Benelux Preference List
AEX Preference List update
Price (06/01/2017): 487.00 Reuters: .AEX Will 2017 be the earnings recovery year? Bloomberg: AEX 2016 was not an obvious stock market year H/L 1 year: 487.99 ‐ 382.61 1 year perf.: 13.6% With the Eurostoxx 600 index down 1.2%, 2016 was not an obvious year for Diff. with DJ E. Stoxx: 7.0% European equities. The year also witnessed significant sector shifts with oil and raw material related companies down at the start of the year but ending the AEX (10 years) 600 year strongly. 550 In Europe, basic resources and oil & gas were the clear outperformers and 500 450 telecom and food & beverage performed poorly. 400 350 The AEX (+9.5%) in the Netherlands benefited from the extreme strong 300 performance of Arcelor Mittal (+130%) and oil related companies SBM and RDS. 250 200 The Bel20 (‐1.5%) in Belgium suffered from the weak performance of 150 07 08 09 10 11 12 13 14 15 16 heavyweights ABI and Engie. The broader market had a difficult year with the AMX small‐ and mid‐cap index down 1.5%. BEL 20 Price (06/01/2017): 3,665.50 Difficult year for Preference List Reuters: .BFX In 2016, our Preference List had a weak performance with a decline of 4.7% and Bloomberg: BEL20 a decline of our Outperformance List by 5.3%. It was only our third year of H/L 1 year: 3,666 ‐ 3,131 1 year perf.: 1.4% underperformance since inception in 2005. Diff. with DJ E. Stoxx: ‐5.2% The underperformance is almost entirely explained by the weak performance of BEL20 (10 years) biotech company Celyad, which imploded by more than 45% after the release of disappointing test data. Excluding Celyad, our list would have been slightly 5,000 positive. 4,500 4,000 Our Long term outperformance is still strong with 10.0% CAGR since 2005. 3,500 3,000 2,500 Will 2017 stock market correlate positively with European 2,000 1,500 macro indicators? 07 08 09 10 11 12 13 14 15 16 In recent years, overall corporate earnings evolution in Europe has been mediocre and is still below end 2011 levels. However, the second half of 2016 has finally witnessed a more sustained period Equity Risk Premium of earnings recovery. The prolonged monetary easing is finally improving Europe investment and consumer sentiment, unemployment is declining, raw material prices are recovering and the weak Euro is supportive for corporate earnings 12.00 10.00 growth. 8.00 At the same time, the Equity Risk Premium at 6.4% is still very low in Europe 6.00 4.00 and the Benelux, which should be a supportive background for equity markets 2.00 in Europe and the Benelux. 0.00 17 15 13 11 09 07 05 03 01 99 97 95 93 91 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐2.00 ‐ We anticipate 12% earnings growth for the Benelux in 2017 after a 3.0% 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 increase in 2016.
Preference List update Our new Preference List: Analyst: o Outperformance List: ASML, BAM, Barco, Corbion, DSM, Galapagos, Greenyard, Melexis, Refresco, RTL Stefaan Genoe o Underperformance List: D’Ieteren, Vopak, Post NL +32 2 662 8299 [email protected]
1 EQUITY RESEARCH 10/01/2017
Table of contents Preference List update ...... 3 Outperformers ...... 4 ASML ...... 4 BAM ...... 6 Barco ...... 8 Corbion ...... 10 DSM ...... 12 Galapagos ...... 14 Greenyard ...... 16 Melexis ...... 18 Refresco ...... 20 RTL ...... 22 Underperformance ...... 24 D’Ieteren ...... 24 Post NL ...... 26 Vopak ...... 28 Benelux stock performances 2016 ...... 30 European sector performances 2016 ...... 31 Benelux and European earnings outlook and valuation ...... 32 European and Benelux market valuation ...... 33 Valuation tables ...... 36 2017 P/E ranking ...... 36 2017 EV/EBITDA ranking ...... 38 2017 EV/EBIT ranking ...... 40 2017 Net debt/EBITDA ranking ...... 42 2017 FCF yield ranking ...... 44 2017 Dividend yield ranking ...... 46
2 EQUITY RESEARCH 10/01/2017
Preference List update
Our new Preference List is shown below. On the next pages, we repeat the Investment Cases of each of the companies included.
Exhibit 1 Updated Preference List Outperformers Target price ASML Holding 120.00 BAM Group 6.50 Barco 95.00 Corbion 30.00 DSM 73.00 Galapagos 68.00 Greenyard 18.00 Melexis 70.00 Refresco Group 20.00 RTL 84.00
Underperformers D'Ieteren 40.00 Post NL 4.00 Vopak 39.00 Source: Degroof Petercam In 2016, our Preference List had a weak performance with a decline of 4.7% and a decline of our Outperformance List by 5.3%. It was only our third year of underperformance since inception in 2005. The underperformance is almost entirely explained by the weak performance of biotech company Celyad, which imploded by more than 45% after the release of disappointing test data. Excluding Celyad, our list would have been slightly positive. Our Long term outperformance is still strong with 10.0% CAGR since 2005, compared to 2.3% for European equities over the same period.
Exhibit 2 Outperformance List vs. Eurostoxx
CAGR: 10.0% 400
350
300
250
200 CAGR: +2.3% 150
100
50 Last Q1 2008 Q2 2009 12/02/2010 27/04/2010 15/11/2010 28/01/2011 24/03/2011 01/08/2011 11/01/2012 26/04/2012 15/10/2012 08/01/2013 13/06/2013 07/08/2013 24/09/2013 21/01/2014 28/05/2014 19/09/2014 28/11/2014 26/02/2015 29/07/2015 17/11/2015 04/07/2016
Outperformance List Eurostoxx
Source: Degroof Petercam estimates
3 EQUITY RESEARCH 10/01/2017
ASML Holding www.asml.com The Netherlands / Semiconductor Capital Equipment www.degroofpetercam.com
Perfectly positioned for a multi‐year growth cycle Buy Investment case Price EUR 105.40 (06/01/17) ASML has grown its revenue by 20% p.a. and EPS by 33% p.a. over the past Target price 120.00 25 years (CAGR). The share of lithography in semiconductor makers’ Risk High budgets has been expanding and ASML has been growing its own market Reuters ASML.AS share. As a result, ASML’s revenue now represents c.20% of all world‐wide Bloomberg ASML NA semiconductor equipment spending. Shares number (m) 422.78 In 2016, ASML updated its 2020 targets of revenue of c.EUR10bn and EPS Market cap. (m) 44,560 of >EUR8 p.s. Key drivers include end market growth, continued growth of Net debt 12/16e (m) ‐752 litho share of wallet and market share growth with EUV shipments. Net debt/EBITDA 12/16e ‐0.39 Meanwhile, the company has fortified its leading position by acquiring H/L 1 year 107.05 ‐ 71.75 HMI, which should add c.EUR1bn to the 2020 revenue target and push EPS 1 year price perf. 33.7% to more than EUR9 p.s. Another key step in 2016 was the acquisition of a Diff. with Euro Stoxx 27.1% stake in lens supplier Carl Zeiss SMT, plus an R&D funding agreement. Volume (sh./day) 1,162,560 2017 is likely to be a good growth year again for ASML. Both DRAM and Free Float 70% NAND memory segments are expected to continue to show solid bit Capital 15% growth (DRAM +25%, NAND +40%) with litho spending slightly up from Intel 14% 2016 due to the 3D NAND transition. Foundry and logic customers are expected to continue to invest in 10‐nm volume manufacturing and 7‐nm pilot lines. Meanwhile, service and option revenue is expected to be boosted by system upgrades and an important factor will be the (partial) revenue recognition of 14 EUV shipments in 2017. ASML’s superior valuation reflects its impressive growth, profitability and dominant market position. When discounting the 2020 EPS target back to today easily gets us to a value above EUR120 p.s. In our view, ASML shares should trade at 20x prospective EV/EBIT, especially when earnings momentum picks up. We reiterate our BUY‐rating. 16e 17e 18e P/E 33.1 25.0 21.1 EV/EBITDA 22.6 18.0 15.4 EV/EBIT 26.9 21.0 17.5 Business description Div. yield 1.0% 1.3% 1.5% ASML is the undisputed world‐wide leader in lithography systems, a crucial type of equipment used in front‐end semiconductor manufacturing. ASML designs, Company Calendar develops, integrates, markets and services advanced systems used by customers 18/01/16 Q4 & FY 2016 results – the major global semiconductor manufacturers – to create chips that power a 19/04/17 1Q17 results wide array of electronic, communications and information technology products. 19/07/17 2Q17 results Competitive position 18/07/17 3Q17 results As the complexity of producing integrated circuits increases, semiconductor manufacturers need partners that provide technology and complete process
solutions. ASML technology is supported by solutions, enabling customers to ASML Holding + relative to Euro Stoxx (grey) gain and sustain a competitive edge in the marketplace. Additionally, ASML 110 105 provides services to its customers via over 70 sales and service organizations in 100 16 countries with over 16,000 staff. 95 90 ASML is well ahead of its two competitors Nikon and Canon of Japan. In the last 85 80 20 years, the company moved from being a small runner‐up to a dominant 75 70 position. Key drivers of this growth are in our view the technical advantages Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar relative to its peers, which result in a lower cost of ownership. The customer co‐ 14 15 15 15 15 16 16 16 16 17
investment program and joint EUV development with Intel, TSMC and Samsung Analyst: underpin the company’s position and so have the acquisitions of Cymer, HMI
and the investment in Carl Zeiss SMT. Marcel Achterberg +31 20 573 5463 [email protected]
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Exhibit 1 ASML’s share of semis capex Profit & Loss (EUR m) 12/14 12/15 12/16e 12/17e 12/18e Revenues 5,856.3 6,287.4 6,651.9 7,952.6 8,768.9 Gross profit 2,596.4 2,895.7 2,982.0 3,632.2 4,070.9 EBITDA 1,547.4 1,864.3 1,923.7 2,389.0 2,733.8 EBITA 1,337.9 1,621.3 1,667.8 2,119.5 2,450.0 EBIT 1,282.2 1,565.1 1,613.9 2,053.6 2,396.0 Net Financial Result ‐8.6 ‐16.5 ‐45.1 ‐26.5 ‐14.0 Exceptionals (gross) ‐‐‐‐‐ Taxes ‐77.0 ‐161.4 ‐201.7 ‐263.5 ‐309.7 Except./discontinued operations ‐‐‐‐‐ Net declared earnings 1,196.6 1,387.2 1,367.2 1,763.6 2,072.4 Net adjusted earnings 1,196.6 1,387.2 1,367.2 1,763.6 2,072.4 Cash Flow (EUR m) 12/14 12/15 12/16e 12/17e 12/18e EBIT 1,282.2 1,565.1 1,613.9 2,053.6 2,396.0 Depreciation 209.5 243.0 255.9 269.5 283.8 Amortization 45.1 53.8 53.8 65.8 54.0 Source: SEMI, company data, Degroof Petercam Impairment charges 0.0 1.0 1.0 1.0 1.0 Changes in provision ‐17.5 18.1 13.5 48.1 30.2 Changes in working capital ‐338.6 446.2 ‐150.7 ‐168.5 ‐153.6 Others ‐‐‐‐‐ Exhibit 2 2020 targets Operational Cash Flow 1,180.8 2,326.3 1,786.5 2,268.6 2,610.4 Tax expenses ‐124.3 ‐126.9 ‐201.7 ‐263.5 ‐309.7 ASML 2020E 2020E Dividends from associates 0.0 1.0 1.0 1.0 1.0 Model Incl. HMI Net interest charges ‐42.4 ‐43.7 ‐45.1 ‐26.5 ‐14.0 Revenues (EUR bn) 10 11 Gross margin 50% >50% Others 0.0 1.0 1.0 1.0 1.0 R%D % rev 13% 13% CF from operating activities 1,014.0 2,157.6 1,541.7 1,980.5 2,288.8 SG&A % rev 4% 4% CAPEX ‐358.3 ‐371.8 ‐350.0 ‐318.1 ‐350.8 Capex % rev 4% 4% Acquisitions 0.0 0.0 0.0 0.0 0.0 Cash conv. Cycle (days) <200 <200 Divestments 0.0 0.0 0.0 0.0 0.0 Tax rate 13% 14% Others ‐3.0 ‐1.1 0.0 0.0 0.0 EPS (EUR) >8 >9 CF from investing activities ‐361.2 ‐372.9 ‐350.0 ‐318.1 ‐350.8 Dividend payment ‐268.0 ‐302.3 ‐449.4 ‐443.5 ‐572.1 Minor. & pref. dividends ‐‐‐‐‐ Equity financing ‐660.3 ‐531.7 113.0 ‐1,113.0 0.0 Others ‐189.5 ‐53.1 0.0 0.0 0.0 CF from financing activities ‐1,117.8 ‐887.1 ‐336.4 ‐1,556.5 ‐572.1 Net debt/cash change ‐465.0 897.7 855.3 105.9 1,365.9 Source: Company data Balance Sheet (EUR m) 12/14 12/15 12/16e 12/17e 12/18e Tangible fixed assets 1,447.5 1,620.7 1,660.9 1,643.7 1,656.7 Goodwill 3,081.4 3,362.7 3,358.5 3,381.3 3,377.1 Exhibit 3 Quarterly order bookings (EUR m) Other intang. assets 0.0 1.0 1.0 1.0 1.0 Financial fixed assets 444.8 450.9 450.9 450.9 450.9 Total Fixed assets 4,973.7 5,435.3 5,471.3 5,476.9 5,485.7 Working capital 969.6 524.4 676.1 845.6 1,000.2 Total Equity 7,512.6 8,389.8 6,652.9 6,834.7 8,300.5 Provisions & deferred taxes 214.5 232.6 246.1 294.2 324.4 Net financial debt ‐1,783.8 ‐2,662.7 ‐751.6 ‐806.4 ‐2,139.0 Total assets 12,203.9 13,295.0 13,850.0 14,405.0 14,960.0 Shares ‐ per share data (EUR) 12/14 12/15 12/16e 12/17e 12/18e Adjusted EPS 2.74 3.22 3.22 4.22 5.00 Dividend 0.70 1.05 1.05 1.38 1.63 No shares ‐ average (m) 437.14 430.64 424.78 417.78 414.78 Ratios 12/14 12/15 12/16e 12/17e 12/18e Valuation analysis Adjusted P/E 32.7 25.6 33.1 25.0 21.1 P/BV 5.2 4.2 6.8 6.4 5.2 EV/EBITDA 23.7 17.8 22.6 18.0 15.4 Source: Company data EV/EBIT 28.7 21.2 26.9 21.0 17.5 EV/FCF (1) 28.6 20.7 26.5 21.0 17.9 FCF yield (2) 2.9% 4.0% 3.1% 4.0% 4.7% Exhibit 4 Sales (EUR m) and EPS (EUR) Dividend yield 0.8% 1.3% 1.0% 1.3% 1.5% Financial ratios 10,000 6.00 Net Debt/EBITDA ‐1.2 ‐1.4 ‐0.4 ‐0.3 ‐0.8 9,000 5.00 Net Debt/Equity ‐23.7% ‐31.7% ‐11.3% ‐11.8% ‐25.8% 8,000 ROCE post‐tax 15.8% 17.6% 17.9% 22.1% 25.1% 7,000 4.00 ROCE post‐tax (grossed gdwll) ‐‐‐‐‐ 6,000 3.00 5,000 Margin analysis and tax rate 4,000 2.00 Gross margin 44.3% 46.1% 44.8% 45.7% 46.4% 3,000 1.00 EBIT margin 21.9% 24.9% 24.3% 25.8% 27.3% 2,000 0.00 Tax rate 6.0% 10.4% 12.9% 13.0% 13.0% 1,000 Growth analysis 0 (1.00) 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016E 2018E Sales 12% 7% 6% 20% 10% Adjusted EPS 11% 18% 0% 31% 18% (1) Based on FCF to Enterprise ‐ (2) Based on FCF to Equity TOTAL NET SALES Headline EPS Basic (EUR)
Source: Company data, Degroof Petercam
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BAM Group www.bam.nl The Netherlands / Construction www.degroofpetercam.com
Has laid good groundwork for higher profits and lower risk Buy Investment case Price EUR 4.55 In the last couple of years BAM has made good progress with its ‘back in shape’ (06/01/17) and subsequent ‘Building the present, creating the future’ programs, which Target price 6.50 should boost profitability while lowering risks. To achieve this, the company has Risk High become more selective in tendering for projects, and more careful to make sure Reuters BAMN.AS that all risks are adequately handled by the contract. It has e.g. analyzed Bloomberg BAMNB NA EUR 50bn in projects to determine the factors that result in success or failure. As a result, there are three main types of risks it will no longer accept: permitting Shares number (m) 270.62 Market cap. (m) 1,232 risk, ground & soil conditions and fit for purpose solutions. On the other hand, it Net debt 12/16e (m) ‐117 will focus future growth on areas where it has been consistently successful like Net debt/EBITDA 12/16e ‐1.24 stadiums, hospitals, tunnels and rail. H/L 1 year 5.02 ‐ 2.96 We consider BAM’s valuation attractive and rate it a Buy. We see the following 1 year price perf. ‐7.0% drivers for the share price: Diff. with Euro Stoxx ‐13.6% Strong profit increase. With the dwindling impact of legacy projects, Volume (sh./day) 1,691,845 and the growing contribution from new projects that were won in a Free Float 80% more favourable market environment using stricter tender procedures, Van Herk 10% we expect BAM’s profit margins to show a healthy rise over the coming NN Group 6% years. The resulting strong profit growth will be a major driver for share I.M. Fares 5% price appreciation. Danske Invest 4% Dimensional Fund 4% Further strong cash generation. We expect ongoing reductions in real estate assets and working capital (to –10% vs –9.5% in Q3‐16), further reinforcing the balance sheet. This will allow BAM to raise its dividend, with an additional boost when it reaches the targeted 25% solvency in 2018. Better visibility on the benefits of the new strategy. BAM aims to impress through solid delivery rather than ambitious targets. We expect further disclosure on the execution of the strategy to create increasing 16e 17e 18e confidence in the benefits P/E 15.2 9.5 7.7 EV/EBITDA 13.3 5.5 3.7 EV/EBIT 41.9 8.1 5.1 Business description Div. yield 0.9% 3.1% 5.2% 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: 21/02/17 FY 2016 Results the Netherlands, the UK, Belgium, Germany and Ireland. 19/04/17 AGM Royal BAM Group ranks among the largest construction firms in Europe. The 11/05/17 Q1‐17 Trading Update groupe is on of the market leaders in the Netherlands and has significant 24/08/17 H1‐17 Results positions in the United Kingdom, Ireland, Belgium, and Germany. The company’s 09/11/17 Q3‐17 Trading Update 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 5.0 development. BAM employs some 21,000 people. 4.5 4.0 Competitive position 3.5 3.0 In the Netherlands, BAM is the #2 (behind Volker Wessels) with a market share 2.5 of around 8%. It competes with companies such as Volker Wessels, Dura 2.0 Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Vermeer, Heijmans, Ballast Nedam and Strukton. Thanks to its size, the company 14 15 15 15 15 16 16 16 16 17 is able to participate in large and complex projects in the Netherlands, but also in the UK, Ireland, Belgium and Germany. On these projects BAM meets Analyst: European competitors such as Bilfinger, Hochtief, Vinci, Bouygues, Balfour Beatty and Skanska. Luuk van Beek +31 20 573 5471 [email protected]
