vontobel_20120221_e

Equity Research Switzerland

Analysts

Claudia Lenz

[email protected]

+41 (0)58 283 77 59

Rene Weber

[email protected]

+41 (0)58 283 77 57

Bell Buy

Switzerland PT CHF 2,150

Food & Beverages 21202212

Bloomberg: BELL SW Reuters: BELL SEDOL no: 5017221 ISIN: CH0004410418 CHF 1,870.00 on 20%02%12

© 2012 Vontobel Equity Research. The objectivity of this report may be compromised by existing or planned business relationships between the producer and the analysed company and potential conflicts of interest arising thereof. Investors should therefore on no account use this report as the sole basis on which to make a decision. Please see the end of the document for more details on potential conflicts of interest and disclaimer information.

Performance

Per share data

Price target (CHF) 2,150.00

Price BELL SW on 20202212 CHF 1,870.00

No. of shares BELL SW in '000 395

Market cap. BELL SW (CHF mns) 738

Total market capitalization (CHF mns) 738

Free float % 33.7

Coop (Voting 66.3%) 66.3

Share valuation

CHF 2010

2011 2012E 2013E

EPS 119 110 196 211

EPS growth % 215.9 27.5 78.2 7.7

P/E 14.9 16.0 9.5 8.9

P/E adjusted 14.9 16.0 9.5 8.9

EV/EBITDA 4.2 4.6 4.5 4.0

Book value per share 1,461 1,597 1,713 1,864

Price / Book 1.2 1.1 1.1 1.0

Dividend per share 50.0 60.0 65.0 70.0

Payout ratio % 42.0 54.6 33.2 33.2

Dividend yield % 2.8 3.4 3.5 3.7

FCF yield % 16.9 9.3 11.4 14.7

High 12%month Low

2,264 1,700

Excess performance

SPI1 SMI2

3M 28.4 28.3

6M 220.7 221.3

12M 3.3 4.5

1SPI 2SMI

Breakdown 2011

CHF mns Change Share

Revenues by Divisions

Fresh Meat 2 CH 816 1% 33%

Carcuterie 2 CH 443 21% 18%

Poultry 2 CH 345 3% 14%

Seafood 2 CH 115 11% 5%

Convenience 2 CH 0.00 NM 0%

Others 2 CH 27.5 210% 1%

Charcuterie 2 EU 705 25% 28%

Others 2 EU 66.4 22% 3%

Region 9 66.4 22% 3%

Region 10 66.4 22% 3%

Revenues by Regions

Key data

CHF mns 2010 2011 2012E 2013E

Sales 2,584 2,483 2,533 2,596

2 growth % 1.4 23.9 2.0 2.5

EBITDA 213 204 203 212

EBITDA margin % 8.2 8.2 8.0 8.2

EBIT margin % 3.9 3.6 4.5 4.6

Shareholders' net profit 46.9 43.8 78.0 84.0

ROE % 8.1 7.3 11.9 11.9

ROIC % 7.8 7.2 9.1 9.7

Equity ratio % 50.6 50.2 53.0 57.7

Gearing % 32.2 39.3 27.3 14.3

Net debt 190 248 185 105

CF operating activities 180 128 174 184

Capex 261.9 263.2 290.0 275.0

Solid growth and profit (before non%recurring). Further improvements despite challenging environment Bell reported a solid financial performance in 2011 despite a challenging environment mainly in its European business. The positive organic growth in both regions (Switzerland +1.2%, Europe +3.5%) is encouraging. However, rising raw material prices, fierce competition and pricing pressure led to an impairment at Zimbo of CHF %26 mn. Before non%recurring items, EBIT reached CHF 111 mn (+6%) and the margin of 4.5% met expectations. Net profit of CHF 72 mn (+11%) included the first%time equity consolidation of Hilcona (49% stake, CHF 6.3 mn net goodwill amortization) as well as an extraordinary gain on FX positions (CHF 14 mn). A positive surprise was the dividend increase from CHF 50 to CHF 60, which leads to an attractive yield of 3.4%. The outlook for 2012 was cautiously positive. We regard the impairment at Zimbo as a cleaning up and it should make a positive EBIT contribution again in 2012. Further production optimization should lead to synergies and efficiency gains and consequently margin improvements also in 2012 (+10bp to 4.6%). Overall, we only fine%tune our estimates which lead to EPS increases of +5% in 2012E and +2% in 2013/14E. In light of the positive growth and mid%term margin prospects (full consolidation of Hilcona in 2015), we regard Bell's P/E 13E valuation of 8.9x (on cash earnings basis even 7.3x) as attractive and confirm our BUY rating. New PT CHF 2,150 (old CHF 2,100).

Solid growth in both regions in 2011: Switzerland sales CHF 1,746 mn (23%), org. +1.2%, deconsolidation of Bell Convenience 24.6%. Europe sales CHF 771 mn (25%), org. +3.5%, acq. +2.3% (Hoppe, "du darfst"), FX 210.5%.

Impairment at Zimbo % further risk limited: Zimbo impairment CHF 226 mn (¼ trademark, ¾ goodwill). Remaining goodwill overall CHF 62 mn (incl. Hilcona).

EU meat industry % still fragmented, trend to value added and convenience: Bell is among the mid2sized meat companies in Europe, but regarding operating profitability it ranks at the upper end thanks to its focus on value added meat products. Further acquisitions unlikely short term, vertical integration rather with co2operations than own slaughtering.

2 Vontobel Research

Bell Buy

Switzerland/Food & Beverages 21202212

Positive org. growth encouraging, after goodwill impairment at Zimbo no further risk, positive margin development despite headwinds

After publishing its full2year sales figure in January, which was about in2line

with estimates, Bell published an operating profit that at first glance was below

expectations. But, adjusted for non2recurring items, EBIT of CHF 111 mn was

ahead of expectations and margin guidance of >4% was reached (4.5%,

+40bp). The first2time equity consolidation of Hilcona (49% stake, CHF 6.3 mn

net deprecitation) and a positive gain on FX transactions (CHF 14.5 mn) led to

a net profit result of CHF 71.6 mn (+11%), in line with expectations. Dividend

increase from CHF 50 to CHF 60 per share is higher than expected and

corresponds to an attractive yield of 3.4%.

Sales in Switzerland (70% of sales) amounted to CHF 1,746 mn (23%). Organic

growth of +1.2% consisted of volumes +2.1% and value 20.9% due to lower

raw material prices. The reason for the sales decline was the deconsolidation of

Bell Convenience (integrated in Hilcona). Bell acquired the Bündnerfleisch (air

dried beef from Grisons) specialist Kocherhans and Schär AG in June. So far Bell

mainly purchased this popular specialty from third2party suppliers for its export

business. After the planned expansion (capacity increase by +50%) in 2012 and

2013 Bell will be able to produce most of these volumes in2house. Furthermore,

Bell will invest in a new charcuterie factory in Cheseaux, which will focus on

local specialties and small batches. It will replace the old production site and

the one in Lausanne by 2014.

In Europe (30% of sales) good organic growth of +3.5% consisted of +5.4%

volume growth, while price/mix was a negative 21.9% due to price pressure.

