Italian Wake-up Call
24 April 2015
Overnight Action Stock Markets: Performance Index 1D% Chg. 1M% Chg. US markets closed the day on a positive note DJ Italy 30 0.24 -0.93 APAC markets were mainly negative S&P 500 COMP. 0.24 0.40 The EUR/US$ rate is down 0.12% to 1.0811 STOXX 50 -0.22 1.65 WTI crude is down 0.61% to 57.39 DAX 30 PERF. -1.21 -1.45 (More detailed comments inside) CAC 40 -0.62 2.46 IBEX 35 0.23 -0.24
NIKKEI 225 0.27 2.19 New Research DJ ITALY 30: Best & Worst stocks Geox (Neutral) - Strong performance in retail expected in 1Q15 Company 1D% Chg.
SAIPEM 1.82 TENARIS 1.25 Morning News UBI BANCA 0.90
A2A (Outperform) - Sorgenia opens to an alliance on generation, Il Messagero says FINMECCANICA -3.16 FERRAGAMO -3.74 Acea (Outperform) - Increases number of Bod members to 9. Consolidation on the STMICROELECTRONICS -4.43 cards. (MIL) Axélero (Outperform) – Strengthening the organizational structure Dj stoxx 600: Best & Worst sectors Azimut Holding (Neutral) – Another small acquisition in Brazil Sector 1D% Chg. Brembo (Outperform) – New investments in sight Energy 0.34 Buzzi Unicem (Outperform) – Good news from Cemex 1Q 15 results Banks 0.22 Enel (Neutral) - Hungarian-led consortium still interested in se, reuters says Telecom 0.21 BasicUtilitiesIndustrials Material -0.34-0.040.11 FCA (Outperform) – GM says it is not interested in a merger with FCA GdsConstrucionMediaHealthFinancial & Srv Care services -0.98-0.68-0.66-0.55-0.49 Finmeccanica (Outperform) – Police searches AgustaWestland offices Insurance -1.52 L’Espresso (Outperform) – Quarterly numbers above estimates Technology -2.07
Moleskine (Outperform) - Co branding agreement with Driade Most Traded Options Moncler (Outperform) - Positive comments on current trading Company Vol. Mondadori (Neutral) – Feedback from AGM TIT 19Jun15 C1.15 7,550 TIT 19Jun15 P1.05 7,500 RCS Mediagroup (Outperform) – New Board appointed, speed up on restructuring TIT 17Jul15 C1.1 5,210 & disposal expected TIT 17Jul15 C1.2 5,005
Saipem (Neutral) – Technip - 1Q results and read across for Saipem ù Source: Mediobanca Securities Unicredit (Outperform) - UCG (O, TP Eur8.3) and SAN (N, TP Eur6.8) – merging their AM businesses Utilities Sector – Portugal: Brussels authorizing Portugal to subsidize marine renewable / Naftogaz accuses Gazprom of blocking gas trading activity
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IMPORTANT DISCLOSURE FOR U.S. INVESTORS: This document is prepared by Mediobanca Securities, the equity research department of Mediobanca S.p.A. (parent company of Mediobanca Securities USA LLC (“MBUSA”)) and it is distributed in the United States by MBUSA which accepts responsibility for its content. The research analyst(s) named on this report are not registered / qualified as research analysts with Finra. Any US person receiving this document and wishing to effect transactions in any securities discussed herein should do so with MBUSA, not Mediobanca S.p.A.. Please refer to the last pages of this document for important disclaimers. Overnight Action
Markets
US markets closed the day on a positive note, with DJ up 0.11%, S&P 500 up 0.24% and Nasdaq up 0.41%. Trading volumes were up 10% vs. 30-day average. Euro STOXX 50 closed down 0.71% with trading volumes up 1% vs. 30-day average. The leading sectors in the US were Telecommunication Services +2.24%, Utilities +0.62% and Energy +0.62%, while the laggards were Consumer Staples - 0.52%, Industrials -0.14% and Financials +0.11%. S&P 500 futures are indicated down 0.13% at 7:00 CET. APAC markets were mainly negative, with Nikkei down 0.71%, Hang Seng down 0.84%, Shanghai down 2.13% and Australia up 1.49% at 7:00 CET. The number of Americans filing new claims for unemployment aid edged up last week for a third straight week but the underlying trend continued to point to solid momentum in the labor market. Still, the rise in jobless claims and other data showing weak new home sales in March and factory activity this month could heighten concerns about the economy’s ability to rebound strongly after stumbling at the start of the year. Growth braked sharply as the economy was slammed by harsh winter weather, weak global demand and a now-settled labor dispute at West Coast ports. Activity also was constrained by a strong dollar as well as lower energy prices, which cut into domestic oil production. Initial claims for state unemployment benefits increased 1,000 to a seasonally adjusted 295,000. Despite the increase, claims remained for a seventh consecutive week below the 300,000 threshold, a level associated with a strengthening labor market. The EUR/US$ rate is down 0.12% to 1.0811, JPY/US$ rate is down 0.04% to 119.54 and AUD/EUR is down 0.13% to 1.3897 at 7:00 CET. The dollar is heading for the first monthly loss since June as disappointing data raised doubts about the US economic outlook and the willingness of the Federal Reserve to raise interest rates. A gauge of the US currency has declined 1.2 percent in April amid evidence growth in the world’s largest economy on the rise before committing to the first interest-rate increase in almost a decade. The Fed has ruled out rising interest rates when it next meets April 28-29. Policy makers have left the door open to move in June. WTI crude is down 0.61% to 57.39, Brent is down 0.45% to 64.56 and Gold is down 0.12% to 1192.55 at 7:00 CET. Base metals on LME were mixed, with Aluminium down 1.58%, Copper up 0.49%, Zinc down 0.56% and Nickel up 0.24%. Copper futures are indicated down 0.04% on Comex this morning. Corn is down 0.40%, Wheat is up 0.05% and Soybean is down 0.13% on CBOT this morning. US data expected to be published today are Durable Goods Orders. European data include IFO Business Climate in Germany and Business Confidence in Belgium.
