th April 2019 Lumibird Electronics Equipments G G E N E S ... - FY Results 2018 - English.pdf · G...

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G G E N E S T A Equity & Bond Research

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Lumibird 4th April 2019

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Recommendation 2. Buy

Closing Price on 02 April 2019 €16,18

Target price €18,80 (+16,2%)

Market data

Reuters / Bloomberg ticker LBIRD.PA / LBIRD.FP

Market capitalisation (€m) 271,09

Enterprise value (€m) 181,30

Free Float

Number of shares 16 754 425

Daily volume 223 758

Capital turnover rate (1 year) 21,63%

High (52 weeks) €17,70

Low (52 weeks) €8,40

Performances

Absolute perf. 1 month 6 months 12 months

10,1% +22% +92,6%

Current shareholding structure

Agenda

2019 Q1 Sales published April 29th 2019

Key figures Ratios

2017 PF 2018E 2019E 2020E 2021E 2017 PF 2018E 2019E 2020E 2021E

Sales (€m) 85,1 100,7 119,5 155,7 EV / Sales 1,2 1,8 2,3 2,1 1,9

Change (%) 34,5% 18,4% 18,7% 14,4% EV / EBITDA* 9,7 11,0 12,2 10,5 9,3

EBITDA (€m)* 10,2 16,5 22,5 27,1 31,9 EV / EBIT* 17,7 15,8 16,6 13,9 12,2

EBIT (€m)* 5,6 11,4 16,6 20,4 24,3 P / E 24,6 33,5 22,5 18,2 15,2

Ebit margin (%) 6,6% 11,4% 13,9% 15,6%

Net profit gp sh. (€m) 3,5 8,1 12,1 14,9 17,8 Gearing (%) 16% 3% -3% -11% -18%

Net margin (%) 4,2% 8,0% 10,1% 11,5% Net debt / EBITDA* 1,2 0,2 -0,2 -0,5 -0,8

EPS 0,22 0,48 0,72 0,89 1,06 ROCE (%) 4% 9% 12% 14% 16%

* : EBITDA & EBIT under IFRS, ie t aking int o account R&D act ivat ion

11,0%

136,1

13,9%

15,0%

Esira / Eurodyne : 54,3% ; Public : 45,7%

123,89 M€ (45,7 %)

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AN

NU

AL

RES

EAR

CH

Electronics Equipments

Date of first publication: 4th April 2019

Lumibird

An absolute record year!

Highest sales and profitability levels!

Lumibird released 2018 record sales of €100.7m, representing a +18.3 % growth vs. 2017 FY Pro Forma.

- The Industrial and Scientific division recorded €25.5m revenues, quite similar to 2017 PF (+0.8% vs.2017 PF).

- Lidar sensors maintained their solid dynamic (+33.8 % over the year) thanks to great demand in wind power and autonomous vehicle markets. New production capacities will definitely enable Lumibird to address this on-going dynamic demand.

- Defense / Space displayed, once again, a great quarter at €26.2m, growing by +56.9 % over the period, due to Aerospace and Megajoule contracts completion, confirming the growing business trend.

- Medical also recorded good sales at €33.6m (+6.3% vs. 2017 PF). This growth confirms the encouraging business pattern, initiated a few months ago with the launch of new products such as Compact Touch 2 or LacryDiag.

In terms of profitability, Lumibird recorded great levels of performance, in line with our expectations and testifying of an effective cost management. Thus, gross margin improvement led to a +62% increase in EBITDA at €16.5m (vs.2017 PF), mainly supported by laser divisions (Industrial and Scientific, Lidar sensors and Defense / Space). After depreciation, EBIT reached €11.4m (vs. €11.6m expected), in spite of the increase of depreciation costs (R&D investments and projects launched). After financial costs and apparent IS tax, the net profit reached €8.1m (vs. €8.2m expected), representing a +131% growth vs.2017 PF.

Strong growth momentum: Buy recommendation

Following this good sales release, the management said it remained confident and ambitious regarding its near future, with regards to its current technological leading position in Lidar Sensors, Defense and Medical segments. Lumibird Management also confirmed its 2021 guidelines, expecting €150m of revenues (only considering organic growth) and an EBITDA margin of over 20 %.

For 2019 and beyond, the combination of the merger synergies and growing volumes should result in an expansion of the EBIT margin (13.9% of sales in 2019E vs 6.6% in 2017 pro forma). For the current 2019 financial year, confident on all its activities (especially in Lidars, Medical and Defense divisions), we maintain revenues estimates of €119.5m.

Based on our valuation methods (DCF and comparable), our model displays a target price at €18.80. Buy recommendation maintained.

Gabrielle AGNUS

Financial Analyst [email protected] +33 1.45.63.68.86

http://www.genesta-finance.com/



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4th April 2019 Lumibird

Company profile

A new laser champion in Europe

Quantel and Keopsys merger enables to combine two complementary companies. Quantel was mainly focused on small series and in particular scientific lasers while Keopsys had been able to move from small to large series, thus generating economies of scale and a better profitability. The new merged company, now known as Lumibird, masters all modern lasers techniques and addresses a large number of applications. The strong position on various sensors like wind turbines or Lidar shows a capacity to address tomorrow’s markets. The new company CEO, coming from the Keopsys side, makes us also confident that the winning strategy will be continued and extended to the new group.

A company facing various types of competitors

Lumibird is active in a field where a multitude of different types and sizes of companies operates. A minority of competitors are small size entities ie LPKF Laser & Electronics AG, Ellex Medical Lasers Ltd or Iridex, but there are also industrial giants like Coherent Inc., IPG Photonics Corporation, Topcon Corp., Carl Zeiss Meditec AG, Han’s Laser Technology Industry and even General Dynamics or Lockheed Martin on some products. This implies in our view that Lumibird must stay focus on specific high valued technologies. In addition, it means that Lumibird could be bought in the future by one of its larger competitors.

The short term is bright

No matter the current competitive environment, we see the short term prospects of Lumibird as bright: new CEO, better coverage of product panel, reinforced marketing efficiency and internationalization, strong position on growing markets, general cost synergies, gradual move from small to large production series and strong balance sheet and cashflow generation.

Valuation Method DCF

Our DCF is built into three stages. Stage 1 results from our detailed Lumibird earnings calculation until 2028E (10 years). The operating FCF increases rapidly over there thanks mainly to the EBITDA growth. Stage 2 sets the operating FCF at +2.5% annually. Stage 3 sets the FCF growth to +2.0% annually to infinity. The key trend in our view for Lumibird will be the EBIT margin improvement brought by the success of Keopsys / Quantel integration and synergies. This deal enabled Lumibird to implement a strong and integrated operating structure, which should 1/ deliver good profitability and cashflow gradually in the next few years and 2/ set up solid foundations for future external development. After discounting the free cashflow at a WACC of 11.3% (detail of the WACC calculation later in this research note), we get to a DCF valuation of €18.54 per share.