The acquisition of Hoppe contributed +2.2% to sales. The strong rise in raw

material prices could not be passed on in a timely matter and this led to margin

pressure foremost at Zimbo. Since targeted business plan seems to be out of

reach, Bell decided to completely write down goodwill at Zimbo (CHF 226 mn,

¼ Trademark and ¾ Goodwill). At the beginning of 2012 the convenience meat

production of Zimbo in Steinheim was integrated into the modern factory of

Hoppe in Bad Wünnenberg. While this led to non2recurring cost of CHF 23 mn

in 2011, we expect efficiency and synergy gains going forward. However, for a

sustainable improvement at Zimbo further rationalization and specialization of

the product range might be necessary.

Bell: FY11 result (in CHF mn) FY10 FY11E FY11ANet sales 2'584 2'521 2'4832 change 1% 22% 24%% organic 1.5% 2.0% 1.9%2 currency 2.6% 22.0% 22.8%2 acquisitions 22.7% 22.3% 21.6%

EBIT 101.2 103.0 89.82 change 7% 2% 211%2 margin 3.9% 4.1% 3.6%non%recurring %30.7EBIT before non%rec. 105.10 111.02 margin 4.1% 4.5%

Net Profit 64.5 71.5 71.62 change 16% 11% 11%

Source: Bell, Vontobel Equity Research

Switzerland 2011 org. growth +1.2%,

Investments in 2012 in Fresh meat

and "Bündnerfleisch" production

Bell: Investment projects 2012%2015 capex location segment/product CHF mns

Churwalden charcuterie/Bündner2 8 fleisch

Cheseaux charcuterie/local spec2 32 ialties

Oensingen fresh meat/new land 20


Europe 2011 good org. growth +3.5%

weak performance at Zimbo lead to

impairment % further rationalization

will lead to positive contribution in

the future

3 Vontobel Research

Bell Buy


Bell is reporting under Swiss GAP FER, which allows goodwill amortization. Bell

depreciates its goodwill over a period of 528 years. With the international

acquisitions (Polette, Zimbo, Abrahams) goodwill increased from CHF 2.3 mn

back in 2007 to slightly below CHF 70 mn at the end of 2008. The ordinary

goodwill amortization would amout to roughly CHF 15 mn p.a., but due to

weak market developments Bell decided to make goodwill impairments on

Abrahams in 2010 (CHF 217 mn) and Zimbo in 2011 (CHF 220 mn). The net

increase of goodwill to CHF 62.5 mn at the end of 2011 is mainly attributable

to Hilcona. We estimate that roughly 2/3 of this goodwill is attributable to

Polette, Abrahams, Marco Polo and Hoppe and 1/3 to Hilcona. The goodwill

depreciation for Hilcona (VTE CHF 2 mn) will be included in the equity

consolidated earnings line. We regard the risk of further goodwill impairments

as limited given the fact that the positions with the highest risk (Zimbo,

Abrahams) have been substantially reduced over the last two years.

Optimized production and more convenience should lead to higher profitability going forward

We have fine2tuned our estimates following the FY11 publication. Bell expects

moderate top2line growth in both Switzerland and Europe in 2012. We expect

organic sales growth of +2.0% in 2012 with +1.5% in Switzerland and +3.3%

in Europe. The acquisition of Kocherhans & Schär and the newly gained

Unilever licence for Bertolli products (Germany and Netherlands) have only a

small impact on our estimates. While European sales were significantly reduced

by the negative currency impact in 2011 (210.5%), we expect no impact in

2012 based on current FX rates. This leads to sales of CHF 1,774 mn (+2%) in

Switzerland and CHF 801 mn (+4%) in Europe.

Meat raw material prices in Switzerland overall were at low levels in 2011 so

we assume prices will tend to increase somewhat in 2012, especially for pork.

In contrast, European meat prices rose strongly in 2011 and, according to Bell,

prices are expected to remain stable at high levels in 2012. While a further shift

to more value2added products is positive for the gross margin, the still lagging

price increases in Europe might lead to a slight reduction in the gross margin (2

20bp to 33.0%). Bell has shown good cost discipline in recent years and

operating expenses have decreased from >10% of sales in 2009 to 9.2% in

2011. In 2012 and beyond Bell will further optimize its production (Switzerland:

Cheseaux, Oensingen / Europe: integration Zimbo and Hoppe Convenience), as

well as its product range (streamlining in Europe, more value2added in

Switzerland). This will lead to efficiency gains and synergies and therefore help

to offset pressure on operating margins.

On February 1, 2012 Martin Henck (Swiss) assumed the position of CEO from

Jürgen Hilti, who will remain chairman of the company. Mr Henck will focus on

the integration of Hilcona into Bell and on the group's future growth strategy.

He formerly held positions in consumer goods companies such as Nestlé

(Mövenpick). The 49%2stake in Hilcona will be equity2consolidated until 2014.

Bell has an option to buy an additional 2% of Hilcona by early 2015 and by

then will fully consolidate the convenience business. The Bell convenience

Limited risk of further goodwill

impairments

Bell: Goodwill positions Date Position CHF mns

2007 Goodwill at year end 2.3

2008 Acq. Polette, Zimbo (price VTE) 160 Goodwill amortization 24.9 Goodwill at year end 68.4

2009 Acq. Abrahams (price VTE) 90 Goodwill amortization 214.8 Goodwill at year end 97.1

2010 Acq. Marco Polo (price VTE) 14 Goodwill amortization 215.3 Impairment Abrahams 217.2 Goodwill at year end 57.6

2011 Acq. Hilcona1), Hoppe, Kocher2 hans & Schär (price VTE) 145 Goodwill amortization 212.9 Impairment Zimbo 219.9 Goodwill at year end 62.5

1) 49% stake, option for additional 2% by 2015


Bell: estimate changes 2012%2014E (CHF mns) 12E old12E new 13E old13E new 14E old14E newGross sales 2630 2628 2697 2691 2762 2755EBIT 108 114 115 119 122 125Net Income 74 78 82 84 87 90EPS 187 196 207 211 220 2272 change 5% 2% 3%

Source: Vontobel Equity Research

Further EBIT potential through

optimized production

Hilcona with new CEO 2 equity

consolidation until 2015

4 Vontobel Research

Bell Buy


business (2011 sales CHF 62 mn) was fully integrated in Hilcona and we

estimate that the "new Hilcona" achieved sales of CHF 400 mn in 2011 and an

EBIT margin of slightly below 10%. According to market estimates, we assume

a growth rate in the European convenience business of +426% p.a. This would

lead to a sales contribution of approx. 13% and an EBIT contribution of approx.

25% by 2015.

