to maintain it in the preference list. We withdraw Boskalis from the Underperformance List.
Exhibit 2 Degroof Petercam Preference List
Date of entry Outperformers Target price Sept. 14, 2017 ABI 115.00 Sept. 14, 2018 AvH 155.00 Jan. 6, 2016 BAM Group 6.50 Jan. 10, 2017 Barco 101.00 Sept. 14, 2017 Besi 65.00 Apr. 13, 2015 DSM 77.00 Jan. 10, 2017 Galapagos 96.00 Nov. 21, 2016 Melexis 85.00
Underperformers
Jan. 10, 2017 D'Ieteren 40.00 Jan. 10, 2017 PostNL 3.60 July 4, 2016 Vopak 35.00 Source: Degroof Petercam Preference List methodology In the first 3 years of existence (2005‐2008), we started with a fixed selection at the start of the year, without revisions. In 2008‐2009 we moved to a quarterly selection and as from 2010 we have a fully variable list with continuous modification possibility. We reweight to equal weightings every time we adapt the list. We use this method because the aim is to generate stock picking ideas, while the weighting of stocks is the task of the Asset Manager. As a result, we are unable to reinvest dividends (not a portfolio) and therefore we compare our performance with a price index, i.e. the STXE 600. We believe that this reweighting to equal weighting is a big disadvantage. As such, we always cut the winners, while portfolio outperformance is supported by the increasing weights of the structural outperformers. We therefore believe that our historical track record is even underestimating our alpha generation. When including/excluding stocks, we always use the closing price from the day of the announcement of change.
4 EQUITY RESEARCH │ Preference List 13/09/2017
AB InBev www.ab‐inbev.com Belgium / Breweries www.degroofpetercam.com
Rise in free cash flow accelerates deleveraging Add Investment case Price EUR 101.70 Thanks to a keen strategy, excellent execution, cost management and (12/09/17) numerous large acquisitions, ABInBev (ABI) has become one of the leading Target price 115.00 FMCG companies in the world and even #1 in terms of EBITDA generation. Risk Low We expect the acquisition of SAB Miller to support ABI’s earnings Reuters ABI.BR momentum. Thanks to the strong presence of SAB in growth regions like Bloomberg ABI BB Africa and Asia Pacific, top line growth should accelerate, particularly due to Shares number (m) 1,933.70 cross selling opportunities for ABI’s global brands and its premiumization Market cap. (m) 196,657 strategy. In addition, synergies will be a clear driver. In March ABI lifted the Net debt 12/17e ($ m) 97,938 synergy target by 25% to USD 1.75bn on top of the cost and efficiency savings Net debt/EBITDA 12/17e 4.66 identified by SAB (USD 1.05bn) resulting in total savings of USD 2.8bn. At the H/L 1 year 118.80 ‐ 93.76 end of 2Q17 some USD 1.4bn were already captured 1 year price perf. ‐7.8% We also expect that 2017 will show the turnaround in Brazil, one of ABI’s key Diff. with Euro Stoxx ‐25.6% regions. Tough macro conditions, competitive behaviour and extreme Volume (sh./day) 1,554,708 volatility in the raw material bill caused a disappointing performance in the Free Float 38% past two years. However, ABI’s 1H17 performance illustrated that ABI Stichting + act. in concert 44% restored the order with a positive volume. Given the impact of the hedging Altria 10% and currencies on the raw material bill, we have no doubt that margins will Bevco 5% improve in 2H17. The rise in EBITDA translates in a higher free cash flow and supports the deleveraging and consequently improves the risk profile of ABI. Pro forma, its net debt/EBITDA ratio stood 5.5x end 2016. We expect this to improve to 4.1x in 2018 and 3.7x in 2019, while still paying a very generous dividend Looking at the 2018 CSS estimates, stock is trading at 2018 FCF of 6.3% vs. 5% for the peer group and only some 4.0% for the large FMCGs. Given the improving risk profile we consider this an attractive valuation. 17e 18e 19e P/E 30.3 25.0 22.8 EV/REBITDA 17.0 15.5 14.5 EV/REBIT 21.2 19.0 17.6 Business description Div. yield 3.6% 3.6% 3.6% ABI is by far the leading global brewer with an estimate market share in volumes of some 30%, more than double the number 2 Heineken. More than 80% of its Company Calendar cash flow comes from regions where the group enjoys a market share around. 26/10/17 3Q17 results or in excess of 50%. In the largest beer markets measured by profits, it is the clear #1 player (US, Brazil and Mexico). In the largest beer market in terms of volumes, China, it ranks 3, but it is the #1 in the premium segment. ABI is not only the largest beer company, it is also the number 1 in EBITDA generation. ABI combines a strong portfolio of global brands (Stella Artois, Budweiser and
Corona) with international brands like Leffe, Becks and Castle and national AB InBev + relative to Euro Stoxx champions such as Skol, Jupiler, and Harbin. ABI’s well‐diversified portfolio (grey) 130 enables it to drive top line growth and premiumization while maintaining a 125 120 strong cost focus. This should be beneficial for margins and cash generation. 115 110 Competitive position 105 100 The ABI‐SAB Miller combination creates the first truly global beer company, 95 90 without any major blind spots. Competition comes from international players 85 Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep like Heineken, Carlsberg and Asahi, especially in the premium segment, and local 15 15 15 16 16 16 16 17 17 17 beers like Snow and craft beers, while market conditions remain challenging Given its scale benefits, and premiumization strategy, we expect ABI to be Analyst: capable to handle the conditions, while the SAB takeover creates a good opportunity for cross selling and costs synergies. However, the transaction also Fernand de Boer increases the risk profile, particularly related to the African continent in view of +31 20 573 5417 FX and political instability. [email protected]
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Exhibit 1 Profit & Loss (USD m) 12/15 12/16 12/17e 12/18e 12/19e EMEA; Asia Revenues 43,604 45,518 56,276 58,925 61,823 Gross profit 26,465 24,348 34,461 36,864 38,945 151 Pacific; 101 REBITDA 16,840 16,753 21,442 23,306 24,751 Latin REBITA 16,465 16,301 20,968 22,808 24,228 North REBIT 13,767 13,276 17,204 18,996 20,354 South; America Net Financial Result ‐2,124 ‐5,829 ‐5,329 ‐4,269 ‐4,167 33 Exceptionals (gross) 240 222 339 150 150 ; 116 Taxes ‐2,594 ‐1,613 ‐2,554 ‐3,632 ‐3,997 Latin Latin Except./discontinued operations 240 222 339 150 150 West; Net declared earnings 9,386 572 7,424 9,295 10,237 North; Net adjusted earnings 9,626 4,853 7,763 9,445 10,387 121 110 Cash Flow (USD m) 12/15 12/16 12/17e 12/18e 12/19e EBIT 13,392 12,824 16,730 18,498 19,830 Depreciation 3,073 3,477 4,238 4,310 4,397 Amortization 375 452 475 498 523 Source: Degroof Petercam Impairment charges ‐800000 Changes in provision ‐449 ‐470 ‐475 ‐479 ‐484 Changes in working capital 1,786 173 511 528 545 Exhibit 2 Leading the FMCG world: 2017e Others ‐‐‐‐‐ EBITDA Operational Cash Flow 18,097 16,456 21,479 23,355 24,812 Tax expenses ‐2,355 ‐3,256 ‐2,554 ‐3,632 ‐3,997 25 Dividends from associates2243000 Net interest charges ‐1,609 ‐2,721 ‐5,329 ‐4,269 ‐4,167 20 Others 1,757 ‐3,764 ‐437 ‐200 ‐200 15 CF from operating activities 15,912 6,758 13,159 15,254 16,448 CAPEX ‐4,749 ‐4,979 ‐3,700 ‐3,959 ‐4,236 10 Acquisitions ‐990 ‐72,194000 Divestments 412 17,352 8,680 0 0 5 Others ‐‐‐‐‐ CF from investing activities ‐5,327 ‐59,821 4,980 ‐3,959 ‐4,236 0 Dividend payment ‐6,419 ‐5,720 ‐6,929 ‐7,743 ‐7,774 Minor. & pref. dividends00000 Equity financing ‐995 0 428 429 431 Others ‐‐‐‐‐ CF from financing activities ‐7,414 ‐5,720 ‐6,500 ‐7,313 ‐7,343 Net debt/cash change ‐3,171 58,783 ‐11,639 ‐3,982 ‐4,869 Source: Degroof Petercam, Bloomberg Balance Sheet (USD m) 12/15 12/16 12/17e 12/18e 12/19e Tangible fixed assets 18,952 27,522 27,459 27,606 27,968 Goodwill 65,061 136,533 136,533 136,533 136,533 Exhibit 3 Organic growth Other intang. assets 29,677 44,568 44,093 43,595 43,072 Financial fixed assets 212 4,324 4,528 4,742 4,967 Total Fixed assets 116,857 215,902 215,568 215,431 215,494 9.0% Working capital 1,786 173 511 528 545 8.0% Total Equity 45,719 81,425 82,944 85,576 89,177 7.0% Provisions & deferred taxes 15,363 21,101 20,626 20,147 19,663 6.0% Net financial debt 42,488 108,508 97,938 95,121 91,522 5.0% Total assets 135,151 258,963 256,700 255,565 255,417 4.0% 3.0% Shares ‐ per share data (USD) 12/15 12/16 12/17e 12/18e 12/19e 2.0% Adjusted EPS 5.92 2.83 4.01 4.86 5.33 1.0% Dividend (EUR) 3.64 3.60 3.63 3.63 3.63 0.0% No shares ‐ average (m) 1625.10 1713.93 1935.70 1943.38 1948.24 2011 2012 2013 2014 2015 2016 2017e Ratios 12/15 12/16 12/17e 12/18e 12/19e Organic revenue growth Revenues/HL Valuation analysis Adjusted P/E 21.0 37.5 30.3 25.0 22.8 P/BV 4.8 2.9 3.3 3.2 3.1 EV/REBITDA 16.7 20.8 17.0 15.5 14.5 Source: Company reports, Degroof Petercam EV/REBIT 20.4 26.3 21.2 19.0 17.6 EV/FCF (1) 21.0 30.4 20.5 18.7 17.4 FCF yield (2) 4.8% 0.3% 3.6% 4.3% 4.6% Exhibit 4 Net debt/EBITDA Dividend yield 3.2% 3.6% 3.6% 3.6% 3.6% Financial ratios Net Debt/EBITDA 2.5 6.6 4.7 4.1 3.7 7.0 Net Debt/Equity 92.9% 133.3% 118.1% 111.2% 102.6% 6.0 ROCE post‐tax 11.7% 5.3% 7.1% 7.8% 8.4% ROCE post‐tax (grossed gdwll) 14.4% 9.3% 9.1% 10.4% 11.1% 5.0 Margin analysis and tax rate 4.0 Gross margin 60.7% 53.5% 61.2% 62.6% 63.0% REBIT margin 31.6% 29.2% 30.6% 32.2% 32.9% 3.0 Tax rate 19.1% 43.6% 22.3% 25.0% 25.0% Growth analysis 2.0 Sales ‐7% 4% 24% 5% 5% 1.0 Adjusted EPS 8% ‐52% 42% 21% 10% (1) Based on FCF to Enterprise ‐ (2) Based on FCF to Equity 0.0 2014 2015 2016 2017e 2018 2019 2020
Source: Degroof Petercam estimates
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Ackermans www.avh.be Belgium / Diversified group of companies www.degroofpetercam.com
Excellent track‐record and now firing on all four cylinders Buy Investment case Price EUR 143.45 Excellent track‐record and a high‐performing management team. Since (12/09/17) IPO in 1984, the average annual value creation amounts to +14.4%. Target price 155.00 More diversified than ever. We expect Ackermans to further transform Risk Medium from a two‐cylinder to a four‐cylinder company, while streamlining the Reuters ACKB.BR portfolio. In 1H17, the contribution of the “smaller” Real Estate & Energy Bloomberg ACKB BB segments represented over 25% of the core result. Shares number (m) 33.50 Strong recurring results. We believe that the outlook for the remainder of Market cap. (m) 4,805 the year and thereafter is solid: Cash Position 12/16 (m) o Following a tough half year for Marine Engineering due to timing H/L 1 year 156.20 ‐ 114.75 issues and one‐offs, we expect strong revenue growth at healthy 1 year price perf. 24.0% margins, driven by the very good order book in combination with a Diff. with Euro Stoxx 6.2% Volume (sh./day) 29,781 solid tender pipeline. CFE Contracting has improved structurally and will potentially integrate Van Laere. Free Float 52% Private Banking’s performance is expected to be even stronger as the Belfimas 33% o Other family members 15% record net inflow of 1H17 will be monetized and the full‐year banking taxes were already included in the 1H17 result. The commercial performance at Bank Delen and Bank van Breda remains impressive (again a record net inflow) and with a first net inflow at JM Finn & Co, AuM growth is further supported. o Continued development of Tour & Taxis and Cloche d’Or underpins a solid result in the Real Estate segment for the coming two to three years, while Senior Care participations continue to grow rapidly. o Sipef significantly expanded its planted hectares thanks to the acquisition of Agro Muko and PT Dendy Marker. Ackermans also increased its stake in Sipef during the recent capital increase. We believe the negative reaction following 1H17 results was unjustified as the 16 17e 18e Div. (EUR) 2.04 2.12 2.23 negatives were mainly one‐offs and the quality of the earnings was high. As Div. yield 1.5% 1.5% 1.6% such today provides a nice entry point in a long‐term value creation story.