Comparables

As indicated above, there is a large number of comparables showing various sizes sometimes with much larger market capitalizations than for Lumibird. We have decided to select a panel of five companies evolving in the laser industry, excluding biggest companies or ones showing operating margin ratios much different than those of Lumibird. The comparable valuation for Lumibird delivers a €19.06 per share result, after taking into account a -8.2% size discount. The average of the two methods shows a fair value estimated at €18.80. Buy recommendation.

Investment case

As mentioned before, Lumibird conveyed great levels of growth and profitability in 2018, reaching new records and important milestones.

Every sector participated in this great performance, confirming the good integration of Keopsys and Quantel activities. The consistency of this operation, initiated in 2017, is such that synergies generated are already translated in terms of great profitability and business developments.

For 2019, we believe that Lumibird will keep on delivering great levels of growth and performance, with regard 1/ to the market trends in laser segments (Medical and Lidar in particular) and 2/ to the strategic and leading positioning of the group in all its markets.

New thresholds targeted for 2021

The company confirmed a sales target of €150m for 2021 as well as an EBITDA margin of over 20%.

We believe the group will be able to reach its objectives, mainly thanks to 1/ its powerful technology and product positioning, 2/ laser market growth tendency, 3/ revenue synergies and 4/ new product deliveries, in Medical and Lidars, with good sales potential.

We set our sales estimates at €119.5m and EBIT forecast at 13.9%, believing the group will be able to deliver even better margin levels in the near future thanks to structural enhancements.

According to our expectations and our valuation model (DCF and comparables), we set our TP at €18.80. Buy recommendation maintained.

We still believe that investors seeking good fundamental business models with a reasonable future visibility should take a look at Lumibird.

SWOT

Strengths Weaknesses

- Excellent technical position

on the promising fiber laser

technology

- Quasi-majority of laser

techniques mastered

- Synergies generated by the

Quantel/Keopsys business

combination

- New CEO

- Markets growing in many

applications

- Small size compared to

leading producers

- The group is still too active

on some non-profitable scientific lasers

Opportunities Threats

- Considerable market growth

prospect for the Lidar

sensors (Light Detection and Ranging)

- Critical mass of the new

group enabling access to new

military markets

- New medical applications

- Development of mass

production in the new group

- Commercial and cost

synergies in the new group

- Aggressive attack of foreign

competitors on the French

market

- Major new technology

displacing laser



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Table of contents

1 Laser technologies and applications ................................................................................................................. 4

1.1 Quick presentation of laser technologies ..................................................................................................... 4

1.2 Lasers uses and market size .......................................................................................................................... 5

2 A group cut to address this opportunity ........................................................................................................... 6

2.1 Gains generated by the merger .................................................................................................................... 6

2.2 Wider geographical footprint ....................................................................................................................... 9

2.3 Addressable markets growth ...................................................................................................................... 10

2.4 R&D and innovation culture ........................................................................................................................ 11

3 FY 2018 earnings analysis and 2019-2021 forecasts....................................................................................... 12

3.1 FY 2018 results analysis............................................................................................................................... 12

3.2 2019 – 2021: Profitable growth prospects ................................................................................................. 13

3.3 Consolidated cashflow statement............................................................................................................... 14

3.4 Consolidated Balance Sheet ........................................................................................................................ 14

4 Valuation ......................................................................................................................................................... 15

4.1 DCF .............................................................................................................................................................. 15

4.1.1 Discount rate calculation .................................................................................................................... 15

4.1.2 Enterprise value calculation ................................................................................................................ 16

4.1.3 Price per share calculation .................................................................................................................. 16

4.2 Comparables Valuation ............................................................................................................................... 17

4.2.1 Comparables selection ........................................................................................................................ 17

4.2.2 Valuation ............................................................................................................................................. 18

4.2.3 Size discount / premium methodology ............................................................................................... 19

5 Summary of financial statements ................................................................................................................... 20

5.1 Simplified Income Statement ...................................................................................................................... 20

5.2 Balance Sheet – Main items ........................................................................................................................ 20

5.3 Cash Flows Statement – Main items ........................................................................................................... 20

5.4 Ratios ........................................................................................................................................................... 21

6 Important disclosure ....................................................................................................................................... 22

6.1 Genesta Equity Research ratings and target prices definition .................................................................... 22

6.2 Detection of potential conflicts of interest ................................................................................................. 22

6.3 Rating and target price evolution throughout the last 12 months ............................................................. 22

6.4 Ratings distribution ..................................................................................................................................... 22

6.5 Additional disclosures ................................................................................................................................. 23



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1 Laser technologies and applications

Lumibird is a now one of the European leaders in the growing lasers market. The global lasers market was estimated at around $13.8bn in 2018 by Strategies Unlimited and is expected to grow by $14.6bn in 2019 (+5-6% CAGR – Compounded Average Growth rate). Thanks to the business combination with Keopsys in October 2017, which was actually a reverse take-over of Quantel by Keopsys, the new group, now known as Lumibird, is mastering the most important and innovative laser technologies available on the market.

1.1 Quick presentation of laser technologies

The word ‘‘laser’’ is an acronym for ‘‘Light Amplification by Stimulated Emission of Radiation.’’ The first laser was built in 1960 in the US yet; the technology has obviously immensely improved since then. A laser emits an intense coherent beam of light with some unique and highly useful properties. Most importantly, a laser is orders of magnitude brighter than any lamp. As a result of its coherence, the beam can be focused to a very small and intense spot, useful for applications requiring very high power densities such as cutting and other materials processing procedures. The laser’s high spatial resolution is also useful for microscopic imaging and inspection applications. Laser light can be monochromatic—all of the beam energy is confined to a narrow wavelength band. Some lasers can be used to create ultrafast output—a series of pulses with pulse durations as short as attoseconds (10 power -18 of a second). Lasers are distinguished from other light sources by their coherence. Spatial coherence is typically expressed through the output being a narrow beam, which is diffraction limited. The laser emits light through a process of optical amplification. A laser consists of a “gain medium”, a mechanism to energize it, and something to provide optical “feedback”. For the gain medium to amplify light, it needs to be supplied with energy in a process called “pumping”:

• There are different possible types of gain mediums, as for example a crystal, optical fiber, a semiconductor or a gas.

• The gain medium is put into an excited state by an external source of energy (“pumping” process), typically an electric power or an outside light source.

• The feedback is provided by an “optical cavity”, which is made of mirrors on either end of the gain medium. This cavity will force light to go repeatedly through the gain medium in a specific direction, thus concentrating the photons emission.

Components of a typical laser

Source: Lasers – University Science Books

Components of a typical laser:

1. Gain medium

2. Laser pumping energy

3. High reflector

4. Output coupler

5. Laser beam



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Lasers can be classified into four main technologies, corresponding to the type of gain medium used.

• Fiber lasers: modern and fast growing technology where the gain medium is optical fiber. An advantage of this technique is that fibers have high surface area to volume ratio, which enables efficient cooling.

• Solid-state lasers: they use a crystalline or glass rod which is “doped” with ions that provide the required energy states. There are however limitations in solid-state lasers due to heating that can reduce their efficiency.

• Diode lasers (or Semiconductor lasers) here, the gain medium is made of diodes (a type of semiconductors) which are electrically pumped.