Bell: Gross sales by division

(in CHF mn) 2009 2010 2011 2012E 2013E 2014E 2015E

Fresh Meat 775.4 809.6 815.8 824.0 835.0 848.0 861.0

Change (%) 22 4 1 1 1 2 2as % of Switzerland 44 45 47 46 46 46 40

Charcuterie 453.8 445.1 442.7 445.0 450.0 455.0 458.0


Poultry 339.6 334.6 344.8 355.0 365.0 375.0 385.0

Change (%) 0 21 3 3 3 3 3

as % of Switzerland 19 19 20 20 20 20 18

Seafood 86.6 103.8 115.1 123.0 130.0 138.0 145.0

Change (%) 12 20 11 6.8 5.7 6.2 5.1as % of Switzerland 5 6 7 7 7 7 7

Convenience 81.5 84.1 280.0

Change (%) 3 3 NAas % of Switzerland 5 5 13

Others 42.3 30.7 27.5 27.0 28.0 29.0 30.5


Total Switzerland 1'779.2 1'807.8 1'745.9 1'774.0 1'808.0 1'845.0 2'159.5

Change (%) 21 2 23 1.6 2 2 17

organic (%) 1.6 1.2 1.5 1.9 2.0 2.5

Akq./Dev. (%) 0 24.6 0 0 0 15.0as % of total 68 68 68 68 67 67 67

Charcuterie 720.7 742.0 704.7 733.0 759.0 786.0 814.0

Change (%) 524 3 25 4 4 4 4as % of Europe 88 92 91 92 92 92 83

Convenience 100.0

Change (%) NAas % of Europe 10

Others 97.8 67.8 66.4 67.7 69.0 70.5 72.0

Change (%) 277 231 22 2 2 2 2

as % of Europe 12 8 9 8 8 8 7

Total Europe 818.5 809.8 771.1 800.7 828.0 856.5 986.0

Change (%) 478 21 25 4 3 3 15

organic 2.0 3.2 3.3 3.4 3.4 3.5

Akq./Dev. (%) 7.0 5.0 0 0 0 12Currency (%) 27.5 210.5 0 0 0

as % of total 32 30 30 30 31 31 31

Other operating proceeds 0 51 60 53 55 54 55

as % of total 1.9 2.3 2.0 2.0 1.9 1.7

Gross Sales Group 2'597.71 2'668.9 2'576.8 2'628.0 2'691.0 2'755.0 3'200.0

Change (%) 34 3 23 2 2 2 16

Organic %1 1.5 1.8 2.0 2.5 2.5 3.0

Acq./Dev. (%) 5.8 21.6 0 0 0 12.5Currency (%) 22.3 23.1 20.1 0 0 0


Bell: sales by country 2011

pïáíòÉêä~åÇ

TMB

dÉêã~åó

NTB

cê~åÅÉ=QB

líÜÉê=

tÉëíÉêå=

bìêçéÉ=QB

b~ëíÉêå=

bìêçéÉ=RB


5 Vontobel Research

Bell Buy


European meat market still fragmented % Bell mid%field in sales and profitability

For our European peer group comparison we looked at quoted and privately

owned companies in the meat industry, ranging from primarily meat2packing

companies (Tönnies, L.D.C., Cranswick, Danish Crowne, Vion, PHW) to

refinement and convenience companies (Atria Group, Campofrio, Herta, Ter

Beke, Orior, Fleury Michon). The European meat market is still fragmented with

the top 10 players making up only about 1/3 of total market. In contrast to

that the top 3 US players (Hormel, Smithfield, Tyson) claim almost 60% of the

market! But the European market is in the midst of transformation:

consolidation continues, slaughterhouses are also become suppliers of packaged

and refined meat products and offering an increasing number of convenience

food products.

European Meat companies: company profiles Company Ownership Category split Country split Brands

Atria Group (Fi) 100% free float 100% refined meat 58% Finland Atria, Forssan, Sibilla, Woro, Maks & 29% Scandinavia Moorits, VK Arboga, Lönneberga, 13% Eastern Europe KamnoMoc, Ridderheims

Bell (CH) 60% Coop 52% fresh meat 69% Switzerland Bell, Groupe Polette, Zimbo, Abrahams, 48% refined meat 17% Germany Hoppe 8% other Europe 6% Eastern Europe

Cremonini (I) Cremonini Family 40% fresh meat 70% Italy Inalca, Montana Alimentari, ibisé, MARR (going private 2008) 21% refined meat 21% EU distribution), Chef Express, Gruppo 39% distribution 9% RoW Cremonini

Cranswick (GB) 100% free float 50% fresh meat 97% UK Jamie Oliver, Richard Woodall, 45% refined meat 3% Europe Simply Sausages, Red Lion Foods, 5% conveninece Black Farmer, Reggae Reggae

Campofrio (E) 37% Smithfield 100% refined meat 47% Iberia Campofrio, Osca Mayer, Fiorucci, Foods 53% Germany & Benelux Aoste, Nobre, Stegeman, Caroli

Danish Crowne (DK) Farmers co2operative 50% fresh meat 20% Scandinavia Danish Crown, Mou, Gol 43% refined meat 20% UK 7% convenience 15% Germany 10% France 15% other Europe

Fleury Michon (F) 100% free float 53% refined meat 86% France Fleury Michon 45% convenience 6% Spain 2% foodservice 5% RoW

Herta (D) 100% Nestlé 90% refined meat 100% Germany Herta 10% convenience

HKScan (FI) 29% farmers co2 33% fresh meat 83% Scandinavia HK, Scan, Rose Poultry, Rakvere, Lihakom2 operative 33% refined meat 17% Eastern Europe binat, Tallegg 33% convenience

L.D.C. (F) 75% Families 74% fresh meat 94% France LeGaulois, Loué, Maitre Coq, Marie 6% refined meat 6% Other Europe 20% convenience

Orior (CH) 20% Capvis 58% refined meat 97% Switzerland Rapelli, Spiess, Pastinella, Ticinella, 36% convenience 3% Europe Fredag, Le patron, Natur Gourmet, 4% logistic San Pietro, La Romagnola

PHW2Gruppe (D) Lohmann & Wesjohann 50% fresh meat 70% Germany Lohmann, Wiesenhof, Drobimex, Bomadek Families 10% refined meat 10% Eastern Europe 10% convenience 20% RoW 30% other

Ter Beke (B) 62% Coovan 69% refined meat 43% Belgium L'Ardennaise, Pluma, Daniel Coop man, Stichting 31% convenience 37% Holland Come a casa, Vamos 20% Other Europe

Tönnies (D) Tönnies Family 90% fresh meat 70% Germany Tönnies 10% refined meat 10% Eastern Europe 20% RoW

Vion Food (NL) Farmers co2operative 50% fresh meat 32% Germany Salomon, encebe, deGroene Weg, Food 15% refined meat 26% UK Family, Weylander, hackplus, Lutz, Harris, 15% convenience 19% other Europe Debbie&Andrews, Snowbird foods 20% other 14% Eastern Europe 9% RoW

Source: Companies, Vontobel Equity Research

European meat companies – “from

the slaughterhouse to the dinner

table”

6 Vontobel Research

Bell Buy


The largest companies in terms of sales in the European meat industry are the

big slaughterhouses like Vion Food (EUR 8.5bn, of which 80% in meat), Danish

Crowne (EUR 6.9bn, world's 2nd

largest pork slaughterhouse) and Tönnies (EUR

4.3bn, could become IPO candidate due to family dispute?). The large players

are predominantly active in the primary production stage and often owned by

farmer co2operatives (Vion, Danish Crowne, HKScan) or families (Tönnies,

Cremonini, L.D.C., PHW2Gruppe). With sales of EUR 2bn Bell has a mid2field

ranking with companies like the quoted French L.D.C. and Spanish Campofrio,

in which US meat giant Smithfield Foods holds a 37% stake (plans of a full

takeover have been put on hold due to unfavorable market environment in

Europe and financing problems). Most of the small to mid2sized meat

companies in Europe still generate a large portion of sales in their home

markets like Cranswick (97% UK), Fleury Michon (86% France), Ter Beke (80%

Benelux) and Orior (97% Switzerland). For all players Europe is still the main

market. While some players have started to expand towards Central Eastern

Europe (Vion, Tönnies, PHW2Gruppe, Bell), Asia and other overseas markets are

still almost untapped.

