ESN Analyser
Investment Research
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ESN Analyser
Investment Research
26 October 2016
ESN Top Picks
Roadshows
Corporate Events
Tactical Sector Views
RECOMMENDATION CHANGES
Ahlstrom downgraded to Neutral from Buy Q3 preview: Sharpest price rally already behind
Saipem downgraded to Neutral from Accumulate One-offs weigh on Q3 – 2017 targets revised downwards
Oriola-KD downgraded to Accumulate from Buy Additional investments weigh on cash flow
UPM-Kymmene downgraded to Neutral from Accumulate Still something positive for the rest of the year?
Nokian Tyres upgraded to Accumulate from Reduce Q3 preview: Turn to growth on the cards – Accumulate
Tieto upgraded to Accumulate from Neutral H2 earnings concentrated to Q4
NEWS BY SECTOR
AEROSPACE & DEFENSE
Airbus Group (Neutral) Q3-2016: very low net profit and cash halved, but 2017…
ALTERNATIVE ENERGY
Gamesa (Neutral) Shareholders approve merger with Siemens WP
AUTOMOBILES & PARTS
Fiat Chrysler Automobiles (Buy) Q3 results matched our estimates
Nokian Tyres (Accumulate) Q3 preview: Turn to growth on the cards – Accumulate
Sogefi (Buy) Positive feed-back from the conference call
Volkswagen (Buy) VW obtains approval of 2L TDI settlement in the US
BANKS
Banco Santander (Buy) 9M16 Earnings: EUR4.606m (-22.5% Y/Y)
Bankia (Accumulate) 9M16: EUR731m -10% Y/Y
BBVA (Buy) 3Q’16 Estimates: EUR874m (+11.4% Y/Y)
BASIC RESOURCES
Stora Enso (Accumulate) Target price upgraded to EUR 9.30
UPM-Kymmene (Neutral) Still something positive for the rest of the year?
FINANCIAL SERVICES
Sector News AM: net inflows c. EUR 5.8bn in September
FOOD & BEVERAGE
Heineken (Buy) Four comforting positives in 3Q16 trading update
GENERAL INDUSTRIALS
Ahlstrom (Neutral) Q3 preview: Sharpest price rally already behind
ESN Analyser
Investment Research
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HEALTHCARE
Amplifon (Accumulate) Q3 16 preview
Bayer (Buy) Q3 results: Covestro strong, slight guidance upgrade
Oriola-KD (Accumulate) Additional investments weigh on cash flow
Wilex (Buy) Research collaboration with Nordic Nanovector
HOUSEHOLD GOODS
Seb SA (Neutral) Q3 revenues in line with expectations
INDUSTRIAL ENGINEERING
Cargotec Corp (Accumulate) MacGregor a disappointment but not decisive
Exel Composites (Accumulate) Difficult market conditions continue – risks relating to dividend on the rise
Wärtsilä (Neutral) Weak ship market, stable big picture
INDUSTRIAL TRANSPORTATION
CAF (Accumulate) 9m’16 results
MATERIALS, CONSTRUCTION & INFRASTRUCTURE
Sector News Opportune quarter for guidance revisions
AENA (Neutral) Good results and cash generation
Eltel (Neutral) Q3 preview: Building confidence takes time
Ferrovial (Accumulate) Heathrow extension has been approved
Lehto (Accumulate) Q3 preview: A smaller quarter in store again
Ramirent (Accumulate) Q3 preview: Focus on the debut of the new CEO
SRV (Accumulate) Q3 preview: Significant earnings growth driven by residential construction
Vinci (Accumulate) 9M 2016: reported figures miss the consensus by EUR200m
MEDIA
Axel Springer (Neutral) Dull 9M results could put pressure on FY guidance
Gruppo Ed. L'Espresso (Accumulate) Q3 2016 Pre: negative trends expected to continue
Havas (Buy) Slightly disappointing Q3-16 but encouraging prospects!
Impresa (Buy) 3Q16 results below expectations
OIL & GAS PRODUCERS
Galp Energia (Accumulate) 3Q16 results: higher output and robust R&M
Neste Corporation (Neutral) Recommendation Neutral while waiting for decisions
OIL SERVICES
Saipem (Neutral) One-offs weigh on Q3 – 2017 targets revised downwards
PERSONAL GOODS
Kering (Neutral) Excellent Gucci and Saint Laurent performances in Q3
SOFTWARE & COMPUTER SERVICES
Reply (Neutral) Q3 2016 Pre: solid quarter expected
Tieto (Accumulate) H2 earnings concentrated to Q4
TomTom (Buy) Mixed news from French car markers in 3Q16
ESN Analyser
Investment Research
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TECHNOLOGY HARDWARE & EQUIPMENT
STMicroelectronics (Neutral) Q3 & 9M 16 preview
TELECOMMUNICATIONS
Sector News SPAIN: Orange, Strong growth in 3Q’16
Euskaltel (Buy) Possible agreement with Orange in terms of FttH
TRAVEL & LEISURE
Int. Airlines Group (Buy) Extension of Heathrow backed
UTILITIES
A2A (Buy) Brescia may reduce its quota
Fortum (Reduce) Attention on the CMD next
Iren (Buy) Salerno Energia Vendite due to be merged
Red Electrica De Espana (Accumulate) Results 9M16 in line with strategic targets
ESN Top Picks
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Blue Chips Top Picks
Compa ny Count r y S e c t or I de a Ra t i ngP r i c e a s of
2 5 / 10 / 2 0 16
Ta r ge t
P r i c e
Upsi de /
Downsi deEnt r y da t e
Ent r y
pr i c e
Ent r y
pr i c e
( D i v .
Adj )
Tot a l
Re t ur n
Ent r y To
Da t e
Re l . Cml . d
pe r f . v s Eur o
S t ox x
AM ADEUS Spain Sof t ware & Comput er Services Long Buy 43.23 49.20 14% 18/ 08/ 2016 41.96 41.96 3 . 0 % 0.1%
CI E FI N . R I CHEM ONT Swit zerland Personal Goods Long Buy 65.15 76.00 17% 17/ 10/ 2016 66.30 66.30 - 1. 7 % -3.5%
HEI NEKEN Net herlands Food & Beverage Long Buy 79.00 100.00 27% 25/ 05/ 2016 83.08 82.56 - 4 . 3 % -7.2%
I NDI TEX Spain General Ret ailers Long Accumulat e 32.57 36.10 11% 18/ 08/ 2016 30.93 30.93 5 . 3 % 2.4%
J CDECAUX France Media Long Accumulat e 27.39 31.00 13% 17/ 10/ 2016 28.16 28.16 - 2 . 7 % -4.5%
KP N TELECOM Net herlands Telecommunicat ions Long Buy 2.94 3.55 21% 20/ 09/ 2016 2.82 2.82 4 . 0 % 0.9%
NORDEA Finland Banks Long Accumulat e 9.55 10.00 5% 03/ 08/ 2016 7.78 7.78 2 2 . 7 % 17.0%
S TORA ENS O Finland Basic Resources Long Accumulat e 8.63 9.30 8% 17/ 10/ 2016 8.16 8.16 5 . 8 % 4.0%
TECHNI P France Oil Services Long Buy 60.77 67.00 10% 18/ 10/ 2016 58.60 58.60 3 . 7 % 1.5% source: ESN Members’ estimates
M/S Caps Top Picks
Compa ny Count r y S e c t or I de a Ra t i ngP r i c e a s of
2 5 / 10 / 2 0 16
Ta r ge t
P r i c e
Upsi de /
Downsi deEnt r y da t e
Ent r y
pr i c e
Ent r y pr i c e
( D i v . Adj )
Tot a l
Re t ur n
Ent r y To
Da t e
Re l . Cml . d
pe r f . v s
Eur o
S t ox x
ACERI NOX Spain Basic Resources Long Buy 11.82 14.00 18% 18/ 08/ 2016 11.71 11.71 0 . 9 % -2.1%
ALTRAN France Sof t ware & Comput er Services Long Buy 13.56 15.00 11% 17/ 10/ 2016 13.20 13.20 2 . 7 % 1.0%
CAF Spain Indust r ial Transport at ion Long Accumulat e 348.15 390.00 12% 18/ 08/ 2016 342.80 342.80 1. 6 % -1.4%
DEUTS CHE P FANDBRI EFBANK Germany Banks Long Buy 9.42 12.30 31% 22/ 08/ 2016 8.10 8.10 16 . 3 % 13.2%
FORFARM ERS Net herlands Food & Beverage Long Buy 6.85 8.30 21% 28/ 09/ 2016 6.48 6.48 5 . 7 % 2.7%
FUGRO Net herlands Oil Services Long Buy 16.35 19.00 16% 20/ 10/ 2016 15.56 15.56 5 . 1% 4.5%
J UM BO Greece General Ret ailers Long Buy 12.90 14.99 16% 21/ 10/ 2016 12.62 12.62 2 . 2 % 2.0%
NH HOTEL GROUP Spain Travel & Leisure Long Buy 4.07 6.80 67% 18/ 08/ 2016 4.00 4.00 1. 8 % -1.2%
NOS Port ugal Telecommunicat ions Long Buy 6.11 7.00 15% 17/ 10/ 2016 5.89 5.89 3 . 7 % 2.0%
OP AP Greece Travel & Leisure Long Buy 7.76 9.60 24% 28/ 06/ 2016 5.98 5.86 3 2 . 4 % 17.6%
RI B S OFTWARE Germany Sof t ware & Comput er Services Long Buy 12.41 12.00 -3% 20/ 06/ 2016 8.29 8.29 4 9 . 7 % 41.2%
TECHNOGYM It aly Personal Goods Long Buy 4.13 4.95 20% 15/ 06/ 2016 3.78 3.78 9 . 5 % -0.7%
THE NAVI GATOR COM P ANY Port ugal Basic Resources Long Buy 2.66 4.60 73% 22/ 06/ 2016 2.72 2.72 - 2 . 4 % -6.9%
YOOX NET- A- P ORTER It aly General Ret ailers Long Buy 27.70 31.30 13% 17/ 10/ 2016 27.82 27.82 - 0 . 4 % -2.2%
source: ESN Members’ estimates
This selection of stocks is not intended to provide a recommended portfolio; therefore there is no point in comparing its performance with any benchmark. The performance of each stock has to be considered independently. Risk factors are taken into account when selecting individual stocks but the risk profile of the selection as a whole is not considered. The approach used to select each investment idea is opportunistic with an absolute return target.
Roadshows
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SUBJECT LOCATION EVENT DATE
TECHNOGYM Helsinki Cross-country Company Roadshow 26/10/2016
TECHNOGYM Amsterdam Cross-country Company Roadshow 27/10/2016
EDENRED Geneva Cross-country Company Roadshow 09/11/2016
EDENRED Zurich Cross-country Company Roadshow 10/11/2016
Mediaset España Madrid Local Company Roadshow 10/11/2016
Kemira Lisboa Cross-country Company Roadshow 11/11/2016
Corporate Events
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Corporate Events today
Source: Precise
CompanyBloomberg
codeDate Event Type Description
ABERTIS ABE SM 26/10/16 Results Q3 2016 Results
ABE SM 26/10/16 Results Q3 2016 Earnings conference call
ACERINOX ACX SM 26/10/16 Results Q3 2016 Earnings conference call / Webcast
ACX SM 26/10/16 Results Q3 2016 Results
AIRBUS GROUP AIR FP 26/10/16 Results Q3 2016 Earnings conference call / Webcast
AIR FP 26/10/16 Results Q3 2016 Results
ALBIOMA ABIO FP 26/10/16 Results Q3 2016 Sales
AMPLIFON AMP IM 26/10/16 Results Q3 2016 Results
ASM INTERNATIONAL ASM NA 26/10/16 Results Q3 2016 Results
BANCO SANTANDER SAN SM 26/10/16 Results Q3 2016 Results
BANKIA BKIA SM 26/10/16 Results Q3 2016 Earnings conference call / Webcast
BKIA SM 26/10/16 Results Q3 2016 Results
BAYER BAYN GR 26/10/16 Results Q3 2016 Results
BAYN GR 26/10/16 Results Q3 2016 Earnings conference call / Webcast
BIC BB FP 26/10/16 Results Q3 2016 Results
BB FP 26/10/16 Results Q3 2016 Earnings conference call
BPI BPI PL 26/10/16 Results Q3 2016 Press conference
BPI PL 26/10/16 Results Q3 2016 Results
CARGOTEC CORP CGCBV FH 26/10/16 Analyst Meeting Q3 2016 Press & analyst meeting
CRAMO CRA1V FH 26/10/16 Results Q3 2016 Results
EBRO FOODS EBRO SM 26/10/16 Results Q3 2016 Results
EDITORIALE L'ESPRESSO ES IM 26/10/16 Results Q3 2016 Results
ENCE ENC SM 26/10/16 Results Q3 2016 Results
EXEL COMPOSITES EXL1V FH 26/10/16 Analyst Meeting Q3 2016 Press & analyst meeting
FINNAIR FIA1S FH 26/10/16 Results Q3 2016 Results
HEINEKEN HEIA NA 26/10/16 Trading Update Q3 2016 Trading statement
HUHTAMÄKI HUH1V FH 26/10/16 Results Q3 2016 Results
IBERDROLA IBE SM 26/10/16 Results Q3 2016 Earnings conference call
IBE SM 26/10/16 Results Q3 2016 Results
INGENICO ING FP 26/10/16 Trading Update Q3 2016 Sales conference call
ING FP 26/10/16 Trading Update Q3 2016 Sales
IPSOS IPS FP 26/10/16 Trading Update Q3 2016 Sales
KESKO KESBV FH 26/10/16 Results Q3 2016 Results
KONE KNEBV FH 26/10/16 Results Q3 2016 Analyst conference call / Webcast {simultaneous}
KNEBV FH 26/10/16 Results Q3 2016 Press conference {Finnish}
KNEBV FH 26/10/16 Analyst Meeting Q3 2016 Analyst meeting {English}
KONECRANES KCR1V FH 26/10/16 Results Q3 2016 Earnings conference call / Webcast {simultaneous}
KCR1V FH 26/10/16 Results Q3 2016 Results
KCR1V FH 26/10/16 Analyst Meeting Q3 2016 Press & analyst meeting
KORIAN KORI FP 26/10/16 Trading Update Q3 2016 Sales
LASSILA & TIKANOJA LAT1V FH 26/10/16 Results Q3 2016 Results
LAT1V FH 26/10/16 Analyst Meeting Q3 2016 Analyst meeting / Webcast
LISI FII FP 26/10/16 Trading Update Q3 2016 Sales
MEDIASET ESPANA TL5 SM 26/10/16 Results Q3 2016 Earnings conference call / Webcast
TL5 SM 26/10/16 Results Q3 2016 Results
NORDEA NDA1V FH 26/10/16 Results Q3 2016 Earnings conference call
NDA1V FH 26/10/16 Results Q3 2016 Press conference / Webcast
NDA1V FH 26/10/16 Results Q3 2016 Results
VAISALA VAIAS FH 26/10/16 Results Q3 2016 Results
VISIATIV ALVIV FP 26/10/16 Trading Update Q3 2016 Sales
ESN Tactical Sector Views
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Tactical Sector Allocation Matrix July 2016
SectorCurrent Tactical
ViewAction
Previous
Tactical View
Stoxx 600
Weighting
LATEST REVIEW
DATE
Automobiles & Parts + upgrade = 3% Jul-16
Banks - - 10% Jul-16
Basic Resources = = 2% Jul-16
Chemicals = = 5% Jul-16
Construction & Materials + + 3% Jul-16
Financial Services - dow ngrade = 2% Jul-16
Food & Beverage + + 7% Jul-16
Healthcare + upgrade = 14% Jul-16
Industrial Good & Services + upgrade = 11% Jul-16
Insurance - dow ngrade + 6% Jul-16
Media - dow ngrade = 3% Jul-16
Oil & Gas = = 5% Jul-16
Personal & Household Goods + + 9% Jul-16
Real Estate + upgrade - 2% Jul-16
Retail - dow ngrade = 3% Jul-16
Technology + upgrade = 4% Jul-16
Telecommunications = dow ngrade + 5% Jul-16
Travel & Leisure + + 2% Jul-16
Utilities + upgrade - 4% Jul-16
Legend: + (Overw eight); =/+ (Slightly Overw eight); = (Market Weight); =/- (Slightly Underw eight); - (Underw eight);
Note: The tactical sector view is the shorter term trading view of the ESN strategy team and it can vary from the longer term
fundamental view of the relevant ESN sector analyst team
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Airbus Group
France/Aerospace & Defense Analyser
AEROSPACE & DEFENSE
Airbus Group (Neutral) Q3-2016: very low net profit and cash halved, but 2017…
Q3-2016: very low net profit and cash halved, but 2017…
The facts: As expected Airbus’ results were weak, for the P&L and the balance
sheet structure. The balance sheet deteriorated mainly due to the increase in
inventories, which is logical given the ongoing industrial ramp-up (change in WCR
+EUR4.4bn), and the share buyback -EUR736m. Revenues and EBIT by division:
Airbus: EUR10,450m +4%; EUR354m -26%
Airbus Helicopters: EUR1,595m +8%; EUR56m
Airbus Defense & Space: EUR2,274m -20% (changes of scope); EUR105m
HQ/Elim.: EUR(369)m; EUR(8)m
Airbus Group (consol data): EUR13,950m -9%; EBIT EUR507m -30%
Our analysis: Several headwinds on revenues and margins and some
deconsolidation resulted in Q3 reported EBIT of EUR507m -30% (below our
estimate of EUR640m).
Net cash of EUR5.6bn, vs. EUR10bn at 30 Dec. 2015 and EUR7.8bn at 30 Sept.
2015. As expected, the cash burn in Q3 was EUR3bn, twice as high as in Q3-2015.
Restoring this cash is set to occur through the deliveries concentrated in Q4
(destocking of around 20 A320NEO if the engines arrive, deliveries from the A350
final assembly line).
There was a slight change to guidance, relating to the financing of sales, itself due
to problems on ECA financing, hence Airbus excluded this point from guidance. In
sum, this means that the balance sheet could remain deteriorated compared to
initial expectations.
Conclusion & Action: The group maintained its EBIT guidance, but it is
stretched. We have to look further ahead and note that 2017 will be a good year,
with double-digit earnings growth. The environment is still good and there is
nothing in IATA figures that indicate that the slightest of downturns is underway.
Multiples are slightly high, but there is no reason why Airbus should correct
lastingly.
Analyst(s):
Agnès Blazy, CM - CIC Market Solutions
+33 1 53 48 80 67
Neutral
53.39
closing price as of 25/10/2016
53.00
Target Price unchanged
Recommendation unchanged
Target price: EUR
Share price: EUR
Reuters/Bloomberg AIR.PA/AIR FP
Market capitalisation (EURm) 41,253
Current N° of shares (m) 773
Free float 70%
Daily avg. no. trad. sh. 12 mth 2,290
Daily avg. trad. vol. 12 mth (m) 174,961
Price high 12 mth (EUR) 68.44
Price low 12 mth (EUR) 48.47
Abs. perf. 1 mth -0.78%
Abs. perf. 3 mth 4.52%
Abs. perf. 12 mth -11.27%
Key financials (EUR) 12/15 12/16e 12/17e
Sales (m) 64,450 63,206 65,171
EBITDA (m) 7,015 6,552 7,165
EBITDA margin 10.9% 10.4% 11.0%
EBIT (m) 4,062 3,929 4,390
EBIT margin 6.3% 6.2% 6.7%
Net Profit (adj.)(m) 2,696 2,699 3,055
ROCE -284.1% 54.7% 54.5%
Net debt/(cash) (m) 1,636 2,542 (567)
Net Debt/Equity 0.3 0.2 0.0
Debt/EBITDA 0.2 0.4 -0.1
Int. cover(EBITDA/Fin. int) 19.1 20.9 27.2
EV/Sales 0.9 0.8 0.7
EV/EBITDA 8.1 7.7 6.6
EV/EBITDA (adj.) 8.1 7.7 6.6
EV/EBIT 14.0 12.8 10.8
P/E (adj.) 18.1 15.3 13.5
P/BV 8.2 3.7 2.8
OpFCF yield 3.3% -8.1% 5.9%
Dividend yield 2.4% 2.6% 2.7%
EPS (adj.) 3.43 3.49 3.95
BVPS 7.60 14.36 19.17
DPS 1.30 1.37 1.43
48
50
52
54
56
58
60
62
64
66
68
70
Oct 15 Nov 15 Dec 15 Jan 16 Feb 16 Mar 16 Apr 16 May 16 Jun 16 Jul 16 Aug 16 Sep 16 Oct 16
vvdsvdvsdy
AIRBUS GROUP Stoxx Aerospace & Defense (Rebased)Source: Factset
Shareholders: SOGEPA- French State 12%; GZBV-
German State 11%; SEPI-Spain 4%;
Treasury shares 0.95%; Employees 2%;
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Gamesa
Spain/Alternative Energy Analyser
ALTERNATIVE ENERGY
Gamesa (Neutral) Q3-2016: very low net profit and cash halved, but 2017…
Shareholders approve merger with Siemens WP
The facts: Gamesa’s shareholders yesterday approved the merger with Siemens
Wind Power.
Our analysis: Gamesa held an EGM yesterday, ratifying the agreements required
to carry out the merger with Siemens Wind Power.
With this operation, Gamesa integrates Siemens’ wind activities via a share
exchange (new shares to be issued by Gamesa). Following this transaction,
Siemens would hold 59% of the new company.
Conclusion: Apart from results, the focus i son the performance of upcoming
milestones in the merger process with Siemens Wind Power. The operation is
subject to the approval of the Anti-Trust Tribune and the conformation on behalf
of the CNMV that Siemens will not have to carry out a mandatory takeover bid
following the merger. This operation is expected to be closed in 1Q’17.
Analyst(s):
Iñigo Recio Pascual, GVC Gaesco Beka
+34 91 436 7814
Neutral
21.53
closing price as of 25/10/2016
20.20
Target Price unchanged
Recommendation unchanged
Target price: EUR
Share price: EUR
Reuters/Bloomberg GAM.MC/GAM SM
Market capitalisation (EURm) 6,013
Current N° of shares (m) 279
Free float 69%
Daily avg. no. trad. sh. 12 mth 2,394
Daily avg. trad. vol. 12 mth (m) 26,226
Price high 12 mth (EUR) 21.77
Price low 12 mth (EUR) 13.76
Abs. perf. 1 mth -0.30%
Abs. perf. 3 mth 16.82%
Abs. perf. 12 mth 53.79%
Key financials (EUR) 12/15 12/16e 12/17e
Sales (m) 3,504 4,340 4,786
EBITDA (m) 520 689 743
EBITDA margin 14.8% 15.9% 15.5%
EBIT (m) 323 440 482
EBIT margin 9.2% 10.1% 10.1%
Net Profit (adj.)(m) 177 273 304
ROCE 26.5% 32.0% 30.6%
Net debt/(cash) (m) (301) (437) (548)
Net Debt/Equity -0.2 -0.2 -0.3
Debt/EBITDA -0.6 -0.6 -0.7
Int. cover(EBITDA/Fin. int) 15.5 25.9 38.1
EV/Sales 1.1 1.2 1.1
EV/EBITDA 7.4 7.7 7.0
EV/EBITDA (adj.) 7.4 7.7 7.0
EV/EBIT 11.9 12.1 10.9
P/E (adj.) 24.9 22.0 19.8
P/BV 2.9 3.4 3.0
OpFCF yield 4.0% 3.0% 2.9%
Dividend yield 0.7% 1.1% 1.1%
EPS (adj.) 0.64 0.98 1.09
BVPS 5.47 6.28 7.12
DPS 0.15 0.24 0.25
10
12
14
16
18
20
22
Oct 15 Nov 15 Dec 15 Jan 16 Feb 16 Mar 16 Apr 16 May 16 Jun 16 Jul 16 Aug 16 Sep 16 Oct 16
vvdsvdvsdy
GAMESA IBEX 35 (Rebased)Source: Factset
Shareholders: Iberdrola 20%; Blackrock Inc. 3%;
Norges Bank 3%;
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Fiat Chrysler Automobiles
Italy/Automobiles & Parts Analyser
AUTOMOBILES & PARTS
Fiat Chrysler Automobiles (Buy) Shareholders approve merger with Siemens WP
Q3 results matched our estimates
The facts: Yesterday, FCA released bang-in-line Q3 results; the company
improved its FY16 guidance for Adj. EBIT (to ">EUR 5.8bn" from ">EUR 5.5bn")
and Adj. Net Profit (to ">EUR 2.3bn" from ">2.0bn"), while keeping the revenues
(">EUR 112bn") and Net Industrial Debt guidance ("<EUR 5.0bn") unchanged.
Our analysis: Q3 revenues hit EUR 26.8bn (-1% Y/Y), while Adj. EBIT was EUR
1.5bn (+29% Y/Y), not far from our and consensus' estimates (~EUR 1.5/1.4bn);
Adj. net profit (EUR 740m, x3.5 Y/Y) beat our and consensus' estimates (EUR
609/557m). Net Industrial Debt (~EUR 5.5bn at the end of June) worsened to
~EUR 6.5bn, not far from our and consensus estimates (EUR 6.7/6.3bn). Here
follow some details:
- NAFTA operations did well with Adj. EBIT reaching EUR 1.28bn (+8% Y/Y)
and a 7.6% margin (+90 bps Y/Y), in line with our assumptions (7.6%).
- In LAT AM, Adj. EBIT was EUR -16m (EUR +28m in Q3 2015), worse than
expected (EUR +21m) due to adverse market conditions.