Latest three days performance of the main financial variables (minute by minute evolution)
EUR/USD CURRENCY DJSTOXX50 VOLATILITY OIL FUTURE (USD / bll) 1.09 25.0 59.0 24.0 1.08 23.0 58.0 22.0 1.07 57.0 21.0 1.06 20.0 56.0 19.0 1.05 18.0 55.0 17.0 1.04 54.0 16.0 1.03 15.0 53.0
Source: Bloomberg
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24 April 2015 ◆ 2
New Research
Geox Geox (Neutral, TP € 2.90)
Market Cap. €863.01m Price: € 3.33 (Chiara Rotelli +39 02 8829 931) Turnover Net Profit PE Adj. PBV Yield 2014 824 -3 nm 2.0 0.0 2015E 873 13 67.4 2.2 0.0 2016E 967 36 23.8 2.0 0.0
Source: Mediobanca Securities
Strong performance in retail expected in 1Q15
Event GEOX is set to report its 1Q15 results on 14 May, and a conference call has been scheduled in the late afternoon on the same date (TBD).
Comment/financials The company has already commented that the start of 2015 has been strong, with a LFL of DOS +5.9% in the first 9 weeks ending 1st March, despite a tough comparison basis (SSSG was +19.9% in 1Q14) and that backlog orders for S/S2015 was +5% with a positive performance in the EMEA region, that has more than compensated for the weakness in Asia in wholesale. For 1Q15 we therefore expect:
Consolidated revenues of €281m with an increase of 4.8% YoY, which combines +10.6% in retail despite a very challenging comparison basis (+45% in 1Q14), supported by 6% growth expected in SSSG, +4.5% in wholesale, and slightly offset by -2% in franchises;
Group EBITDA of €31.3m or +13% YoY, the result of +150bps in the gross margin as guided for FY15, and tight control on G&A expenses in the quarter; this implies an EBITDA margin of 11.1% from 10.4% in 1Q14;
at the bottom line, net profit of €12.4m (+24% YoY), assuming a tax rate of 35%; and
a net debt to €25.3m vs €77.2m in 1Q14, assuming NWC at 30% of LTM sales vs 34% in 1Q14.
On this occasion, we expect GEOX to provide full visibility on backlog of orders for the F/W2015 season, which should drive an update on FY15 guidance. In March, the company noted some problems with its Chinese distributor and said that it expects a positive year in terms of sales growth and profitability, but that it was not ready to fully confirm the target provided (i.e. sales at €887m +10% YoY, EBITDA at 8% of sales and EBIT at 4%). At this earnings release, GEOX might provide some indications on potential new partners in China and whether the original guidance can be confirmed. Our FY15 estimates are more conservative than consensus numbers. (€m) 1Q 15e 1Q 14 Y/Y ch. FY 15e FY14 Y/Y ch. GROUP REVENUES 281.4 268.5 4.8% 872.9 824.2 5.9% Margin% 11.1% 10.4% 7.1% 5.2% EBIT 21.1 17.4 21.6% 23.2 4.9 375.0% Margin% 7.5% 6.5% 2.7% 0.6% NET PROFIT 12.4 10.0 23.8% 12.8 -2.9 nm NET DEBT/(CASH) 25.3 77.2 1.5 13.0 Source: Mediobanca Securities
View/action As stated in our report published on 9 March, troubles with the Chinese partner are unlikely to threaten the company’s long term profitable growth, although some delay on the Chinese business is definitely on the cards. That said, this is unlikely to materially change GEOX’s mid-term prospects ahead, in our view. Whilst we see no downside risk on consensus estimates, we rather see some upside if orders collected for the F/W15 season support the company’s confirmation of its original FY15 guidance (€887m sales, EBITDA at 8%). We confirm our NEUTRAL rating on the stock.