EU meat industry: sales 2011 (EUR mns)

TT

OSQ

OUO

PQN

VNT

NDOSM

NDPNQ

NDSQV

NDVPN

ODMQQ

ODMNP

ODPQM

QDPMM

SDQRM

SDUMM

VVM

J NDMMM ODMMM PDMMM QDMMM RDMMM SDMMM TDMMM UDMMM

káâ~ë

lêáçê

qÉê=_ÉâÉ

cäÉìêó=jáÅÜçå

`ê~åëïáÅâ

eÉêí~G

metJdêìééÉ

^íêá~=dêçìé

ehpÅ~å

`~ãéçÑêáç

iKaK`K

_Éää

`êÉãçåáåá

q∏ååáÉë

a~åáëÜ=`êçïå

sáçå=cççÇ


The product offering of the big slaughterhouses like Vion Food, Danish Crown

and Tönnies has shifted over the past few years from fresh meat towards

packaged meat and refined meat products (forward integration). In light of the

shrinking number of independent butchers and increasing shelf2space for pre2

packaged meat in supermarkets this is no surprise. In its home market

Switzerland Bell is a vertically integrated meat company, but its European

businesses (Abrahams, Hoppe, Zimbo) are pure refinement companies. Vertical

integration would help to secure sustainable sourcing, but it is rather unlikely at

this stage, since only specific parts of meat are used for the refinement

business. Mid term this could be solved with Coop's European business

Transgourmet (wholesale). Until then we believe that the sourcing will more

like be arranged through cooperations rather than through own vertical

integration.

Bell among mid%size players in

European meat industry

Trend to forward integration and

more convenience

7 Vontobel Research

Bell Buy


EU meat industry: Positioning

high

low

high low

Strenght of brand

degree if vertical integration

Soucre: Vontobel Equity Research

On average European meat companies already generate about half of their

sales with refined meat products (like ham, cured meat, sausages, etc).

Changing lifestyles and demographic trends have fuelled growth in the

convenience food segment in recent years. This trend is also visible in the meat

industry and companies are increasingly shifting in this direction (average sales

share 20%). Meat convenience products are prepared meat products like ready2

to2eat products, but also complete ready meals including pasta, pizza and so

on. Bell merged its convenience business (which consisted mainly of sandwiches

and salads) with Hilcona in 2011. By 2015 HIlcona will be fully consolidated

(stake rising from 49% to 51%) and the convenience business then will make

up approx. 13% of total sales at Bell and also have a positive impact on

profitability.

EU meat industry: sales by category

MB NMB OMB PMB QMB RMB SMB TMB UMB VMB NMMB

q∏ååáÉë

iKaK`K


`ê~åëïáÅâ

sáçå

metJdêìéé

_Éää

`êÉãçåáåá

ehpÅ~å

káâ~ë

^íêá~=dêçìé

`~ãéçÑêáç

eÉêí~

qÉê=_ÉâÉ

lêáçê


ÑêÉëÜ=ãÉ~í êÉÑáåÉÇ=ãÉ~í ÅçåîÉåáÉåÅÉ çíÜÉê

Source: Vontobel Equity Research

Bell vertical integration only in

Switzerland % European business

(Hoppe, Abraham, Zimbo) only in

refined meat business

EU meat companies shift to more

value added and convenience meat

producer

8 Vontobel Research

Bell Buy


On average companies in the European meat industry achieve an operating

profit margin of around 4%. Differences can be seen between companies that

are mainly active in the fresh meat segment and companies with a higher sales

share in value added categories (refinement, convenience). The first group of

companies mainly active in the first stage of meat production (Atria, Danish

Crown, HK Scan, L.D.C., Vion) achieve on average operating margins of 223%.

In recent years their margins have improved thanks to increasing forward

integration. The second group of companies (TerBeke, Orior, Fleury Michon,

Cranswick), which is mainly active in value2added segments, generates higher

margins of 425%. With a EBIT margin of 4.5% Bell occupies a mid2field ranking

and, thanks to the full consolidation of Hilcona (EBIT margin of around 10%),

by 2015 its margin should go up to a level of >5%.

EU meat industry: EBIT margins 2011

MKQB

MKSB

NKSB

OKNB

PKRB

PKSB

PKVB

QKMB

QKMB

QKRB

QKUB

RKPB

TKSB

MKMB NKMB OKMB PKMB QKMB RKMB SKMB TKMB UKMB

káâ~ë

^íêá~=dêçìé

ehpÅ~å=G

sáçå=G

iKaK`K



qÉê=_ÉâÉ

`êÉãçåáåá

_Éää

`~ãéçÑêáç=G

`ê~åëïáÅâ

lêáçê=G=NF

* Vontobel Estimate, 1) 96% of sales in Switzerland


EU meat industry: operating profit margins 2001%2011

Company 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011Atria Group 3.7% 2.9% 4.0% 4.7% 4.1% 3.8% 4.7% 2.8% 2.3% 0.9% 0.6%Bell 4.4% 4.7% 4.4% 3.4% 3.0% 3.9% 4.5% 4.1% 3.7% 4.1% 4.5%

Campofrio 1.6% 1.6% 3.6% 4.8% 6.5% 6.6% 7.5% 5.2% 4.3% 5.8% 4.8%Cranswick 6.5% 6.0% 6.2% 6.5% 5.3%Cremonini 2.7% 3.3% 3.5% 3.5% 3.4% 3.7% 3.8% 3.4% 3.3% 4.0% 4.0%Danish Crown 3.6% 4.2% 3.8% 3.5% 0.4% 3.9% 4.2% 3.9% 3.7% 4.1% 3.9%Fleury Michon 2.9% 3.1% 3.3% 3.6% 5.1% 4.2% 4.4% 3.0% 4.9% 3.8% 3.6%HKScan 4.3% 2.6% 1.7% 2.6% 2.3% 1.6%L.D.C. 3.8% 4.0% 3.1% 4.5% 3.5%Nikas 12.5% 13.2% 14.0% 10.7% 3.3% 2.7% 22.9% 3.5% 4.1% 4.1% 0.4%Orior 7.6% 7.1% 7.7% 8.0% 7.6%

Ter Beke 2.6% 3.3% 2.9% 3.8% 4.4% 4.0%Vion 3.0% 1.9% 1.9% 2.1% 2.9% 1.5% 1.9% 2.1% 2.1%

Average 4.5% 4.7% 4.9% 4.5% 3.5% 3.8% 4.1% 3.8% 4.0% 4.2% 3.5%2 integrated businesses 3.4% 3.5% 3.6% 3.4% 2.4% 3.6% 4.1% 3.3% 3.3% 3.5% 3.0%2 value2added businesses 5.3% 5.7% 6.3% 5.6% 4.5% 4.0% 4.1% 4.3% 4.8% 5.0% 4.1%


No vertical integration and higher

share in convenience lead to better

profitability

9 Vontobel Research

Bell Buy


Attractive valuation % Buy confirmed

With a P/E 13E of 8.9x or an even lower 7.3x based on cash earnings (excluding

goodwill amortization), Bell's valuation is well below its peers. The Swiss

small/mid cap peer group shows an average valuation of 10.3x. Orior, which is

a direct competitior in Switzerland (96% of sales), is valued at 8.8x but in our

view has less attractive growth and margin prospects. The European meat

producers are valued with an average P/E 13E of 9.5x and the convenience

producers 8.9x. We think a valuation discount is not justified given Bell's mid2

term growth and margin prospects (full consolidation of Hilcona by 2015). The

company also offers an attractive dividend yield of 3.4%, which should support

the share price. We only fine2tuned our estimates after the publication of FY11

results (EPS 12E +5%, 13E +2%, 14E +2%) and confirm the Buy Rating with a

new Price Target of CHF 2,150 (old CHF 2,100).