- In APAC, Adj. EBIT reached EUR 21m (EUR -83m in Q3 2015), missing our
estimate (EUR 42m); the Chinese JVs are ramping up fast.
- In EMEA, Adj. EBIT (EUR 104m, x4.2 Y/Y at 2.0% of revenues, +170 b.ps)
was in line with our estimates, thanks to higher volumes and better mix; the
effect of the new Alfa Romeo "Giulia" will be felt from Q4 onwards.
- Maserati Adj. EBIT (EUR 103m, x8.6 Y/Y) beat our estimates (EUR 74m)
thanks to the new "Levante" SUV, which had an excellent start with 18 K
orders collected and ~5 K units delivered in Q3.
Here follow a few more topics from the conference call:
- FCA did not improve the FY16 Net Industrial Debt guidance because of the
Brazilian Real revaluation: FCA has sizeable debt positions in BRL.
- Competition in NAFTA has increased, but market conditions remain
healthy; FCA goes on with its plan to focus the U.S. production capacity on
high value-added vehicles with the aim to reach a double-digit Adj. EBIT
margin in 2018.
- The Brazilian market is expected to flatten in Q4 and rebound in FY17.
- On the asset disposal front (components business), the CEO didn't confirm
the rumours around Samsung; anyway, no news are expected in Q4 2016.
Following the Q3 results release, we have tuned our estimates.
EUR m 2016 e 2017 e
New Old Δ New Old Δ
Revenues 111,698 114,438 -2.4% 118,775 118,606 0.1%
Adjusted EBIT 6,447 6,404 0.7% 7,093 6,860 3.4%
As a % of revenues 5.8% 5.6%
6.0% 5.8%
Net Profit (Adjusted) 2,817 2,699 4.4% 3,390 3,279 3.4%
NID 4,931 4,700 232 3,151 3,300 (149)
Conclusion & Action: Q3 results were in line and the investment case has not
changed in our view: FCA remains a cheap stock without particular triggers
(M&A) in the short term. FCA trades at ~3.6x in terms of P/E (under US GAAP)
when GM and Ford trade on average at ~6.2x.
Analyst(s):
Gabriele Gambarova, Banca Akros
+39 02 43 444 289
Buy
5.95
closing price as of 25/10/2016
10.00
Target Price unchanged
Recommendation unchanged
Target price: EUR
Share price: EUR
Reuters/Bloomberg FCHA.MI/FCA IM
Market capitalisation (EURm) 8,969
Current N° of shares (m) 1,507
Free float 59%
Daily avg. no. trad. sh. 12 mth 17,226
Daily avg. trad. vol. 12 mth (m) 236,551
Price high 12 mth (EUR) 9.11
Price low 12 mth (EUR) 5.11
Abs. perf. 1 mth 3.30%
Abs. perf. 3 mth -5.18%
Abs. perf. 12 mth -34.95%
Key financials (EUR) 12/15 12/16e 12/17e
Sales (m) 113,191 111,698 118,775
EBITDA (m) 9,059 11,928 13,672
EBITDA margin 8.0% 10.7% 11.5%
EBIT (m) 3,098 5,648 7,093
EBIT margin 2.7% 5.1% 6.0%
Net Profit (adj.)(m) 1,787 2,817 3,390
ROCE 7.4% 8.7% 9.2%
Net debt/(cash) (m) 5,910 4,931 3,151
Net Debt/Equity 0.4 0.3 0.1
Debt/EBITDA 0.7 0.4 0.2
Int. cover(EBITDA/Fin. int) 3.8 6.0 8.2
EV/Sales 0.2 0.2 0.1
EV/EBITDA 2.6 1.6 1.2
EV/EBITDA (adj.) 2.1 1.5 1.2
EV/EBIT 7.7 3.3 2.4
P/E (adj.) 7.2 3.2 2.6
P/BV 0.8 0.5 0.4
OpFCF yield -24.1% -3.8% 19.9%
Dividend yield 0.0% 0.0% 0.0%
EPS (adj.) 1.19 1.87 2.25
BVPS 10.68 12.20 14.45
DPS 0.00 0.00 0.00
5.0
5.5
6.0
6.5
7.0
7.5
8.0
8.5
9.0
9.5
10.0
Sep 15 Oct 15 Nov 15 Dec 15 Jan 16 Feb 16 Mar 16 Apr 16 May 16 Jun 16 Jul 16 Aug 16 Sep 16 Oct 16
vvdsvdvsdy
FIAT CHRYSLER AUTOMOBILES Stoxx Automobiles & Parts (Rebased)Source: Factset
Shareholders: EXOR 29%; Baillie Gifford & Co 10%;
Harris & Associates 2%;
Page 11 of 63
Produced & Distributed by the Members of ESN (see last page of this report)
Nokian Renkaat
Q3/2015a Growth
M€ OP Cons. Diff. OP Cons. Diff.
Passenger Car Tyres 237 236 0% 226 5% 956 950 1%
Heavy Tyres 39 39 -1% 38 2% 158 158 0%
Vianor 68 69 -1% 66 2% 336 337 0%
Other and eliminations -20 #DIV/0! -20 -1% -78 #DIV/0!
Total sales 324 329.0 -1% 311 4% 1,371 1,376 0%
Sales growth 0.8 % 1.2 %
EBIT
Passenger Car Tyres 79.0 78 1% 76 4% 283 287 -1%
Heavy Tyres 7.7 8 -4% 8 -1% 30 31 -4%
Vianor -5.5 -5 -10 % -6 -8% -1 -1 -40 %
Other and eliminations -4.0 #DIV/0! -5 -20% -11 #DIV/0!
Total EBIT 77.2 79.0 -2% 72.4 7% 301 308 -2%
Total EBIT margin 23.8 % 24.0 % 23.3 % 21.9 % 22.4 %#DIV/0!
PTP 74.2 75.0 -1% 64.6 14.9 % 288 295 -2%
EPS 0.46 0.48 -5% 0.42 8.8 % 1.77 1.82 -3%#DIV/0!
DPS #DIV/0! 1.50 1.50 0%
Source : OP and FactSet
Q3/2016e 2016e
Nokian Tyres
Finland/Automobiles & Parts Analyser
AUTOMOBILES & PARTS
Nokian Tyres (Accumulate) Q3 results matched our estimates
Q3 preview: Turn to growth on the cards – Accumulate
The facts: Nokian Tyres releases its Q3 results on Tuesday, 1 November, at 7
am CET. An analyst briefing starts at 9 am CET.
Our analysis: In Q3 the attention will focus on the sales performance in the
Nordic countries and Europe, where winter tyre sales have shifted closer to the
actual peak season. This means that seasonal variation may have a great impact
on earnings. In Q2, the rather high winter tyre inventories dampened sales in
Russia and North America, but we estimate that the inventory situation has
stabilised, allowing demand to strengthen at the time of H1 2017 pre-orders at the
latest. In recent years the share of Russian sales of the whole Group's sales has
clearly declined as a result of Russia's weak economic environment, but now a
turnaround appears to be at hand. Russian new car sales dropped 11% in
September and have declined by 14% in January–September. We estimate that
tyre sales volumes in Russia will rebound to slight growth next year, supported by
GDP growth and the stronger RUB. A more noticeable pick-up in new car sales
would underpin demand for the most expensive A segment in particular.
According to our forecast, Q3 sales will grow by 4% to EUR 324m (cons.
EUR 329m). We expect EBIT to improve by EUR 5m to EUR 77.2m (cons.
EUR 79m). The company expects full-year sales and EBIT excl. NRI to be at the
2015 level (EUR 1,360m/EUR 296m). The forecasts are now marginally above
the company's guidance range. The focus will, however, shift more strongly to
next year and the appointment of a new CEO after Ari Lehtoranta moves to
Caverion. A possible turnaround in Russia and the RUB appreciation will support
the growth outlook for 2017. In addition, the strong balance sheet will once again
enable a shareholder-friendly dividend yield.
Conclusion & Action: We have revised our 2017–2018 EBIT forecasts up by
2%. We are raising our target price to correspond to the value indicated by our
DCF model, i.e. EUR 34.50, and our recommendation rises to Accumulate (from
Reduce).
Analyst(s):
Jari Raisanen, OP Corporate Bank
+358 10 252 4504
Accumulate
30.94
closing price as of 25/10/2016
34.50
31.50from Target Price: EUR
from Reduce
Target price: EUR
Share price: EUR
Reuters/Bloomberg NRE1V.HE/NRE1V FH
Market capitalisation (EURm) 4,135
Current N° of shares (m) 134
Free float 100%
Daily avg. no. trad. sh. 12 mth 552
Daily avg. trad. vol. 12 mth (m) 12,322
Price high 12 mth (EUR) 37.15
Price low 12 mth (EUR) 28.22
Abs. perf. 1 mth -3.73%
Abs. perf. 3 mth -9.21%
Abs. perf. 12 mth 1.51%
Key financials (EUR) 12/15 12/16e 12/17e
Sales (m) 1,360 1,371 1,450
EBITDA (m) 379 382 405
EBITDA margin 27.8% 27.9% 27.9%
EBIT (m) 296 301 322
EBIT margin 21.8% 21.9% 22.2%
Net Profit (adj.)(m) 239 236 252
ROCE 22.2% -5.4% -5.5%
Net debt/(cash) (m) (208) (195) (196)
Net Debt/Equity -0.2 -0.2 -0.1
Debt/EBITDA -0.5 -0.5 -0.5
Int. cover(EBITDA/Fin. int) 17.3 30.1 27.9
EV/Sales 3.1 2.9 2.7
EV/EBITDA 11.1 10.3 9.7
EV/EBITDA (adj.) 11.1 10.3 9.7
EV/EBIT 14.2 13.1 12.2
P/E (adj.) 18.5 17.5 16.4
P/BV 3.6 3.2 3.1
OpFCF yield 4.5% 4.8% 3.6%
Dividend yield 4.8% 4.8% 5.2%
EPS (adj.) 1.79 1.77 1.89
BVPS 9.29 9.56 10.02
DPS 1.50 1.50 1.60
22
24
26
28
30
32
34
36
38
Sep 15 Oct 15 Nov 15 Dec 15 Jan 16 Feb 16 Mar 16 Apr 16 May 16 Jun 16 Jul 16 Aug 16 Sep 16 Oct 16
vvdsvdvsdy
NOKIAN TYRES Stoxx Automobiles & Parts (Rebased)Source: Factset
Shareholders: Keskinäinen työeläkevakuutusyhtiö
Varma 4%; Keskinäinen
Eläkevakuutusyhtiö Ilmarinen 2%; Odin
Norden 0.80%;
Page 12 of 63
Produced & Distributed by the Members of ESN (see last page of this report)
Sogefi
Italy/Automobiles & Parts Analyser
AUTOMOBILES & PARTS
Sogefi (Buy) Q3 preview: Turn to growth on the cards – Accumulate
Positive feed-back from the conference call
The facts: Yesterday, Sogefi management hold a conference call on Q3 results.
Our analysis: Here follow the main topics:
- The contribution margin improvement derivers from better productivity and
a lower cost of labour, while the low raw material costs didn't have a role in
the improvement. We understood that there's still room to improve
productivity through better capacity utilisation and stronger automation.
- Sogefi cashed in EUR 6m from the French fiscal authorities putting an end
to a 10-year long dispute.
- When it comes to the claim against Dayco (the seller of Systèmes Moteurs
in 2011), Sogefi got a EUR 5.5m payment following the May 2016 arbitration
ruling and it is still waiting for the remaining EUR 4m; the company has taken
legal action to get the rest of the reimbursement, but it does not assume to
get this money before the end of the year.
- The NFP (EUR -314m as at the end of September without meaningful Δ in
the level of factoring) is expected to improve to EUR -300/310m by the end of
the year, without taking into account the EUR 4m payment from Dayco.
- Restructuring costs are expected to come in at below EUR 7m this year,
EUR 1m less than expected by us.
- On the Chateauroux proceeding, there's no major news; the expert report
may be ready well into 2017; the expert is reportedly trying to understand the
level of "shared responsibility" between Sogefi (Tier I supplier), the clients
(BMW and PSA), the Tier II supplier (BTT/Mahle) and Tier III suppliers.
- When it comes to 2017, the management envisages an organic top line
growth in the range of 2/3% Y/Y.
Following Q3 results, we have adjusted our estimates to factor in certain one-offs
and to reflect a lower level of debt.
2016 e 2017 e
New Old Δ New Old Δ
Revenues 1,569 1,559 0.6% 1,632 1,621 0.7%
EBITDA Adj. 150 148
164 165 -0.6%
EBIT Adj. 83 78 6.4% 88 94 -6.8%
Net Profit Adj. 22 22 -1.6% 30 32 -8.6%
NFP (305) (322) 17 (289) (317) 28
Conclusion & Action: We argue that the management has a clear strategy when
dealing with contribution margin stabilisation/improvement and cash generation
improvement. We argue that the market environment remains supportive.
When it comes to the Chateauroux proceeding, the fact that the expert is taking
time to assess the level of "shared responsibility" between the actors is positive
because it makes our worst case scenario (i.e. only Sogefi has to pay for the
damages, EUR 123m) less and less likely.
We keep our positive stance on the stock and improve our target price (to
EUR 3.1) based on a 5X EV/EBITDA multiple.
Analyst(s):
Gabriele Gambarova, Banca Akros
+39 02 43 444 289
Buy
1.93
closing price as of 25/10/2016
3.10
2.90from Target Price: EUR
Recommendation unchanged
Target price: EUR
Share price: EUR
Reuters/Bloomberg SGFI.MI/SO IM
Market capitalisation (EURm) 225
Current N° of shares (m) 117
Free float 36%
Daily avg. no. trad. sh. 12 mth 323
Daily avg. trad. vol. 12 mth (m) 3,471
Price high 12 mth (EUR) 2.34
Price low 12 mth (EUR) 1.16
Abs. perf. 1 mth 6.22%
Abs. perf. 3 mth 37.37%
Abs. perf. 12 mth -12.51%
Key financials (EUR) 12/15 12/16e 12/17e
Sales (m) 1,499 1,569 1,632
EBITDA (m) 116 143 157
EBITDA margin 7.7% 9.1% 9.6%
EBIT (m) 51 76 88
EBIT margin 3.4% 4.8% 5.4%
Net Profit (adj.)(m) 8 22 34
ROCE 4.0% 8.2% 10.6%
Net debt/(cash) (m) 322 305 289
Net Debt/Equity 1.7 1.4 1.2
Debt/EBITDA 2.8 2.1 1.8
Int. cover(EBITDA/Fin. int) 3.5 4.0 4.6
EV/Sales 0.4 0.3 0.3
EV/EBITDA 5.1 3.7 3.3
EV/EBITDA (adj.) 4.3 3.6 3.1
EV/EBIT 11.6 7.0 5.9
P/E (adj.) 33.6 10.4 6.6
P/BV 1.5 1.2 1.0
OpFCF yield -4.2% 4.2% 8.5%
Dividend yield 0.0% 0.0% 0.0%
EPS (adj.) 0.06 0.19 0.29
BVPS 1.46 1.64 1.90
DPS 0.00 0.00 0.00
1.0
1.2
1.4
1.6
1.8
2.0
2.2
2.4
Sep 15 Oct 15 Nov 15 Dec 15 Jan 16 Feb 16 Mar 16 Apr 16 May 16 Jun 16 Jul 16 Aug 16 Sep 16 Oct 16
vvdsvdvsdy
SOGEFI Stoxx Automobiles & Parts (Rebased)Source: Factset
Shareholders: CIR 56%; JP MORGAN AM 5%; Giovanni
Germano 3%;
Page 13 of 63
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Volkswagen
Germany/Automobiles & Parts Analyser
AUTOMOBILES & PARTS
Volkswagen (Buy) Positive feed-back from the conference call
VW obtains approval of 2L TDI settlement in the US
The facts: Yesterday evening, Volkswagen has announced that it has Judge
Charles Breyer granted them the final approval of the settlement with private
plaintiffs to resolve civil claims regarding VW and Audi 2.0L TDI vehicles in the
US.
Concurrently, the judge also approved a Consent Decree between VW and the
US Department of Justice on behalf of the EPA and the state of California (CARB)
as well as a Consent Order between VW and the Federal Trade Commission.
Our analysis: According to the settlement, Volkswagen will pay a total of up to
USD 14.7bn, of which up to USD 10bn will be paid to customers and another USD
4.7bn will be paid to finance environmental programs in the US. This amount was
already agreed on in June 2016 and is thus no surprise.
Conclusion & Action: The approval by Judge Breyer was expected by the
market and does thus not come as a surprise. Nonetheless, we see this as
slightly positive news for VW as it resolves another point of uncertainty on the
way back to normality. Next step is to find a solution for the 3.0L TDI vehicles, for
which an amended offer by VW was transmitted to court on October 24th 2016.
Analyst(s):
Tim Schuldt, CFA, equinet Bank
+49 69 5899 7433
Buy
126.90
closing price as of 25/10/2016
166.00
Target Price unchanged
Recommendation unchanged
Target price: EUR
Share price: EUR
Reuters/Bloomberg VOWG_p.DE/VOW3 GR
Market capitalisation (EURm) 63,614
Current N° of shares (m) 501
Free float 48%
Daily avg. no. trad. sh. 12 mth 1,466
Daily avg. trad. vol. 12 mth (m) 168,128
Price high 12 mth (EUR) 137.95
Price low 12 mth (EUR) 94.00
Abs. perf. 1 mth 6.50%
Abs. perf. 3 mth 4.27%
Abs. perf. 12 mth 17.83%
Key financials (EUR) 12/15 12/16e 12/17e
Sales (m) 213,292 209,455 218,545
EBITDA (m) 9,447 25,872 28,392
EBITDA margin 4.4% 12.4% 13.0%
EBIT (m) (4,069) 11,751 13,872
EBIT margin nm 5.6% 6.3%
Net Profit (adj.)(m) 11,411 10,430 10,546
ROCE -2.1% 7.0% 7.0%
Net debt/(cash) (m) (16,962) (20,438) (20,194)
Net Debt/Equity -0.2 -0.2 -0.2
Debt/EBITDA -1.8 -0.8 -0.7
Int. cover(EBITDA/Fin. int) (5.8) 12.9 16.5
EV/Sales 0.2 0.2 0.2
EV/EBITDA 5.3 1.7 1.7
EV/EBITDA (adj.) 5.3 1.6 1.7
EV/EBIT nm 3.8 3.4
P/E (adj.) 5.8 6.0 6.0
P/BV 0.8 0.7 0.6
OpFCF yield 3.9% 5.8% 11.3%
Dividend yield 0.1% 2.4% 2.8%
EPS (adj.) 22.98 21.00 21.24
BVPS 162.10 176.56 197.98
DPS 0.11 3.00 3.50
80
90
100
110
120
130
140
Sep 15 Okt 15 Nov 15 Dez 15 Jan 16 Feb 16 Mrz 16 Apr 16 Mai 16 Jun 16 Jul 16 Aug 16 Sep 16 Okt 16
vvdsvdvsdy
VOLKSWAGEN Stoxx Automobiles & Parts (Rebased)Source: Factset
Shareholders: Porsche 37%; Lower Saxony 15%;
Page 14 of 63
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Banco Santander
Spain/Banks Analyser
BANKS
Banco Santander (Buy) VW obtains approval of 2L TDI settlement in the US
9M16 Earnings: EUR4.606m (-22.5% Y/Y)
The facts: For 9m16 B Santander reported a net profit of EUR 4,606m, 22.5%
below EUR5,941m 9m 2015. Adjusting for non-recurring items, 9m16 profit
stands at 7,975m 2.6% vs comparable figure of 2015 (EUR5.106m).
Our analysis: The 2016 main non-recurring items are capital gains from the
disposal of the stake in VISA Europe (€227m), restructuring costs (€475m) and
contribution to the Single Resolution Fund (€120m). In 9M’15, reversal of tax
liabilities in Brazil (€835 million). Currencies had a negative impact of 8%.
Solvency: positive trends, the CET1 FL ratio increased by 11bp Q/Q to 10.47%
and 42 bp in the year. Some 16pbs were generated organically and by asset
optimization. Other 5pbs were a non-recurring generation. The fully loaded
leverage ratio stands at 5.0% (4.7% in September 2015).
Credit quality: NPL ratio of the Group improved to 4.15% (-14 bp quarterly; -35 bp
yoy) and coverage remains stable at 73%. The pressure of the CoR is reduced by
7bp to 1.19%.
Efficiency: the C/I ratio (including depreciation) ends the period at 47.8% vs
47.0% a year ago. The September figure is similar to the reported at Dec15 level:
47.6% which implies that the operating expenses remain under control.
Profitability: ROE reported ends at 7.66% vs. 7.23% (Dic15), while the ROTE
(11.36%) exceeds the Dec15 of 10.99% reference as well as the RORWA (1.40
% vs 1.30%).
Conclusion & action: Results and management ratios slightly better than
expected. The presentation to analysts is scheduled for today at 10:00 CET.
Recommendation reiterated.
Analyst(s):
Javier Bernat, GVC Gaesco Beka
+34 91 436 7816
Buy
4.44
closing price as of 25/10/2016
5.13
Target Price unchanged
Recommendation unchanged
Target price: EUR
Share price: EUR
Reuters/Bloomberg SAN.MC/SAN SM
Market capitalisation (EURm) 64,104
Current N° of shares (m) 14,434
Free float 99%
Daily avg. no. trad. sh. 12 mth 100,189
Daily avg. trad. vol. 12 mth (m) 424,184
Price high 12 mth (EUR) 5.31
Price low 12 mth (EUR) 3.30
Abs. perf. 1 mth 12.20%
Abs. perf. 3 mth 17.21%
Abs. perf. 12 mth -15.75%
Key financials (EUR) 12/15 12/16e 12/17e
Total Revenue (m) 45,272 43,909 43,486
Pre-Provision Profit (PPP) (m) 23,702 22,489 22,027
Operating profit (OP) 13,594 13,391 13,092
Earnings Before Tax (m) 10,339 10,424 11,029
Net Profit (adj.) (m) 6,566 6,011 6,316
Shareholders Equity (m) 88,320 91,676 95,725
Tangible BV (m) 61,080 65,467 69,516
RWA (m) 592,781 626,878 655,495
ROTE 11.0% 9.5% 9.4%
Total Capital Ratio (B3) 13.1% 13.6% 14.1%
Cost/Income 47.6% 48.8% 49.3%
NPL ratio (gross) 4.9% 4.1% 3.5%
P/PPP 2.7 2.9 2.9
P/E (adj.) 9.8 10.7 10.1
P/BV 0.7 0.7 0.7
P/TBV 1.1 1.0 0.9
Dividend Yield 3.4% 3.7% 3.4%
PPPPS 1.68 1.56 1.53
EPS (adj.) 0.46 0.42 0.44
BVPS 6.25 6.35 6.63
TBVPS 4.32 4.54 4.82
DPS 0.15 0.17 0.15
SANTANDER (EURm) 9M16 9M15 Y/Y (m) Y/Y (%)
GOP 32,740 34,378 (1,638) (4.8)%
NII 22,992 24,302 (1,310) (5.4)%
Fees & Comm. 7,543 7,584 (41) (0.5)%
Trading 1,311 1,702 (391) (23.0)%
Op Expense (15,634) (16,149) 515 (3.2)%
Impairments (7,112) (7,550) 438 (5.8)%
% GOP (21.7)% (22.0)% 0 (1.1)%
PBT 8,625 8,766 (141) (1.6)%
Net Inc. (reported) 4,606 5,941 (1,335) (22.5)%
Net Inc. (adjust): 4,975 5,106 (131) (2.6)%
Financial ratios: Sep 2016 Dec 2015 YTDbp YTD (%)
CET1-FL (%) 10.47 10.05 42.0 4.2%
Total capital ratio (%) 13.70 13.05 65.0 5.0%
C /I Ratio (%) 47.40 47.60 (20.0) (0.4)%
NPL Coverage (%) 72.70 73.10 (40.0) (0.5)%
NPL Ratio (%) 4.15 4.36 (21.0) (4.8)%
CoR (%) 1.19 1.25 (6.0) (4.8)%
RoRWA (%) 1.40 1.30 10.0 7.7%
RoTE (%) 11.36 10.99 37.0 3.4%
Source SAN
3.0
3.5
4.0
4.5
5.0
5.5
Oct 15 Nov 15 Dec 15 Jan 16 Feb 16 Mar 16 Apr 16 May 16 Jun 16 Jul 16 Aug 16 Sep 16 Oct 16
vvdsvdvsdy
BANCO SANTANDER Stoxx Banks (Rebased)Source: Factset
Shareholders: Botin family 1.05%;
Page 15 of 63
Produced & Distributed by the Members of ESN (see last page of this report)
Bankia
Spain/Banks Analyser
BANKS
Bankia (Accumulate) 9M16 Earnings: EUR4.606m (-22.5% Y/Y)
9M16: EUR731m -10% Y/Y
The facts: Bankia reports net income of EUR731m for 9m16.
Conclusion & Action: First impression Neutral. Results in line with estimates.
CC today @ 12:30 CET. Recommendation reiterated.