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24 April 2015 ◆ 3
Morning News
A2A A2A (Outperform, TP € 1.17)
Market Cap. €3.3bn Price: € 1.05 (Javier Suárez +39 02 8829 036, Sara Piccinini +39 02 8829 295) Turnover Net Profit PE Adj. PBV Yield 2014 4,984 -37 15.1 1.0 4.3 2015E 5,069 229 14.4 1.2 3.5 2016E 5,152 241 13.6 1.2 3.5
Source: Mediobanca Securities
Sorgenia opens to an alliance on generation, Il Messagero says Local newspaper Il Messaggero says that Sorgenia may be open to a possible integration of with thermal generation subsidiary of A2A. Mediobanca View - At latest strategy presentation A2A, apart from the closure of 3GW of low-performing generation capacity, announced the creation of a "GenCo Gas" where to put the CCGT generation assets. And we believe that the interest of Sorgenia could be in joining for A2A in its subsidiary.
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24 April 2015 ◆ 4
Morning News
Acea Acea (Outperform, TP € 12.50)
Market Cap. €2.6bn Price: € 12.09 (Javier Suárez +39 02 8829 036, Sara Piccinini +39 02 8829 295) Turnover Net Profit PE Adj. PBV Yield 2014 2,931 163 12.8 1.5 4.6 2015E 2,853 172 14.9 1.7 4.0 2016E 2,915 179 14.4 1.6 4.2
Source: Mediobanca Securities
Increases number of Bod members to 9. Consolidation on the cards.
Yesterday Acea held its shareholders meeting in which they officially approved the introduction of two 2 members in the board, which brings the total members to 9. The CEO Irace has also confirmed that Acea will definitely participate to the consolidation process that the government is bringing forward and that this will likely involve non listed companies instead of big players.
Mediobanca View - We agree on the view that companies will likely to realize the consolidation companies with smaller and non listed entities to consolidate position in their reference territory. On the number of board, this is something already expected in the past and that the company justifies with the underlying growth of the business.
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24 April 2015 ◆ 5
Morning News
Axélero Axélero (Outperform, TP € 7.40)
Market Cap. €69.36m Price: € 5.10 (Fabio Pavan +39 02 8829 633) Turnover Net Profit PE Adj. PBV Yield 2013 9 1 2014E 10 2 40.1 3.1 0.4 2015E 21 3 25.4 2.8 0.6
Source: Mediobanca Securities
Strengthening the organizational structure
Event The Company disclosed a press release in order to announce the appointment of Mr Costantino Caroppo as new Chief Marketing officer.
Comment/Financials Mr Caroppo has spent 15 years in Seat PG: in the last 8 years, he served as Head of Business Development (with a focus on business model innovation, strategy, digital advertising and social media). Before that, he has been for 6 years the Head of Internet Marketing of Seat. In Axélero, he will focus on strategic marketing and will report directly to the COO, Mr Stefano Cereseto.
View/Action We welcome this news, as one of the main pillars of the Group strategy is to strengthening the organizational structure and sales team. Mr Caroppo has strong skills and is a talented manager of the geolocal digital world, in particular when referring to SMEs and SoHos. The Italian online advertising market is still at a very early stage, and it’s extremely fragmented: Axélero, could play a key-role on that. The potential GDP recovery could provide a good help, being the company’s client based represented by SMEs and SoHos (Small Office-Home Office). We reiterate our Outperform on the stock, with a €7.4TP: AXEL is trading at 5x ‘16E EV/EBITDA, peers average at 9x; at our target price, offering more than 40% upside from current levels, the stock would be trading at a 10% discount vs peers when looking at 2016 EV/EBITDA.
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24 April 2015 ◆ 6
Morning News
Azimut Holding Azimut Holding (Neutral, TP € 23.00)
Market Cap. €3.7bn Price: € 25.93 (Gian Luca Ferrari +39 02 8829 482) Net Profit PE PBV Yield ROE 2013 140 23 3.4 2.7 21.9 2014E 76 41 5.5 1.5 11.2 2015E 194 18 5.0 3.9 26.0
Source: Mediobanca Securities
Another small acquisition in Brazil
Event Yesterday, Azimut announced the acquisittion of a 60% stake of Quest Investimentos, a Brazilian asset gatherer, for a purchase price of around €21.5m.
Comment/Financials – According to the press release, Quest manages around R$ 2.0bn (€615m) mainly in equity products and is one of Brazil’s best-performing fund managers. This transaction will substantially increase Azimut AuM to R$ 3,6bn (equivalent to €1.11bn). Together, the companies will form the joint venture AZ Quest, deepening Azimut product offering and increasing its team by more than a third.
The final purchase price, based on net profit for year 2014 and on Quest AuM on completion date, is expected to be approximately R$70m (€21.5m).
Quest management will maintain independence of its day-to-day operational and investment decisions. Furthermore, Quest management and staff have committed to continue to work for at least eight years. As part of the transaction, founder Luiz Carlos Mendonça de Barros, the investment bank BTG Pactual and the management team are respectively selling 35%, 15% and 10% stakes in Quest. Mr Mendonça de Barros will continue to act as Chairman of AZ Quest Advisory Board.