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Exhibit 1 Revenue by geography 2016e Profit & Loss (EUR m) 12/14 12/15 12/16e 12/17e 12/18e Belgium Revenues 7,314.0 7,422.9 6,986.1 6,967.0 7,218.0 Gross profit 1,831.4 1,719.6 1,826.9 1,909.0 2,015.2 11% EBITDA 45.7 101.0 94.3 202.1 246.7 EBITA ‐37.1 30.5 30.1 136.6 177.3 UK Germany EBIT ‐104.7 ‐10.6 30.1 136.6 177.3 35% Net Financial Result 12.1 11.0 0.1 12.6 14.6 11% Exceptionals (gross) ‐‐‐‐‐ Ireland Taxes ‐15.5 ‐2.3 ‐7.5 ‐37.3 ‐48.0 Except./discontinued operations 0.0 0.0 0.0 0.0 0.0 4% Net declared earnings ‐139.2 10.3 36.9 130.8 163.6 Net adjusted earnings 68.8 72.1 78.2 130.8 163.6 Netherlands International Cash Flow (EUR m) 12/14 12/15 12/16e 12/17e 12/18e 32% 7% EBIT ‐104.7 ‐10.6 30.1 136.6 177.3 Depreciation 82.8 70.5 64.3 65.5 69.5 Amortization 0.0 0.0 0.0 0.0 0.0 Source: Degroof Petercam Impairment charges 115.8 41.1 0.0 0.0 0.0 Changes in provision ‐11.7 ‐69.6 0.0 0.0 0.0 Changes in working capital 189.6 88.3 64.1 102.5 98.6 Others ‐5.5 ‐4.6 0.0 0.0 0.0 Exhibit 2 Revenue by activity 2016e Operational Cash Flow 266.3 115.1 158.4 304.6 345.4 Tax expenses ‐10.3 ‐10.0 0.7 ‐27.3 ‐34.3 Dividends from associates 11.5 13.3 7.5 10.0 10.4 Net interest charges ‐0.8 ‐3.3 0.1 12.6 14.6 Others 0.0 0.0 0.0 0.0 0.0 Ci vi l CF from operating activities 266.7 115.1 166.7 299.9 336.1 Engineering CAPEX ‐140.9 ‐103.4 ‐69.9 ‐83.6 ‐86.6 Property Acquisitions 0.0 0.0 0.0 0.0 0.0 47% Divestments 83.9 33.1 0.0 0.0 0.0 Development PPP Others 118.4 35.0 0.0 0.0 0.0 5% 3% CF from investing activities 61.4 ‐35.3 ‐69.9 ‐83.6 ‐86.6 Construction & Dividend payment ‐7.4 0.0 ‐2.4 ‐4.9 ‐17.2 M&E Minor. & pref. dividends ‐0.9 ‐0.7 0.0 0.0 0.0 45% Equity financing 0.0 0.0 0.0 0.0 0.0 Others ‐‐‐‐‐ CF from financing activities ‐8.3 ‐0.7 ‐2.4 ‐4.9 ‐17.2 Net debt/cash change ‐343.2 ‐79.7 ‐76.8 ‐211.5 ‐232.3 Source: Degroof Petercam Balance Sheet (EUR m) 12/14 12/15 12/16e 12/17e 12/18e Tangible fixed assets 315.8 292.2 297.7 315.8 333.0 Goodwill 400.0 406.1 406.1 406.1 406.1 Exhibit 3 Profit before tax Other intang. assets 9.2 9.9 9.9 9.9 9.9 Financial fixed assets 726.0 723.3 716.2 709.1 697.9 Total Fixed assets 1,469.0 1,507.2 1,505.7 1,516.7 1,522.6 300 Working capital ‐221.3 ‐335.1 ‐392.8 ‐488.2 ‐578.9 Total Equity 830.7 905.8 923.3 1,050.3 1,197.9 200 Provisions & deferred taxes 327.8 267.6 267.6 267.6 267.6 Net financial debt 39.8 ‐39.9 ‐116.7 ‐328.1 ‐560.4 100 Total assets 4,956.0 4,852.2 4,558.8 4,621.2 4,668.7 Shares ‐ per share data (EUR) 12/14 12/15 12/16e 12/17e 12/18e ‐ Adjusted EPS 0.25 0.27 0.29 0.48 0.59 Dividend 0.00 0.02 0.04 0.14 0.24 ‐100 PPP Civil Eng. No shares ‐ average (m) 270.40 270.96 271.34 272.30 274.96 Prop. Dev. Construction ‐200 Ratios 12/14 12/15 12/16e 12/17e 12/18e Valuation analysis Adjusted P/E 10.1 19.3 15.2 9.5 7.7 P/BV 0.8 1.7 1.3 1.2 1.1 EV/EBITDA 22.0 15.1 13.3 5.5 3.7 Source: Degroof Petercam EV/EBIT ‐9.6 ‐143.1 41.9 8.1 5.1 EV/FCF (1) 4.1 32.7 14.2 5.0 3.5 FCF yield (2) 35.0% 3.4% 8.1% 17.4% 19.8% Exhibit 4 Backlog development Dividend yield 0.0% 0.4% 0.9% 3.1% 5.2% Financial ratios 14,000 Net Debt/EBITDA 0.9 ‐0.4 ‐1.2 ‐1.6 ‐2.3 12,000 Net Debt/Equity 4.8% ‐4.4% ‐12.6% ‐31.2% ‐46.8% ROCE post‐tax ‐6.0% ‐3.1% ‐0.9% 10.6% 14.1% 10,000 ROCE post‐tax (grossed gdwll) ‐4.3% ‐2.2% ‐0.6% 5.4% 7.0% 8,000 Margin analysis and tax rate 6,000 Gross margin 25.0% 23.2% 26.2% 27.4% 27.9% 4,000 EBIT margin ‐1.4% ‐0.1% 0.4% 2.0% 2.5% 2,000 Tax rate ‐16.7% 766.7% 25.0% 25.0% 25.0% ‐ Growth analysis Sales 4% 1% ‐6% 0% 4% ‐2,000 Adjusted EPS ‐3% 5% 8% 67% 24% (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 Made ready for another leap forward Buy Investment case Price EUR 81.50 During his leadership, CEO Eric Van Zele was the key driving force for (06/01/17) Barco’s worldwide leadership in Digital Cinema. He also pushed for a Target price 95.00 focused and ambitious growth strategy into key value drivers such as the Risk High ClickShare product and new Healthcare solutions such as digital operating Reuters BAR.BR rooms. Bloomberg BAR BB His “One Barco” philosophy re‐dynamised the group, he acquired some Shares number (m) 12.76 strategic strong performing companies such as Awind and Fimi and he also Market cap. (m) 1,040 divested Defense & Aerospace. Net debt 12/16e (m) ‐213 We believe Eric Van Zele has changed the company from a too diversified Net debt/EBITDA 12/16e ‐2.45 engineering conglomerate to a focused group with renewed ambitions H/L 1 year 81.58 ‐ 54.37 and strong market positions beyond pure small scale niche businesses. 1 year price perf. 35.7% With its Healthcare unit, ClickShare product and Digital Cinema worldwide Diff. with Euro Stoxx 29.1% leadership it has some clear value drivers, offering economies of scale, on Volume (sh./day) 17,841 which Barco, together with operational excellence programs, should be Free Float 68% able to increase margins. Michel Van de Wiele NV 18% With 16 years of experience at GE healthcare, the new CEO has the right 3D NV 4% profile to take the company to the next level by combining the renewed U. Vandeurzen 3% treasury 7% growth profile with operational execution. From the 3.6% EBITA‐margin level in 2014, the 5.0% in 2015, we expect Barco to improve its margin to 5.7% in 2016, 6.3% in ’17 and 7.4% in ’18. This will result in strong EBITA growth of 20%, 28% and 17% in ‘16/’17/’18 respectively. Applying a multiple of 11x EV/EBIT ‘18, we arrive at a target price of EUR 95.00. However, we believe there is upside to our current expected 7.4% EBIT margin 2018 and, as such, if execution follows, further upside is in the cards. BUY! 16e 17e 18e P/E 54.7 22.9 17.9 EV/EBITDA 11.1 9.2 7.7 EV/EBIT 24.7 12.5 9.8 Business description Div. yield 2.3% 2.5% 2.5% 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. 09/02/17 Q4 and FY ’16 results Entertainment consists of the important Digital Cinema business and Venues & 21/04/17 Q1 trading update Hospitality for the rental & staging market and simulation markets. 19/07/17 H1 results Enterprise consists of big screen walls used in control rooms to monitor 18/10/17 Q3 trading update 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) operating room platform. Defense & Aerospace was sold in 2014. 85 80 75 70 65 60 Competitive position 55 50 Competition is global and differs per segment. In the Events market an 45 Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar important competitor is Nasdaq quoted Daktronics. Privately held Christie is a 14 15 15 15 15 16 16 16 16 17 competitor in the Events, Digital Cinema and Control Rooms market. EIZO and Planar are competitors in the medical display market. Planar and Mitsubishi are Analyst: also competitors in Control Rooms and Entertainment. Stefaan Genoe +32 2 662 8299 [email protected]
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Exhibit 1 Sales breakdown 16 H1 Profit & Loss (EUR m) 12/14 12/15 12/16e 12/17e 12/18e Revenues 1,051.4 1,028.9 1,095.1 1,127.2 1,174.4 Gross profit 315.4 360.5 397.0 411.4 428.7 EBITDA 128.5 74.0 86.8 102.4 116.3 Enterprise EBITA 38.6 51.1 62.0 77.6 91.3 27% EBIT 27.5 ‐22.5 39.1 75.6 91.5 Net Financial Result ‐1.1 3.0 3.5 3.5 3.5 Entertain Exceptionals (gross) 0.0 0.0 0.0 0.0 0.0 Health- ment Taxes ‐4.7 4.9 ‐16.1 ‐17.8 ‐20.9 care 51% Except./discontinued operations ‐‐‐‐‐ 22% Net declared earnings 17.8 ‐24.7 11.4 46.2 59.1 Net adjusted earnings 6.8 ‐53.8 19.0 46.2 59.1 Cash Flow (EUR m) 12/14 12/15 12/16e 12/17e 12/18e EBIT 27.5 ‐22.5 39.1 75.6 91.5 Depreciation 19.3 22.9 24.8 24.8 24.8 Amortization 50.0 44.6 22.9 2.0 0.0 Source: Barco Impairment charges 7.2 25.7 0.0 0.0 0.0 Changes in provision 0.0 0.0 0.0 0.0 0.0 Changes in working capital ‐26.1 89.7 ‐52.3 ‐0.3 ‐0.5 Exhibit 2 Geographical breakdown 16 H1 Others ‐11.1 ‐6.1 7.7 0.0 0.0 Operational Cash Flow 66.8 154.1 42.1 102.1 115.9 Tax expenses ‐3.0 ‐14.9 ‐16.1 ‐17.8 ‐20.9 Dividends from associates 0.0 0.0 0.0 0.0 0.0 Net interest charges ‐1.1 0.2 3.5 3.5 3.5 Others 0.0 ‐20.7 9.3 0.0 0.0 EMEA CF from operating activities 62.7 118.7 38.8 87.7 98.5 APAC 32% CAPEX ‐82.6 ‐37.8 ‐25.0 ‐25.0 ‐25.0 31% Acquisitions ‐21.9 ‐9.6 ‐10.8 0.0 0.0 Divestments 14.9 140.8 1.3 0.0 0.0 Others ‐3.8 ‐3.5 ‐16.5 0.0 0.0 Americas CF from investing activities ‐93.4 89.8 ‐50.9 ‐25.0 ‐25.0 37% Dividend payment ‐18.4 ‐19.4 ‐20.8 ‐24.0 ‐26.0 Minor. & pref. dividends 0.0 0.0 ‐1.7 0.0 0.0 Equity financing ‐11.3 ‐0.8 ‐2.3 0.0 0.0 Others 20.8 0.0 0.0 0.0 0.0 CF from financing activities ‐9.0 ‐20.2 ‐24.8 ‐24.0 ‐26.0 Net debt/cash change ‐39.7 188.3 ‐37.0 38.7 47.5 Source: Barco Balance Sheet (EUR m) 12/14 12/15 12/16e 12/17e 12/18e Tangible fixed assets 65.9 92.6 106.0 106.1 105.2 Goodwill 143.8 132.4 124.7 124.7 124.7 Exhibit 3 Sales and EBIT margin Other intang. assets 127.3 75.5 52.6 52.6 52.6 Financial fixed assets 14.4 9.0 9.0 9.0 9.0 Total Fixed assets 435.3 410.7 393.6 393.8 392.9 1,400 10% Working capital 104.9 ‐41.4 11.0 11.3 11.7 1,200 8% Total Equity 594.6 611.7 619.3 658.4 705.5 Provisions & deferred taxes 6.8 7.3 7.3 7.3 7.3 1,000 6% 4% Net financial debt ‐61.2 ‐249.6 ‐212.7 ‐251.4 ‐298.9 800 2% Total assets 1,075.4 1,140.3 1,101.5 1,151.9 1,215.5 600 0% Shares ‐ per share data (EUR) 12/14 12/15 12/16e 12/17e 12/18e 400 -2% 200 -4% Adjusted EPS 0.52 ‐4.14 1.46 3.55 4.55 0 -6% Dividend 1.60 1.75 1.85 2.00 2.00 08 09 10 11 12 13 14 15e 16e 17e No shares ‐ average (m) 13.00 13.00 13.00 13.00 13.00 Sales EBIT margin Ratios 12/14 12/15 12/16e 12/17e 12/18e Valuation analysis Adjusted P/E nm nm 54.7 22.9 17.9 P/BV 1.3 1.3 1.7 1.6 1.5 EV/EBITDA 5.4 8.6 11.1 9.2 7.7 Source: Degroof Petercam EV/EBIT 25.5 ‐28.4 24.7 12.5 9.8 EV/FCF (1) ‐44.4 5.5 56.5 12.3 9.9 FCF yield (2) ‐2.6% 10.1% 1.3% 5.9% 6.9% Exhibit 4 Digital screens China Dividend yield 2.7% 2.8% 2.3% 2.5% 2.5% Financial ratios Net Debt/EBITDA ‐0.5 ‐3.4 ‐2.5 ‐2.5 ‐2.6 45,000 40,000 Net Debt/Equity ‐10.3% ‐40.8% ‐34.3% ‐38.2% ‐42.4% 35,000 ROCE post‐tax 6.6% 21.0% 9.5% 14.6% 17.6% 30,000 25,000 ROCE post‐tax (grossed gdwll) 6.8% 22.8% 10.8% 16.2% 19.7% 20,000 Margin analysis and tax rate 15,000 10,000 Gross margin 30.0% 35.0% 36.3% 36.5% 36.5% 5,000 EBIT margin 2.6% ‐2.2% 3.6% 6.7% 7.8% 0 Tax rate 31.0% 10.0% 22.0% 22.0% 22.0% Growth analysis Sales ‐9% ‐2% 6% 3% 4% Adjusted EPS ‐90% ‐chg +chg 143% 28% # screens (1) Based on FCF to Enterprise ‐ (2) Based on FCF to Equity
Source: Degroof Petercam
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Corbion www.corbion.com The Netherlands / Food & Beverages www.degroofpetercam.com
Strong in the core, more substance in PLA Buy Investment case Price EUR 24.76 Management proved its quality by exceeding the targets set out in the (06/01/17) strategy update of Oct 2014. In the segment bio‐based ingredients it Target price 30.00 realized the EUR 20m cost savings well in time. The costs savings in Risk High combination with operational leverage, mix and raw materials tailwind Reuters CORB.AS resulted in a steep improvement in profitability. Where management was Bloomberg CRBN NA targeting an EBITDA margin of 18% in 2018 and ROCE in excess of 15%, we Shares number (m) 59.42 foresee already a 2016 EBITDA margin and group ROCE > 20%. Market cap. (m) 1,471 Only on organic top line growth, Corbion has been missing, partly because Net debt 12/16e (m) 98 of market conditions, partly because of the termination of low margin Net debt/EBITDA 12/16e 0.57 business. However, given the comparison basis and product pipeline we H/L 1 year 25.77 ‐ 18.27 expect 2017 to show an improvement on this criterion. 1 year price perf. 19.3% In the innovation segment, Corbion announced a very important step in Diff. with Euro Stoxx 12.7% November, forming a JV with Total for the development/production of Volume (sh./day) 140,676 PLA. Corbion will sell its lactide plant to the JV, while the JV will build a PLA Free Float 73% polymerization plant. We are very positive on the move. 1. It strengthens ING 11% Corbion’s leading position in lactic acid 2. It increases the chances of Lansdowne 7% success for PLA while reducing the risks for Corbion and 3. It makes Jo Hambro 5% another capital return very likely. ASR 4% Thanks to the strong execution, Corbion has created a very solid basis in bio‐based ingredients, generating sufficient cash flow to fund its future growth and attractive shareholders returns. Considering the estimated year end net debt/EBITDA of 0.6x, a capital return of EUR 100m in 2017 is well possible. The solid basis, cash generation and growth potential is not reflected in the current valuation with the stock trading at only 10.1x 2017 EV/EBIT. Valuing the biobased business at an EV/EBITDA of 10x, (still a significant discount to peers) and the PLA JV at EUR 65m leads to a SoP 16e 17e 18e value in excess of EUR 30. P/E 14.1 16.8 15.7 EV/EBITDA 9.1 8.2 7.5 EV/EBIT 12.7 11.4 10.3 Business description Div. yield 2.5% 2.3% 2.4% Corbion is a leading bio based food ingredients and biochemical company generating some EUR 900m of turnover and EUR 175m in EBITDA. 65% of Company Calendar revenues are generated in North America, 18% in Europe and 17% in the rest of 06/03/17 Q4 & FY 2016 results the world. 25/04/17 1Q17 results In 2014, Corbion created a new segment structure: Biobased Ingredients and 15/05/17 AGM Biobased Innovations. Ingredients include food ingredients (75% of revenues), 09/08/17 2Q17 results biochemical (25%) and corporate costs. In food ingredients it has leading 27/10/17 3Q17 results positions in bakery and meat. Corbion is targeting sales growth of 2% to 4% per
annum for this segment. In biochemicals (25% of turnover) Corbion is targeting 5‐8% sales growth per annum. Ingredients aimed to improve its REBITDA margin Corbion + relative to Euro Stoxx (grey) to >18% in 2018. However, thanks to cost savings, operational leverage and raw 26 24 material tailwind this was already achieved in 2016. 22 20 Innovations includes the PLA and Succinic Acid initiatives and the development 18 of gypsum free technology. Corbion expects this segment to be loss making for 16 14 the coming years. In October 2016, it formed a JV with Total for the production 12 Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar development of PLA. 14 15 15 15 15 16 16 16 16 17 Competitive position Corbion is the global market leader in lactic acid and lactic acid derivatives with Analyst: approximately 65% market share. It produces natural lactic acid, biochemically produced by means of fermentation. In the US it is the number 2 player in Fernand de Boer emulsifiers (20% market share) and number 2 in functional blends (25%). +31 20 573 5417 [email protected]
