zooplus AG Germany | Retail | MCap EUR 1,716m
29 March 2021 INITIATION
Just all-time highs BUY (INITIATION) Target price EUR 267.00 (na) Current price EUR 240.00 delivered – Initiate with Up/downside 11.3%
BUY
What’s it all about? zooplus achieved healthy results in 2020 on a strong loyal customer base across geographies and solid performance in its own brands business. The global pet and pet supply market is expected to further grow in the coming years, driven by a growing population and the progressive "humanization" of pets in most countries. In addition, Europe is expected to continue to grow significantly in the field of online retailing, digitalization, and Covid-19-related changes of customer purchase behavior. zooplus is expected to follow its strategy of fast-growing top-line growth and sustainably expanding its business in other countries. We take the mid-point of its 2021E guidance and slightly lower assumptions than management targets in its 5-year-horizont into account. However, zooplus is running a well-established and digital business model, which easily could beat mid-term estimates and hence, improve attractiveness and MAIN AUTHOR Thomas Wissler shareholder value (ROCE 21E: 12.9%) due to the scalable business model. Backed by [email protected] these assumptions, we derive a DCF-based price target of EUR 267.00 and a BUY +49 40 309 293-58 recommendation.
IMPORTANT. Please refer to the last page of this report for “Important disclosures” alsterresearch.com and analyst(s) certifications. This research is the product of AlsterResearch, which is authorized and regulated by the BaFin in Germany. AlsterResearch Page 2 of 18 zooplus AG
Germany | Retail | MCap EUR 1,716m | EV EUR 1,694m
MAIN AUTHOR BUY (INITIATION) Target price EUR 267.00 (na) Current price EUR 240.00 Thomas Wissler Up/downside 11.3% [email protected] +49 40 309 293-58
Just all-time highs delivered – Initiate with BUY 3 2 Achieved record customer base and cash flow 2 zooplus posted record results in 2020, with revenues and profits reaching all-time highs, demonstrating resilience of its pure-online business model, despite COVID-19- related challenges. The active repeat customer base touched the 5m mark in 2020 (+15.5% yoy; c. 2m “Subscribe & Save” users; total active customers: 8.3m, +9% yoy), with annual spend rising sharply to a record-high EUR 383 (gross) in December 2020. ooplus A A Moreover, strong operational profitability and effective working capital management supported robust FCF generation in 2020. Source: Company data, AlsterResearch
Strong customer loyalty levels significantly lowered revenue churn to 1% High/low 52 weeks 245.50 / 89.50 zooplus reported 18.2% yoy growth in sales to EUR 1.8bn in 2020, which were in the Price/Book Ratio 13.8x upper end of the targeted range of EUR 1.77bn to EUR 1.81bn and 1% ahead of consensus expectations, with double-digit growth across regions. Highest-ever Ticker / Symbols revenue retention (99% currency adjusted vs 91% in 2019) and record new customer ISIN 511,170 sales volumes (+4.7% yoy to EUR 315m on the back of rising demand for pets) WKN DE0005111702 supported top-line growth. Revenue retention was boosted by increased average Bloomberg ZO1:GR sales per existing customer, indicating high loyalty. Q4 2020 sales accelerated to 19.9% yoy to EUR 503m (vs +15.5% yoy in Q3 2020), implying an over EUR 2.0bn Changes in estimates annual run-rate. Sales EBIT EPS 2021 old 00.0 00.0 00.0 ∆ – – – Sustained investments on loyalty programs 2022 old 00.0 00.0 00.0 zooplus has been consistently expanding its flagship loyalty programme Subscribe & ∆ – – – Save to strengthen customer bonding and increase sales per account. Sales share of 2023 old 00.0 00.0 00.0 Subscribe & Save users increased to 54% of active repeat sales (vs 49% in 2019), with ∆ – – – sales from the programme increasing a solid 32% yoy. Moreover, average gross sales per repeat customer (under this programme) stood high at EUR 536 (vs EUR 288 for Key share data non-Subscribe & Save customers) given its incentives, prompting customers to spend Number of shares: (in m pcs) 7 on more products. Book value per share: (in EUR) 17.34 Ø trading volume: (12 months) 22,000 - continued - Major shareholders zooplus