The closing of the transaction is expected to occur within the next few weeks upon satisfaction of some conditions precedents provided in the sale and purchase agreement. The acquisition will not be in any case subject to the approval of the local Authorities.
View/Action – NEUTRAL rating, TP €23.
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24 April 2015 ◆ 7
Morning News
Brembo Brembo (Outperform, TP € 35.50)
Market Cap. €2.5bn Price: € 37.10 (Niccolò Storer +39 02 8829 444, Massimo Vecchio +39 02 8829 541) Turnover Net Profit PE Adj. PBV Yield 2013 1,566 89 12.7 2.3 3.4 2014E 1,795 128 21.1 5.8 1.9 2015E 1,968 148 17.9 6.1 2.3
Source: Mediobanca Securities
New investments in sight
Event In an interview to the local online newspaper Bergamo News, Mr Tiraboschi, company Executive Vice Chairman, suggested that Brembo’s presence in China could be increased.
Comment/Financials In more detail, he stated that at the moment the company has just one industrial site in China, that can’t be the sole hub for all the Asian continent, opening the door to further investments in the region. In 2015 Brembo will start working to the construction of two foundries in North America (cast iron in Michigan and light alloy in Mexico). Considering that Brembo is now replicating the successful European industrial footprint in North America (cast iron foundry + light alloy) we wouldn’t be surprised if the next step for the company would be the creation of a light alloy foundry in China (where a cast iron one already exists).
Commenting on FY15 guidance, Mr Tiraboschi stated that the company is working for reaching €2.0bn revenues, which is slightly ahead of our estimates and of guidance provided by the company in March.
View/Action We confirm our Outperform on the stock.
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24 April 2015 ◆ 8
Morning News
Buzzi Unicem Buzzi Unicem (Outperform, TP € 15.00)
Market Cap. €2.7bn Price: € 14.38 (Alessandro Tortora +39 02 8829 673) Turnover Net Profit PE Adj. PBV Yield 2013 2,510 -51 nm 1.0 0.4 2014E 2,506 117 25.4 1.2 0.4 2015E 2,584 114 23.9 1.1 0.5
Source: Mediobanca Securities
Good news from Cemex 1Q 15 results
Event Cemex 1Q 15 results out yesterday. During the conference call CEO gave some indications on the FY 15 trend.
Comment/Financials 1Q 15 EBITDA was touch lower than consensus at USD569 (+6% Y/Y) vs. USD584m consensus. Key messages are set out below:
US market. Good start of the year despite bad weather in March which affected particularly Texas. Cemex expects US construction to pick up in April after bad weather. Company suffered in Texas from lower oil well cement deliveries but decided to raise prices by 7USD per metric ton in Texas. Company saw a positive response to April US prices hikes; Strong performance in Mexico with volume growth expected to be in the mid to high single digit area. CEO sees volume upside risk; On the cost side. Cemex sees energy costs per ton slightly declining from last year level. Fuel cost.
Reading across these indications for Buzzi Unicem, we see supporting news for the Italian company which on top of this organic performance, will also enjoy a positive Forex impact in the US. Mexico is not consolidated line by line but market trend is quite strong. The US accounts some 60% of total 2015E FY EBITDA for Buzzi Unicem.
View/Action Outperform confirmed.
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24 April 2015 ◆ 9
Morning News
Enel Enel (Neutral, TP € 4.30)
Market Cap. €39.8bn Price: € 4.23 (Javier Suárez +39 02 8829 036, Sara Piccinini +39 02 8829 295) Turnover Net Profit PE Adj. PBV Yield 2013 80,535 3,235 8.3 0.7 4.5 2014E 73,328 517 76.9 1.2 3.3 2015E 67,319 2,971 13.4 1.2 3.8
Source: Mediobanca Securities
Hungarian-led consortium still interested in SE, Reuters says
Reuters reports this morning that the Hungarian-led consortium is still interested in bidding for Enel’s 66% stake in Slovenske Elektrarne and that would prepare an offer that will secure the completion of the Mochovce nuclear plant.
Enel is due to receive offers on SE by the next 9 May but Slovak PM said on Friday last week that they will “actively obstruct” the planned sale since they oppose to the sale until the project to build new units at the Mochovce nuclear plant is completed. Other than the Hungarian-led consortium, other companies that might be interested are CEZ, EPH and Fortum. According to Reuters, the dispute is making “less likely” a bid on CEZ group on the company, citing a CEZ Board member.
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24 April 2015 ◆ 10
Morning News
FCA FCA (Outperform, TP € 16.40)
Market Cap. €22.3bn Price: € 14.80 (Massimo Vecchio +39 02 8829 541) Turnover Net Profit PE Adj. PBV Yield 2014 96,090 568 10.8 0.7 0.0 2015E 105,026 1,307 14.5 1.2 0.7 2016E 111,284 2,117 9.0 1.1 1.4
Source: Mediobanca Securities
GM says it is not interested in a merger with FCA
Event Yesterday CEO said they have a 10 years plan and will not be distracted in the execution from a merger. Meanwhile GM missed on 1Q’15 and Renault reported a beat on 1Q15 revenues.