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Exhibit 1 Breakdown of 2015 sales Profit & Loss (EUR m) 12/14 12/15 12/16e 12/17e 12/18e Revenues 770.1 918.3 918.8 931.7 969.9 Gross profit 178.8 261.9 395.1 400.6 417.1 Asia EBITDA 94.8 154.3 171.7 175.1 183.6 EBITA 54.7 115.3 130.0 133.3 141.6 12% EBIT 12.9 108.6 123.5 126.3 134.1 EMEA Net Financial Result ‐9.4 ‐5.8 ‐5.8 ‐7.4 ‐7.0 19% Exceptionals (gross) ‐‐‐‐‐ Taxes ‐20.2 ‐22.0 ‐11.6 ‐32.7 ‐34.9 North Except./discontinued operations ‐58.5 5.9 ‐2.5 ‐1.4 ‐1.4 America Net declared earnings ‐18.3 80.2 106.1 86.2 92.2 Latin 64% Net adjusted earnings 33.4 71.0 105.0 91.3 97.8 America Cash Flow (EUR m) 12/14 12/15 12/16e 12/17e 12/18e 5% EBIT 12.9 108.6 123.5 126.3 134.1 Depreciation 40.1 39.0 41.7 41.9 42.0 Amortization 4.0 6.7 6.5 7.0 7.5 Source: Company reports Impairment charges 0.0 0.0 0.0 0.0 0.0 Changes in provision 7.9 ‐13.6 ‐3.0 ‐3.0 ‐3.0 Changes in working capital ‐22.0 1.0 ‐0.8 ‐1.0 ‐2.8 Others 52.6 ‐2.4 3.3 2.0 2.0 Exhibit 2 2015 Ingredients sales per market Operational Cash Flow 95.5 139.3 171.3 173.2 179.8 Tax expenses ‐6.9 ‐23.1 ‐11.6 ‐32.7 ‐34.9 Animal Pharma Home, Dividends from associates 0.0 0.0 0.0 0.0 0.0 7% person Net interest charges ‐6.7 ‐5.8 ‐6.4 ‐7.4 ‐7.0 health Others 0.0 0.0 0.0 0.0 0.0 3% al care CF from operating activities 81.9 110.4 153.2 133.1 137.9 Bakery 4% CAPEX ‐66.2 ‐49.3 ‐85.0 39.8 ‐45.0 Chemic Acquisitions ‐1.3 ‐0.4 0.0 ‐50.0 0.0 38% als Divestments 0.0 0.0 0.0 0.0 0.0 Others ‐5.7 0.0 0.0 0.0 0.0 11% Other CF from investing activities ‐73.2 ‐49.7 ‐85.0 ‐10.2 ‐45.0 20% Meat Dividend payment ‐1.9 ‐55.1 ‐50.5 ‐36.1 ‐32.0 Minor. & pref. dividends ‐3.7 ‐3.3 ‐3.3 ‐3.3 ‐3.3 17% Equity financing 0.0 ‐50.0 ‐50.0 0.0 0.0 Others ‐‐‐‐‐ CF from financing activities ‐5.6 ‐108.4 ‐103.8 ‐39.5 ‐35.3 Net debt/cash change 21.6 62.5 35.6 ‐83.4 ‐57.7 Source: Company reports Balance Sheet (EUR m) 12/14 12/15 12/16e 12/17e 12/18e Tangible fixed assets 288.7 307.4 350.7 306.5 309.4 Goodwill 58.2 64.2 64.2 64.2 64.2 Exhibit 3 Bio based Ingredients Other intang. assets 64.7 74.4 67.9 60.9 53.4 Financial fixed assets 21.5 23.8 23.6 73.6 73.6 Total Fixed assets 433.1 469.8 506.4 505.2 500.6 Working capital 91.0 105.2 105.7 107.6 111.4 1200 22.0 Total Equity 508.7 487.8 489.2 536.0 592.9 1000 20.0 Provisions & deferred taxes 11.8 13.6 13.6 13.6 13.6 Net financial debt ‐5.8 62.1 97.7 51.7 ‐6.0 800 18.0 Total assets 783.6 808.0 826.1 868.9 916.2 600 16.0 Shares ‐ per share data (EUR) 12/14 12/15 12/16e 12/17e 12/18e 400 14.0 Adjusted EPS 0.57 1.17 1.80 1.47 1.58 200 12.0 Dividend 1.02 0.85 0.63 0.56 0.60 0 10.0 No shares ‐ average (m) 61.36 60.38 58.20 57.21 57.21 2012 2013 2014 2015e2016e2017e2018e Ratios 12/14 12/15 12/16e 12/17e 12/18e Valuation analysis Sales (in EURm) EBITDA margin in % Adjusted P/E 24.3 19.1 14.1 16.8 15.7 P/BV 1.9 3.1 3.4 2.9 2.6 EV/EBITDA 9.2 9.1 9.1 8.2 7.5 Source: Company reports, Degroof Petercam EV/EBIT 67.3 12.9 12.7 11.4 10.3 EV/FCF (1) 30.4 16.6 18.2 8.2 10.2 FCF yield (2) 1.3% 3.9% 4.5% 9.3% 6.3% Exhibit 4 SOP Dividend yield 7.4% 3.8% 2.5% 2.3% 2.4% Financial ratios Net Debt/EBITDA ‐0.1 0.4 0.6 0.3 0.0 Sales REBITDA Multiple Value EUR m 2017e 2017e Net Debt/Equity ‐1.1% 12.7% 20.0% 9.6% ‐1.0% ROCE post‐tax 7.6% 17.8% 21.3% 0.0% 0.0% Ingredients 922 179 10 x (REBITDA) 1,792 Innovations 5 -3 4 -12 ROCE post‐tax (grossed gdwll) 4.4% 10.7% 13.4% 11.3% 12.4% PLA JV x (REBITDA) 65 Margin analysis and tax rate Total value activities 927 176 1,845 Gross margin 23.2% 28.5% 43.0% 43.0% 43.0%
Net debt at y/e 2017 -15 EBIT margin 1.7% 11.8% 13.4% 13.6% 13.8% Property Breda 15 Tax rate 33.6% 20.9% 9.1% 25.5% 25.6% Preference shares -54 Growth analysis Equity value 1,791 Number of shares (m) 57.9 Sales 4% 19% 0% 1% 4% Value per share (EUR) 30.96 Adjusted EPS 26% 105% 55% ‐18% 7% (1) Based on FCF to Enterprise ‐ (2) Based on FCF to Equity
Source: Degroof Petercam
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DSM www.dsm.com The Netherlands / Nutrition/Performance Materials www.degroofpetercam.com
The party is not over yet Buy Investment case Price EUR 58.70 We rate DSM a Buy with a 12m TP of EUR 73 (06/01/17) In 2016, DSM made significant progress on its 2018 strategic targets (high Target price 73.00 single digit annual EBITDA growth and high double digit bps ROCE growth). Risk Medium Driven by solid top line growth, margin mix and cost control DSM expects Reuters DSMN.AS to report a mid‐teens EBITDA growth in 2016. ROCE is expected to Bloomberg DSM NA increase by more than 200bps (2015: 7.6%, end 3Q16 10.6%). In addition, Shares number (m) 172.20 net debt started to decline thanks to the listing of Patheon. Market cap. (m) 10,108 We do not expect the party to be over. Although market conditions Net debt 12/16e (m) 2,088 remain challenging, we have confidence that DSM can maintain its solid Net debt/EBITDA 12/16e 1.82 top line performance, while most of the cost savings still have to come in H/L 1 year 64.18 ‐ 41.40 and DSM might have some support of the higher vitamin prices. 1 year price perf. 30.4% Consequently 2017 will likely be a year of high single digit EBITDA growth. Diff. with Euro Stoxx 23.8% DSM’s innovation pipeline, among others stevia and clean cow, create Volume (sh./day) 783,821 confidence that growth will remain strong in the medium term as well. Free Float 100% On top of the strong earnings growth, we expect a further reduction of Capital Group 5% DSM’s stake in Patheon, bringing in significant cash. At this moment it still holds 48.7m shares or 33.5% of Patheon worth some EUR 1.3bn. Apart from Patheon, the sale of DSM stake in DSM Sinochem is getting closer, which could bring in another few hundred millions. 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 and Nutrion at a 20% discount results in a SOP of EUR 73.
16e 17e 18e P/E 20.4 16.4 13.9 EV/REBITDA 10.4 9.8 8.9 EV/REBIT 16.9 15.4 13.7 Business description Div. yield 3.2% 3.1% 3.1% DSM is a life science and material science company, focused on Nutrition and Performance Materials. Following the vision 2005 strategy, the group moved Company Calendar away from cyclical petrochemicals into non‐cyclical nutrition businesses. In 15/02/17 Q4 & FY 2016 results addition, DSM is the nr. 1 industrial biotech player. The most important cluster 02/05/17 1Q 2017 results is Nutrition. This groups the leading position in the vitamin and food supplement 03/05/17 AGM market for both human and animal health. Performance Materials is the other 01/08/17 2Q 2017 results key cluster. This involves a broad range of materials that replace steel, or that 02/11/17 3Q 2017 results 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 DSM + relative to Euro Stoxx (grey) Intermediates division and composite resins named ChemicaInvest, in which 65 DSM owns 35%. DSM also holds interesting stakes in companies like 60 Patheon/DPx (49%) and Sinochem Pharmaceuticals (50%) 55 50 45 Competitive position 40 Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar DSM operates in a highly competitive environment where its market positions 14 15 15 15 15 16 16 16 16 17 vary between strong positions with pricing power, and positions without pricing power. For instance DSM is market leader in vitamin E but pricing power seems Analyst: zero. With other products, like Dyneema and Stanyl, it should be able to resist price .pressure Fernand de Boer +31 20 573 5417 [email protected]
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Exhibit 1 2016 sales breakdown Profit & Loss (EUR m) 12/14 12/15 12/16e 12/17e 12/18e Revenues 9,260 7,722 7,883 8,237 8,578 Other Gross profit 2,482 2,451 2,326 2,430 2,530 1% REBITDA 1,168 1,075 1,248 1,340 1,435 Innovation REBITA ‐‐‐‐‐ 2% Nutrition REBIT 619 573 765 850 937 65% Net Financial Result ‐125 ‐164 ‐126 ‐128 ‐90 Exceptionals (gross) ‐355 ‐211 ‐101 ‐60 ‐40 Taxes ‐8 46 102 126 153 Materials Except./discontinued operations ‐347 ‐184 135 ‐54 ‐37 32% Net declared earnings 71 163 614 571 709 Net adjusted earnings 418 268 467 625 746 Cash Flow (EUR m) 12/14 12/15 12/16e 12/17e 12/18e EBIT 264 362 664 790 897 Depreciation 361 377 358 365 373 Amortization 190 125 125 125 125 Source: Degroof Petercam Impairment charges 351 125 0 0 0 Changes in provision 0 0 ‐40 ‐25 ‐25 Changes in working capital ‐74 ‐13 80 2 11 Others 00000 Exhibit 2 EBITDA development Operational Cash Flow 1,092 976 1,187 1,257 1,381 Tax expenses ‐82 ‐75 ‐102 ‐126 ‐153 1,600 Dividends from associates 0 0 0 0 0 1,400 Net interest charges ‐194 ‐237 ‐126 ‐128 ‐90 1,200 Others ‐202 ‐387 0 0 0 1,000 CF from operating activities 614 277 959 1,003 1,138 800 CAPEX ‐638 ‐543 ‐510 ‐520 ‐520 600 Acquisitions 0 ‐84 0 0 0 400 Divestments 0 325 0 0 0 200 Others 0 155 0 0 0 0 CF from investing activities ‐638 ‐147 ‐510 ‐520 ‐520 ‐200 Dividend payment ‐175 ‐174 ‐315 ‐320 ‐323 ‐400 Minor. & pref. dividends ‐10 ‐10 ‐10 ‐10 ‐10 2014 2015 2016e 2017e 2018e Equity financing 100 ‐83 110 110 110 Other/corporate Innovation Performance materials Nutrition Others ‐1890000 CF from financing activities ‐274 ‐267 ‐215 ‐220 ‐223 Net debt/cash change 298 137 ‐233 ‐264 ‐395 Source: company reports, Degroof Petercam Balance Sheet (EUR m) 12/14 12/15 12/16e 12/17e 12/18e Tangible fixed assets 3,673 3,171 3,198 3,228 3,250 Goodwill 1,660 1,660 1,660 1,660 1,660 Exhibit 3 Organic growth Nutrition Other intang. assets 1,207 1,568 1,568 1,568 1,568 (price/mix) Financial fixed assets 892 1,063 1,258 1,303 1,368 8.0 Total Fixed assets 7,859 7,828 8,050 8,125 8,212 Working capital 1,557 1,158 1,078 1,076 1,064 6.0 Total Equity 5,936 5,631 6,046 6,408 6,903 4.0 Provisions & deferred taxes 949 913 873 848 823 2.0 Net financial debt 2,420 2,321 2,088 1,824 1,429 0.0 Total assets 12,089 11,732 12,871 12,513 13,036 ‐2.0 Shares ‐ per share data (EUR) 12/14 12/15 12/16e 12/17e 12/18e ‐4.0 Adjusted EPS 2.42 2.16 2.79 3.57 4.21 ‐6.0 Dividend 1.65 1.65 1.80 1.80 1.80 2009 2010 2011 2012 2013 2014 2015e 2016e 2017e 2018e No shares ‐ average (m) 172.63 174.23 175.18 177.58 179.36 Volume Price/mix Ratios 12/14 12/15 12/16e 12/17e 12/18e
Valuation analysis Adjusted P/E 20.9 21.4 20.4 16.4 13.9 P/BV 1.6 1.5 1.7 1.7 1.6 EV/REBITDA 10.4 10.5 10.4 9.8 8.9 Source: Company reports, Degroof Petercam EV/REBIT 19.7 19.7 16.9 15.4 13.7 EV/FCF (1) 26.9 26.1 19.1 17.8 14.8 FCF yield (2) ‐0.3% ‐3.3% 4.5% 4.6% 5.9% Exhibit 4 SOP Dividend yield 3.3% 3.6% 3.2% 3.1% 3.1% Financial ratios 2017 Peer Multiple Value Net Debt/EBITDA 3.0 2.7 1.8 1.4 1.0 EBITDA multiples Applied Net Debt/Equity 40.8% 41.2% 34.5% 28.5% 20.7% Nutrition 1,006 13.3 10.6 10,709 ROCE post‐tax 6.9% 7.0% 10.0% 11.1% 12.3% Materials 413 7.7 7.7 3,180 ROCE post‐tax (grossed gdwll) 6.8% 7.2% 9.8% 10.9% 12.1% Innovation 10 135 Margin analysis and tax rate Other ‐90 9.8 9.9 ‐895 Gross margin 26.8% 31.7% 29.5% 29.5% 29.5% Total EV 1,339 13,128 net cash/(debt 17) ‐1,559 REBIT margin 6.7% 7.4% 9.7% 10.3% 10.9% minorities ‐96 Tax rate 5.8% 19.0% 19.0% 19.0% 19.0% Pension deficit ‐540 Growth analysis Associated companies 1,829 Sales 1% ‐16% 2% 4% 4% equity value 12,762 Adjusted EPS ‐15% ‐11% 29% 28% 18% number of shares 174.2 (1) Based on FCF to Enterprise ‐ (2) Based on FCF to Equity per share 73.2
Source: Degroof Petercam
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Galapagos www.glpg.com Belgium / Healthcare www.degroofpetercam.com
Developing a diversified and maturing portfolio Buy Steady progress in clinical development Price EUR 65.68 Galapagos’ partner Gilead has a remarkable track record in developing and (06/01/17) launching new drugs. This is also evident in the Filgotinib collaboration. Target price 68.00 Since closure of the deal in January 2016, Gilead and Galapagos initiated Risk High three large trials: the FINCH trial in rheumatoid arthritis, the DIVERSITY Reuters GLPG AS trial in Crohn’s disease and the SELECTION trial in ulcerative colitis. Bloomberg GLPG NA In cystic fibrosis, the development of a triple combination therapy Shares number (m) 46.26 (including a potentiator, C1 corrector and C2 corrector) that addresses up Market cap. (m) 3,038 to 90% of CF patients is key. Vertex Pharmaceuticals started two PhII Cash Position 12/16e (m) 897 studies evaluating triple combinations in 3Q16, taking at least a six‐month H/L 1 year 65.68 ‐ 32.66 head start. Galapagos is planning to have a first triple combination in the 1 year price perf. 19.4% clinic by mid‐2017. To maximize its chances of success, the company is Diff. with Euro Stoxx 12.8% developing several compounds in parallel. Volume (sh./day) 257,945 In addition to its lead programs, Galapagos is conducting studies in Free Float 55% idiopathic pulmonary fibrosis, osteoarthritis and atopic dermatitis, keeping Fidelity mgmt. 7% the focus on inflammatory and fibrotic disorders. FEMCP 6% The roll‐out of these clinical studies is supported by a strong cash position J&J 8% and will lead to steady news flow in 2017. GSK 1% AbbVie 2% Strong cash position paves the way towards commercialization Van Herk 6% Gilead 15% Galapagos reported a cash position of EUR 939m at the end of 3Q16. Guidance for operational cash burn for FY 2016 remains at EUR 100m‐ 120m, excluding milestone payments from Gilead. At this rate, the path towards full clinical development and commercialization is opening up. The expected news flow, combined with an attractive valuation, strong cash position and diverse portfolio make Galapagos one of our healthcare favourites for 2017. 16e 17e 18e P/E nmnmnm EV/Revenues 14.7 15.6 16.5 EV/R & D 11.9 12.9 13.3 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 trials in 24/02/17 FY 2016 results idiopathic pulmonary fibrosis (IPF), osteoarthritis (OA) and atopic dermatitis. In 28/04/17 1Q 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 initiate a clinical study for a triple combination (grey) 70 CF therapy by mid‐2017. 65 60 55 GLPG1690, a proprietary first‐in‐class inhibitor of autotaxin, is in PhII studies 50 45 for IPF. 40 35 30 GLPG1690 (Servier) for OA and MOR106 (MorphoSys) for atopic dermatitis 25 20 are partnered programs in early clinical development. 15 Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Competitive position 14 15 15 15 15 16 16 16 16 17
Galapagos operates in a very competitive environment. In order to balance the Analyst: risks, most programs have been partnered before entering large later stage,
expensive clinical trials. Competition in the cystic fibrosis field is rather limited, Stéphanie Put, PhD currently there is no marketed triple combination therapy. +32 2 287 91 92 [email protected]
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Exhibit 1 – Galapagos’ R&D focus Profit & Loss (EUR m) 12/14 12/15 12/16e 12/17e 12/18e Galapagos Revenues 90.0 60.6 131.2 146.3 146.3 (of which Sales) 0.0 0.0 18.0 0.0 0.0 Gross profit 90.0 60.6 131.2 146.3 146.3 Inflammation Fibrosis Metabolic Anti‐infectives Operating costs ‐126.6 ‐150.0 ‐184.0 ‐200.1 ‐206.8 (of which R & D) ‐111.1 ‐129.7 ‐162.0 ‐176.3 ‐181.3
Rheumatoid arthritis Cystic fibrosis Type 2 diabetes Hepatitis B EBIT ‐36.6 ‐89.4 ‐52.8 ‐53.8 ‐60.5 Crohn’s disease Idiopathic Net Financial Result 1.4 ‐30.2 1.0 7.0 6.1 pulmonary fibrosis Ulcerativecolitis NASH Exceptionals (gross) ‐‐‐‐‐ Osteoarthritis Taxes ‐2.1 1.2 1.2 1.2 1.2 Ankylosing Except./discontinued operations 67.5 ‐‐‐‐ spondylitis Net declared earnings 30.2 ‐118.4 ‐50.6 ‐45.6 ‐53.2 Psoriatic arthritis Lupus Cash Flow (EUR m) 12/14 12/15 12/16e 12/17e 12/18e Atopic dermatitis EBIT ‐36.6 ‐89.4 ‐52.8 ‐53.8 ‐60.5 Depreciation 3.6 2.4 2.4 2.4 2.4 Amortization 0.0 1.0 1.0 1.0 1.0 Source: Galapagos Impairment charges ‐1.0 ‐2.0 ‐3.0 ‐4.0 ‐5.0 Changes in provision 0.0 ‐0.1 0.0 0.0 1.0 Changes in working capital ‐54.5 ‐34.0 ‐9.5 0.0 0.0 Others 3.2 4.6 4.6 4.6 5.6 Exhibit 2 – On track for triple combo therapy Operational Cash Flow ‐85.4 ‐117.5 ‐57.3 ‐49.8 ‐55.5
Preclinical Phase I Phase II Status Tax expenses 0.0 0.0 0.0 0.0 0.0 Potentiator '1837 Phase II results: disclosed Dividends from associates ‐‐‐‐‐ Potentiator '2451 Phase I results: H1 '17 Net interest charges 8.8 1.0 1.0 7.0 6.1 Potentiator '3067 Phase I start: H1 '17 C1 corrector '2222 Phase II started Others ‐‐‐‐‐ C1 corrector '2851 Phase I start: H2 '17 CF from operating activities ‐76.6 ‐116.6 ‐56.3 ‐42.8 ‐49.4 C2 corrector '2737 Phase I results: H1 '17 CAPEX ‐2.1 ‐6.1 ‐5.2 ‐5.9 ‐5.9 C2 corrector '3221 Phase I start: H2 '17 Acquisitions 130.8 0.0 0.0 0.0 0.0 Divestments 0.0 0.0 0.0 0.0 0.0 Others ‐7.4 2.3 0.0 0.0 0.0 CF from investing activities 120.6 ‐4.3 ‐5.8 ‐6.4 ‐6.4 Dividend payment ‐‐‐‐‐ Minor. & pref. dividends ‐‐‐‐‐ Equity financing 4.4 269.0 392.0 0.0 0.0 Others 0.0 0.0 0.0 0.0 0.0 CF from financing activities 4.4 269.0 392.0 0.0 0.0 Net debt/cash change 48.5 148.1 329.9 ‐49.2 ‐55.8 Source: Galapagos Balance Sheet (EUR m) 12/14 12/15 12/16e 12/17e 12/18e Tangible fixed assets 10.1 13.8 16.7 20.1 23.6 Goodwill 0.0 0.0 0.0 0.0 0.0 Exhibit 3 – Dual and triple combinations Other intang. assets 2.0 1.6 1.1 0.6 0.2 Financial fixed assets 0.3 52.7 54.1 55.6 57.0 Total Fixed assets 12.4 68.0 71.9 76.3 80.8 Working capital 1.0 2.0 3.0 4.0 5.0 Total Equity 206.1 365.0 706.4 660.8 607.6 Provisions & deferred taxes 2.9 2.7 2.9 3.1 5.3 Net financial debt ‐197.7 ‐347.1 ‐896.8 ‐761.2 ‐620.1 Total assets 270.2 442.5 972.6 841.5 704.9 Cash Position 197.8 347.2 896.8 761.3 620.2 Shares ‐ per share data (EUR) 12/14 12/15 12/16e 12/17e 12/18e Declared EPS 1.02 ‐3.03 ‐1.09 ‐0.99 ‐1.15 Dividend ‐‐‐‐‐ No shares ‐ average (m) 29.67 39.08 46.26 46.26 46.26 Ratios 12/14 12/15 12/16e 12/17e 12/18e Valuation analysis Declared P/E 15.2nmnmnmnm P/BV 2.2 6.1 4.0 4.6 5.0 Source: Galapagos EV/Revenues 2.9 30.9 14.7 15.6 16.5 EV/R & D 2.4 14.4 11.9 12.9 13.3 Dividend yield ‐‐‐‐‐ Exhibit 4 – Shareholder structure