Business description Ackermans & van Haaren (ACKB) is an industrial group with a diversified portfolio of mainly unlisted companies. The group is focused on a limited Company Calendar number of strategic participations with considerable potential for growth. ACKB 22/11/17 Q3 Interim statement mostly holds significant stakes, with a long‐term time horizon. The company is not actively involved in yda ‐to‐day management of its holdings but focuses on the selection of the top management of its major stakes and then closely monitors their performance. Currently, the Marine Engineering & Contracting and Private Banking segments are the heavy‐weights in the portfolio but
contributions from the Real Estate and Energy segments are becoming more Ackermans + relative to Euro Stoxx important. (grey) 160 Competitive position 150 In general, Ackermans & van Haaren’s management team isvery well‐regarded. 140 130 However, for a diversified industrial group we should look at the competition for 120 each segment of the portfolio. 110 100 In dredging, CFE/DEME’s key peers are Jan De Nul (BEL), Boskalis (NDL), Van Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Oord (NDL) and CCCC (CHN). Together these companies cover 80% of the global 15 15 15 16 16 16 16 17 17 17
free dredging market. Next to the traditional dredging activities, DEME is also Analyst: active in marine & civil engineering, environmental services and aggregates, for
which competition often is local. In private banking, the 2 Finaxis units are Thijs Hoste challengers focussing on a specific niche, facing competition of the specialised +32 2 287 93 85 units of the universal banking groups that are active in Belgium. [email protected]
7 u
Per Exhibit 1 GAV breakdown per segment ‐ % % stake Valuation Spot NAV % of Target NAV Target NAVps Participation share (transitive) method (EUR m) NAV (EUR m) (EUR) (EUR)
Marine Engineering 1,965 41.0% 59.2 2,052 61.8
CFE 60.4% Share price 1,909 39.9% 57.5 1,988 59.9
A.A. Van Laere 100.0% Peer multiples 24 0.5% 0.7 25 0.8
Rent-a-Port (direc t) 72.2% Peer multiples 32 0.7% 1.0 39 1.2
Private Banking 1,359 28.4% 40.9 1,548 46.6
Bank Delen 78.8% Peer multiples 992 20.7% 29.9 1,156 34.8
Bank Van Breda 78.8% Peer multiples 359 7.5% 10.8 384 11.6
Asco-BDM 50.0% Equity value (es 80.2%0.24 8 0.2
Real Estate 896 18.7% 27.0 998 30.1 Extensa (exc l. Leasinvest RE) 100.0% Peer multiples 444 9.3% 13.4 510 15.4 Leasinvest Real Estate 30.0% Share price 149 3.1% 4.5 153 4.6
Source: Company data, Degroof Petercam HPA 87.2% Peer multiples 150 3.1% 4.5 165 5.0
Anima care 100.0% Peer multiples 154 3.2% 4.7 170 5.1
Energy & Resources 268 5.6% 8.1 306 9.2 Exhibit 2 Net result contribution Sipef 30.3% Share price 202 4.2% 6.1 227 6.8
N.M.P. / S.N.T.C. 75.0% Peer multiples 30 0.6% 0.9 32 1.0
Oriental Quarries & Mines 50.0% Equity value 2 0.0% 0.1 2 0.1
Sagar Cement 18.6% Share pric e 34 0.7% 1.0 44 1.3
Growth Capital 216 4.5% 6.5 245 7.4
Other assets 68 1.4% 2.2 69 2.1
Total portfolio value 4,772 100% 143.8 5,217 157.2
Total consolidated Net cash/(debt) 16 0.3% 0.0 19 0.6
Total adjusted equity value 4,788 100% 144.3 5,236 157.7
Key financials FY13 FY14 FY15 FY16 Present
NAVps, EUR * 85.9 104.6 147.6 126.8 144.3 Source: Company data, Degroof Petercam (Disc.)/Prem. to NAV -0.9% -2.4% -8.3% 4.2% -1.6%
Exhibit 3 10 yrs evol. stock, NAV, prem./disc. EPS (reported), EUR 8.87 6.45 8.58 6.69
ROE 13.2% 9.1% 11.0% 8.1%
DPS, EUR 1.70 1.82 1.96 2.04 2.12
Dividend yield 2.0% 1.8% 1.4% 1.5% 1.5%
Key market data
Market cap, EUR bn 4.82 Local index BEL20
Free float 67% BEL20 member Yes
Free float Mcap, EUR bn 3.23 Next AGM May-17
Daily avg. no. trad. sh. 12 mth 29,957 Velocity 44.8% Source: Company, Bloomberg, Degroof Petercam Daily avg. trad. vol. 12 mth, EUR m 4.1 5yr avg econ. return 16.3%
Performance 5d -0.2% Divid. yld (trail. 12m) 1.5% Exhibit 4 Target price ‐ range Performance 30d -4.5% 5yr avg hist. discount -7.0%
Performance 90d -5.6% 12m avg hist. discount -1.4%
* Degroof Petercam Estimate
Source: Company, Bloomberg, Degroof Petercam
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BAM Group www.bam.nl The Netherlands / Construction www.degroofpetercam.com
Profits in a clear upward trend Buy Encouraging H1‐17 Results Price EUR 4.91 BAM reported solid H1‐17 results, confirming the benefits of the internal (12/09/17) measures in combination with an improving market. Management’s Target price 6.50 comment that with the average margin on new order intake is now well Risk High within the strategic target margin of 2% to 4% is encouraging. We expect Reuters BAMN.AS Construction & Property to continue to benefit from the recovering Dutch Bloomberg BAMNB NA residential market and the early recovery in non‐residential. Civil Shares number (m) 271.16 Engineering should catch up after a rather soft start of 2017, which was Market cap. (m) 1,331 partly caused by individual projects. Net debt 12/17e (m) ‐197
Net debt/EBITDA 12/17e ‐1.06 Investment Conclusion H/L 1 year 5.46 ‐ 3.96 We consider BAM’s valuation attractive and rate it a Buy. We see the following 1 year price perf. 22.8% drivers for the share price: Diff. with Euro Stoxx 5.1% Strong profit increase. With the dwindling impact of legacy projects, and Volume (sh./day) 1,600,053 the growing contribution from new projects that were won in a more Free Float 80% favorable market environment using stricter tender procedures, we expect Van Herk 10% BAM’s profit margins to show a healthy improvement over the coming NN Group 6% I.M. Fares 5% years. The resulting strong profit growth should be a major driver for Danske Invest 3% share price appreciation. Dimensional Fund 4% Further strong cash generation. The improving profitability in combination with a further reduction in real estate assets and ongoing tight working capital management will drive strong cash generation in the coming years. We expect this to translate into attractive dividend yields, especially from 2018 onwards, when BAM should reach the targeted 25% solvency level. Better visibility on the benefits of the new strategy. BAM aims to impress 17e 18e 19e through solid delivery rather than ambitious targets. Continued execution P/E 11.7 8.7 7.3 of the strategy should build further investor confidence. EV/EBITDA 7.0 4.9 3.8 EV/EBIT 10.7 6.7 5.0 Business description Div. yield 3.3% 4.6% 5.5% BAM is active in construction (including mechanical and electrical contracting), property development, civil engineering, and public‐private partnerships (PPP). Company Calendar BAM’s operating companies are primarily active in five European home markets: 09/11/17 Q3 2017 trading update the Netherlands, the UK, Belgium, Germany and Ireland. Royal BAM Group ranks among the largest construction firms in Europe. The groupe is on of the market leaders in the Netherlands and has significant positions in the United Kingdom, Ireland, Belgium, and Germany. The company’s most important region is the Netherlands, where the company has a strong
position in civil engineering and also a large exposure to residential property BAM Group + relative to Euro Stoxx development. In the UK the company is mainly active in (non‐residential) (grey) construction and civil engineering, with limited (non‐residential) property 5.5 development. BAM employs some 19,000 people. 5.0 4.5 4.0 Competitive position 3.5 3.0 In the Netherlands, BAM is the #2 (behind Volker Wessels) with a market share Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep of around 8%. It competes with companies such as Volker Wessels, Dura 15 15 15 16 16 16 16 17 17 17 Vermeer, Heijmans, Ballast Nedam and Strukton. Thanks to its size, the company is able to participate in large and complex projects in the Netherlands, but also Analyst: in the UK, Ireland, Belgium and Germany. On these projects BAM meets European competitors such as Bilfinger, Hochtief, Vinci, Bouygues, Balfour Luuk van Beek Beatty and Skanska. +31 20 573 5471 [email protected]
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Exhibit 1 Revenue breakdown 2017e Profit & Loss (EUR m) 12/15 12/16 12/17e 12/18e 12/19e Belgium Revenues 7,423.0 6,976.0 6,669.8 6,820.6 7,087.7 Gross profit 1,719.6 1,667.2 1,819.5 1,916.0 2,018.6 10% EBITDA 101.0 148.0 185.4 245.0 282.1 UK EBITA 30.5 83.6 125.9 178.1 211.9 EBIT ‐10.6 32.9 120.9 178.1 211.9 30% Germany Net Financial Result 11.0 7.3 11.0 14.5 24.6 12% Exceptionals (gross) ‐‐‐‐‐ Taxes ‐2.3 ‐10.9 ‐32.3 ‐47.2 ‐59.1 Ireland Except./discontinued operations0.00.00.00.00.0 5% Net declared earnings 10.3 46.8 108.5 154.6 187.0 Netherlands Net adjusted earnings 72.1 81.7 113.8 154.6 187.0 39% International Cash Flow (EUR m) 12/15 12/16 12/17e 12/18e 12/19e 4% EBIT ‐10.6 32.9 120.9 178.1 211.9 Depreciation 70.5 64.4 59.4 66.9 70.2 Amortization 0.0 0.0 0.0 0.0 0.0 Source: Degroof Petercam Impairment charges 41.1 50.7 5.0 0.0 0.0 Changes in provision ‐69.6 ‐62.5 ‐50.1 ‐3.0 1.3 Changes in working capital 88.3 176.4 7.3 17.6 27.8 Others ‐4.6 ‐10.4 0.0 0.0 0.0 Exhibit 2 Revenue breakdown 2017e Operational Cash Flow 115.1 251.5 142.6 259.6 311.1 Tax expenses ‐10.0 ‐14.5 ‐19.9 ‐35.4 ‐47.9 Dividends from associates 13.3 13.0 10.0 5.2 5.4 Net interest charges ‐3.3 ‐27.5 11.0 14.5 24.6 Others 0.00.00.00.00.0 Ci vi l CF from operating activities 115.1 222.5 143.7 243.9 293.3 Engineering CAPEX ‐103.4 ‐94.6 ‐93.4 ‐81.8 ‐85.1 42% Acquisitions 0.0 0.0 0.0 0.0 0.0 Divestments 33.1 45.5 14.7 0.0 0.0 Others 35.0 ‐155.6 15.0 ‐20.0 ‐15.0 Cons truction CF from investing activities ‐35.3 ‐204.7 ‐63.7 ‐101.8 ‐100.1 & Property Dividend payment 0.0 ‐2.0 ‐7.5 ‐19.5 ‐28.0 56% Minor. & pref. dividends ‐0.7 ‐0.5 0.0 0.0 0.0 PPP Equity financing 0.0 ‐2.5 ‐2.7 0.0 0.0 2% Others ‐‐‐‐‐ CF from financing activities ‐0.7 ‐5.0 ‐10.2 ‐19.5 ‐28.0 Net debt/cash change ‐79.8 ‐87.0 ‐69.8 ‐122.6 ‐165.2 Source: Degroof Petercam Balance Sheet (EUR m) 12/15 12/16 12/17e 12/18e 12/19e Tangible fixed assets 292.2 270.2 304.1 319.1 333.9 Goodwill 406.1 379.4 374.4 374.4 374.4 Exhibit 3 PBT development Other intang. assets 9.9 10.6 ‐4.1 ‐4.1 ‐4.1 Financial fixed assets 723.3 723.2 688.0 693.2 692.6 Total Fixed assets 1,507.2 1,446.1 1,425.2 1,445.3 1,459.6 300 Working capital ‐335.1 ‐492.2 ‐471.0 ‐477.4 ‐496.7 Total Equity 905.8 839.3 938.7 1,075.0 1,235.2 200 Provisions & deferred taxes 267.6 257.1 227.8 227.8 227.8 Net financial debt ‐39.9 ‐126.9 ‐196.8 ‐319.4 ‐484.5 100 Total assets 4,852.2 4,812.1 4,390.7 4,040.0 4,306.4 Sharesr ‐ pe share data (EUR) 12/15 12/16 12/17e 12/18e 12/19e ‐ Adjusted EPS 0.27 0.30 0.42 0.57 0.67 Dividend 0.02 0.09 0.16 0.23 0.27 ‐100 PPP Civil Eng. No shares ‐ average (m) 270.96 270.50 271.69 273.11 277.64 Prop. Dev. Construction ‐200 Ratios 12/15 12/16 12/17e 12/18e 12/19e Valuation analysis Adjusted P/E 19.3 14.5 11.7 8.7 7.3 P/BV 1.7 1.3 1.4 1.3 1.1 EV/EBITDA 15.1 8.3 7.0 4.9 3.8 Source: Degroof Petercam EV/EBIT ‐143.8 37.6 10.7 6.7 5.0 EV/FCF (1) 32.7 ‐ 20.1 7.6 5.0 FCF yield (2) 3.4% 0.0% 4.9% 10.5% 14.0% Exhibit 4 Backlog development Dividend yield 0.4% 2.1% 3.3% 4.6% 5.5% Financial ratios 14,000 Net Debt/EBITDA ‐0.4 ‐0.9 ‐1.1 ‐1.3 ‐1.7 12,000 Net Debt/Equity ‐4.4% ‐15.1% ‐21.0% ‐29.7% ‐39.2% ROCE post‐tax ‐3.1% 1.2% 4.2% 8.0% 9.9% 10,000 ROCE post‐tax (grossed gdwll) ‐2.2% 0.8% 2.8% 8.0% 9.9% 8,000 Margin analysis and tax rate 6,000 Gross margin 23.2% 23.9% 27.3% 28.1% 28.5% 4,000 EBIT margin ‐0.1% 0.5% 1.8% 2.6% 3.0% 2,000 Tax rate 766.7% 27.1% 24.5% 24.5% 25.0% ‐ Growth analysis Sales 1% ‐6% ‐4% 2% 4% ‐2,000 Adjusted EPS 5% 13% 39% 35% 19% (1) Based on FCF to Enterprise ‐ (2) Based on FCF to Equity
Construction Property Civil Engineering PPP Source: Degroof Petercam