Comment/Financials GM missed on 1Q’15 (EPS of $0.86 vs. consensus of $0.97) mostly due to LATAM. This should not be a surprise to us as in our 1Q’15 preview we highlighted a €-20mn operating loss for FCA in LATAM. FCA has been the most profitable company and therefore doesn’t seem a surprise that GM has lost $200mn.
Meanwhile Renault reported €9.4bn sales (above consensus of €8.5bn) and said:
1Q’15 has been stronger than anticipated;
Improved the outlook on the European car market (now seen at +5% vs. previous +2%);
Confirmed the FY outlook.
View/Action Few potential partner left in the “merger search” for FCA: VW remains the most likely for us.
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24 April 2015 ◆ 11
Morning News
Finm eccanica Finmeccanica (Outperform, TP € 13.90)
Market Cap. €6.4bn Price: € 11.05 (Massimo Vecchio +39 02 8829 541) Turnover Net Profit PE Adj. PBV Yield 2014 14,663 -42 nm 1.1 0.0 2015E 12,293 528 15.8 1.8 0.0 2016E 12,916 517 11.5 1.6 0.5
Source: Mediobanca Securities
Police searches AgustaWestland offices
Event According to the press and to a company statement police searched AgustaWestland offices yesterday in relation to a helicopter contract in Algeria.
Comment/Financials The contract refers to the 2009-11 period and was worth €460mn.
View/Action Press compared this case with the Indian Helicopter one (similar amount, €560mn in that case, €-256mn cash flow impact) but there is a big difference: here the contract has already been executed therefore Finmeccanica doesn’t bear the risk it had with India where it had to lose the advance payment and the WIP. The only similarity may be that, if the managers that acted (because this kind of liability is at personal level) would be found guilty the company may be prevented to bid in that country (which of course is a much lower damage than being out of the much bigger Indian market).
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24 April 2015 ◆ 12
Morning News
L’Espresso L'Espresso (Outperform, TP € 1.66)
Market Cap. €488.17m Price: € 1.19 (Fabio Pavan +39 02 8829 633) Turnover Net Profit PE Adj. PBV Yield 2013 712 4 nm 0.7 0.0 2014E 647 7 72.7 0.9 0.0 2015E 637 23 21.5 0.8 4.2
Source: Mediobanca Securities
Quarterly numbers above estimates
Event Yesterday Espresso disclosed its 1Q15 results, which confirmed great results in term of savings and suggested a recovery trend at the top line level.
Comment/Financials In greater detail:
Quarterly sales slightly better, -4% YoY, thanks to advertising collection down 3% (vs. our 4% estimated drop); radio collection up 3% YoY, internet in line and press down 7%: the Group is outperforming the reference market in all the categories;
1Q15 Ebitda at €14m, in line with last year, and 14% above our estimates: once again, the management achieved great results in terms of savings;
Big surprise at bottom line level, with Net profit at €12m thanks to: i) lower taxes (€2m), ii) reorganization of TV business (€1m) and iii) capital gain from disposal of Deejay TV to Discovery (€6m);
Net Debt stood at €11m (€34m as at YE 2014, MB est. at €20m);
In its press release, the Group highlighted the trend of the advertising market is still uncertain.
1Q 15E 1Q 14A YoY chg. 1Q 15E A/E
Sales 146.6 152.3 -3.7% 145.7 0.6%
Ebitda 13.9 14.2 -2.1% 12.2 14.3%
% margin 9.5% 9.3% 8.4%
Ebit 10.2 10.2 0.0% 8.2 24.9%
% margin 7.0% 6.7% 5.6%
Pre-tax profit 13.9 7.1 95.8% 5.6 149.7%
Net profit 12.0 2.1 471.4% 3.8 218.6%
Net Debt 11.2 58.2 -80.8% 20.0 -44.0%
Source: Mediobanca Securities
View/Action Despite the cautious outlook provided, we reiterate our constructive mid-term view. We believe that starting from the second quarter of 2015, some good surprise in terms of domestic collection will come (car sales, employment data, consumer confidence are anticipating good GDP news). On top of that, we highlight the great job on the savings side that’s translating into sound FCF generation. We reiterate our Outperform, €1.66TP.
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24 April 2015 ◆ 13
Morning News
Moleskine Moleskine (Outperform, TP € 1.70)
Market Cap. €308.04m Price: € 1.45 (Chiara Rotelli +39 02 8829 931) Turnover Net Profit PE Adj. PBV Yield 2014 99 18 13.8 3.1 2.6 2015E 115 20 15.2 3.0 2.5 2016E 134 24 12.7 2.6 3.0
Source: Mediobanca Securities
Co branding agreement with Driade
Event Yesterday Moleskine announced that ih has signed an agreement with Driade, to create a capsule collection of objects combining Moleskine’s iconic aesthetic values and Driade’s excellence in design.