Analyst(s):
Javier Bernat, GVC Gaesco Beka
+34 91 436 7816
Accumulate
0.80
closing price as of 25/10/2016
0.91
Target Price unchanged
Recommendation unchanged
Target price: EUR
Share price: EUR
Reuters/Bloomberg BKIA.MC/BKIA SM
Market capitalisation (EURm) 9,237
Current N° of shares (m) 11,517
Free float 35%
Daily avg. no. trad. sh. 12 mth 30,365
Daily avg. trad. vol. 12 mth (m) 25,761
Price high 12 mth (EUR) 1.21
Price low 12 mth (EUR) 0.57
Abs. perf. 1 mth 12.96%
Abs. perf. 3 mth 15.90%
Abs. perf. 12 mth -31.10%
Key financials (EUR) 12/15 12/16e 12/17e
Total Revenue (m) 3,806 3,358 3,397
Pre-Provision Profit (PPP) (m) 2,148 1,857 1,868
Operating profit (OP) 1,565 1,445 1,489
Earnings Before Tax (m) 1,452 1,402 1,445
Net Profit (adj.) (m) 1,138 975 990
Shareholders Equity (m) 12,696 13,388 14,082
Tangible BV (m) 9,964 10,619 11,282
RWA (m) 81,303 79,402 80,702
ROTE 11.8% 9.5% 9.0%
Total Capital Ratio (B3) 15.1% 14.4% 15.0%
Cost/Income 43.6% 44.7% 45.0%
NPL ratio (gross) 11.6% 10.6% 9.3%
P/PPP 5.8 5.0 4.9
P/E (adj.) 10.9 9.5 9.3
P/BV 1.0 0.7 0.7
P/TBV 1.2 0.9 0.8
Dividend Yield 3.3% 3.2% 3.2%
PPPPS 0.19 0.16 0.16
EPS (adj.) 0.10 0.08 0.09
BVPS 1.10 1.16 1.22
TBVPS 0.87 0.92 0.98
DPS 0.03 0.03 0.03
P&L EUR (m) 9M16 9M15 Y/Y (m) Y/Y (%)
GOP 2,460 2,910 (450) (15.5)%
NII 1,631 1,964 (333) (17.0)%
Fees & Comm. 611 701 (90) (12.8)%
Trading 184 223 (39) (17.5)%
Op Expense (1,057) (1,200) 143 (11.9)%
Impairments (256) (472) 216 (45.8)%
% GOP (10.4)% (16.2)% 0 (35.8)%
PBT 941 1,093 (152) (13.9)%
Net Inc. (reported) 731 812 (81) (10.0)%
Net Inc. (adjust): 731 812 (81) (10.0)%
Financial ratios: Sep 2016 Sep 2015 Y/Y (%) YTD (%)
CET1-Phase in (%) 13.24 12.26 98.0 8.0%
Total capital ratio (%) 16.80 15.15 165.0 10.9%
C /I Ratio (%) 47.70 41.50 620.0 14.9%
NPL Coverage (%) 60.50 60.00 50.0 0.8%
NPL Ratio (%) 9.50 10.80 (130.0) (12.0)%
CoR (%) 0.24 0.43 (19.0) (44.2)%
RoRWA (%) 1.30 1.32 (2.0) (1.5)%
RoTE (%) 10.20 9.90 30.0 3.0%
Source Company
0.50
0.60
0.70
0.80
0.90
1.00
1.10
1.20
1.30
Oct 15 Nov 15 Dec 15 Jan 16 Feb 16 Mar 16 Apr 16 May 16 Jun 16 Jul 16 Aug 16 Sep 16 Oct 16
vvdsvdvsdy
BANKIA Stoxx Banks (Rebased)Source: Factset
Shareholders: FROB 65%;
Page 16 of 63
Produced & Distributed by the Members of ESN (see last page of this report)
BBVA
Spain/Banks Analyser
BANKS
BBVA (Buy) 9M16: EUR731m -10% Y/Y
3Q’16 Estimates: EUR874m (+11.4% Y/Y)
The facts: BBVA will release 3Q’16 results tomorrow prior to market opening. and
hold the CC at 09:30 CET. For 3Q we estimate net profit EUR874m, +11.4% vs.
3Q’15.
Our analysis: Last Monday, Garanti Bank released 3Q’16 results, obtaining
EUR400m, in line with our forecasts. BBVA holds 49.9% of Garanti Bank which
contributes 13.8% to the Group’s earnings.
BBVA Business Breakdown. 3Q16e
Consensus
Conclusion: Recommendation reiterated.
Analyst(s):
Javier Bernat, GVC Gaesco Beka
+34 91 436 7816
Buy
6.30
closing price as of 25/10/2016
6.70
Target Price unchanged
Recommendation unchanged
Target price: EUR
Share price: EUR
Reuters/Bloomberg BBVA.MC/BBVA SM
Market capitalisation (EURm) 40,839
Current N° of shares (m) 6,480
Free float 96%
Daily avg. no. trad. sh. 12 mth 47,958
Daily avg. trad. vol. 12 mth (m) 206,448
Price high 12 mth (EUR) 8.19
Price low 12 mth (EUR) 4.76
Abs. perf. 1 mth 14.87%
Abs. perf. 3 mth 21.78%
Abs. perf. 12 mth -22.32%
Key financials (EUR) 12/15 12/16e 12/17e
Total Revenue (m) 23,366 23,956 25,668
Pre-Provision Profit (PPP) (m) 13,283 11,386 12,236
Operating profit (OP) 8,944 7,063 7,846
Earnings Before Tax (m) 4,602 6,068 6,851
Net Profit (adj.) (m) 2,701 3,722 4,202
Shareholders Equity (m) 47,291 50,097 53,342
Tangible BV (m) 40,480 43,286 46,531
RWA (m) 401,346 456,729 487,698
ROTE 6.4% 8.9% 9.4%
Total Capital Ratio (B3) 15.0% 16.3% 16.4%
Cost/Income 43.2% 52.5% 52.3%
NPL ratio (gross) 7.0% 5.5% 4.6%
P/PPP 3.2 3.6 3.3
P/E (adj.) 15.9 11.0 9.7
P/BV 0.9 0.8 0.8
P/TBV 1.1 0.9 0.9
Dividend Yield 2.5% 3.0% 3.9%
PPPPS 2.09 1.76 1.89
EPS (adj.) 0.42 0.57 0.65
BVPS 7.43 7.73 8.23
TBVPS 6.36 6.68 7.18
DPS 0.16 0.19 0.24
BBVA (EURm) 9m16E 9m15 y/y Sep-16 Sep-15 Jun-16 y/y q/q
NII 12,523 12,011 4.3% 4,158 4,490 4,213 (7.4)% (1.3)%
GOP 18,234 17,534 4.0% 6,001 5,980 6,445 0.3% (6.9)%
PPP 8,815 8,510 3.6% 2,915 2,673 3,287 9.0% (11.3)%
PBT 4,984 4,335 0.1 1,593 1,289 2,053 0.2 (0.2)
Net income (adj) (*) 2,706 2,816 (3.9)% 874 784 1,123 11.4% (22.2)%
EPS 0.418 0.447 (6.5)% 0.135 0.124 0.173 8.4% (22.2)%
Estimates GVC Gaesco Beka (*) ex BW impacto integracion Garnati
GARANTI BANK
EURm Q1 2016 Q2 2016 Q3 2016 Q/Q
Net Interest Income 852.1 935.2 904.9 -3.2%
Non Interest Income 405.6 501.8 330.1 -34.2%
Net Revenue 1,257.7 1,436.9 1,235.0 -14.1%
Provision for Loan Losses 208.8 226.7 171.3 -24.4%
Non Interest Expense 636.7 631.3 494.6 -21.7%
Net Income to Common 322.3 469.7 400.3 -14.8%
Basic EPS, GAAP 0.077 0.112 0.095 -14.9%
Total Loans 56,726.3 58,438.8 54,804.1 -6.2%
Net Loans 55,370.2 57,058.7 54,804.1 -4.0%
Total Deposits 49,218.1 52,327.4 49,617.7 -5.2%
Total Liabilities 80,497.5 79,795.1 49,617.7 -37.8%
Efficiency Ratio % 47.5 40.6 40.0 -1.4%
Loans to Deposit Ratio % 115.3 111.7 110.5 -1.1%
Source: Bloomberg
EURm 9m16E Y/Y 3Q16E Y/Y Q/Q
Spain + RE 630 10.5% 220 56.8% (23.9)%
Spain 944 (4.4)% 325 27.0% (15.5)%
Real Estate (314) (24.7)% (105) (9.2)% 10.0%
Mexico 1,446 (5.0)% 478 0.2% (0.2)%
Turkey 521 108.9% 197 162.6% 3.0%
Rest of Eurasia 114 72.2% 38 67.7% (33.8)%
South America 582 (16.0)% 189 (13.6)% (10.9)%
USA 300 (23.8)% 122 3.7% (5.6)%
Estimates GVC Gaesco Beka
EURm 9m16E 9m15 Y/Y 3Q16E Y/Y Q/Q
Revenue 18,207 17,534 3.8% 4,228 (5.8)% 0.4%
NII 12,593 12,011 4.8% na na na
PPP 8,705 8,510 2.3% na na na
Netr Profit 2,684 2,815 (4.7)% 852 8.7% (24.1)%
Source Thomsonreuters
4.5
5.0
5.5
6.0
6.5
7.0
7.5
8.0
Oct 15 Nov 15 Dec 15 Jan 16 Feb 16 Mar 16 Apr 16 May 16 Jun 16 Jul 16 Aug 16 Sep 16 Oct 16
vvdsvdvsdy
BBVA Stoxx Banks (Rebased)Source: Factset
Shareholders: BlackRock 4%;
Page 17 of 63
Produced & Distributed by the Members of ESN (see last page of this report)
Stora Enso
Q3/2015a Growth
EURm Q3a vs. Cons. OP Cons. Diff.
Paper 792 -5% 888 835 6% 911 -3%
Biomaterials 334 -3% 400 344 16% 392 2%
Wood Products 385 -2% 398 391 2% 375 6%
Consumer Board 599 -3% 644 620 4% 608 6%
Packaging Solutions 259 -1% 243 262 -7% 226 8%
Other 559 #DIV/0! 675 #DIV/0! 563 20%
Inter-segment sales -535 #DIV/0! -682 #DIV/0! -575 19%
Total sales 2,393.0 -2% 2,566 2,451.0 5% 2,500 3%
Sales growth
EBIT
Paper 53 36% 26.0 39 -33% 6 333%
Biomaterials 43 -9% 60.0 47 28% 100 -40%
Wood Products 22 -8% 24.0 24 0% 22 9%
Consumer Board 67 16% 79.0 58 36% 80 -1%
Packaging Solutions 21 -19% 20.0 26 -23% 18 11%
Other 13 8% 5.0 12 -58% 20 -75%
Inter-segment sales #DIV/0! 0.0 #DIV/0! 0 #DIV/0!
Total EBIT 219.0 5% 214.0 208.0 3% 246.0 -13%
Total EBIT margin 9.2 % 8.3 % 8.5 % 9.8 %#DIV/0!
PTP 170 7% 159.0 159.0 0% 128.0 24.2 %
EPS 0.17 6% 0.16 0.16 -2% 0.13 20.3 %#DIV/0!
DPS #DIV/0!
Source : OP and VaraResearch
Q3/2016e
Stora Enso
Finland/Basic Resources Analyser
BASIC RESOURCES
Stora Enso (Accumulate) 3Q’16 Estimates: EUR874m (+11.4% Y/Y)
Target price upgraded to EUR 9.30
The facts: Stora Enso's comparable operating profit (EUR 219m) in Q3 came in
slightly higher than our forecast (EUR 214m) and consensus (EUR 208m). The
company’s cash flow was still solid – the operating cash flow in Q3 was EUR
390m and the amount of interest-bearing net debt reduced by nearly EUR 400m
compared to the end of Q2.
Our analysis: The absolute profit level and profit contribution of the Paper
division increased significantly compared to Q3/15. A favourable trend of variable
costs and internal efficiency that has improved thanks to efficiency measures and
structural changes resulted in an operating EBIT margin of 6.7% (0.7% in Q3/15).
Stora Enso will organise a Capital Markets Day in London on 17 November. We
repeat our view that the company could change its dividend policy towards cash
flow orientation, and a possible point of time for the change in the dividend policy
could be the Capital Markets Day.
We estimate that Stora Enso’s results will remain relatively stable in 2017 and
2018. The recent USD appreciation, SEK depreciation and the stabilisation of
pulp prices after a long decline are potential short-term positive share price
drivers in addition to our expectations for the Capital Markets Day.
Conclusion & Action: As a result of the revisions to our earnings forecasts, we
are raising our target price to EUR 9.30 (from EUR 9.10). The target corresponds
to the upper quartile of the company’s five-year EV/EBITDA (6.9) on 2016
forecasts. We reiterate the Accumulate recommendation.
Analyst(s):
Henri Parkkinen, OP Corporate Bank
+358 10 252 4409
Accumulate
8.63
closing price as of 25/10/2016
9.30
9.10from Target Price: EUR
Recommendation unchanged
Target price: EUR
Share price: EUR
Reuters/Bloomberg STERV.HE/STERV FH
Market capitalisation (EURm) 6,810
Current N° of shares (m) 790
Free float 100%
Daily avg. no. trad. sh. 12 mth 2,972
Daily avg. trad. vol. 12 mth (m) 90,737
Price high 12 mth (EUR) 9.47
Price low 12 mth (EUR) 6.65
Abs. perf. 1 mth 6.15%
Abs. perf. 3 mth 7.41%
Abs. perf. 12 mth -1.37%
Key financials (EUR) 12/15 12/16e 12/17e
Sales (m) 10,040 9,772 9,849
EBITDA (m) 1,447 1,403 1,454
EBITDA margin 14.4% 14.4% 14.8%
EBIT (m) 896 891 949
EBIT margin 8.9% 9.1% 9.6%
Net Profit (adj.)(m) 495 488 580
ROCE 9.6% 9.5% 10.1%
Net debt/(cash) (m) 3,388 2,842 2,616
Net Debt/Equity 0.6 0.5 0.4
Debt/EBITDA 2.3 2.0 1.8
Int. cover(EBITDA/Fin. int) 5.4 5.2 7.3
EV/Sales 1.0 1.0 1.0
EV/EBITDA 6.9 6.9 6.5
EV/EBITDA (adj.) 6.9 6.9 6.5
EV/EBIT 11.2 10.8 9.9
P/E (adj.) 13.4 14.0 11.7
P/BV 1.2 1.2 1.1
OpFCF yield 5.5% 3.6% 11.9%
Dividend yield 3.8% 4.1% 4.6%
EPS (adj.) 0.63 0.62 0.74
BVPS 6.98 7.27 7.66
DPS 0.33 0.35 0.40
5.5
6.0
6.5
7.0
7.5
8.0
8.5
9.0
9.5
10.0
10.5
Sep 15 Oct 15 Nov 15 Dec 15 Jan 16 Feb 16 Mar 16 Apr 16 May 16 Jun 16 Jul 16 Aug 16 Sep 16 Oct 16
vvdsvdvsdy
STORA ENSO Stoxx Basic Resources (Rebased)Source: Factset
Shareholders: FAM AB 10%; Solidium Oy 12%; Social
Insurance Institution of Finland 3%;
Page 18 of 63
Produced & Distributed by the Members of ESN (see last page of this report)
UPM-Kymmene
Q3/2015a Growth
EURm Q3a vs. Cons. OP Cons. Diff. Low High
Biorefining 541 -1% 562 549 2% 502 605 554 1%
Energy 89 -4% 84 93 -10% 74 119 112 -25%
Raflatac 355 -2% 359 364 -1% 353 371 353 2%
Paper Asia 305 -8% 310 331 -6% 282 366 286 8%
Paper ENA 1,234 3% 1,215 1,201 1% 1,172 1,244 1,279 -5%
Plywood 106 -2% 112 108 4% 100 116 105 7%
Other 65 -32% 95 95 0% 75 101 97 -2%
Total sales 2,445 -1% 2,437 2,481.0 -2% 2,437 2,559 2,530 -4%
Sales growth
EBIT
Biorefining 94 0% 110.0 94 17% 68 110 122 -10%
Energy 30 7% 26.0 28 -7% 20 45 45 -42%
Raflatac 35 0% 30.0 35 -14% 23 37 29 3%
Paper Asia 36 20% 16.0 30 -47% 16 36 12 33%
Paper ENA 113 117% 39.0 52 -25% 21 73 9 333%
Plywood 12 -8% 12.0 13 -8% 10 17 11 9%
Other -4 n.a. 5.0 5 0% -14 14 14 -64%
Total EBIT 314.0 25% 236.0 251.0 -6% 211 284 240.0 -2%
Total EBIT margin 12.8 % 9.7 % 10.1 % 9.5 %#DIV/0!
PTP 288 22% 220.0 236.0 -7% 196 268 225.0 -2.2 %
EPS 0.44 26% 0.32 0.35 -8% 0.29 0.41 0.35 -8.9 %#DIV/0!
DPS #DIV/0!
Source : OP and UPM-Kymmene
Q3/2016e
UPM-Kymmene
Finland/Basic Resources Analyser
BASIC RESOURCES
UPM-Kymmene (Neutral) Target price upgraded to EUR 9.30
Still something positive for the rest of the year?
The facts: UPM-Kymmene’s comparable EBIT for Q3 (EUR 314m) came in
markedly above our forecast (EUR 236m) and consensus (EUR 251m) and it also
exceeded the upper end of consensus. In terms of divisions, the definite positive
surprise in the Q3 results came from the Paper ENA division that benefited from
solid seasonality, but in particular, high efficiency and exceptionally low fixed
costs.
Our analysis: The company has initiated a competitiveness review concerning
the European graphic paper business. According to our estimate, GBP
depreciation and a weaker predictability of the market in the UK due to Brexit
increase the probability that UPM-Kymmene’s production facilities in the UK
(Shotton and Caledonian) are part of possible structural arrangements.
As a result of forecast revisions, our EBIT forecast for 2017 is increased by 6%
and our EBIT forecast for 2018 is increased by 8%. Our dividend projections for
2016–2018 are unchanged (EUR 0.90, EUR 0.95 and EUR 0.95).
Conclusion & Action: We are raising our target price to EUR 21.00 (from EUR
19.50) and downgrading our recommendation Neutral (from Accumulate). The
upgraded target price results from forecast revisions and updated balance sheet
data. The target corresponds to the upper quartile of the company’s five-year
EV/EBITDA (7.4) on 2016 forecasts. In our opinion, the upside is more limited
than before after the strong share price movement (+11%) that took place
yesterday but expectations about modifying the balance sheet and the significant
extra dividend potential indicated by our calculations are likely to maintain the
share in a positive light.
Analyst(s):
Henri Parkkinen, OP Corporate Bank
+358 10 252 4409
Neutral
21.02
closing price as of 25/10/2016
21.00
19.50from Target Price: EUR
from Accumulate
Target price: EUR
Share price: EUR
Reuters/Bloomberg UPM1V.HE/UPM1V FH
Market capitalisation (EURm) 11,219
Current N° of shares (m) 534
Free float 100%
Daily avg. no. trad. sh. 12 mth 1,466
Daily avg. trad. vol. 12 mth (m) 94,720
Price high 12 mth (EUR) 21.02
Price low 12 mth (EUR) 13.77
Abs. perf. 1 mth 11.87%
Abs. perf. 3 mth 17.43%
Abs. perf. 12 mth 24.67%
Key financials (EUR) 12/15 12/16e 12/17e
Sales (m) 10,138 9,729 9,506
EBITDA (m) 1,422 1,650 1,573
EBITDA margin 14.0% 17.0% 16.5%
EBIT (m) 916 1,111 1,033
EBIT margin 9.0% 11.4% 10.9%
Net Profit (adj.)(m) 744 841 756
ROCE 7.7% 9.9% 9.0%
Net debt/(cash) (m) 3,132 2,217 2,118
Net Debt/Equity 0.4 0.3 0.2
Debt/EBITDA 2.2 1.3 1.3
Int. cover(EBITDA/Fin. int) 21.2 24.3 24.6
EV/Sales 1.2 1.4 1.4
EV/EBITDA 8.7 8.1 8.5
EV/EBITDA (adj.) 8.7 8.1 8.5
EV/EBIT 13.5 12.1 12.9
P/E (adj.) 12.4 13.3 14.8
P/BV 1.2 1.3 1.3
OpFCF yield 8.5% 9.5% 6.2%
Dividend yield 3.6% 4.3% 4.5%
EPS (adj.) 1.39 1.58 1.42
BVPS 14.88 15.71 16.22
DPS 0.75 0.90 0.95
10
12
14
16
18
20
22
Sep 15 Oct 15 Nov 15 Dec 15 Jan 16 Feb 16 Mar 16 Apr 16 May 16 Jun 16 Jul 16 Aug 16 Sep 16 Oct 16
vvdsvdvsdy
UPM-KYMMENE Stoxx Basic Resources (Rebased)Source: Factset
Shareholders: Ilmarinen Mutual Pension Insurance
Company 1.33%; Varma Mutual Pension
Insurance Company 1.30%; The State
Pension Fund 0.90%;
Page 19 of 63
Produced & Distributed by the Members of ESN (see last page of this report)
Italian Financial Services
Analyser
FINANCIAL SERVICES
Still something positive for the rest of the year?
AM: net inflows c. EUR 5.8bn in September
The facts: According to Assogestioni’s monthly data, the net inflows in asset
management industry were c EUR 5.8bn in September, -33% Y/Y.
Our analysis: the decrease Y/Y was mainly due to portfolio management
(EUR 581m vs EUR 5.9bn of last year), while open-end funds net inflows
achieved EUR 5.2bn vs EUR 2.8bn in September 2015. The performance was
still negative in equity funds (EUR -678m) and in hedge funds (EUR -57m),
while monetary funds (EUR 888m) were positive, after five months of negative
net inflows in a row. The bond funds were particularly strong (EUR 2.2bn vs
EUR -1.3bn in September 2015). The flexible fund net inflows were still
positive, but in decrease around EUR 1bn Y/Y. Total net inflows were c. EUR
42bn YTD at the end of September compared to EUR 116bn in the same
period of last year. The total funds under management achieved EUR 1,914bn
vs EUR 1,778bn in 2015.
Conclusion & Action: September was another difficult months compared to
2015, although net inflows were positive. We remind readers that the
companies in the asset gatherers sector we cover have already published
September data, which were still strong.
---------- Stoxx Financial Services,
DJ Stoxx TMI rebased on sector
Analyst(s):
Enrico Esposti, CIIA, Banca Akros
+39 02 4344 4022
340
360
380
400
420
440
460
480
Oct 15 Nov 15 Dec 15 Jan 16 Feb 16 Mar 16 Apr 16 May 16 Jun 16 Jul 16 Aug 16 Sep 16 Oct 16
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Page 20 of 63
Produced & Distributed by the Members of ESN (see last page of this report)
Heineken
Netherlands/Food & Beverage Analyser
FOOD & BEVERAGE
Heineken (Buy) AM: net inflows c. EUR 5.8bn in September Buy
79.00
closing price as of 25/10/2016
100.00
Target Price unchanged
Recommendation unchanged
Target price: EUR
Share price: EUR
Reuters/Bloomberg HEIN.AS/HEIA NA
Market capitalisation (EURm) 45,079
Current N° of shares (m) 571
Free float 38%
Daily avg. no. trad. sh. 12 mth 673
Daily avg. trad. vol. 12 mth (m) 75,694
Price high 12 mth (EUR) 85.23
Price low 12 mth (EUR) 71.08
Abs. perf. 1 mth -0.19%
Abs. perf. 3 mth -5.97%
Abs. perf. 12 mth -1.25%
Key financials (EUR) 12/15 12/16e 12/17e
Sales (m) 20,511 20,528 21,454
EBITDA (m) 4,669 4,639 4,964
EBITDA margin 22.8% 22.6% 23.1%
EBIT (m) 3,075 3,154 3,429
EBIT margin 15.0% 15.4% 16.0%
Net Profit (adj.)(m) 2,045 2,116 2,319
ROCE 8.8% 8.6% 9.2%
Net debt/(cash) (m) 10,658 9,890 9,159
Net Debt/Equity 0.7 0.5 0.5
Debt/EBITDA 2.3 2.1 1.8
Int. cover(EBITDA/Fin. int) 13.3 14.0 15.6
EV/Sales 2.7 2.7 2.5
EV/EBITDA 11.9 11.8 10.9
EV/EBITDA (adj.) 11.9 11.8 10.9
EV/EBIT 18.1 17.4 15.8
P/E (adj.) 22.1 21.3 19.4
P/BV 3.3 3.0 2.8
OpFCF yield 3.9% 3.3% 3.7%
Dividend yield 1.6% 2.1% 2.6%
EPS (adj.) 3.57 3.71 4.06
BVPS 23.62 26.13 28.52
DPS 1.30 1.67 2.03
Four comforting positives in 3Q16 trading update
The facts: Heineken reports a 3Q16 organic consolidated beer volume growth of
2.0%, slightly ahead of consensus estimates which were in the 1.4-1.6% range.
The company also mentions that CEO Jean-Francois van Boxmeer will be
nominated to be re-appointed for his fourth term.
The company says that it keeps its full year margin expectations unchanged
despite adverse economic / currency headwinds in some markets. It says that
based on the 20 October currency rates, the negative impact on consolidated
operating profit BEIA is EUR 215m and on net profit BEIA EUR 115m. These
numbers are slightly ahead of the guidance of 3 months ago (respectively EUR
200m and EUR 110m).
Our analysis: We see four positives in the trading update.
At first, the organic volume growth (2.0%) remains healthy despite difficult YoY
comps versus 3Q15 of 5.4%. In 3Q16, Asia-Pacific grew by 15.1% based on
strong growth in Vietnam and Cambodia. Also Europe grew ahead of
expectations as volume was up 0.6% (consensus: -0.2%). Americas showed
growth of 3% mainly based on Mexico and the Caribbean, although consensus
was 3.6%. US performed weak in the Heineken brand. In Africa/ME/Russia
volumes declined by 3.6%, slightly more than expected (-3.0%) due to weakness
in Russia, Egypt and DRC. Nigeria in fact showed low single digit growth.