AG 2018 2019 2020 2021E 2022E 2023E Maxburg Beteiligungen 9.9% Sales 1,342 1,524 1,802 2,060 2,341 2,660 The Capital Group 10.2% Growth yoy 20.8% 13.6% 18.2% 14.3% 13.6% 13.6% Union Investment 5.6% EBITDA 9 12 63 59 70 82 Free Float 64.0% EBIT -2 -14 32 29 44 60 Net profit -2 -12 19 18 28 39 Company description Net debt (net cash) -10 18 -21 -65 -112 -165 Zooplus is present across Europe and Net debt/EBITDA -1.1x 1.5x -0.3x -1.1x -1.6x -2.0x offers approximately 8,000 different EPS recurring -0.29 -1.69 2.65 2.46 3.98 5.45 products in more than 30 countries. In DPS 0.00 0.00 0.00 0.00 0.00 0.00 addition to its online stores, an online Dividend yield 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% information service and a community Gross profit margin 28.9% 29.1% 30.4% 30.1% 30.2% 30.3% are also operated. The product range EBITDA margin 0.6% 0.8% 3.5% 2.9% 3.0% 3.1% includes in particular pet food and EBIT margin -0.1% -1.0% 1.8% 1.4% 1.9% 2.2% accessories in all price categories. The ROCE -0.9% -7.9% 14.8% 12.5% 17.6% 20.7% company operates a private label EV/EBITDA 199.1x 147.3x 26.8x 27.9x 23.0x 19.0x portfolio for cat- and dogfood. EV/EBIT -1,128.8x -119.7x 53.0x 57.5x 36.1x 26.0x
PER -814.1x -142.1x 90.6x 97.4x 60.2x 44.0x FCF yield 0.8% 0.3% 2.9% 1.7% 2.2% 2.8% Source: Company data, Alster Research
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Reduced marketing activities and traffic acquisition costs drove the profit beat In 2020, the gross margin improved 140bps yoy to 30.4%, aided by lower promotional spend amid increasing high-margin, own brands business (16% of total sales vs 14% in 2019; +34% yoy), and reduced share of loss-making orders. This coupled with decreased traffic acquisition costs (+1.8ppt) resulted in a strong EBITDA margin of 3.5% (vs 0.8% in 2019) and a significant rise in EBITDA to EUR_63m (vs EUR 12m in 2019 and EUR 50m to EUR 65m target), 10% above analyst consensus. Consequently, it reported basic EPS of EUR 2.65 (vs a loss per share of EUR 1.69 in 2019) and record high FCF of EUR 70m (+EUR 45m yoy).
Excellent long-term outlook amid fast-growing market For 2021, management now expects sales to reach mid to high end of the EUR_2.04bn to EUR 2.14bn (eAR: EUR 2.06bn) range and retained EBITDA to be EUR 40m to EUR 80m, which corresponds to a margin of 2% to 4% (eAR: EUR 59m; 2.9% margin). By 2025, zooplus targets to achieve sales of EUR 3.4bn to EUR 3.8bn (eAR 3.43m), EBITDA of over EUR 130m (eAR; EUR 113m), which is equivalent to a margin of at least 4% (eAR: 3.3%) and share of own brands at 23% of sales.
European market outlook and market share gains The total addressable market in Europe of ca EUR 29bn (both online and retail; ooplus’ market share of ca 7%) is estimated to reach ca EUR 37bn by 2 2 from increasing interest towards owning pets, premiumization of pet food and care products and significant growth opportunities for online players (only 17% of the total market). zooplus is best placed to achieve its long-term targets (estimated market share of ca 10% by 2025), as it is a pure-online player with consistent investments on loyalty programs.
Conclusion zooplus achieved healthy results in 2020 on a strong loyal customer base across geographies and solid performance in its own brands business. The global pet and pet supply market is expected to further grow in the coming years, driven by a growing population and the progressive "humanization" of pets in most countries. In addition, Europe is expected to continue to grow significantly in the field of online retailing, digitalization, and Covid-19-related changes of customer purchase behavior. zooplus is expected to follow its strategy of fast-growing top-line growth and sustainably expanding its business in other countries. We take the mid-point of the 2021E guidance and slightly lower assumptions than management targets in its 5-year-horizont into account. However, zooplus is running a well-established, digital business model, which easily could beat mid-term estimates and hence, improve attractiveness and shareholder value (ROCE 21E: 12.9%) due to the scalable business model. Backed by these assumptions, we derive a DCF-base price target of EUR 267.00 and a BUY recommendation.