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Barco www.barco.com Belgium / Image processing www.degroofpetercam.com Margin execution Buy Investment case Price EUR 86.93 For “2017 ‐ …” Barco puts forward a revenue CAGR of 3+% and a 8++% (12/09/17) EBITDA margin. Target price 101.00 In the first half of 2017, revenues declined by 2.1% and REBITDA by 2.6% Risk High and the company guided for flat sales for the FY with rising EBITDA. Reuters BAR.BR However, we believe Barco will have an improved relative performance in Bloomberg BAR BB H2 2017 and should be able to significantly increase margins in the coming Shares number (m) 13.00 years. The incoming orders increased by 561.9m and the H1 EBITDA Market cap. (m) 1,130 margin of 9.3% compares to only 6.7% in H2 2016. Net debt 12/17e (m) ‐289 The new hardware and software product launches of Control Rooms, Net debt/EBITDA 12/17e ‐2.81 which generates EUR 140m sales but without margin contribution, should H/L 1 year 95.31 ‐ 68.55 support margin in 2018. 1 year price perf. 23.5% At the same time, ClickShare (EUR 170me), which generates the highest Diff. with Euro Stoxx 5.8% margins is also the fastest growth engine. On September 12, Barco Volume (sh./day) 14,185 announced that it shipped 300k systems, up from 200k at the end of 2016 Free Float 69% and growing 37% in EMEA. The product still has a large untapped market Michel Van de Wiele NV 18% potential if user satisfaction is handled well. 3D NV 4% U. Vandeurzen 3% Healthcare (EUR 250me) continues to be a solid growth driver with treasury 6% healthy margins and a large potential in the digital operating room area. Digital Cinema (EUR 270me) sales are expected to decline but solid state laser projectors should accelerate the replacement cycle thanks to a lower TCO. Investment Conclusion All in all, we believe Barco should be able to improve its EBIT margin closer to the 10%+level of diversified technology groups from 5.4% in 2016. This margin improvement, combined with a normalised EV/EBIT valuation multiple should offer upside beyond EUR 100 in 12 months with further upside in the years to 17e 18e 19e P/E 29.2 19.1 16.0 come. EV/EBITDA 8.7 7.3 6.2 EV/EBIT 12.9 10.1 8.3 Business description Div. yield 2.3% 2.4% 2.4% Barco manufactures and markets high value added professional imaging equipment such as Projectors, LED walls and specialised displays. Increasingly, Company Calendar the offering includes network connectivity, collaboration and cloud solutions. 18/10/17 Q3 trading update Entertainment consists of the important Digital Cinema business and Venues & Hospitality for the rental & staging market and simulation markets. Enterprise consists of big screen walls used in control rooms to monitor networks together with visualization network equipment. This also comprises corporate projectors and the very successful ClickShare product. The Healthcare unit manufactures flat panels for diagnostic imaging and surgical networking and monitoring equipment. Nexxis is a IP centric integrated Barco + relative to Euro Stoxx (grey) 95 operating room platform. Defense & Aerospace was sold in 2014. 90 85 Competitive position 80 75 70 Competition is global and differs per segment. In the Events market an 65 60 important competitor is Nasdaq quoted Daktronics. Privately held Christie is a 55 50 competitor in the Events, Digital Cinema and Control Rooms market. EIZO and Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Planar are competitors in the medical display market. Planar and Mitsubishi are 15 15 15 16 16 16 16 17 17 17 also competitors in Control Rooms and Entertainment. Analyst:
Stefaan Genoe +32 2 662 8299 [email protected]
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Exhibit 1 Sales breakdown 17 H1 Profit & Loss (EUR m) 12/15 12/16 12/17e 12/18e 12/19e Revenues 1,028.9 1,102.5 1,089.1 1,133.2 1,191.7 Gross profit 360.5 378.9 392.1 419.3 440.9 EBITDA 74.0 87.7 103.0 118.8 133.2 Enterprise EBITA 51.1 59.2 69.8 85.6 100.0 29% EBIT ‐22.5 36.3 69.8 85.6 100.0 Entertain Net Financial Result 3.01.22.32.82.8 ment Exceptionals (gross) 0.00.00.00.00.0 Health- 48% Taxes 4.9 ‐6.3 ‐14.9 ‐19.4 ‐22.6 care Except./discontinued operations ‐‐‐‐‐ 22% Net declared earnings ‐24.7 10.2 43.0 59.2 70.4 Net adjusted earnings ‐53.8 4.2 38.6 59.2 70.4 Cash Flow (EUR m) 12/15 12/16 12/17e 12/18e 12/19e EBIT ‐22.5 36.3 69.8 85.6 100.0 Depreciation 22.9 28.6 33.2 33.2 33.2 Amortization 44.6 22.9 0.0 0.0 0.0 Source: Barco Impairment charges 25.7 0.0 0.0 0.0 0.0 Changes in provision 0.0 0.0 0.0 0.0 0.0 Changes in working capital 89.7 6.6 ‐20.1 ‐6.8 ‐4.0 Exhibit 2 Geographical breakdown 17 H1 Others ‐6.1 ‐4.8 0.0 0.0 0.0 Operational Cash Flow 154.1 89.5 82.8 112.0 129.2 Tax expenses ‐14.9 ‐11.5 ‐14.9 ‐19.4 ‐22.6 Dividends from associates0.00.00.00.00.0 Net interest charges 0.2 4.1 2.3 2.8 2.8 Others ‐20.7 9.3 0.0 0.0 0.0 EMEA CF from operating activities 118.7 91.4 70.2 95.4 109.3 APAC 32% CAPEX ‐37.8 ‐24.2 ‐33.0 ‐30.0 ‐36.0 31% Acquisitions ‐9.6 ‐9.2 ‐2.0 0.0 0.0 Divestments 140.8 9.9 5.6 0.0 0.0 Others ‐3.5 ‐16.7 ‐1.2 0.0 0.0 Americas CF from investing activities 89.8 ‐40.3 ‐30.6 ‐30.0 ‐36.0 37% Dividend payment ‐19.4 ‐20.8 ‐23.3 ‐26.0 ‐27.3 Minor. & pref. dividends 0.0 ‐2.8 0.0 0.0 0.0 Equity financing ‐0.85.20.00.00.0 Others 0.00.00.00.00.0 CF from financing activities ‐20.2 ‐18.4 ‐23.3 ‐26.0 ‐27.3 Net debt/cash change 188.3 23.2 16.3 39.4 46.0 Source: Barco Balance Sheet (EUR m) 12/15 12/16 12/17e 12/18e 12/19e Tangible fixed assets 92.6 103.9 147.6 144.6 147.6 Goodwill 132.4 124.3 128.6 128.6 128.6 Exhibit 3 Sales and EBIT margin Other intang. assets 75.5 75.8 75.8 75.8 75.8 Financial fixed assets 9.0 14.5 14.5 14.5 14.5 Total Fixed assets 410.7 426.6 474.7 471.7 474.7 1,400 12% Working capital ‐41.4 ‐64.3 ‐44.1 ‐37.4 ‐33.3 1,200 10% 8% Total Equity 611.7 615.5 648.2 691.4 744.5 1,000 6% Provisions & deferred taxes 7.3 20.0 20.0 20.0 20.0 800 4% Net financial debt ‐249.6 ‐273.2 ‐289.5 ‐328.8 ‐374.9 600 2% Total assets 1,140.3 1,159.2 1,236.6 1,282.9 1,352.3 400 0% -2% 200 -4% Shares ‐ per share data (EUR) 12/15 12/16 12/17e 12/18e 12/19e 0 -6% 08 09 10 11 12 13 14 15 16 17e18e19e20e Adjusted EPS ‐4.14 0.32 2.97 4.55 5.42 Dividend 1.75 1.90 2.00 2.10 2.10 Sales EBIT margin No shares ‐ average (m) 13.00 13.00 13.00 13.00 13.00 Ratios 12/15 12/16 12/17e 12/18e 12/19e Valuation analysis Adjusted P/E nmnm29.219.116.0 P/BV 1.3 1.8 1.8 1.7 1.6 EV/EBITDA 8.6 9.9 8.7 7.3 6.2 Source: Degroof Petercam EV/EBIT ‐28.4 24.0 12.9 10.1 8.3 EV/FCF (1) 5.5 13.3 18.0 10.5 8.9 FCF yield (2) 10.1% 6.5% 3.3% 5.8% 6.5% Exhibit 4 ClickShare Dividend yield 2.8% 2.4% 2.3% 2.4% 2.4% Financial ratios Net Debt/EBITDA ‐3.4 ‐3.1 ‐2.8 ‐2.8 ‐2.8 140,000 Net Debt/Equity ‐40.8% ‐44.4% ‐44.7% ‐47.6% ‐50.4% 120,000 ROCE post‐tax 21.0% 7.3% 19.1% 24.1% 27.6% 100,000 ROCE post‐tax (grossed gdwll) 22.8% 8.8% 24.4% 30.8% 35.1% 80,000 Margin analysis and tax rate 60,000 Gross margin 35.0% 34.4% 36.0% 37.0% 37.0% 40,000 EBIT margin ‐2.2% 3.3% 6.4% 7.6% 8.4% 20,000 Tax rate 10.0% 24.9% 22.0% 22.0% 22.0% Growth analysis 0 Sales ‐2% 7% ‐1% 4% 5% Adjusted EPS ‐ chg +chg 822% 53% 19% (1) Based on FCF to Enterprise ‐ (2) Based on FCF to Equity
Source: Barco and Degroof Petercam estimates
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BESI www.besi.nl The Netherlands / Semiconductor Equipment www.degroofpetercam.com
This equipment cycle is strong Buy Investment case Price EUR 57.77 BESI’s revenue growth in 1H17 has significantly exceeded expectations on (12/09/17) the back of strong die attach equipment demand. Also, the company’s Target price 65.00 guidance for 5‐15% sequentially lower revenue in 3Q17 was better than Risk High historical seasonality would suggest. Management cited customers’ Reuters BESI.AS ongoing investment in a new technology upgrade cycle and specific Bloomberg BESI NA applications such as smart phones, automotive, servers and memory. Shares number (m) 37.33
Meanwhile, BESI continues to execute on its operational strategy, focusing Market cap. (m) 2,156 on development of advanced packaging technologies, which offer above Net debt 12/17e (m) ‐226 average growth rates and better margins. These include flip chip bonding, Net debt/EBITDA 12/17e ‐1.21 wafer level packaging and 3D structure assembly. H/L 1 year 57.77 ‐ 27.27 The company also continues to transfer manufacturing activities from 1 year price perf. 113% Europe to Asia, where most of its customers are based. We estimate that Diff. with Euro Stoxx 94.8% about 95% of shipments to Asian customers are now also manufactured in Volume (sh./day) 190,908 Asia and BESI is also increasingly sourcing from local suppliers. We Free Float 80% estimate that this already covers some 75% of its requirements. Van Lanschot 6% The successful execution of these important strategic steps have reduced Old Mutual 5% the revenue break‐even level and improved scalability and flexibility. Teslin 5% Norges Bank 5% Furthermore, it has resulted in lower capital intensity, higher ROIC and improved cash generation. We reiterate our BUY rating Following the 2Q17 release we raised our 2017‐19 EPS estimates by an average 17%. We expect back‐end semiconductor equipment demand to be very strong in 2017 as many end markets require additional die bonding capacity. Hence, BESI is very well positioned to enjoy this multi‐ year growth cycle. We reiterate our BUY‐rating on the shares. 17e 18e 19e P/E 15.5 14.6 14.3 EV/EBITDA 10.1 9.5 9.1 EV/EBIT 11.0 10.3 9.9 Business description Div. yield 5.2% 5.5% 5.6% BESI is a leading back‐end semiconductor equipment supplier with top 2 positions in its key addressable markets and an overall 30% market share. The Company Calendar majority of its revenues is derived from die attach assembly equipment (c.75% 01/11/17 3Q17 Results of sales) with the remainder coming from packaging (20%) and plating (5%). It 30/11/17 Degroof Petercam designs its systems in Europe while most of its manufacturing and assembly Conference, Zurich takes place in Asia (Malaysia and China).
The company has had a net cash position for almost all of the past twenty years
while it has been returning excess capital to shareholders through share buybacks and dividends. BESI + relative to Euro Stoxx (grey) 60 55 50 45 Competitive position 40 35 30 BESI ships approximately 60% of its assembly equipment to leading independent 25 20 device manufacturers (IDMs) such as Intel, TSMC and Infineon, and c.40% to 15 10 subcontractors like SPIL, STATS ChipPAC and Amkor. Key competitors include Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep ASMPT, Hitachi, Shinkawa and Toray in die attach, and Towa, Hanmi and ASMPT 15 15 15 16 16 16 16 17 17 17
in packaging. Analyst:
Marcel Achterberg +31 20 573 5463 [email protected]
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Exhibit 1 Revenue end‐market exposure Profit & Loss (EUR m) 12/15 12/16 12/17e 12/18e 12/19e Revenues 349.2 375.4 540.3 562.0 570.4 Gross profit 170.4 191.5 299.7 313.0 317.7 EBITDA 73.0 89.8 186.5 194.3 197.5 EBITA 67.8 85.0 181.7 189.6 192.8 EBIT 57.9 75.2 171.3 178.7 181.4 Net Financial Result ‐0.8 ‐1.6 ‐8.8 ‐7.0 ‐6.0 Exceptionals (gross) 3.9 ‐0.9 0.0 0.0 0.0 Taxes ‐8.1 ‐8.3 ‐23.9 ‐25.8 ‐26.3 Except./discontinued operations ‐‐‐‐‐ Net declared earnings 49.0 65.2 138.7 145.9 149.0 Net adjusted earnings 46.7 65.1 138.7 145.9 149.0 Cash Flow (EUR m) 12/15 12/16 12/17e 12/18e 12/19e EBIT 57.9 75.2 171.3 178.7 181.4 Depreciation 5.2 4.7 4.7 4.7 4.7 Amortization 9.6 9.9 10.4 10.9 11.4 Source: Degroof Petercam Impairment charges 0.3 0.0 0.0 0.0 0.0 Changes in provision ‐3.8 3.9 11.3 0.4 0.6 Changes in working capital 17.4 8.5 ‐31.0 1.3 ‐1.6 Exhibit 2 Revenue and break‐even level Others 4.6 10.2 0.0 0.0 0.0 (EURm) Operational Cash Flow 91.1 112.4 166.7 196.0 196.5 Tax expenses ‐3.1 ‐52. ‐23.9 ‐25.8 ‐26.3 Dividends from associates ‐‐‐‐‐ Net interest charges 0.3 0.3 ‐8.8 ‐7.0 ‐6.0 Others ‐‐‐‐‐ CF from operating activities 88.3 110.2 134.1 163.3 164.2 CAPEX ‐4.2 ‐4.5 ‐5.0 ‐5.0 ‐5.0 Acquisitions 0.0 0.0 0.0 0.0 0.0 Divestments 0.0 0.0 0.0 0.0 0.0 Others ‐‐‐‐‐ CF from investing activities ‐9.8 ‐11.2 ‐12.7 ‐13.1 ‐13.5 Dividend payment ‐56.9 ‐45.4 ‐63.7 ‐108.6 ‐115.1 Minor. & pref. dividends ‐‐‐‐‐ Equity financing ‐3.1 ‐22.0 0.0 0.0 0.0 Others ‐‐‐‐‐ CF from financing activities ‐60.0 ‐67.4 ‐63.7 ‐108.6 ‐115.1 Net debt/cash change 18.5 31.6 57.7 41.6 35.5 Source: Company data, Degroof Petercam Balance Sheet (EUR m) 12/15 12/16 12/17e 12/18e 12/19e Tangible fixed assets 26.7 27.0 27.3 27.5 27.8 Goodwill 45.5 45.9 45.9 45.9 45.9 Exhibit 3 Capital intensity and returns Other intang. assets 40.4 37.8 35.2 32.5 29.6 Financial fixed assets 21.3 16.8 16.8 16.8 16.8 Total Fixed assets 133.9 127.5 125.1 122.6 120.0 Working capital 85.6 77.1 108.1 106.8 108.4 Total Equity 332.2 345.0 420.1 457.4 491.3 Provisions & deferred taxes 23.7 27.6 38.9 39.3 39.9 Net financial debt ‐136.5 ‐168.1 ‐225.8 ‐267.3 ‐302.9 Total assets 432.7 587.6 634.6 647.3 660.2 Shares ‐ per share data (EUR) 12/15 12/16 12/17e 12/18e 12/19e Adjusted EPS 1.23 1.73 3.73 3.95 4.05 Dividend 1.20 1.74 2.98 3.16 3.24 No shares ‐ average (m) 37.93 37.60 37.20 36.90 36.80 Ratios 12/15 12/16 12/17e 12/18e 12/19e Valuation analysis Adjusted P/E 15.1 18.3 15.5 14.6 14.3 P/BV 2.1 3.5 5.1 4.7 4.3 EV/EBITDA 7.8 11.3 10.1 9.5 9.1 Source: Degroof Petercam EV/EBIT 9.8 13.5 11.0 10.3 9.9 EV/FCF (1) 10.9 13.9 11.7 10.9 10.5 FCF yield (2) 7.0% 6.0% 6.1% 6.5% 6.6% Exhibit 4 Underlying EPS and DPS (EUR) Dividend yield 6.5% 5.5% 5.2% 5.5% 5.6% Financial ratios 4.50 Net Debt/EBITDA ‐1.9 ‐1.9 ‐1.2 ‐1.4 ‐1.5
4.00 Net Debt/Equity ‐41.1% ‐48.7% ‐53.7% ‐58.4% ‐61.6% ROCE post‐tax 15.3% 23.1% 49.6% 48.8% 50.2% 3.50 ROCE post‐tax (grossed gdwll) 15.3% 23.1% 49.6% 48.8% 50.2% 3.00 Margin analysis and tax rate
2.50 Gross margin 48.8% 51.0% 55.5% 55.7% 55.7% EBIT margin 16.6% 20.0% 31.7% 31.8% 31.8% 2.00 Tax rate 14.3% 11.2% 14.7% 15.0% 15.0% 1.50 Growth analysis
1.00 Sales ‐8% 7% 44% 4% 2% Adjusted EPS ‐37% 41% 115% 6% 2% 0.50 (1) Based on FCF to Enterprise ‐ (2) Based on FFC to Equity 0.00 2011 2012 2013 2014 2015 2016 2017E 2018E 2019E Underliyng EPS (EUR, Est.) Dividend (EUR) .