The second positive is the nomination for re-appointment of Jean-Francois van
Boxmeer. He has been head of the company in its most important transformation
to a real global brewer with more target-setting to disciplined cost control
programs and revenue management. Successors are available, but probably the
‘fight’/selection of the best one has not yet finalized. Although a re-appointment
for a fourth term does not fit into modern governance practices, for the Heineken
structure this decision is not un-logical.
The third positive is the statement that the margin guidance for the year (40bps)
remains intact. With initial margin pressure from strong depreciation of the
Nigerian Naira and Pound Sterling, probably some investors had become
uncertain on this. Heineken’s disciplined efficiency programs, which are already
planned for the next couple of years, give a healthy foundation for forecasting.
With innovation and revenue management initiatives on top of that, the company
feels comfortable with this guidance.
The fourth positive is related to this. The impact of currency changes is slightly
raised versus three months ago while we expected a bit more. The impact is
always calculated at the time of publication and in August (three months ago) part
of the weakness of Naira and Pound Sterling was already there. Brazilian Real
and Mexican peso have improved.
Conclusion & Action: This 3Q16 trading update gives comfort to a defensive
stock as Heineken. Although revenue management in order to compensate for
higher local input costs in Nigeria and the UK in particular will take time, the
margin guidance shows that the disciplined medium/long-term policies in the
company on benchmarking and innovation remain very successful. EV/EBITDA of
Heineken is lagging 5% against peers and PER circa 15-20%. We remain positive
on this stock as a potential EUR 170 stock in 2022, despite Sterling and Naira
volatility.
70
72
74
76
78
80
82
84
86
Oct 15 Nov 15 Dec 15 Jan 16 Feb 16 Mar 16 Apr 16 May 16 Jun 16 Jul 16 Aug 16 Sep 16 Oct 16
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HEINEKEN Stoxx Food & Beverage (Rebased)Source: Factset Shareholders: Heineken Holding 50%; CB Equity 13%;
Analyst(s):
Gerard Rijk, NIBC Markets N.V.
+ 31 (0)20 550 8572
Page 21 of 63
Produced & Distributed by the Members of ESN (see last page of this report)
Ahlstrom
Q3/2016a
M€ OP Cons. Diff. OP Cons. Diff.
Filtration & Performance 172 #DIV/0! 168 686 #DIV/0!
Specialties 103 #DIV/0! 104 411 #DIV/0!
Other operations 9 #DIV/0! 11 37 #DIV/0!
Internal sales -12 #DIV/0! -16 -54 #DIV/0!
Sales 273 269 1% 267 1,080 1,080 0%
Sales growth 2.1 % 0.8 % 0.5 % 0.5 %
Total EBIT 19.1 17.1 12% 9.9 64.5 62.7 3%
EBIT excl. NRI 21.6 11.2 75.1
Total EBIT margin 7.0 % 6.4 % 3.7 % 6.0 % 5.8 %
EBIT margin excl. NRI 7.9 % 4.2 % 7.0 %
PTP 15.1 13.4 13% 8.5 49.2 51.2 -4%
EPS 0.18 0.23 -22% 0.06 0.52 0.65 -20%
DPS 0.32 0.32 0%
Source : OP and FactSet
Q3/2016e 2016e
Ahlstrom
Finland/General Industrials Analyser
GENERAL INDUSTRIALS
Ahlstrom (Neutral) Four comforting positives in 3Q16 trading update
Q3 preview: Sharpest price rally already behind
The facts: Ahlstrom releases its figures for July–September on Friday, 28
October, at around 7:30 CET. It is rare that the company has upgraded its full-
year profit guidance three times during Q3, albeit one of the upgrades was purely
technical and related to the cancelled divestment of the Building and Wind
business unit. The outlook has clearly improved in a short period of time based on
continued improvement in operational performance as well as the drop in variable
costs (such as raw materials) which has continued longer than estimated. Sales
growth is still subdued. According to the valid guidance, full-year sales from
continuing operations are now expected to be in the range of EUR 1,060–1,100m
and the adjusted operating margin in the range of 6.5–7.5%.
Our analysis: We have not made any revisions to our forecasts in this context.
Our forecasts are in line with the mid-point of the guidance range. Thus we do not
expect any major guidance revisions in connection with the Q3 report but some
fine-tuning may be seen.
Ahlstrom's underlying EBIT has improved in 11 consecutive quarters, and based
on the recent indications it strongly appears that Q3 will increase the number to a
full dozen. We expect sales to turn to 2% growth in Q3 with the FX impact diluting
euro-denominated sales less than in Q2 (consensus: +0.8%). Our forecast for
adjusted EBIT is EUR 21.6m (+94% YoY) and for reported EBIT EUR 19.1m as
we estimate that restructuring costs will weigh on reported EBIT. The consensus
forecast collected by FactSet for Q3 EBIT is EUR 17.1m. The forecast range is
EUR 16–22m but it does not specify any adjusting items.
Conclusion & Action: Ahlstrom's share price has gained 61% in three months
and 76% YTD. We estimate that the strongest short-term upside potential has
now been used and downgrade our recommendation to Neutral (from Buy). We
are revising our target price up to EUR 13 (from EUR 12.50) as the valuation level
of peers has edged up. The target price leans on our 2017 earnings forecasts as
well as on the EV/EBITDA valuation derived from the most relevant peers (~6.3x).
Analyst(s):
Niclas Catani, OP Corporate Bank
+358 10 252 8780
Neutral
12.83
closing price as of 25/10/2016
13.00
12.50from Target Price: EUR
from Buy
Target price: EUR
Share price: EUR
Reuters/Bloomberg AHL1V.HE/AHL1V FH
Market capitalisation (EURm) 599
Current N° of shares (m) 47
Free float 88%
Daily avg. no. trad. sh. 12 mth 7
Daily avg. trad. vol. 12 mth (m) 132
Price high 12 mth (EUR) 13.02
Price low 12 mth (EUR) 6.75
Abs. perf. 1 mth 16.64%
Abs. perf. 3 mth 61.79%
Abs. perf. 12 mth 80.96%
Key financials (EUR) 12/15 12/16e 12/17e
Sales (m) 1,075 1,080 1,100
EBITDA (m) 96 115 131
EBITDA margin 9.0% 10.7% 11.9%
EBIT (m) 22 65 82
EBIT margin 2.0% 6.0% 7.5%
Net Profit (adj.)(m) 29 39 44
ROCE 7.2% 11.9% 13.4%
Net debt/(cash) (m) 196 160 197
Net Debt/Equity 0.7 0.5 0.7
Debt/EBITDA 2.0 1.4 1.5
Int. cover(EBITDA/Fin. int) high high high
EV/Sales 0.4 0.6 0.6
EV/EBITDA 4.6 5.8 5.4
EV/EBITDA (adj.) 3.6 5.3 5.4
EV/EBIT 20.2 10.3 8.6
P/E (adj.) 11.8 15.4 13.5
P/BV 1.1 1.9 2.3
OpFCF yield 15.1% 11.0% 12.0%
Dividend yield 2.4% 2.5% 3.1%
EPS (adj.) 0.61 0.84 0.95
BVPS 6.32 6.67 5.58
DPS 0.31 0.32 0.40
6
7
8
9
10
11
12
13
14
Sep 15 Oct 15 Nov 15 Dec 15 Jan 16 Feb 16 Mar 16 Apr 16 May 16 Jun 16 Jul 16 Aug 16 Sep 16 Oct 16
vvdsvdvsdy
AHLSTROM OMXH (Rebased)Source: Factset
Shareholders: Vimpu Intressenter Ab 12%; AC Invest
Six B.V. 11%; Varma Mutual Pension
Insurance Co 3%;
Page 22 of 63
Produced & Distributed by the Members of ESN (see last page of this report)
Amplifon
Italy/Healthcare Analyser
HEALTHCARE
Amplifon (Accumulate) Q3 preview: Sharpest price rally already behind
Q3 16 preview
The facts: Q3 16 results are due out today (Conference call at 3:00 pm CET).
Q3 16 estimates: as in the previous months, we expect positive sales growth
across all 3 regions.
In terms of profitability, the expected stable operating margins in APAC and the
further profitability improvement in EMEA should be offset by the lower margins in
AMERICAS affected by the strong increase in marketing expenses.
The following table shows our sales and profitability forecast.
AMPLIFON: Q3 16e and 9M 16e preview
Q3 15a Q3 16e %Chg. 9M 15a 9M 16e %Chg.
Sales 233.5 253.7 +8.7% 733.7 797.8 +8.7%
EBITDA adj 29.7 32.4 +9.1% 101.5 117.9 +16.1%
Margin % 12.7% 12.8% 13.8% 14.8%
Source: Company Data and BANCA AKROS estimates
Conclusion & Action: we confirm our positive stance on the stock while we wait
to verify our estimates based on the results and on the management indications
during the conference call (Accumulate recommendation confirmed).
Analyst(s):
Paola Saglietti, Banca Akros
+39 02 4344 4287
Accumulate
9.15
closing price as of 25/10/2016
9.90
Target Price unchanged
Recommendation unchanged
Target price: EUR
Share price: EUR
Reuters/Bloomberg AMPF.MI/AMP IM
Market capitalisation (EURm) 2,063
Current N° of shares (m) 226
Free float 45%
Daily avg. no. trad. sh. 12 mth 426
Daily avg. trad. vol. 12 mth (m) 2,124
Price high 12 mth (EUR) 9.53
Price low 12 mth (EUR) 6.76
Abs. perf. 1 mth 0.77%
Abs. perf. 3 mth 4.57%
Abs. perf. 12 mth 27.26%
Key financials (EUR) 12/15 12/16e 12/17e
Sales (m) 1,034 1,111 1,189
EBITDA (m) 165 185 208
EBITDA margin 16.0% 16.7% 17.5%
EBIT (m) 111 126 143
EBIT margin 10.7% 11.3% 12.0%
Net Profit (adj.)(m) 47 62 74
ROCE 9.0% 9.7% 10.6%
Net debt/(cash) (m) 205 180 135
Net Debt/Equity 0.4 0.3 0.2
Debt/EBITDA 1.2 1.0 0.6
Int. cover(EBITDA/Fin. int) 7.2 9.1 10.9
EV/Sales 2.0 2.1 1.9
EV/EBITDA 12.3 12.4 10.8
EV/EBITDA (adj.) 12.3 12.4 10.8
EV/EBIT 18.3 18.2 15.7
P/E (adj.) 37.2 32.1 27.3
P/BV 3.6 3.7 3.4
OpFCF yield 1.5% 4.0% 2.4%
Dividend yield 0.5% 0.5% 0.5%
EPS (adj.) 0.22 0.29 0.34
BVPS 2.23 2.45 2.73
DPS 0.04 0.04 0.05
6.0
6.5
7.0
7.5
8.0
8.5
9.0
9.5
10.0
Sep 15 Oct 15 Nov 15 Dec 15 Jan 16 Feb 16 Mar 16 Apr 16 May 16 Jun 16 Jul 16 Aug 16 Sep 16 Oct 16
vvdsvdvsdy
AMPLIFON FTSE Italy STAR (Rebased)Source: Factset
Shareholders: Ampliter N.V. 55%;
Page 23 of 63
Produced & Distributed by the Members of ESN (see last page of this report)
Bayer
Germany/Healthcare Analyser
HEALTHCARE
Bayer (Buy) Q3 16 preview
Q3 results: Covestro strong, slight guidance upgrade
The facts: On October 26th
, Bayer reported Q3 2016 results as shown below. The
company raised group guidance for core EPS to the upper end of the previously
announced range: it is now expecting growth in the high-single-digit percentage
range (previously: mid- to high-single-digit percentage range). Group EBITDA
guidance remains unchanged, although guidance for the Covestro subgroup was
upgraded (the company now expects adjusted EBITDA of €1.9bn (previously: at
least on prior year level of €1.7bn), while slightly downgrading profit expectations
for its Animal Health business, where it now expects adjusted EBITDA on the
prior year level (previously: low- to mid-single-digit growth).
Bayer Q3 2016 results
EUR m Q3 2016 Q3 2016e equinet Q3 2016e
consensus Q3 2015
Sales
Group Sales 11,262 11,492 11,289 11,004
Pharmaceuticals 4,152 4,295 4,146 3,870
Cropscience 2,057 1,970 2,091 2,081
Covestro 3,004 3,020 2,973 3,009
Xarelto 772 799 747 571
Eylea 409 452 427 320
Kogenate 302 298 301 309
Betaseron 163 192 187 204
EBITDA
Group (adj) 2,682 2,436 2,532 2,530 Pharmaceuticals (adj) 1,421 1,290 1,359 1,253
Cropscience (adj) 318 296 297 316
Covestro (adj) 564 490 482 472
Special Items -122 0 -74 -204
EBITDA (reported) 2,560 2,436 2,448 2,332
EPS Core (EUR) 1.73 1.51 1.66 1.69
Source: Bayer, equinet Research
Our analysis: The beat versus consensus in Q3 2016 appears chiefly attributable
to continued strength of Covestro. Profitability of the pharmaceutical segment
also came in ahead of our expectations, although this appears to be a phasing
issue, with FY 2016 guidance for this segment unchanged. The modest upgrade
to group EPS guidance appears to be due to factors “below the line”, as group
EBITDA guidance remains unchanged. We note that the financial result tends to
benefit from share price weakness due to lower long-term incentive plan charges.
Conclusion & Action: Given that Bayer had held a Meet Management event as
recently as late September, major changes to guidance were unlikely in our view.
Against this backdrop, we regard the strength of Covestro and slight EPS
guidance upgrade as the best possible outcome for the Q3 2016 results. We
expect a slightly positive share price reaction to strong results, albeit likely muted
by lingering concerns over the proposed acquisition of Monsanto.
Analyst(s):
Marietta Miemietz CFA, equinet Bank
+49-69-58997-439
Buy
91.50
closing price as of 25/10/2016
118.00
Target Price unchanged
Recommendation unchanged
Target price: EUR
Share price: EUR
Reuters/Bloomberg BAYG.DE/BAYN GR
Market capitalisation (EURm) 75,666
Current N° of shares (m) 827
Free float 100%
Daily avg. no. trad. sh. 12 mth 2,435
Daily avg. trad. vol. 12 mth (m) 149,710
Price high 12 mth (EUR) 126.85
Price low 12 mth (EUR) 84.42
Abs. perf. 1 mth 0.02%
Abs. perf. 3 mth -1.21%
Abs. perf. 12 mth -21.39%
Key financials (EUR) 12/15 12/16e 12/17e
Sales (m) 46,085 46,684 48,709
EBITDA (m) 9,573 10,402 11,370
EBITDA margin 20.8% 22.3% 23.3%
EBIT (m) 6,241 7,318 8,377
EBIT margin 13.5% 15.7% 17.2%
Net Profit (adj.)(m) 5,647 5,988 6,526
ROCE 9.3% 10.2% 11.2%
Net debt/(cash) (m) 18,075 16,151 13,320
Net Debt/Equity 0.7 0.6 0.5
Debt/EBITDA 1.9 1.6 1.2
Int. cover(EBITDA/Fin. int) 12.9 11.5 13.5
EV/Sales 2.6 2.1 2.0
EV/EBITDA 12.5 9.4 8.4
EV/EBITDA (adj.) 11.5 9.0 8.3
EV/EBIT 19.1 13.4 11.4
P/E (adj.) 17.0 12.6 11.6
P/BV 3.9 3.0 2.8
OpFCF yield 4.2% 7.3% 8.6%
Dividend yield 2.5% 2.7% 2.8%
EPS (adj.) 6.83 7.24 7.89
BVPS 29.34 30.39 32.72
DPS 2.26 2.50 2.60
80
85
90
95
100
105
110
115
120
125
130
Sep 15 Oct 15 Nov 15 Dec 15 Jan 16 Feb 16 Mar 16 Apr 16 May 16 Jun 16 Jul 16 Aug 16 Sep 16 Oct 16
vvdsvdvsdy
BAYER DAX30 (Rebased)Source: Factset
Shareholders:
Page 24 of 63
Produced & Distributed by the Members of ESN (see last page of this report)
Oriola-KD
M€ Q3a vs. Cons. OP Cons.
Consumer 191.1 #DIV/0! 192.5
Services 278.5 #DIV/0! 262.3
Healthcare 10.7 #DIV/0! 11.6
Total sales 395.8 3% 380.3 386
Sales growth
EBIT
Consumer 9.5 #DIV/0! 10.4
Services 9.0 #DIV/0! 9.2
Healthcare 0.0 #DIV/0! -0.5
Total EBIT 17.0 -3% 17.4 17.5
EBIT margin
Consumer 5.0 % 5.4 % #DIV/0!
Services 3.2 % 3.5 % #DIV/0!
Healthcare 0.0 % -4.3 % #DIV/0!
Total EBIT margin 4.3 % 4.6 % 4.5 %
PTP 15.6 -3% 15.9 16.1
EPS 0.07 0% 0.07 0.07
DPS
Source : OP and Inquiry Financial
Q3/2016e
Oriola-KD
Finland/Healthcare Analyser
HEALTHCARE
Oriola-KD (Accumulate) Q3 results: Covestro strong, slight guidance upgrade
Additional investments weigh on cash flow
The facts: The key lines of Oriola-KD's Q3 results nearly matched expectations.
Profitability was slightly weaker than we estimated in the Consumer and Services
businesses, but the better-than-expected quarter of Healthcare offset the big
picture nicely. The start-up costs of pharmacies burdened the profitability of the
Consumer segment, and the company commented that new pharmacies would be
set up in Q4 as well. Full-year guidance remained unchanged (sales at the 2015
level and EBIT expected to be at the 2015 level or to increase).
Our analysis: The only flaw in the otherwise stable report was another new
investment programme. In 2015, the company decided on additional investments
of around EUR 20m for 2015–2018 and has now decided to make new
investments worth EUR 22m in Sweden. Investments will altogether amount to
EUR 35m per year on average in 2016–2018 (OP estimate: EUR 20m per year).
The new investments concern the automation and IT environment of the new
logistics centre in Sweden. The delivery volumes in Sweden will grow next year
when Oriola will start to distribute Meda's products. In addition, Oriola says that
the number of product lines will grow rapidly in Sweden as the offerings become
more versatile, which will also require increasing automation.
Conclusion & Action: In an industry witnessing slow growth cash flow
generation plays a key role, and the sizeable investments naturally erode it.
Profitability should basically improve with the investments, and we are revising
our margin forecasts slightly up. Our dividend projections are, in turn, revised
moderately down as a result of the growing capex. The changes in the margin
and investments offset each other, and the price indicated by DCF (EUR 5, 50%)
remains intact. The value according to the EV/EBITDA multiple (EUR 4.60; 50%)
also remains unchanged and we reiterate our target price of EUR 4.80. Following
the mild share price rise, we are downgrading our recommendation to Accumulate
(from Buy).
Analyst(s):
Kimmo Stenvall, OP Corporate Bank
+358 10 252 4561
Accumulate
4.26
closing price as of 25/10/2016
4.80
Target Price unchanged
from Buy
Target price: EUR
Share price: EUR
Reuters/Bloomberg OKDBV.HE/OKDBV FH
Market capitalisation (EURm) 773
Current N° of shares (m) 181
Free float 100%
Daily avg. no. trad. sh. 12 mth 89
Daily avg. trad. vol. 12 mth (m) 285
Price high 12 mth (EUR) 4.60
Price low 12 mth (EUR) 3.75
Abs. perf. 1 mth 3.90%
Abs. perf. 3 mth 1.19%
Abs. perf. 12 mth 5.19%
Key financials (EUR) 12/15 12/16e 12/17e
Sales (m) 1,626 1,644 1,695
EBITDA (m) 85 92 90
EBITDA margin 5.2% 5.6% 5.3%
EBIT (m) 63 60 64
EBIT margin 3.8% 3.7% 3.8%
Net Profit (adj.)(m) 44 43 47
ROCE 21.0% 18.6% 18.1%
Net debt/(cash) (m) 7 6 11
Net Debt/Equity 0.0 0.0 0.0
Debt/EBITDA 0.1 0.1 0.1
Int. cover(EBITDA/Fin. int) 15.2 23.6 30.0
EV/Sales 0.5 0.5 0.5
EV/EBITDA 9.3 8.5 8.7
EV/EBITDA (adj.) 9.3 8.5 8.7
EV/EBIT 12.6 13.0 12.3
P/E (adj.) 17.7 17.9 16.6
P/BV 4.0 3.6 3.3
OpFCF yield 8.8% 4.7% 4.7%
Dividend yield 3.1% 3.5% 4.0%
EPS (adj.) 0.24 0.24 0.26
BVPS 1.07 1.18 1.29
DPS 0.13 0.15 0.17
3.60
3.70
3.80
3.90
4.00
4.10
4.20
4.30
4.40
4.50
4.60
4.70
Sep 15 Oct 15 Nov 15 Dec 15 Jan 16 Feb 16 Mar 16 Apr 16 May 16 Jun 16 Jul 16 Aug 16 Sep 16 Oct 16
vvdsvdvsdy
ORIOLA-KD OMXH (Rebased)Source: Factset
Shareholders: Keskinäinen Työeläkevakuutusyhtiö
Varma 8%; Ilmarinen Keskinäinen
Eläkevakuutusyhtiö 5%; Keskinäinen
Eläkevakuutusyhtiö Etera 4%;
Page 25 of 63
Produced & Distributed by the Members of ESN (see last page of this report)
Wilex
Germany/Healthcare Analyser
HEALTHCARE
Wilex (Buy) Additional investments weigh on cash flow
Research collaboration with Nordic Nanovector
The facts: On October 26th
, Wilex announced that it had entered into a research
collaboration with Nordic Nanovector to develop novel drug antibody conjugates
for the treatment of leukemia. Terms were not disclosed.
Our analysis: We regard the deal as consistent with Wilex’ previously announced
strategy of focussing on its antibody-drug-conjugate technology. It also
complements the company’s exposure to the hematology space, as Wilex’ lead
compound HDP-101 is currently in pre-clinical development for multiple myeloma.
We believe that the deal provides long-term upside to our forecasts, although we
note the high development risk of research (i.e. early-stage) projects.
Conclusion & Action: The deal is consistent with Wilex’ strategy of focussing on
its antibody-drug-conjugate technology and adds to the company’s hematology
portfolio, where the pre-clinical asset HDP-101 for the treatment of multiple
myeloma is the lead compound. While the announcement relates to a research
collaboration and the project must thus be considered as high-risk and early-
stage, we note potential for long-term upside.
Analyst(s):
Marietta Miemietz CFA, equinet Bank
+49-69-58997-439
Buy
1.59
closing price as of 25/10/2016
4.00
Target Price unchanged
Recommendation unchanged
Target price: EUR
Share price: EUR
Reuters/Bloomberg WL6.DE/WL6 GR
Market capitalisation (EURm) 17
Current N° of shares (m) 11
Free float 33%
Daily avg. no. trad. sh. 12 mth 4
Daily avg. trad. vol. 12 mth (m) 6
Price high 12 mth (EUR) 2.16
Price low 12 mth (EUR) 1.46
Abs. perf. 1 mth -3.88%
Abs. perf. 3 mth -9.43%
Abs. perf. 12 mth -19.66%
Key financials (EUR) 11/15 11/16e 11/17e
Sales (m) 4 4 4
EBITDA (m) (6) (6) (6)
EBITDA margin nm nm nm
EBIT (m) (7) (7) (7)
EBIT margin nm nm nm
Net Profit (adj.)(m) (7) (7) (7)
ROCE -48.1% -48.1% -48.1%
Net debt/(cash) (m) (1) (1) (1)
Net Debt/Equity -0.1 -0.1 -0.1
Debt/EBITDA 0.2 0.2 0.2
Int. cover(EBITDA/Fin. int) (86.0) (86.0) (86.0)
EV/Sales 4.0 3.4 3.4
EV/EBITDA nm nm nm
EV/EBITDA (adj.) nm nm nm
EV/EBIT nm nm nm
P/E (adj.) nm nm nm
P/BV 2.0 1.8 1.8
OpFCF yield -88.4% -101.2% -101.2%
Dividend yield 0.0% 0.0% 0.0%
EPS (adj.) (0.62) (0.62) (0.62)
BVPS 0.89 0.89 0.89
DPS 0.00 0.00 0.00
1.40
1.50
1.60
1.70
1.80
1.90
2.00
2.10
2.20
2.30
Sep 15 Oct 15 Nov 15 Dec 15 Jan 16 Feb 16 Mar 16 Apr 16 May 16 Jun 16 Jul 16 Aug 16 Sep 16 Oct 16
vvdsvdvsdy
WILEX Stoxx Biotechnology (Rebased)Source: Factset
Shareholders: Dievini Hopp 56%; UCB 11%;
Management 1.10%;
Page 26 of 63
Produced & Distributed by the Members of ESN (see last page of this report)
Seb SA
France/Household Goods Analyser
HOUSEHOLD GOODS
Seb SA (Neutral) Research collaboration with Nordic Nanovector
Q3 revenues in line with expectations
The facts: SEB published Q3 revenues of EUR1.204bn, up by 7% (idem
organic), in line with our expectations (EUR1.205bn), that of the consensus
(EUR1.201m, company) and the communication given at the last investor day.