Quartely table
P&L data Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020
Sales 363 363 378 419 440 423 436 503 yoy growth in % 13% 14% 14% 14% 21% 16% 16% 20% Gross profit 103 105 109 127 130 134 134 151 Gross margin in % 28% 29% 29% 30% 30% 32% 31% 30% EBITDA 2 2 2 5 8 21 18 15 EBITDA margin in % 1% 1% 1% 1% 2% 5% 4% 3% EBIT -4 -4 -4 -2 1 13 11 7 EBIT margin in % -1% -1% -1% -0% 0% 3% 3% 1% EBT -4 -5 -5 -2 1 13 11 6 taxes paid -1 -1 -1 -1 1 5 3 2 tax rate in % 21% 25% 25% 29% 181% 36% 32% 39% net profit -4 -4 -4 -1 -1 8 7 4 yoy growth in % na% na% na% na% na% na% na% na% EPS -0.50 -0.49 -0.50 -0.20 -0.07 1.17 1.02 0.53 Source: Company data; AlsterResearch
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Investment case in six charts
Leading plattform for pet supplies Value creating strategy
Pan-European business Regional Split
Germany 22%
Rest of Europe 72%
Others 6%
Sales per active customer Active customers (in m)
9,0
8,0
7,0
6,0
5,0
4,0
3,0
2,0
1,0
0,0 2014 2015 2016 2017 2018 2019 2020
Source: Company data; AlsterResearch
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SWOT – Analysis
Strengths
• Asset-light business model • Specialized and clearly focused on online pet supply • European online pet supplies market leadership • European pet market has a gross market volume of around EUR 30 bn • High level of net sales retention (>90%) • CEO: Co-founder of the company with continued stake
Weaknesses
• Dependency on third parties for internal and external logistics • Production setup of European pet supplies limits logistics setup • Low pricing power • 10% exposure to FX
Opportunities
• Development of private label brands • Online migration of the European pet supplies market • Retreat of smaller online competitors due to pricing pressure • Trend towards the humanisation of pets
Threats
• Tight labour market for IT specialists • Potential intensification of online competition by offline competitors • Price inflation in logistics services • Probable intensification of competition by Amazon
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Company background
Business description zooplus AG, founded in 1999, has more than 20 years of experience and is Europe's leading internet retailer for pet supplies. In terms of turnover, zooplus is already number two in the overall European market for pet market, which includes both stationary and online sales of pet supplies.
The company is stock market listed since 2008 and has been included in the SDAX in 2011.
Zooplus does not prepare segment reporting because the business is not divided into segments.
The zooplus AG operates in 30 European countries and it is due to a pan-European logistics network, that the company achieves a high general product availability for customers throughout Europe. The company operates with two brands in these markets.
Two brand strategy
Source: Company data; AlsterResearch
Management Since 2019, the management board consist out of three persons, which are:
Management
Dr. Cornelius Patt Andreas Maueröder Dr. Mischa Ritter Founder & CEO CFO COO
Business Strategy, IT/Data Finance, Controlling, Legal, Logistics and Operations Science, HR and Sales Investor Relations, Internal Audit and Vendor
Source: Company data; AlsterResearch
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Products zooplus offers around 8,000 products for all major types of pets, which includes dogs, cats, fish, birds, horses, etc). The product portfolio includes pet food (dry and wet food, food supplements) as well as accessories (such as scratching posts, dog baskets or toys) across all price categories. Furthermore, zooplus offers a variety of interactive content and community.
Products and online shop
Source: Company data; AlsterResearch
Regional split Due to its an international expansion strategy, the scalable business model and the constant development of its business activities, zooplus is the only pan-European online retailer for pet supplies. The company offers its shops in over 20 languages and is active in 30 countries.
Pan-European business activites
Source: Company data; AlsterResearch
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Major Shareholder The current shareholder structure is shown on the chart below. All shareholders holding more than 5% of the outstanding shares are displayed.
Shareholder structure
Maxburg Beteiligungen 9%
The Capital Group 10%
Union Investment 5%
Kapitalforeningen 5% Free Float 61% Adelphi Capital 5%
Management 5%
Source: Company data; AlsterResearch
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Valuation
The DCF model results in a price target of EUR 267.00 per share. Key model assumptions:
• Top-line growth: We expect zooplus to continue benefitting from structural growth. Hence our growth estimates for 2021-28E is in the range of 12-13% p.a.
• The long-term growth rate is set at 2.0%.
• EBIT margins. The scalable business model should allow for EBIT margins of up to 3% by 2025E, which look defendable given high competitive quality based on scale geography and expertise.
• WACC. We model a weighted average cost of capital of c. 6.7% to reflect the mature stage of the business model, consisting of a 5.0% risk premium beta of 0.8x and 2.0% risk free rate.