• Gas lasers: the gain medium is a gas. Many types of gases can be used to amplify light coherently, helium-neon or CO² among others. Note that gas lasers are an old technology being gradually replaced by fiber lasers.

Lumibird masters all the laser technologies except for the declining gas technology. The table below sums up the various laser types, the Lumibird presence on these products and their market growth trend.

Laser types and markets

Source: Lumibird and Genesta

1.2 Lasers uses and market size

Lasers are widely used in thousands of applications including science, medicine and industry. As an indication, lasers for industrial applications are sold in a €3,000 - €50,000 range per unit while medical laser price (mainly for ophthalmology) can vary from €40,000 to €70,000 per machine. For scientific applications, prices are set in a €30,000 - €100,000 range. We give below a few examples of actual applications:

• Science/Research: spectroscopy, fluorescence microscopy, metrology, high energy scientific lasers, atoms and molecular samples cooling.

• Medicine: laser surgery (in particular eye surgery), kidney stone treatment, cancer tumors, blood analysis.

• Industry: LIDAR civil (Light Detection and Ranging), obstacle detection, scan 3D, mapping 2D/3D, wind speed measurement, cutting, welding, marking parts.

• Military: telemetry, guiding munitions, missile defense, electro-optical countermeasures.

• Space: laser communication in space, space vessels docking systems.

• Communications: optical amplifier for fiber-optic communication.

• Law enforcement: Lidar traffic enforcement (Light Detection and Ranging), fingerprint detection.

• Commercial products: laser printers, barcode scanners, holograms.

Laser types Presence of Lumibird Market trend

Fiber lasers Yes

Solid-state lasers Yes

Diode lasers (Semiconductor lasers) Yes

Gas lasers No

A very large panel of applications…



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Lumibird is a now one of the European leaders in the growing lasers market. The industrial laser industry is seen as vibrant, robust and growing. It has even grown during years when the global economy has not. The global lasers market was estimated at around $9.7bn in 2015 by Strategies Unlimited, and is expected to grow to $14.6bn by 2019, reflecting a five-year compounded annual growth rate of +8.5%. This 8.5% growth rate stands below double-digit annual rates seen in other technology markets but is steady and should remain about the same in the long term, in spite of a period of market consolidation. This gives a good visibility to the laser business for fundamental long-term investors. Moreover, market trends are good, and evolving technology should continue to drive this global market, especially within fiber laser submarkets. Reports from BCC Research, Allied Market Research and Laser Focus World stand that the fiber lasers market should experience a higher growth (+12% annually), spurred by demand for its high-output power, compact size, reliability and reasonable cost.

Source: Strategies Unlimited Source: Laser Focus World

2 A group cut to address this opportunity

2.1 Gains generated by the merger

The business combination Quantel – Keopsys was consummated on October, the 6th 2017. In our view, there is a strong logic in combining the two companies and thus creating a European specialist in high value-added lasers. The chart below shows the main characteristics of the new Lumibird group.

Fiber 31%

Other Lasers69%

Fiber 39%

Other Lasers61%

2015

2020

Estimated growth of global lasers market

Evolution of the fiber laser share in the global lasers market



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Lumibird business combination

Source: Quantel and Keopsys For FY 2016, the new Lumibird group, managed by Marc Le Flohic (ex-CEO of the Keopsys group), generated €80.5m of sales (2016 pro forma figures) and a net profit of €2.4m (2016 pro forma figures), a net margin of 3.0%. These 2.9% resulted from a 2016 net margin of 0.9% at Quantel and 12.8% at Keopsys group. For FY 2017, the new group pro forma accounts released on 29th March, 2018 unveiled that pro forma sales stood at €85.1m and net profit at €4.3m (5.1% net margin). The new group generated 26% of sales in France and 74% abroad, with significant footprints in the US, Germany, China, South Korea and South East Asia. More recently, Lumibird released 2018 record sales of €100.7m, representing a +18.3 % growth vs. 2017 FY Pro Forma, mainly supported by Lidar sensors and Defense / Spatial divisions.

The following pie chart below shows the group sales breakdown by division for 2018:

Lumibird: 2018 sales by division*

Source: Lumibird

*Lumibird recently reviewed the segmentation of its business units to integrate military and space activities into the Defense segment, businesses previously included within the 1/ Industrial & Scientific and 2/ Lidar divisions.

Industrial & Scientific35%

Lidar Sensors13%

Defense12%

Medical 37%



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Lumibird cannot be attacked by large laser generalist players (i.e Coherent or Topcon) who are in fact insignificant players in the very specific technologies addressed by the company, based on R&D dedicated approaches (for example unmanned vehicles market). IN OUR VIEW, THE TWO MAIN ADVANTAGES OF THE BUSINESS COMBINATION ARE:

• Technology: Full control of the fiber lasers technology. Quantel was present on the fiber lasers new technology but not as a specialist. Keopsys is specialized in the development, production and marketing of fiber lasers and fiber amplifiers.

Fiber lasers are a fast growing market. As seen before, this is a modern technology where the gain medium is optical fiber. A technical advantage of this technique is that fibers have high surface area to volume ratio, which enables efficient cooling. In addition, the fiber’s wave guiding properties tend to reduce thermal distortion of the beam.

Share of fiber lasers in global laser market

Source: Laser Focus World

From an economic point of view, fiber lasers are cheaper than other technologies. They have also a lower power consumption and low maintenance costs. In addition, they are compact products easy to integrate into larger systems. Over five years (2015-2020), it is estimated that the global growth rate of fiber lasers will be 12% per year compared to +7% per year for the total laser market. The fiber laser technology will account for 39% of the total market in 2020. The combination of the Keopsys and Quantel fiber lasers production lines within Keopsys will enable to reduce the cost base per unit and increase productivity.

• Improvement of the historical Lumibird perimeter’s profitability: “Quantel” historical part of the new group used to have low Ebit and net profit margins. Part of this was due to the presence of Quantel in a too large number of activities of smaller size with less R&D concentration. This was also explained by a focus of the historical Quantel on small series of maximum 100 lasers per product per year with sometimes only a few taylor-made lasers developed for clients. In this “laboratory” type of business model, it was difficult to absorb fixed costs and generate earnings.

Keopsys on the contrary is vertically integrated and producing high volumes of several thousand machines (maximum production capacity of series of more than 2,500 lasers per year) where economies of scales, production time and productivity can be optimized. It takes a few hours to produce a laser at Keopsys versus thirty hours on average at Quantel. The new group management wants to apply the Keopsys profitability culture to Lumibird. We believe this is possible over 2-3 years. The management indicated that the historical Quantel used to have difficulties to move from small to large series and will have in the future to make a better selection of the markets where they want to concentrate. In some cases, decisions could be taken to discontinue entirely some products, i.e some of the scientific lasers.

2015 2020

Lasers Fiber lasers Lasers Fiber lasers

4.8bn $

1.5bn $

2.6bn $

6.8bn $

Fiber laser share in the

world market

31%

Fiber laser share in the

world market

39%



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Other gains generated by the combination are experienced in many acquisitions or mergers and are more common. The profitability improvements drivers include:

• Vertical integration: Integration of new core technologies to internalize margins on strategic components

• Industrialization: Cover of more than 500 finished goods with less than 10 global platforms

• Direct sales: Achievement of more than 80% through direct sales (vs. 60% today)

• Size effect: Addressing larger tender and benefiting from economies of scales, optimizing raw materials and pooling fixed costs.