Our analysis: Growth proved resilient sequentially vs Q2 (+7%) which had seen
Supor pick up pace prior to closure of its industrial site during the G20. By region:
1) Europe is still buoyant (+7%) with an improved context for the emerging part of
the zone (+13%). Western Europe is still on the right track (+5%) despite the poor
recent publications of some retailers; 2) Asia has thus slowed sequentially (+10%)
due to the Chinese industrial calendar (+10% after +17% in Q2); 3) Latin America
posted a more difficult Q3 (+3% l-f-l) with Brazil stabilising and activity disrupted
by strikes in Colombia; 4) North America has remained particularly weak for the
group (+1%). The geographic mix and management decisions taken two years
ago have had a favourable impact on growth. Operating result from activity
(ORfA) stood at EUR140m, up by 20% y-o-y, perfectly in line with our
expectations but above the consensus (EUR130m). Net financial debt stood at
EUR619m, obviously before the acquisition of WMF. The group has slightly
raised its 2016 targets: 6% organic growth (vs >5%) and a >15% rise in ORfA to
over EUR490m (vs >10%). With regard to the acquisition of WMF, the
competition authorities’ response should be given at end-November.
Conclusion & Action: The stock has generated a +60% performance since our
re-initiation of coverage one year ago. The investment case is still readable and
attractive, but the valuation potential seems to be exhausted.
Analyst(s):
Arnaud Cadart, CM - CIC Market Solutions
+33 1 53 48 80 86
Neutral
132.50
closing price as of 25/10/2016
107.00
Target Price unchanged
Recommendation unchanged
Target price: EUR
Share price: EUR
Reuters/Bloomberg SEBF.PA/SK FP
Market capitalisation (EURm) 6,647
Current N° of shares (m) 50
Free float 43%
Daily avg. no. trad. sh. 12 mth 51
Daily avg. trad. vol. 12 mth (m) 6,684
Price high 12 mth (EUR) 132.50
Price low 12 mth (EUR) 81.89
Abs. perf. 1 mth 5.62%
Abs. perf. 3 mth 8.03%
Abs. perf. 12 mth 46.83%
Key financials (EUR) 12/15 12/16e 12/17e
Sales (m) 4,770 5,336 6,244
EBITDA (m) 518 578 725
EBITDA margin 10.9% 10.8% 11.6%
EBIT (m) 371 426 567
EBIT margin 7.8% 8.0% 9.1%
Net Profit (adj.)(m) 220 271 351
ROCE 12.7% 7.8% 6.9%
Net debt/(cash) (m) 315 1,991 1,865
Net Debt/Equity 0.2 1.0 0.8
Debt/EBITDA 0.6 3.4 2.6
Int. cover(EBITDA/Fin. int) 15.5 24.1 14.6
EV/Sales 1.2 1.8 1.5
EV/EBITDA 11.3 16.4 13.0
EV/EBITDA (adj.) 10.7 15.3 12.7
EV/EBIT 15.7 22.3 16.6
P/E (adj.) 21.7 24.8 19.1
P/BV 2.8 3.5 3.1
OpFCF yield 4.6% 3.0% 3.4%
Dividend yield 1.2% 1.3% 1.5%
EPS (adj.) 4.35 5.35 6.93
BVPS 33.73 37.55 42.80
DPS 1.54 1.70 2.00
70
80
90
100
110
120
130
140
Oct 15 Nov 15 Dec 15 Jan 16 Feb 16 Mar 16 Apr 16 May 16 Jun 16 Jul 16 Aug 16 Sep 16 Oct 16
vvdsvdvsdy
SEB SA SBF 120 (Rebased)Source: Factset
Shareholders: F¿d¿ractive 22%; Venelle Investissement
19%; Fonds Start¿gique de Participation
(FSP) 5%;
Page 27 of 63
Produced & Distributed by the Members of ESN (see last page of this report)
Cargotec - OP forecasts and consensus
Q3/2016e Q2/2015a
EURm Q3a OP Diff. Cons. Low High
Sales
Kalmar 436 447 -2% 435 429 448 409
Hiab 250 245 2% 247 240 250 229
MacGregor 169 197 -14% 208 183 211 289
Total sales 854 889 -4% 889 867 901 928
EBIT
Kalmar 36.3 36 0% 39 36 44 36
Hiab 33.0 27 22% 31 27 35 25
MacGregor 2.8 9 -69% 6 0 9 13
Other -6 -7 - -7 0 0 -6
Total EBIT 56.2 63 -10% 63 55 66 62
EBIT excl. NRI 65.9 65 1% 68 65 72 68
Margin 7.7 % 7.3% 7.6% 7.4%
Financials (net) -9.6 -6 -7
PTP 46.6 57 -18% 55 51 60 55
Taxes -13.0 -15 -12
EPS 0.52 0.69 -25% 0.65 0.58 0.70 0.67
EPS, excl NRI 0.63 0.69 -9% 0.73 0.68 0.82 0.75
DPS 0.00 0.00 0.00
Source: OP (7 October 2016) and Vara Research (18 October 2016)
Cargotec Corp
Finland/Industrial Engineering Analyser
INDUSTRIAL ENGINEERING
Cargotec Corp (Accumulate) Q3 revenues in line with expectations
MacGregor a disappointment but not decisive
The facts: The most solid figure in Cargotec’s report was Hiab’s margin that once
again exceeded expectations. Kalmar’s profitability complied with our forecast but
orders remained soft. Ports are postponing their investments due to uncertainty.
Our analysis: MacGregor’s results were clearly weaker than anticipated. The
number of orders declined and sales reduced considerably, which weighed on
profitability. MacGregor will start a new efficiency programme that aims to achieve
total savings of EUR 25m. The guidance was kept intact: sales at the 2015 level
or slightly below, EBIT excluding restructuring costs improving.
Our EBIT forecasts for Hiab are upgraded, Kalmar’s forecasts are slightly
downgraded, and we are cutting our MacGregor’s forecasts considerably. Orders
predict a considerable decline in MacGregor’s sales in 2017. We predict that its
EBIT will remain slightly positive in the next few quarters. Cost savings will start to
improve profitability in H2/2017. Our EBIT forecasts for Cargotec as a whole are
moderately downgraded as MacGregor's contribution to the earnings has already
become less significant.
Conclusion & Action: We value the share based on 2016–18 earnings, the
sector’s long-term P/E and EV/EBITDA multiples and our DCF analysis. We take
MacGregor’s uncertainty into consideration by weighing the earnings more and
the cash flow less than before. Our target price falls to EUR 40 (prev. EUR 42),
and we maintain our Accumulate recommendation. Hiab’s outlook remains
favourable and profitability is good. Kalmar’s sales will increase moderately and
the margin will slightly improve regardless of costs resulting from growth
investments. MacGregor is in an extremely weak economic situation but our
outlook for the long-term possibilities of its business operations remains positive.
In our opinion, the share price decline is too extensive in relation to the forecast
revisions. The valuation remains moderate, the cash flow is good and Cargotec
invests in services, automation and software on the basis of which we expect
additional growth.
Analyst(s):
Pekka Spolander, OP Corporate Bank
+358 10 252 4351
Accumulate
36.76
closing price as of 25/10/2016
40.00
42.00from Target Price: EUR
Recommendation unchanged
Target price: EUR
Share price: EUR
Reuters/Bloomberg CGCBV.HE/CGCBV FH
Market capitalisation (EURm) 2,379
Current N° of shares (m) 65
Free float 65%
Daily avg. no. trad. sh. 12 mth 170
Daily avg. trad. vol. 12 mth (m) 42,649
Price high 12 mth (EUR) 42.69
Price low 12 mth (EUR) 25.39
Abs. perf. 1 mth -9.64%
Abs. perf. 3 mth -9.68%
Abs. perf. 12 mth 16.70%
Key financials (EUR) 12/15 12/16e 12/17e
Sales (m) 3,730 3,500 3,500
EBITDA (m) 304 316 328
EBITDA margin 8.1% 9.0% 9.4%
EBIT (m) 227 238 244
EBIT margin 6.1% 6.8% 7.0%
Net Profit (adj.)(m) 160 171 185
ROCE 7.9% 8.9% 9.4%
Net debt/(cash) (m) 661 535 400
Net Debt/Equity 0.5 0.4 0.3
Debt/EBITDA 2.2 1.7 1.2
Int. cover(EBITDA/Fin. int) 11.3 11.9 17.3
EV/Sales 0.7 0.8 0.8
EV/EBITDA 9.1 8.9 8.1
EV/EBITDA (adj.) 9.0 8.3 7.5
EV/EBIT 12.2 11.8 10.9
P/E (adj.) 14.0 13.9 12.9
P/BV 1.7 1.6 1.5
OpFCF yield 7.9% 4.3% 7.4%
Dividend yield 2.2% 2.7% 2.9%
EPS (adj.) 2.47 2.65 2.86
BVPS 20.70 22.29 23.86
DPS 0.80 1.00 1.05
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CARGOTEC CORP Stoxx Industrial Engineering (Rebased)Source: Factset
Shareholders: Ownership of Ilkka Herlin, total 14%;
Mariatorp Oy (controlled by Niklas Herlin)
12%; Pivosto Oy (controlled by Ilona
Herlin) 11%;
Page 28 of 63
Produced & Distributed by the Members of ESN (see last page of this report)
Exel Composites
Q3/2015a Growth
M€ Q3a vs. Cons. OP OP Cons. Diff.
Total sales 16.4 #DIV/0! 17.7 18.0 -2% 75 #DIV/0!
Sales growth -8.7 % -6.7 %
Total EBIT 0.6 #DIV/0! 1.0 0.5 115% 4 #DIV/0!
Total EBIT margin 3.7 % 5.6 % 2.6 % 4.8 % #DIV/0!
#DIV/0!
PTP #DIV/0! 0.8 0.3 207.8 % 3 #DIV/0!
EPS 0.03 #DIV/0! 0.05 0.01 602.6 % 0.22 #DIV/0!
#DIV/0!
DPS #DIV/0! 0.22 #DIV/0!
Source : OP, no consensus available
Q3/2016e 2016e
Exel Composites
Finland/Industrial Engineering Analyser
INDUSTRIAL ENGINEERING
Exel Composites (Accumulate) MacGregor a disappointment but not decisive
Difficult market conditions continue – risks relating to dividend on the rise
The facts: The message in Exel Composites' Q3 business review remained
subdued. Sales decreased by 8.7% to EUR 16.4m and also missed our forecast
of EUR 17.7m. This can be attributed especially to the declined demand among
telecommunications customers. Overall, the order volumes of Exel's high-volume
customers decreased, and consequently production will be adjusted further to
correspond to the prevailing order flow. The company is actively seeking new
clientele from industries that can utilise composite materials.
Our analysis: Despite the lower volumes, Exel's EBIT improved slightly YoY
thanks to the implemented cost saving measures. Adjusted EBIT improved to
EUR 0.6m from EUR 0.5m a year ago (OP: EUR 1m). The company will continue
measures to lighten the cost base.
Demand factors look unfavourable for Exel in the short term. Due to the weaker
than expected results and the demand situation, we are cutting our 2016–2018
sales forecasts by 4–5%. Our EBIT forecasts fall by 20%, 19% and 12%. The
uncertainty around dividend payment will increase as the 2016 earnings will
decline notably. The balance sheet is in order, so in that respect the company
could pay out a dividend of EUR 0.22 in line with last year. Management has
indicated that it is trying to find acquisition targets, so if potential companies are in
sight, the company may cut its dividend.
Conclusion & Action: At this stage we maintain our forecast of EUR 0.22, on
which the share would offer a 4.5% dividend yield. We are lowering our target
price to EUR 5.30 (prev. EUR 5.50), which corresponds to the value indicated by
our DCF model.
Analyst(s):
Jari Raisanen, OP Corporate Bank
+358 10 252 4504
Accumulate
4.86
closing price as of 25/10/2016
5.30
5.50from Target Price: EUR
Recommendation unchanged
Target price: EUR
Share price: EUR
Reuters/Bloomberg EXL1V.HE/EXL1V FH
Market capitalisation (EURm) 58
Current N° of shares (m) 12
Free float 100%
Daily avg. no. trad. sh. 12 mth 11
Daily avg. trad. vol. 12 mth (m) 34
Price high 12 mth (EUR) 7.20
Price low 12 mth (EUR) 4.76
Abs. perf. 1 mth -0.82%
Abs. perf. 3 mth -1.02%
Abs. perf. 12 mth -25.35%
Key financials (EUR) 12/15 12/16e 12/17e
Sales (m) 80 72 75
EBITDA (m) 7 6 8
EBITDA margin 9.1% 8.1% 10.2%
EBIT (m) 4 3 5
EBIT margin 5.5% 4.0% 6.3%
Net Profit (adj.)(m) 3 2 3
ROCE 10.6% 7.5% 11.9%
Net debt/(cash) (m) 1 (1) (2)
Net Debt/Equity 0.0 0.0 0.0
Debt/EBITDA 0.1 -0.2 -0.2
Int. cover(EBITDA/Fin. int) 46.0 111.9 36.3
EV/Sales 1.0 0.8 0.8
EV/EBITDA 10.8 10.0 7.6
EV/EBITDA (adj.) 10.8 10.0 7.6
EV/EBIT 17.9 20.3 12.3
P/E (adj.) 27.4 28.3 18.2
P/BV 2.5 1.9 1.8
OpFCF yield -1.7% 7.9% 2.6%
Dividend yield 4.5% 4.5% 4.5%
EPS (adj.) 0.24 0.17 0.27
BVPS 2.58 2.53 2.63
DPS 0.22 0.22 0.22
4.5
5.0
5.5
6.0
6.5
7.0
7.5
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vvdsvdvsdy
EXEL COMPOSITES Stoxx Industrial Engineering (Rebased)Source: Factset
Shareholders: Skandinaviska Enskilda Banken AB
(Hallintarekisteröity) 20%; Nordea Pankki
Suomi Oyj (Hallintarekisteröity) 15%;
Sijoitusrahasto Nordea Suomi 5%;
Page 29 of 63
Produced & Distributed by the Members of ESN (see last page of this report)
Wärtsilä
Finland/Industrial Engineering Analyser
INDUSTRIAL ENGINEERING
Wärtsilä (Neutral) Difficult market conditions continue – risks relating to dividend on the rise
Weak ship market, stable big picture
The facts: Wärtsilä's results fell considerably short of expectations, which can be
attributed to the concentration of deliveries to Q4. Guidance was reiterated: sales
are expected to decline by around 5% and the EBIT margin excl. NRI is expected
to be around 12%. The guidance requires a strong Q4 margin. The orders of
Marine Solutions were slightly below expectations and dropped nearly 30% YoY.
Demand was brisk only for cruise and passenger ships, and the segment
accounted for over 40% of Marine Solutions' orders in the early part of the year.
Contrary to expectations, sales of Services shrank slightly on account of the
negative FX impact and especially the muted offshore-related activity.
Our analysis: Our forecasts for 2016 remain unchanged and in line with the
guidance. The weak order intake lead to an additional cut in the 2017–18 sales
forecasts for Marine Solutions. The delivery times of cruise ship orders are
exceptionally long, and we find the 2017 outlook weaker than the order book
would indicate. We are assuming a slightly more cautious view of growth in
Services but assume that its good profitability will remain stable. The orders of
Energy Solutions were good, but some of the anticipated orders have been
postponed, not cancelled. The stronger order book will turn Energy Solutions'
sales to clear growth next year.
Conclusion & Action: We base our target price on 2016–18 earnings, the
sector's historical P/E and EV/EBITDA multiples and our DCF model. The drop in
our forecasts leads to a target price of EUR 39 (prev. EUR 40). Our Neutral
recommendation remains unchanged. The decline in global ship orders is now
starting to weigh notably on Wärtsilä's sales, which is, however, largely offset by
the strengthening of the power plant market and stable maintenance activities.
Cash flow will be strong, and the balance sheet enables seeking of growth
through acquisitions, which we consider likely. On our forecasts, we find the
share's significant downside risk minor, but the uncertainty about the outlook for
Marine Solutions limits the upside potential for the time being.
Analyst(s):
Pekka Spolander, OP Corporate Bank
+358 10 252 4351
Neutral
39.32
closing price as of 25/10/2016
39.00
40.00from Target Price: EUR
Recommendation unchanged
Target price: EUR
Share price: EUR
Reuters/Bloomberg WRT1V.HE/WRT1V FH
Market capitalisation (EURm) 7,756
Current N° of shares (m) 197
Free float 83%
Daily avg. no. trad. sh. 12 mth 384
Daily avg. trad. vol. 12 mth (m) 27,787
Price high 12 mth (EUR) 42.80
Price low 12 mth (EUR) 34.23
Abs. perf. 1 mth 3.23%
Abs. perf. 3 mth 0.87%
Abs. perf. 12 mth 5.16%
Key financials (EUR) 12/15 12/16e 12/17e
Sales (m) 5,029 4,772 4,730
EBITDA (m) 711 665 695
EBITDA margin 14.1% 13.9% 14.7%
EBIT (m) 587 530 571
EBIT margin 11.7% 11.1% 12.1%
Net Profit (adj.)(m) 441 387 433
ROCE 14.3% 14.4% 14.8%
Net debt/(cash) (m) 391 185 (15)
Net Debt/Equity 0.2 0.1 0.0
Debt/EBITDA 0.5 0.3 0.0
Int. cover(EBITDA/Fin. int) 20.9 12.8 43.4
EV/Sales 1.7 1.6 1.6
EV/EBITDA 12.1 11.8 11.0
EV/EBITDA (adj.) 11.7 11.1 10.9
EV/EBIT 14.7 14.8 13.4
P/E (adj.) 18.9 20.0 17.9
P/BV 3.8 3.3 3.1
OpFCF yield 2.5% 4.6% 6.0%
Dividend yield 3.1% 3.1% 3.2%
EPS (adj.) 2.23 1.96 2.20
BVPS 11.16 11.82 12.83
DPS 1.20 1.20 1.25
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vvdsvdvsdy
WÄRTSILÄ Stoxx Industrial Engineering (Rebased)Source: Factset
Shareholders: Invaw Invest AB (Investor) 18%; Fiskars
Corp. 6%; Varma Mutual Pension
Insurance Company 5%;
Page 30 of 63
Produced & Distributed by the Members of ESN (see last page of this report)
CAF
Spain/Industrial Transportation Analyser
INDUSTRIAL TRANSPORTATION
CAF (Accumulate) Weak ship market, stable big picture
9m’16 results
The facts: CAF presented 3Q’16 results at market close yesterday.
Our analysis: Results preactically in line with consensus (Sales EUR946m;
EBITDA EUR105.3m and net profit EUR28.1m)
Sales +3% thanks to the recovery in the industrial activity and higher sales in
services and signalling. The forex effect, mainly the Brazilian real, was not
relevant.
The 10x1 split will take place on November 30th.
Conclusion: Results very similar to consensus. In 2017 a good growth phase will
begin and CAF is well positioned to compete for important contracts.
Analyst(s):
Iñigo Recio Pascual, GVC Gaesco Beka
+34 91 436 7814
Accumulate
348.15
closing price as of 25/10/2016
390.00
Target Price unchanged
Recommendation unchanged
Target price: EUR
Share price: EUR
Reuters/Bloomberg CAF.MC/CAF SM
Market capitalisation (EURm) 1,193
Current N° of shares (m) 3
Free float 49%
Daily avg. no. trad. sh. 12 mth 5
Daily avg. trad. vol. 12 mth (m) 3,657
Price high 12 mth (EUR) 365.75
Price low 12 mth (EUR) 209.00
Abs. perf. 1 mth -2.74%
Abs. perf. 3 mth 10.56%
Abs. perf. 12 mth 36.48%
Key financials (EUR) 12/15 12/16e 12/17e
Sales (m) 1,284 1,353 1,545
EBITDA (m) 166 155 201
EBITDA margin 12.9% 11.4% 13.0%
EBIT (m) 127 120 166
EBIT margin 9.9% 8.8% 10.7%
Net Profit (adj.)(m) 41 41 84
ROCE 10.7% 11.4% 15.3%
Net debt/(cash) (m) 480 340 304
Net Debt/Equity 0.7 0.5 0.4
Debt/EBITDA 2.9 2.2 1.5
Int. cover(EBITDA/Fin. int) 3.6 2.9 4.8
EV/Sales 1.1 1.1 1.0
EV/EBITDA 8.1 9.9 7.4
EV/EBITDA (adj.) 8.1 9.9 7.4
EV/EBIT 10.7 12.8 9.0
P/E (adj.) 21.3 28.9 14.2
P/BV 1.2 1.6 1.5
OpFCF yield 12.7% 13.2% 4.5%
Dividend yield 1.5% 1.5% 2.4%
EPS (adj.) 11.97 12.06 24.54
BVPS 205.29 213.13 232.42
DPS 5.25 5.25 8.50
CAF: 9M16 RESULTS
EUR m 9M15 % sles 9M16 % sles % y/y 3Q15 3Q16 3Q16e
Sales 935,4 100% 962,6 100% 2,9% 275,4 330,7 341,0
EBITDA 137,9 14,7% 104,2 10,8% -24,5% 42,5 39,5 38,2
EBIT 108,0 11,5% 81,5 8,5% -24,5% 34,1 30,9 29,8
Financial Results -56,6 -6% -39,1 -4%
EBT 51,4 5% 42,4 4% -17,4% 7,0 18,5 17,3
Net profit 35,8 4% 26,5 3% -26,0% 3,8 11,8 11,3
Source: GVC Gaesco Beka estimates
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CAF IGBM (Rebased)Source: Factset
Shareholders: Cartera Social 26%; Kutxabank 19%;
Bestinver 3%; Others 0.00%;
Page 31 of 63
Produced & Distributed by the Members of ESN (see last page of this report)
Construction Target price Price EPS16e P/E16 P/E17 P/E18 Div.yield 16e %
Caverion NEUTRAL 6.80 6.89 -0.07 - 20.2 15.1 3.2
Cramo NEUTRAL 24.00 25.04 1.67 15.0 13.1 12.0 3.0
Eltel (SEK) NEUTRAL 55.00 57.00 0.03 194.5 16.3 9.7 -
Lehto Group ACCUMULATE 9.00 9.10 0.44 20.6 17.6 15.5 1.9
Lemminkäinen ACCUMULATE 18.00 17.34 1.21 14.3 16.9 13.4 1.4
Ramirent ACCUMULATE 7.80 7.86 0.37 21.5 15.6 13.3 5.1
SRV ACCUMULATE 4.80 4.55 0.13 35.1 11.5 9.2 2.2
Uponor BUY 20.00 16.67 0.60 27.7 17.4 16.5 2.8
YIT BUY 8.00 7.81 0.10 76.8 14.5 11.1 3.1
Finnish Construction
Analyser
MATERIALS, CONSTRUCTION &
INFRASTRUCTURE
9m’16 results Opportune quarter for guidance revisions
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Share price performance has been robust in the Finnish construction sector
ahead of the Q3 earnings season. The favourable economic outlook supports
profits, and the earnings season will show how well corporate earnings match
expectations. Valuations in general still leave some upside if the big picture for
2018 remains positive. The sector's earnings will be released at a brisk pace
mainly this week and the next. Our report includes our Q3 previews for these
companies.
We have altered two recommendations in our report. We have upgraded
Uponor's recommendation to Buy (from Accumulate) with a target price of
EUR 20 (prev. EUR 18), as we think Uponor has potential for faster-than-
expected growth in Building Solutions - Europe. Our view does not apply so
much to the Q3 results but rather to 2017–2018. The other change of
recommendation concerns Lemminkäinen whose recommendation we have
upgraded to Accumulate (from Neutral) with a target price of EUR 18 (prev.
EUR 15). The positive decision on damages has prompted us to raise the
target price, but we also anticipate a strong H2 performance.
Cramo, Lehto, Ramirent and YIT are close to their target prices. We do not
change the recommendations or target prices of these companies in this
report; instead, we will wait for additional information provided by the earnings
releases. The share prices are loaded with high expectations, but small
disappointments without a change to the investment case will offer buy
opportunities.
Caverion and Eltel have issued warnings about their H2 results, and
Lemminkäinen has upgraded its guidance. We estimate that Uponor would
have good grounds to raise its guidance. SRV may also upgrade its guidance
but more likely around the turn of the year. Ramirent poses a minor risk of a
guidance downgrade.
---------- Stoxx Construction & Materials,
DJ Stoxx TMI rebased on sector
Matias Rautionmaa, OP Corporate Bank
+358 10 252 4408nalyst(s):
Page 32 of 63
Produced & Distributed by the Members of ESN (see last page of this report)
AENA
Spain/Materials, Construction & Infrastructure Analyser
MATERIALS, CONSTRUCTION & INFRASTRUCTURE
AENA (Neutral) Opportune quarter for guidance revisions
Good results and cash generation
The facts: AENA released 9m’16 results, in which the following aspects stand
out: traffic +11.2%; cost contention, EBITDA +10.5%, operating cash flow +22%,
debt reduction (EUR1,160m).
Our analysis: EBITDA increased 10.5% (EUR1,759m) thanks to the mentioned
aspects and the good services outside of the terminal (+16% EBITDA). PAX
decreased 3.8% (EUR10.9/PAX) due to the tariff cut (-1.9% since March 1st).
Net profit increased 47% to EUR944m, although excluding the positive impact
from the reversion of provisions (EUR204m) earnings would have increased
23.7%.
Operating cash flow +22% (EUR1,699m). Debt drops by EUR1,160m, and
stands at EUR8,241m and EUR8,139m covenants (3.7x vs. 4.5x Dec’15).
Investments dropped (EUR198m).
Conclusion: Excellent results and cash generation. We remain attentive to the
new tariffs for the next 5 year period. Neutral reiterated.