DCF (EUR m) Terminal 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E (except per share data and beta) value NOPAT 22 32 41 52 63 76 87 98 Depreciation 27 23 21 20 20 19 18 18 Change in working capital 7 7 8 9 10 11 11 11 Chg. in long-term provisions 0 1 1 1 1 1 1 1 Capex -12 -14 -16 -18 -14 -15 -17 -19 Cash flow 44 48 55 64 80 91 100 109 2,321 Present value 42 43 46 50 59 63 64 66 1,394 WACC 6.7% 6.7% 6.7% 6.7% 6.7% 6.7% 6.7% 6.7% 6.8%
DCF per share derived from DCF avg. growth and earnings assumptions Planning horizon avg. revenue growth (2021E - 2028E) 12.8% Total present value 1,827 Terminal value growth (2028E - infinity) 2.0% Mid-year adj. total present value 1,887 Terminal year ROCE 23.8% Net debt / cash at start of year -21 Terminal year WACC 6.8% Financial assets 0 Provisions and off b/s debt na Terminal WACC derived from Equity value 1,909 Cost of borrowing (before taxes) 5.0% No. of shares outstanding 7.1 Long-term tax rate 30% Equity beta 0.32 Discounted cash flow per share 267.01 Unlevered beta (industry or company) 0.79 upside/(downside) 11.3% Target debt / equity 1.4 Relevered beta 1.57 Risk-free rate 2.0% Equity risk premium 6.0% Share price 240.00 Cost of equity 11.4%
Sensitivity analysis DCF
Long term growth Share of present value
73,1 0.0% 1.0% 2.0% 3.0% 4.0%
2.0% 155.1 168.2 185.2 208.1 240.5 2021E - 2024E 9.9%
1.0% 176.7 194.7 219.0 253.3 305.8 2025E - 2028E 13.8%
points)
- 0.0% 204.9 230.6 267.0 322.6 418.0 terminal value 76.3%
(% -1.0% 243.0 281.6 340.6 441.9 656.2 Change in WACC in Change
-2.0% 297.3 359.9 467.4 694.8 1,496.4
Source: AlsterResearch
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Due to the fact that companies rarely bear sufficient resemblance to peers in terms of geographical exposure, size or competitive strength and in order to adjust for the pitfalls of weak long-term visibility, an Adjusted Free Cash Flow analysis (Adjusted FCF) has been conducted.
The adjusted Free Cash Flow Yield results in a fair value between EUR 71.00. per share based on 2021E and EUR 205.00 per share on 2025E estimates. Having said that, just for the sake of completeness, the FCF model is presented here. However, the company is in a strong growth phase, which is why we opt for the DCF model in order to accurately value the inherent growth opportunities.
The main driver of this model is the level of return available to a controlling investor, influenced by the cost of that investors’ capital (opportunity costs) and the purchase price – in this case the enterprise value of the company. Here, the adjusted FCF yield is used as a proxy for the required return and is defined as EBITDA less minority interest, taxes and investments required to maintain existing assets (maintenance capex).
FCF yield in EURm 2021E 2022E 2023E 2024E 2025E
EBITDA 59,2 69,6 81,8 96,0 112,5 - Maintenance capex 26,6 23,4 21,4 20,4 20,3 - Minorities 0,0 0,0 0,0 0,0 0,0 - tax expenses 8,2 13,2 18,1 23,1 28,5 = Adjusted Free Cash Flow 24,4 33,0 42,3 52,5 63,7
Actual Market Cap 1.715 1.715 1.715 1.715 1.715 + Net debt (cash) -64,6 -111,7 -165,3 -227,3 -306,4 + Pension provisions 0,0 0,0 0,0 0,0 0,0 + Off balance sheet financing 0,0 0,0 0,0 0,0 0,0 - Financial assets 0,4 0,4 0,4 0,4 0,4 - Accumulated dividend payments 0,0 0,0 0,0 0,0 0,0 EV Reconciliations -65,0 -112,1 -165,8 -227,8 -306,8 = Actual EV' 1.650 1.603 1.549 1.487 1.408
Adjusted Free Cash Flow yield 1,5% 2,1% 2,7% 3,5% 4,5% base hurdle 6,0% 6,0% 6,0% 6,0% 6,0% rate ESG adjustment (score 75/100) 0,5% 0,5% 0,5% 0,5% 0,5% adjusted hurdle rate 5,5% 5,5% 5,5% 5,5% 5,5% Fair EV 444 600 769 954 1.158 - EV Reconciliations -65 -112 -166 -228 -307 Fair Market Cap 509 712 935 1.182 1.465
No. of shares (million) 7,1 7,1 7,1 7,1 7,1 Fair value per share in EUR 71,2 99,6 130,8 165,3 204,9 Premium (-) / discount (+) in % -70,3% -58,5% -45,5% -31,1% -14,6%
Sensitivity analysis fair value
3,5% 106,7 147,6 192,3 241,6 297,5 4,5% 85,0 118,3 154,8 195,0 240,9 Adjusted 5,5% 71,2 99,6 130,8 165,3 204,9 hurdle rate 6,5% 61,6 86,7 114,3 144,8 180,0 7,5% 54,6 77,2 102,1 129,8 161,7 Source: AlsterResearch
Simply put, the model assumes that investors require companies to generate a minimum return on the investor’s purchase price. The required after-tax return equals the model’s hurdle rate of 6%. Anything less suggests the stock is expensive; anything more suggests the stock is cheap. ESG adjustments might be applicable, based on the overall Leeway ESG Score. A high score indicates high awareness for environmental, social or governance issues and thus might lower the overall risk an investment in the company might carry. A low score on the contrary might increase the risk of an investment and might therefore trigger a higher required hurdle rate.
