Süss MicroTec Germany/ Technology Hardware & Equipment Preview note Investment Research 28 July 2016 Accumulate 2Q16 Preview: Continued strong performance is expected Recommendation unchanged however first signs of slow down become visible Share price: EUR 6.95 The facts: Suess MicroTec will release its 2Q16 report on Friday, August 5, 2016. closing price as of 27/07/2016 Target price: EUR 8.50 The subsequent conference call should be hosted shortly after the announcement. Target Price unchanged Reuters/Bloomberg SMHNn.DE/SMH GY Our analysis: Top line & Profitability: Given sound order backlog at the end of the Daily avg. no. trad. sh. 12 mth 97,763 first quarter we expect group sales to be increase both sequentially and yoy to around Daily avg. trad. vol. 12 mth (m) 678.80 EUR31.2m and still negative EBIT of EUR1.2m representing some moderate Price high 12 mth (EUR) 9.90 improvement compared to the year before (EUR1.8m). Price low 12 mth (EUR) 4.77 Abs. perf. 1 mth 10.3% It should be highlighted, in 4Q15 Süss has set a new record showing the highest order Abs. perf. 3 mth -25.9% inflow across its major segments (Lithography +106% and Mask Cleaner +130%) with Abs. perf. 12 mth 23.0% Bonder catching up shortly. On the regional basis, we should expect the performance should be mainly driven by Market capitalisation (EURm) 133 Current N° of shares (m) 19 Asia and North America, due to strong order intake in the past quarters. Please recall that management alluded to a relatively weak 1H16 as strong order intake recorded in Free float 100% 4Q15 which should start to pay off in H2-16 where we would expect sound top and Key financials (EUR) 12/15 12/16e 12/17e bottom-line growth. Sales (m) 149 172 180 EBITDA (m) 9 14 16 Order intake: Yesterday, Süss has announced slowing down of its operating activity EBITDA margin 6.2% 8.4% 8.7% demonstrated by somewhat subdued order intake, mainly the result of lower than EBIT (m) 5 10 12 expected interest for UV-Scanners and generally difficult market situation. These EBIT margin 3.3% 6.0% 6.5% Net Profit (adj.)(m) 0 6 7 developments made the company to reduce its expected order inflow for the H2-16 to ROCE 0.3% 6.4% 6.9% EUR80-90m vs ~ EUR119m previous year. Please keep in mind that management Net debt/(cash) (m) (40) (37) (41) has guided for 2Q16 bookings of EUR30-40m vs EUR39.2m realized. Net Debt Equity -0.3 -0.3 -0.3 Net Debt/EBITDA -4.4 -2.6 -2.6 Outlook 2016/17: The company has reiterated its forecast for FY16 with sales in the Int. cover(EBITDA/Fin.int) 34.2 (121.2) (65.5) range of EUR170-180m and EBIT between EUR9-13m vs. our estimate of EUR175m EV/Sales 0.8 0.6 0.5 (yoy 18%) and EBIT EUR11.1m (margin 6.3%) and FactSet consensus of EV/EBITDA 13.5 6.9 6.1 EUR174.9m (yoy 17.8%) and EBIT EUR11.4m (margin 6.5%). For 2017, Süss EV/EBITDA (adj.) 13.5 6.9 6.1 EV/EBIT 24.9 9.7 8.3 expects sales of around EUR160m given slowing down of operating activity. P/E (adj.) nm 21.2 18.7 2Q16 preview P/BV 1.3 1.1 1.0 OpFCF yield 0.8% -2.2% 2.9% in EUR m 2Q16e 2Q15a yoy FY16e FY15 yoy FY16c delta Dividend yield 0.0% 0.0% 0.0% Sales 31.2 28.1 11% 175.4 148.5 18% 174.9 0% EPS (adj.) 0.01 0.33 0.37 BVPS 6.21 6.54 6.91 EBIT -1.2 -1.8 29% 11.1 5.0 122% 11.4 -3% DPS 0.00 0.00 0.00 EBIT margin -4.0% -6.2% 220bp 6.3% 3.3% 300bp 6.5% -20bp Net profit -1.5 -2.1 28% 6.7 0.2 2879% 7.8 86% EPS [EUR] -0.08 -0.11 28% 0.35 0.01 2879% 0.40 -12% vvdsvdvsdy10 Sources: company data, FactSet, equinet estimates 9 Conclusion & Action: Overall, we expect 2Q15 results should turn out moderately 8 positive with much stronger 2H16. We believe, this year would show less activity in 7 terms of order intake, which should in turn determine group’s operating performance 6 in the coming year. For the time being we confirm our Accumulate rating and our PT 5 of EUR8.50. 