International comparison of meat and convenience companies Price EV/ Div. Marketas of Perf. EPS P/E P/E P/E EBITDA yield P/B cap. in

Company Rat. Curr. 20%02%12 YTD high low 2011E 2012E 2013E 2011E 2012E 2013E 2011E 2012E 2013E 2012E 2011E 2011E CHF mnsSwiss Small Caps% weighted average %2.6 10.9 11.2 10.2 5.7 3.2 1.3

% average %5.3 11.2 11.2 10.3 9.7% 9.8% 10.0% 11.9 11.9 11.9 Bell + CHF 1870 4.7 2'264 1'700 181 188 211 10.3 10.0 8.9 8.2% 8.0% 8.2% 4.5 3.4 1.1 682

Emmi o CHF 204 22.9 216 169 18.1 17.3 18.5 10.8 11.8 11.0 8.2% 8.3% 8.6% 5.7 2.9 1.2 995

Hügli o CHF 600 211.2 725 541 41.0 44.9 48.5 13.8 13.4 12.4 11.7% 11.9% 12.4% 7.9 2.6 2.3 265Orior o CHF 48.0 211.8 57.0 45.6 4.80 5.00 5.45 10.0 9.6 8.8 10.8% 10.9% 11.0% 6.1 4.2 1.6 259

European meat industry% weighted average %8.4 13.3 14.1 11.4 6.5 2.1 1.0 % average %10.5 6.2 11.8 9.5 6.6% 7.0% 7.0% 5.8 3.1 1.0

Atria Plc EUR 6.05 232.8 7.03 5.07 20.12 0.48 0.79 252.6 12.7 7.7 4.7% 6.1% 6.8% 7.1 2.0 0.4 206

Campofrio Food EUR 7.15 23.9 9.30 5.32 0.31 0.38 0.46 22.9 18.8 15.4 7.8% 8.2% 8.5% 7.1 1.2 1.1 882Cranswick GBP 821.5 24.9 841 589 0.72 0.67 0.74 11.5 12.3 11.1 8.1% 7.2% 7.5% 7.7 3.3 1.8 474

Fleury Michon EUR 29.4 24.5 37.7 23.50 3.53 3.82 4.47 8.3 7.7 6.6 8.2% 8.7% NA 3.8 3.1 0.8 156HK Scan EUR 6.10 216.4 6.40 4.30 0.19 0.47 0.67 32.1 13.0 9.2 4.5% 5.2% 5.4% 6.0 2.9 0.8 405Ter Beke EUR 52.2 214.5 53.7 48.0 5.19 6.12 6.80 10.0 8.5 7.7 8.6% 9.1% 9.4% 3.9 4.8 0.9 109

Hilton Food Group GBP 267.5 3.3 297 237 0.25 0.28 0.31 10.9 9.6 8.7 4.3% 4.3% 4.3% 4.7 4.2 NA 226

European convenience industry% weighted average 17.9 14.4 13.0 11.6 11.1% 11.2% 11.7% 9.1 1.3 2.7 % average %7.1 12.1 10.1 8.9 9.5% 9.9% 10.3% 8.0 3.1 1.6

Bonduelle EUR 68.5 24.3 68.7 58.8 4.51 6.38 7.37 15.2 10.7 9.3 8.3% 9.6% 9.7% 6.2 2.0 1.1 662Greencore Group EUR 0.6 239.8 1.0 0.5 0.10 0.11 0.12 6.4 5.9 5.4 8.7% 8.6% 9.0% NA 6.3 0.7 298

Kerry Group EUR 31.1 22.7 31.1 24.6 2.11 2.29 2.57 14.7 13.6 12.1 11.5% 11.5% 12.0% 9.8 1.0 3.0 6'591

US meat industry% weighted average 14.9 12.2 12.0 11.1 6.2 1.2 2.0 % average 15.0 11.4 11.3 10.5 8.7% 8.0% 8.0% 6.0 1.0 1.8

Hormel Foods USD 29.2 14.0 30.4 26.4 1.75 1.82 1.91 16.7 16.1 15.2 10.7% 10.5% 10.7% 8.1 2.0 3.0 7'024Tyson Foods USD 19.0 15.7 20.9 15.7 1.97 2.03 2.34 9.7 9.4 8.1 5.8% 5.4% 5.6% 4.5 0.9 1.2 6'387

Smithfield Foods USD 23.0 15.2 25.0 18.1 2.94 2.69 2.80 7.8 8.6 8.2 9.6% 8.1% 7.8% 5.4 2 1.2 3'376

Price12 mth. EBITDA margin %

Source: Bloomberg, Vontobel Equity Research

P/E 13E 8.9x (P/CE even lower 7.3x)

and EV/EBITDA 13E 3.9x below peers

Bell Buy


10 Vontobel Research

1 .

P/E EV/EBITDA

ROIC/Invested capital Cash flow/CAPEX

Revenues/EBIT margin Revenue breakdown for 2012

Bell Buy



Income Statement 2006 2007 2008 2009 2010 2011 2012E 2013E Revenues CHF mns 1,496 1,643 1,940 2,548 2,584 2,483 2,533 2,596

Gross profit CHF mns 485 535 610 859 864 823 837 861

Total operating expenses CHF mns 2365 2391 2468 2669 2651 2619 2634 2649

EBITDA CHF mns 120 143 143 189 213 204 203 212

Depreciation of tangible assets CHF mns 254.8 257.4 255.7 279.9 274.2 272.1 274.0 276.0

EBITA CHF mns 65.2 86.1 87.0 110 138 132 129 136

Amortization of intangibles CHF mns 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Impairment and amortization of goodwill CHF mns 26.84 26.56 28.11 214.5 237.2 242.3 215.0 217.0

EBIT CHF mns 58.4 79.5 78.9 95.0 101 89.8 114 119

Total operating one2off items CHF mns 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Adjusted EBIT CHF mns 58.4 79.5 78.9 95.0 101 89.8 114 119

Net financial result CHF mns 21.84 1.36 24.77 29.21 23.00 5.14 27.60 25.50

Extraordinary result CHF mns 0.00 0.00 0.00 0.00 217.6 227.9 0.00 0.00

Pretax profit CHF mns 56.5 80.9 76.1 84.0 81.6 73.4 115 123

Taxes CHF mns 212.3 217.6 217.9 227.8 233.1 228.9 235.3 237.4

Group net profit CHF mns 44.2 63.2 58.2 56.2 48.5 44.5 79.6 85.7

Minority interests CHF mns 20.30 20.12 0.86 20.63 21.55 20.78 21.65 21.70

Shareholders' net profit CHF mns 43.9 63.1 59.1 55.6 46.9 43.8 78.0 84.0

Total one2off items CHF mns 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Adjusted net profit CHF mns 43.9 63.1 59.1 55.6 46.9 43.8 78.0 84.0