The company targets to reach €150m in sales by 2021 (only considering organic growth). We believe this is achievable and we depict in the table below our 2019-2021 sales estimates by division (without M&A deals).

Lumibird – Estimated sales by division

Sales (in € million) 2017PF 2018E 2019E 2020E 2021E

Industrial and Scientific 25,3 25,5 26,3 26,9 27,6

% change 33,9% 0,8% 3,0% 2,5% 2,5%

% of revenues 29,7% 25,3% 22,0% 19,8% 17,7%

Lidar Sensors 11,5 15,4 20,1 25,1 31,6

% change 505,3% 33,9% 30,8% 24,5% 26,0%

% of revenues 13,5% 15,3% 16,9% 18,4% 20,3%

Defense & Spatial 16,7 26,2 34,1 40,8 49,0

% change 39,2% 56,9% 30,2% 19,7% 20,0%

% of revenues 19,6% 26,0% 28,5% 30,0% 31,5%

Medical 31,6 33,6 39,0 43,3 47,5

% change 3,6% 6,3% 16,0% 11,0% 9,9%

% of revenues 37,1% 33,4% 32,6% 31,8% 30,5%

TOTAL 85,1 100,7 119,5 136,1 155,7

% change 34,4% 18,3% 18,7% 13,9% 14,4%

Source: Genesta estimates

2.2 Wider geographical footprint

The company is active in France (31% of 2018 sales) but also in the US, Germany, China, South Korea and South East Asia. Thanks to the merger, Lumibird has increased footprint in the US and Germany where both Quantel and Keopsys were previously present.

Countries with existing group subsidiaries

Source: Lumibird Group

Office ChiangMai

Thailand



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The company has several industrial production sites located in France and abroad, such as:

• Les Ulis (Paris area) – Solid lasers

• Lannion (Britany, France) – Fiber lasers

• Clermont Ferrand (France) - Medical

• Bozeman (Montana, USA) – Laser diodes and fiber lasers

• Bordeaux (France), smaller site dedicated to the French megajoules project. This project is managed by the CEA (French nuclear energy governmental organization).

In terms of products distribution, in the Medical division, Lumibird directly sells to customers in France and in the US. In other geographical markets, medical products are sold via more than 90 exclusive distributors in 110 countries. Medical division earned 80% of its sales abroad in 2018. Lumibird also opened a new subsidiary in Poland in 2018, strengthening its positions in Europe and expecting a great growth dynamic in this area. In other segments (industrial & scientific, Lidar, defense), Lumibird sales directly in France and relies on a commercial subsidiary in Japan. Lumibird also sells through independent distributors in the rest of the world, although this policy may gradually evolve towards the organization of direct subsidiaries belonging to the group.

2.3 Addressable markets growth

The chart below shows 2018 breakdown of sales.

Lumibird 2018 sales by division and geographical area

Source: Lumibird

We previously detailed our expectations for 2019-2021 sales by division. Lumibird is obviously not the only player on all these promising markets and competes with a number of other companies of various sizes as described later in the comparables list. Generally speaking, lasers are a fragmented market with actors in many countries. Lumibird indicates that one of its strengths is to be vertically integrated and able to produce lasers complete systems, thus generating more innovation and a better control of costs. We agree with this analysis even though it remains difficult to gauge precisely the technical strengths or weaknesses of each producer. In one application though, Lumibird controls 80% of global market shares. This is the sensors market for wind turbines, used to evaluate wind speed and direction and optimize the turbine operation. Lumibird is also well positioned in 3D sensors, enabling to collect 3D data precisely and rapidly.

Industrial & Scientific35%

Lidar Sensors13%

Defense12%

Medical 37%

France 31%

Europe 18%America 19%

Asia 20%

ROW 12%



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Applications providing potential additional longer-term growth opportunities (in $ million)

Source: Strategies Unlimited, IPGP estimate of potentially addressable market.

2.4 R&D and innovation culture

The company incurs research and development and engineering expenses as part of its ongoing operations. Thus, Lumibird group is constantly developing and introducing new products as well as improving and refining existing ones. The company is also committed to funding research into future market opportunities as markets have experienced rapid technological changes and product innovations. The annual R&D budget for the group stands at around 6-7% of sales. In 2018, Capex related to Research and development reached €6.7m (6.3% of sales), including a small acquisition completed last year. The three main R&D sites are located within the main production locations in Les Ulis (Paris area), Lannion (Britany, France) and Bozeman (Montana, USA). Regarding patents registrations, the company owns around 30 patents but does not pursue an active policy in this field for two reasons. Firstly, the laser technology has been existing for a long time, leaving little space for new patents. Innovation is coming more from know-how and applications development. Secondly, the company philosophy, following the Keopsys model, will be more and more to focus on marketing and sales instead of spending time and money to register patents.

192

161

67

455

372

628

2015

Displays & Light Shows

Sensors, LIDAR & Inspection

Mid-IR Spectroscopy

R&D

Defense

Medical

569

236

108

594524

1 042

2020



12


3 FY 2018 earnings analysis and 2019-2021 forecasts

3.1 FY 2018 results analysis

Lumibird released 2018 record sales of €100.7m, representing a +18.3 % growth vs. 2017 FY Pro Forma.

- The Industrial and Scientific division recorded €25.5m revenues, quite similar to 2017 PF (+0.8% vs. 2017 FY Pro Forma).

- Lidar sensors maintained their solid dynamic (+33.8 % over the year) thanks to great demand in wind power and autonomous vehicle markets. New production capacities will definitely enable Lumibird to address this on-going dynamic demand. As an example, between January and December 2018, the overall Lidar production grew from 150 to 700 items per months.

- Defense / Space displayed, once again, a great quarter at €26.2m, growing by +56.9 % over the period, due to Aerospace and Megajoule contracts completion, confirming the growing business trend.

- Medical also recorded good sales at €33.6m (+6.3% vs. 2017 PF). This growth confirms the encouraging business pattern, initiated a few months ago with the launch of new products such as Compact Touch 2 or LacryDiag.

In terms of profitability, Lumibird recorded great levels of profitability, in line with our expectations and testifying of an effective cost management. Thus, the gross margin benefited from productivity improvements, leading to a +62% increase in EBITDA at €16.5m, mainly supported by laser divisions (Industrial and Scientific, Lidar sensors and Defense / Space). After depreciation, EBIT reached €11.4m (vs. €11.6m expected), in spite of the increase of depreciation costs (lots of R&D investments and projects launched).

After financial costs and apparent IS tax, the net profit reached €8.1m (vs. €8.2m expected), representing a +131% growth vs. 2017 FY Pro Forma.

