Italian Research Company Update Milan, January 9, 2014 TIP BUY SECTOR: Holdings & RE Price (Eu): 2.30 Michele Ballatore +39-02-77115.252 e-mail: [email protected] Target Price (Eu): 2.80 Reassessing the Value After Moncler’s IPO Moncler: a great start. On Monday Moncler made a spectacular debut on the stock TIP - 12m Performance market, posting +47% on its first day of trading thanks to major interest from both institutional and retail investors. With revenues up 17% at 9M13 (to Eu390mn) and an 2.4 EBITDA margin of close to 30%, Moncler still has lot plenty of room to execute its 2.2 ambitious growth strategy. Still, TIP has once again demonstrated its considerable flair 2.0 1.8 for good investment opportunities. Thanks to Club 7, the special purpose vehicle set up 1.6 last summer and controlled through a 52.5% stake, TIP acquired a 14% stake in Ruffini 1.4 Partecipazioni (owner of 32% of Moncler + liquidity) for a total investment of Eu103mn. 1.2 N-12 J-13 M-13 M-13 J-13 S-13 N-13 This allowed TIP and its partners (mainly Italian entrepreneurial families) to have an indirect stake of 4.4% in Moncler. TIP TIP Rel. to BCI Index (Reb.) NAV-accretive deal. Considering Moncler’s successful IPO, we have tried to estimate the impact that the current price performance could have on our adjusted NAV for TIP. As Ruffini Partecipazioni is a holding company that contains both the 32% stake in Moncler and some liquidity, the acquisition made by Club 7 was an as yet undisclosed mix of cash and equity. We have assumed 3 different scenarios in terms of the weight RATING: Unchanged of liquidity in the total price paid, deriving an average implied acquisition price for TARGET PRICE (Eu): from Eu2.6 to 2.8 Moncler of Eu8.3 per share, with an estimated unrealised capital gain for Club 7 (at Change in EPS est: 2013E 2014E Moncler’s current share price) above Eu70mn, or around Eu38mn for TIP. 0.0% 0.0% BUY confirmed. Target from Eu2.6 to Eu2.8. Even though TIP has a 6-year lock-up agreement with Ruffini Partecipazioni (3 years for the other members of the club), we STOCK DATA Reuters code: TIP.MI remain positive on the growth potential of Moncler over this period. Our estimate of Bloomberg code: TIP IM the unrealised gains from the IPO lift our adjusted NAV for TIP to Eu387mn, or Eu3.0 per share. This latest success once again justifies our positive view on the investment Performance 1m 3m 12m company, which after the successful completion of the Printemps deal (Eu33mn Absolute 1.5% 23.5% 50.3% capital gain on the disposal of the French retail chain that was completed last Relative 4.3% 20.8% 33.3% summer) has provided a further demonstration of its strong capabilities as an investor, 12 months H/L: 2.32/1.48 placing TIP among the leading merchant banks in the Italian financial arena. SHAREHOLDER DATA Considering its significant differentiation from all other listed Italian investment and No. of Ord. shares (mn): 136 holding companies, both in terms of investment flexibility and active management Total No. of shares (mn): 129 style, we think the current discount of 21% to our estimated NAV will close (historically Mkt Cap Ord (Eu mn): 307 the stock traded at a premium of over 10% on average pre-crisis). We evaluate the Total Mkt Cap (Eu mn): 307 company using an AM-based approach coupled with our adjusted NAV, yielding a Mkt Float - ord (Eu mn): 144 fair value of Eu362mn and a target price of Eu2.8. Moreover, considering TIP’s recent Mkt Float (in %): 47.0% Main shareholder: introduction onto the FTSE Mid-Cap index, we expect the stock to enjoy more visibility D'Amico SdN 10.0% and liquidity in the near future. BUY recommendation confirmed. BALANCE SHEET DATA 2013 Book value (Eu mn): 269 Key Figures 2010A 2011A 2012A 2013E 2014E BVPS (Eu): 1.81 Net profit (E mn) 10 39347 P/BV: 1.2 EPS - New (Eu) 0.076 0.020 0.069 0.262 0.050 Net Debt (#BadKeyword mn): -13 EPS - Old (Eu) 0.076 0.020 0.069 0.262 0.050 NAV (Eu mn) 397 DPS (Eu) 0.035 0.035 0.041 0.090 0.045 NAVPS (Eu) 1.493 1.427 1.587 3.080 3.080 Ratios & Multiples 2010A 2011A 2012A 2013E 2014E P/E 29.5 nm 32.5 8.6 44.8 Div. Yield 1.6% 1.6% 1.8% 4.0% 2.0% P/NAVPS 1.5 1.6 1.4 0.7 0.7 The reproduction of the information, recommendations and research produced by Intermonte SIM contained herein, and of any of its parts, is strictly prohibited. None of the contents of this document may be shared with third parties without Company authorization. Intermonte SIM S.p.A. Milan 20122 (Italy) - Corso Vittorio Emanuele II, 9 - phone: +39-02-77115.1 fax: +39-02-77115.300 New York - (USA) - Sales contacts: JPP Eurosecurities, 595 Madison Avenue, 10022 - phone: +1 (212) 521 6718 TIP - Adjusted NAV (Eu mn) Value Stake (%) % on NAV Valuation method Sector LISTED COMPANIES 103.3 26.64% Amplifon S.p.A. 41.6 4.40% 10.72% Market v alue Hearing aids Monrif S.p.A. 8.1 8.81% 2.08% Market v alue Publishing NoemaLife S.p.A. 4.4 16.39% 1.13% Market v alue Healthcare Servizi Italia S.p.A. 2.1 1.83% 0.54% Market v alue Healthcare Valsoia S.p.A. 2.8 2.34% 0.72% Market v alue Food Bolzoni S.p.A. 6.0 7.70% 1.55% Market v alue Lift Truck Datalogic S.p.A. 32.2 6.57% 8.29% Market v alue RFID M&C S.p.A. 3.0 4.04% 0.79% Market v alue Asset Management Other listed companies 3.2 n.a. 0.83% Book Value Various NON LISTED COMPANIES 26.9 6.93% Assist Consulting S.r.l. 0.7 10.87% 0.17% Book Value Consulting Between S.p.A. 0.1 2.37% 0.04% Book Value ICT Consulting Dafe 4000 S.p.A. (Intercos S.p.A.) 9.0 17.94% 2.33% Book Value Cosmetics Borletti Group Finance S.C.A. 2.0 n.a. 0.52% Book Value Retail stores Long Term Partners 0.3 n.a. 0.08% Book Value Consulting TXR S.r.L. (Roche Bobois) 14.2 51.00% 3.67% Book Value Furniture Other non listed companies 0.5 n.a. 0.13% Book Value Various ASSOCIATES 262.0 67.54% Club 3 S.r.l. (6.2% of Prysmian) 84.7 35.00% 21.83% Market v alue Cables Club 7 S.r.l. (14% of Ruffini-32% Moncler) 118.1 52.50% 30.44% Estimated MV Luxury Data Holding 2007 S.r.l. (34.2% of B.E.E. Team) 6.7 46.71% 1.72% Market v alue IT Banking Gruppo IPG Holding (26.988% of Interpump) 52.0 19.23% 13.40% Market v alue Hydraulic Palazzari & Turries Limited 0.3 30.00% 0.09% Book Value Finance Gatti & Co 0.3 29.97% 0.07% Book Value Finance Net Financial Position (FY13E) - 17.0 Advisory Valuation 21.2 Holding Costs - 8.6 TOTAL NAV 387.9 TOTAL NAV x share 3.0 TIP Market Value 306.4 Current premium (discount) on NAV -21% Source: Intermonte SIM estimates and company data 2 3 Another high capital gain expected Considering Moncler’s successful IPO, we have tried to estimate the impact that the current price performance could have on our adjusted NAV for TIP. As Ruffini Partecipazioni is a holding company that contains both the 32% stake in Moncler and liquidity, the acquisition made by Club 7 was an as yet undisclosed mix of cash and equity. We have assumed 3 different scenarios in terms of the weight of liquidity in the total price paid (ranging from 5% to 15% of the total investment), yielding on average implied Moncler acquisition price of Eu8.3 per share. This means that the estimated unrealised capital gain for Club 7 (at Moncler’s current share price) is just over Eu70mn; TIP’s share of this gain would then be around Eu38mn. We think the recent success of its IPO is just the beginning of an ambitious growth strategy the company will be able to deliver in the coming years. We expect TIP’s long- term investment strategy will be rewarded within the six-year time frame initially set for the investment in Moncler. Moncler market valuation Nr. of shares (mn) 250 Share price (Eu) 14.75 Market Cap. (Eu mn) 3688 Source: Intermonte SIM estimates and company data Club 7 - Structure of the deal Ruffini Partecipazioni stake in Moncler (%) 32.0% Club 7 stake in Ruffini Partecipazioni (%) 14.0% Club 7 indirect stake in Moncler (%) 4.5% TIP stake in Club 7 (%) 52.5% TIP indirect stake in Moncler (%) 2.4% Source: Intermonte SIM estimates and company data Club 7 - Investment for the acquisition of 14% of Ruffini Partec. (32% of Moncler + Liquidity) Total acquisition cost (Eu mn) 103 TIP pro-quota (52.5%) investment (Eu mn) 54 Source: Intermonte SIM estimates and company data Club 7/TIP - Capital gain scenarios HP1 HP2 HP3 HPs of liquidity weight on Ruffini stake (%) 5% 10% 15% HPs of liquidity weight on Ruffini stake (Eu mn) 5 10 15 Moncler stake implied cost for Club 7 98 93 88 Moncler stake implied cost per share 8.74 8.28 7.82 Plus/Minus at current Moncler mkt price for Club 7 67 73 78 Plus/Minus at current Moncler mkt price for TIP 35 38 41 Source: Intermonte SIM estimates and company data Ruffini Partecipazioni - Main figures (FY12) (Eu mn) % of Assets Shareholders' funds 212 Assets 214 o/w Liquidity 142 66% o/w Equity 58 27% o/w Other assets 14 7% Source: Company data DISCLAIMER (for more details go to http://intermonte.it/ disclosures.asp) IMPORTANT DISCLOSURES The reproduction of the information, recommendations and research produced by Intermonte SIM contained herein and of any its parts is strictly prohibited.