Source: Degroof Petercam
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DSM www.dsm.com The Netherlands / Nutrition/Performance Materials www.degroofpetercam.com
Valuation lagging improved performance Buy Investment case Price EUR 66.32 Strong progress on Strategy 2018. Through solid execution DSM made (12/09/17) significant progress on its 2018 strategic targets (high single digit annual Target price 77.00 EBITDA growth and high double digit bps ROCE growth). In 2016 this Risk Medium resulted in EBITDA growth of 17%, more or less double the target. Despite Reuters DSMN.AS the tough comparison base, DSM continues to perform strongly and Bloomberg DSM NA guided for double digit EBITDA growth in 2017. Shares number (m) 172.20
Innovation pipeline creates confidence in medium term. Although market Market cap. (m) 11,420 conditions remain challenging, we have confidence that DSM can continue Net debt 12/17e (m) 108 to deliver on profit growth and returns. DSM’s innovation pipeline, which Net debt/EBITDA 12/17e 0.08 include among others stevia and clean cow, creates confidence that H/L 1 year 68.22 ‐ 54.70 growth will remain solid in the medium term. 1 year price perf. 9.2% DSM to return to M&A as from 2018. Thanks to improving cash Diff. with Euro Stoxx ‐8.6% generation and in particular thanks to the Patheon transaction (bringing in Volume (sh./day) 685,967 EUR 1.5bn cash this year), DSM is on its way to become net cash. The Free Float 100% sound financial position in combination with its improved operational Capital Group 5% execution allows DSM to return to M&A. We estimate the war chest in excess of EUR 3.0bn. Given DSM’s aim to move up higher in the value chain we expect multiples to be paid in excess of DSM’s own multiples. We estimate that using the EUR 3.0bn could drive EPS by 10% to 15%. Discount overdone. While DSM’s operational performance continues to improve and its financials offer potential for shareholder returns or M&A, valuation is still lagging. Valuing the materials cluster in line with its peers we still arrive at an implied discount for DSM’s Nutrition activities of some 35%. Given the improving returns in Nutrition (ROCE up from 10% to 14% in the past three years) we stress that a 35% is significantly overdone. Applying a 25% discount, we arrive at a 12m TP of EUR 77. 17e 18e 19e P/E 18.1 16.0 14.4 EV/REBITDA 9.1 8.4 7.7 EV/REBIT 13.9 12.6 11.3 Business description Div. yield 2.7% 2.7% 2.7% DSM is a life science and material science company, focused on Nutrition and Performance Materials. In addition, DSM is the nr. 1 industrial biotech player. Company Calendar The most important cluster is Nutrition, which groups the leading position in the 25/09/17 CMD vitamin and food supplement market for both human and animal health. 02/11/17 3Q17 results Performance Materials is the other key cluster. This involves a broad range of materials that replace steel, or that allow the development of the next generation coatings. Brands like Dyneema and Stanyl are well known plastics that revolutionize the various end markets where they are used. In 2015, DSM
formed a JV with CVC for its Polymer Intermediates division and composite resins named ChemicaInvest, in which DSM owns 35%. DSM also holds a 50% DSM + relative to Euro Stoxx (grey) stake in Sinochem Pharmaceuticals 70 65 Competitive position 60 DSM operates in a highly competitive environment where its market positions 55 50 vary between strong positions with pricing power, and positions without pricing 45 power. For instance DSM is market leader in vitamin E but pricing power seems 40 Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep zero. With other products, like Dyneema and Stanyl, it should be able to resist 15 15 15 16 16 16 16 17 17 17 price .pressure The portfolio is gradually moving to higher added value products, which makes DSM less sensitive to price pressure. Analyst:
Fernand de Boer +31 20 573 5417 [email protected]
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Exhibit 1 2016 revenue breakdown Profit & Loss (EUR m) 12/15 12/16 12/17e 12/18e 12/19e Other Revenues 7,722 7,920 8,555 8,892 9,246 Inno‐ 1% Gross profit 2,451 2,658 2,524 2,623 2,728 vation REBITDA 1,075 1,262 1,397 1,488 1,577 Nutrition REBITA ‐‐‐‐‐ 2% 65% REBIT 573 791 911 994 1,076 Net Financial Result ‐164 ‐133 ‐118 ‐88 ‐66 Exceptionals (gross) ‐211 ‐120 ‐62 ‐40 ‐40 Materials Taxes 46 102 139 165 184 32% Except./discontinued operations ‐184 115 1,123 ‐37 ‐37 Net declared earnings 163 612 1,754 697 786 Net adjusted earnings 268 479 627 734 823 Cash Flow (EUR m) 12/15 12/16 12/17e 12/18e 12/19e EBIT 362 671 849 954 1,036 Depreciation 377 346 361 368 375 Amortization 125 125 125 125 125 Source: Company reports Impairment charges 1250000 Changes in provision 0 ‐40 ‐25 ‐25 ‐25 Changes in working capital ‐13 ‐89 136 15 ‐71 Others 038000 Exhibit 2 EBITDA development Operational Cash Flow 976 1,051 1,446 1,438 1,441 Tax expenses ‐75 ‐77 ‐139 ‐165 ‐184 1,800 Dividends from associates0152000 1,600 Net interest charges ‐237 ‐111 ‐118 ‐88 ‐66 1,400 Others ‐387 ‐11 ‐20000 1,200 CF from operating activities 277 1,004 989 1,185 1,190 1,000 CAPEX ‐543 ‐495 ‐520 ‐530 ‐540 800 600 Acquisitions ‐840000 400 Divestments 3250000 200 Others 155 0 1,509 0 0 0 CF from investing activities ‐147 ‐495 989 ‐530 ‐540 ‐200 Dividend payment ‐174 ‐190 ‐316 ‐323 ‐326 ‐400 Minor. & pref. dividends ‐10 ‐10 ‐10 ‐10 ‐10 2014 2015 2016 2017e 2018e 2019e Equity financing ‐83 ‐136 110 110 110 Other/corporate Innovation Performance materials Nutrition Others 00000 CF from financing activities ‐267 ‐336 ‐216 ‐223 ‐226 Net debt/cash change 137 ‐173 ‐1,762 ‐432 ‐424 Source: Company reports, DP estimates Balance Sheet (EUR m) 12/15 12/16 12/17e 12/18e 12/19e Tangible fixed assets 3,171 3,325 3,359 3,396 3,435 Goodwill 1,660 1,660 1,660 1,660 1,660 Exhibit 3 Organic growth Nutrition Other intang. assets 1,568 1,528 1,528 1,528 1,528 Financial fixed assets 1,063 1,049 714 719 729
8.0 Total Fixed assets 7,828 7,917 7,616 7,658 7,707 Working capital 1,158 1,368 1,232 1,217 1,288 6.0 Total Equity 5,631 6,180 7,730 8,214 8,784 4.0 Provisions & deferred taxes 913 896 871 846 821 2.0 Net financial debt 2,321 2,070 108 ‐324 ‐748 Total assets 11,732 12,958 13,494 13,206 13,505 0.0
‐2.0 Shares ‐ per share data (EUR) 12/15 12/16 12/17e 12/18e 12/19e
‐4.0 Adjusted EPS 2.16 2.90 3.66 4.15 4.60 Dividend 1.65 1.80 1.80 1.80 1.80 ‐6.0 2009 2010 2011 2012 2013 2014 2015 2016 2017e2018e2019e No shares ‐ average (m) 174.23 174.98 175.55 179.36 181.15
Volume Price/mix Organic growth Ratios 12/15 12/16 12/17e 12/18e 12/19e Valuation analysis Adjusted P/E 21.4 19.7 18.1 16.0 14.4 P/BV 1.5 1.7 1.6 1.5 1.4 EV/REBITDA 10.5 10.3 9.1 8.4 7.7 Source: Company reports, DP estimates EV/REBIT 19.7 16.4 13.9 12.6 11.3 EV/FCF (1) 26.1 23.4 13.7 13.8 13.5 FCF yield (2) ‐3.3% 5.1% 4.0% 5.5% 5.4% Exhibit 4 SoP Dividend yield 3.6% 3.2% 2.7% 2.7% 2.7% Financial ratios 2018 Peer Multiple Value Net Debt/EBITDA 2.7 1.8 0.1 ‐0.2 ‐0.5 EBITDA multiples Applied Net Debt/Equity 41.2% 33.5% 1.4% ‐3.9% ‐8.5% Nutrition 1,083 13.3 10.0 10,802 ROCE post‐tax 7.0% 10.2% 12.2% 13.7% 14.8% Materials 485 7.0 7.0 3,392 ROCE post‐tax (grossed gdwll) 7.2% 10.0% 12.3% 13.5% 14.5% Innovation 10 135 Margin analysis and tax rate Other ‐90 9.0 9.4 ‐850 Gross margin 31.7% 29.5% 29.5% 29.5% 29.5% Total EV 1,488 13,479 net cash/(debt 18) 71 REBIT margin 7.4% 10.0% 10.7% 11.2% 11.6% minorities ‐110 Tax rate 19.0% 19.0% 19.0% 19.0% 19.0% Pension deficit ‐530 Growth analysis Associated companies 530 Sales ‐16%3%8%4%4% equity value 13,440 Adjusted EPS ‐11% 34% 26% 14% 11% number of shares 174.2 (1) Based on FCF to Enterprise ‐ (2) Based on FCF to Equity per share 77.1
Source: Degroof Petercam
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Galapagos www.glpg.com Belgium / Healthcare www.degroofpetercam.com
Rich portfolio of partnered and proprietary programs Buy Broad pipeline provides steady stream of news Price EUR 84.01 Galapagos and partner Gilead made remarkable progress in the development (12/09/17) of potential blockbuster filgotinib. Following the initiation of three large Target price 96.00 Phase III trials, the companies are evaluating their JAK‐inhibitor in several Risk High proof‐of‐concept studies aimed at broadening the future filgotinib label. Reuters GLPG AS We would particularly focus on the DARWIN3 data that demonstrated Bloomberg GLPG NA durable efficacy and differentiating factors of filgotinib in comparison to Shares number (m) 46.26 other JAK‐inhibitors, where safety readouts are likely to be most essential. Market cap. (m) 3,886 In cystic fibrosis (CF), much attention went to Vertex’ first triple combination Cash Position 12/17e (m) 1,178 results, which set the bar for efficacy high, but also provided strong evidence H/L 1 year 85.10 ‐ 48.10 for the triple combo hypothesis. While Galapagos and partner AbbVie had to 1 year price perf. 73.5% deal with some delays in starting their triple combo trials, they now seem to Diff. with Euro Stoxx 55.7% be on track for kick off in Q4. Volume (sh./day) 418,395 In the short term (4Q17), we are specifically looking forward to the results of Free Float 70% the ALBATROSS study in CF that evaluates GLPG2222 as add-on to ivacaftor Gilead 13% and should give a first indication of the potential of this corrector, a key FMR 9% compound in the triple combinations. Van Herk Investments 7% The positive Phase IIa results in idiopathic pulmonary fibrosis brought back Insiders 1% the focus to Galapagos’ valuable discovery platform. The Phase I studies in atopic dermatitis and osteoarthritis will read out in 2H17 and early 2018, respectively. Ambitious goals fuelled by strong cash position and partnerships Galapagos has set the ambitious goal to deliver three proof‐of‐concepts each year as well as starting a phase III study every two years. With a cash position close to EUR 1.3bn and several strong partnerships, the company is in a comfortable position today. At this rate, the path towards full clinical 17e 18e 19e development and commercialization is opening up. P/E nmnmnm EV/Revenues 23.2 22.5 19.8 EV/R & D 16.8 16.1 15.8 Business description Div. yield ‐‐‐ Galapagos is a biotech company developing small molecule medicines with novel modes of action. The pipeline includes two PhIII studies and one PhIIb/III Company Calendar in autoimmune indications, an extensive CF program and clinical programs in 26/10/17 3Q 2017 results idiopathic pulmonary fibrosis (IPF), osteoarthritis (OA) and atopic dermatitis. In 22/02/18 FY 2017 results addition, Galapagos has 20 different target‐based discovery programs. Filgotinib is an orally‐available selective JAK‐1 inhibitor partnered with Gilead. Two PhIII programs and one PhIIb/III were initiated in 2016 for rheumatoid arthritis, Crohn and ulcerative colitis. Several potentiators and correctors are being developed in collaboration Galapagos + relative to Euro Stoxx with Abbvie with the goal to develop a triple combination CF therapy. (grey) GLPG1690, a proprietary first‐in‐class inhibitor of autotaxin, is in PhII studies 90 80 for IPF. 70 GLPG1690 (Servier) for OA and MOR106 (MorphoSys) for atopic dermatitis 60 50 are partnered programs in early clinical development. 40 30 Competitive position Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep 15 15 15 16 16 16 16 17 17 17 Galapagos operates in a very competitive environment. In order to balance the risks, most programs have been partnered before entering large later stage, Analyst: expensive clinical trials. Competition in the cystic fibrosis field is rather limited,
currently there is no marketed triple combination therapy. Stéphanie Put, PhD +32 2 287 91 92 [email protected]
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Exhibit 1 – Broad filgotinib program Profit & Loss (EUR m) 12/15 12/16 12/17e 12/18e 12/19e Revenues 60.6 151.6 133.2 145.1 170.3 (of which Sales) 0.0 0.0 0.0 0.0 0.0 Gross profit 60.6 151.6 133.2 145.1 170.3 Operating costs ‐150.0 ‐163.1 ‐209.9 ‐230.0 ‐240.7 (of which R & D) ‐129.7 ‐139.6 ‐184.2 ‐202.7 ‐212.8 EBIT ‐89.4 ‐11.5 ‐76.7 ‐84.9 ‐70.4 Net Financial Result ‐30.2 65.7 0.0 2.5 1.3 Exceptionals (gross) ‐‐‐‐‐ Taxes 1.2 ‐0.2 ‐0.2 ‐0.2 ‐0.2 Except./discontinued operations ‐‐‐‐‐ Net declared earnings ‐118.4 54.0 ‐77.0 ‐82.7 ‐69.3 Cash Flow (EUR m) 12/15 12/16 12/17e 12/18e 12/19e EBIT ‐89.4 ‐11.5 ‐76.7 ‐84.9 ‐70.4 Depreciation 2.4 3.3 3.3 3.3 3.3 Amortization 1.0 0.9 0.9 0.9 0.9 Source: Galapagos Impairment charges 0.0 0.0 0.0 0.0 0.0 Changes in provision ‐0.1 0.0 0.0 0.0 0.0 Changes in working capital ‐34.0 ‐10.9 ‐81.3 ‐100.8 ‐43.0 Exhibit 2 – DARWIN3 demonstrates Others 4.6 12.5 11.2 11.2 11.2 durability of efficacy in RA Operational Cash Flow ‐115.5 ‐5.7 ‐142.6 ‐170.3 ‐98.0 Tax expenses 0.0 0.0 0.0 0.0 0.0 Dividends from associates ‐‐‐‐‐ Net interest charges 1.0 ‐0.70.02.51.3 Others ‐‐‐‐‐ CF from operating activities ‐114.6 ‐6.4 ‐142.6 ‐167.8 ‐96.6 CAPEX ‐6.1 ‐4.5 ‐5.3 8‐5. ‐6.8 Acquisitions 0.0 0.0 0.0 0.0 0.0 Divestments 0.0 0.0 0.0 0.0 0.0 Others 2.3 0.2 0.0 0.0 0.0 CF from investing activities ‐4.3 ‐4.5 ‐6.0 ‐6.3 ‐7.2 Dividend payment ‐‐‐‐‐ Minor. & pref. dividends ‐‐‐‐‐ Equity financing 271.4 396.0 352.7 0.0 0.0 Others 0.0 0.0 0.0 0.0 0.0 CF from financing activities 271.4 396.0 352.6 0.0 0.0 Net debt/cash change 152.5 385.1 204.0 ‐174.2 ‐103.9 Source: Galapagos Balance Sheet (EUR m) 12/15 12/16 12/17e 12/18e 12/19e Tangible fixed assets 13.8 15.0 17.0 19.4 22.9 Goodwill 0.0 0.0 0.0 0.0 0.0 Exhibit 3 – CF development plan Other intang. assets 1.6 1.0 0.9 0.5 0.0 Financial fixed assets 52.7 60.1 60.4 60.6 60.8 Total Fixed assets 68.0 76.1 78.2 80.5 83.8 Working capital 2.0 3.0 4.0 5.0 6.0 Total Equity 365.0 758.7 1,029.7 947.1 877.8 Provisions & deferred taxes 2.7 3.6 3.8 4.0 4.2 Net financial debt ‐347.1 ‐979.8 ‐1,178.4 ‐1,004.2 ‐901.3 Total assets 442.5 1,083.3 1,266.3 1,116.7 1,002.6 Cash Position 347.2 979.8 1,178.4 1,004.2 901.3 Shares ‐ per share data (EUR) 12/15 12/16 12/17e 12/18e 12/19e Declared EPS ‐3.03 1.17 ‐1.51 ‐1.63 ‐1.36 Dividend ‐‐‐‐‐ No shares ‐ average (m) 39.08 46.26 50.87 50.87 50.87 Ratios 12/15 12/16 12/17e 12/18e 12/19e Valuation analysis Declared P/E nm52.2nmnmnm P/BV 6.1 3.7 4.1 4.5 4.9 Source: Galapagos EV/Revenues 30.9 12.1 23.2 22.5 19.8 EV/R & D 14.4 13.2 16.8 16.1 15.8 Dividend yield ‐‐‐‐‐ Exhibit 4 – Shareholder structure
Source: Degroof Petercam
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Melexis www.melexis.com Belgium / Semiconductors www.degroofpetercam.com
Making headway despite headwinds Buy Investment case Price EUR 79.80 Melexis’ better than expected 2Q17 results were driven by robust sales (12/09/17) th growth of 14% y‐o‐y, its 16 consecutive quarter with double digit growth. Target price 85.00 Management reported that it was seeing "optimistic customer sentiment Risk Medium and order behaviour" and hence they reaffirmed the FY17 outlook, despite Reuters MLXS.BR the less favourable EUR/USD exchange rate. For FY17, management Bloomberg MELE BB narrowed the guidance for sales growth to +12%‐14% (from +11‐15%) Shares number (m) 40.40 while they continued to see a FY17 gross margin of c.45% and an EBIT Market cap. (m) 3,224 margin of c.25%. Net debt 12/17e (m) ‐72 We expect long‐term market growth to be c.8% p.a., driven by world‐wide Net debt/EBITDA 12/17e ‐0.45 car production (3‐5% p.a.) and growth of silicon content in cars (2‐4%). Key H/L 1 year 84.74 ‐ 55.74 drivers remain carbon emission regulation, advanced security, and safety 1 year price perf. 37.1% innovation. Furthermore, electric vehicle (HEV/EV) market growth of some Diff. with Euro Stoxx 19.3% 25% p.a. adds another 1%‐point to the market growth rate. Sensors (c.60% Volume (sh./day) 34,873 of Melexis’ sales) is expected to grow at an even faster rate of about 11%. Free Float 36% Hence we estimate Melexis’ revenue growth should be c.10% in the years Xtrion NV 54% ahead. Fidelity Management 10% Taking a 5‐10 year view, with leading technology companies and car makers developing various assisted/autonomous driving technologies, we believe that this will lead to unprecedented demand for automotive sensors and semiconductors. Moreover, the Internet‐of‐Things should offer many non‐automotive opportunities for Melexis too. This should ensure continued long‐term revenue growth. A core holding for every growth portfolio Melexis’ unique combination of high growth, returns and visibility warrants a prospective EV/EBIT multiple of around 20x in our view. Hence 17e 18e 19e our target price of EUR85 and our BUY rating. P/E 28.6 25.8 23.3 EV/EBITDA 19.8 17.9 16.0 EV/EBIT 24.1 21.8 19.5 Business description Div. yield 2.4% 2.5% 2.5% Melexis is a fabless automotive semiconductor manufacturer. All of its manufacturing is outsourced to foundries, with the bulk going to manufacturing Company Calendar partner X‐Fab. Melexis develops, tests and markets a wide range of integrated 25/10/17 3Q 2017 results semiconductors for the automotive industry as well as, to a lesser extent, for the consumer electronics industry. The company sells its products to OEMs, which, in turn, integrate these products into their own electronic systems, which are subsequently sold to car manufacturers.