In terms of financial situation, net financial debt stands out at €3.0m (vs. €12.1m on 31/12/2017), leading to Gearing Improvement at 3.3% vs. 16% in 2017 and testifying of healthy financial position. Shareholder’s equity now represents almost €91m, improved in particular by the success of the € .8m capital increase occurred in last December. This bodes well for the group capacity to pursue its strategy of selective acquisitions in 2019 and beyond. Acquisitions should be of limited size at the earlier stage (acquisition of specific technologies) but Lumibird does not exclude more significant moves if an opportunity occurs.



13


3.2 2019 – 2021: Profitable growth prospects

Based on our sales estimates, growth will generate mechanically a margin expansion through a better absorption of the company fixed costs. We built our P&L estimates on this assumption, and then added the additional benefit created by the top line growth.

Lumibird – Overview of earnings and earnings estimates 2016-2021E

31/12 (€m) 2016 2017 PF 2018E 2019E 2020E 2021E

Revenues 63,3 85,1 100,7 119,5 136,1 155,7

% change 1,8% 34,5% 18,4% 18,7% 13,9% 14,4%

Procurements -27,2 -36,6 -39,8 -48,9 -55,5 -64,3

% of revenues 43,0% 43,0% 39,5% 40,9% 40,8% 41,3%

Staff costs -19,6 -24,5 -27,1 -29,8 -32,7 -37,1

% of revenues 31,0% 28,8% 26,9% 24,9% 24,0% 23,8%

Other costs -12,3 -15,3 -18,3 -19,4 -21,9 -23,6

% of revenues 19,4% 18,0% 18,1% 16,2% 16,1% 15,1%

Ebitda 4,9 10,2 16,5 22,5 27,1 31,9

% of sales 7,7% 12,0% 16,4% 18,8% 19,9% 20,5%

Depreciations & Provisions -3,8 -4,6 -5,1 -5,9 -6,7 -7,6

% of revenues 6,0% 5,4% 5,1% 4,9% 4,9% 4,9%

Ebit 1,1 5,6 11,4 16,6 20,4 24,3

% of revenues 1,7% 6,6% 11,4% 13,9% 15,0% 15,6%

Financial income & charges -0,5 -0,8 -0,5 -0,5 -0,5 -0,5

% of revenues -0,7% -0,9% -0,5% -0,4% -0,4% -0,3%

Earnings before tax 0,6 4,3 10,9 16,1 19,9 23,8

% of revenues 1,0% 5,0% 10,9% 13,4% 14,6% 15,3%

Income tax 0,0 -0,7 -2,8 -4,0 -5,0 -5,9

Tax rate (%) 0,6% 17,5% 26,0% 25,0% 25,0% 25,0%

Net earnings 0,6 3,5 8,1 12,0 14,9 17,8

% change 447,8% 129,3% 48,6% 23,8% 19,7%

% of revenues 1,0% 4,2% 8,0% 10,1% 11,0% 11,5%

Number of shares (in thousands) 9,23 15,77 16,75 16,75 16,75 16,75

EPS (EUR per share) 0,07 0,22 0,48 0,72 0,89 1,06

Source: Lumibird and Genesta estimates



14


3.3 Consolidated cashflow statement

The table below shows the Lumibird cashflow statement over 2016 – 2021E.

Lumibird – Overview of cashflow statement 2016-2021E

Cashflow Statement (in € million) 2016 2017 PF 2018E 2019E 2020E 2021E

Revenues 63,3 85,1 100,7 119,5 136,1 155,7

Ebit 1,1 4,7 11,4 16,6 20,4 24,3

% of revenues 1,7% 5,5% 11,4% 13,9% 15,0% 15,6%

Income tax 0,6 0,0 -1,3 -1,5 -1,5 -1,5

Tax rate -54,0% 0,0% 11,4% 9,1% 7,4% 6,2%

Earnings after tax 1,7 4,7 10,1 15,1 18,9 22,8

Depreciations 3,2 4,6 4,6 5,7 6,5 7,4

Impact of WCR variation -0,7 -8,1 -11,3 1,2 -4,7 -6,3

Capital expenditure -5,6 -3,6 -10,4 -13,0 -10,9 -12,5

% of revenues 8,9% 4,2% 10,3% 10,9% 8,0% 8,0%

Free cashflow -1,4 -2,4 -7,0 9,0 9,8 11,4

Capital increase 2,2 0,0 7,8 0,0 0,0 0,0

Dividend payments 0,0 0,0 0,0 0,0 0,0 0,0

Other 0,0 0,0 2,7 -2,0 -2,0 -2,0

Change in net financial position 0,8 -2,4 3,5 7,0 7,8 9,4

WCR = Working Capital Requirements = Inventories + clients – suppliers Net financial position = Short term investments + cash – long term & short-term financial liability

Source: Lumibird and Genesta estimates

The free cashflow line should grow for the following reasons:

- Profitable growth thanks to consolidation and synergies, - Working capital requirements and capital expenditure under control.

We believe that this company should continue to generate a positive and growing free cash flow avec the years, hence a positive impact on the DCF valuation.

3.4 Consolidated Balance Sheet

The consolidated balance sheet expectations take into account an improving net financial position, thanks to the positive free cashflow, culminating with an estimated net cash position by end 2019, assuming of course that no acquisition will have been carried out by then. The balance sheet main items are displayed later in the research note.



15


4 Valuation

4.1 DCF

4.1.1 Discount rate calculation

The discount rate results from the weighted average rate between the capital cost and the cost of financial debt. The cost of capital is calculated based on the CAPM model to which is added a Small Cap risk premium according to the following formula:

Cost of capital = Rf +beta * (Rm-Rf) + Small Caps risk premium

Rf: risk free rate (Rm-Rf): stock market risk premium

Depending on the company size, we add a Small Caps premium to the cost of capital. The Small Caps premium is calculated according to six criteria which are objectively evaluated. For each criterium, there are five increments from – de ++. Each move upwards adds 20 basis points to the cost of capital. Please find below the criteria table:

Criterium Notation scale

++ + = - --

Company governance 1 4 3 2 1 0

Liquidity2 [66 % ; 100 %] [33 % ; 66 %[ [15 % ; 33 %[ [5 % ; 15 %[ [0 % ; 5 %[

Revenues size (€m) [150 ; +∞[ [100 ; 150[ [50 ; 100[ [25 ; 50[ [0 ; 25[

Operating profitability [25 % ; 100 %] [15 % ; 25 %[ [8 % ; 15 %[ [3 % ; 8 %[ [0 % ; 3 %[

Gearing ]-∞ % ; -15 %] ]-15 % ; 15 %] ]15 % ; 50 %] ]50 % ; 80 %] ]80 % ; +∞[

Clients risks 3 [0 % ; 10 %] ]10 % ; 20 %] ]20 % ; 30 %] ]30 % ; 40 %] ]40 % ; 100 %]

In the case of Lumibird, we obtain the following matrix:

++ + = - -- Small Caps Premium

Company governance 0,80%

Liquidity 0,20%

Revenues size 0,40%

Operating profitability 0,60%

Gearing 0,40%

Client risk 0,60%

TOTAL 3,00%

Based on the prevalent risk free, a market risk premium of 7.8% (source: Fairness Finance, Market Risk Premia), a 3 years beta of 1.02, a Small Caps risk premium of 3.0% and a weighted taxed debt cost, we get to a discount rate of 11.3%.