2% 1%
6% Free float 6% Gilead 7% J&J Fidelity mgmt. 8% FEMCP 55% Van Herk
15% AbbVie GSK
Source: Degroof Petercam
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Greenyard www.greenyardfoods.com Belgium / Prepared and fresh vegetables & fruits www.degroofpetercam.com Size matters in fruit and vegetables Buy Investment case Price EUR 14.96 With over EUR 4bn in sales, Greenyard is the leading European fruit, vegetables (06/01/17) and growing media supplier. Although the consumption of fruit and vegetables Target price 18.00 has been flat in Europe, we see multiple reasons to assume steady growth: Risk Medium Two global opportunities: (1) Health: Increasing health challenges call for Reuters GRYFO.BR healthier food consumption. Fruit & vegetables are a cheap and suitable Bloomberg GRYFO BB way to meet this trend. (2) Environmental awareness. The environmental Shares number (m) footprint of fruit and vegetables is significantly lower than the production Market cap. (m) of meat. Net debt 03/17e (m) 338 Net debt/EBITDA 03/17e 2.35 Size matters: Fruit & vegetables production and distribution is a low margin business. Being cost efficient is key and as such size matters in this H/L 1 year 15.85 ‐ 11.68 fragmented market. As largest player in the industry, we expect Greenyard 1 year price perf. ‐1.4% Diff. with Euro Stoxx ‐8.0% to gain market share at the expense of smaller players. In addition, we Volume (sh./day) 19,475 assume that Greenyard will expand its overseas activities. Free Float 30% Merger synergies: (1) Cross‐selling and innovation following the business Deprez family 45% combination of Univeg with Greenyard Foods and Peltracom. (2) Recent Gimv & related 5% optimization of financing structure due to bond refinancing has led to Sujajo Investm. 9% over EUR 15m in annual savings. (3) Decrease in tax charges from the high Green Valley 7% current reported level of 47.2%. (4) Other synergies with regards to NWC, Agri Investment Fund 4% Other minorities 1% OPEX and CAPEX. All this will lead to considerable cash generation and rapid balance sheet deleveraging, which in turn provides room for further consolidation and EPS growth. The expected EPS growth in excess of double digits is currently not reflected in the valuation. Based on the leading industry position of the company and the earnings potential described above, we value Greenyard at a TP of EUR 18 and 16e 17e 18e thus reiterate our Buy recommendation. P/E 18.1 17.5 13.0 EV/EBITDA 7.3 6.3 5.7 EV/EBIT 14.2 12.0 9.2 Business description Div. yield 1.3% 1.3% 1.3% Greenyard is a global player active in three segments and over 30 countries after the business combination in June 2015. Two segments relating to fruit and Company Calendar vegetables: (1) Fresh in which it is n°1 in Europa and n°3 worldwide (former 23/02/17 Q3 trading update Univeg) and (2) Long Fresh: a combination of Frozen (n°2 in former Europe ‐ 06/06/17 FY 2016‐2017 results Pinguin & Lutèce) and Canned (n°4 in Europe – former Noliko). (3) It also 18/07/17 Publication annual report operates a Horticulture business (former Peltracom) which is Europe’s 3th 29/08/17 Q1 trading update largest supplier of growing media. 21/11/17 H1 2017‐2018 results Competitive position
Greenyard is a leading global player in fruit and vegetables with strong global Greenyard + relative to Euro Stoxx (grey) sourcing capabilities which enables the company to offer the entire product 20 19 range in quality fruit and vegetables throughout the year and in sufficient 18 17 quantities. Due to their vertical logistic funnel the company has become a major 16 15 14 supplier fors it global customer base including most of the leading retailers in 13 12 Europe. Through Horticulture, Greenyard has full control over the entire supply 11 10 chain from “field to fork”. Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar M&A has been a key pillar for both the former Greenyard Foods (Pinguin, 14 15 15 15 15 16 16 16 16 17
Lutosa, D’Aucy, Scana Noliko, …) and Univeg. Both companies have proven to be Analyst: opportunistic, yet disciplined in their acquisitions.
Degroof Petercam acted as joint book runner for the private placement of existing shares in Thijs Hoste June 2015 and was paid for these services. Degroof Petercam also acts as a liquidity provider +32 2 287 93 85 [email protected] for this company and is paid for these services.
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Exhibit 1 Revenue split by division H1 2016 Profit & Loss (EUR m) 03/15 03/16p 03/17e 03/18e 03/19e Revenues 4,012.1 3,967.3 4,288.6 4,369.6 4,452.3 Gross profit ‐‐‐‐‐ EBITDA 159.1 134.9 143.7 161.1 166.7 EBITA ‐ 88.2 96.5 100.4 119.5 EBIT ‐ 94.4 74.6 84.4 103.5 Net Financial Result ‐‐43.8 ‐44.0 ‐24.7 ‐24.9 Exceptionals (gross) ‐‐‐‐‐ Taxes ‐‐12.4 ‐8.4 ‐20.4 ‐26.0 Except./discontinued operations ‐‐‐‐‐ Net declared earnings ‐ 37.6 20.7 37.9 51.1 Net adjusted earnings ‐ 24.8 36.7 37.9 51.1 Cash Flow (EUR m) 03/15 03/16p 03/17e 03/18e 03/19e EBIT ‐ 94.4 74.6 84.4 103.5 Depreciation ‐ 54.6 49.8 50.4 50.6 Amortization ‐‐16.0 16.0 16.0 Impairment charges ‐‐‐‐‐ Source: Management, Degroof Petercam Changes in provision ‐‐‐‐‐ Changes in working capital ‐ 123.8 26.2 2.3 2.3 Others ‐‐‐‐‐ Exhibit 2 REBITDA split by division H1 2016 Operational Cash Flow ‐ 272.8 166.6 153.1 172.4 Tax expenses ‐‐12.4 ‐8.4 ‐20.4 ‐26.0 Dividends from associates ‐‐‐‐‐ Net interest charges ‐‐43.8 ‐44.0 ‐24.7 ‐24.9 Others ‐ 2.8 ‐‐‐ CF from operating activities ‐ 219.3 112.8 106.5 120.1 CAPEX ‐‐61.5 ‐55.0 ‐54.6 ‐53.2 Acquisitions ‐‐0.0 0.0 0.0 Divestments ‐‐1.8 0.0 0.0 Others ‐‐‐‐‐ CF from investing activities ‐‐45.1 ‐53.2 ‐54.6 ‐53.2 Dividend payment ‐‐‐8.9 ‐8.9 ‐8.9 Minor. & pref. dividends ‐‐‐‐‐ Equity financing ‐ 25.6 0.0 0.0 0.0 Others ‐ 78.1 ‐106.8 30.2 0.0 CF from financing activities ‐ 103.7 ‐115.7 21.3 ‐8.9 Net debt/cash change ‐‐‐‐‐ Balance Sheet (EUR m) 03/15 03/16p 03/17e 03/18e 03/19e Source: Management, Degroof Petercam Tangible fixed assets ‐ 402.0 398.5 402.7 405.4 Goodwill ‐ 589.9 589.9 589.9 589.9 Other intang. assets ‐ 249.7 235.9 219.9 203.9 Financial fixed assets ‐ 0.2 0.2 0.2 0.2 Exhibit 3 Geographical revenue split Total Fixed assets ‐ 1,286.2 1,269.6 1,257.8 1,244.5 Working capital ‐‐86.4 ‐121.4 ‐123.7 ‐126.0 Total Equity ‐ 728.3 718.6 747.5 789.8 Provisions & deferred taxes ‐ 79.2 77.9 77.9 77.9 Net financial debt ‐ 375.7 338.2 295.2 237.2 Total assets ‐ 2,086.6 2,120.1 2,194.9 2,253.1 Shares ‐ per share data (EUR) 03/15 03/16p 03/17e 03/18e 03/19e Adjusted EPS ‐ 0.75 0.83 0.85 1.15 Dividend ‐ 0.20 0.20 0.20 0.20 No shares ‐ average (m) ‐ 44.40 44.40 44.40 44.40 Ratios 03/15 03/16p 03/17e 03/18e 03/19e Valuation analysis Adjusted P/E ‐ 17.8 18.1 17.5 13.0 P/BV ‐ 0.8 0.9 0.9 0.8 EV/EBITDA ‐ 7.6 7.3 6.3 5.7 EV/EBIT ‐ 10.8 14.2 12.0 9.2 EV/FCF (1) ‐‐11.7 14.5 11.4 Source: Management, Degroof Petercam FCF yield (2) ‐‐‐9.1% 11.3% 8.9% Dividend yield ‐ 1.5% 1.3% 1.3% 1.3% Financial ratios Exhibit 4 Revenue split by customer group Net Debt/EBITDA ‐ 2.8 2.4 1.8 1.4 Net Debt/Equity ‐ 51.6% 47.1% 39.5% 30.0% ROCE post‐tax ‐ 6.0% 4.7% 4.9% 6.2% ROCE post‐tax (grossed gdwll) ‐‐‐‐‐ Margin analysis and tax rate Gross margin ‐‐‐‐‐ EBIT margin ‐‐‐‐‐ Tax rate ‐ 22.1% 28.8% 35.0% 33.7% Growth analysis Sales ‐‐‐‐‐ Adjusted EPS ‐‐11% 3% 35% (1) Based on FCF to Enterprise ‐ (2) Based on FCF to Equity
Source: Management, Degroof Petercam
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Melexis www.melexis.com Belgium / Semiconductors www.degroofpetercam.com
Get back in the car ! Buy Investment case Price EUR 64.41 Several important tailwinds are supporting the shares’ performance: the (06/01/17) US‐dollar has increased substantially vs the Euro recently. This is positive Target price 70.00 for Melexis: we estimate that every 0.05 rise, positively impacts EBIT by Risk Medium about EUR3‐4m. Further, China passenger car data have remained very Reuters MLXS.BR strong this year. In November, manufacturing volumes were up 18.3% y‐o‐ Bloomberg MELE BB y according to the China Association of Automobile Manufacturers, while Shares number (m) 41.26 sales volumes were up 17.9% y‐o‐y (please see Exhibit 2 overleaf). Market cap. (m) 2,657 We expect long‐term market growth to stay at c.8% p.a., driven by world‐ Net debt 12/16e (m) ‐48 wide car production (3‐5% p.a.) and growth of silicon content in cars (2‐ Net debt/EBITDA 12/16e ‐0.35 4%). Key drivers remain carbon emission regulation, advanced security H/L 1 year 65.88 ‐ 40.94 and safety innovation. Furthermore, HEV/EV market growth of some 25% 1 year price perf. 35.3% p.a. adds another 1%‐point. Sensors (60% of Melexis’s sales) is expected to Diff. with Euro Stoxx 28.7% grow at an even faster rate of about 11%. Hence we estimate Melexis’s Volume (sh./day) 35,565 revenue growth could be close to 10% in the years ahead. Free Float 36% Taking a 5‐10 year view, with the likes of Google, Uber and leading car Xtrion NV 54% makers developing various assisted/autonomous driving technologies, we Fidelity Management 10% believe that this will lead to unprecedented demand for automotive sensors and semiconductors. Moreover, the Internet‐of‐Things should offer many non‐automotive opportunities too. This should ensure continued long‐term revenue growth. Melexis’ unique combination of high growth, returns and visibility warrants prospective EV/EBIT multiples of around 20x in our view. In addition, we believe that there is a good chance that Melexis will pay a special final dividend again this year. Hence our Target Price of EUR70 and our BUY‐rating. 16e 17e 18e P/E 26.5 23.5 21.4 EV/EBITDA 18.3 16.4 14.9 EV/EBIT 22.2 19.9 18.0 Business description Div. yield 3.0% 3.0% 3.1% 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 10/02/17 Q4 & FY 2016 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 market average and profitability has been at a very healthy level. Melexis Melexis + relative to Euro Stoxx (grey) 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 45 Competitive position 40 35 The automotive semiconductor industry is still very fragmented and Melexis Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar competes with IC vendors like Infineon, NEC, Freescale, which have automotive 14 15 15 15 15 16 16 16 16 17
product sales often more than ten times the size of Melexis. Nevertheless, Analyst: Melexis’ focused product offering, long‐term customer relationships and its
flexible fabless model allow it to have outperformed most competitors in recent Marcel Achterberg years. +31 20 573 5463 [email protected]
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Exhibit 1 Revenue by segment Profit & Loss (EUR m) 12/14 12/15 12/16e 12/17e 12/18e Revenues 332.4 400.1 454.5 511.0 559.6 Gross profit 161.3 192.1 206.8 236.6 260.2 EBITDA 111.3 129.7 137.8 154.7 169.0 EBITA 111.3 129.7 137.8 154.7 169.0 EBIT 89.2 107.6 113.5 128.0 139.6 Net Financial Result 2.9 1.9 ‐0.8 1.0 2.0 Exceptionals (gross) ‐‐‐‐‐ Taxes ‐7.1 ‐10.4 ‐15.5 ‐18.1 ‐19.8 Except./discontinued operations ‐7.6 0.0 0.3 0.0 0.0 Net declared earnings 85.0 99.1 97.2 110.9 121.8 Net adjusted earnings 92.6 99.1 96.9 110.9 121.8 Cash Flow (EUR m) 12/14 12/15 12/16e 12/17e 12/18e EBIT 89.2 107.6 113.5 128.0 139.6 Depreciation 0.0 0.0 0.0 0.0 0.0 Amortization 0.0 0.0 0.0 0.0 0.0 Source: Degroof Petercam Impairment charges ‐‐‐‐‐ Changes in provision 0.0 0.0 0.0 0.0 0.0 Changes in working capital ‐7.2 ‐8.6 ‐11.8 ‐13.3 ‐11.2 Exhibit 2 China passenger car production Others ‐‐‐‐‐ and sales (y‐o‐y growth) Operational Cash Flow 81.9 99.0 101.8 114.7 128.4 Tax expenses ‐4.3 ‐4.3 ‐15.5 ‐18.1 ‐19.8 Dividends from associates ‐‐‐‐‐ Net interest charges 0.1 0.0 ‐0.8 1.0 2.0 Others ‐‐‐‐‐ CF from operating activities 77.7 94.7 85.4 97.6 110.6 CAPEX ‐23.7 ‐40.3 ‐40.0 ‐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 4.3 0.0 0.0 0.0 0.0 CF from investing activities ‐19.4 ‐40.3 ‐40.0 ‐35.0 ‐35.0 Dividend payment ‐40.1 ‐52.1 ‐76.8 ‐78.8 ‐80.8 Minor. & pref. dividends ‐‐‐‐‐ Equity financing 0.0 0.0 0.0 0.0 0.0 Others ‐‐‐‐‐ CF from financing activities ‐40.1 ‐52.1 ‐76.8 ‐78.8 ‐80.8 Net debt/cash change 9.3 ‐6.3 ‐31.3 ‐16.2 ‐5.2 Source: CAAM Balance Sheet (EUR m) 12/14 12/15 12/16e 12/17e 12/18e Tangible fixed assets 71.7 90.3 106.0 114.3 119.9 Goodwill ‐‐‐‐‐ Exhibit 3 Silicon content per car (USD) Other intang. assets 17.0 16.2 16.2 16.2 16.2 Financial fixed assets ‐‐‐‐‐ Total Fixed assets 88.8 106.5 122.2 130.5 136.1 Working capital 72.4 81.0 92.8 106.1 117.2 Total Equity 201.4 242.5 262.6 294.8 335.8 Provisions & deferred taxes 0.0 0.0 0.0 0.0 0.0 Net financial debt ‐39.0 ‐54.7 ‐47.7 ‐58.2 ‐82.4 Total assets 256.8 306.8 326.9 359.1 400.1 Shares ‐ per share data (EUR) 12/14 12/15 12/16e 12/17e 12/18e Adjusted EPS 2.29 2.45 2.40 2.75 3.01 Dividend 1.00 1.90 1.90 1.95 2.00 No shares ‐ average (m) 40.40 40.40 40.40 40.40 40.40 Ratios 12/14 12/15 12/16e 12/17e 12/18e Valuation analysis Adjusted P/E 16.4 20.5 26.5 23.5 21.4 P/BV 7.5 8.4 9.8 8.8 7.7 EV/EBITDA 13.3 15.2 18.3 16.4 14.9 Source: PWC, Degroof Petercam EV/EBIT 16.5 18.3 22.2 19.9 18.0 EV/FCF (1) 16.5 19.1 23.4 21.0 19.1 FCF yield (2) 5.6% 4.9% 3.6% 4.0% 4.4% Exhibit 4 EPS (EUR) Dividend yield 2.7% 3.8% 3.0% 3.0% 3.1% Financial ratios Net Debt/EBITDA ‐0.4 ‐0.4 ‐0.3 ‐0.4 ‐0.5
3.50 Net Debt/Equity ‐19.3% ‐22.6% ‐18.1% ‐19.7% ‐24.5% ROCE post‐tax 43.4% 43.9% 39.1% 38.7% 38.7% 3.00 ROCE post‐tax (grossed gdwll) 29.3% 30.3% 27.1% 27.1% 27.8% 2.50 Margin analysis and tax rate 2.00 Gross margin 48.5% 48.0% 45.5% 46.3% 46.5% 1.50 EBIT margin 26.8% 26.9% 25.0% 25.1% 25.0% 1.00 Tax rate 7.7% 9.5% 13.8% 14.0% 14.0% 0.50 Growth analysis Sales 21% 20% 14% 12% 9% 0.00 Adjusted EPS 68% 7% ‐2% 14% 10% ‐0.50 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016e 2017e 2018e (1) Based on FCF to Enterprise ‐ (2) Based on FCF to Equity
Source: Degroof Petercam
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Refresco Group www.refresco‐gerber.com The Netherlands / FMCG company www.degroofpetercam.com
Leading European cash bottler Buy Investment case Price EUR 14.54 Refresco Group is the leading European bottler of soft drinks and fruit (06/01/17) juices for retailers and branded customers with leading market positions in Target price 20.00 private label non‐alcoholic drinks and in the fast growing co‐packing Risk Low market. Co‐packing represents some 38% of volumes and revenues. Reuters RFRG.AS In 2016, it entered the North America market through the acquisition of Bloomberg RFRG NA Whitlock. Whitlock adds some 15% to group volume and it increases the Shares number (m) 81.16 exposure to co‐packing. More importantly, after Europe, the acquisition Market cap. (m) 1,180 creates a second growth platform for Refresco. Net debt 12/16e (m) 613 In 2016, RG’s share price performance was disappointing especially caused Net debt/EBITDA 12/16e 2.75 by the negative organic volume growth. However, we expect organic H/L 1 year 16.44 ‐ 12.94 volume growth to improve in 2017 and beyond, thanks to easy comps and 1 year price perf. ‐10.3% the higher exposure to co‐packing. Diff. with Euro Stoxx ‐16.9% Note however, RG is not an organic growth story. It is about cash Volume (sh./day) 114,544 generation, consolidating the market, integrate acquired companies and Free Float 59% through that driving EPS growth. In that respect, Refresco made Stodir 20% tremendous progress in 2016. It took its first step in North America and it GZ Trust 11% strengthened its position in Europe by acquiring DIS in the Netherlands, 3i Investment 7% Okil Holding 4% the Pepsi plant in Germany and a San Pellegrino plant in Italy. Thanks to M&A/top line growth, we foresee adjusted EPS growth of 16% per annum and solid cash generation, with further upside potential from future M&A. The expected earnings growth and cash generation is not reflected in current valuation in our view. At the current share price the stock trades at a 2018 PER of 12x and a FCF yield of close to 10%.