Analyst(s):
Rafael Fernández de Heredia, GVC Gaesco Beka
+34 91 436 78 08
Neutral
135,95
closing price as of 25/10/2016
133,80
Target Price unchanged
Recommendation unchanged
Target price: EUR
Share price: EUR
Reuters/Bloomberg AENA.MC/AENA SM
Market capitalisation (EURm) 20.393
Current N° of shares (m) 150
Free float 32%
Daily avg. no. trad. sh. 12 mth 622
Daily avg. trad. vol. 12 mth (m) 47.811
Price high 12 mth (EUR) 136,00
Price low 12 mth (EUR) 94,07
Abs. perf. 1 mth 3,66%
Abs. perf. 3 mth 6,05%
Abs. perf. 12 mth 32,44%
Key financials (EUR) 12/15 12/16e 12/17e
Sales (m) 3.451 3.633 3.754
EBITDA (m) 2.098 2.222 2.298
EBITDA margin 60,8% 61,2% 61,2%
EBIT (m) 1.252 1.394 1.479
EBIT margin 36,3% 38,4% 39,4%
Net Profit (adj.)(m) 850 966 1.033
ROCE 6,4% 6,9% 7,5%
Net debt/(cash) (m) 9.402 8.440 7.625
Net Debt/Equity 2,2 1,7 1,4
Debt/EBITDA 4,5 3,8 3,3
Int. cover(EBITDA/Fin. int) 10,3 (28,6) 18,6
EV/Sales 7,3 7,7 7,2
EV/EBITDA 12,0 12,5 11,8
EV/EBITDA (adj.) 12,0 12,6 11,8
EV/EBIT 20,1 20,0 18,3
P/E (adj.) 18,6 21,1 19,7
P/BV 3,7 4,1 3,7
OpFCF yield 8,7% 6,7% 6,4%
Dividend yield 2,0% 2,4% 2,5%
EPS (adj.) 5,66 6,44 6,89
BVPS 28,69 33,28 36,95
DPS 2,71 3,22 3,44
SALES 9M15 9M16 %
Aeronautic 1,838.2 1,959.3 6.6%
Retail 568.2 626.9 10.3%
Other 284.5 304.5 7.0%
TOTAL 2,689.7 2,889.1 7.4%
9M15 9M16 %
Aeronautic 985.0 1,083.9 10.0%
Retail 479.1 532.9 11.2%
Other 128.4 142.7 11.1%
EBITDA 1,592.4 1,759.6 10.5%
RESULTS ACCOUNT 9M15 9M16 %
Amortisations/Prov -632.5 -611.3 -3.4%
Financial result -174.6 81.9 -146.9%
Associates 10.3 11.9 16.0%
Ordinary Result 795.6 1,242.1 56.1%
Taxes/Minorities -156.5 -297.7 90.3%
Net Income 639.1 944.4 47.8%
Source: AENA
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vvdsvdvsdy
AENA Stoxx Construction & Materials (Rebased)Source: Factset
Shareholders: Enaire 51%; TCI 11%; HSBC 5%;
Page 33 of 63
Produced & Distributed by the Members of ESN (see last page of this report)
Eltel
Sweden/Materials, Construction & Infrastructure Analyser
MATERIALS, CONSTRUCTION & INFRASTRUCTURE
Eltel (Neutral) Good results and cash generation
Q3 preview: Building confidence takes time
The facts: Eltel releases its Q3 results on 9 November 2016.
Eltel has issued two profit warnings within two months. The profit warnings have
been issued in a situation in which private equity firms have mainly exited the
company that was listed 18 months ago, the long-term CEO has left the company,
and business unit managers have sold some of their holdings. The risks relating
to the project business have been considerably bigger than we expected. The
markets' confidence in the company has suffered a severe blow.
Our analysis: Eltel expects EBITA to be EUR 8m in Q3 and EUR 10–15m in Q4.
The company has been having problems with the rail projects in Norway and the
power transmission network projects in Africa. Due to the made adjustments and
the low order intake in the segment, sales of Power Transmission are estimated
to decline in 2017. The sales of the Power Segment in H2 will offer an important
reference point based on which we can estimate the 2017 outlook.
We estimate that the company is about to breach its net debt/EBITDA covenant
of 4.0 in Q4. We do not find a share issue likely, but the financing problems will
restrain the company's dividend payment capacity significantly.
Conclusion & Action: The valuation reflects an EBITA margin of around 3.5%,
which would in practice mean a very small implicit margin expectation for the
project business (around 1/3 of sales). Due to the low visibility, our
recommendation is Neutral and our target price SEK 55, based on 10xEBITA17e.
Analyst(s):
Matias Rautionmaa, OP Corporate Bank
+358 10 252 4408
Neutral
56.50
closing price as of 25/10/2016
55.00
Target Price unchanged
Recommendation unchanged
Target price: SEK
Share price: SEK
Reuters/Bloomberg ELTEL.ST/ELTEL SS
Market capitalisation (SEKm) 3,538
Current N° of shares (m) 63
Free float 81%
Daily avg. no. trad. sh. 12 mth 191
Daily avg. trad. vol. 12 mth (m) 1,811
Price high 12 mth (SEK) 99.25
Price low 12 mth (SEK) 50.00
Abs. perf. 1 mth -33.33%
Abs. perf. 3 mth -36.52%
Abs. perf. 12 mth -37.40%
Key financials (EUR) 12/15 12/16e 12/17e
Sales (m) 1,254 1,392 1,391
EBITDA (m) 72 40 64
EBITDA margin 5.8% 2.9% 4.6%
EBIT (m) 47 14 39
EBIT margin 3.7% 1.0% 2.8%
Net Profit (adj.)(m) 43 2 23
ROCE 6.2% 1.7% 5.0%
Net debt/(cash) (m) 144 189 152
Net Debt/Equity 0.3 0.4 0.3
Debt/EBITDA 2.0 4.7 2.4
Int. cover(EBITDA/Fin. int) 5.0 4.4 7.6
EV/Sales 0.5 0.3 0.3
EV/EBITDA 9.0 12.0 7.0
EV/EBITDA (adj.) 9.0 12.0 7.0
EV/EBIT 14.0 35.3 11.5
P/E (adj.) 13.4 nm 16.1
P/BV 1.3 0.9 0.8
OpFCF yield 13.6% 3.8% 15.9%
Dividend yield 4.1% 0.0% 3.1%
EPS (adj.) 0.69 0.03 0.36
BVPS 7.15 6.83 7.20
DPS 0.24 0.00 0.18
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ELTEL OMXS All (Rebased)Source: Factset
Shareholders: 3i 20%; Zeres Capital 11%; The Fourth
Swedish National Pension Fund 9%;
Page 34 of 63
Produced & Distributed by the Members of ESN (see last page of this report)
Ferrovial
Spain/Materials, Construction & Infrastructure Analyser
MATERIALS, CONSTRUCTION & INFRASTRUCTURE
Ferrovial (Accumulate) Q3 preview: Building confidence takes time
Heathrow extension has been approved
The facts: British Government approved Heathrow third runaway construction.
Our analysis: This decision adopted by British Government should be approved
by Parliament so the formal approval should be extended another 18/24 months.
This project will require GBP 17 bn investments and infrastructure construction
will require GBP 11.000m. Construction will start in 2020 and will be finished by
2025. Capacity will be increased by 54% in terms of flights and 88% in terms of
passengers.
Conclusion & Action: Ferrovial owns 25% of HR representing 7.4% of our
estimated equity. Good price of news, but difficult to quantify by now, but our
impression is that the impact on Ferrovial will be moderate.
Analyst(s):
Rafael Fernández de Heredia, GVC Gaesco Beka
+34 91 436 78 08
Accumulate
18.68
closing price as of 25/10/2016
22.10
Target Price unchanged
Recommendation unchanged
Target price: EUR
Share price: EUR
Reuters/Bloomberg FER.MC/FER SM
Market capitalisation (EURm) 13,681
Current N° of shares (m) 732
Free float 65%
Daily avg. no. trad. sh. 12 mth 3,231
Daily avg. trad. vol. 12 mth (m) 104,266
Price high 12 mth (EUR) 23.32
Price low 12 mth (EUR) 15.96
Abs. perf. 1 mth 2.10%
Abs. perf. 3 mth 2.75%
Abs. perf. 12 mth -19.27%
Key financials (EUR) 12/15 12/16e 12/17e
Sales (m) 9,698 9,353 9,646
EBITDA (m) 1,024 980 973
EBITDA margin 10.6% 10.5% 10.1%
EBIT (m) 899 1,021 725
EBIT margin 9.3% 10.9% 7.5%
Net Profit (adj.)(m) 718 657 440
ROCE 8.0% 9.4% 6.5%
Net debt/(cash) (m) 4,542 4,574 4,746
Net Debt/Equity 0.7 0.7 0.7
Debt/EBITDA 4.4 4.7 4.9
Int. cover(EBITDA/Fin. int) 2.0 2.2 2.1
EV/Sales 1.2 1.1 1.1
EV/EBITDA 11.4 10.2 10.4
EV/EBITDA (adj.) 11.4 10.2 10.4
EV/EBIT 13.0 9.8 14.0
P/E (adj.) 21.3 20.8 31.1
P/BV 2.5 2.2 2.3
OpFCF yield 3.3% 4.2% 5.2%
Dividend yield 3.8% 3.9% 4.0%
EPS (adj.) 0.98 0.90 0.60
BVPS 8.27 8.44 8.29
DPS 0.71 0.73 0.75
15
16
17
18
19
20
21
22
23
24
25
Oct 15 Nov 15 Dec 15 Jan 16 Feb 16 Mar 16 Apr 16 May 16 Jun 16 Jul 16 Aug 16 Sep 16 Oct 16
vvdsvdvsdy
FERROVIAL Stoxx Construction & Materials (Rebased)Source: Factset
Shareholders: Del Pino Family 36%;
Page 35 of 63
Produced & Distributed by the Members of ESN (see last page of this report)
Lehto
Finland/Materials, Construction & Infrastructure Analyser
MATERIALS, CONSTRUCTION & INFRASTRUCTURE
Lehto (Accumulate) Heathrow extension has been approved
Q3 preview: A smaller quarter in store again
The facts: Lehto Group releases its Q3 business review on 17 November. A
business review is a more concise version of the interim report. The company
expects sales growth to be at least in accordance with the average growth target
(10–15%) and operating profit to be around 8–10% of net sales. We estimate that
sales will grow 22% and the EBITA margin will be 9.8% in 2016 (cons. 20% and
10%). In addition, the company has specified that sales and EBIT are expected to
be higher in H2 than in H1. We estimate that H2 will represent 58% of full-year
sales and EBIT.
Our analysis: We predict Q3 sales of EUR 82m and EBIT of EUR 6.1m. The
margin would thus be 7.4%, which is weaker than in H1 (10%). Lehto has not
published benchmark data for the quarters of 2015. Besides our forecast,
FactSet's quarterly consensus also includes one forecast, amounting to EUR 9m.
It is typical of residential building companies that comply with the IFRS
recognition practice that Q3 is a small quarter and Q4 correspondingly bigger.
Earnings are swung by the timing of the completion of residential development
projects. A significant proportion of the residential production for the year is
typically completed in Q4. Lehto's Q2 results were strong since the volume of
completed apartments was high.
After the Q2 results, Lehto has announced a contract worth EUR 25m for building
accommodation for the nuclear power plant site in Pyhäjoki and an acquisition in
renovation construction. Furthermore, the company has agreed on building a total
of 188 apartments for Etera and VVO. We have not yet included the impact of
these in our forecasts.
Conclusion & Action: Even though Lehto's valuation multiples have limited
upside, its earnings growth still offers potential, maybe not in Q3 but in Q4 next
year. For the time being, we repeat our Accumulate recommendation and our
target price of EUR 9.
Analyst(s):
Matias Rautionmaa, OP Corporate Bank
+358 10 252 4408
Accumulate
9.09
closing price as of 25/10/2016
9.00
Target Price unchanged
Recommendation unchanged
Target price: EUR
Share price: EUR
Reuters/Bloomberg LEHTO.HE/LEHTO FH
Market capitalisation (EURm) 529
Current N° of shares (m) 58
Free float 28%
Daily avg. no. trad. sh. 12 mth 111
Daily avg. trad. vol. 12 mth (m) 156
Price high 12 mth (EUR) 9.65
Price low 12 mth (EUR) 5.70
Abs. perf. 1 mth -1.20%
Abs. perf. 3 mth 31.93%
Abs. perf. 12 mth
Key financials (EUR) 12/15 12/16e 12/17e
Sales (m) 276 336 413
EBITDA (m) 29 35 41
EBITDA margin 10.4% 10.4% 10.0%
EBIT (m) 27 33 39
EBIT margin 9.9% 9.8% 9.4%
Net Profit (adj.)(m) 21 26 30
ROCE 108.3% 52.3% 41.2%
Net debt/(cash) (m) (8) (54) (51)
Net Debt/Equity -0.2 -0.5 -0.4
Debt/EBITDA -0.3 -1.6 -1.2
Int. cover(EBITDA/Fin. int) high high high
EV/Sales 1.4 1.1
EV/EBITDA 13.3 11.4
EV/EBITDA (adj.) 13.3 11.4
EV/EBIT 14.1 12.1
P/E (adj.) 20.6 17.5
P/BV 4.9 4.1
OpFCF yield 0.7% 1.3%
Dividend yield 1.5% 1.9% 2.3%
EPS (adj.) 0.36 0.44 0.52
BVPS 0.57 1.86 2.21
DPS 0.14 0.18 0.21
5.5
6.0
6.5
7.0
7.5
8.0
8.5
9.0
9.5
10.0
Mar 16 Apr 16 May 16 Jun 16 Jul 16 Aug 16 Sep 16 Oct 16
vvdsvdvsdy
LEHTO OMXH (Rebased)Source: Factset
Shareholders: Lehto Invest Oy 37%; Myllymäki Asko
11%; Kinnunen Mikko 4%;
Page 36 of 63
Produced & Distributed by the Members of ESN (see last page of this report)
Ramirent
Q3/2015a Growth
M€ OP Cons. Diff. OP Cons. Diff.
Sales 177 176 1% 165 7% 675 672 0%
Total EBIT 25.3 26.6 -5% 22.6 12% 63 65 -2%
Total EBIT margin 14.3 % 15.2 % 13.7 % 9.4 % 9.6 %
#DIV/0!
PTP 21.8 22.8 -4% 17.7 23% 51 54 -5%
EPS 0.16 0.18 -11% 0.13 17% 0.37 0.42 -13%
#DIV/0!
DPS #DIV/0! 0.40 0.40 0%
Source : OP and FactSet
Q3/2016e 2016e
Ramirent
Finland/Materials, Construction & Infrastructure Analyser
MATERIALS, CONSTRUCTION & INFRASTRUCTURE
Ramirent (Accumulate) Q3 preview: A smaller quarter in store again
Q3 preview: Focus on the debut of the new CEO
The facts: Ramirent releases its Q3 results on 4 November 2016.
Our analysis: We expect rental income growth to accelerate in Q3, driven by
Finland, and the trend in gross margin to be consequently positive. Fixed costs
were high in Q2 and we expect them to remain higher than normal in H2 as well.
Even though the 2016 guidance of an improving EBITA margin leaves some
uncertainty factors, as it requires markedly better profitability in H2 than in H1, we
have emphasised in our view the outlook in the longer term.
The Nordic order book of construction companies grew 18% on an annual basis
at the end of Q2. The volumes of building construction are showing two-digit
growth in both Sweden and Finland. In Norway, building construction has started
to grow slightly but order growth is two-digit. 80% of Ramirent's sales come from
Sweden, Finland and Norway. All this should lend considerable support to the
company against the slight weakness of Latvia, and Central Europe, which is
suffering from delays in EU funding. The Nordic market leaders Cramo and
Ramirent have been struggling for a long time with weak pricing, especially in
Sweden, due to the low cost of capital and the competitive pressure it brings, we
estimate. Cramo commented that prices have finally started to underpin earnings
in Q2 and delivered a strong margin for Q2. We estimate that Ramirent should
also be supported by the improving pricing.
Conclusion & Action: Ramirent's share price has risen sharply and exceeded
the peak level preceding the disappointing Q2 results. Even though visibility into
H2 is weakened by the problems with companies' profitability in Sweden, the
robust market performance and the anticipated policy lines of the new CEO Tapio
Kolunsarka support the share.
Analyst(s):
Matias Rautionmaa, OP Corporate Bank
+358 10 252 4408
Accumulate
7,85
closing price as of 25/10/2016
7,80
Target Price unchanged
Recommendation unchanged
Target price: EUR
Share price: EUR
Reuters/Bloomberg RMR1V.HE/RMR1V FH
Market capitalisation (EURm) 853
Current N° of shares (m) 109
Free float 71%
Daily avg. no. trad. sh. 12 mth 207
Daily avg. trad. vol. 12 mth (m) 860
Price high 12 mth (EUR) 7,86
Price low 12 mth (EUR) 5,05
Abs. perf. 1 mth 10,25%
Abs. perf. 3 mth 4,67%
Abs. perf. 12 mth 9,18%
Key financials (EUR) 12/15 12/16e 12/17e
Sales (m) 636 675 716
EBITDA (m) 168 176 202
EBITDA margin 26,4% 26,1% 28,3%
EBIT (m) 58 63 83
EBIT margin 9,1% 9,4% 11,7%
Net Profit (adj.)(m) 39 39 54
ROCE 6,8% 7,1% 9,0%
Net debt/(cash) (m) 281 313 333
Net Debt/Equity 0,9 1,0 1,0
Debt/EBITDA 1,7 1,8 1,6
Int. cover(EBITDA/Fin. int) 14,7 14,5 15,6
EV/Sales 1,5 1,7 1,6
EV/EBITDA 5,7 6,5 5,8
EV/EBITDA (adj.) 5,7 6,5 5,8
EV/EBIT 16,6 18,1 14,0
P/E (adj.) 18,2 21,7 15,7
P/BV 2,2 2,7 2,6
OpFCF yield -1,5% -1,2% 1,9%
Dividend yield 5,1% 5,1% 5,4%
EPS (adj.) 0,35 0,36 0,50
BVPS 2,94 2,90 3,00
DPS 0,40 0,40 0,42
5,0
5,5
6,0
6,5
7,0
7,5
8,0
set 15 ott 15 nov 15 dic 15 gen 16 feb 16 mar 16 apr 16 mag 16 giu 16 lug 16 ago 16 set 16 ott 16
vvdsvdvsdy
RAMIRENT OMXH (Rebased)Source: Factset
Shareholders: Nordstjernan AB 28%; Oy Julius Tallberg
Ab 11%; Varma Mutual Pension
Insurance Co 5%;
Page 37 of 63
Produced & Distributed by the Members of ESN (see last page of this report)
SRV Yhtiöt
Q3/2015a Growth
M€ OP Cons. Diff. OP Cons. Diff.
Sales 226 219 3% 187 21% 873 874 0%
Total EBIT 6.5 5.9 8% 4.1 57% 32 31 3%
Total EBIT margin 2.9 % 2.7 % 2.2 % 3.6 % 3.5 %
#DIV/0!
PTP 3.7 3.9 -6% 0.1 7304% 15.1 17 -9%
EPS 0.05 0.03 62% -0.02 -316% 0.13 0.23 -44%
#DIV/0!
DPS #DIV/0! 0.10 0.11 -9%
Source : OP and FactSet
Q3/2016e 2016e
SRV
Finland/Materials, Construction & Infrastructure Analyser
MATERIALS, CONSTRUCTION & INFRASTRUCTURE
SRV (Accumulate) Q3 preview: Focus on the debut of the new CEO
Q3 preview: Significant earnings growth driven by residential construction
The facts: SRV will report its Q3 results on 3 November. Due to the completion
schedules of residential production, a considerable proportion of earnings is
generated in Q4, so Q3 is a small quarter in terms of earnings. SRV expects
sales and EBIT to grow in 2016. We do not expect any guidance revisions in Q3
since the biggest uncertainty factor is whether the projects scheduled for
December will be completed on time. The guidance may be upgraded at the turn
of the year since we expect full-year EBIT to increase by one-third.
Our analysis: We expect SRV's EBIT growth to be the fastest in the sector in
2016–2017. Growing financial expenses will, however, cut earnings growth in
2016, so EPS will not grow markedly until in 2017.
SRV's earnings growth driver is the higher operating volume in residential
development projects. The company reacted swiftly to the pick-up in demand by
raising housing starts from 330 to 802 units last year. About double the amount
of residential units will be completed into the 2016 earnings (503 vs. 247 in 2014),
and in 2017 the number of residential units recognised as revenue should rise to
800. An interesting factor in view of the outlook is housing starts.
Conclusion & Action: SRV's share has stabilised at around EUR 4.50. The P/E
valuation on the 2017 forecasts is at the long-term level of construction firms at
11.5. The balance sheet is stretched but the valuation has upside if earnings
growth continues in 2018 in line with our forecast and economic conditions in
Russia continue to improve, enabling future exits from shopping centres.
Analyst(s):
Matias Rautionmaa, OP Corporate Bank
+358 10 252 4408
Accumulate
4.53
closing price as of 25/10/2016
4.80
Target Price unchanged
Recommendation unchanged
Target price: EUR
Share price: EUR
Reuters/Bloomberg SRV1V.HE/SRV1V FH
Market capitalisation (EURm) 274
Current N° of shares (m) 60
Free float 100%
Daily avg. no. trad. sh. 12 mth 37
Daily avg. trad. vol. 12 mth (m) 55
Price high 12 mth (EUR) 4.67
Price low 12 mth (EUR) 2.65
Abs. perf. 1 mth -1.09%
Abs. perf. 3 mth 0.22%
Abs. perf. 12 mth 67.78%
Key financials (EUR) 12/15 12/16e 12/17e
Sales (m) 751 873 1,036
EBITDA (m) 28 35 53
EBITDA margin 3.7% 4.0% 5.1%
EBIT (m) 24 32 49
EBIT margin 3.3% 3.6% 4.8%
Net Profit (adj.)(m) 14 12 28
ROCE 7.1% 7.7% 10.7%
Net debt/(cash) (m) 231 282 305
Net Debt/Equity 0.8 1.0 1.0
Debt/EBITDA 8.3 8.0 5.8
Int. cover(EBITDA/Fin. int) 4.1 2.1 3.6
EV/Sales 0.6 0.7 0.6
EV/EBITDA 16.6 17.0 11.8
EV/EBITDA (adj.) 16.6 17.0 11.8
EV/EBIT 19.0 18.9 12.6
P/E (adj.) 13.4 22.7 9.8
P/BV 0.7 1.0 0.9
OpFCF yield 23.9% -15.0% -5.0%
Dividend yield 2.2% 2.2% 2.4%
EPS (adj.) 0.23 0.20 0.46
BVPS 4.58 4.62 4.91
DPS 0.10 0.10 0.11
2.0
2.5
3.0
3.5
4.0
4.5
5.0
Sep 15 Oct 15 Nov 15 Dec 15 Jan 16 Feb 16 Mar 16 Apr 16 May 16 Jun 16 Jul 16 Aug 16 Sep 16 Oct 16
vvdsvdvsdy
SRV OMXH (Rebased)Source: Factset
Shareholders: Kokkila Ilpo 22%; Kolpi Investments Oy
19%; Kokkila Timo 13%;
Page 38 of 63
Produced & Distributed by the Members of ESN (see last page of this report)
Vinci
France/Materials, Construction & Infrastructure Analyser
MATERIALS, CONSTRUCTION & INFRASTRUCTURE
Vinci (Accumulate) Q3 preview: Significant earnings growth driven by residential construction
9M 2016: reported figures miss the consensus by EUR200m
The facts: Without drama, it is true, published figures slightly diverged from
provisional ones. Vinci published consolidated revenues of EUR27.6bn, lower
than consensus revenues of EUR27.8bn (a difference of EUR200m, with the
guilty party being identified as the Vinci Énergies segment). Guidance has not
been changed (slight fall in revenues, rise in operating income and net income).
Our analysis: 9M revenues posted an organic decrease of -2.9% (-2.6% in H1,
-3.4% in Q3). The trend remains globally positive like in H1 but shows a two-
speed trend: very buoyant rate for concession business lines which posted
unwavering growth (H1 at + 5.8%, Q3 at +6.6%), but the opposite, i.e. a laborious
trend for contracting business lines, for which revenues fell by 5.4% l-f-l in Q3.
Vinci Énergies, an asset traditionally well managed (Quartz, a very efficient
software package for bidding and monitoring business) sprang a negative
surprise (stable in H1 but a decrease of 5.4% in Q3 focused on International
which fell by 7.6%, partially due to one-off invoicing delays in Germany with, in
principle, no impact on margins), as well as in France.
Conclusion & Action: IV maintained at EUR71. Given the momentum shown on
more profitable business lines (airport concessions, Cofiroute and ASF), Vinci
should have no difficulty in improving its results and nourishing its shareholders.