Risk Free Rate Risk premium Beta Small Caps risk

premium Cost of capital

Cost of debt

Financial leverage

Tax rate WACC

0,54% 7,8% 1,02 3,0% 11,4% 1,5% 1,1% 25,0% 11,3%

Source: Agence France Trésor, Fairness Finance, Market Risk Premia, Damodaran, Genesta estimates

1 Company’s governance is evaluated through the 4 following criterions: separation of functions between president and top management or functioning as a supervisory board and a board of directors; presence of independent members in the board of trustees or in the supervisory board; presence of censors or control board; existence of specialized committees. 2 Percentage of capital exchanged in the last 12 months 3 Sales parts represented since by the 5 most important clients.



16


4.1.2 Enterprise value calculation

Using our 11.3% discount rate, we obtain the following discounted cashflow statement for the period 2018E – 2028E (in €m).

2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E

Revenues 100,7 119,5 136,1 155,7 174,4 194,5 215,9 237,5 256,5 271,9 277,3

EBIT 11,4 16,6 20,4 24,3 27,6 31,1 34,8 38,5 41,8 44,9 46,0

Tax -1,3 -1,5 -1,5 -1,5 -6,9 -7,8 -8,7 -9,6 -10,5 -11,2 -11,5

Depreciation 4,6 5,7 6,5 7,4 8,4 9,3 10,4 11,4 12,3 13,6 13,9

Capital expenditure -10,4 -13,0 -10,9 -12,5 -9,6 -10,7 -10,8 -11,9 -12,8 -13,6 -13,9

Impact of WCR variation -8,1 -11,3 1,2 -4,7 -5,8 -2,5 -4,3 -1,5 -5,1 -4,2 5,5

Operating FCFs -3,7 -3,6 15,7 13,0 13,6 19,4 21,4 26,9 25,7 29,5 40,0

Discounted operating FCF -3,3 13,2 9,8 9,2 11,8 11,7 14,1 12,1 12,5 15,2

Source: Lumibird, Genesta estimates

For the period following the forecasts, we apply a terminal growth rate in two times, and obtain the following table (in €m):

FCF growth Value %

1-10 years period 106,2 34,3%

11-20 years period 2,5% 128,2 41,4%

Terminal growth rate 2,0% 74,9 24,2%

Total 309,3 100,0%

Of which discounted terminal value 203,1 65,7%


Thus, Lumibird enterprise value stands at € 309.3 million.

4.1.3 Price per share calculation

The table below details the final calculation of equity value per share.

Discounted FCF 2018-2022 106,2

Discounted terminal value 203,1

Financial assets 1,0

Assets consolidated on an equity basis 0,0

Provisions 0,5

Net financial debt 3,0

Minorities 0,0

Discounted tax loss carry forward 3,7

Equity Value (in EUR million) 310,6

Number of shares (in million) 16,754

Share valuation (in EUR) 18,54


As a consequence, the use of the Discounted Free Cash Flow method values Lumibird at €18.54 per share, representing an upside of +14.6% compared to the last closing price of 16.18 on April 2nd, 2019. The following table summarizes the DCF valuation sensitivity to changes in the discount rate and terminal growth rate (in €):

Growth rate to infinity

9.991927697 1.0% 1.5% 2.0% 2.5% 3.0%

CA

PM

9.1% 20,82 21,14 21,51 21,91 22,38

9.6% 19,37 19,63 19,93 20,27 20,65

10.1% 18,06 18,29 18,54 18,81 19,12

10.6% 16,89 17,08 17,29 17,52 17,77

11.1% 15,83 15,99 16,16 16,36 16,57



17


4.2 Comparables Valuation

4.2.1 Comparables selection

In order to value Lumibird through the comparables valuation method, we selected a sample of five listed companies specialized in the development of lasers technologies.

We excluded IPG Photonics, which has much more higher margin than Lumibird’s, and Carl Zeiss Meditec, due to the fact that this company is involved in additional non laser-based medical devices. We also exlcuded Han’s Laser Technology, due to its large footprint in industrial lasers (welding, cutting, graving, and marking) which are not Lumibird’s focus. Thus, we selected the following peers:

- Topcon Corporation: Topcon Corporation is headquartered in Tokyo (Japan). The company’s main operations are divided into three segments based on laser technologies: Smart Infrastructure, Positioning, Eye Care. Its brands include Topcon, Sokkia, Tierra, Digi-Star, RDS Technology, and NORAC. The group realized € 1.2 billion of revenues in 2018. Topcon Corporation, founded in 1932, is traded on the Tokyo Stock Exchange.

- LPKF Laser & Electronics AG: LPKF is a pioneer in the development of new markets for laser technology applications in micromaterial processing, and has built up leading global positions in many sectors. Special expertise and experience in all aspects of micromaterial processing with lasers are the solid platform for all the LPKF Group's segments. On the basis of preliminary figures, LPKF Laser & Electronics AG is forecasting consolidated revenue of € 120 million for 2018.

- Ellex Medical: the company designs, develops, manufactures and sells innovative products that help eye surgeons around the world to effectively and efficiently treat eye diseases. Ellex is a world leader in this field. Headquartered in Adelaide, Australia, Ellex has ophthalmic lasers and devices that treat glaucoma, retinal disease primarily caused by diabetes, secondary cataract and vitreous opacities, as well as age-related macular degeneration. For 2018, Ellex reported revenues of € 56 million.

- Novanta: the group is a leading global supplier of core technology solutions that give healthcare and advanced industrial original equipment manufacturers (“OEMs”) a competitive advantage. The company combines deep proprietary technology expertise and competencies in photonics, vision and precision motion with a proven ability to solve complex technical challenges. This enables Novanta to engineer core components and sub-systems that deliver extreme precision and performance, tailored to company's demanding applications. Novanta's common shares are quoted on Nasdaq. For 2018, the company reported € 580 million of revenues.

- NLight: NLight is an American company specialized in the development, design and manufacturing of semiconductor and fiber lasers. Its key markets are the industry, aerospace and defense. The group sales its equipment all over the world, focusing on the American and Asian areas. The company reported in 2018 €179m in sales. NLight is headquartered in Vancouver, Washington and employs more than 1 000 people in the US and abroad.