16e 17e 18e P/E 14.1 11.1 10.0 EV/EBITDA 8.2 6.6 5.9 EV/EBIT 13.2 10.1 8.9 Business description Div. yield 2.6% 3.3% 3.8% Refresco Group is the leading European bottler of soft drinks and fruit juices for retailers and branded customers. With production facilities in the Benelux, Company Calendar Finland, France, Germany, Iberia, Italy, Poland and the UK, its global sourcing 10/03/17 Q4 & FY 2016 results and local R&D capabilities offer an almost unlimited variety of products, 11/05/17 1Q17 results manufactured to customer specifications and requirements. Aside from an 11/05/17 AGM efficient bottling process it also provides its customers total supply chain 10/08/17 2Q17 results solutions, from planning and sourcing of raw materials and packaging to warehousing and transportation. RG generates revenues well in excess of EUR
2.0bn, primarily in Western Europe. In terms of volumes, RG produces some Refresco Group + relative to Euro 60mhl of soft drinks per annum which can be divided in 5 categories of which Stoxx (grey) energy drinks are relatively small. The other 4 categories are almost equal in 20 19 size, but note that carbonated soft drinks and mineral water are rather seasonal. 18 17 Juices and energy drinks are rather stable throughout the year. In 2016, RG 16 15 entered North America by taking over Whitlock, thus creating a second growth 14 13 platform. 12 Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Competitive position 14 15 15 15 15 16 16 16 16 17
Refresco Gerber is the European market leader with more than 10% market Analyst: share and leading positions in the Benelux, Germany and Italy, and top 3
positions in France, UK and Iberia. In co‐packing it has more than 3x the size of Fernand de Boer its nearest competitor. It aims to strengthen its positions through organic +31 20 573 5417 growth and M&A. Competition is mainly local with different competitors per [email protected] country.
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Exhibit 1 Est. breakdown of 2017 volumes Profit & Loss (EUR m) 12/14 12/15 12/16e 12/17e 12/18e Revenues 2,036.9 2,016.9 2,111.3 2,365.1 2,415.4 Gross profit 850.4 868.7 895.3 1,053.4 1,077.0 Benelux EBITDA 194.7 194.9 222.5 266.4 282.0 North East North 18% EBITA ‐‐‐‐‐ Europe America EBIT 106.9 110.5 137.9 172.8 188.4 12% 7% Net Financial Result ‐49.4 ‐50.0 ‐22.0 ‐24.0 ‐23.0 Exceptionals (gross) ‐‐‐‐‐ Italy Taxes ‐20.9 ‐18.7 ‐33.0 ‐43.1 ‐48.0 13% Except./discontinued operations ‐‐‐‐‐ Net declared earnings 38.6 42.2 83.2 106.0 117.9 Germany Net adjusted earnings 47.3 77.9 83.2 106.0 117.9 UK France 20% Iberia 10% 12% Cash Flow (EUR m) 12/14 12/15 12/16e 12/17e 12/18e 8% EBIT 106.9 110.5 137.9 172.8 188.4 Depreciation 83.9 78.6 82.0 91.0 91.0 Amortization 2.6 2.6 2.6 2.6 2.6 Source: Degroof Petercam Impairment charges 1.3 3.3 0.0 0.0 0.0 Changes in provision ‐5.1 ‐8.0 ‐5.8 0.0 0.0 Changes in working capital 28.1 12.0 0.0 0.0 0.0 Others ‐‐‐‐‐ Exhibit 2 Est. breakdown of 2017 revenues Operational Cash Flow 217.7 198.9 216.7 266.4 282.0 Tax expenses ‐11.0 ‐23.0 ‐33.0 ‐43.1 ‐48.0 North Dividends from associates ‐‐‐‐‐ North East America Europe 5% Net interest charges ‐47.9 ‐47.2 ‐22.0 ‐24.0 ‐23.0 6% Others 0.0 0.0 0.0 0.0 0.0 Benelux CF from operating activities 158.8 128.7 161.6 199.2 211.1 24% Italy CAPEX ‐59.1 ‐84.3 ‐80.2 ‐94.6 ‐96.6 Iberia 8% Acquisitions 0.0 0.0 ‐213.6 0.0 0.0 7% Divestments 0.8 2.7 0.0 0.0 0.0 Others 20.6 2.5 0.0 0.0 0.0 CF from investing activities ‐37.7 ‐79.1 ‐293.8 ‐94.6 ‐96.6 UK 15% Dividend payment 0.0 0.0 ‐23.5 ‐29.9 ‐39.2 Germany Minor. & pref. dividends ‐‐‐‐‐ France 21% Equity financing 0.0 96.1 0.0 0.0 0.0 14% Others ‐‐‐‐‐ CF from financing activities 0.0 96.1 ‐23.5 ‐29.9 ‐39.2 Net debt/cash change ‐120.9 ‐145.7 155.7 ‐74.7 ‐75.2 Source: Degroof Petercam Balance Sheet (EUR m) 12/14 12/15 12/16e 12/17e 12/18e Tangible fixed assets 523.5 526.4 567.4 571.0 576.6 Goodwill ‐‐‐‐‐ Exhibit 3 Co‐packing vs. private label Other intang. assets 428.4 445.7 614.0 611.4 608.8 Financial fixed assets 5.7 3.2 3.2 3.2 3.2 Total Fixed assets 961.8 983.9 1,193.1 1,194.1 1,197.2 100% Working capital 143.1 0.0 0.0 0.0 0.0 Total Equity 361.3 513.8 573.5 649.2 727.5 80% Provisions & deferred taxes 52.1 45.4 45.4 45.4 45.4 60% Net financial debt 593.1 457.5 612.8 538.1 462.9 Total assets 1,643.1 1,641.1 1,850.0 1,900.7 1,954.0 40% Shares ‐ per share data (EUR) 12/14 12/15 12/16e 12/17e 12/18e
20% Adjusted EPS 0.64 0.98 1.03 1.31 1.45 Dividend 0.00 0.34 0.37 0.48 0.55 0% No shares ‐ average (m) 74.26 79.45 81.20 81.20 81.20 2013 2013 PF 2014 2015e 2016e 2017e 2018e Ratios 12/14 12/15 12/16e 12/17e 12/18e Co‐packing Private label Valuation analysis Adjusted P/E ‐ 16.2 14.1 11.1 10.0 P/BV ‐ 2.5 2.0 1.8 1.6 EV/EBITDA ‐ 9.1 8.2 6.6 5.9 Source: Company reports, DP estimates EV/EBIT ‐ 16.1 13.2 10.1 8.9 EV/FCF (1) ‐ 15.8 13.3 10.2 9.0 FCF yield (2) ‐ 3.3% 7.0% 8.9% 9.7% Exhibit 4 Raw materials; % price change vs. Dividend yield ‐ 2.1% 2.6% 3.3% 3.8% 2016 avg Financial ratios
50 Net Debt/EBITDA 3.0 2.3 2.8 2.0 1.6 Net Debt/Equity 164.2% 89.0% 106.8% 82.9% 63.6% 40 ROCE post‐tax 0.0% 0.0% 0.0% 0.0% 0.0% 30 ROCE post‐tax (grossed gdwll) ‐‐‐‐‐ Margin analysis and tax rate 20 Gross margin 41.7% 43.1% 42.4% 44.5% 44.6% 10 EBIT margin 5.2% 5.5% 6.5% 7.3% 7.8% Tax rate 36.3% 30.9% 28.5% 29.0% 29.0% 0 Growth analysis ‐10 Sales 28% ‐1% 5% 12% 2% Adjusted EPS ‐ 54% 5% 27% 11% ‐20 (1) Based on FCF to Enterprise ‐ (2) Based on FCF to Equity
Source: Degroof Petercam
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RTL Group www.rtlgroup.com Luxembourg / Media: Broadcasters www.degroofpetercam.com
Digitizing the business model Buy Investment case Price EUR 69.94 During 2016, RTL made further progress in growing the business. Over the (06/01/17) first nine months, sales rose 2% y/y and EBITA rose 5.6% y/y (op. profit Target price 84.00 +5%, associates +14%). The y/y comparison is not entirely fair as sales Risk Medium were held back by the seasonal loss of market share related to large sports Reuters AUDKt.BR events (Euro 2016, Olympics) for which RTL did not have the rights. On the Bloomberg RTL BB other hand, operating profit included a gain from a corporate deal. These Shares number (m) 154.79 two effects partly cancel each other out. The main kicker is still to come: in Market cap. (m) 10,826 Q4‐16 FremantleMedia should turn a 9M‐16 decline into FY growth. Net debt 12/16e (m) 566 RTL has been successfully countering the shift in demand towards online Net debt/EBITDA 12/16e 0.42 and digital by investing its consistently strong cash flows into development H/L 1 year 83.30 ‐ 63.60 of new formats, and into expansion in online and digital through internal 1 year price perf. ‐6.1% development and M&A. Digital sales have been growing strongly and now Diff. with Euro Stoxx ‐12.7% represent >10% of group sales. Digital profitability is not disclosed, and Volume (sh./day) 11,908 should continue to be pressured by investments. However, ongoing sales Free Float 25% growth should benefit digital profits in the mid‐term Bertelsmann 75% Management remains on the look‐out for new acquisitions, notably in digital. Large acquisitions, however, are not on the menu, which leaves plenty of cash flow available for dividends. In 2016, M&A spend was relatively modest, but in Q1‐17 there will be a possibility to buy out the minority shareholders of one of the digital activities. As such, it is not yet certain that there will be a special dividend on top of the regular dividend. Our sole concern is the growing dominance of Germany within the profit pool, caused by a steady rise in profits in Germany and shrinking or stagnating profits elsewhere. Our target price of EUR 84 is based on the average outcome of the fair values from our DCF‐model and historic valuation multiples. 16e 17e 18e P/E 14.9 14.0 13.6 EV/EBITDA 9.0 8.8 8.4 EV/EBIT 10.9 10.5 10.0 Business description Div. yield 5.8% 5.7% 5.7% RTL Group is Europe’s largest television and radio operator with interests in 60 television channels and 31 radio stations throughout Europe and South East Asia Company Calendar (the latter via a JV with CBS). RTL is also one of the world’s largest producers of 09/03/17 FY 2016 results content through its production unit FremantleMedia, which develops, produces, 19/04/17 AGM and distributes multi‐genre content. It has operations in 31 countries, creates 11/05/17 Q1‐17 results more than 10,000 hours of television programming p/a and distributes more 30/08/17 Q2‐17 results than 20,000 hours of content p/a in more than 200 territories. RTL is European 09/11/17 Q3‐17 results leader in online video with a run rate of close to 25 billion views p/m. Other
digital activities include free and subscription‐based on‐demand services. RTL Group + relative to Euro Stoxx (grey) RTL owns 48% in French company Metropole Television, which operates the 100 95 television channel Groupe M6 and which recently acquired RTL’s French radio 90 85 activities. This participation is fully consolidated. Other important participations 80 75 are Spanish television and radio operator Atresmedia Corp. (RTL owns 19%), and 70 65 German television operator RTL 2 Fernsehen (RTL owns 36%). 60 Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar 14 15 15 15 15 16 16 16 16 17 Competitive position Analyst: RTL holds the number 1 or 2 position in television in eight European markets.
Competition is typically local, against names like ProSiebenSat1 in Germany, TF1 Michael Roeg in France, SBS in the Netherlands, and public broadcasters in Belgium. +31 20 573 5422 [email protected]
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Exhibit 1 Sales split 2017e Profit & Loss (EUR m) 12/14 12/15 12/16e 12/17e 12/18e Revenues 5,891 6,084 6,280 6,410 6,552 Gross profit 3,988 4,069 4,201 4,289 4,430 Other EBITDA 1,308 1,323 1,346 1,374 1,411 B 9% EBITA 1,105 1,124 1,116 1,141 1,177 3% NL EBIT 1,002 1,118 1,105 1,141 1,177 8% Germany Net Financial Result ‐27 ‐12 ‐12 ‐8 ‐4 34% Exceptionals (gross) ‐‐‐‐‐ Taxes ‐288 ‐300 ‐366 ‐351 ‐364 Fremantle Except./discontinued operations00000 24% Net declared earnings 653 789 701 765 793 France Net adjusted earnings 693 779 712 765 793 22% Cash Flow (EUR m) 12/14 12/15 12/16e 12/17e 12/18e EBIT 1,002 1,118 1,105 1,141 1,177 Depreciation 63 64 90 91 92 Amortization 140 135 139 141 142 Source: Degroof Petercam Impairment charges 103 6 11 0 0 Changes in provision 9 ‐110 ‐17 0 0 Changes in working capital ‐91 ‐102 78 ‐9 ‐10 Others ‐‐‐‐‐ Exhibit 2 Operating profit split 2017e Operational Cash Flow 1,226 1,111 1,408 1,365 1,401 Tax expenses ‐288 ‐300 ‐366 ‐351 ‐364 Dividends from associates ‐‐‐‐‐ Net interest charges ‐27 ‐12 ‐12 ‐8 ‐4 B NL Others 19 169 ‐26 ‐17 ‐17 3% 8% CF from operating activities 930 968 1,004 988 1,017 CAPEX ‐72 ‐117 ‐110 ‐100 ‐100 Fremantle Acquisitions ‐246 ‐82 ‐57 0 0 10% Divestments 8 20 47 20 20 Others ‐23 15 ‐30 10 10 France TV Germany 59% CF from investing activities ‐454 ‐272 ‐270 ‐190 ‐190 20% Dividend payment ‐1,073 ‐766 ‐619 ‐619 ‐619 Minor. & pref. dividends 2 ‐1000 Equity financing ‐1 ‐2000 Others ‐32 14 0 0 0 CF from financing activities ‐1,104 ‐755 ‐619 ‐619 ‐619 Net debt/cash change ‐628 ‐59 114 179 208 Source: Degroof Petercam Balance Sheet (EUR m) 12/14 12/15 12/16e 12/17e 12/18e Tangible fixed assets 337 352 ‐ 380 388 Goodwill 2,870 2,959 2,996 2,996 2,996 Exhibit 3 Sales and operating margins Other intang. assets 280 300 307 286 264 Financial fixed assets 573 607 584 584 584 Total Fixed assets 4,455 4,588 4,217 4,576 4,562 7,000 28% Working capital 135 241 163 172 181 6,000 24% Total Equity 3,276 3,409 3,462 3,638 3,841 Provisions & deferred taxes 539 574 557 557 557 5,000 20% Net financial debt 621 477 566 387 179 Total assets 7,738 8,197 7,832 8,255 8,308 4,000 16% Shares ‐ per share data (EUR) 12/14 12/15 12/16e 12/17e 12/18e 3,000 12% Adjusted EPS 4.51 5.07 4.64 4.98 5.16 2,000 8% Dividend 5.50 4.00 4.00 4.00 4.00 No shares ‐ average (m) 153.58 153.59 153.59 153.59 153.59 1,000 4% Ratios 12/14 12/15 12/16e 12/17e 12/18e 0 0% 05 06 07 08 09 10 11 12 13 14 15 16e17e18e Valuation analysis Adjusted P/E 17.2 15.2 14.9 14.0 13.6 Sales EBITA margin REBITA margin P/BV 3.7 3.5 3.1 3.0 2.8 EV/EBITDA 10.2 9.9 9.0 8.8 8.4 Source: Degroof Petercam EV/EBIT 13.3 11.7 10.9 10.5 10.0 EV/FCF (1) 12.7 12.4 10.5 10.7 10.1 FCF yield (2) 6.1% 6.2% 7.2% 7.1% 7.4% Exhibit 4 Return on invested capital Dividend yield 7.1% 5.2% 5.8% 5.7% 5.7% Financial ratios 30% Net Debt/EBITDA 0.5 0.4 0.4 0.3 0.1 Net Debt/Equity 19.0% 14.0% 16.3% 10.6% 4.6% 25% ROCE post‐tax 18.8% 19.7% 17.0% 18.0% 18.6% ROCE post‐tax (grossed gdwll) 18.8% 19.7% 17.0% 18.0% 18.6% 20% Margin analysis and tax rate Gross margin 67.7% 66.9% 66.9% 66.9% 67.6% 15% EBIT margin 17.3% 18.5% 17.8% 18.0% 18.1% Tax rate 29.5% 27.1% 33.4% 31.0% 31.0% 10% Growth analysis Sales ‐1% 4% 3% 2% 2% 5% Adjusted EPS ‐5% 12% ‐9% 7% 4% (1) Based on FCF to Enterprise ‐ (2) Based on FCF to Equity 0% 05 06 07 08 09 10 11 12 13 14 15 16e 17e 18e
ROIC (post‐tax) ROIC adjusted (post‐tax)
Source: Degroof Petercam
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D'Ieteren www.dieteren.com Belgium / Car services www.degroofpetercam.com What will be the next investment? Hold Investment case Price EUR 42.36 D’Ieteren is diversifying outside of the automotive market with the (06/01/17) acquisition of Moleskine, the luxury paper accessories manufacturer. This Target price 40.00 is just the first new investment step, and which we can say was pretty Risk Medium unexpected. The acquisition strategy can go in any direction as D’Ieteren Reuters IETB.BR seems to be increasingly diversifying into an investment company. Bloomberg DIE BB o Auto is expected to keep on growing nicely as the dealership Shares number (m) 55.30 consolation project evolves and as the order book will be Market cap. (m) 2,343 delivered. However, 2016 should be considered an exceptional Net debt 12/16e (m) 783 year with the renewal of the leased fleet that peaked in 2011 Net debt/EBITDA 12/16e 1.98 and the solid motor show contribution. As a result 2016’s H/L 1 year 45.16 ‐ 26.08 performance is not anticipated to be repeated any soon. 1 year price perf. 37.7% o Outside of North America, Belron will keep on facing challenges Diff. with Euro Stoxx 31.1% 47,423 in most geographies. Nevertheless, we highlight the fact that Volume (sh./day) the gain in market share and solid growth in North America is Free Float 41% driven by the marketing efforts, that obviously limit the pass‐ D'Ieteren Familly 57% Own shares 2% through to profit. During the coming 2 years, Belron will need to keep on investing massively to adapt to new technologies and defend market position. o Moleskine is anticipated to grow its top‐line by double‐digit but the company remains a small contributor to the group. We rate D’Ieteren a Hold with a target price of EUR 40, implying 10.0x EV/EBIT 17, as it is unclear what the acquisition strategy of the group will be in the near future. In our opinion, the investment company feature deserves a holding discount of 10%. Given that 2016 was a solid year for Auto and that Belron should keep on showing a mixed picture, we see limited upside for the time being. 16e 17e 18e P/E 12.5 10.8 10.2 EV/EBITDA 8.1 7.0 5.5 EV/EBIT 12.5 10.3 8.0 Business description Div. yield 1.9% 2.0% 2.0% 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 06/03/17 Q4 & FY 2016 results has 5.15% in the hand of its management. The Group is controlled by the family 01/06/17 Annual General Meeting (57%). D’Ieteren Auto accounts for EUR 2.8bn sales and EUR ~74m REBIT. This 01/06/17 Trading 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 34 The unit is highly dependent on the marketing actions and decisions of car 32 30 makers and hence, has limited influence on both volumes and pricing. D’Ieteren 28 26 is currently restructuring its dealers network to improve profitability. Belron is Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar the worldwide leader in vehicle glass repair & maintenance with more than half 14 15 15 15 15 16 16 16 16 17