Melexis is a unique and highly focused player in the automotive semiconductors / sensors market with solid market positions. Sales growth has been above Melexis + relative to Euro Stoxx (grey) 85 market average and profitability has been at a very healthy level. Melexis 80 75 emerged from the severe 2009 downturn – world‐wide car production fell an 70 65 unprecedented 13% ‐ with a higher level of profitability than ever before. 60 55 50 Competitive position 45 40 The automotive semiconductor industry is still very fragmented and Melexis Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep competes with IC vendors like NXP, Infineon, Renesas and Texas Instruments, 15 15 15 16 16 16 16 17 17 17
which have automotive product sales often more than ten times the size of Analyst: Melexis. Nevertheless, Melexis’ has a focused product offering; it is the global
number four in automotive sensors. This m, combined with steady long‐term Marcel Achterberg customer relationships and its flexible fabless model allow it to outperform +31 20 573 5463 most competitors. [email protected]
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Exhibit 1 Revenue by geography, 2016 Profit & Loss (EUR m) 12/15 12/16 12/17e 12/18e 12/19e Revenues 400.1 456.3 515.2 568.1 625.0 Gross profit 192.1 208.5 235.8 260.1 286.9 EBITDA 129.7 140.2 159.4 174.3 192.4 EBITA 129.7 140.2 159.4 174.3 192.4 EBIT 107.6 114.4 130.9 143.0 158.0 Net Financial Result 1.9 ‐1.3 2.3 2.8 3.2 Exceptionals (gross) ‐‐‐‐‐ Taxes ‐10.4 ‐16.8 ‐20.2 ‐20.4 ‐22.6 Except./discontinued operations0.00.30.30.40.4 Net declared earnings 99.1 96.3 113.0 125.4 138.6 Net adjusted earnings 99.1 96.0 112.7 124.9 138.2 Cash Flow (EUR m) 12/15 12/16 12/17e 12/18e 12/19e EBIT 107.6 114.4 130.9 143.0 158.0 Depreciation 0.0 0.0 0.0 0.0 0.0 Amortization 0.0 0.0 0.0 0.0 0.0 Source: Company data Impairment charges ‐‐‐‐‐ Changes in provision 0.0 0.0 0.0 0.0 0.0 Changes in working capital ‐8.6 1.8 ‐13.3 ‐10.3 ‐14.0 Others ‐‐‐‐‐ Exhibit 2 Quarterly revenue (EUR m) Operational Cash Flow 99.0 116.2 117.6 132.6 144.0 Tax expenses ‐4.3 ‐4.5 ‐20.2 ‐20.4 ‐ 22.6 Dividends from associates ‐‐‐‐‐ Net interest charges 0.0 ‐0.1 2.3 2.8 3.2 Others ‐‐‐‐‐ CF from operating activities 94.7 111.5 99.7 115.0 124.6 CAPEX ‐40.3 ‐28.8 ‐35.0 ‐35.0 ‐35.0 Acquisitions 0.0 0.0 0.0 0.0 0.0 Divestments 0.0 0.0 0.0 0.0 0.0 Others 0.0 ‐0.1 0.0 0.0 0.0 CF from investing activities ‐40.3 ‐28.9 ‐35.0 ‐35.0 ‐35.0 Dividend payment ‐52.1 ‐76.1 ‐78.8 ‐80.8 ‐80.8 Minor. & pref. dividends ‐‐‐‐‐ Equity financing 0.0 0.0 0.0 0.0 0.0 Others ‐‐‐‐‐ CF from financing activities ‐52.1 ‐76.1 ‐78.8 ‐80.8 ‐80.8 Net debt/cash change ‐6.3 ‐22.8 ‐14.0 ‐0.8 8.8 Source: Degroof Petercam Balance Sheet (EUR m) 12/15 12/16 12/17e 12/18e 12/19e Tangible fixed assets 90.3 97.4 104.0 107.6 108.2 Goodwill ‐‐‐‐‐ Exhibit 3 Re‐rating (prospective EV/EBIT) Other intang. assets 16.2 28.1 28.1 28.1 28.1 Financial fixed assets ‐‐‐‐‐ Total Fixed assets 106.5 125.5 132.1 135.8 136.3 Working capital 81.0 79.2 92.5 102.8 116.8 Total Equity 242.5 262.5 296.7 341.3 399.1 Provisions & deferred taxes 0.0 0.0 0.0 0.0 0.0 Net financial debt ‐54.7 ‐57.8 ‐72.2 ‐102.7 ‐146.0 Total assets 306.8 358.2 392.4 437.0 494.8 Shares ‐ per share data (EUR) 12/15 12/16 12/17e 12/18e 12/19e Adjusted EPS 2.45 2.38 2.79 3.09 3.42 Dividend 1.90 1.90 1.95 2.00 2.00 No shares ‐ average (m) 40.40 40.40 40.40 40.40 40.40 Ratios 12/15 12/16 12/17e 12/18e 12/19e Valuation analysis Adjusted P/E 20.5 26.8 28.6 25.8 23.3 P/BV 8.4 9.8 10.9 9.4 8.1 EV/EBITDA 15.2 17.9 19.8 17.9 16.0 Source: Degroof Petercam EV/EBIT 18.3 22.0 24.1 21.8 19.5 EV/FCF (1) 19.1 22.8 25.0 22.7 20.3 FCF yield (2) 4.9% 4.1% 3.3% 3.7% 4.1% Exhibit 4 EPS (EUR) Dividend yield 3.8% 3.0% 2.4% 2.5% 2.5% Financial ratios Net Debt/EBITDA ‐0.4 ‐0.4 ‐0.5 ‐0.6 ‐0.8 Net Debt/Equity ‐22.6% ‐22.0% ‐24.3% ‐30.1% ‐36.6% ROCE post‐tax 43.9% 42.5% 45.2% 45.2% 46.7% ROCE post‐tax (grossed gdwll) 30.3% 28.7% 30.2% 31.3% 33.9% Margin analysis and tax rate Gross margin 48.0% 45.7% 45.8% 45.8% 45.9% EBIT margin 26.9% 25.1% 25.4% 25.2% 25.3% Tax rate 9.5% 14.9% 15.2% 14.0% 14.0% Growth analysis Sales 20% 14% 13% 10% 10% Adjusted EPS 7% ‐3% 17% 11% 11% (1) Based on FCF to Enterprise ‐ (2) Based on FCF to Equity
Source: Degroof Petercam
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D'Ieteren www.dieteren.com Belgium / Car services www.degroofpetercam.com All eyes on the next portfolio move Hold D’Ieteren is diversifying outside of the automotive market. The acquisition of Moleskine, the luxury paper accessories manufacturer, marked the first Price EUR 37.44 step of this strategy. This was just a first step and more will come once the (12/09/17) group will find a bidder for a minority stake in Belron. For the time being it Target price 40.00 is unclear what kind of new activity D’Ieteren will invest the proceeds in. Risk Medium The “legacy” part of the portfolio is having a decent performance, while Reuters IETB.BR Moleskine will clearly see margin pressure in the medium term due to the Bloomberg DIE BB investments that are being done to expand the retail network. Shares number (m) 55.30 o Auto should remain resilient as the dealership consolation project Market cap. (m) 2,071 1,315 evolves and as the order book will be delivered. With the new Net debt 12/17e (m) Net debt/EBITDA 12/17e 2.29 mobility policy to be implemented in Belgium, D’Ieteren is increasingly looking to become a mobility provider, rather than a car H/L 1 year 45.88 ‐ 36.41 1 year price perf. ‐14.4% distributor. Diff. with Euro Stoxx ‐32.2% o Belron continues to improve its profitability with good performance Volume (sh./day) 36,653 across the board. UK is now break‐even and other European Free Float 41% countries are showing healthy development thanks to market share D'Ieteren Familly 57% gains. It remains clear however that, in a declining market, the Own shares 2% investment level is likely to remain high to ensure further market share gains. The service extension strategy also seems to be paying off and will further contribute in the coming years. o Moleskine is anticipated to grow its top‐line by double‐digit but the investments being realized to expand the retail network clearly will weigh on the margin in the medium term. We rate D’Ieteren a Hold with a target price of EUR 40, implying 12.0x EV/EBIT 17, as it is unclear what the acquisition strategy of the group will be in the near future. We initially estimated that a 49% stake in Belron could be worth up to EUR 1.0bn but could be worth less if sold to a PE 17e 18e 19e partner. In our opinion, the investment company feature deserves a P/E 10.8 10.4 9.7 holding discount of 10%. EV/EBITDA 6.1 3.4 3.1 EV/EBIT 8.2 4.6 4.2 Business description Div. yield 2.7% 2.7% 2.9% D’Ieteren Group is today active in services to motorists with sales of ~EUR6.0bn and REBIT of EUR250m. The two activities operated by the company are Company Calendar D’Ieteren Auto and Belron. Whereas D’Ieteren Auto is 100% controlled, Belron 13/12/17 Investor day has 5.15% in the hand of its management. The Group is controlled by the family 27/02/17 FY 2017 results (57%). D’Ieteren Auto accounts for EUR 2.8bn sales and EUR ~74m REBIT. This 31/05/17 Q1 2017 update unit is the distributor of the Volkswagen brands (VW, Audi, Seat, Skoda, Porsche, 31/08/17 H1 2017 results …) in Belgium. Belron is the worldwide leader in vehicle glass repair & maintenance and accounts for ~EUR 3.2bn in revenues and EUR 175m REBIT. In
September 2016, the group added Moleskine to the activities portfolio. The is D'Ieteren + relative to Euro Stoxx anticipated to contribute EUR 45‐50m in EBIT in 2017. (grey) 46 Competitive position 44 42 40 The brands sold by D’Ieteren Auto in Belgium represent a market share of ~22%. 38 36 The unit is highly dependent on the marketing actions and decisions of car 34 32 makers and hence, has limited influence on both volumes and pricing. D’Ieteren 30 28 is currently restructuring its dealers network to improve profitability. Belron is 26 Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep the worldwide leader in vehicle glass repair & maintenance with more than half 15 15 15 16 16 16 16 17 17 17 of the sales realised in Europe. Over the last 4 years,e th market conditions have been tough for Belron with margins under pressure in some countries but with Analyst: positive outlook in the US thanks to the marketing efforts realised. Moleskine, being a manufacturer of luxury products, is positioned on a niche market and Nathalie Debruyne, CFA competition is rather limited. +32 2 662 8308 [email protected]
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Exhibit 1 Shareholder base Profit & Loss (EUR m) 12/15 12/16e 12/17e 12/18e 12/19e Revenues 6,035.2 6,471.7 6,837.1 7,087.0 7,239.4 Free Gross profit 382.7 460.0 574.0 615.0 652.2 Float EBITDA 382.7 460.0 574.0 615.0 652.2 26% EBITA 282.1 361.7 468.9 492.3 523.3 EBIT 242.4 320.3 427.2 450.6 481.6 Net Financial Result ‐38.9 ‐35.7 ‐43.1 ‐43.6 ‐43.0 Exceptionals (gross) ‐20.2 ‐149.9 0.0 0.0 0.0 D'Ieteren Taxes ‐21.5 ‐18.9 ‐54.2 ‐56.8 ‐61.6 Family Except./discontinued operations ‐‐‐‐‐ Net declared earnings 175.4 65.8 207.7 216.3 233.0 74% Net adjusted earnings 237.5 204.1 192.6 199.3 212.9 Cash Flow (EUR m) 12/15 12/16e 12/17e 12/18e 12/19e EBIT 242.4 320.3 427.2 450.6 481.6 Depreciation 100.6 98.3 105.2 122.7 128.8 Amortization 39.7 41.4 41.7 41.7 41.7 Impairment charges ‐‐‐‐‐ Source: D’Ieteren / Bloomberg Changes in provision 5.8 21.6 0.5 0.5 0.5 Changes in working capital ‐4.0 44.8 ‐30.7 ‐17.2 ‐10.7 Others 0.0 0.0 0.0 0.0 0.0 Exhibit 2 EBIT breakdown 2017 Operational Cash Flow 384.5 526.4 543.8 598.3 641.9 Tax expenses ‐21.5 ‐18.9 ‐54.2 ‐56.8 ‐61.6 Dividends from associates 0.5 3.8 3.8 3.9 3.9 Moleskine Net interest charges ‐38.9 ‐35.7 ‐43.1 ‐43.6 ‐43.0 11% Others ‐20.2 ‐149.9 0.0 0.0 0.0 CF from operating activities 304.4 325.7 450.4 501.8 541.3 CAPEX ‐137.3 ‐182.8 ‐192.0 ‐180.7 ‐183.9 Acquisitions ‐22.6 ‐495.2 0.0 0.0 0.0 Divestments 0.0 20.3 0.0 0.0 0.0 Others 0.0 0.7 0.0 0.0 0.0 CF from investing activities ‐159.9 ‐657.0 ‐192.0 ‐180.7 ‐183.9 Belron Dividend payment ‐43.9 ‐49.3 ‐55.3 ‐55.3 ‐60.8 61% Auto Minor. & pref. dividends 0.0 0.0 0.0 0.0 0.0 28% Equity financing 0.0 0.0 0.0 0.0 0.0 Others 32.1 43.4 0.0 0.0 0.0 CF from financing activities ‐11.8 ‐5.9 ‐55.3 ‐55.3 ‐60.8 Net debt/cash change ‐132.7 337.2 ‐203.1 ‐265.8 ‐296.6 Balance Sheet (EUR m) 12/15 12/16e 12/17e 12/18e 12/19e Source: Degroof Petercam Tangible fixed assets 521.0 568.7 649.0 702.5 753.7 Goodwill 990.6 919.3 864.7 812.7 763.2 Other intang. assets 470.7 467.6 439.4 412.6 387.1 Financial fixed assets 183.5 167.5 168.3 169.1 169.9 Exhibit 3 Profit before tax evolution Total Fixed assets 2,165.8 2,123.1 2,121.4 2,097.0 2,073.9 Working capital 442.7 159.9 193.2 208.1 216.7 Total Equity 2,040.3 2,055.0 2,403.6 2,558.6 2,727.4 8,000 300 Provisions & deferred taxes 86.4 135.6 136.4 137.3 138.1 250 Net financial debt 867.1 1,390.9 1,314.6 1,187.4 1,039.6 7,000 Total assets 3,335.0 3,123.6 3,345.1 3,472.3 3,594.2 200 6,000 150 Shares ‐ per share data (EUR) 12/15 12/16e 12/17e 12/18e 12/19e 5,000 100 Adjusted EPS 4.29 3.69 3.48 3.60 3.85 Dividend 0.90 0.90 1.00 1.00 1.10 4,000 50 No shares ‐ average (m) 55.30 55.30 55.30 55.30 55.30 3,000 0 Ratios 12/15 12/16e 12/17e 12/18e 12/19e Valuation analysis Sales Current PBT Adjusted P/E 8.0 11.4 10.8 10.4 9.7 P/BV 1.0 1.2 0.9 0.8 0.8 EV/EBITDA 7.1 8.4 6.1 3.4 3.1 EV/EBIT 11.3 12.0 8.2 4.6 4.2 EV/FCF (1) 12.5 26.0 20.2 9.2 8.0 Source: Degroof Petercam FCF yield (2) 9.4% 4.8% 6.4% 8.8% 10.1% Dividend yield 2.6% 2.1% 2.7% 2.7% 2.9% Financial ratios Exhibit 4 Market share Auto Net Debt/EBITDA 2.3 3.0 2.3 1.9 1.6 Net Debt/Equity 42.5% 67.7% 54.7% 46.4% 38.1% ROCE post‐tax 7.2% 8.0% 8.7% 9.2% 9.5% ROCE post‐tax (grossed gdwll) ‐‐‐‐‐ 24% Margin analysis and tax rate 23% Gross margin ‐‐‐‐‐ 22% EBIT margin 4.0% 4.9% 6.2% 6.4% 6.7% Tax rate ‐‐‐‐‐ 21% Growth analysis 20% Sales 9% 7% 6% 4% 2% 19% Adjusted EPS +chg ‐14% ‐6% 3% 7% (1) Based on FCF to Enterprise ‐ (2) Based on FCF to Equity 18%
Market share Net market share
Source: Febiac
22
PostNL www.postnl.com The Netherlands / Industrial Services www.degroofpetercam.com
Targets in the wind Reduce Investment case Price EUR 3.45 On 7 August, PostNL cut its FY17 guidance for Underlying Cash Operating (12/09/17) Income (“UCOI”) to the low end of its previous guidance range of EUR220‐ Target price 3.60 260m, citing the impact of measures by the market regulator ACM on Risk High “Significant Market Power” (SMP) and a soft performance in Germany and Reuters PTNL.AS at Spring. Management maintained its 2020 target (UCOI of EUR310‐ Bloomberg PNL NA 380m), but now with the provision that this depends on the final Shares number (m) 440.92 implementation of the ACM decision on SMP. Market cap. (m) 1,522 As per 1 August 2017, ACM requires PostNL to grant other postal Net debt 12/17e (m) ‐110 operators in the 24‐hours bulk mail segment access to its network and by Net debt/EBITDA 12/17e ‐0.30 1 November 2017, PostNL must publish its proposed tariffs and related H/L 1 year 4.88 ‐ 3.20 conditions for postal operators using its network. The proposed tariffs will 1 year price perf. ‐12.5% be subject to ACM approval. Depending on the final implementation of the Diff. with Euro Stoxx ‐30.3% SMP decision, the company now expects the financial impact to be at the Volume (sh./day) 3,461,920 higher end of the range (EUR30‐50m p.a.) that it previously expected. The Free Float 83% full effect is anticipated to come in 2019. Edinburgh Partners 7% Meanwhile, the fast growing parcels business is facing intensifying Capfi Delen 5% competition, also from integrating e‐commerce vendors, which keeps J.H.H. de Mol 5% prices under pressure. We also see significant risk of mispricing new delivery models. Furthermore, the company’s relationships with its drivers and third party service point operators remains less than perfect. Too many uncertainties Besides the uncertain SMP impact, the review of the Postal Law of the yet to be formed new Dutch coalition Government adds to the uncertainty. Despite the sell‐off since the 2Q17 release, we expect the shares to underperform until there is more clarity on the many issues that the 17e 18e 19e company faces. P/E 9.0 8.7 7.8 EV/EBITDA 3.8 3.6 3.5 EV/EBIT 4.8 4.5 4.4 Business description Div. yield 6.1% 6.2% 7.3% PostNL is a mail and parcel operator with operations in four countries: the Netherlands, Belgium, Germany and Italy. It also operates various on‐line Company Calendar activities. In The Netherlands, the company is the incumbent mail distributor 06/11/17 3Q17 Results and responsible for the Dutch USO. To the investment community PostNL has aimed to position itself as a cash generative defensive stock offering a solid dividend yield. However, a pension fund deficit and IAS19 accounting have prevented PostNL from paying dividends in cash for some time. In 2017, the company has resumed paying dividends.