This table summarizes the main aggregates of Lumibird selected peers:

In €M Sales 17E

Sales 18E

Sales 19E

Ebitda 17

Ebitda 18E

Ebitda 19E

Ebit 17 Ebit 18E Ebit 19E Net

Earnings 17

Net Earnings

18E

Net Earnings

19E

Topcon Corp. 1 200,6 1 287,4 1 358,7 177,7 189,7 199,3 113,8 129,5 143,5 52,3 61,3 71,5

LPKF Laser & Electronics AG 120,0 132,0 138,5 15,8 22,0 26,3 7,3 13,5 16,9 5,5 11,2 12,8

Ellex Medical Lasers Limited 56,1 61,9 68,5 -1,9 -1,5 5,2 -3,5 -3,5 2,5 -3,2 -3,4 1,7

Novanta Inc. 535,8 580,1 615,0 107,9 118,5 132,1 91,3 101,5 114,7 44,4 57,5 70,8

NLight INC 166,9 179,4 218,3 26,3 24,3 39,5 14,9 12,7 24,4 8,3 9,9 20,1

Source: Genesta. Infront Analytics

in € million Market cap. Net debt Minorities EV

Topcon Corp. 1 132,2 297,6 0,0 1 429,7

LPKF Laser & Electronics AG 211,2 37,7 0,0 248,8

Ellex Medical Lasers Limited 54,4 4,3 0,0 58,7

Novanta Inc. 2 671,2 118,7 0,0 2 790,0

NLight INC 757,8 -16,0 0,0 741,8

Source: Genesta. Infront Analytics



18


4.2.2 Valuation

This table summarizes the ratios of comparable companies:

EV / Sales 19 EV / Sales 20 EV / Ebitda 19 EV / Ebitda 20 EV / Ebit 19 EV / Ebit 20 PE 19 PE 20

Topcon Corp. 1,1 1,1 7,5 7,2 11,0 10,0 23,3 20,0

LPKF Laser & Electronics AG 1,9 1,8 11,3 9,5 18,4 14,7 22,3 19,4

Ellex Medical Lasers Limited 0,9 0,9 NS 11,2 NS 23,8 NS 34,4

Novanta Inc. 4,8 4,5 23,5 21,1 27,5 24,3 NS 39,4

NLight INC 4,1 3,4 30,6 18,8 NS 30,4 NS 36,9

Average 2,6 2,3 18,2 13,5 19,0 20,7 22,8 30,0

Median 1,9 1,8 17,4 11,2 18,4 23,8 22,8 34,4

Source: Genesta. Infront Analytis

This table displays the implied valuations of Lumibird according to the current valuation multiples of the comparables companies:

Sales 19E Sales 20E Ebitda 19E Ebitda 20E Ebit 19E Ebit 20E Net earnings

19E Net earnings

20E

Lumibird 119,5 136,1 22,5 27,1 16,6 20,4 12,0 14,9

Resulting valuation 305,0 313,8 406,5 363,6 311,3 417,8 274,7 447,5

222,2 241,5 388,3 300,2 302,1 482,6 274,7 513,2

Average valuation / share 16,15 21,76 22,59 22,53

Source: Genesta. Infront Analytis

Given the difference between the average market capitalisation of the selected comparables companies and the calculated capitalisation of Lumibird, we apply a discount based on the approach established through a model developed by Eric-Eugène Grena. This approach is introduced hereafter in a methodological note. In the case of Lumibird, this method leads us up to apply a discount of -8.2 % to the previous result.

Average capitalisation of comparables companies € 965,3 million

Company capitalisation (not adjusted) € 348,0 million

Capitalisation ratio 36,0%

Applied discount -8,2%

After the application of this discount, we obtain the following valuation:

Average valuation per share 14,83 19,98 20,74 20,69

Average 19,06

By deduction, using the comparable method, we obtain the following valuation of €19,06 for Lumibird, representing an upside of +17,8% compared to the last closing price of €16.18 at April 2nd, 2019.



19


4.2.3 Size discount / premium methodology

Considering the possible gap between the peers’ average market capitalization and the company’s, Genesta implements a discount, or a premium, inspired by the Eric-Eugène Grena’s model, in order to obtain a more relevant valuation of the company. Works led by Eric-Eugène Grena – SFAF member, former director of BNP Paribas Equity Research and former partner at Clinvest – showed that there exists a risk to implement peers valuation approach without taking into account the existence of large gaps between the size of the valuated company and the one of its peers. Thus, it seems important to make a correction by calculating a discount or a premium applied to the estimated company if necessary. The study, which has been made on a conclusive sample, revealed a decrease in the PE ratios regarding the peers’ size and that the correction should be of the same order of extent. The approach followed by Genesta consists in:

1) Calculating the ratio between the estimated company’s market capitalization and the one of its peers;

2) Implementing, as stated by the previously calculated ratio, a discount or a premium according to the abacus defined by Eric-Eugène Grena while taking care of using a linear regression between each increment ;

3) Applying this discount or premium to the estimated market capitalization of the valuated company and thus refining the peers estimation’s relevance.