of the sales realised in Europe. Over the last 4 years, the market conditions have Analyst: been tough for Belron with margins under pressure in some countries but with
positive outlook in the US thanks to the marketing efforts realised. Moleskine, Nathalie Debruyne, CFA being a manufacturer of luxury products, is positioned on a niche market and +32 2 662 8308 competition is rather limited. [email protected]
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Exhibit 1 Ownership Profit & Loss (EUR m) 12/14 12/15e 12/16e 12/17e 12/18e Revenues 5,541.6 6,035.2 6,184.6 6,292.2 6,450.8 Free Gross profit 180.6 382.7 395.1 437.2 466.3 Float EBITDA 180.6 382.7 395.1 437.2 466.3 26% EBITA 86.5 282.1 291.5 330.5 353.1 EBIT 62.7 242.4 255.7 298.2 323.9 Net Financial Result ‐32.2 ‐38.9 ‐30.4 ‐30.4 ‐30.4 Exceptionals (gross) ‐144.9 ‐20.2 ‐20.0 0.0 0.0 D'Ieteren Taxes ‐12.4 ‐21.5 ‐31.5 ‐45.9 ‐57.7 Family Except./discontinued operations ‐‐‐‐‐ 74% Net declared earnings 19.7 175.4 174.3 222.4 236.3 Net adjusted earnings ‐41.7 237.5 185.9 216.3 229.5 Cash Flow (EUR m) 12/14 12/15e 12/16e 12/17e 12/18e EBIT 62.7 242.4 255.7 298.2 323.9 Depreciation 94.1 100.6 103.6 106.7 113.2 Amortization 23.8 39.7 35.8 32.3 29.2 Impairment charges ‐‐‐‐‐ Source: D’Ieteren Changes in provision ‐3.5 5.8 0.3 0.3 0.3 Changes in working capital ‐114.1 ‐4.0 13.6 ‐9.5 ‐9.4 Others 5.5 0.0 0.0 0.0 0.0 Exhibit 2 Profitability evolution (Moleskine Operational Cash Flow 68.5 384.5 409.0 428.1 457.2 incl.) Tax expenses ‐12.4 ‐21.5 ‐31.5 ‐45.9 ‐57.7 Dividends from associates 0.9 0.5 0.5 0.5 0.5 Net interest charges ‐32.2 ‐38.9 ‐30.4 ‐30.4 ‐30.4 7,000 400 Others ‐144.9 ‐20.2 ‐20.0 0.0 0.0 6,500 350 CF from operating activities ‐120.1 304.4 327.5 352.3 369.5 6,000 300 5,500 250 CAPEX ‐156.7 ‐137.3 ‐169.3 ‐165.3 ‐153.3 5,000 200 Acquisitions ‐35.0 ‐25.0 ‐25.0 ‐25.0 ‐25.0 4,500 150 Divestments 0.0 0.0 0.0 0.0 0.0 4,000 100 Others 0.0 0.0 0.0 0.0 0.0 3,500 50 CF from investing activities ‐191.7 ‐162.3 ‐194.3 ‐190.3 ‐178.3 3,000 0 Dividend payment ‐44.0 ‐43.9 ‐44.2 ‐47.0 ‐47.0 Minor. & pref. dividends 0.0 0.0 0.0 0.0 0.0 Equity financing ‐2.9 0.0 0.0 0.0 0.0 Sales Current PBT Others 0.0 0.0 0.0 0.0 0.0 CF from financing activities ‐46.9 ‐43.9 ‐44.2 ‐47.0 ‐47.0 Net debt/cash change 358.7 ‐98.2 ‐89.0 ‐114.9 ‐144.3 Balance Sheet (EUR m) 12/14 12/15e 12/16e 12/17e 12/18e Source: Degroof Petercam Tangible fixed assets 505.8 521.0 586.7 645.3 685.4 Goodwill 965.7 990.6 943.4 900.9 862.5 Other intang. assets 457.9 470.7 446.2 424.1 404.1 Exhibit 3 2016 Operating profit breakdown Financial fixed assets 188.4 183.5 184.0 184.4 184.9 (Moleskine for 3 months) Total Fixed assets 2,117.8 2,165.8 2,160.3 2,154.7 2,136.9 Working capital 585.2 442.7 429.2 438.7 448.1 Moleskine Total Equity 1,777.6 2,045.8 2,170.0 2,337.7 2,518.6 4% Provisions & deferred taxes 121.5 86.4 87.0 87.6 88.2 Net financial debt 992.2 901.6 782.5 627.6 483.3 Total assets 3,387.1 3,335.0 3,408.0 3,531.8 3,683.0 Shares ‐ per share data (EUR) 12/14 12/15e 12/16e 12/17e 12/18e Auto Adjusted EPS ‐0.75 4.29 3.36 3.91 4.15 28% Dividend 0.80 0.80 0.80 0.85 0.85 No shares ‐ average (m) 55.30 55.30 55.30 55.30 55.30 Ratios 12/14 12/15e 12/16e 12/17e 12/18e Belron 68% Valuation analysis Adjusted P/E nm 8.0 12.5 10.8 10.2 P/BV 1.0 1.0 1.1 1.0 1.0 EV/EBITDA 15.3 7.2 8.1 7.0 5.5 EV/EBIT 44.2 11.4 12.5 10.3 8.0 EV/FCF (1) ‐27.8 12.6 21.5 11.9 10.5 Source: Degroof Petercam FCF yield (2) ‐8.1% 9.4% 5.1% 9.7% 9.2% Dividend yield 2.7% 2.3% 1.9% 2.0% 2.0% Financial ratios Exhibit 4 D’Ieteren auto market share Net Debt/EBITDA 5.5 2.4 2.0 1.4 1.0 Net Debt/Equity 55.8% 44.1% 36.1% 26.8% 19.2% ROCE post‐tax 5.8% 7.2% 8.0% 8.7% 9.2% ROCE post‐tax (grossed gdwll) ‐‐‐‐‐ 24% Margin analysis and tax rate 23% Gross margin ‐‐‐‐‐ 22% EBIT margin 1.1% 4.0% 4.1% 4.7% 5.0% Tax rate ‐‐‐‐‐ 21% Growth analysis 20% Sales 1% 9% 2% 2% 3% 19% Adjusted EPS ‐chg+chg ‐22% 16% 6% (1) Based on FCF to Enterprise ‐ (2) Based on FCF to Equity 18%
Market share Net market share
Source: D’Ieteren
25
PostNL www.postnl.com The Netherlands / Mail & Parcels www.degroofpetercam.com
Living alone Reduce Investment case Price EUR 4.19 PostNL’s rejection of bpost’s final friendly offer was a major (06/01/17) disappointment for PostNL shareholders in 2016. Management decided Target price 4.00 against the creation of a strong Benelux operator. Instead, the company is Risk High now considering accelerating their 2020 strategy. This would include a Reuters PTNL.AS faster transition to digital mail, accelerating parcels growth and another Bloomberg PNL NA review of the cost base. The existing 2015‐20 savings plan is for a cost Shares number (m) 440.92 reduction of EUR345m in aggregate. Market cap. (m) 1,846 Meanwhile, PostNL has a lot of uncertainties to deal with. E.g. a continued Net debt 12/16e (m) ‐70 strong mail volume decline, increasing competition from mail Net debt/EBITDA 12/16e ‐0.18 consolidators, the USO evaluation, the uncertain outcome and costs of the H/L 1 year 4.88 ‐ 3.01 “significant market power” issues. Meanwhile, Sandd, the main corporate 1 year price perf. 26.9% mail competitor, recently announced their low priced entry into the SME Diff. with Euro Stoxx 20.3% market, together with DPD. Volume (sh./day) 3,168,766 The fast growing parcels business is facing intensifying competition, also Free Float 72% from integrating e‐commerce vendors, which keeps prices under pressure. FMR 10% We also see significant risk of mispricing new delivery models. Edinburgh Partners 7% Furthermore, the company’s relationships with its drivers and third party Causeway Capital 6% service point operators remains less than perfect. J.H.H. de Mol 5% Meanwhile, the negative equity on the balance sheet continues to prevent PostNL from paying a dividend again this year. Too many uncertainties It will likely take until the end of February 2017 for PostNL to inform investors on how it intends to “improve the value proposition for its shareholders”. This could involve accelerated restructuring and additional charges. We expect the shares to underperform until there is more clarity 16e 17e 18e on the many issues that the company faces in 2017. P/E 12.1 9.6 8.9 EV/EBITDA 4.4 4.0 3.5 EV/EBIT 5.8 5.1 4.4 Business description Div. yield 0.0% 5.3% 6.9% PostNL is a focused mail and parcel operator with operations in four countries: the Netherlands, Belgium, Germany and Italy. It also operates various on‐line Company Calendar activities. 27/02/17 Q4 & FY 2016 results To the investment community PostNL has aimed to position itself as a cash (+Capital Markets Day in Feb ‘17) generative defensive stock offering a solid dividend yield. It promised an annual dividend of at least EUR150m. However, a pension fund deficit and IAS19 accounting currently prevent PostNL from paying dividends in cash.
Competitive position PostNL + relative to Euro Stoxx (grey) PostNL aims to defend its market leadership and profitability in the Dutch mail 5.0 market against the trend shift to electronic mail and against competition. It also 4.5 aggressively expands in Parcels to benefit from expected further growth in the 4.0 Dutch parcels market as well as new penetration of parcel markets in Belgium, 3.5 Germany and Italy. Meanwhile, it has strengthened its position as key challenger 3.0 2.5 in liberalizing mail markets Germany and Italy, where it competes with the local Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar postal services. In 2015 it decided to exit the UK postal market. 14 15 15 15 15 16 16 16 16 17
Analyst:
Marcel Achterberg +31 20 573 5463 [email protected]
26
Exhibit 1 Revenue by segment, 2016e Profit & Loss (EUR m) 12/14 12/15 12/16e 12/17e 12/18e
Other Revenues 4,251 3,461 3,460 3,482 3,519 4% Gross profit 1,949 1,757 1,765 1,783 1,812 EBITDA 505 433 387 413 453 Internat. Mail NL EBITA 431 366 317 338 373 25% 47% EBIT 405 340 295 321 361 Net Financial Result ‐95 ‐78 39 ‐73 ‐62 Exceptionals (gross) 13 ‐18 ‐24 0 0 Taxes ‐83 ‐77 ‐58 ‐74 ‐90 Except./discontinued operations ‐‐‐‐‐ Net declared earnings 226 149 278 174 209 Net adjusted earnings 212 195 150 193 208 Parcels Cash Flow (EUR m) 12/14 12/15 12/16e 12/17e 12/18e 24% EBIT 405 340 295 321 361 Depreciation 70 65 70 75 80 Amortization 26 26 22 17 12 Source: Degroof Petercam Impairment charges 31000 Changes in provision ‐48 ‐132 ‐78 ‐14 ‐12 Changes in working capital ‐28 11 ‐15 ‐18 ‐17 Exhibit 2 Underlying EBIT by segment, Others 00000 2016e, EUR m Operational Cash Flow 428 311 294 382 423 Tax expenses ‐72 ‐105 ‐58 ‐74 ‐90 Dividends from associates 7 3 3 3 3 Other Net interest charges ‐84 ‐69 ‐106 ‐73 ‐62 Others ‐‐‐‐‐ CF from operating activities 279 140 132 237 275 Internat. CAPEX ‐81 ‐82 ‐100 ‐85 ‐85 Acquisitions 0 ‐5000 Divestments 0 0 649 0 0 Parcels Others 0 0 ‐10 0 0 CF from investing activities ‐81 ‐87 539 ‐85 ‐85 Dividend payment 0 0 0 0 ‐98 Mail NL Minor. & pref. dividends ‐‐‐‐‐ Equity financing 0 0 0 0 0 ‐50 0 50 100 150 200 250 Others ‐‐‐‐‐ CF from financing activities 0 0 0 0 ‐98 Net debt/cash change 139 130 622 102 42 Source: Degroof Petercam Balance Sheet (EUR m) 12/14 12/15 12/16e 12/17e 12/18e Tangible fixed assets 519 508 538 548 553 Goodwill 84 90 0 0 0 Exhibit 3 Revenue (EUR m) and Underlying Other intang. assets 46 56 0 0 0 EBITDA % Financial fixed assets 51 37 37 37 37 Total Fixed assets 700 691 721 731 736 Working capital ‐419 ‐430 ‐415 ‐397 ‐380 Total Equity ‐590 ‐216 ‐110 34 110 Provisions & deferred taxes 729 597 519 505 493 Net financial debt 682 552 ‐70 ‐172 ‐213 Total assets 1,212 1,196 1,226 1,239 1,248 Shares ‐ per share data (EUR) 12/14 12/15 12/16e 12/17e 12/18e Adjusted EPS 0.48 0.44 0.34 0.44 0.47 Dividend 0.00 0.00 0.00 0.22 0.29 No shares ‐ average (m) 440.59 441.35 441.35 441.35 441.35 Ratios 12/14 12/15 12/16e 12/17e 12/18e Valuation analysis Adjusted P/E 6.4 7.9 12.1 9.6 8.9 P/BV nm nm nm 71.8 18.1 EV/EBITDA 5.0 5.8 4.4 4.0 3.5 Source: Degroof Petercam EV/EBIT 6.3 7.4 5.8 5.1 4.4 EV/FCF (1) 7.3 11.0 8.8 5.5 4.7 FCF yield (2) 14.5% 3.8% 1.8% 8.2% 10.3% Exhibit 4 Normalized EPS (EUR) Dividend yield 0.0% 0.0% 0.0% 5.3% 6.9% Financial ratios Net Debt/EBITDA 1.4 1.3 ‐0.2 ‐0.4 ‐0.5 Net Debt/Equity ‐115.6% ‐255.6% 63.1% ‐509.0% ‐194.1% ROCE post‐tax 100.1% 112.8% 85.0% 75.6% 79.1% ROCE post‐tax (grossed gdwll) 42.6% 44.3% 36.4% 34.8% 37.9% Margin analysis and tax rate Gross margin 45.8% 50.8% 51.0% 51.2% 51.5% EBIT margin 9.6% 9.9% 8.6% 9.3% 10.3% Tax rate 24.8% 26.9% 16.2% 28.1% 28.8% Growth analysis Sales ‐1% ‐19% 0% 1% 1% Adjusted EPS 37% ‐8% ‐23% 29% 8% (1) Based on FCF to Enterprise ‐ (2) Based on FCF to Equity
Source: Degroof Petercam
27
Vopak www.vopak.com The Netherlands / Industrial Services www.degroofpetercam.com
Looking for new profit flows Sell
Capacity expansion needed for growth, as efficiency has maxed out Price EUR 45.19 (06/01/17) Vopak has been operating in a rather benign market environment in 2016, allowing it to continue its recovery from the 2012‐2014 dip. With occupancy Target price 39.00 Risk Medium near the 95% ceiling and a continuing increase in competition, future profit growth needs to come from capacity expansion. Given the lack of visibility in Reuters VOPA.AS today’s uncertain world it remains difficult to take new investment decisions. Bloomberg VPK NA Shares number (m) 127.84 Investment case Market cap. (m) 5,776 Net debt 12/16e (m) 1,901 We rate Vopak a Sell with a EUR 39 target price for the following reasons: Net debt/EBITDA 12/16e 1.98 No further upside for profit margins. The market conditions are already H/L 1 year 48.88 ‐ 36.16 rather benign, with occupancy near the maximum of 95% and some help 1 year price perf. 17.5% from contango. Taking into account the increased competition, we see Diff. with Euro Stoxx 10.9% hardly any upside for profit margins. Volume (sh./day) 336,415 Little support from capacity growth. Current expansion projects add only Free Float 52% 1% to proportionally consolidated capacity until 2019. New capacity HAL Holding 48% expansions are unlikely to generate a significant profit contribution before UBS 3% 2019, except for acquisitions. OppenheimerFunds 4% ING Groep 3% Low net cash generation. Due to the very high maintenance & Delta Lloyd 1% improvement capex, Vopak generates only a limited net cash flow. Treasury 0% Declining ROCE. The high maintenance & improvement capex generates a below‐average ROCE. New terminals also tend to depress ROCE in the first period. 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. 16e 17e 18e P/E 16.6 16.3 15.6 EV/EBITDA 7.4 9.6 9.1 EV/EBIT 10.2 15.6 14.8 Business description Div. yield 2.4% 2.5% 2.5% 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 17/02/17 FY 2016 Results represented in hub locations like the ports of Amsterdam/Rotterdam/Antwerp, 19/04/17 Q1‐17 Trading Update Houston, Singapore and Fujairah, ywhich pla a key role in global logistic flows. It 19/04/17 AGM offers a full range of services at these locations, including storage and 18/04/17 H1‐17 Results transhipment of products intended for export and import and distribution of 06/11/17 Q3‐17 Trading Update 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) local logistics and import and export activities, whereby the producers 55 outsource the terminal function to Vopak based on long‐term contracts. 50 45 40 Competitive position 35 30 Vopak is the leading operator with storage capacity of 34.6m cbm. The closest Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar peer is Oiltanking (Germany) with a capacity of 21m cbm. Oiltanking is owned by 14 15 15 15 15 16 16 16 16 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 (France, Challenger Luuk van Beek Infrastructure Fund), VTTI (Netherlands; 50% Vitol, 50% MISC Berhad), Odfjell +31 20 573 5471 [email protected] and Stolt‐Nielsen.