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Financials in six charts
Sales vs. EBITDA margin development EPS, DPS in EUR & yoy EPS growth
3.000 4% 6,00 80% 4% 5,00 60% 2.500 3% 4,00 40% 2.000 3% 3,00 20% 1.500 2% 2,00 0%
2% 1,00 -20% 1.000 1% 0,00 -40% 500 14 15 16 17 18 19 20 21E 22E 23E 1% -1,00 -60%
0 0% -2,00 -80% 14 15 16 17 18 19 20 21E 22E 23E -3,00 -100% Sales (€m) EBITDA margin (%) EPS DPS EPS growth
ROCE vs. WACC (pre tax) Net debt and net debt/EBITDA
25% 50 2,00x
20% 1,00x 0 14 15 16 17 18 19 20 21E 22E 23E 15% 0,00x
-50 10% -1,00x
5% -2,00x -100
0% -3,00x 14 15 16 17 18 19 20 21E 22E 23E -150 -5% -4,00x
-10% -200 -5,00x ROCE WACC pre tax Net debt (€m) Net debt / EBITDA (x)
Capex & chgn in w/c requirements in EURm Free Cash Flow in EURm
20 80
15 70
10 60
5 50
0 40 14 15 16 17 18 19 20 21E 22E 23E -5 30
-10 20
-15 10
-20 0 14 15 16 17 18 19 20 21E 22E 23E Capex Change in w/c -10
Source: Company data; AlsterResearch
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Financials
Profit and loss (EUR m) 2018 2019 2020 2021E 2022E 2023E Net sales 1,342 1,524 1,802 2,060 2,341 2,660 Sales growth 20.8% 13.6% 18.2% 14.3% 13.6% 13.6% Change in finished goods and work-in-process 3 2 1 1 1 2 Total sales 1,345 1,526 1,803 2,061 2,342 2,662 Material expenses 957 1,082 1,255 1,442 1,636 1,857 Gross profit 388 444 548 619 706 805 Other operating income 9 5 0 0 0 0 Personnel expenses 47 55 67 78 89 101 Other operating expenses 341 381 417 482 548 622 EBITDA 9 12 63 59 70 82 Depreciation 7 22 24 27 23 21 EBITA 1 -10 39 33 46 60 Amortisation of goodwill and intangible assets 3 4 7 4 2 1 EBIT -2 -14 32 29 44 60 Financial result -1 -1 -1 -3 -3 -3 Recurring pretax income from continuing operations -2 -16 31 26 42 57 Extraordinary income/loss 0 0 0 0 0 0 Earnings before taxes -2 -16 31 26 42 57 Taxes -0 -4 12 8 13 18 Net income from continuing operations -2 -12 19 18 28 39 Result from discontinued operations (net of tax) 0 0 0 0 0 0 Net income -2 -12 19 18 28 39 Minority interest 0 0 0 0 0 0 Net profit (reported) -2 -12 19 18 28 39 Average number of shares 7.14 7.14 7.15 7.15 7.15 7.15 EPS reported -0.29 -1.69 2.65 2.46 3.98 5.45
Profit and loss (common size) 2018 2019 2020 2021E 2022E 2023E Net sales 100% 100% 100% 100% 100% 100% Change in finished goods and work-in-process 0% 0% 0% 0% 0% 0% Total sales 100% 100% 100% 100% 100% 100% Material expenses 71% 71% 70% 70% 70% 70% Gross profit 29% 29% 30% 30% 30% 30% Other operating income 1% 0% 0% 0% 0% 0% Personnel expenses 4% 4% 4% 4% 4% 4% Other operating expenses 25% 25% 23% 23% 23% 23% EBITDA 1% 1% 4% 3% 3% 3% Depreciation 1% 1% 1% 1% 1% 1% EBITA 0% -1% 2% 2% 2% 2% Amortisation of goodwill and intangible assets 0% 0% 0% 0% 0% 0% EBIT -0% -1% 2% 1% 2% 2% Financial result -0% -0% -0% -0% -0% -0% Recurring pretax income from continuing operations -0% -1% 2% 1% 2% 2% Extraordinary income/loss 0% 0% 0% 0% 0% 0% Earnings before taxes -0% -1% 2% 1% 2% 2% Taxes -0% -0% 1% 0% 1% 1% Net income from continuing operations -0% -1% 1% 1% 1% 1% Result from discontinued operations (net of tax) 0% 0% 0% 0% 0% 0% Net income -0% -1% 1% 1% 1% 1% Minority interest 0% 0% 0% 0% 0% 0% Net profit (reported) -0% -1% 1% 1% 1% 1% Source: Company data; AlsterResearch
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Balance sheet (EUR m) 2018 2019 2020 2021E 2022E 2023E Intangible assets (exl. Goodwill) 14 13 7 3 2 1 Goodwill 0 0 0 0 0 0 Property, plant and equipment 56 86 95 80 71 65 Financial assets 0 4 0 0 0 0 FIXED ASSETS 70 103 102 84 73 67 Inventories 108 118 157 162 184 209 Accounts receivable 47 28 30 35 39 45 Other current assets 7 42 48 48 48 48 Liquid assets 60 64 110 148 190 239 Deferred taxes 0 0 0 0 0 0 Deferred charges and prepaid expenses 11 6 16 18 20 23 CURRENT ASSETS 232 258 361 411 483 564 TOTAL ASSETS 302 361 463 495 555 631 SHAREHOLDERS EQUITY 111 101 124 142 