Capitalization ratio Adjustment applied

<2% -40%

2% -34%

5% -26%

10% -20%

20% -14%

30% -10%

40% -7%

50% -5%

60% -4%

80% -2%

100% 0%

120% 2%

140% 4%

150% 5%

160% 7%

170% 10%

180% 14%

190% 20%

195% 26%

198% 34%

>198% 40%

Discount

Premium



20


5 Summary of financial statements

5.1 Simplified Income Statement

5.2 Balance Sheet – Main items

5.3 Cash Flows Statement – Main items

31/12 (€m) 2016 2017 PF 2018E 2019E 2020E 2021E

Revenues 63,3 85,1 100,7 119,5 136,1 155,7

% change 1,8 % 3 4 ,5% 18 ,4 % 18 ,7% 13 ,9 % 14 ,4 %

Procurements -27,2 -36,6 -39,8 -48,9 -55,5 -64,3

% of revenues 43,0% 43,0% 39,5% 40,9% 40,8% 41,3%

Staff costs -19,6 -24,5 -27,1 -29,8 -32,7 -37,1

% of revenues 31,0% 28,8% 26,9% 24,9% 24,0% 23,8%

Other costs -12,3 -15,3 -18,3 -19,4 -21,9 -23,6

% of revenues 19,4% 18,0% 18,1% 16,2% 16,1% 15,1%

Ebitda 4,9 10,2 16,5 22,5 27,1 31,9

% of sales 7,7% 12 ,0 % 16 ,4 % 18 ,8 % 19 ,9 % 2 0 ,5%

Depreciations & Provisions -3,8 -4,6 -5,1 -5,9 -6,7 -7,6

% of revenues 6,0% 5,4% 5,1% 4,9% 4,9% 4,9%

Ebit 1,1 5,6 11,4 16,6 20,4 24,3

% of revenues 1,7% 6 ,6 % 11,4 % 13 ,9 % 15,0 % 15,6 %

Financial income & charges -0,5 -0,8 -0,5 -0,5 -0,5 -0,5

% of revenues -0,7% -0,9% -0,5% -0,4% -0,4% -0,3%

Earnings before tax 0,6 4,3 10,9 16,1 19,9 23,8

% of revenues 1,0 % 5,0 % 10 ,9 % 13 ,4 % 14 ,6 % 15,3 %

Income tax 0,0 -0,7 -2,8 -4,0 -5,0 -5,9

Tax rate (%) 0,6% 17,5% 26,0% 25,0% 25,0% 25,0%

Net earnings 0,6 3,5 8,1 12,0 14,9 17,8

% change 4 4 7,8 % 12 9 ,3 % 4 8 ,6 % 2 3 ,8 % 19 ,7%

% of revenues 1,0 % 4 ,2 % 8 ,0 % 10 ,1% 11,0 % 11,5%

Number of shares (in million) 9,23 15,77 16,75 16,75 16,75 16,75

EPS ( EU R per share) 0 ,0 7 0 ,2 2 0 ,4 8 0 ,72 0 ,8 9 1,0 6

Steady and strong increase in sales driven

by Medical and Lidar activities

Great productivity gains supported by 1/ an

efficient and well-integrated cost structures and 2/ the

increase of direct sales

31/12 (€m) 2016 2017 PF 2018E 2019E 2020E 2021E

Goodwill 4,0 31,4 31,4 33,2 33,2 33,2

Intangible assets 10,4 19,5 22,7 22,9 22,9 22,9

Tangible assets 1,9 6,1 8,3 15,6 20,0 25,0

Financial fixed assets 1,0 1,1 1,0 1,1 1,1 1,1

Working Capital Requirements (WCR) 20,8 28,9 40,2 39,0 43,7 50,0

% of revenues 32,9% 33,9% 39,9% 32,6% 32,1% 32,1%

Gross financial debts 11,9 22,8 24,6 24,9 22,9 20,9

Cash and short term investments 4,7 10,7 21,6 28,4 35,9 45,2

Net financial position (net financial debt if a minus) 7,2 12,0 3,0 -3,5 -13,0 -24,3

Sound financial position maintained thanks to a

rigourous management of ressources

31/12 (m€) 2016 2017 PF 2018E 2019E 2020E 2021E

Cashflow 4,9 9,3 14,7 20,8 25,4 30,2

Capital expenditure -5,6 -3,6 -10,4 -13,0 -10,9 -12,5

% of revenues 8,9% 4,2% 10,3% 10,9% 8,0% 8,0%

Impact of working capital requirements variation -0,7 -8,1 -11,3 1,2 -4,7 -6,3

Free cashflow -1,4 -2,4 -7,0 9,0 9,8 11,4



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5.4 Ratios

31/12 (€m) 2016 2017 PF 2018E 2019E 2020E 2021E

EPS (€) 0,07 0,22 0,48 0,72 0,89 1,06

% change -73,1% 220,0% 115,9% 48,6% 23,8% 19,7%

Market capitalisation (€m) 28,6 111,1 184,3 271,1 271,1 271,1

Enterprise value 21,4 99,1 181,3 274,6 284,1 295,4

P/E 50,00 24,6 33,5 22,5 18,2 15,2

EV/Sales 0,3 1,2 1,8 2,3 2,1 1,9

EV/Ebitda 4,4 9,7 11,0 12,2 10,5 9,3

EV/Ebit 19,3 17,7 15,8 16,6 13,9 12,2

Cashflow/Sales 7,7% 10,9% 14,6% 17,4% 18,6% 19,4%

Ebit/Sales 1,7% 6,6% 11,4% 13,9% 15,0% 15,6%

Net earnings/Sales 1,0% 4,2% 8,0% 10,1% 11,0% 11,5%

Gearing 23,8% 16,1% 3,3% -3,4% -11,2% -18,0%



22

Lumibird 4th April 2019

6 Important disclosure

6.1 Genesta Equity Research ratings and target prices definition Genesta Equity Research stock market recommendations reflect the absolute change expected in the share price from a six to twelve month perspective (in local currencies).

Details of valuation methods used by Genesta Equity Research in target price calculations are available at www.genesta-finance.com.

6.2 Detection of potential conflicts of interest

The analyst. Genesta or any of its employees is a

shareholder of the issuer

The issuer subject of this

report is a shareholder of

Genesta

Other financial interest between

Genesta and the issuer

Genesta is a market maker or liquidity

provider in financial instruments issued

by this issuer

Genesta has received

compensation for the production of

this research report

Genesta has received compensation for

another service than the production of this

research report

This research report was sent to the issuer before

its publication

No No No No Yes Yes* No

* Genesta acted as a service provider for Lumibird for the organization of an Investors road show in London, in June 2018.

As a consultant in financial investments and ACIFTE member, Genesta refers to the administrative and organizational terms defined by this association for its internal functioning, in compliance with the voluntary code of conduct defined by the ACIFTE and with the ground rules in terms of conflict of interests dictated by the ACIFTE. Genesta internal procedures define aspects which are complementary to the equity research activity.

6.3 Rating and target price evolution throughout the last 12 months

Date of 1st publication

Rating Target Price

April 4 2019 Annual Research

Buy € 18.80

January 30 2019 Equity Flash

Buy € 15.55

October 29 2018 Equity Flash

Buy € 14.00

October 1 2018 Semi-Annual Research

Neutral € 14.00

July 31 2018 Equity Flash

Neutral € 14.30

6.4 Ratings distribution

1. Strong buy The absolute share price performance is expected to be at least +25 %

2. Buy The absolute share price performance is expected to be comprised between +10 % and +25 %

3. Neutral The absolute share price performance is expected to be comprised between +10 % et -10 %

4. Sell The absolute share price underperformance is expected to be comprised between -10 % et -25 %

5. Strong Sell The absolute share price underperformance is expected to be at least -25 %

36% 23% 41%

Distribution of ratings concerning the entire

coverage of Genesta

100%

Distribution of ratings concerning companies

belonging to the same sector

Strong Buy Buy Neutral Sell Strong Sell

57% 29% 14%


which are clients of Genesta

50% 50%

Répartition des opinions

sur les valeurs suivies par Genesta au sein

d'un même secteur d'activité

Achat Fort Achat Neutre Vente Vente Fort

73% 20% 7%

Répartition des opinions sur lesvaleurs pour lesquelles Genesta a fourni des

prestations de services


69% 25% 6%

Répartition des opinions

sur l'ensemble des valeurs suivies par Genesta


36% 23% 41%

Distribution of ratings concerning the entire

coverage of Genesta

100%


belonging to the same sector

Strong Buy Buy Neutral Sell Strong Sell

57% 29% 14%


which are clients of Genesta





23


6.5 Additional disclosures

The information herein is not complete and therefore cannot be considered as contractual.

This document is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment. Only investors with sufficient knowledge and experience in financial and business matters to evaluate the relevant merits and risks should consider an investment in any issuer or market discussed herein. Neither Genesta nor any officer or employee of Genesta accepts any liability whatsoever for any direct or consequential loss arising from any use of this publication or its contents. The information herein has been obtained from, and any opinions herein are based upon, sources believed reliable, but Genesta makes no representation as to its accuracy or completeness and it should not be relied upon as such. All opinions and estimates herein reflect the judgment of Genesta on the date of this report and are subject to change without notice. This report is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would subject Genesta to any registration or licensing requirement within such jurisdiction. In particular, in the United Kingdom, Genesta further advises that this Research is solely intended to be delivered persons who qualify as defined in Rule 11 (3) du ‘Financial Services Act 1986 (Investment Advertisement) (Exemption) order 1997’. The distribution of this research report in the United States or its distribution to any citizen of the United States is forbidden. Genesta may have concluded a contract with the issuer subject of this report in order to produce one or several research reports which were previously sent to the issuer. However, Genesta may produce research reports concerning this issuer in an independent way. Copyright 2010 Genesta. All rights reserved.

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