28
Exhibit 1 Revenue by geography 2016e Profit & Loss (EUR m) 12/14 12/15 12/16e 12/17e 12/18e North Revenues 1,348.9 1,492.1 1,643.4 1,361.4 1,398.1 Gross profit 1,348.9 1,492.1 1,643.4 1,361.4 1,398.1 America EBITDA 673.6 754.9 958.8 704.1 715.8 20% EBITA 394.0 495.2 697.4 434.0 442.2 EBIT 394.0 495.2 697.4 434.0 442.2 Net Financial Result ‐89.8 ‐105.2 ‐95.9 ‐84.4 ‐80.0 Exceptionals (gross) ‐‐‐‐‐ Netherlands Taxes ‐83.1 ‐117.3 ‐80.8 ‐94.8 ‐101.7 37% Except./discontinued operations ‐47.1 ‐43.1 210.7 0.0 0.0 Asia Net declared earnings 250.4 282.2 556.1 353.6 367.9 29% EMEA Net adjusted earnings 294.2 325.3 345.4 353.6 367.9 14% Cash Flow (EUR m) 12/14 12/15 12/16e 12/17e 12/18e EBIT 394.0 495.2 697.4 434.0 442.2 Depreciation 279.6 259.7 261.4 270.1 273.7 Amortization 0.0 0.0 0.0 0.0 0.0 Source: Degroof Petercam Impairment charges ‐‐‐‐‐ Changes in provision ‐7.3 41.7 0.0 0.0 0.0 Changes in working capital 21.4 31.7 33.7 ‐43.4 5.6 Others 5.8 ‐0.1 0.0 0.0 0.0 Exhibit 2 Indicative EBITDA by end market Operational Cash Flow 693.5 828.2 992.5 660.7 721.5 Tax expenses ‐51.8 ‐104.6 ‐80.8 ‐94.8 ‐101.7 Biofuels LNG Dividends from associates 92.3 93.7 114.9 122.8 131.5 6% 4% Net interest charges ‐83.6 ‐102.4 ‐95.9 ‐84.4 ‐80.0 High growth Others ‐18.1 17.4 0.0 0.0 0.0 segment CF from operating activities 632.3 732.3 930.7 604.3 671.4 CAPEX ‐518.7 ‐346.9 ‐359.2 ‐325.2 ‐317.5 Oil Acquisitions ‐170.8 ‐132.1 ‐150.0 ‐70.0 ‐75.0 Industrial products Divestments 22.5 330.5 135.4 0.0 0.0 Others ‐16.1 ‐102.1 0.0 0.0 0.0 22% 46% About 10% CF from investing activities ‐683.1 ‐250.6 ‐373.7 ‐395.2 ‐392.5 related to oil Dividend payment ‐114.8 ‐114.8 ‐127.5 ‐137.5 ‐141.3 Chemi cals trading by Minor. & pref. dividends ‐36.1 ‐55.3 ‐34.6 ‐30.1 ‐31.0 22% Equity financing 5.0 ‐2.9 0.0 0.0 0.0 dedicated Others ‐41.9 ‐60.9 0.0 0.0 0.0 traders CF from financing activities ‐187.8 ‐233.9 ‐162.2 ‐167.5 ‐172.3 Net debt/cash change 441.6 29.3 ‐394.8 ‐41.5 ‐106.5 Source: Degroof Petercam Balance Sheet (EUR m) 12/14 12/15 12/16e 12/17e 12/18e Tangible fixed assets 3,622.4 3,496.0 3,605.1 3,726.1 3,839.7 Goodwill ‐‐‐‐‐ Exhibit 3 Occupancy rates Other intang. assets ‐‐‐‐‐ Financial fixed assets 985.0 1,197.3 1,074.6 1,088.3 1,102.9 Total Fixed assets 4,814.9 4,855.9 4,845.5 4,984.2 5,117.7 96% Working capital ‐104.4 ‐162.8 ‐180.7 ‐146.9 ‐151.3 Total Equity 1,902.8 2,160.4 2,511.1 2,734.8 2,969.2 94% Provisions & deferred taxes 466.0 365.9 365.9 365.9 365.9 92% Net financial debt 2,266.3 2,295.6 1,900.8 1,859.3 1,752.7 Total assets 5,408.4 5,497.2 5,554.7 5,659.2 5,755.8 90% Shares ‐ per share data (EUR) 12/14 12/15 12/16e 12/17e 12/18e 88% Adjusted EPS 2.31 2.55 2.71 2.78 2.89 Dividend 0.90 1.00 1.08 1.11 1.13 86% No shares ‐ average (m) 127.52 127.62 127.45 127.29 127.29 84% Ratios 12/14 12/15 12/16e 12/17e 12/18e 82% Valuation analysis Adjusted P/E 18.7 15.6 16.6 16.3 15.6 2013 2014 2015 2016 P/BV nm nm 2.4 2.2 2.1 EV/EBITDA 11.9 9.6 7.4 9.6 9.1 Source: Degroof Petercam EV/EBIT 20.3 14.6 10.2 15.6 14.8 EV/FCF (1) 59.3 20.1 26.1 25.5 19.9 FCF yield (2) 1.3% 5.2% 3.7% 3.6% 4.8% Exhibit 4 ROCE development Dividend yield 2.1% 2.5% 2.4% 2.5% 2.5% Financial ratios Net Debt/EBITDA 3.4 3.0 2.0 2.6 2.4 6,000 12% Net Debt/Equity 119.1% 106.3% 75.7% 68.0% 59.0% 5,000 10% ROCE post‐tax 8.5% 7.3% 7.9% 8.3% 8.3% ROCE post‐tax (grossed gdwll) 8.5% 7.3% 7.9% 8.3% 8.3% 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 29.8% 35.7% 51.8% 32.1% 31.8% 2,000 4% Tax rate 27.3% 30.1% 13.4% 27.1% 28.1% Growth analysis 1,000 2% Sales 2% 5% ‐3% 1% 3% ‐ 0% Adjusted EPS ‐6% 10% 6% 3% 4% (1) Based on FCF to Enterprise ‐ (2) Based on FCF to Equity
Capital Empl. ROCE
Source: Degroof Petercam
29
Benelux stock performances 2016
Exhibit 3 Benelux out‐ and underperformers
ArcelorMittal ‐57% 132% 70% BESI 0% Econocom 63% 30% 53% Sioen Industries 62% 48% Fagron ‐80% 43% argenx 46% 43% Lotus Bakeries 88% 42% Wessanen 78% 41% Ter Beke 57% 40% Umicore 16% 36% Bekaert 8% 2016 35% Zetes 60% 35% 2015 Care Property Invest ‐5% 34% Xior 0% Aperam 32% 34% 30% Barco 6% 29% ASML Holding ‐8% 28% SBM Offshore 19% 27% Melexis 34% 27% Tessenderlo 31%
… … …
‐14% Ontex 38% ‐14% BAM Group 99% ‐15% Nyrstar ‐45% ‐17% Biocartis 15% ‐17% Wereldhave ‐9% ‐19% KPN 33% ‐23% Exmar ‐3% ‐24% GrandVision 38% ‐25% Beter Bed Holding 31% ‐26% TomTom 110% ‐27% UCB 32% ‐28% Flow Traders 42% ‐28% Arcadis ‐26% ‐30% ThromboGenics ‐45% Agfa‐Gevaert ‐30% 151% ‐32% Ablynx 76% ‐32% Heijmans ‐9% ‐35% Curetis 0% Euronav ‐40% ‐63% 22% Celyad 43% ‐100% ‐75% ‐50% ‐25% 0% 25% 50% 75% 100% 125% 150% 175%
Source: Degroof Petercam estimates
30 EQUITY RESEARCH 10/01/2017
European sector performances 2016
Exhibit 4 European sector out‐ and underperformers
51.0% Basic Resources ‐13.1% 19.4% Oil & Gas ‐4.0% Personal & Household Goods 12.6% 19.2% 2016 12.6% Industrial Goods & Services 6.7% 2015 8.6% Construction & Materials 22.9% 5.4% Chemicals 1.9% 4.9% Retail 18.5% 4.0% Technology 16.4% 1.1% Real Estate 11.3% 0.6% Health Care 17.4% ‐3.9% Financial Services 22.9% ‐3.9% Automobiles & Parts 13.3% ‐5.6% Insurance 15.9% ‐5.9% Media 7.1% ‐6.7% Travel & Leisure 28.1% ‐7.8% Utilities ‐5.4% ‐8.0% Banks ‐4.9% ‐8.1% Telecommunications 9.9% ‐8.4% Food & Beverage 21.4%
‐30% ‐20% ‐10% 0% 10% 20% 30% 40% 50% 60%
Source: Degroof Petercam estimates
31 EQUITY RESEARCH 10/01/2017
Benelux and European earnings outlook and valuation
European and Benelux corporate earnings have not shown any significant recovery in recent years and even today remain below the levels of 2011. This is a totally different picture compared to the US.
Exhibit 5 European corporate earnings evolution
Source: Degroof Petercam estimates and Eurostoxx data
However, the second half of 2016 has finally witnessed a more sustained period of earnings recovery. The prolonged monetary easing is finally improving investment and consumer sentiment, unemployment is declining, raw material prices are recovering and the weak Euro is supportive for corporate earnings growth. Especially the strengthening of the dollar versus the euro at the end of the year is important for companies with significant transaction exposure. This has resulted in a more consistent trend of upwards earnings revisions in recent months but we believe that this is not yet fully translated in earnings estimates.
Exhibit 6 Monthly earnings evolution Europe
5.0%
3.0%
1.0%
-1.0%
-3.0%
-5.0% Jul-11 Jul-12 Jul-13 Jul-14 Jul-15 Jul-16 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17
Source: Degroof Petercam estimates and Eurostoxx data
For the Benelux, in our Degroof Petercam coverage universe we witnessed 3.9% estimated earnings growth between 2016 and 2015, we anticipate 11.8% for 2017 and 9.5% for 2018.
32 EQUITY RESEARCH 10/01/2017
The main risk to earnings estimates are emerging market trends and the US macro environment. Exhibit 7 shows the high correlation between earnings evolution and stock market performance in the long run.
Exhibit 7 Earnings growth and stock market correlation
8% 500 6% 450 4% 400 2% 0% 350 -2% 300 -4% 250 -6% 200 -8% -10% 150 -12% 100 30/11/94 30/11/95 30/11/96 30/11/97 30/11/98 30/11/99 30/11/00 30/11/01 30/11/02 30/11/03 30/11/04 30/11/05 30/11/06 30/11/07 30/11/08 30/11/09 30/11/10 30/11/11 30/11/12 30/11/13 30/11/14 30/11/15 30/11/16
Earnings revisions Eurostoxx
Source: Degroof Petercam estimates and JCF data
European and Benelux market valuation
For Europe, 2017 could well be the first year since 2010 of real earnings recovery. Ceteris paribus, this should bode well for equity markets if market multiples are rolled over. The recent stock market rise has increased the PER to 14.7x rolling 12m forward earnings but in view of the macro improvements, low interest and also in historical perspective, this is still not demanding.
Exhibit 8 Price/earnings ratio Eurostoxx
26.0 24.0 22.0 20.0 18.0 16.0 14.0 12.0 10.0 8.0 17 - Dec-91 Dec-93 Dec-95 Dec-97 Dec-99 Dec-01 Dec-03 Dec-05 Dec-07 Dec-09 Dec-11 Dec-13 Dec-15 Dec
Source: Degroof Petercam estimates and JCF data
Slightly higher inflation is positive for corporate earnings and the high Equity Risk Premium offers a valuation reserve for equities compared to bonds.
33 EQUITY RESEARCH 10/01/2017
Exhibit 9 Benelux median forward PER evolution Exhibit 10 Benelux forward EV/EBIT evolution 20.00 14.00 12.00 15.00 10.00 8.00 10.00 6.00
5.00 4.00 2.00 0.00 0.00 2012 2013 2014 2015 2016 2017 2018 2011 2012 2013 2014 2015 2016 2017 2018
PER Benelux EV/EBIT Benelux
Source: Degroof Petercam estimates Source: Degroof Petercam estimates
The recent increase in bond yields is still from a low base. With core inflation remaining limited and the ECB policy maintained, we do not anticipate a significant rate increase.
Exhibit 11 Long term bond yield evolution
10 9 8 7 6 5 4 3 2 1 0 12/1/1991 12/1/1992 12/1/1993 12/1/1994 12/1/1995 12/1/1996 12/1/1997 12/1/1998 12/1/1999 12/1/2000 12/1/2001 12/1/2002 12/1/2003 12/1/2004 12/1/2005 12/1/2006 12/1/2007 12/1/2008 12/1/2009 12/1/2010 12/1/2011 12/1/2012 12/1/2013 12/1/2014 12/1/2015 12/1/2016
bond yield
Source: JCF data
The dividend yield of 3.2% remains attractive and significantly above government bond yields of 0.7%.
34 EQUITY RESEARCH 10/01/2017
Exhibit 12 Bond yield/earnings yield/dividend yield Europe
14 12 10 8 6 4 2 0 2/1/1993 4/1/1994 6/1/1995 8/1/1996 2/1/2000 4/1/2001 6/1/2002 8/1/2003 2/1/2007 4/1/2008 6/1/2009 8/1/2010 2/1/2014 4/1/2015 6/1/2016 12/1/1991 10/1/1997 12/1/1998 10/1/2004 12/1/2005 10/1/2011 12/1/2012
E yield div yield bond yield
Source: Degroof Petercam estimates and JCF data The European Equity Risk Premium of around 6.4% remains high in a historical perspective and significantly above levels in the US and Japan.
Exhibit 13 Equity Risk Premium 12.00
10.00
8.00
6.00
4.00
2.00
0.00 17 15 13 11 09 07 05 03 01 99 97 95 93 91 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐2.00 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 Source: Degroof Petercam estimates and JCF data
35 EQUITY RESEARCH 10/01/2017
Valuation tables
2017 P/E ranking Price at P/E P/E P/E 06/01/17 16e 17e 18e Heijmans 6.09 nm 8.3 4.3 Arcadis 13.28 9.4 8.7 7.2 Agfa‐Gevaert 3.78 6.4 8.7 8.9 Recticel 6.76 10.9 9.5 8.2 BAM Group 4.55 15.2 9.5 7.7 PostNL 4.19 12.1 9.6 8.9 Roularta 24.90 10.6 10.2 9.5 Philips Lighting 23.52 10.4 10.4 9.6 D'Ieteren 42.36 12.5 10.8 10.2 Refresco Group 14.54 14.1 11.1 10.0 Tessenderlo 34.13 14.0 11.9 10.9 Solvay 110.55 13.6 12.2 10.9 Aperam 43.80 17.7 12.9 11.9 Sipef 59.87 19.2 13.2 12.4 Randstad 54.03 14.2 13.3 12.5 UCB 65.87 15.0 13.3 10.3 Greenyard 14.96 16.5 13.4 11.9 Accell Group 21.33 15.9 13.5 12.0 Bekaert 38.91 23.8 13.7 12.0 Ontex 28.28 16.0 13.9 12.4 RTL Group 69.94 14.9 14.0 13.6 bpost 23.14 13.7 14.1 14.0 Beter Bed Holding 16.97 16.6 14.3 12.3 Akzo Nobel 59.80 14.6 14.3 13.3 Royal Dutch Shell 26.43 25.1 14.4 12.0 Ter Beke 148.85 14.4 14.5 13.3 ASM International 42.14 18.8 14.8 13.3 Wolters Kluwer 34.75 16.4 14.8 13.8 Elia 49.00 17.7 14.8 13.3 Euronav 7.88 5.3 15.0 Aalberts 30.75 16.9 15.3 14.2 Ahold Delhaize 19.62 19.2 15.5 13.5 RELX 15.84 18.3 15.6 14.6 TKH Group 37.66 18.0 16.0 14.1 Proximus 27.95 17.0 16.2 15.1 Flow Traders 32.79 18.4 16.2 13.4 Vopak 45.19 16.6 16.3 15.6 Median 18.4 16.3 14.1 DSM 58.70 20.4 16.4 13.9 Philips 28.46 21.1 16.5 14.7
36 EQUITY RESEARCH 10/01/2017
Price at P/E P/E P/E 06/01/17 16e 17e 18e EVS 32.84 13.7 16.8 Corbion 24.76 14.1 16.8 15.7 Econocom 14.20 17.5 16.8 15.7 SBM Offshore 14.94 20.3 17.0 9.6 Sligro Food Group 33.17 19.3 17.1 15.6 BESI 32.40 20.4 17.4 15.8 Colruyt 46.69 18.1 17.6 17.2 Average 20.4 17.8 15.4 Orange Belgium 21.53 18.0 17.9 Sioen Industries 28.05 20.3 18.1 16.7 CFE 104.05 19.1 18.5 14.4 Heineken 71.01 19.1 18.6 17.5 ArcelorMittal 7.27 38.1 18.8 18.1 Fagron 9.96 22.2 19.1 15.5 Unilever 38.93 21.0 19.4 18.1 Boskalis 33.24 20.5 19.8 19.5 Umicore 54.46 21.9 19.9 18.1 GrandVision 20.90 22.9 20.5 18.8 Van de Velde 66.30 22.1 21.3 20.5 AB InBev 100.50 27.8 21.3 21.8 Barco 81.50 54.7 22.9 17.9 Melexis 64.41 26.5 23.5 21.4 Zetes 54.00 22.6 23.7 21.7 IMCD 40.90 25.0 24.2 23.1 Kinepolis 43.30 29.4 24.4 22.5 ASML Holding 105.40 33.1 25.0 21.1 Telenet 52.85 23.2 25.4 7.4 KPN 2.86 25.7 25.9 25.7 Lotus Bakeries 2474.80 31.9 28.9 25.7 IBA 41.36 39.8 29.0 23.8 Wessanen 13.62 37.7 31.1 27.6 TomTom 8.88 37.0 32.4 31.2 Brunel 15.71 48.5 33.0 27.8 Fluxys Belgium 26.43 32.7 33.9 Exmar 7.60 12.2 43.7 23.5 Fugro 14.62 nm nm 22.6 Nyrstar 7.78 nm nm 10.2