Growth 2006 2007 2008 2009 2010 2011 2012E 2013E Revenues % 3.0 9.8 18.1 31.4 1.4 23.9 2.0 2.5

Organic revenues % 0.0 9.4 12.6 20.7 1.5 1.8 2.0 2.5

Gross profit % 6.8 10.1 14.1 40.7 0.6 24.7 1.7 2.9

EBITDA % 22.6 19.6 20.5 32.7 12.3 24.0 20.6 4.4

EBIT % 35.1 36.2 20.7 20.4 6.5 211.3 26.9 4.4

Net profit % 25.1 43.8 26.4 25.9 215.5 26.8 78.2 7.7

Net profit adjusted % 25.1 43.8 26.4 25.9 215.5 26.8 78.2 7.7

Margin analysis 2006 2007 2008 2009 2010 2011 2012E 2013E Gross margin % 32.4 32.5 31.5 33.7 33.4 33.2 33.0 33.2

EBITDA margin % 8.0 8.7 7.4 7.4 8.2 8.2 8.0 8.2

EBITA margin % 4.4 5.2 4.5 4.3 5.4 5.3 5.1 5.2

EBIT margin % 3.9 4.8 4.1 3.7 3.9 3.6 4.5 4.6

Adjusted EBIT margin % 3.9 4.8 4.1 3.7 3.9 3.6 4.5 4.6

Tax rate % 21.8 21.8 23.5 33.1 40.6 39.3 30.7 30.4

Net profit margin % 2.9 3.8 3.0 2.2 1.8 1.8 3.1 3.2

Adjusted net profit margin % 2.9 3.8 3.0 2.2 1.8 1.8 3.1 3.2

Bell Buy



Balance Sheet 2006 2007 2008 2009 2010 2011 2012E 2013E Cash and cash equivalents CHF mns 41.6 67.4 26.5 81.4 33.7 28.3 59.1 80.4

Marketable securities CHF mns 0.00 17.8 9.74 7.05 4.51 5.58 6.00 4.50

Inventories CHF mns 74.9 74.8 113 167 152 170 165 160

Accounts receivable CHF mns 120 142 210 272 287 305 305 310

Prepayment and accrued income CHF mns 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Other current assets CHF mns 0.91 5.23 3.89 10.9 17.8 16.9 20.0 19.0

Total current assets CHF mns 238 307 363 538 495 526 555 574

Tangible assets CHF mns 446 434 560 598 556 552 550 550

Other intangible assets CHF mns 11.7 8.86 86.6 115 76.3 76.7 68.0 48.0

Goodwill CHF mns 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Financial assets CHF mns 48.0 37.1 128 57.1 39.2 103 105 105

Other non2current assets CHF mns 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Total non%current assets CHF mns 506 480 775 770 672 732 723 703

Total assets CHF mns 743 788 1,138 1,307 1,167 1,258 1,278 1,277

Accounts payable CHF mns 67.1 90.9 142 139 160 164 165 170

Short2term interest2bearing debt CHF mns 34.2 30.4 251 110 107 117 105 90.0

Accrued expenses and deferred income CHF mns 17.2 27.3 69.5 51.3 59.8 48.6 53.0 55.0

Other current liabilities/provisions CHF mns 18.0 24.8 27.6 70.8 58.4 61.9 65.0 60.0

Total current liabilities CHF mns 136 173 491 371 386 392 388 375

Long2term interest2bearing debt CHF mns 74.5 39.2 47.8 274 121 165 145 100

Pension liabilities (long2term portion) CHF mns 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Other non2current liabilities CHF mns 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Provisions CHF mns 53.6 53.2 60.6 68.0 69.8 68.9 68.0 65.0

Total non%current liabilities CHF mns 128 92.3 108 342 191 234 213 165

Total liabilities CHF mns 264 266 599 713 577 626 601 540

Total interest%bearing debt CHF mns 109 69.5 299 384 228 282 250 190

Ordinary share capital CHF mns 1.99 1.99 1.96 1.97 1.97 1.97 1.97 1.97

Share premium & retained earnings CHF mns 472 516 533 574 575 628 674 734

Shareholders' equity CHF mns 474 518 535 576 576 630 676 736

Minority interests CHF mns 4.43 4.56 3.29 18.6 14.0 0.79 0.85 0.90

Group equity CHF mns 479 523 539 595 590 631 677 737

Total liabilities and equity CHF mns 743 788 1,138 1,307 1,167 1,257 1,278 1,277

Balance sheet analysis 2006 2007 2008 2009 2010 2011 2012E 2013E Net working capital (NWC) CHF mns 111 98.9 111 248 219 262 252 245

NWC/revenues % 7.1 6.4 5.4 7.1 9.0 9.7 10.1 9.6

NWC/total assets % 14.9 12.6 9.8 19.0 18.8 20.8 19.7 19.2

Inventory days days 30 25 26 30 34 35 36 34

Receivables days days 30 29 33 34 39 44 44 43

Payables days days 30 26 32 30 32 36 35 35

Net debt (+) / net cash (%) CHF mns 55.9 %15.6 263 295 190 248 185 105

Equity/total assets % 64.4 66.4 47.3 45.5 50.6 50.2 53.0 57.7

Net debt/equity (gearing) % 11.7 23.0 48.8 49.7 32.2 39.3 27.3 14.3

Net debt/EBITDA x 0.6 %0.1 1.8 1.6 0.9 1.2 0.9 0.5

Bell Buy



Cash flow statement 2006 2007 2008 2009 2010 2011 2012E 2013E Group profit CHF mns 44.2 56.7 58.2 56.2 66.1 72.4 79.6 85.7

Depreciation + Amortization CHF mns 54.8 57.4 55.7 79.9 74.2 72.1 74.0 76.0

Goodwill impairment CHF mns 6.84 6.56 8.11 14.5 37.2 42.3 15.0 17.0

Non2cash financial income (2)/expenses (+) CHF mns 21.08 22.66 21.74 1.85 22.69 0.00 0.00 0.00

Inc. (+)/decr.(2) in deferred taxes CHF mns 0.00 0.00 0.00 0.81 0.57 0.00 0.00 0.00

Inc. (+)/decr.(2) in pension provisions CHF mns 0.00 22.57 1.11 20.69 20.09 0.00 0.00 0.00

Inc. (+)/decr.(2) in other provisions CHF mns 1.68 1.30 20.54 20.94 4.88 24.83 0.00 0.00

Other non2cash changes/adjustments CHF mns 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Operation cash flow (before chng in NWC) CHF mns 106 117 121 152 180 182 169 179

Inc. (2)/decr. (+) in NWC CHF mns 6.31 11.7 231.5 233.6 20.60 254.2 5.69 5.00

CF from operating activities CHF mns 113 128 89.3 118 180 128 174 184

Capex CHF mns 241.1 250.5 249.8 261.1 261.9 263.2 290.0 275.0

Operating free cash flow (FCF) CHF mns 71.6 77.9 39.5 56.9 118 64.6 84.3 109

Invest.(2)/disp.(+) of tang./intang. CHF mns 0.00 1.15 2.96 2.90 0.00 11.9 0.00 0.00

Invest.(2)/disp.(+) of associates CHF mns 20.06 21.60 9.88 2.69 5.26 0.55 1.70 0.00