Comment/Financials: based on the terms of the agreement, Moleskine will contribute its values of culture, creativity and personal identity on the move, while Driade will bring its unique design. The capsule collection will be designed by Philippe Nigro and Maurizio Galante & Tal Lancman, and will include a line of desktop accessories, furniture items and objects for travellers.
First products will be released in Autumn 2015 and will be distributed by Driade in design and concept stores, and by Moleskine through its own direct channels.
View/action: although of little significance in terms of impact on group’s financials, the agreement is a step toward brand diversification, and improve the risk profile of the company. We have an OUTPERFORM rating on the stock.
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24 April 2015 ◆ 14
Morning News
Moncler Moncler (Outperform, TP € 18.00)
Market Cap. €4.2bn Price: € 16.64 (Chiara Rotelli +39 02 8829 931) Turnover Net Profit PE Adj. PBV Yield 2014 694 130 22.7 7.3 1.0 2015E 798 146 28.6 7.8 0.7 2016E 913 169 24.6 6.2 0.7
Source: Mediobanca Securities Positive comments on current trading
Event: Yesterday the shareholders of Moncler approved the FY14 results and the distribution of a DPS of 0.12 per share for a total of €30m, with a coupon date of May 18, 2015, and payment date of May 20, 2015.The shareholders approved also the adoption of the equity-based incentive plan "2015 Performance Stock Option Plan" “intended for executive directors and/or Key-managers with strategic responsibilities and/or employees and/or external consultants and other collaborators of Moncler and its subsidiaries which are considered as having a strategic importance or are otherwise able to make a significant contribution to achieving Moncler's strategic objectives”. Shareholders have also authorized the purchase of the Company's own shares over a period of 18 months from the date of said shareholder authorization and the disposal.
Comment/financials: According to Reuters during the shareholders meeting the group Chairman M. Remo Ruffini commenting 1Q15 performance, stated that they are satisfied with the trend reported in 1Q15 sales, although it accounts for just 20% of the full year turnover. MB view: these indications are coherent with our estimates as published in our note on 22 Aprile where we expect a strong start to the year: we forecast revenues +17.5% at 171m with retail +31.7%, EBITDA +22% at €55m and net profit +20% at €28mi.
View/action Although the 1Q15 results are of little significance, in our view, we expect them to confirm our positive stance on the stock, supported by Moncler’s strong track record, unique niche brand positioning in the luxury sector, and highly skilled management team that has driven the group year-to-date. Expectations of superior top-line growth prospects are supported by the company’s undisputed leadership in its niche reference market, huge scope to expand its business in the promising US market, considerable potential for product and distribution expansion, and a best-in-class level of profitability. We have an OUTPERFORM rating.
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24 April 2015 ◆ 15
Morning News
Mondadori Mondadori (Neutral, TP € 1.31)
Market Cap. €276.03m Price: € 1.12 (Fabio Pavan +39 02 8829 633) Turnover Net Profit PE Adj. PBV Yield 2013 1,276 -185 nm 1.3 0.0 2014E 1,227 8 37.6 1.3 0.0 2015E 1,221 15 19.2 1.2 1.8
Source: Mediobanca Securities
Feedback from AGM
Event Yesterday Mondadori hosted its Annual General Meeting.
Comment/Financials The Group CEO Mr Ernesto Mauri confirmed that the process to acquire RCS’s book division is under due diligence (three weeks to be ended) and, until the end of May, the company will launch its offer. He also anticipated a 5% drop in magazine advertising collection in 1Q15 (collection now accounts for the 13% of the total turnover). Mr Mauri confirmed the intention to speed up on the digital side, with target of 10% of sales (from current 4%) in three years.
View/Action We highlight that the top management led by Mr Mauri is finalizing a new phase of more severe restructuring, and the effects in terms of profitability are even more visible. A consolidation between Mondadori & RCS in the books business would allow to achieve significant amount of synergies.
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24 April 2015 ◆ 16
Morning News
RCS Mediagroup RCS Mediagroup (Outperform, TP € 1.73)
Market Cap. €601.22m Price: € 1.20 (Fabio Pavan +39 02 8829 633) Turnover Net Profit PE Adj. PBV Yield 2013 1,314 -219 nm 2.5 0.0 2014E 1,279 -111 nm 4.3 0.0 2015E 1,297 20 17.3 3.8 0.0
Source: Mediobanca Securities
New Board appointed, speed up on restructuring & disposal expected
Event Yesterday the shareholders’ meeting of RCS appointed the Board of Directors for the years 2015-17.