37 EQUITY RESEARCH 10/01/2017
2017 EV/EBITDA ranking Price at EV/EBITDA EV/EBITDA EV/EBITDA 06/01/17 16e 17e 18e PostNL 4.19 4.4 4.0 3.5 Heijmans 6.09 nm 4.2 2.6 ASM International 42.14 6.5 4.6 3.9 Euronav 7.88 3.5 4.7 Royal Dutch Shell 26.43 6.2 4.8 4.1 Orange Belgium 21.53 5.3 5.2 BAM Group 4.55 13.3 5.5 3.7 Recticel 6.76 7.2 6.1 5.6 Greenyard 14.96 7.3 6.2 5.5 Arcadis 13.28 6.8 6.2 4.9 Roularta 24.90 6.7 6.3 5.4 CFE 104.05 6.7 6.3 5.3 Proximus 27.95 6.4 6.4 6.2 Nyrstar 7.78 10.7 6.4 5.3 ArcelorMittal 7.27 6.9 6.4 5.9 Philips Lighting 23.52 7.1 6.5 5.7 Refresco Group 14.54 8.2 6.6 5.9 Ahold Delhaize 19.62 9.7 6.7 6.0 Ter Beke 148.85 6.8 6.8 5.7 Aperam 43.80 8.3 6.9 6.3 Bekaert 38.91 7.5 7.0 6.4 D'Ieteren 42.36 8.1 7.0 5.5 KPN 2.86 7.3 7.0 6.7 SBM Offshore 14.94 8.9 7.1 5.4 Sipef 59.87 9.3 7.1 6.6 Beter Bed Holding 16.97 8.3 7.3 6.3 bpost 23.14 7.3 7.4 7.2 Agfa‐Gevaert 3.78 6.8 7.6 7.5 Boskalis 33.24 8.2 7.6 7.6 Colruyt 46.69 8.3 8.0 7.6 Akzo Nobel 59.80 8.5 8.0 7.2 Sioen Industries 28.05 9.1 8.0 7.1 Philips 28.46 9.6 8.1 7.2 Corbion 24.76 9.1 8.2 7.5 Sligro Food Group 33.17 9.1 8.3 7.7 Solvay 110.55 8.9 8.3 7.6 Tessenderlo 34.13 9.4 8.3 7.5 Accell Group 21.33 10.1 8.6 7.6 Median 9.5 8.6 7.6 RTL Group 69.94 9.0 8.8 8.4
38 EQUITY RESEARCH 10/01/2017
Price at EV/EBITDA EV/EBITDA EV/EBITDA 06/01/17 16e 17e 18e Fugro 14.62 13.8 8.8 5.7 Telenet 52.85 9.6 9.1 8.5 Barco 81.50 11.1 9.2 7.7 Randstad 54.03 10.1 9.3 8.6 Average 10.7 9.5 8.5 Vopak 45.19 7.4 9.6 9.1 Aalberts 30.75 10.5 9.7 8.7 Ontex 28.28 11.1 9.9 8.5 Exmar 7.60 7.7 9.9 9.1 TKH Group 37.66 11.0 10.0 8.8 EVS 32.84 8.6 10.1 DSM 58.70 11.3 10.2 9.2 Zetes 54.00 9.3 10.2 9.5 GrandVision 20.90 11.8 10.6 9.7 Wolters Kluwer 34.75 11.9 10.7 9.9 Econocom 14.20 11.4 10.8 9.8 Umicore 54.46 11.7 10.8 9.8 BESI 32.40 12.6 10.9 9.8 Fagron 9.96 11.9 10.9 9.7 Kinepolis 43.30 11.4 10.9 10.7 Flow Traders 32.79 13.2 11.6 9.6 UCB 65.87 12.6 11.6 9.5 Heineken 71.01 12.2 11.7 11.1 Fluxys Belgium 26.43 11.7 12.1 Unilever 38.93 14.1 12.3 11.8 Van de Velde 66.30 14.1 12.9 12.4 TomTom 8.88 14.6 13.2 12.5 RELX 15.84 15.1 13.2 12.5 Elia 49.00 15.9 14.7 13.7 Brunel 15.71 14.5 15.1 13.6 AB InBev 100.50 16.3 15.3 14.2 IMCD 40.90 16.6 15.8 14.8 Melexis 64.41 18.3 16.4 14.9 Lotus Bakeries 2474.80 19.8 17.6 15.7 ASML Holding 105.40 22.6 18.0 15.4 Wessanen 13.62 23.5 18.2 16.3 IBA 41.36 34.3 24.1 18.5
39 EQUITY RESEARCH 10/01/2017
2017 EV/EBIT ranking Price at EV/EBIT EV/EBIT EV/EBIT 06/01/17 16e 17e 18e PostNL 4.19 5.8 5.1 4.4 ASM International 42.14 9.8 6.3 5.2 BAM Group 4.55 41.9 8.1 5.1 Royal Dutch Shell 26.43 14.3 8.5 6.8 bpost 23.14 8.6 8.7 8.6 Arcadis 13.28 10.5 9.2 6.8 Recticel 6.76 12.3 9.4 8.2 Heijmans 6.09 nm 9.6 4.0 Aperam 43.80 13.1 9.6 8.7 Beter Bed Holding 16.97 11.5 9.8 8.3 Greenyard 14.96 13.0 10.0 8.8 Accell Group 21.33 12.0 10.0 8.7 Agfa‐Gevaert 3.78 8.8 10.1 9.9 Refresco Group 14.54 13.2 10.1 8.9 D'Ieteren 42.36 12.5 10.3 8.0 RTL Group 69.94 10.9 10.5 10.0 Sioen Industries 28.05 11.6 10.7 9.3 Akzo Nobel 59.80 11.6 10.7 9.5 Randstad 54.03 12.2 11.0 10.0 EVS 32.84 9.1 11.1 Philips Lighting 23.52 12.9 11.1 9.1 Colruyt 46.69 11.7 11.3 10.8 ArcelorMittal7.2710.111.410.0 Corbion 24.76 12.7 11.4 10.3 Bekaert 38.91 13.2 11.5 9.9 Roularta 24.90 12.8 11.7 9.8 Sipef 59.87 17.6 11.7 10.7 Ter Beke 148.85 11.9 11.7 10.2 Ahold Delhaize 19.62 17.9 11.8 10.0 Ontex 28.28 13.5 12.0 10.1 Econocom 14.20 12.7 12.0 10.9 Solvay 110.55 15.3 12.1 11.0 Flow Traders 32.79 14.3 12.5 10.2 Barco 81.50 24.7 12.5 9.8 Philips 28.46 16.6 12.9 11.1 BESI 32.40 15.6 13.1 11.6 Sligro Food Group 33.17 15.5 13.3 11.9 Median 15.3 13.5 11.0 Aalberts 30.75 15.6 13.7 12.4 Proximus 27.95 14.7 13.8 12.7
40 EQUITY RESEARCH 10/01/2017
Price at EV/EBIT EV/EBIT EV/EBIT 06/01/17 16e 17e 18e Orange Belgium 21.53 15.0 13.9 Unilever 38.93 16.6 14.2 13.6 TKH Group 37.66 16.5 14.5 12.4 GrandVision 20.90 16.5 14.6 13.1 Average 16.1 14.8 12.8 Fagron 9.96 16.1 14.8 13.2 UCB 65.87 16.8 14.9 11.7 Van de Velde 66.30 16.4 15.1 14.6 Kinepolis 43.30 16.3 15.2 14.5 Euronav 7.88 6.9 15.4 Tessenderlo 34.13 18.0 15.5 13.9 Zetes 54.00 14.8 15.6 14.0 Vopak 45.19 10.2 15.6 14.8 Wolters Kluwer 34.75 18.0 15.6 14.3 KPN 2.86 19.4 16.0 13.5 Telenet 52.85 15.3 16.1 8.2 CFE 104.05 17.7 16.4 12.0 DSM 58.70 19.5 16.6 14.3 Nyrstar 7.78 nm 16.6 9.9 Umicore 54.46 18.4 16.6 14.8 RELX 15.84 19.8 17.0 15.9 SBM Offshore 14.94 22.4 17.2 11.0 Heineken 71.01 19.8 17.4 16.4 Boskalis 33.24 17.8 18.1 19.1 Brunel 15.71 19.7 18.7 16.5 IMCD 40.90 20.0 19.0 17.8 AB InBev 100.50 20.9 19.2 18.4 Melexis 64.41 22.2 19.9 18.0 ASML Holding 105.40 26.9 21.0 17.5 Elia 49.00 23.4 21.1 19.4 Wessanen 13.62 27.8 21.3 18.9 Lotus Bakeries 2474.80 24.0 21.4 18.9 Exmar 7.60 13.6 21.9 19.1 Fluxys Belgium 26.43 22.33 22.73 IBA 41.36 34.3 24.1 18.5 TomTom 8.88 nm 79.4 70.5 Fugro 14.62 nm nm 19.2
41 EQUITY RESEARCH 10/01/2017
2017 Net debt/EBITDA ranking
Net debt/ Net debt/ Net debt/ Price at EBITDA EBITDA EBITDA 06/01/17 16e 17e 18e ASM International 42.14 ‐3.13 ‐2.52 ‐2.67 IBA 41.36 ‐2.90 ‐2.51 ‐2.48 Barco 81.50 ‐2.45 ‐2.45 ‐2.57 BAM Group 4.55 ‐1.24 ‐1.62 ‐2.27 BESI 32.40 ‐1.55 ‐1.54 ‐1.63 bpost 23.14 ‐1.08 ‐1.20 ‐1.31 Colruyt 46.69 ‐0.68 ‐0.79 ‐0.90 EVS 32.84 ‐0.45 ‐0.77 Beter Bed Holding 16.97 ‐0.50 ‐0.56 ‐0.62 Agfa‐Gevaert 3.78 ‐0.14 ‐0.49 ‐0.80 Flow Traders 32.79 ‐0.39 ‐0.44 ‐0.47 PostNL 4.19 ‐0.18 ‐0.42 ‐0.47 Melexis 64.41 ‐0.35 ‐0.38 ‐0.49 Van de Velde 66.30 ‐0.30 ‐0.34 ‐0.38 ASML Holding 105.40 ‐0.39 ‐0.34 ‐0.78 Zetes 54.00 ‐0.26 ‐0.32 ‐0.44 Heijmans 6.09 ‐2.60 ‐0.06 ‐0.62 Aperam 43.80 0.34 0.00 ‐0.26 Boskalis 33.24 0.47 0.04 ‐0.47 Philips 28.46 0.88 0.07 ‐0.23 Sligro Food Group 33.17 0.37 0.19 0.05 Sipef 59.87 0.55 0.25 0.11 RTL Group 69.94 0.42 0.28 0.13 Corbion 24.76 0.57 0.30 ‐0.03 Tessenderlo 34.13 0.59 0.34 0.02 Sioen Industries 28.05 0.90 0.42 ‐0.07 Akzo Nobel 59.80 0.69 0.43 0.16 Umicore 54.46 0.63 0.47 0.24 Ahold Delhaize 19.62 1.05 0.50 0.21 Philips Lighting 23.52 0.97 0.54 0.12 TKH Group 37.66 0.94 0.54 0.11 Randstad 54.03 0.51 0.55 0.21 Ter Beke 148.85 0.87 0.66 0.75 CFE 104.05 0.92 0.77 0.51 TomTom 8.88 0.80 0.80 0.85 Orange Belgium 21.53 1.15 0.83 Royal Dutch Shell 26.43 1.14 0.90 0.59 Lotus Bakeries 2474.80 1.44 0.96 0.51 Median 1.15 0.96 0.63 Average 1.25 1.00 0.62
42 EQUITY RESEARCH 10/01/2017
Net debt/ Net debt/ Net debt/ Price at EBITDA EBITDA EBITDA 06/01/17 16e 17e 18e Wessanen 13.62 1.93 1.15 0.73 UCB 65.87 1.63 1.16 0.63 Proximus 27.95 1.14 1.16 1.13 Recticel 6.76 1.52 1.21 1.01 Solvay 110.55 1.50 1.21 0.95 Kinepolis 43.30 1.79 1.25 0.81 GrandVision 20.90 1.42 1.25 0.91 Wolters Kluwer 34.75 1.66 1.26 0.93 Euronav 7.88 1.43 1.29 Unilever 38.93 1.39 1.30 0.96 Arcadis 13.28 1.77 1.30 0.67 Aalberts 30.75 1.61 1.33 0.98 Econocom 14.20 1.65 1.34 0.92 IMCD 40.90 1.93 1.38 0.86 DSM 58.70 1.82 1.43 1.02 D'Ieteren 42.36 1.98 1.44 1.04 RELX 15.84 1.76 1.54 1.44 Roularta 24.90 2.73 1.61 0.37 Accell Group 21.33 2.14 1.64 1.13 ArcelorMittal 7.27 1.88 1.67 1.40 Greenyard 14.96 2.35 1.81 1.37 Bekaert 38.91 2.30 1.95 1.58 Refresco Group 14.54 2.75 2.02 1.64 Fugro 14.62 3.62 2.08 1.11 AB InBev 100.50 2.48 2.17 1.81 Heineken 71.01 2.54 2.30 2.04 Vopak 45.19 1.98 2.64 2.45 Ontex 28.28 2.29 2.67 1.98 Fagron 9.96 3.47 2.81 2.17 Nyrstar 7.78 4.78 2.88 2.31 KPN 2.86 3.16 2.89 2.62 SBM Offshore 14.94 4.22 2.99 1.78 Brunel 15.71 3.57 3.24 2.61 Telenet 52.85 4.13 3.80 3.45 Fluxys Belgium 26.43 4.88 4.95 Exmar 7.60 5.53 6.95 6.01 Elia 49.00 7.51 7.04 6.57
43 EQUITY RESEARCH 10/01/2017
2017 FCF yield ranking
Price at FCF Yield FCF Yield FCF Yield 06/01/17 16e (%) 17e (%) 18e (%) Euronav 7.88 37.5 24.0 0.0 SBM Offshore 14.94 13.5 17.5 21.8 BAM Group 4.55 8.1 17.4 19.8 Heijmans 6.09 ‐16.7 12.8 23.4 Philips Lighting 23.52 11.0 11.6 12.5 Greenyard 14.96 ‐9.1 11.5 9.0 Agfa‐Gevaert 3.78 14.3 11.4 9.9 Arcadis 13.28 10.1 10.1 13.1 Orange Belgium 21.53 5.4 9.9 0.0 D'Ieteren 42.36 5.1 9.7 9.2 Corbion 24.76 4.5 9.3 6.3 Refresco Group 14.54 7.0 8.9 9.7 Solvay 110.55 9.5 8.6 7.9 Bekaert 38.91 ‐4.7 8.5 9.8 Philips 28.46 7.3 8.4 9.1 PostNL 4.19 1.8 8.2 10.3 KPN 2.86 7.5 7.9 7.6 Aperam 43.80 7.0 7.9 8.5 bpost 23.14 7.8 7.9 7.9 Wolters Kluwer 34.75 7.0 7.7 8.3 Randstad 54.03 6.9 7.3 7.7 RTL Group 69.94 7.2 7.1 7.4 Ahold Delhaize 19.62 4.1 6.9 7.7 Sioen Industries 28.05 5.6 6.8 7.3 ArcelorMittal 7.27 6.3 6.6 8.1 Akzo Nobel 59.80 4.7 4.3 6.7 EVS 32.84 8.2 6.4 0.0 Ter Beke 148.85 6.6 6.2 ‐0.6 Sligro Food Group 33.17 6.3 6.2 5.9 Average 0.00 4.1 4.2 5.5 Barco 81.50 1.3 5.9 6.9 RELX 15.84 5.0 5.9 6.4 Kinepolis 43.30 0.0 5.8 6.0 Beter Bed Holding 16.97 4.8 5.8 7.0 Fagron 9.96 5.7 5.8 6.8 Boskalis 33.24 0.3 5.7 6.7 Aalberts 30.75 5.8 5.6 6.4 Ontex 28.28 6.4 5.6 7.7 Flow Traders 32.79 7.5 5.5 5.8 Median 0.00 4.1 4.2 5.5
44 EQUITY RESEARCH 10/01/2017
Price at FCF Yield FCF Yield FCF Yield 06/01/17 16e (%) 17e (%) 18e (%) BESI 32.40 4.9 5.4 5.9 Accell Group 21.33 10.7 5.4 7.5 Recticel 6.76 1.0 5.3 7.3 Van de Velde 66.30 5.3 5.2 5.4 TKH Group 37.66 3.5 5.2 6.2 AB InBev 100.50 4.9 5.2 5.7 GrandVision 20.90 4.5 5.0 5.3 Roularta 24.90 5.8 4.9 6.0 Econocom 14.20 3.2 4.9 5.3 Fluxys Belgium 26.43 5.9 4.9 0.0 IMCD 40.90 3.6 4.8 5.0 DSM 58.70 4.5 4.6 5.9 Proximus 27.95 4.1 4.2 5.5 Fugro 14.62 ‐2.8 4.4 7.0 Heineken 71.01 3.9 4.3 4.8 Unilever 38.93 3.7 4.3 4.7 UCB 65.87 3.3 4.2 5.4 Sipef 59.87 4.1 4.1 4.1 Royal Dutch Shell 26.43 ‐0.9 4.1 11.2 CFE 104.05 ‐0.5 4.0 6.3 ASML Holding 105.40 3.1 4.0 4.7 Melexis 64.41 3.6 4.0 4.4 Colruyt 46.69 3.7 3.9 4.1 Vopak 45.19 3.7 3.6 4.8 Umicore 54.46 2.1 3.4 4.3 Brunel 15.71 2.3 3.4 3.8 Telenet 52.85 ‐15.6 3.4 4.4 ASM International 42.14 2.5 3.2 3.5 Wessanen 13.62 2.2 3.1 3.4 Tessenderlo 34.13 1.9 3.0 4.7 Lotus Bakeries 2474.80 1.2 2.8 3.3 Zetes 54.00 3.7 2.8 3.8 TomTom 8.88 2.2 2.3 2.3 IBA 41.36 2.0 2.1 3.1 Nyrstar 7.78 ‐56.4 1.8 10.6 Elia 49.00 ‐2.5 0.0 0.7 Exmar 7.60 ‐39.2 ‐24.6 0.5
45 EQUITY RESEARCH 10/01/2017
2017 Dividend yield ranking
Price at Div. Yield Div. Yield Div. Yield 06/01/17 16e (%) 17e (%) 18e (%) Royal Dutch Shell 26.43 6.9 6.7 6.7 bpost 23.14 5.8 5.7 5.8 RTL Group 69.94 5.8 5.7 5.7 Proximus 27.95 5.5 5.4 5.4 PostNL 4.19 0.0 5.3 6.9 Van de Velde 66.30 5.3 5.3 5.3 Euronav 7.88 15.0 5.0 0.0 Beter Bed Holding 16.97 3.9 4.9 5.7 Brunel 15.71 4.9 4.8 4.8 Flow Traders 32.79 4.7 4.7 4.7 EVS 32.84 4.5 4.7 0.0 Arcadis 13.28 4.3 4.6 5.6 Recticel 6.76 3.8 4.4 5.2 Sligro Food Group 33.17 3.8 4.4 4.4 BESI 32.40 3.9 4.3 5.1 AB InBev 100.50 4.1 4.3 4.0 Fluxys Belgium 26.43 4.4 4.2 0.0 Accell Group 21.33 3.3 3.8 4.2 Philips Lighting 23.52 3.9 3.8 4.2 KPN 2.86 8.8 3.8 4.2 Randstad 54.03 3.5 3.8 4.0 Orange Belgium 21.53 3.0 3.7 0.0 Heijmans 6.09 0.0 3.6 8.8 Ter Beke 148.85 3.6 3.4 3.8 Refresco Group 14.54 2.6 3.3 3.8 Aperam 43.80 2.7 3.2 3.8 RELX 15.84 2.8 3.2 3.4 Elia 49.00 3.1 3.2 3.2 Philips 28.46 2.9 3.2 3.5 Ahold Delhaize 19.62 2.6 3.1 3.7 Unilever 38.93 3.3 3.1 3.3 Solvay 110.55 3.1 3.1 3.2 CFE 104.05 2.3 3.1 3.7 BAM Group 4.55 0.9 3.1 5.2 DSM 58.70 3.2 3.1 3.1 Melexis 64.41 3.0 3.0 3.1 Aalberts 30.75 2.7 3.0 3.3 Boskalis 33.24 3.0 3.0 3.0 Median 2.5 3.0 3.0 TKH Group 37.66 2.5 2.8 3.2
46 EQUITY RESEARCH 10/01/2017
Price at Div. Yield Div. Yield Div. Yield 06/01/17 16e (%) 17e(%) 18e (%) Average 2.7 2.8 3.0 Akzo Nobel 59.80 2.6 2.7 2.7 Colruyt 46.69 2.4 2.6 2.6 Ontex 28.28 2.2 2.5 2.8 Vopak 45.19 2.4 2.5 2.5 Barco 81.50 2.3 2.5 2.5 Zetes 54.00 2.4 2.4 2.4 Wolters Kluwer 34.75 2.2 2.4 2.5 Bekaert 38.91 2.3 2.3 0.0 Corbion 24.76 2.5 2.3 2.4 Roularta 24.90 2.1 2.2 2.4 Umicore 54.46 2.2 2.2 2.2 ASM International 42.14 1.9 2.1 2.1 Sipef 59.87 1.5 2.1 2.3 Kinepolis 43.30 1.9 2.0 2.2 D'Ieteren 42.36 1.9 2.0 2.0 Sioen Industries 28.05 1.9 2.0 2.1 GrandVision 20.90 1.5 2.0 2.1 Heineken 71.01 1.8 1.9 2.0 UCB 65.87 1.9 1.8 1.9 SBM Offshore 14.94 1.2 1.8 3.1 Greenyard 14.96 1.5 1.6 1.7 Econocom 14.20 1.4 1.4 1.5 ASML Holding 105.40 1.0 1.3 1.5 Wessanen 13.62 1.1 1.3 1.4 IMCD 40.90 1.2 1.3 1.3 Lotus Bakeries 2474.80 0.8 1.0 1.1 IBA 41.36 3.3 0.8 1.0 Fugro 14.62 0.0 0.0 1.8 Agfa‐Gevaert 3.78 0.0 0.0 0.0 ArcelorMittal 7.27 0.0 0.0 0.0 Exmar 7.60 0.0 0.0 0.0 Fagron 9.96 0.0 0.0 0.0 Nyrstar 7.78 0.0 0.0 0.0 Telenet 52.85 0.0 0.0 0.0 Tessenderlo 34.13 0.0 0.0 0.0 TomTom 8.88 0.0 0.0 0.0
47 EQUITY RESEARCH 10/01/2017
Degroof Petercam Financial Markets www.degroofpetercam.com
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