Invest.(2)/disp.(+) of non2core assets CHF mns 6.42 0.00 0.00 1.00 1.19 0.00 0.00 0.00

Acquisitions CHF mns 0.00 0.00 2251 213.7 27.48 2124 0.00 0.00

Other adjustments CHF mns 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

CF from investing activities CHF mns %34.7 %50.9 %288 %68.2 %62.9 %174 %88.3 %75.0

Proceeds from issue of share capitals CHF mns 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Disposal (+)/ purchase (2) of shares CHF mns 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Inc. (+)/decr. (%) in equity CHF mns 0.00 0.61 %10.5 1.83 2.37 5.52 0.00 0.00

Dividend paid CHF mns 212.0 213.2 215.9 215.7 216.5 220.7 223.9 225.9

Inc. (+)/decr.(2) in interest bearing debt CHF mns 269.6 239.1 185 19.0 2147 51.4 231.7 260.0

Other adjustments CHF mns 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

CF from financing activities CHF mns %81.6 %51.8 159 5.13 %161 36.3 %55.6 %85.9

Translation impact CHF mns 0.17 0.00 0.00 20.06 23.41 20.54 0.00 0.00

Inc. (+)/decr. (%) in cash CHF mns %3.50 25.7 %39.8 54.9 %47.7 %11.0 30.4 22.8

Cash flow analysis 2006 2007 2008 2009 2010 2011 2012E 2013E Operating cash flow margin % 7.5 7.8 4.6 4.6 6.9 5.1 6.9 7.1

Capex/revenues % 2.7 3.1 2.6 2.4 2.4 2.5 3.6 2.9

Capex/depreciation % 75.1 87.9 89.4 76.4 83.4 87.6 121.6 98.7

Bell Buy



Price 2006 2007 2008 2009 2010 2011 2012E 2013E Price (year2end or current) CHF 1,410.00 1,925.00 1,300.00 1,551.00 1,766.00 1,762.00 1,870.00 1,870.00

High CHF 1,450.00 2,163.00 1,950.00 1,745.00 1,875.00 2,264.00 1,870.00 NA

Low CHF 975.00 1,449.00 1,101.00 1,310.00 1,481.00 1,700.00 1,725.00 NA

Average basic shares outstanding ('000) 398 398 392 393 395 398 398 398

Year2end basic shares outstanding ('000) 398 398 392 393 395 395 395 395

Average fully diluted shares ('000) 398 398 392 393 395 398 398 398

Market capitalization CHF mns 561 767 509 610 697 695 738 738

Enterprise value CHF mns 628 751 772 905 887 943 923 843

Per%share data 2006 2007 2008 2009 2010 2011 2012E 2013E EPS (reported) CHF 110 158 151 141 119 110 196 211

EPS (adjusted) CHF 110 158 151 141 119 110 196 211

FCF CHF 180 196 101 145 298 162 212 273

Net cash (+) / net debt (2) CHF 2169 39.2 2671 2751 2482 2628 2468 2266

BVPS (reported) CHF 1,193 1,301 1,367 1,466 1,461 1,597 1,713 1,864

Dividend CHF 33.0 40.0 40.0 40.0 50.0 60.0 65.0 70.0

Payout ratio % 29.9 25.2 26.5 28.3 42.0 54.6 33.2 33.2

Valuation 2006 2007 2008 2009 2010 2011 2012E 2013E P/E (reported) x 12.8 12.1 8.6 11.0 14.9 16.0 9.5 8.9

P/E (adjusted) x 12.8 12.1 8.6 11.0 14.9 16.0 9.5 8.9

P/Op. free cash flow x 7.8 9.8 12.9 10.7 5.9 10.9 8.8 6.8

P/Book (reported) x 1.2 1.5 1.0 1.1 1.2 1.1 1.1 1.0

EV/Sales x 0.4 0.5 0.4 0.4 0.3 0.4 0.4 0.3

EV/EBITDA x 5.2 5.2 5.4 4.8 4.2 4.6 4.5 4.0

EV/EBIT x 10.8 9.4 9.8 9.5 8.8 10.5 8.1 7.1

EV/Op. free cash flow x 8.8 9.6 19.5 15.9 7.5 14.6 10.9 7.8

EV/Equity free cash flow x 8.1 9.7 23.9 18.2 7.6 220.2 10.7 7.8

EV/Invested Capital x 1.1 1.4 1.0 0.9 1.0 1.1 1.1 1.0

FCF yield % 12.8 10.2 7.8 9.3 16.9 9.3 11.4 14.7

Dividend yield % 2.3 2.1 3.1 2.6 2.8 3.4 3.5 3.7

Profitability ratios & ROIC 2006 2007 2008 2009 2010 2011 2012E 2013E Average invested capital CHF mns 578 555 650 859 906 871 880 857

NOPLAT CHF mns 40.9 55.7 55.3 66.5 70.9 62.9 79.8 83.3

Economic profit (EVA) CHF mns 24.55 3.33 25.98 214.4 214.6 219.2 23.17 2.58

ROIC % 7.1 10.0 8.5 7.7 7.8 7.2 9.1 9.7

ROE % 9.6 12.7 11.2 10.0 8.1 7.3 11.9 11.9

ROA % 5.7 8.3 6.0 4.6 3.9 3.7 6.3 6.7

Enterprise value 2006 2007 2008 2009 2010 2011 2012E 2013E Market capitalization CHF mns 561 767 509 610 697 695 738 738

Net Debt (+) / net cash (2) CHF mns 55.9 215.6 263 295 190 248 185 105

Value of minorities CHF mns 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Value of associates CHF mns 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Other adjustments for EV calculation CHF mns 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Enterprise value CHF mns 628 751 772 905 887 943 923 843

Disclaimer & Disclosures Vontobel Research

1. Analyst Declaration This Vontobel Report has been produced by the organizational unit responsible for investment research (Research unit, sell2side analysis) of Bank Vontobel AG, Gotthardstrasse 43, CH28022 Zurich, tel. +41 (0)58 283 71 11 http://www.vontobel.com/. Bank Vontobel AG is subject to supervision by the Swiss Financial Market Supervising Authority (FINMA), Einsteinstrasse 2,3003 Bern, http://www.finma.ch. The authors listed on page 1 confirm that this report gives a complete and precise reflection of their opinion of the analysed company and that they have neither directly nor indirectly received compensation for their assessment or opinion. The compensation of the authors of this report is not directly related to the investment banking volume generated between Vontobel Group and the analysed company.

The author(s) of this document owns securities in the analysed companies: Bell

The document was not submitted to the analysed companies before publication or distribution

2. Disclosure of conflicts of interest As an internationally active company, Vontobel Group is subject to a number of provisions in drawing up and distributing its investment research documents. The maker and distributors of this financial analysis point out the following potential conflicts of interests: The author and its associated companies

• Will or are attempting to generate investment banking business with the analysed companies within the next three months,

• conduct transactions with securities of the analysed companies from time to time • have participated in capital market transactions/the issue of securities of the following analysed companies in

the last 12 months: None • have been active as Market Maker in equities of the following analysed companies in the last 12 months:

None • have provided other publicly known Investment Banking services for the following companies mentioned in

this report in the last 12 months: None • have received compensation for products and services outside Investment Banking from the following

analysed companies: None • hold mandatory disclosable (%) of the voting rights of the following analysed companies: None • have executives who are members of the board of the analysed companies: None and • have executives who are members of the board of Bank Vontobel AG or affiliated companies: None • have no significant financial interest in the analysed companies and • have reached no agreement with the analysed companies regarding this financial analysis.