170 209 MINORITY INTEREST 0 0 0 0 0 0 Long-term debt 40 62 65 60 55 50 Provisions for pensions and similar obligations 0 0 0 0 0 0 Other provisions 1 0 3 4 4 5 Non-current liabilities 41 62 68 63 59 54 short-term liabilities to banks 10 20 24 24 24 24 Accounts payable 100 125 149 154 175 198 Advance payments received on orders 17 14 29 33 38 43 Other liabilities (incl. from lease and rental contracts) 3 14 33 38 43 49 Deferred taxes 1 0 1 1 1 1 Deferred income 19 25 35 40 45 52 Current liabilities 149 198 272 291 327 367 TOTAL LIABILITIES AND SHAREHOLDERS EQUITY 302 361 463 495 555 631
Balance sheet (common size) 2018 2019 2020 2021E 2022E 2023E Intangible assets (excl. Goodwill) 5% 4% 2% 1% 0% 0% Goodwill 0% 0% 0% 0% 0% 0% Property, plant and equipment 19% 24% 20% 16% 13% 10% Financial assets 0% 1% 0% 0% 0% 0% FIXED ASSETS 23% 29% 22% 17% 13% 11% Inventories 36% 33% 34% 33% 33% 33% Accounts receivable 16% 8% 7% 7% 7% 7% Other current assets 2% 12% 10% 10% 9% 8% Liquid assets 20% 18% 24% 30% 34% 38% Deferred taxes 0% 0% 0% 0% 0% 0% Deferred charges and prepaid expenses 4% 2% 3% 4% 4% 4% CURRENT ASSETS 77% 71% 78% 83% 87% 89% TOTAL ASSETS 100% 100% 100% 100% 100% 100% SHAREHOLDERS EQUITY 37% 28% 27% 29% 31% 33% MINORITY INTEREST 0% 0% 0% 0% 0% 0% Long-term debt 13% 17% 14% 12% 10% 8% Provisions for pensions and similar obligations 0% 0% 0% 0% 0% 0% Other provisions 0% 0% 1% 1% 1% 1% Non-current liabilities 14% 17% 15% 13% 11% 9% short-term liabilities to banks 3% 6% 5% 5% 4% 4% Accounts payable 33% 35% 32% 31% 31% 31% Advance payments received on orders 6% 4% 6% 7% 7% 7% Other liabilities (incl. from lease and rental contracts) 1% 4% 7% 8% 8% 8% Deferred taxes 0% 0% 0% 0% 0% 0% Deferred income 6% 7% 8% 8% 8% 8% Current liabilities 49% 55% 59% 59% 59% 58% TOTAL LIABILITIES AND SHAREHOLDERS EQUITY 100% 100% 100% 100% 100% 100% Source: Company data; AlsterResearch
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Cash flow statement (EUR m) 2018 2019 2020 2021E 2022E 2023E Net profit/loss -2 -16 31 18 28 39 Depreciation of fixed assets (incl. leases) 10 26 31 27 23 21 Amortisation of goodwill 0 0 0 0 0 0 Amortisation of intangible assets 0 0 0 4 2 1 Others 2 2 6 0 1 1 Cash flow from operations before changes in w/c 10 12 68 49 54 62 Increase/decrease in inventory -3 -10 -39 -5 -22 -25 Increase/decrease in accounts receivable -21 0 -3 -4 -5 -5 Increase/decrease in accounts payable 22 25 24 5 21 24 Increase/decrease in other w/c positions 14 -0 25 12 13 14 Increase/decrease in working capital 12 15 7 7 7 8 Cash flow from operating activities 22 28 74 56 61 70 CAPEX -7 -3 -5 -12 -14 -16 Payments for acquisitions 0 0 0 0 0 0 Financial investments 0 0 0 0 0 0 Income from asset disposals 0 0 0 0 0 0 Cash flow from investing activities -7 -3 -5 -12 -14 -16 Cash flow before financing 14 24 70 43 47 54 Increase/decrease in debt position -6 -20 -23 -5 -5 -5 Purchase of own shares 0 0 0 0 0 0 Capital measures 0 0 0 0 0 0 Dividends paid 0 0 0 0 0 0 Others -1 -0 -1 0 0 0 Effects of exchange rate changes on cash 0 -0 -1 0 0 0 Cash flow from financing activities -6 -20 -24 -5 -5 -5 Increase/decrease in liquid assets 8 4 46 38 42 49 Liquid assets at end of period 60 64 110 148 190 239 Source: Company data; AlsterResearch
Regional sales split (EURm) 2018 2019 2020 2021E 2022E 2023E Domestic 308 348 395 452 513 583 Europe (ex domestic) 965 1,086 1,290 1,475 1,676 1,904 The Americas 0 0 0 0 0 0 Asia 0 0 0 0 0 0 Rest of World 69 90 117 133 151 172 Total sales 1,342 1,524 1,802 2,060 2,341 2,660
Regional sales split (common size) 2018 2019 2020 2021E 2022E 2023E Domestic 23.0% 22.9% 21.9% 21.9% 21.9% 21.9% Europe (ex domestic) 71.9% 71.3% 71.6% 71.6% 71.6% 71.6% The Americas 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Asia 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Rest of World 5.1% 5.9% 6.5% 6.5% 6.5% 6.5% Total sales 100% 100% 100% 100% 100% 100% Source: Company data; AlsterResearch