Comment/Financials Press reported that the 59% of the share capital attended the AGM, with FY accounts approved by almost 90% of accounts. The CEO Pietro Scott Jovane noted all managers' bonuses have been suspended until the group returns to profit, Chairman Provasoli noted he's cut his own remuneration by -30%, the managers by -10%. The majority list, incl. FCA, Intesa, Pirelli, Mediobanca and Mr Diego Della Valle, voted in their candidates, including Maurizio Costa in the Chair (he’s also chairman of the Italian newspaper publishers association FIEG), Pietro Scott Jovane as CEO, banker Gerardo Braggiotti and current CEO of Liberty Media controlled Virgin Media, Tom Mockridge, former CEO at Sky Italia Laura Cioli and Teresa Cremisi (General Manager at Flammarion). Re. minorities' list, Assogestioni got 2 board members in, and Urbano Cairo got 1.
All candidates, except Pietro Scott Jovane, declared they have the independence requirements
Press reported statements from the CEO Mr Jovane, stating that talks with Clessidra for the radio disposal were suspended, while it confirmed the presence of others Italian bidders. The new Chairman, Mr Maurizio Costa, stated the Group needs to speed up its migration to the digital world. Today the Italian daily la Repubblica was suggesting that additional €40m savings may come from a new strategic plan (as a reminder, the ongoing plan will end up with more than €200m savings). Finally, Mondadori confirmed the intention to present a binding offer on Rizzoli books before the end of May (with press arguing about a €120m to €150m cash in).
View/Action The top management has been able to address a severe cost cutting in the last three years and should now be in the position to complete the announced disposals: this will change the picture of the Group, as Debt will come down and the Group will focus on the new business initiatives. Outperform, €1.73TP. Our estimates stand 8% above the most updated consensus, assuming a flattish trend for the Italian collection in 2015 and a mid-single digit increase in Spain (where in 4Q collection was up 20%): note a €10m increase in advertising revenues would translate into €7-8m EBITDA. Also, we note the stock at current prices would offer a 12% Op. FCF yield, set to increase in case the advertising recovery should materialize in our country. After the announced disposal of the outdoor activities (€20m cash in without any impact at EBITDA level), RCS would have the chance to visibly reduce its debt pile by selling its books and radio activities: its Net Debt/EBITDA to around 2x, a sustainable level in our view, that could help the company to speed up the investments in the Sports and digital businesses. The implied valuation of the remaining part of the business would stand below 6x 2016E EV/EBITDA, a cheap multiple in our view.
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24 April 2015 ◆ 17
Morning News
Saipem
Saipem (Neutral, TP € 11.90)
Market Cap. €5.2bn Price: € 11.73 (Andrea Scauri +39 02 8829 496) Turnover Net Profit PE Adj. PBV Yield 2014 12,882 -230 nm 1.8 1.2 2015E 12,026 225 23.1 1.2 0.0 2016E 9,824 361 14.3 1.1 0.0
Source: Mediobanca Securities
Technip - 1Q results and read across for Saipem
Event Techip released its 1Q results yesterday. Saipem will report its results on 27 Monday (conf. call scheduled at 6.00 PM CET).
Comment/Financials Here below the main highlights:
Soft intake as the result of a good intake in the subsea division and a non-satisfactory order collection in the offshore/onshore divisions;
Guidance for 2015 unchanged, i.e.:
1. Subsea revenues at between €5.2bn and €5.5bn. EBIT at around the top of the indicated range of €810m and €840m (15%-16% EBIT margin);
2. Onshore/Offshore revenues around €6.0bn. EBIT at around the bottom of the indicated range of €250m and €290m (4% EBIT margin);
Outlook:
1. Slowdown expected to be prolonged and harsh;
2. New projects are being deferred as clients assess their investment priorities in a durably changed economic environment;
3. Projects launched in 2014 and earlier continue to progress but tension along the supply chain is exacerbated by the lack of financial flexibility from some clients;
4. Negotiations on contract changes and variations are protracted.
View/Action Read across for Saipem (Neutral rating; €11.90 TP):
SPM’s first quarter intake is supposed to be decent thanks to the award of the USD1.8bn contract for the Kashagan field pipes substitution;
Contracts’ re-phasing requests from clients is something true also for Saipem;
Key catalyst to SPM’s investment case might be represented by 1) the potential recovery of the USD2.4m contract for the Turkish Stream contract and 2) a M&A angle related to the disposal of a 15%-20% stake from ENI to an industrial partner.