PostNL + relative to Euro Stoxx (grey) Competitive position 5.0 PostNL aims to defend its market leadership and profitability in the Dutch mail 4.5 market against the trend shift to electronic mail and against competition. It also 4.0 aggressively expands in e‐commerce driven Parcels markets in order to benefit 3.5 from expected further growth in the Dutch parcels market as well as new 3.0 2.5 penetration of parcel markets in Belgium, Germany and Italy. Meanwhile, it has Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep strengthened its position as key challenger in liberalizing mail markets Germany 15 15 15 16 16 16 16 17 17 17
and Italy, where it competes with the local postal services. In 2015 it decided to Analyst: exit the UK postal market.
Marcel Achterberg +31 20 573 5463 [email protected]
23
Exhibit 1 Revenue by segment, 2017e Profit & Loss (EUR m) 12/15 12/16 12/17e 12/18e 12/19e Revenues 3,461 3,413 3,469 3,495 3,548 Gross profit 1,757 1,645 1,683 1,695 1,721 EBITDA 433 383 364 383 398 EBITA 366 318 289 303 317 EBIT 340 291 290 308 322 Net Financial Result ‐78 45 ‐45 ‐56 ‐54 Exceptionals (gross) ‐18 ‐33 ‐1100 Taxes ‐77 ‐55 ‐64 ‐76 ‐81 Except./discontinued operations ‐‐‐‐‐ Net declared earnings 149 280 170 177 189 Net adjusted earnings 195 257 171 176 197 Cash Flow (EUR m) 12/15 12/16 12/17e 12/18e 12/19e EBIT 340 291 290 308 322 Depreciation 65 62 75 80 81 Amortization 26 27 ‐1 ‐5 ‐5 Source: Degroof Petercam Impairment charges 13000 Changes in provision ‐132 ‐69 ‐25 ‐14 ‐28 Changes in working capital 11 ‐30 ‐19 ‐16 ‐18 Exhibit 2 Underlying EBIT by segment, Others 00000 2017e, EUR m Operational Cash Flow 311 284 320 353 351 Tax expenses ‐105 ‐80 ‐64 ‐76 ‐81 Dividends from associates31111 Net interest charges ‐69 ‐87 ‐45 ‐56 ‐54 Others ‐‐‐‐‐ CF from operating activities 140 118 212 222 217 CAPEX ‐82 ‐68 ‐85 ‐85 ‐85 Acquisitions ‐5 ‐30000 Divestments 0639000 Others 1 ‐4000 CF from investing activities ‐86 537 ‐85 ‐85 ‐85 Dividend payment 0 0 ‐53 ‐94 ‐95 Minor. & pref. dividends ‐‐‐‐‐ Equity financing 00000 Others ‐‐‐‐‐ CF from financing activities 0 0 ‐53 ‐94 ‐95 Net debt/cash change 130 638 24 ‐7 ‐11 Source: Degroof Petercam Balance Sheet (EUR m) 12/15 12/16 12/17e 12/18e 12/19e Tangible fixed assets 508 505 515 520 524 Goodwill 90134000 Exhibit 3 Revenue (EUR m) and Underlying Other intang. assets 5667000 EBITDA % Financial fixed assets 37 38 38 38 38 Total Fixed assets 691 744 754 759 763 Working capital ‐430 ‐400 ‐381 ‐365 ‐347 Total Equity ‐216 ‐76 ‐32564 Provisions & deferred taxes 597 528 503 489 461 Net financial debt 552 ‐86 ‐110 ‐103 ‐92 Total assets 1,196 1,273 1,290 1,298 1,309 Shares ‐ per share data (EUR) 12/15 12/16 12/17e 12/18e 12/19e Adjusted EPS 0.44 0.58 0.38 0.40 0.44 Dividend 0.00 0.12 0.21 0.21 0.25 No shares ‐ average (m) 441.35 441.35 444.59 444.59 444.59 Ratios 12/15 12/16 12/17e 12/18e 12/19e Valuation analysis Adjusted P/E 7.9 7.0 9.0 8.7 7.8 P/BV nm nm nm nm 27.2 EV/EBITDA 5.8 5.5 3.8 3.6 3.5 Source: Degroof Petercam EV/EBIT 7.4 7.2 4.8 4.5 4.4 EV/FCF (1) 11.0 9.7 5.9 5.2 5.3 FCF yield (2) 3.8% 2.8% 8.3% 9.0% 8.7% Exhibit 4 Normalized EPS (EUR) Dividend yield 0.0% 2.9% 6.1% 6.2% 7.3% Financial ratios Net Debt/EBITDA 1.3 ‐0.2 ‐0.3 ‐0.3 ‐0.2 Net Debt/Equity ‐255.6% 113.2% 3373.1% ‐414.0% ‐143.3% ROCE post‐tax 112.8% 80.5% 60.1% 57.5% 56.9% ROCE post‐tax (grossed gdwll) 44.3% 35.9% 28.7% 28.4% 28.9% Margin analysis and tax rate Gross margin 50.8% 48.2% 48.5% 48.5% 48.5% EBIT margin 9.9% 8.6% 8.4% 8.8% 9.1% Tax rate 26.9% 15.2% 27.4% 30.6% 30.6% Growth analysis Sales ‐19% ‐1% 2% 1% 2% Adjusted EPS ‐8% 32% ‐34% 3% 12% (1) Based on FCF to Enterprise ‐ (2) Based on FCF to Equity
Source: Degroof Petercam
24
Vopak www.vopak.com The Netherlands / Industrial Services www.degroofpetercam.com
The tide is turning Sell Investment case Price EUR 35.57 Vopak’s Q2‐17 results highlighted the increasingly competitive environment for (12/09/17) the company. After very strong occupancy rates in H1‐2016, the market is Target price 35.00 becoming more challenging again, with H2‐17 possibly dropping below the 90‐ Risk Medium 95% range. In our view, increasing maintenance and improvement capex is Reuters VOPA.AS needed to support Vopak's occupancy rates, which will be negative for cash Bloomberg VPK NA generation and ROCE. At the same time, the strengthening of the euro during 127.84 the last quarter also puts pressure on results. Shares number (m) Market cap. (m) 4,547 We rate the shares a Sell for the following reasons: Net debt 12/17e (m) 1,810 No further upside for profit margins. The market conditions are becoming Net debt/EBITDA 12/17e 2.83 more challenging with oil in backwardation, and increasing competition H/L 1 year 47.56 ‐ 35.30 from new terminals. This depresses occupancy rates and profit margins. 1 year price perf. ‐21.5% Little support from capacity growth. Current expansion projects add only Diff. with Euro Stoxx ‐39.2% 7% to proportionally consolidated capacity until 2019. New capacity Volume (sh./day) 410,442 expansions are unlikely to generate a significant profit contribution before Free Float 52% 2019 (except for acquisitions). HAL Holding 48% Low net cash generation. Due to the structurally high maintenance & UBS 3% improvement capex requirements, Vopak generates only a limited net cash OppenheimerFunds 4% Blackrock 2% flow. ING Groep 3% Declining ROCE. The high maintenance & improvement capex generates a Delta Lloyd 1% below‐average ROCE. New terminals also tend to depress ROCE in the first Treasury 0% years of operation. Hence, Vopak’s ROCE has been under pressure since 2008 and we do not anticipate this to turn for the better. Valuation uncompelling. Taking into account the deteriorated profile, we believe that Vopak should trade at a discount to historical multiples and the peer group. Its 2018 P/E of 16x is above the historical average of 15.3x and the 2% discount versus the peer group average is below the historical 17e 18e 19e P/E 16.4 16.6 13.5 average of 10%. EV/EBITDA 9.3 9.7 8.6 EV/EBIT 16.2 17.1 14.2 Business description Div. yield 2.6% 2.4% 3.0% Vopak is the world’s largest independent tank terminal operator, specialising in the storage and handling of liquid and gaseous chemical and oil products. Most Company Calendar of its customers are operating in the chemical and oil industries. Vopak is well 06/11/17 Q3‐17 Trading Update represented in hub locations like the ports of Amsterdam/Rotterdam/Antwerp, Houston, Singapore and Fujairah, ywhich pla a key role in global logistic flows. It offers a full range of services at these locations, including storage and transhipment of products intended for export and import and distribution of products for the local market. Many of the other locations are specialised in just
one of these activities. In addition, Vopak operates industrial terminals. These terminals are integrated in a major chemical complex or refinery and support Vopak + relative to Euro Stoxx (grey) 50 local logistics and import and export activities, whereby the producers 48 46 outsource the terminal function to Vopak based on long‐term contracts. 44 42 40 38 36 Competitive position 34 32 30 Vopak is the leading operator with storage capacity of 35.9m cbm. The closest Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep peer is Oiltanking (Germany) with a capacity of 21m cbm. Oiltanking is owned by 15 15 15 16 16 16 16 17 17 17 Marquard & Bahls. Other players in this market include Kinder Morgan, Nustar (only USA) and IMTT (USA; 50% owned by Macquarie), but also Horizon Analyst: (Government of Dubai; ENOC), Sinochem (China), 4Gas (UK, Carlyle), TanQuid (Germany, also Macquarie), Rubis (France), LBC (Belgium), VTTI (Netherlands; Luuk van Beek 50% Vitol, 50% MISC Berhad), Odfjell and Stolt‐Nielsen. +31 20 573 5471 [email protected]
25
Exhibit 1 Revenue by geogaphy 2017e Profit & Loss (EUR m) 12/15 12/16 12/17e 12/18e 12/19e Revenues 1,492.1 1,650.1 1,309.4 1,315.2 1,439.1 Gross profit 1,492.1 1,650.1 1,309.4 1,315.2 1,439.1 EBITDA 754.9 969.0 639.0 644.6 713.3 North EBITA 495.2 699.4 366.0 363.1 431.8 EBIT 495.2 699.4 366.0 363.1 431.8 America Net Financial Result ‐105.2 ‐107.2 ‐100.2 ‐90.4 ‐90.4 22% Exceptionals (gross) ‐‐‐‐‐ Netherlands Taxes ‐117.3 ‐72.5 ‐67.9 ‐79.0 ‐95.0 35% Except./discontinued operations ‐43.1 207.9 ‐1.6 0.0 0.0 Asia Net declared earnings 282.2 548.9 277.3 272.7 334.7 EMEA Net adjusted earnings 325.3 326.1 276.8 272.7 334.7 29% 14% Cash Flow (EUR m) 12/15 12/16 12/17e 12/18e 12/19e EBIT 495.2 699.4 366.0 363.1 431.8 Depreciation 259.7 269.6 273.0 281.5 281.5 Amortization 0.0 0.0 0.0 0.0 0.0 Source: Degroof Petercam Impairment charges ‐‐‐‐‐ Changes in provision 41.7 9.5 0.0 0.0 0.0 Changes in working capital 31.7 ‐8.3 ‐2.0 0.8 13.8 Others ‐0.1 ‐2.2 0.0 0.0 0.0 Exhibit 2 Indicative EBITDA by end market Operational Cash Flow 828.2 675.0 637.0 645.5 727.0 Tax expenses ‐104.6 ‐70.9 ‐67.9 ‐79.0 ‐95.0 Biofuels LNG Dividends from associates 93.7 113.7 109.8 110.3 120.2 6% 4% Net interest charges ‐102.4 ‐98.9 ‐100.2 ‐90.4 ‐90.4 Others 17.4 ‐8.6 0.0 0.0 0.0 CF from operating activities 732.3 610.3 578.7 586.3 661.8 CAPEX ‐346.9 ‐344.2 ‐481.1 ‐606.1 ‐492.8 Oil Acquisitions ‐132.1 ‐94.8 ‐65.9 ‐100.0 ‐50.0 Industrial products Divestments 330.5 566.0 2.8 0.0 0.0 22% Others ‐102.1 ‐3.5 0.0 0.0 0.0 46% About 10 CF from investing activities ‐250.6 123.5 ‐544.2 ‐706.1 ‐542.8 related to Dividend payment ‐114.8 ‐127.5 ‐134.2 ‐119.3 ‐109.4 Chemi cals trading b Minor. & pref. dividends ‐55.3 ‐41.3 ‐34.1 ‐34.8 ‐36.2 22% Equity financing ‐2.9 ‐3.8 ‐1.6 0.0 0.0 dedicate Others ‐60.9 0.0 0.0 0.0 0.0 traders CF from financing activities ‐233.9 ‐172.6 ‐169.9 ‐154.1 ‐145.6 Net debt/cash change 29.3 ‐491.4 4.2 274.0 26.6 Source: Degroof Petercam Balance Sheet (EUR m) 12/15 12/16 12/17e 12/18e 12/19e Tangible fixed assets 3,496.0 3,553.0 3,816.1 4,231.1 4,481.1 Goodwill ‐‐‐‐‐ Exhibit 3 Occupancy rates Other intang. assets ‐‐‐‐‐ Financial fixed assets 1,197.3 1,200.4 1,209.8 1,222.1 1,235.4 Total Fixed assets 4,855.9 4,974.0 5,254.6 5,691.5 5,966.2 96% Working capital ‐162.8 ‐67.2 ‐68.4 ‐69.0 ‐78.9 Total Equity 2,160.4 2,559.0 2,835.4 2,997.4 3,231.7 94% Provisions & deferred taxes 365.9 442.9 442.9 442.9 442.9 92% Net financial debt 2,295.6 1,804.2 1,810.5 2,084.5 2,111.0 Total assets 5,497.2 5,582.0 5,834.6 6,138.8 6,208.8 90% Shares ‐ per share data (EUR) 12/15 12/16 12/17e 12/18e 12/19e 88% Adjusted EPS 2.55 2.56 2.17 2.14 2.63 Dividend 1.00 1.05 0.93 0.86 1.05 86% No shares ‐ average (m) 127.82 127.50 127.50 127.47 127.47 84% Ratios 12/15 12/16 12/17e 12/18e 12/19e 82% Valuation analysis Adjusted P/E 15.6 17.5 16.4 16.6 13.5 20132014 2015 2016 2017 P/BV 2.5 2.4 1.7 1.6 1.5 EV/EBITDA 9.6 7.4 9.3 9.7 8.6 Source: Degroof Petercam EV/EBIT 14.6 10.2 16.2 17.1 14.2 EV/FCF (1) 20.2 27.8 57.1 ‐102.5 33.2 FCF yield (2) 5.2% 3.3% 1.0% ‐2.6% 2.6% Exhibit 4 Capital Employed & ROCE Dividend yield 2.5% 2.3% 2.6% 2.4% 3.0% Financial ratios Net Debt/EBITDA 3.0 1.9 2.8 3.2 3.0 6,000 12% Net Debt/Equity 106.3% 70.5% 63.9% 69.5% 65.3% 5,000 10% ROCE post‐tax 7.3% 7.9% 6.2% 6.0% 7.0% ROCE post‐tax (grossed gdwll) 7.3% 7.9% 6.2% 6.0% 7.0% 4,000 8% Margin analysis and tax rate 3,000 6% Gross margin 100.0% 100.0% 100.0% 100.0% 100.0% EBIT margin 35.7% 51.9% 28.1% 27.7% 30.1% 2,000 4% Tax rate 30.1% 12.2% 25.5% 29.0% 27.8% Growth analysis 1,000 2% Sales 5% ‐3% ‐3% 1% 9% ‐ 0% Adjusted EPS 10% 0% ‐15% ‐1% 23% (1) Based on FCF to Enterprise ‐ (2) Based on FCF to Equity