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Ratios 2018 2019 2020 2021E 2022E 2023E Per share data Earnings per share reported -0.29 -1.69 2.65 2.46 3.98 5.45 Cash flow per share 2.01 0.80 7.00 4.08 5.28 6.75 Book value per share 15.56 14.11 17.34 19.80 23.79 29.23 Dividend per share 0.00 0.00 0.00 0.00 0.00 0.00 Valuation P/E -814.1x -142.1x 90.6x 97.4x 60.2x 44.0x P/CF 119.6x 299.6x 34.3x 58.8x 45.5x 35.6x P/BV 15.4x 17.0x 13.8x 12.1x 10.1x 8.2x Dividend yield (%) 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% FCF yield (%) 0.8% 0.3% 2.9% 1.7% 2.2% 2.8% EV/Sales 1.3x 1.1x 0.9x 0.8x 0.7x 0.6x EV/EBITDA 199.1x 147.3x 26.8x 27.9x 23.0x 19.0x EV/EBIT -1,128.8x -119.7x 53.0x 57.5x 36.1x 26.0x Income statement (EURm) Sales 1,342 1,524 1,802 2,060 2,341 2,660 yoy chg in % 20.8% 13.6% 18.2% 14.3% 13.6% 13.6% Gross profit 388 444 548 619 706 805 Gross margin in % 28.9% 29.1% 30.4% 30.1% 30.2% 30.3% EBITDA 9 12 63 59 70 82 EBITDA margin in % 0.6% 0.8% 3.5% 2.9% 3.0% 3.1% EBIT -2 -14 32 29 44 60 EBIT margin in % -0.1% -1.0% 1.8% 1.4% 1.9% 2.2% Net profit -2 -12 19 18 28 39 Cash flow statement (EURm) CF from operations 22 28 74 56 61 70 Capex -7 -3 -5 -12 -14 -16 Maintenance Capex 7 22 24 27 23 21 Free cash flow 14 24 70 43 47 54 Balance sheet (EURm) Intangible assets 14 13 7 3 2 1 Tangible assets 56 86 95 80 71 65 Shareholders' equity 111 101 124 142 170 209 Pension provisions 0 0 0 0 0 0 Liabilities and provisions 51 82 92 87 83 79 Net financial debt -10 18 -21 -65 -112 -165 w/c requirements 38 6 9 9 10 12 Ratios ROE -1.9% -12.0% 15.3% 12.4% 16.8% 18.6% ROCE -0.9% -7.9% 14.8% 12.5% 17.6% 20.7% Net gearing -8.6% 17.8% -17.0% -45.6% -65.7% -79.1% Net debt / EBITDA -1.1x 1.5x -0.3x -1.1x -1.6x -2.0x Source: Company data; AlsterResearch
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Conflict of interests
Disclosures regarding research publications of SRH AlsterResearch AG pursuant to section 85 of the German Securities Trading Act (WpHG) and distributed in the UK under an EEA branch passport, subject to the FCA requirements on research recommendation disclosures It is essential that any research recommendation is fairly presented and discloses interests of indicates relevant conflicts of interest. Pursuant to section 85 of the German Securities Trading Act (WpHG) a research report has to point out possible conflicts of interest in connection with the analyzed company. Further to this, under the FCA’s rules on research recommendations, any conflicts of interest in connection with the recommendation must be disclosed. A conflict of interest is presumed to exist in particular if SRH AlsterResearch AG
(1) or its affiliate(s) (either in its own right or as part of a consortium) within the past twelve months, acquired the financial instruments of the analyzed company,
(2) has entered into an agreement on the production of the research report with the analyzed company,
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(4) or its affiliate(s) holds a) 5% or more of the share capital of the analyzed company, or b) the analyzed company holds 5% or more of the share capital of SRH AlsterResearch AG or its affiliate(s),
(5) or its affiliate(s) holds a net long (a) or a net short (b) position of 0.5% of the outstanding share capital of the analyzed company or derivatives thereof,
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(7) or the analyst has any other significant financial interests relating to the analyzed company such as, for example, exercising mandates in the interest of the analyzed company or a significant conflict of interest with respect to the issuer,
(8) The research report has been made available to the company prior to its publication. Thereafter, only factual changes have been made to the report.