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24 April 2015 ◆ 18
Morning News
Unicredit Unicredit (Outperform, TP € 8.30)
Market Cap. €36.2bn Price: € 6.25 (Andrea Filtri +44 203 0369 571) Net Profit PE PBV Yield ROE 2014 2,008 18 0.7 1.8 4.1 2015E 2,978 13 0.7 3.1 5.8 2016E 3,288 11 0.7 3.7 6.2
Source: Mediobanca Securities UCG (O, TP Eur8.3) and SAN (N, TP Eur6.8) – merging their AM businesses After over six months of exclusive negotiations, UCG and SAN agreed to merge their AM arms. The new entity will be called Pioneer Investments and will hold €400bn AUM, ranking top 35 globally and top 10 in Europe by assets. Pioneer has been valued at €2.75bn, while SAN AM and the 49.5% stake in All Funds Bank held have been valued at €2.6bn. The new co. will be controlled 1/3 by UCG, 1/3 by SAN and 1/3 by Warburg Pincus and General Atlantic which today hold 50% stake in SAN AM. Juan Alcaraz, current CEO of SAN AM will be CEO of the new co.; Giordano Lombardo, current CEO of Pioneer will be the new CIO. The company will be strong of a distribution across 30 countries in America and in Europe and will leverage on the economies of scale the combination will generate. The deal will be accretive to UCG’s CET1 ratio by 25bp. We see the deal as a compromise for UCG on valuation and governance. The Italian AM market is providing much higher growth and better prospects than the Spanish one and we believe the relative valuations do not fully reflect this. Also, SAN AM will appoint the CEO of the new co.. On capital ratios, while 25bp is a positive advance for UCG, it is not a large enough boost to remove the ongoing market worries on the bank’s capital position, in our view. Finally, on product offer, we believe the new company will hold one of the best global retail distributions but will somewhat lack completeness of product offer across asset classes and geographies. We would expect the next step of the growth to involve the IPO of the integrated vehicle and the acquisition/combination with another AM company to complete the product offer and position as one of the leading global players. Overall, we believe the deal dilutes UCG’s direct exposure to the booming Italian AM market to invest in future higher sustainability of the business and benefit from economies of scope and scale with SAN AM. We reiterate our Outperform.
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24 April 2015 ◆ 19
Morning News
Utilities Sector
Utilitie s Sector (Javier Suárez +39 02 8829 036 & Sara Piccinini +39 02 8829 295)
Portugal: Brussels authorizing Portugal to subsidize marine renewable
Brussels authorized the subsidy regime for marine renewable energy proposed by the Portuguese Government and confirmed that this respects the European competition law and corresponds with the objectives of EU energy and environment without causing distortions in the market.
Mediobanca View – This is important in order to promote renewable energies although we questioned if this will be financed through further tariff increase. We remember that Portuguese bills are among the highest among Europe.
Naftogaz accuses Gazprom of blocking gas trading activity
Ukraine's Naftogaz has stated that Gazprom is actively blocking effective gas trading adding that several companies have asked for the use of their infrastructure to deliver gas in countries such as Hungary, Poland, Bulgary, Greece and Turkey.
Naftogaz also says that Gazprom's policy effectively avoids the creation of a real European gas market adding that it is currently avoiding the creation of a reverse flow system between Ukraine and Slovakia.
Mediobanca View - This is one step forward in the relationship between Gazprom and the EC, in a case that could imply a fine for up to 10% of its total revenues. Gazprom has now 12 weeks to respond.
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24 April 2015 ◆ 20
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24 April 2015 ◆ 21
Mediobanca S.p.A. Antonio Guglielmi Head of European Equity Research +44 203 0369 570 [email protected] ANALYSTS European Banks
Alain Tchibozo France/IBK +44 203 0369 573 [email protected]
Adam Terelak France/IBK +44 203 0369 574 [email protected]
Andrea Filtri Spain/Italy +44 203 0369 571 [email protected]
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Riccardo Rovere Italy/Scandinavia/CEE/Germany +39 02 8829 604 [email protected] European Insurance
Gianluca Ferrari Italy and Reinsurance +39 02 8829 482 [email protected]
Simonetta Chiriotti Nordics +39 02 8829 933 [email protected] Italian Research
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Fabio Pavan Media/Telecommunications/Consumer Goods +39 02 8829 633 [email protected]
Javier Suárez Utilities +39 02 8829 036 [email protected] Jean Farah Utilities +44 203 0369 665 [email protected]
Massimo Vecchio Auto & Auto Components/Industrials/Holdings +39 02 8829 541 [email protected]
Niccolò Storer Auto & Auto Components/Industrials/Holdings +39 02 8829 444 [email protected]
Nicolò Pessina Consumer Goods/Infrastructure +39 02 8829 796 [email protected] Sara Piccinini Utilities +39 02 8829 295 [email protected]
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FOR NON US PERSON receiving this document and wishing to effect transactions in any securities discussed herein, please contact: Mediobanca S.p.A. Charlotte Roden Head of Equity Sales +44 203 0369 537 [email protected] SALES Angelo Vietri +39 02 8829 989 [email protected]
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FOR US PERSON receiving this document and wishing to effect transactions in any securities discussed herein, please contact: Mediobanca Securities USA LLC Pierluigi Gastone Head of Mediobanca Securities USA LLC +1 212 991 4745 [email protected] Massimiliano Pula +1 646 839 4911 [email protected]
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MEDIOBANCA – Banca di Credito Finanziario S.p.A. Piazzetta Enrico Cuccia, 1 - 20121 Milano - T. +39 02 8829.1 33 Grosvenor Place – London SW1X 7HY – T. +44 (0) 203 0369 530 24 April 2015 ◆ 22