4 Jun 15 Jul 15 Aug 15 Sep 15 Okt 15 Nov 15 Dez 15 Jan 16 Feb 16 Mrz 16 Apr 16 Mai 16 Jun 16 Jul 16 Source: Factset SUESS MICROTEC Tec Dax (Rebased) Victoria Kruchevska Analyst(s): +49 69 5 89 97 416 [email protected] Shareholders: (CFA,FRM) For company description please see summary table footnote For important disclosure information, please refer to the disclaimer page of this report Produced by: All ESN research is available on Bloomberg (“ESNR”), Thomson-Reuters, Capital IQ, FactSet Distributed by the Members of ESN (see last page of this report) Süss MicroTec Süss MicroTec: Summary tables PROFIT & LOSS (EURm) 12/2013 12/2014 12/2015 12/2016e 12/2017e 12/2018e Sales 135 145 149 172 180 186 Cost of Sales & Operating Costs -135 -133 -139 -158 -164 -169 Non Recurrent Expenses/Income -13.2 0.3 0.0 0.0 0.0 0.0 EBITDA -13.4 12.6 9.2 14.4 15.8 17.0 EBITDA (adj.)* -0.2 12.3 9.2 14.4 15.8 17.0 Depreciation -2.6 -2.7 -2.9 -3.0 -3.0 -3.1 EBITA -16.0 9.9 6.2 11.5 12.7 13.9 EBITA (adj)* -2.8 9.6 6.2 11.5 12.7 13.9 Amortisations and Write Downs -3.5 -1.5 -1.2 -1.2 -1.1 -1.1 of which PPA amortisation -0.8 -0.8 -0.8 -0.8 -0.8 -0.8 EBIT -19.4 8.4 5.0 10.3 11.6 12.8 EBIT (adj.)* -5.4 8.9 5.8 11.1 12.4 13.6 Net Financial Interest -0.1 -0.2 -0.3 0.1 0.2 0.4 Other Financials 0.0 0.0 0.0 0.0 0.0 0.0 Associates 0.0 0.0 0.0 0.0 0.0 0.0 Other Non Recurrent Items 0.0 0.0 0.0 0.0 0.0 0.0 Earnings Before Tax (EBT) -19.6 8.2 4.7 10.4 11.9 13.2 Tax 3.6 -3.6 -4.5 -4.2 -4.7 -5.3 Tax rate 18.3% 43.7% 95.2% 40.0% 40.0% 40.0% Discontinued Operations 0.0 0.0 0.0 0.0 0.0 0.0 Minorities 0.0 0.0 0.0 0.0 0.0 0.0 Net Profit (reported) -16.0 4.6 0.2 6.3 7.1 7.9 Net Profit (adj.) -2.8 4.3 0.2 6.3 7.1 7.9 CASH FLOW (EURm) 12/2013 12/2014 12/2015 12/2016e 12/2017e 12/2018e Cash Flow from Operations before change in NWC -8.3 9.7 6.7 10.4 11.3 12.1 Change in Net Working Capital 33.6 -4.6 -2.0 -9.1 -3.1 -2.2 Cash Flow from Operations 25.3 5.1 4.7 1.2 8.2 9.9 Capex -3.3 -3.0 -3.4 -4.1 -4.3 -4.5 Net Financial Investments -8.5 -0.8 -0.9 0.0 0.0 0.0 Free Cash Flow 13.5 1.4 0.4 -2.9 3.9 5.4 Dividends 0.0 0.0 0.0 0.0 0.0 0.0 Other (incl. Capital Increase & share buy backs) -10.4 0.9 1.5 0.0 0.0 0.0 Change in Net Debt 3.1 2.3 1.9 -2.9 3.9 5.4 NOPLAT -4.4 5.0 0.3 6.7 7.5 8.2 BALANCE SHEET & OTHER ITEMS (EURm) 12/2013 12/2014 12/2015 12/2016e 12/2017e 12/2018e Net Tangible Assets 20.9 20.2 20.3 20.5 20.9 21.4 Net Intangible Assets (incl.Goodwill) 19.8 20.0 20.0 19.7 19.5 19.4 Net Financial Assets & Other 0.6 0.6 0.6 0.6 0.6 0.6 Total Fixed Assets 41.3 40.8 40.9 40.9 41.1 41.4 Inventories 71.1 58.9 68.7 79.6 83.4 86.2 Trade receivables 11.1 13.4 13.1 15.2 15.9 16.4 Other current assets 8.9 6.3 5.1 5.1 5.1 5.1 Cash (-) -47.5 -48.5 -49.3 -46.4 -50.3 -55.7 Total Current Assets 139 127 136 146 155 163 Total Assets 180 168 177 187 196 205 Shareholders Equity 109 116 119 125 132 140 Minority 0.0 0.0 0.0 0.0 0.0 0.0 Total Equity 109 116 119 125 132 140 Long term interest bearing debt 10.3 9.1 7.9 7.9 7.9 7.9 Provisions 9.8 8.0 7.5 7.5 7.5 7.5 Other long term liabilities 34.7 23.8 28.2 30.7 31.7 32.4 Total Long Term Liabilities 54.8 40.9 43.7 46.1 47.1 47.8 Short term interest bearing debt 1.2 1.2 1.2 1.2 1.2 1.2 Trade payables 5.6 3.4 8.5 9.8 10.3 10.6 Other current liabilities 8.9 6.3 5.1 5.1 5.1 5.1 Total Current Liabilities 15.6 11.0 14.8 16.1 16.6 16.9 Total Liabilities and Shareholders' Equity 180 168 177 187 196 205 Net Capital Employed 118 110 114 126 130 133 Net Working Capital 45.9 50.9 55.2 64.3 67.4 69.6 GROWTH & MARGINS 12/2013 12/2014 12/2015 12/2016e 12/2017e 12/2018e Sales growth -17.9% 8.0% 2.2% 15.8% 4.8% 3.3% EBITDA (adj.)* growth n.m.