Capital Empl. ROCE
Source: Degroof Petercam
26
Valuation tables
2017 P/E ranking
Price at P/E P/E P/E 07/09/17 16 17e 18e ArcelorMittal 22.46 28.2 7.3 10.0 Agfa‐Gevaert 3.83 8.8 8.8 8.3 PostNL 3.43 7.0 8.9 8.7 D'Ieteren 37.44 12.4 9.5 9.3 BAM Group 4.83 14.5 11.5 8.5 Tessenderlo 39.09 9.8 11.9 10.1 Philips Lighting 30.94 10.5 11.9 11.2 Randstad 49.50 13.7 12.1 10.9 Recticel 7.18 15.2 12.2 9.0 Ahold Delhaize 15.26 19.3 12.2 11.0 Bekaert 41.64 21.0 12.4 10.9 RTL Group 62.00 14.5 12.7 12.3 Sipef 62.71 14.3 13.8 15.6 bpost 23.72 15.7 13.9 13.8 Solvay 122.75 16.4 14.0 11.5 Beter Bed Holding 15.65 19.6 14.4 12.9 Ontex 29.53 16.1 14.7 13.8 Refresco Group 16.36 13.7 14.7 12.9 Elia 49.68 16.7 14.8 13.1 Aperam 45.24 16.7 14.9 13.8 Arcadis 17.45 12.3 15.3 14.5 ASM International 51.09 15.9 15.4 13.7 BESI 57.35 18.3 15.4 14.5 Royal Dutch Shell 23.59 29.9 15.6 14.0 Proximus 29.32 16.7 15.8 15.7 Wolters Kluwer 37.36 16.2 16.0 15.4 VolkerWessels 25.71 16.1 13.5 EVS 30.80 13.8 16.1 12.9 Vopak 35.44 17.5 16.3 16.6 DSM 64.82 19.7 16.6 14.3 UCB 58.48 24.9 17.1 16.9 Orange Belgium 19.61 15.6 17.3 17.2 CFE 121.80 15.5 17.9 14.7 Econocom 6.39 18.2 18.0 15.1 Roularta 16.00 12.3 18.2 20.0 RELX 17.71 18.9 18.3 17.7 Aalberts 37.92 16.0 18.6 17.5 Fagron 12.64 16.4 19.0 16.2 Colruyt 46.90 17.8 19.6 19.2 Akzo Nobel 78.60 14.8 19.6 19.1
27 EQUITY RESEARCH │ Preference List 13/09/2017
Price at P/E P/E P/E 07/09/17 16 17e 18e Kendrion 35.56 18.6 19.9 16.6 TKH Group 50.75 16.7 20.0 18.1 Accell Group 25.97 14.9 20.3 16.2 Ter Beke 166.60 19.3 20.5 15.4 Sioen Industries 26.83 25.9 20.6 20.1 Sligro Food Group 37.47 19.9 20.6 16.6 Van de Velde 43.75 26.7 20.7 21.0 Corbion 26.67 14.7 20.9 18.8 Flow Traders 22.57 16.8 21.0 13.0 GrandVision 21.39 24.9 21.8 18.7 Unilever 50.44 20.7 21.9 19.8 Heineken 87.42 19.3 22.4 21.0 KPN 2.90 28.4 22.6 29.5 Philips 33.13 18.9 23.5 19.2 Umicore 65.60 20.7 24.2 20.2 Greenyard 19.56 28.0 24.7 18.6 Boskalis 28.09 15.2 26.6 23.6 Kinepolis 48.24 28.8 28.0 24.1 Melexis 79.34 26.8 28.4 25.7 Lotus Bakeries 2267.00 33.2 28.5 26.4 Barco 85.86 nm 28.9 18.9 AB InBev 100.75 37.5 29.1 24.1 ASML Holding 133.20 30.8 30.7 26.2 IMCD 50.17 28.5 32.0 25.2 Fluxys Belgium 25.23 37.8 33.2 33.6 Wessanen 15.08 46.5 33.5 29.4 Telenet 55.71 79.6 35.4 29.3 TomTom 8.89 37.1 36.9 34.2 Basic Fit 16.33 62.2 37.2 22.1 SBM Offshore 14.30 22.2 44.7 7.7 IBA 27.33 38.3 70.6 48.8 Brunel 12.48 76.9 75.6 29.7 OCI 18.53 nm 80.7 13.5 Heijmans 9.09 nm nm 9.1 Euronav 6.69 8.2 nm nm Exmar 4.80 12.9 nm 46.5 Fugro 11.44 nm nm 30.6 Nyrstar 5.96 nm nm 27.9
28 EQUITY RESEARCH │ Preference List 13/09/2017
2017 EV/EBITDA ranking
Price at EV/EBITDA EV/EBITDA EV/EBITDA 07/09/17 16 17e 18e PostNL 3.43 5.5 3.8 3.6 Orange Belgium 19.61 5.0 4.9 4.9 ASM International 51.09 7.6 5.1 3.8 D'Ieteren 37.44 8.6 5.4 3.5 ArcelorMittal 22.46 6.5 5.5 5.3 Ahold Delhaize 15.26 9.9 5.6 5.2 Heijmans 9.09 nm 5.9 12.3 Royal Dutch Shell 23.59 8.8 6.2 6.0 Roularta 16.00 8.8 6.5 7.5 Proximus 29.32 6.3 6.5 6.2 CFE 121.80 6.0 6.7 5.2 BAM Group 4.83 8.3 6.9 4.8 KPN 2.90 6.6 6.9 6.6 Recticel 7.18 7.5 6.9 5.9 SBM Offshore 14.30 7.6 7.1 4.1 Beter Bed Holding 15.65 9.5 7.2 6.4 Bekaert 41.64 7.1 7.2 6.5 Philips Lighting 30.94 6.8 7.2 6.6 VolkerWessels 25.71 7.4 5.9 Agfa‐Gevaert 3.83 7.6 7.7 7.3 Ter Beke 166.60 7.0 7.8 6.3 bpost 23.72 7.4 7.8 7.5 Greenyard 19.56 8.1 7.8 7.2 Sipef 62.71 7.9 7.8 7.8 Refresco Group 16.36 8.3 7.9 7.2 RTL Group 62.00 9.0 7.9 7.5 Aperam 45.24 8.2 8.0 7.5 Colruyt 46.90 8.2 8.5 8.1 Randstad 49.50 10.1 8.5 7.4 Solvay 122.75 9.5 8.5 7.4 Barco 85.86 9.9 8.6 7.2 Fugro 11.44 10.5 8.8 6.0 Euronav 6.69 4.5 8.8 9.0 Boskalis 28.09 6.5 9.0 8.4 Telenet 55.71 9.4 9.0 8.4 UCB 58.48 10.8 9.1 8.9 Vopak 35.44 7.4 9.2 9.6 Kendrion 35.56 8.4 9.3 8.2 Nyrstar 5.96 13.1 9.3 7.3 Corbion 26.67 9.5 9.3 8.7
29 EQUITY RESEARCH │ Preference List 13/09/2017
Price at EV/EBITDA EV/EBITDA EV/EBITDA 07/09/17 16 17e 18e Sioen Industries 26.83 11.4 9.4 7.8 EVS 30.80 8.4 9.5 7.5 Arcadis 17.45 8.1 9.8 9.3 Philips 33.13 10.2 9.9 9.0 Tessenderlo 39.09 9.6 10.0 8.6 BESI 57.35 11.3 10.1 9.4 Ontex 29.53 11.6 10.3 9.3 Sligro Food Group 37.47 9.3 10.3 8.9 Econocom 6.39 11.7 10.4 9.3 DSM 64.82 11.4 10.5 9.5 Akzo Nobel 78.60 8.6 10.9 10.4 Van de Velde 43.75 14.5 11.1 11.1 Exmar 4.80 6.6 11.1 9.1 Wolters Kluwer 37.36 11.9 11.3 11.2 GrandVision 21.39 11.9 11.5 10.0 Aalberts 37.92 10.8 11.5 10.7 Fagron 12.64 11.4 12.0 10.6 Fluxys Belgium 25.23 12.1 12.0 12.1 Accell Group 25.97 10.0 12.0 10.0 Basic Fit 16.33 15.6 12.2 9.2 TKH Group 50.75 10.3 12.3 11.2 Kinepolis 48.24 13.0 12.4 11.3 TomTom 8.89 13.2 13.0 12.0 OCI 18.53 12.2 13.5 8.5 Heineken 87.42 12.0 13.6 12.7 Umicore 65.60 12.2 13.8 12.3 Elia 49.68 16.5 14.2 13.0 Flow Traders 22.57 12.7 15.0 9.3 RELX 17.71 15.7 15.1 14.3 Unilever 50.44 14.0 15.2 14.6 AB InBev 100.75 21.3 17.0 15.3 Lotus Bakeries 2267.00 20.2 18.0 16.5 IMCD 50.17 17.0 19.1 16.0 Melexis 79.34 17.9 19.7 17.8 Brunel 12.48 15.7 20.2 12.1 Wessanen 15.08 26.3 20.4 17.8 ASML Holding 133.20 21.8 21.3 18.6 IBA 27.33 40.9 65.7 39.8
30 EQUITY RESEARCH │ Preference List 13/09/2017
2017 EV/EBIT ranking
Price at EV/EBIT EV/EBIT EV/EBIT 07/09/17 16 17e 18e PostNL 3.43 7.2 4.8 4.5 Heijmans 9.09 nm 4.8 7.9 D'Ieteren 37.44 12.7 7.0 4.5 ASM International 51.09 12.4 7.2 5.2 ArcelorMittal 22.46 9.8 8.4 8.1 bpost 23.72 8.8 9.2 9.0 RTL Group 62.00 10.8 9.5 9.0 Beter Bed Holding 15.65 13.5 9.7 8.5 Ahold Delhaize 15.26 18.4 9.9 8.8 Agfa‐Gevaert 3.83 10.2 10.2 9.5 EVS 30.80 9.0 10.4 8.1 BAM Group 4.83 37.6 10.5 6.6 Randstad 49.50 12.4 10.7 9.2 Recticel 7.18 14.1 10.9 8.5 BESI 57.35 13.5 10.9 10.2 Aperam 45.24 13.2 11.0 10.3 VolkerWessels 25.71 11.3 8.6 UCB 58.48 13.7 11.4 11.2 Bekaert 41.64 13.2 11.6 9.7 Sipef 62.71 12.6 11.7 13.0 Philips Lighting 30.94 12.2 11.9 10.4 Corbion 26.67 12.5 12.3 11.5 Ontex 29.53 14.2 12.4 11.1 Solvay 122.75 16.9 12.5 10.5 Colruyt 46.90 12.3 12.6 12.1 Sioen Industries 26.83 15.1 12.6 10.3 Barco 85.86 24.0 12.7 9.9 Refresco Group 16.36 14.0 13.0 11.3 Econocom 6.39 12.8 13.0 10.2 Proximus 29.32 13.8 13.2 12.5 Ter Beke 166.60 14.6 13.4 11.4 Orange Belgium 19.61 14.9 13.6 13.1 Van de Velde 43.75 16.9 13.6 14.0 Sligro Food Group 37.47 12.8 13.7 11.8 Greenyard 19.56 15.8 13.7 11.5 CFE 121.80 12.1 13.8 10.8 Royal Dutch Shell 23.59 33.9 13.9 12.0 Accell Group 25.97 11.7 14.2 11.6 Akzo Nobel 78.60 12.0 15.0 14.3 Fagron 12.64 55.9 15.1 13.4
31 EQUITY RESEARCH │ Preference List 13/09/2017
Price at EV/EBIT EV/EBIT EV/EBIT 07/09/17 16 17e 18e Arcadis 17.45 14.7 15.3 13.6 KPN 2.90 18.3 15.5 14.6 Kendrion 35.56 15.8 15.9 13.3 Vopak 35.44 10.2 16.1 17.1 GrandVision 21.39 18.8 16.2 13.7 Wolters Kluwer 37.36 17.5 16.3 16.4 DSM 64.82 19.4 16.5 14.4 Aalberts 37.92 15.8 16.6 15.2 Flow Traders 22.57 13.8 16.7 10.0 Tessenderlo 39.09 16.1 16.9 14.1 Philips 33.13 17.1 17.2 14.5 Kinepolis 48.24 18.7 17.4 15.4 TKH Group 50.75 15.3 17.7 15.9 Unilever 50.44 16.7 17.7 16.9 SBM Offshore 14.30 19.0 18.6 6.5 Heineken 87.42 20.0 19.8 18.4 Umicore 65.60 18.3 20.2 17.3 RELX 17.71 21.4 20.2 18.9 Lotus Bakeries 2267.00 24.0 20.3 19.1 Elia 49.68 26.1 20.8 18.6 AB InBev 100.75 27.2 21.3 18.8 Telenet 55.71 21.5 21.3 18.8 Melexis 79.34 22.0 23.9 21.7 Wessanen 15.08 32.3 23.9 20.7 Boskalis28.09nm24.821.4 ASML Holding 133.20 26.5 25.1 21.6 IMCD 50.17 23.6 25.6 20.7 Fluxys Belgium 25.23 28.2 26.3 26.1 OCI 18.53 25.0 26.7 13.8 Nyrstar 5.96 nm 26.7 15.6 Brunel 12.48 23.7 30.1 15.0 Exmar 4.80 11.0 30.4 20.9 Basic Fit 16.33 nm 52.5 27.2 IBA 27.33 40.9 65.7 39.8 Fugro 11.44 nm nm 21.1 TomTom 8.89 nm nm 92.7 Roularta 16.00 21.5 nm nm Euronav 6.69 9.3 nm nm
32 EQUITY RESEARCH │ Preference List 13/09/2017
2017 Net debt/EBITDA ranking
Net debt/ Net debt/ Net debt/ Price at EBITDA EBITDA EBITDA 07/09/17 16 17e 18e Brunel 12.48 ‐3.70 ‐5.51 ‐3.03 Barco 85.86 ‐3.11 ‐2.81 ‐2.77 ASM International 51.09 ‐2.82 ‐2.39 ‐2.67 BESI 57.35 ‐1.87 ‐1.21 ‐1.38 bpost 23.72 ‐0.84 ‐1.08 ‐1.17 BAM Group 4.83 ‐0.86 ‐1.06 ‐1.30 VolkerWessels 25.71 ‐0.77 ‐1.01 ‐1.31 EVS 30.80 ‐0.67 ‐1.01 ‐1.00 Colruyt 46.90 ‐0.70 ‐0.85 ‐0.98 Beter Bed Holding 15.65 ‐0.59 ‐0.60 ‐0.71 Boskalis 28.09 ‐0.33 ‐0.47 ‐0.69 Melexis 79.34 ‐0.41 ‐0.45 ‐0.59 PostNL 3.43 ‐0.22 ‐0.30 ‐0.27 ASML Holding 133.20 ‐0.59 ‐0.29 ‐0.72 Agfa‐Gevaert 3.83 ‐0.08 ‐0.23 ‐0.49 IBA 27.33 ‐1.51 ‐0.01 0.67 Flow Traders 22.57 ‐0.02 ‐0.01 ‐0.26 Aperam 45.24 0.31 0.05 ‐0.15 RTL Group 62.00 0.42 0.10 ‐0.10 Van de Velde 43.75 ‐0.09 0.10 0.15 Philips Lighting 30.94 0.49 0.24 0.05 Tessenderlo 39.09 0.69 0.34 0.04 Randstad 49.50 0.37 0.45 0.06 Corbion 26.67 0.59 0.64 0.42 Lotus Bakeries 2267.00 0.89 0.72 0.49 TKH Group 50.75 1.05 0.74 0.43 Ahold Delhaize 15.26 1.03 0.76 0.49 UCB 58.48 1.23 0.78 0.46 Kendrion 35.56 1.05 0.83 0.61 Sipef 62.71 0.61 0.84 0.64 Orange Belgium 19.61 1.09 0.86 0.73 Philips 33.13 1.13 0.88 0.73 CFE 121.80 0.46 0.89 0.47 Econocom 6.39 1.27 0.90 0.61 Heijmans 9.09 ‐1.32 0.92 1.11 Umicore 65.60 0.44 0.94 1.07 Proximus 29.32 1.04 0.99 0.93 TomTom 8.89 0.95 1.00 1.04 Sligro Food Group 37.47 0.53 1.03 0.87 Akzo Nobel 78.60 0.59 1.11 0.95