Conflicts of interest that existed at the time when this research report was published:
Company Disclosure zooplus AG
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Important disclosures
1. General Information/Liabilities This research report has been produced for the The decision on the choice of the financial instruments analyzed in this document information purposes of institutional investors only, and is not in any way a was solely made by SRH AlsterResearch AG. The opinions and estimates in this personal recommendation, offer or solicitation to buy or sell the financial research report are subject to change without notice. It is within the discretion of instruments mentioned herein. The document is confidential and is made SRH AlsterResearch AG whether and when it publishes an update to this research available by SRH AlsterResearch AG, exclusively to selected recipients [in DE, GB, report, but in general updates are created on a regular basis, after 6 months at FR, CH, US, UK, Scandinavia, and Benelux or, in individual cases, also in other the latest. A sensitivity analysis is included and published in company’s initial countries]. 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In case a research analyst or a closely this report is based on publicly available sources (such as, for example, related person is confronted with a conflict of interest, the research analyst is Bloomberg, Reuters, VWD-Trader and the relevant daily press) believed to be restricted from covering this company. reliable. SRH AlsterResearch AG has checked the information for plausibility but not for accuracy or completeness. 4. Information Concerning the Methods of Valuation/Update The determination of the fair value per share, i.e. the price target, and the resultant rating is done on 8. Competent Supervisory Authority SRH AlsterResearch AG are under the basis of the adjusted free cash flow (adj. FCF) method and on the basis of supervision of the BaFin – German Federal Financial Supervisory Authority the discounted cash flow – DCF model. Furthermore, a peer group comparison is (Bundesanstalt für Finanzdienstleistungsaufsicht), Graurheindorfer Straße 108, made. The adj. FCF method is based on the assumption that investors purchase 53117 Bonn and Marie-Curie-Straße 24 – 28, 60439 Frankfurt a.M. This assets only at a price (enterprise value) at which the operating cash flow return document is distributed in the UK under a MiFID EEA branch passport and in after taxes on this investment exceeds their opportunity costs in the form of a compliance with the applicable FCA requirements. hurdle rate of 7.5%. The operating cash flow is calculated as EBITDA less maintenance capex and taxes. Within the framework of the DCF approach, the 9. Specific Comments for Recipients Outside of Germany This research report future free cash flows are calculated initially on the basis of a fictitious capital is subject to the law of the Federal Republic of Germany. The distribution of this structure of 100% equity, i.e. interest and repayments on debt capital are not information to other states in particular to the USA, Canada, Australia and Japan factored in initially. The adjustment towards the actual capital structure is done may be restricted or prohibited by the laws applicable within this state. by discounting the calculated free cash flows with the weighted average cost of capital (WACC), which takes into account both the cost of equity capital and the 10. Miscellaneous According to Article 4(1) No. i of the delegated regulation cost of debt. After discounting, the calculated total enterprise value is reduced by 2016/958 supplementing regulation 596/2014 of the European Parliament, the interest-bearing debt capital in order to arrive at the equity value. Detailed further information regarding investment recommendations of the last 12 information on the valuation principles and methods used and the underlying months are published free of charge under https://www.alsterresearch.com. assumptions can be found at https://www.alsterresearch.com.
SRH AlsterResearch AG uses the following three-step rating system for the analyzed companies:
• Buy: Sustainable upside potential of more than 10% within 12 months
• Sell: Sustainable downside potential of more than 10% within 12 months.
• Hold: Upside/downside potential is limited. No immediate catalyst visible.
NB: The ratings of SRH AlsterResearch AG are not based on a performance that is expected to be “relative“ to the market.
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