Analyst(s):
Jean-Christophe Lefèvre-Moulenq, CM - CIC Market Solutions [email protected]
+33 1 53 48 80 65
Accumulate
67.48
closing price as of 25/10/2016
71.00
Target Price unchanged
Recommendation unchanged
Target price: EUR
Share price: EUR
Reuters/Bloomberg SGEF.PA/DG FP
Market capitalisation (EURm) 40,127
Current N° of shares (m) 595
Free float 81%
Daily avg. no. trad. sh. 12 mth 1,599
Daily avg. trad. vol. 12 mth (m) 42,861
Price high 12 mth (EUR) 69.68
Price low 12 mth (EUR) 56.86
Abs. perf. 1 mth -1.76%
Abs. perf. 3 mth 0.40%
Abs. perf. 12 mth 12.24%
Key financials (EUR) 12/15 12/16e 12/17e
Sales (m) 39,158 38,530 39,064
EBITDA (m) 5,966 6,188 6,352
EBITDA margin 15.2% 16.1% 16.3%
EBIT (m) 3,755 4,009 4,143
EBIT margin 9.6% 10.4% 10.6%
Net Profit (adj.)(m) 2,042 2,276 2,374
ROCE 7.7% 8.0% 8.4%
Net debt/(cash) (m) 12,439 12,298 10,853
Net Debt/Equity 0.8 0.8 0.6
Debt/EBITDA 2.1 2.0 1.7
Int. cover(EBITDA/Fin. int) 10.3 11.2 12.2
EV/Sales 1.2 1.4 1.3
EV/EBITDA 8.0 8.6 8.1
EV/EBITDA (adj.) 8.0 8.5 8.0
EV/EBIT 12.7 13.2 12.4
P/E (adj.) 16.2 16.8 16.1
P/BV 2.3 2.5 2.3
OpFCF yield 8.6% 7.2% 6.7%
Dividend yield 2.7% 2.9% 3.0%
EPS (adj.) 3.65 4.01 4.18
BVPS 25.69 27.25 29.17
DPS 1.84 1.95 2.00
52
54
56
58
60
62
64
66
68
70
Oct 15 Nov 15 Dec 15 Jan 16 Feb 16 Mar 16 Apr 16 May 16 Jun 16 Jul 16 Aug 16 Sep 16 Oct 16
vvdsvdvsdy
VINCI Stoxx Construction & Materials (Rebased)Source: Factset
Shareholders: Salari¿s/Employees 9%; Qatar Diar Real
Estate 4%; Treasury stock 6%;
Page 39 of 63
Produced & Distributed by the Members of ESN (see last page of this report)
Axel Springer
Germany/Media Analyser
MEDIA
Axel Springer (Neutral) 9M 2016: reported figures miss the consensus by EUR200m
Dull 9M results could put pressure on FY guidance
The facts: We expect Q3 results to allow SPR to confirm existing operational
guidance although we anticipate consensus moving towards the lower end of the
guided range. However, higher financing charges are likely to make it difficult for
the group to record growth in adjusted EPS this year. We lower our target price
to EUR 51 but retain our Neutral rating.
Our analysis: For Q3-16 we model sales of EUR 807m (+1%) making for 9M-16
EUR 2.39bn (+1%). Thus existing guidance calling for annual sales around the
2015 level is still likely: we assume +1%. In terms of EBITDA despite modelling
strong 10% growth in Q3, with less than 5% at 9M, annual guidance calling for
mid to high-single digit growth is just achievable (but equinet +4%).
By division, Digital Classifieds is expected to be the main sales driver growing by
11% to EUR 214m with the real estate segment recording the strongest
development, but good growth also anticipated in job classifieds and general
segments. The slowing vs previous quarters reflect lower contribution from
acquisitions plus high single-digit organic growth. With flat margins EBITDA of
EUR 87m (+12%) is forecast in Q3.
In Paid Models we look for 4% sales decline to EUR 365m with national
businesses down 1% and international operations 12% lower following the
disposal of the Swiss titles. For EBITDA we see EUR 52m (+4%) with slightly
faster growth abroad supported by the first eMarketeer contribution.
Marketing Models could record 4% sales growth to EUR 213m, largely from
Reach-based models since the Performance models is the segment most
affected by Brexit FX hit. We expect 5% growth in EBITDA, but 9M will still be
down 1%. The division has been addressing its costs base, but sterling’s
devaluation will weigh on future profits.
Conclusion & Action: Assuming lower margins in our DCF, we lower our TP to
EUR51 and thus, Axel Springer shares look a little under-valued at the moment.
We believe that the key issue here is the depressed valuations seen in the
sector at large (particular digital peers) which has under-performed the weak
stock markets in 2016. For the time being we maintain a Neutral rating on the
shares.
Analyst(s):
Mark Josefson, equinet Bank
+4969-58997-437
Neutral
45.11
closing price as of 25/10/2016
51.00
55.00from Target Price: EUR
Recommendation unchanged
Target price: EUR
Share price: EUR
Reuters/Bloomberg SPRGn.DE/SPR GR
Market capitalisation (EURm) 4,865
Current N° of shares (m) 108
Free float 39%
Daily avg. no. trad. sh. 12 mth 132
Daily avg. trad. vol. 12 mth (m) 3,761
Price high 12 mth (EUR) 52.90
Price low 12 mth (EUR) 42.81
Abs. perf. 1 mth -1.46%
Abs. perf. 3 mth -8.00%
Abs. perf. 12 mth -11.95%
Key financials (EUR) 12/15 12/16e 12/17e
Sales (m) 3,295 3,321 3,441
EBITDA (m) 663 709 569
EBITDA margin 20.1% 21.4% 16.6%
EBIT (m) 463 508 360
EBIT margin 14.0% 15.3% 10.5%
Net Profit (adj.)(m) 221 239 288
ROCE 5.2% 4.7% 8.0%
Net debt/(cash) (m) 999 1,280 1,242
Net Debt/Equity 0.4 0.6 0.5
Debt/EBITDA 1.5 1.8 2.2
Int. cover(EBITDA/Fin. int) 42.2 high high
EV/Sales 2.1 2.1 2.0
EV/EBITDA 10.4 9.8 12.1
EV/EBITDA (adj.) 12.3 11.9 10.9
EV/EBIT 14.9 13.6 19.1
P/E (adj.) 23.2 20.3 16.9
P/BV 2.5 2.7 2.6
OpFCF yield 4.7% 4.2% 7.4%
Dividend yield 4.0% 3.7% 4.1%
EPS (adj.) 2.22 2.22 2.67
BVPS 20.69 16.71 17.16
DPS 1.79 1.66 1.85
42
44
46
48
50
52
54
Sep 15 Oct 15 Nov 15 Dec 15 Jan 16 Feb 16 Mar 16 Apr 16 May 16 Jun 16 Jul 16 Aug 16 Sep 16 Oct 16
vvdsvdvsdy
AXEL SPRINGER MDAX (Rebased)Source: Factset
Shareholders: Axel Springer Gesellschaft fuer Publizistik
GmbH & Co. 47%; General Atlantic LLC
8%; Friede Springer 5%;
Page 40 of 63
Produced & Distributed by the Members of ESN (see last page of this report)
Gruppo Ed. L’Espresso
Italy/Media Analyser
MEDIA
Gruppo Ed. L'Espresso (Accumulate) Dull 9M results could put pressure on FY guidance
Q3 2016 Pre: negative trends expected to continue
The facts: Q3 2016 preview (publication today).
Our analysis: We expect once again weak top-line taking into account the
negative performance of the Italian print advertising segment and the downward
acceleration in newspapers diffusion.
According to NMR figures, newspaper advertising declined by 7.7% Y/Y in
July/August vs. -5.4% in Q2, magazines deteriorated to -6.6% vs. -1.8%, however
radio strongly improved with +3.9% vs. a flattish (-0.3%) trend in Q2. Internet also
back to growth at +1.6% (-4.1%). The fall in copies for La Repubblica kept to
around 16% in August, in line with the trend of the market leader "Il Corriere". We
expect Q2 EBITDA to decline by EUR 1/2m Y/Y, depending on the balance
between new restructuring costs and the potential further release of past
provisions. We expect net cash to have further increased by EUR 4/5m vs. the
June 30, 2016 level thanks to positive NWC dynamics.
Editoriale L’Espresso 9m 2016 PREVIEW (EUR m)
Q3 2015a Q3 16e Y/Y 9m 2015a 9m 16e Y/Y
Sales 133.9 128.5 -4.0% 439.6 421.4 -4.1%
advertising 67.5 65.1 -3.5% 245.0 235.8 -3.7%
Circulation&Other 66.4 63.4 -4.5% 194.6 185.6 -4.6%
EBITDA rep. 9.9 8.5 -14.1% 40.9 35.8 -12%
margin 7.4% 6.6% -0.8pp 9.3% 8.5% -0.8pp
EBIT 6.3 4.7 -25% 29.9 24.6 -18%
EBT 4.3 3.7 -14.0% 32.9 20.1 -39%
Net Debt (cash) 8.1 (22.0) nm 8.1 (22.0) nm
Source: Company data, BANCA AKROS estimates (adjusted for Jinny)
Outlook: In our preview of H1 results, we cut our revenues estimates 2016/18 by
5% on average, with EBITDA impacted by 10% and net income, FCFE by
13/14%. Post-H1 2016 results, we have only marginally trimmed our forecasts.
The acquisition of ITEDI (La Stampa/Il Secolo XIX) is due to be finalized by Q1
2017; subject to the approval of relevant authorities. L'Espresso is selling some
regional newspapers in order to comply with the 20% threshold on circulation. We
have not included the impact of the deal in our estimates, or in the target price.
Conclusion & Action: We expect another weak quarter; the main positive point
is the net cash position, which is set to increase further.
Analyst(s):
Andrea Devita, CFA, Banca Akros
+39 02 4344 4031
Accumulate
0.74
closing price as of 25/10/2016
1.12
Target Price unchanged
Recommendation unchanged
Target price: EUR
Share price: EUR
Reuters/Bloomberg ESPI.MI/ES IM
Market capitalisation (EURm) 301
Current N° of shares (m) 408
Free float 40%
Daily avg. no. trad. sh. 12 mth 228
Daily avg. trad. vol. 12 mth (m) 143
Price high 12 mth (EUR) 1.04
Price low 12 mth (EUR) 0.70
Abs. perf. 1 mth 2.43%
Abs. perf. 3 mth -1.86%
Abs. perf. 12 mth -24.53%
Key financials (EUR) 12/15 12/16e 12/17e
Sales (m) 605 581 579
EBITDA (m) 48 50 53
EBITDA margin 7.8% 8.7% 9.2%
EBIT (m) 30 35 38
EBIT margin 5.0% 6.1% 6.6%
Net Profit (adj.)(m) 17 14 19
ROCE 4.2% 3.9% 4.0%
Net debt/(cash) (m) 11 (21) (23)
Net Debt/Equity 0.0 0.0 0.0
Debt/EBITDA 0.2 -0.4 -0.4
Int. cover(EBITDA/Fin. int) 5.4 8.4 high
EV/Sales 0.6 0.4 0.4
EV/EBITDA 7.3 4.4 4.1
EV/EBITDA (adj.) 5.9 4.2 4.0
EV/EBIT 11.4 6.2 5.7
P/E (adj.) 24.3 20.9 16.0
P/BV 0.7 0.5 0.5
OpFCF yield 7.4% 11.1% 0.2%
Dividend yield 0.0% 0.0% 0.0%
EPS (adj.) 0.04 0.04 0.05
BVPS 1.44 1.48 1.53
DPS 0.00 0.00 0.00
0.65
0.70
0.75
0.80
0.85
0.90
0.95
1.00
1.05
set 15 ott 15 nov 15 dic 15 gen 16 feb 16 mar 16 apr 16 mag 16 giu 16 lug 16 ago 16 set 16 ott 16
vvdsvdvsdy
EDITORIALE L'ESPRESSO Stoxx Media (Rebased)Source: Factset
Shareholders: Carlo De Benedetti 53%; Eredi
Caracciolo 12%;
Page 41 of 63
Produced & Distributed by the Members of ESN (see last page of this report)
Havas
France/Media Analyser
MEDIA
Havas (Buy) Q3 2016 Pre: negative trends expected to continue
Slightly disappointing Q3-16 but encouraging prospects!
The facts: 9M 2016 revenues at EUR1,624m (+4.7%) posting organic growth of
+2.7%, i.e. a Q3-16 at EUR537m up by +2.0% organically, slightly lower than our
estimates (EUR538m +2.3%) and those of the consensus (EUR534m/+2.5%). To
be compared with Publicis (+0.2%), Interpublic (+4.3%) and Omnicom (+3.2%).
The company held a conference call.
Our analysis: 1) new growth slowdown after a Q1-16 at +3.4% and Q2-16 at
+2.7%. The base effect was still difficult (+5.5% in Q3-15) but will improve in Q4
(+3.1% in Q4-15); 2) in Q3-16, Europe (50% of revenues) performed very well with
an impressive +7.7% whereas all the other regions switched into negative growth
(North America -1.2%, APAC & Africa -7.1% and LatAm-6.3%); 3) strong
commercial momentum with 9M Net New Business at EUR2,054m vs EUR1,377m.
Outlook: in 2016, the group is expecting an improvement for North America in Q4.
The organic growth target which had been revised up to between 3% and 4% has
now been fixed at between +2.5% and +3%. We have adjusted our forecasts to
+2.9% vs +3.5% and have left our profitability growth estimate unchanged (+10bp)
at 14.5%. The group is going into 2017 with confidence thanks to a return to growth
for APAC, LatAm and North America. We have revised down our forecast to +3%
vs +3.5% as for Publicis, i.e., a 1% cut to our 2016-18 EPS estimates. Comments
on Bolloré’s declaration of intentions (for six months) communicated to French
market watchdog AMF on the fact that it is considering with Vivendi “to study
synergies or possible tie-ups between their respective activities in media and
communication: “time will tell”!
Conclusion & Action: For the second consecutive quarter, Havas no longer
outperformed its market. This does not invalidate our profitable growth scenario
even though momentum is less strong. The under-leveraged financial structure
(which helps to envisage a cash return and/or acquisitions) and the speculative
appeal in the long run (disposal or transfer to Vivendi, offers from WPP or Dentsu,
etc.) are support factors for the stock. Make the most of a possible decrease to
buy more shares.
Analyst(s):
Emmanuel Chevalier, CM - CIC Market Solutions
+33 1 53 48 80 72
Buy
7.43
closing price as of 25/10/2016
8.80
Target Price unchanged
Recommendation unchanged
Target price: EUR
Share price: EUR
Reuters/Bloomberg EURC.PA/HAV FP
Market capitalisation (EURm) 3,099
Current N° of shares (m) 417
Free float 61%
Daily avg. no. trad. sh. 12 mth 222
Daily avg. trad. vol. 12 mth (m) 764
Price high 12 mth (EUR) 8.19
Price low 12 mth (EUR) 6.69
Abs. perf. 1 mth -2.33%
Abs. perf. 3 mth 0.34%
Abs. perf. 12 mth -7.07%
Key financials (EUR) 12/15 12/16e 12/17e
Gross margin (m) 2,188 2,262 2,330
EBITDA (m) 343 361 382
EBIT (m) 293 309 329
EBIT margin 13.4% 13.7% 14.1%
Net Profit (adj.)(m) 172 189 203
ROCE 16.2% 17.1% 18.1%
Net debt/(cash) (m) (128) (278) (431)
Net Debt/Equity -0.1 -0.2 -0.2
Debt/EBITDA -0.4 -0.8 -1.1
Int. cover(EBITDA/Fin. int) 21.5 24.6 29.8
EV/Sales 1.5 1.3 1.2
EV/EBITDA 9.6 8.3 7.4
EV/EBITDA (adj.) 9.1 7.8 7.1
EV/EBIT 11.3 9.6 8.6
P/E (adj.) 18.9 16.5 15.4
P/BV 2.3 2.0 1.8
OpFCF yield 7.7% 6.8% 7.3%
Dividend yield 2.0% 2.3% 2.6%
EPS (adj.) 0.41 0.45 0.48
BVPS 3.42 3.72 4.04
DPS 0.15 0.17 0.19
6.2
6.4
6.6
6.8
7.0
7.2
7.4
7.6
7.8
8.0
8.2
Oct 15 Nov 15 Dec 15 Jan 16 Feb 16 Mar 16 Apr 16 May 16 Jun 16 Jul 16 Aug 16 Sep 16 Oct 16
vvdsvdvsdy
HAVAS Stoxx Media (Rebased)Source: Factset
Shareholders: Bollor¿ M¿dias Investissements 37%;
Rod¿s Family 2%; Treasury shares
0.00%;
Page 42 of 63
Produced & Distributed by the Members of ESN (see last page of this report)
Impresa
Portugal/Media Analyser
MEDIA
Impresa (Buy) Slightly disappointing Q3-16 but encouraging prospects!
3Q16 results below expectations
The facts: Yesterday Impresa disclosed the 3Q16 results and today the company
will hold a conference call at 15.00. The top line, EBITDA and bottom-line were
below our forecasts mainly due to a much worse than anticipated performance of
the television segment.
Our analysis: On the 3Q16 total revenues dropped 14.5% YoY (-8.9% YoY in the
9M16) with the television and publishing segment falling 15.5% and 13% YoY
respectively (-7.7% and -12.6% YoY respectively in the 9M16).
Revenues were lower than expected particularly in the advertising revenues of the
television segment: we were expecting an increase of 4.5% in the 3Q16 YoY
while we were surprised to see that advertising revenues dropped more than
8.3% with the company clearly loosing market share.
The 8.1% reduction in operating costs was not sufficient to offset the drop in the
top line and the EBITDA in the 3Q16 decreased YoY from EUR 4m to EUR 0.3m.
Conclusion & Action: Impresa presented a poorer than expected results, largely
due to a decrease in the advertising market in the 3Q while we were expecting an
increase. Considering this we will have to make a downwards adjustment in our
estimates for the FY16.
Analyst(s):
Helena Barbosa, Caixa-Banco de Investimento
+351 21 389 6831
Buy
0.23
closing price as of 25/10/2016
0.75
Target Price unchanged
Recommendation unchanged
Target price: EUR
Share price: EUR
Reuters/Bloomberg IMPA.LS/IPR PL
Market capitalisation (EURm) 38
Current N° of shares (m) 168
Free float 28%
Daily avg. no. trad. sh. 12 mth 146
Daily avg. trad. vol. 12 mth (m) 46
Price high 12 mth (EUR) 0.64
Price low 12 mth (EUR) 0.19
Abs. perf. 1 mth -6.25%
Abs. perf. 3 mth 5.14%
Abs. perf. 12 mth -64.57%
Key financials (EUR) 12/15 12/16e 12/17e
Sales (m) 231 215 216
EBITDA (m) 23 24 26
EBITDA margin 9.8% 11.1% 12.0%
EBIT (m) 19 20 22
EBIT margin 8.1% 9.5% 10.4%
Net Profit (adj.)(m) 4 8 10
ROCE 4.3% 4.7% 5.0%
Net debt/(cash) (m) 179 171 167
Net Debt/Equity 1.3 1.1 1.0
Debt/EBITDA 7.9 7.1 6.4
Int. cover(EBITDA/Fin. int) 1.9 3.1 3.4
EV/Sales 1.0 0.9 0.9
EV/EBITDA 10.8 8.1 7.3
EV/EBITDA (adj.) 10.8 8.1 7.3
EV/EBIT 13.0 9.5 8.4
P/E (adj.) 19.6 4.7 4.0
P/BV 0.6 0.3 0.2
OpFCF yield 5.6% 21.6% 11.3%
Dividend yield 0.0% 0.0% 0.0%
EPS (adj.) 0.02 0.05 0.06
BVPS 0.84 0.89 0.95
DPS 0.00 0.00 0.00
EUR m 9M15 9M16 % Var 9M16e 3Q15 3Q16 % Var 3Q16e
Revenues 164.5 149.8 -8.9% 153.8 53.0 45.3 -14.5% 49.2
TV 123.1 113.6 -7.7% 117.5 39.6 33.4 -15.5% 37.3
Publishing 40.4 35.3 -12.6% 35.6 13.1 11.4 -13.0% 11.7
Others 1.0 0.9 -11.0% 0.7 0.3 0.4 61.9% 0.3
Operating Costs 150.2 141.1 -6.1% 143.0 49.0 45.0 -8.1% 47.1
EBITDA 14.2 8.7 -38.6% 10.8 4.0 0.3 -93.3% 2.2
EBITDA margin 8.7% 5.8% -2.9pp 7.0% 7.5% 0.6% -7.0pp 4.5%
TV 14.4 11.2 -21.7% 13.0 4.0 0.7 -82.6% 2.5
Publishing 2.3 0.1 -95.4% 0.4 0.7 0.2 -72.3% 0.5
Others -2.5 -2.6 6.2% -2.7 -0.8 -0.6 -17.7% -0.8
Depreciations 2.9 2.6 -10.3% 2.6 1.0 0.9 -10.1% 0.9
Financial results -9.2 -6.0 -34.4% -6.4 -2.2 -2.2 2.2% -2.0
Net Income 1.1 -0.6 n.m 1.0 0.4 -1.8 n.m -0.7
0.15
0.20
0.25
0.30
0.35
0.40
0.45
0.50
0.55
0.60
0.65
Oct 15 Nov 15 Dec 15 Jan 16 Feb 16 Mar 16 Apr 16 May 16 Jun 16 Jul 16 Aug 16 Sep 16 Oct 16
vvdsvdvsdy
IMPRESA Stoxx Media (Rebased)Source: Factset
Shareholders: Impreger 50%; Invesco 5%; Madre 5%;
FIL Ltd 5%; Grupo BPI 4%; Santander
3%;
Page 43 of 63
Produced & Distributed by the Members of ESN (see last page of this report)
Galp Energia
Portugal/Oil & Gas Producers Analyser
OIL & GAS PRODUCERS
Galp Energia (Accumulate) 3Q16 results below expectations
3Q16 results: higher output and robust R&M
The facts: Galp will release its 3Q16 results on October 28 before the opening of
the Lisbon market. We anticipate EBITDA RCA of EUR 388m and net income
RCA of EUR 103m. Consensus for EBITDA and net income stands at EUR 377m
and EUR 115m, respectively.
Our analysis: The company already published its trading update on October 14,
disclosing key operating figures. Working interest production in the quarter rose
to 74 kboed from 54.7 kboed in Q2 and 45.7 kboed in 3Q15. The large qoq
increase is explained by a weaker second quarter when the ramp up of the
Brazilian pre-salt project of Lula/Iracema was hurt by maintenance operations
carried out in April in the Lula Pilot and Lula Northeast areas, and also by the lack
of connection of FPSO #4 to the Cabiúnas gas pipeline that restrained production
in that unit. Therefore, the reading of Q3 figure must be adjusted by this negative
base effect of Q2. Despite that, the ramp up of production in Brazil continues to
be the main highlight of the company’s investment case. Net entitlement
production reached 68.8 kboed from 51.7 kboed in Q2. Processed raw materials
in refining stood at 29.4 million barrels up from 26.3 million barrels in Q2, but
slightly less than the 29.8 million barrels of 3Q15. Product sales were of 4.3
million tons in the quarter (4.8 million in 3Q15), of which 2.3 million to direct
customers (2.4 million in 3Q15). Gas sales stood at 1.750 bcm in 3Q16 from
1.909 bcm in the same quarter of 2015. Benchmark NWE refining margin was 2.3
$/bbl vs. 6.2 $/bbl in 3Q15 and 2.9 $/bbl in Q2. As mentioned, the large qoq
increase in crude production is mainly explained by a base effect but,
nonetheless, the ramp up in production remains the single most important item in
Galp’s medium-long term investment case. After normalization of production in
the first units deployed in Lula/Iracema, the fourth FPSO (Cidade de Itaguaí)
reached plateau, the fifth (Cidade de Maricá) continued to ramp up and the sixth
unit (Cidade de Saquarema) contributed with 1 production well in the full quarter
and with a second in October. Flow rates are expected to remain high close to 30
kboed.
Conclusion & Action. In our opinion, the main highlights of the quarter are
related with the ramp up of production in Brazil and the good performance of R&M
despite the qoq decrease of benchmark refining margins. Management should
give more details on earnings and project delivery in the conference call on the
28th
, after which we’ll publish our comment on results.
Analyst(s):
Carlos Jesus, Caixa-Banco de Investimento
+351 21 389 6812
Accumulate
12.75
closing price as of 25/10/2016
12.40
Target Price unchanged
Recommendation unchanged
Target price: EUR
Share price: EUR
Reuters/Bloomberg GALP.LS/GALP PL
Market capitalisation (EURm) 10,570
Current N° of shares (m) 829
Free float 60%
Daily avg. no. trad. sh. 12 mth 1,588
Daily avg. trad. vol. 12 mth (m) 14,907
Price high 12 mth (EUR) 13.43
Price low 12 mth (EUR) 9.10
Abs. perf. 1 mth 7.69%
Abs. perf. 3 mth 4.42%
Abs. perf. 12 mth 29.30%
Key financials (EUR) 12/15 12/16e 12/17e
Sales (m) 15,517 13,858 16,183
EBITDA (m) 1,564 1,386 1,955
EBITDA margin 10.1% 10.0% 12.1%
EBIT (m) 996 715 1,161
EBIT margin 6.4% 5.2% 7.2%
Net Profit (adj.)(m) 639 437 557
ROCE 9.6% 7.4% 11.2%
Net debt/(cash) (m) 2,421 2,481 2,462
Net Debt/Equity 0.4 0.4 0.4
Debt/EBITDA 1.5 1.8 1.3
Int. cover(EBITDA/Fin. int) 13.1 11.5 14.3
EV/Sales 0.7 0.9 0.8
EV/EBITDA 7.2 9.4 6.7
EV/EBITDA (adj.) 7.2 9.4 6.7
EV/EBIT 11.4 18.3 11.2
P/E (adj.) 13.9 24.2 19.0
P/BV 1.9 2.1 2.1
OpFCF yield 11.4% -0.8% 1.6%
Dividend yield 3.3% 3.9% 3.9%
EPS (adj.) 0.77 0.53 0.67
BVPS 5.76 5.97 6.15
DPS 0.41 0.50 0.50
7
8
9
10
11
12
13
14
Oct 15 Nov 15 Dec 15 Jan 16 Feb 16 Mar 16 Apr 16 May 16 Jun 16 Jul 16 Aug 16 Sep 16 Oct 16
vvdsvdvsdy
GALP ENERGIA Stoxx Oil & Gas (Rebased)Source: Factset
Shareholders: Amorim Energia 33%; Parpública 7%;
RCA figures (EURm) 3Q15 2Q16 3Q16e YoY QoQ 9M16e 9M15
EBITDA 411 337 388 -5.6% 15.1% 1,018 1,255
E&P 89 86 137 271 303
R&M 245 143 172 463 634
G&P 72 97 78 265 295
Depreciations -140 -144 -176 -471 -422
Provisions -8 -8 -5 -18 -17
EBIT 263 185 207 -21.2% 12.1% 529 816
Net financials -11 15 -22 -4 -94
Associates 17 24 25 70 60
Investments 0 0 0 0 1
Taxes -69 -79 -90 -208 -248
Minority interests -20 -12 -17 -38 -46
Net income 180 133 103 -43.0% -22.9% 350 490
EPS 0.22 0.16 0.12 0.42 0.59
Page 44 of 63
Produced & Distributed by the Members of ESN (see last page of this report)
Neste
Q3/2015a Growth
EURm Q3a vs. Cons. OP Cons. Diff.