3. Research rating history The Ratings and / or Rating Outlook of the analysed companies were last changed as follows: Bell[BELN.S] was last changed from Hold to Buy on 18202211

4. Global rating breakdown Share of VT IB clients

VT Research universe VT Research universe in rating category

No. As % As %

Buy 43 30 47

Hold 97 67 46

Reduce 4 3 25

The table above is revised at the beginning of each quarter, i.e. it currently reflects the status as at 31 December 2011.

5. Rating Plotter Charts The data used for the share price and/or price target chart may have to be adjusted to reflect corporate actions undertaken by the company. Not Rated: Currently no rating assigned to company due to e.g. review of rating, advising of analysed company in a capital market transaction or a similar reason.


6. Methodology / Rating system Bank Vontobel’s financial analysts apply a variety of valuation methodologies (e.g. DCF and EVA modelling, 'sum2of2the2parts', break2up and event2related analysis, peer group and market multiple comparisons) to their own financial projections for the companies they cover. Overall, our investment recommendations take into consideration an assessment of the company in its entirety and of the sector to which it belongs ("bottom2up approach"). Price target calculation is based on a number of factors, observations and assumptions, including but not limited to: key business performance indicators and ratios, public and private valuation multiples, comparison with one or more peer groups of comparable companies, overall equity market valuations, and with the company's own history and track record.

The stock recommendations published by Vontobel’s research team are defined as follows:

Rating Definition

Large Cap SLI Index (inc. tolerance) / non2Swiss stocks of similar market capitalisation

Buy Price target (when set) implies 10% or more upside on a 122month horizon

Hold Price target (when set) implies 0210% upside on a 122month horizon

Reduce Price target (when set) implies downside on a 122month horizon

Mid & small cap Other Swiss stocks / non2Swiss stocks of similar market capitalisation

Buy Price target (when set) implies 15% or more upside on a 122month horizon Hold Price target (when set) implies 0215% upside on a 122month horizon

Reduce Price target (when set) downside on a 122month horizon

Analysts are required to review their recommendations under the following conditions: Buy: When upside to price target falls below 5% (all caps).

Hold: When upside to price target reaches or exceeds 15% for large caps or 20% for mid & small cap;

when downside to price target reaches or exceeds 5% (all caps).

Reduce: When upside to price target reaches or exceeds 5% (all caps).

We reserve the right to waive repeated changes of recommendation during periods of unusually high equity market or specific stock price volatility

Share prices used in this financial report are closing prices on the date given. Deviations from this rule are disclosed. The underlying figures of a company valuation, i.e. the profit and loss statement, capital flow and balance sheet are estimates based on date and thus bear certain risks.

The use of the valuation methods do not rule out the risk that the stock fails to achieve the "fair value" within the projected period. Numerous factors influence share price performance. Unforeseen changes can arise from the emergence of competitive pressure, from a change in demand for the products of an issuer, technological development, from macroeconomic activity, exchange rate fluctuation or from a shift in society’s moral concept. Changes in taxation law or supervisory regulations can often have a grave, unforeseen impact. This discourse on valuation methods and risk factors does not claim completeness.

For more information on our methodology and rating system see www.vontobel.ch.

7. Disclaimer & Sources Although Vontobel Group believes that the information provided in this document is based on reliable sources, it cannot assume responsibility for the quality, correctness, timeliness or completeness of the information contained in this report

This research report is for information purposes only and does not constitute a solicitation to invest or investment advice. This report has been written without regard for the financial interests of individual recipients. The author maintains the right to change and/or revoke all opinions expressed in this report at any time. The author also points out that the statements contained in this report are on no account to be considered as advice on tax, accounting, legal or investment matters.

The author neither guarantees that the equities discussed in this report are accessible to recipients nor that they are suitable for them. This research report has been produced for institutional investors only.

If non2institutional investors receive this report it is recommended they seek advice from an asset manager or investment advisor prior to making an investment decision.

The maker of this report does not regard recipients of this report as clients if there are no other business or contractual relations.

No part of this material may be reproduced or duplicated in any form, by any means, or redistributed, without acknowledgement of source and prior written consent from Vontobel Research.

Bank Vontobel AG has taken internal organisational measures to prevent potential or, if unavoidable, to disclose existing conflicts of interest. For more details on handling conflicts of interest and maintaining the independence of financial analysis as well as other disclosures relating to the recommendations of Bank Vontobel AG, see www.vontobel.com


8. Country%specific guidelines and information This research report may not be distributed to persons whose nationality or domicile do not permit the distribution of this report or where a special license is required, unless the author or distributor already has such a license. With the exception of the special distribution channels listed below, this report is distributed by the company on the front page.

Additional Information for US Institutional Clients In the United States of America, this publication is being distributed solely to persons that qualify as "major US institutional investors" under SEC Rule 15a26. Vontobel Securities, Inc. accepts responsibility for the content of reports prepared by its non2US affiliate when distributed to US institutional investors. US investors who wish to effect any transaction in securities mentioned in this report should do so with Vontobel Securities, Inc. at the address hereafter and not with Bank Vontobel AG: Vontobel Securities, Inc., 1540 Broadway, 38th Floor, New York, NY 10036, Tel: 1 212 792 5820, fax: 1 212 792 5832, e2mail: [email protected]

Vontobel Securities Inc. New York, with headquarters at Vontobel Securities AG, Gotthardstrasse 43, 8022 Zurich, Tel +41 (0)58 76 17, Fax +41 (0)58 283 76 49, is a broker2dealer registered with the Securities and Exchange Commission and a member of the Financial Industry Regulatory Authority (FINRA). Bank Vontobel Zurich is a foreign broker dealer which is not delivering services into the USA except for those allowed under the exemption of SEC Rule 15a26.

Additional Information for UK Clients Bank Vontobel AG is a company limited by shares with a Swiss Banking license which has no permanent place of business in the UK and which is not regulated under the Financial Services and Markets Act 2000. The protections provided by the UK regulatory system will not be applicable to the recipients of any information or documentation provided by Bank Vontobel AG and compensation under the Financial Services Compensation Scheme will not be available.

Past performance is not a guide to the future. The price of securities may go down as well as up and as a result investors may not get back the amount originally invested. Changes in the exchange rates may cause the value of investments to go down or up. Any literature, documentation or information provided is directed solely at persons we reasonably believe to be investment professionals. All such communications and the activity to which they relate are available only to such investment professionals; any activity arising from such communications will only be engaged in with investment professionals. Persons who do not have professional experience in matters relating to investments should not rely upon such communications. Any contact with analysts, brokers or other employees of Bank Vontobel AG must be directed with Bank Vontobel AG directly and not through offices or employees of Vontobel Group affiliates in London/UK.

Information for clients in Germany Bank Vontobel Europe AG, Alter Hof 5, D280331 Munich (regulatory authority: Federal Financial Supervisory Authority, Graurheindorfer Strasse 108, 53117 Bonn) is the distributor for institutional and private clients.

Date post:	16-Mar-2016
Category:	Documents
Upload:	bell-ag
View:	213 times
Download:	1 times

vontobel_20120221_e

Documents