33 EQUITY RESEARCH │ Preference List 13/09/2017
Net debt/ Net debt/ Net debt/ Price at EBITDA EBITDA EBITDA 07/09/17 16 17e 18e Solvay 122.75 1.95 1.16 0.85 Wessanen 15.08 1.98 1.17 0.66 Ter Beke 166.60 0.73 1.19 0.70 ArcelorMittal 22.46 1.77 1.21 0.96 DSM 64.82 1.81 1.21 0.82 Royal Dutch Shell 23.59 2.17 1.30 1.09 Kinepolis 48.24 1.87 1.32 0.81 GrandVision 21.39 1.40 1.33 0.84 Recticel 7.18 1.49 1.45 1.31 Aalberts 37.92 1.82 1.49 1.15 Unilever 50.44 1.42 1.61 1.41 Sioen Industries 26.83 2.07 1.61 1.06 Wolters Kluwer 37.36 1.71 1.62 1.40 Accell Group 25.97 2.09 1.69 1.11 RELX 17.71 2.06 1.76 1.62 D'Ieteren 37.44 3.05 1.89 1.49 Bekaert 41.64 2.26 1.95 1.57 Arcadis 17.45 2.39 1.96 1.49 Ontex 29.53 2.50 2.08 1.72 Fugro 11.44 2.26 2.13 1.30 Greenyard 19.56 2.25 2.16 1.77 Refresco Group 16.36 2.82 2.28 1.85 Fagron 12.64 3.27 2.39 1.79 IMCD 50.17 2.15 2.53 1.66 Heineken 87.42 2.53 2.74 2.45 KPN 2.90 2.84 2.75 2.52 Vopak 35.44 1.86 2.83 3.23 Basic Fit 16.33 2.96 2.91 2.35 Telenet 55.71 4.07 3.65 3.24 SBM Offshore 14.30 4.24 3.68 1.80 Euronav 6.69 2.02 3.91 3.92 Nyrstar 5.96 4.97 4.26 3.38 AB InBev 100.75 6.63 4.56 3.99 Fluxys Belgium 25.23 5.25 5.46 5.39 OCI 18.53 6.83 6.54 3.84 Elia 49.68 7.52 6.62 6.06 Roularta 16.00 3.52 7.35 8.85 Exmar 4.80 3.99 8.72 6.75
34 EQUITY RESEARCH │ Preference List 13/09/2017
2017 FCF yield ranking
Price at FCF Yield FCF Yield FCF Yield 07/09/17 16 (%) 17e (%) 18e (%) D'Ieteren 37.44 5.1 11.0 12.3 RTL Group 62.00 7.8 10.8 9.0 Philips Lighting 30.94 12.5 10.4 11.2 SBM Offshore 14.30 8.8 10.2 19.5 Royal Dutch Shell 23.59 ‐0.9 10.1 9.0 Orange Belgium 19.61 10.1 9.9 6.8 Ahold Delhaize 15.26 6.3 9.4 9.6 Randstad 49.50 7.6 8.4 9.0 PostNL 3.43 2.8 8.4 9.0 VolkerWessels 25.71 0.0 8.3 10.5 Arcadis 17.45 5.5 8.0 7.0 Refresco Group 16.36 6.2 7.7 8.1 bpost 23.72 8.5 7.7 7.8 Bekaert 41.64 11.4 7.5 9.5 KPN 2.90 5.5 7.4 7.7 Accell Group 25.97 10.8 6.9 5.1 Philips 33.13 7.6 6.9 7.3 Sligro Food Group 37.47 5.7 6.9 5.5 Wolters Kluwer 37.36 7.0 6.9 7.1 Sipef 62.71 7.0 6.7 3.7 Fagron 12.64 5.2 6.5 6.3 Beter Bed Holding 15.65 4.6 6.5 7.4 ArcelorMittal 22.46 6.9 6.3 7.1 Solvay 122.75 3.3 6.2 7.7 BESI 57.35 6.0 6.2 6.5 EVS 30.80 10.4 5.6 6.4 Corbion 26.67 4.2 5.6 5.9 Proximus 29.32 6.1 5.5 5.9 Telenet 55.71 ‐15.7 5.4 6.0 Aperam 45.24 6.4 5.4 5.9 UCB 58.48 3.4 5.3 5.6 IMCD 50.17 4.0 5.0 5.0 BAM Group 4.83 0.0 5.0 10.7 RELX 17.71 4.8 5.0 5.3 DSM 64.82 5.1 5.0 5.7 Van de Velde 43.75 3.6 4.9 5.3 Agfa‐Gevaert 3.83 18.2 4.7 9.1 GrandVision 21.39 4.1 4.7 5.5 Aalberts 37.92 5.5 4.6 4.9 Roularta 16.00 2.1 4.3 2.4
35 EQUITY RESEARCH │ Preference List 13/09/2017
Price at FCF Yield FCF Yield FCF Yield 07/09/17 16 (%) 17e (%) 18e (%) Flow Traders 22.57 4.6 4.2 8.2 Ontex 29.53 5.7 4.2 6.3 Tessenderlo 39.09 3.0 4.1 3.5 Greenyard 19.56 13.4 4.0 7.2 TKH Group 50.75 1.7 3.9 4.7 Kendrion 35.56 5.9 3.9 5.0 Kinepolis 48.24 1.8 3.8 5.3 Colruyt 46.90 3.4 3.8 4.2 AB InBev 100.75 1.2 3.8 4.4 Unilever 50.44 4.2 3.4 4.3 Melexis 79.34 4.1 3.4 3.7 Barco 85.86 6.5 3.3 5.9 ASML Holding 133.20 3.4 3.3 3.8 Heineken 87.42 4.9 3.3 3.8 OCI 18.53 2.7 3.0 10.0 TomTom 8.89 1.7 2.9 3.3 Fugro 11.44 5.4 2.6 4.7 Akzo Nobel 78.60 4.0 2.5 4.8 ASM International 51.09 3.1 2.4 3.5 Sioen Industries 26.83 6.3 2.4 4.5 Wessanen 15.08 3.1 1.9 3.2 Brunel 12.48 1.4 1.9 3.9 Lotus Bakeries 2267.00 3.5 1.8 1.9 Econocom 6.39 6.3 1.6 5.6 Vopak 35.44 3.3 1.0 ‐2.6 Fluxys Belgium 25.23 3.9 0.4 8.1 Recticel 7.18 3.2 ‐0.6 1.9 CFE 121.80 8.3 ‐0.8 7.7 Boskalis 28.09 3.4 ‐2.1 3.3 Umicore 65.60 2.0 ‐2.5 ‐0.2 Elia 49.68 1.0 ‐3.1 0.8 Ter Beke 166.60 9.4 ‐4.4 8.4 IBA 27.33 ‐2.4 ‐4.4 ‐1.4 Euronav 6.69 ‐0.7 ‐5.2 3.6 Heijmans 9.09 ‐67.1 ‐8.0 9.3 Basic Fit 16.33 ‐9.0 ‐8.3 ‐3.1 Nyrstar 5.96 ‐67.3 ‐47.2 ‐1.7 Exmar 4.80 4.2 ‐103.6 0.1
36 EQUITY RESEARCH │ Preference List 13/09/2017
2017 Dividend yield ranking
Price at Div. Yield Div. Yield Div. Yield 08/09/17 16 (%) 17e (%) 18e (%) Royal Dutch Shell 23.59 6.9 6.6 6.6 RTL Group 62.00 5.8 6.5 6.5 PostNL 3.43 2.9 6.1 6.2 bpost 23.72 5.8 5.6 5.6 BESI 57.35 5.5 5.2 5.5 Proximus 29.32 5.5 5.1 5.1 Fluxys Belgium 25.23 4.6 5.0 5.0 Van de Velde 43.75 5.3 4.9 4.9 Beter Bed Holding 15.65 4.4 4.9 5.4 EVS 30.80 3.9 4.7 5.0 Philips Lighting 30.94 4.7 4.2 4.4 Recticel 7.18 3.8 4.2 4.9 Randstad 49.50 3.6 4.1 4.6 Brunel 12.48 2.6 4.0 4.8 Ahold Delhaize 15.26 2.8 4.0 4.5 Sligro Food Group 37.47 3.9 3.9 3.9 KPN 2.90 8.8 3.8 4.1 VolkerWessels 25.71 0.0 3.7 4.5 AB InBev 100.75 3.6 3.6 3.6 BAM Group 4.83 2.1 3.3 4.7 Elia 49.68 3.2 3.2 3.3 Akzo Nobel 78.60 2.8 3.2 3.2 IMCD 50.17 3.5 3.1 4.0 Orange Belgium 19.61 2.5 3.1 3.6 Flow Traders 22.57 3.8 2.9 4.8 Solvay 122.75 3.1 2.9 3.1 Unilever 50.44 3.3 2.8 3.1 DSM 64.82 3.2 2.8 2.8 Accell Group 25.97 3.3 2.8 3.1 Aperam 45.24 2.7 2.8 3.2 RELX 17.71 2.6 2.7 2.8 Bekaert 41.64 2.9 2.6 2.6 Vopak 35.44 2.3 2.6 2.4 Arcadis 17.45 3.2 2.6 2.8 Philips 33.13 2.8 2.6 2.7 Refresco Group 16.36 2.6 2.5 2.9 Colruyt 46.90 2.6 2.5 2.5 Boskalis 28.09 3.0 2.5 2.5 Kendrion 35.56 2.9 2.5 2.8 Melexis 79.34 3.0 2.5 2.5
37 EQUITY RESEARCH │ Preference List 13/09/2017
Price at Div. Yield Div. Yield Div. Yield 08/09/17 16 (%) 17e(%) 18e (%) Ter Beke 166.60 2.5 2.5 3.2 Sipef 62.71 2.1 2.4 2.3 Ontex 29.53 2.2 2.4 2.5 Barco 85.86 2.4 2.3 2.4 D'Ieteren 37.44 1.9 2.3 2.3 TKH Group 50.75 2.9 2.3 2.5 Wolters Kluwer 37.36 2.3 2.2 2.2 Sioen Industries 26.83 2.0 2.2 2.3 Umicore 65.60 2.4 2.1 2.1 UCB 58.48 1.9 2.1 2.1 Corbion 26.67 3.9 1.8 2.0 Kinepolis 48.24 2.0 1.8 2.1 Econocom 6.39 1.4 1.7 1.9 Aalberts 37.92 1.9 1.6 1.7 GrandVision 21.39 1.5 1.6 1.9 Roularta 16.00 2.1 1.6 1.6 Heineken 87.42 1.8 1.5 1.6 Euronav 6.69 9.6 1.5 1.5 ASM International 51.09 1.6 1.5 1.6 CFE 121.80 2.1 1.4 2.0 ASML Holding 133.20 1.1 1.1 1.3 Greenyard 19.56 1.1 1.1 1.2 IBA 27.33 3.3 1.1 0.4 SBM Offshore 14.30 0.0 0.9 3.2 Wessanen 15.08 0.9 0.9 1.1 Lotus Bakeries 2267.00 0.6 0.8 1.0 Heijmans 9.09 0.0 0.0 3.3 Fagron 12.64 0.0 0.0 1.6 Fugro 11.44 0.0 0.0 1.3 Exmar 4.80 1.2 0.0 0.0 Agfa‐Gevaert 3.83 0.0 0.0 0.0 ArcelorMittal 22.46 0.0 0.0 0.0 Basic Fit 16.33 0.0 0.0 0.0 Nyrstar 5.96 0.0 0.0 0.0 OCI 18.53 0.0 0.0 0.0 Telenet 55.71 0.0 0.0 0.0 Tessenderlo 39.09 0.0 0.0 0.0 TomTom 8.89 0.0 0.0 0.0
38 EQUITY RESEARCH │ Preference List 13/09/2017
Degroof Petercam Financial Markets www.degroofpetercam.com
Rue de l’Industrie 44 – 1040 Brussels De Entrée 238 A 7th floor – 1101 EE Amsterdam
Gautier Bataille ‐ Managing Director ‐ +32 2 287 9705
Analysts Sales Stefaan Genoe Telecom/Technology +32 2 662 8299 Gert Potvlieghe +32 2 662 8289 Head of Research Head of Sales Amal Aboulkhouatem Real Estate +32 2 662 8303 Sandra Aznar y Gil (RE) +32 2 662 8291 Marcel Achterberg Technology/Services +31 20 573 5463 Damien Crispiels (RE) +32 2 287 9697 Ricky Bhajun, PhD Biotech/Healthcare +32 2 287 9906 Quentin De Decker +32 2 287 9287 Jean‐Marie Caucheteux Real Estate +32 2 287 9920 Raymond de Wolff +31 20 573 5414 Frank Claassen Industrials +31 20 573 5409 Damien Fontaine +32 2 662 8287 Fernand de Boer Retail/Food & Bev. +31 20 573 5417 Laurent Goethals +32 2 287 9185 Nathalie Debruyne, CFA Chemicals +32 2 662 8308 Jurgen Smits van Oyen +31 20 573 5413 Thijs Hoste Holdings +32 2 287 9385 Jochen Vercauteren +32 2 662 8288 Bart Jooris, CFA Financials +32 2 287 9279 Stéphanie Put, PhD Biotech/Healthcare +32 2 287 9192 Sales Trading Michael Roeg Media +31 20 573 5422 Hans de Jonge +31 20 573 5404 Luuk van Beek Energy/Engineering/Construction +31 20 573 5471 Head of Sales Trading Herman van der Loos, CFA Real Estate +32 2 662 8304 Pascal Burm +32 2 662 8283 Veronique De Schoemaecker +32 2 662 8280 Market Administration Kristof Joos +32 2 662 8284 Christophe Swinnen +32 2 662 8298 Pascal Magis +32 2 287 9781 Katia Foy +32 2 662 8296 Christian Saint‐Jean +32 2 287 9780 Antoine Miest +32 2 662 8294 Frans van Wakeren +31 20 573 5407
Administration Syndication Christel De Clerck +32 2 662 8302 Erik De Clippel +32 2 287 9534 Monique Gérard +32 2 662 8301 Tineke Hosselaer +32 2 662 8290 Alexandra Krauss +32 2 287 9797 Charlotte Mertens Roadshow Coordinator +31 20 573 5416
Investment rating system: The Degroof Petercam stock ratings are based on the estimated performance relative to the Degroof Petercam Benelux coverage universe. The total return required for a given rating depends on the risk profile relative to this universe. This risk profile is represented by the Beta, as estimated by the analyst. Low risk stocks have an estimated Beta below or equal to 0.9, Medium risk stocks have a Beta between 0.9 and 1.3 and High risk stocks have a Beta equal to or above 1.3. The required relative performance for a given rating is indicated below. The price targets given and the expected relative performance are always based on a 12 month time horizon. SELL REDUCE HOLD ADD BUY Information about rating distribution and analyst remuneration system can be High RP<‐15% ‐15%<=RP<‐6% ‐6%<=RP<+6% +6%<=RP<+15% RP>=15% found at: https://www.petercam.com/indexen.cfm?act=petercam.ssresearch Beta >= 1.3 Medium Additional company related disclosures, including any potential conflicts of RP<‐10% ‐10%<=RP<‐4% ‐4%<=RP<+4% +4%<=RP<+10% RP>=10% 0.9 < Beta > 1.3 interest, and recommendation history can be found at (password protected): Low RP<‐6% ‐6%<=RP<‐2% ‐2%<=RP<+2% +2%<=RP<+6% RP>=6% Beta <= 0.9 https://www.petercam.com/indexen.cfm?act=petercam.isrmifid RP : Relative Performance against Degroof Petercam coverage universe This document was prepared by Bank Degroof Petercam, S.A. (“BDP”), a company authorized in Belgium to engage in securities activities, under regulatory supervision of the Belgian Financial Services and Markets Authority (“FSMA”). Although the information contained in this report has been obtained from sources considered to be reliable, BDP guarantees neither its accuracy nor its completeness. The Managing Director of BDP Institutional Research & Sales bears final responsibility of this report. This document may not be reproduced in whole or in part or communicated in any other way without BDP’s written consent.
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