Oil Products 1,961 4% 1,599 1,886 -15% 2,060 -22%
Renewable Products 640 -3% 729 657 11% 582 25%
Oil Retail 925 -4% 985 960 3% 991 -1%
Others 73 20% 65 61 7% 60 8%
Eliminations -564 #DIV/0! -464 #DIV/0! -670 -31%
Total sales 3,034 4% 2,913 2,928.0 -1% 3,023 -4%
Sales growth
EBIT
Oil Products 120.0 4% 83.9 115 -27% 178 -53%
Renewable Products 124.0 -12% 153.5 141 9% 75 104%
Oil Retail 25.0 -7% 25.0 27 -7% 27 -7%
Others -6.0 -500,0 % 10.0 -1 n.a. -1 -1100%
Eliminations 0.0 #DIV/0! -2.0 #DIV/0! 1 -300%
Total EBIT 264.0 -6% 270.4 281.0 -4% 281.0 -4%
Total EBIT margin 8.7 % 9.3 % 9.6 % 9.3 %#DIV/0!
PTP 239 #DIV/0! 250.4 #DIV/0! 281.0 -10.9 %
EPS 0.80 -2% 0.80 0.82 -2% 0.89 -9.7 %#DIV/0!
DPS #DIV/0!
Source : OP and Neste
Q3/2016e
Neste Corporation
Finland/Oil & Gas Producers Analyser
OIL & GAS PRODUCERS
Neste Corporation (Neutral) 3Q16 results: higher output and robust R&M
Recommendation Neutral while waiting for decisions
The facts: Neste’s comparable EBIT (EUR 264m) in Q3 was slightly lower than
our forecast (EUR 270m) and consensus (EUR 281m). Compared to our
forecasts, the result of the Oil Products division was clearly a positive surprise,
and the result of Renewable Products was lower than predicted, mainly due to
lower than estimated sales volumes.
Our analysis: As usual, the company did not issue earnings guidance for Q4 or
2016. The reference margins for Oil Products are estimated to be slightly higher
in Q4 than in Q3, and the reference margins for Renewable Products are
estimated to remain at the average level of 2015. The reference margin for Oil
Products has improved in October, and the Q4 outlook for Renewable Products is
supported by solid volume expectations and the seasonal strengthening of the
market in Europe as well as RIN prices that have remained at a high level.
Conclusion & Action: We are downgrading our target price to EUR 37.00 (from
EUR 38.00). Our recommendation is still Neutral. Our target price corresponds to
the P/E multiple average (12.0) calculated using our revised earnings forecast for
2016 and Neste’s 12-month forecasts for 2013–2016. The time horizon of the
valuation multiple corresponds to the period of consistently positive generation of
quarterly operating profit at Renewable Products.
In our opinion, the most significant themes during the next couple of quarters in
terms of share price formation are the decision about the Blender’s Tax Credit in
the US biofuel market in 2017 and the end result of the company’s survey
concerning the increase of the Renewable Products’ capacity.
Analyst(s):
Henri Parkkinen, OP Corporate Bank
+358 10 252 4409
Neutral
38.50
closing price as of 25/10/2016
37.00
38.00from Target Price: EUR
Recommendation unchanged
Target price: EUR
Share price: EUR
Reuters/Bloomberg NESTE.HE/NESTE FH
Market capitalisation (EURm) 9,852
Current N° of shares (m) 256
Free float 50%
Daily avg. no. trad. sh. 12 mth 788
Daily avg. trad. vol. 12 mth (m) 64,466
Price high 12 mth (EUR) 40.78
Price low 12 mth (EUR) 21.50
Abs. perf. 1 mth 3.00%
Abs. perf. 3 mth 25.20%
Abs. perf. 12 mth 78.82%
Key financials (EUR) 12/15 12/16e 12/17e
Sales (m) 11,128 11,295 12,250
EBITDA (m) 1,054 1,294 1,126
EBITDA margin 9.5% 11.5% 9.2%
EBIT (m) 925 1,000 898
EBIT margin 8.3% 8.9% 7.3%
Net Profit (adj.)(m) 727 777 661
ROCE 16.0% 16.8% 15.2%
Net debt/(cash) (m) 1,270 859 477
Net Debt/Equity 0.4 0.2 0.1
Debt/EBITDA 1.2 0.7 0.4
Int. cover(EBITDA/Fin. int) 16.2 13.5 15.6
EV/Sales 0.7 0.9 0.8
EV/EBITDA 7.9 8.3 9.2
EV/EBITDA (adj.) 7.9 8.3 9.2
EV/EBIT 9.0 10.7 11.5
P/E (adj.) 9.7 12.7 14.9
P/BV 2.3 2.7 2.5
OpFCF yield 2.6% 5.0% 5.3%
Dividend yield 2.6% 3.1% 3.1%
EPS (adj.) 2.84 3.03 2.58
BVPS 12.13 14.17 15.55
DPS 1.00 1.20 1.20
15
20
25
30
35
40
45
Sep 15 Oct 15 Nov 15 Dec 15 Jan 16 Feb 16 Mar 16 Apr 16 May 16 Jun 16 Jul 16 Aug 16 Sep 16 Oct 16
vvdsvdvsdy
NESTE CORPORATION Stoxx Oil & Gas (Rebased)Source: Factset
Shareholders: Prime Minister´s Office 50%; Ilmarinen
Mutual Pension Insurance Company 3%;
Varma Mutual Pension Insurance
Company 1.20%;
Page 45 of 63
Produced & Distributed by the Members of ESN (see last page of this report)
Saipem
Italy/Oil Services Analyser
OIL SERVICES
Saipem (Neutral) Recommendation Neutral while waiting for decisions
One-offs weigh on Q3 – 2017 targets revised downwards
The facts: Saipem published its third quarter results yesterday after market
closing
Our analysis: the company’s results were almost in line with our estimates at the
operative level. The company’s bottom line was much worse than expected after
some EUR 2bn write-downs and write-offs; this was mainly related to the offshore
drilling division (around EUR 1.1bn) and the E&C offshore (around EUR 400m).
Q3 15 Q3 16 y/y% Q3 16e
revenues 3,072 2,610 -15.0% 2,521
EBITDA 321 328 2.2% 316
margin 10.4% 12.6%
12.5%
EBIT adj. 143 155
137
margin 4.7% 5.9%
5.4%
PBT 62 108 74.2% 106
Net profit 47 60 27.7% 68
One-off 7 -2,038
0
Net profit reported 54 -1,978
68
2016 guidance confirmed - The company confirmed its 2016 guidance of
revenues at EUR 10.5bn, EBIT of EUR 600m, net profit of EUR 200m and net
debt at EUR 1.5bn.
2017 revised downwards – the company also updated its 2017 guidance as
follows
old guidance consensus new guidance
Revenues > EUR 11bn EUR 9.4bn ~ EUR 10bn
EBIT ~ EUR 700m EUR 470m ~ EUR 400m
Net debt <EUR 1bn EUR 1.05bn <EUR 1.4bn
The main difference is a sizeably worse guidance on net debt: this revision is the
result of some dividend payments to third parties arising from SPV related to
specific contracts and worse net working capital in some projects (not disclosed)
in the Middle East. This latter component could be reversed in 2018.
As regards the Turkish Stream/South stream project the management said that
the was the possibility to find an agreement before the arbitration. It is our
understanding this agreement could include an award for the construction of the
Turkish stream.
The management also confirmed the focus on a cost-saving programme; this
includes an overall headcount reduction (800 staff headcount reduction in
Europe)
Conclusion & Action: we lower our target price to EUR 0.43/sh to take into
account the foregoing guidance especially as regards the net debt. In addition to
a rebound in oil prices the main upside relies on a positive settlement of the
dispute over the South Stream project. We change our recommendation to
Neutral from Accumulate.
Analyst(s):
Francesco Sala, Banca Akros
+39 02 4344 4240
Neutral
0.42
closing price as of 25/10/2016
0.43
0.46from Target Price: EUR
from Accumulate
Target price: EUR
Share price: EUR
Reuters/Bloomberg SPMI.MI/SPM IM
Market capitalisation (EURm) 4,231
Current N° of shares (m) 10,110
Free float 57%
Daily avg. no. trad. sh. 12 mth 74,700
Daily avg. trad. vol. 12 mth (m) 31,086
Price high 12 mth (EUR) 0.63
Price low 12 mth (EUR) 0.08
Abs. perf. 1 mth 13.11%
Abs. perf. 3 mth 1.41%
Abs. perf. 12 mth 259.04%
Key financials (EUR) 12/15 12/16e 12/17e
Sales (m) 11,512 10,576 9,682
EBITDA (m) 508 1,238 1,012
EBITDA margin 4.4% 11.7% 10.5%
EBIT (m) (452) 530 399
EBIT margin nm 5.0% 4.1%
Net Profit (adj.)(m) (806) (1,879) 220
ROCE -4.0% 10.4% 7.4%
Net debt/(cash) (m) 5,390 1,490 1,352
Net Debt/Equity 1.5 0.3 0.3
Debt/EBITDA 10.6 1.2 1.3
Int. cover(EBITDA/Fin. int) 2.1 7.7 11.9
EV/Sales 0.5 0.5 0.5
EV/EBITDA 10.4 4.5 5.2
EV/EBITDA (adj.) 10.4 4.5 5.2
EV/EBIT nm 10.4 13.2
P/E (adj.) nm nm 19.2
P/BV 0.0 0.8 0.8
OpFCF yield -2187.1% -39.2% 5.4%
Dividend yield 0.0% 0.0% 2.4%
EPS (adj.) (1.83) (0.19) 0.02
BVPS 7.87 0.50 0.53
DPS 0.00 0.00 0.01
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
set 15 ott 15 nov 15 dic 15 gen 16 feb 16 mar 16 apr 16 mag 16 giu 16 lug 16 ago 16 set 16 ott 16
vvdsvdvsdy
SAIPEM FTSE MIB (Rebased)Source: Factset
Shareholders: ENI 30%; FSI 13%;
Page 46 of 63
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Kering
France/Personal Goods Analyser
PERSONAL GOODS
Kering (Neutral) One-offs weigh on Q3 – 2017 targets revised downwards
Excellent Gucci and Saint Laurent performances in Q3
The facts: Kering reported Q3 revenues of EUR3,185m after the market
yesterday, fairly well ahead of our estimate (EUR3,075m) and the Factset
consensus (EUR3,096m), and showing solid organic growth (11%).
Our analysis: As was the case for LVMH, the ‘Luxury’ arm gathered pace
sequentially (+11% l-f-l), with a more undemanding base effect, driven by Gucci
(+17%), which benefited from the same factors as in Q2 (recovery for Wholesale,
increase with European clients), but above all the brand’s excellent creative
momentum faced with a less wait-and-see emerging market clientele. Saint
Laurent picked up speed (+34%) and became the division’s second-largest brand
in terms of revenues. Bottega Veneta suffered more (-10%) from over-exposure
to Asian clients while awaiting a fresh creative impetus to further penetrate
western clients, under the helm of Claus-Dietrich Lahrs, the former CEO of Hugo
Boss. The ‘Other brands’ posted performances in line (+3%), jewellery and the
younger fashion brands offsetting a still sluggish watches business. The ‘Sport &
LS’ arm, which is less directly exposed than Adidas to summer competitions,
maintained good momentum (+10% l-f-l) but currencies weighed more strongly (-
4%). The group did not give any guidance for Q4.
Conclusion & Action: The performance gap between brands is high but Gucci
and Saint Laurent turned in excellent showings. Demand could show signs of
volatility in the coming quarters, depending on tourist flows. Following on the
heels of LVMH, the publication confirms that the Luxury market harbours more
lasting potential to accelerate.
Analyst(s):
Arnaud Cadart, CM - CIC Market Solutions
+33 1 53 48 80 86
Neutral
188.40
closing price as of 25/10/2016
180.00
Target Price unchanged
Recommendation unchanged
Target price: EUR
Share price: EUR
Reuters/Bloomberg KER.PA/KER FP
Market capitalisation (EURm) 23,781
Current N° of shares (m) 126
Free float 59%
Daily avg. no. trad. sh. 12 mth 263
Daily avg. trad. vol. 12 mth (m) 45,445
Price high 12 mth (EUR) 192.45
Price low 12 mth (EUR) 138.60
Abs. perf. 1 mth 3.37%
Abs. perf. 3 mth 20.54%
Abs. perf. 12 mth 9.06%
Key financials (EUR) 12/15 12/16e 12/17e
Sales (m) 11,584 12,053 12,855
EBITDA (m) 1,662 2,121 2,389
EBITDA margin 14.3% 17.6% 18.6%
EBIT (m) 1,253 1,708 1,951
EBIT margin 10.8% 14.2% 15.2%
Net Profit (adj.)(m) 696 1,260 1,457
ROCE 6.2% 6.4% 7.0%
Net debt/(cash) (m) 4,679 4,291 3,784
Net Debt/Equity 0.4 0.3 0.3
Debt/EBITDA 2.8 2.0 1.6
Int. cover(EBITDA/Fin. int) 12.9 20.2 23.6
EV/Sales 2.2 2.4 2.2
EV/EBITDA 15.2 13.6 11.9
EV/EBITDA (adj.) 12.3 13.3 11.8
EV/EBIT 20.2 16.9 14.5
P/E (adj.) 28.7 18.9 16.3
P/BV 1.8 2.0 1.9
OpFCF yield 3.3% 4.4% 4.9%
Dividend yield 2.1% 2.2% 2.5%
EPS (adj.) 5.51 9.97 11.53
BVPS 86.66 92.61 99.92
DPS 4.00 4.20 4.70
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vvdsvdvsdy
KERING Stoxx Personal Goods (Rebased)Source: Factset
Shareholders: Artemis 41%; Own shares 0.00%;
Page 47 of 63
Produced & Distributed by the Members of ESN (see last page of this report)
Reply
Italy/Software & Computer Services Analyser
SOFTWARE & COMPUTER SERVICES
Reply (Neutral) Excellent Gucci and Saint Laurent performances in Q3
Q3 2016 Pre: solid quarter expected
The facts: Q3 2016 preview (publication on November 10)
Our analysis: We expect a solid quarter, characterized by the contribution of
acquired businesses in Italy (the agency Xister) and UK. In the latter country, the
Brexit impact will be fully visible in Q3 through the 15.5% average depreciation of
the Pound, while the underlying business could have probably remained intact.
The main issue there is the profitability of some contracts, which have erratically
affected the past few quarters. In Germany, we expect some slow-down of Y/Y
revenue growth (unexpectedly close to 20% in the first half) coupled with double-
digit EBITDA margin. We expect a positive net cash position at c EUR 28m (EUR
72m as per March 31, 2016, EUR 23.3m at the end of June) also depending on
the payment terms and conditions of the recent two deals (undisclosed) and the
payment of the outstanding EUR 28m in earn-out (as of June 30, 2016).
Reply 9m 2016 Preview (EUR m)
Q3 15a Q3 2016e Y/Y 9M 2015a 9m 2016e Y/Y
Revenues 171 186 8.5% 517 572 10.8%
Italy 123 135 10.5% 379 418 10.3%
Germany* 30.1 31.6 5.1% 85.2 97.5 14.4%
UK 23.0 21.7 -5.5% 66.1 66.3 0.3%
EBITDA 23.0 25.9 12.5% 70.3 77.2 9.9%
mg 13.5% 14.0% 0.5% 13.6% 13.5% -0.1%
Italy EBITDA 16.8 19.6 16.9% 57.7 64.1 11.0%
Germany EBITDA 4.0 4.1 2.8% 8.1 10.3 26.6%
UK EBITDA 2.5 2.3 -8.0% 5.9 3.3 -44.2%
Other EBITDA na -0.15 nm na -0.4 nm
EBIT 20.5 23.3 13.4% 63.4 71.3 12.5%
EBT 19.2 23.3 21.1% 63.1 70.6 11.8%
Source: Company data, BANCA AKROS estimates
Outlook: following the publication of H1 2016 results, we had increased our
estimates for full-year revenues by 3% in FY 2016, 2% for the following two years
to include the better than expected underlying trends across countries and the
impact of recent M&A. The EBITDA impact was 0.8% this year, 2.2% and 3% in
2017 and 2018 respectively.
Conclusion & Action: we expect a solid but not exceptional quarter taking into
account the first Brexit impact; focus on cash generation.
Analyst(s):
Andrea Devita, CFA, Banca Akros
+39 02 4344 4031
Neutral
114.00
closing price as of 25/10/2016
124.00
Target Price unchanged
Recommendation unchanged
Target price: EUR
Share price: EUR
Reuters/Bloomberg REY.MI/REY IM
Market capitalisation (EURm) 1,066
Current N° of shares (m) 9
Free float 38%
Daily avg. no. trad. sh. 12 mth 10
Daily avg. trad. vol. 12 mth (m) 378
Price high 12 mth (EUR) 135.90
Price low 12 mth (EUR) 105.00
Abs. perf. 1 mth -4.04%
Abs. perf. 3 mth -9.16%
Abs. perf. 12 mth 4.01%
Key financials (EUR) 12/15 12/16e 12/17e
Sales (m) 706 776 817
EBITDA (m) 99 107 117
EBITDA margin 14.0% 13.8% 14.3%
EBIT (m) 89 97 105
EBIT margin 12.7% 12.5% 12.9%
Net Profit (adj.)(m) 57 62 67
ROCE 16.3% 25.5% 26.6%
Net debt/(cash) (m) (28) (55) (104)
Net Debt/Equity -0.1 -0.2 -0.3
Debt/EBITDA -0.3 -0.5 -0.9
Int. cover(EBITDA/Fin. int) 47.8 107.3 234.1
EV/Sales 1.7 1.3 1.2
EV/EBITDA 12.0 9.5 8.3
EV/EBITDA (adj.) 12.0 9.5 8.3
EV/EBIT 13.2 10.4 9.2
P/E (adj.) 20.8 17.2 16.0
P/BV 4.0 3.1 2.6
OpFCF yield 1.7% 2.6% 5.0%
Dividend yield 0.7% 0.9% 0.9%
EPS (adj.) 6.07 6.61 7.14
BVPS 31.66 37.27 43.40
DPS 0.85 1.00 1.00
100
105
110
115
120
125
130
135
140
Sep 15 Oct 15 Nov 15 Dec 15 Jan 16 Feb 16 Mar 16 Apr 16 May 16 Jun 16 Jul 16 Aug 16 Sep 16 Oct 16
vvdsvdvsdy
REPLYSource: Factset
Shareholders: Rizzante Mario 53%; Shareholder value
mgmt AG 4%; Lodigiani Riccardo 1.90%;
JP Morgan 2.00%; Toqueville 1.20%;
Page 48 of 63
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Tieto
Finland/Software & Computer Services Analyser
SOFTWARE & COMPUTER SERVICES
Tieto (Accumulate) Q3 2016 Pre: solid quarter expected
H2 earnings concentrated to Q4
The facts: Tieto's Q3 results were disappointing compared to forecasts. The
disappointment can be largely attributed to the Industry Solutions business,
where EBIT fell EUR 5m short of consensus expectations. The lacklustre
performance was caused by shifts in licence sales to Q4. The introduction of a
new organisation model also caused temporary additional costs for Q3 (around
EUR 3–5m). Despite the modest quarter, Tieto repeats its guidance that 2016
adjusted EBIT is expect to improve from the previous year (EUR 150.8m).
Our analysis: Based on the guidance, Tieto has to deliver EBIT excl. NRI of at
least EUR 48m in Q4. On our sales forecast this means an EBIT margin of 12.1%
when in Q4 2015 the EBIT margin was 13%. We expect profitability to improve
during the rest of the year on account of the sales of Industry Solutions that have
moved to Q4. Tieto expects the EBIT margin of Technology Services and
Modernization to be at the H1 level (10.5%) or better. In practice, these two
divisions account for nearly all of Tieto's EBIT. Based on the company's
comments, we expect profitability in Q4 to be very close to the Q4 2015 EBIT
margin. Taking into account the order book to be recognised this year, Tieto will
have accumulated sales at the end of Q3 corresponding to last year's level. We
assume that the company will still get some additional sales during Q4, which
would put its sales on a growth track of around 2%. We find the EBIT guidance
realistic.
Visibility into the 2017 and 2018 performance is weakened by the rapid
transformation in the IT industry, which increasingly emphasises the cloud model.
The transition has weighed on the profitability of Tieto's peers during the transition
phase. Tieto also commented that price competitiveness has become an
increasingly important competitive factor. Tieto's cash flow is strong and we
expect the company to be able to pay out an attractive dividend even in a more
distressed market environment.
Conclusion & Action: We have not made any major revisions to our EBIT or
sales forecasts. Our target price is based on the average of the peer group's P/E
and EV/EBITDA multiples for 2017 and 2018, the dividend yield and DCF
valuation. On the basis of this method, our target price rises to EUR 26.50 (from
EUR 25) and our new recommendation is Accumulate (prev. Neutral).
Analyst(s):
Hannu Rauhala, OP Corporate Bank
+358 10 252 4392
Accumulate
25.33
closing price as of 25/10/2016
26.50
25.00from Target Price: EUR
from Neutral
Target price: EUR
Share price: EUR
Reuters/Bloomberg TIE1V.HE/TIE1V FH
Market capitalisation (EURm) 1,867
Current N° of shares (m) 74
Free float 100%
Daily avg. no. trad. sh. 12 mth 122
Daily avg. trad. vol. 12 mth (m) 11,942
Price high 12 mth (EUR) 28.18
Price low 12 mth (EUR) 22.42
Abs. perf. 1 mth -9.76%
Abs. perf. 3 mth -4.95%
Abs. perf. 12 mth 6.43%
Key financials (EUR) 12/15 12/16e 12/17e
Sales (m) 1,461 1,490 1,558
EBITDA (m) 182 201 172
EBITDA margin 12.5% 13.5% 11.0%
EBIT (m) 125 146 147
EBIT margin 8.6% 9.8% 9.5%
Net Profit (adj.)(m) 111 115 119
ROCE 84.7% 80.6% 85.3%
Net debt/(cash) (m) 69 107 109
Net Debt/Equity 0.1 0.2 0.2
Debt/EBITDA 0.4 0.5 0.6
Int. cover(EBITDA/Fin. int) 52.1 67.2 71.7
EV/Sales 1.3 1.3 1.2
EV/EBITDA 10.1 9.5 10.9
EV/EBITDA (adj.) 2.9 3.0 3.0
EV/EBIT 14.6 13.1 12.7
P/E (adj.) 16.4 16.2 15.2
P/BV 3.8 3.8 3.9
OpFCF yield 1.2% 6.2% 5.8%
Dividend yield 5.3% 5.5% 5.7%
EPS (adj.) 1.51 1.56 1.66
BVPS 6.56 6.67 6.44
DPS 1.35 1.40 1.45
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Sep 15 Oct 15 Nov 15 Dec 15 Jan 16 Feb 16 Mar 16 Apr 16 May 16 Jun 16 Jul 16 Aug 16 Sep 16 Oct 16
vvdsvdvsdy
TIETO Stoxx Software & Computer Services (Rebased)Source: Factset
Shareholders: Cevian Capital 15%; Solidium Oy 10%;
Silchester International Investors LLP
10%;
Page 49 of 63
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TomTom
Netherlands/Software & Computer Services Analyser
SOFTWARE & COMPUTER SERVICES
TomTom (Buy) H2 earnings concentrated to Q4 Buy
7.68
closing price as of 25/10/2016
10.00
Target Price unchanged
Recommendation unchanged
Target price: EUR
Share price: EUR
Reuters/Bloomberg TOM2.AS/TOM2 NA
Market capitalisation (EURm) 1,761
Current N° of shares (m) 229
Free float 56%
Daily avg. no. trad. sh. 12 mth 1,540
Daily avg. trad. vol. 12 mth (m) 12,834
Price high 12 mth (EUR) 12.29
Price low 12 mth (EUR) 6.21
Abs. perf. 1 mth -7.34%
Abs. perf. 3 mth 6.83%
Abs. perf. 12 mth -23.28%
Key financials (EUR) 12/15 12/16e 12/17e
Sales (m) 1,007 1,003 1,033
EBITDA (m) 124 138 154
EBITDA margin 12.3% 13.8% 14.9%
EBIT (m) 1 14 27
EBIT margin 0.1% 1.4% 2.6%
Net Profit (adj.)(m) 49 42 52
ROCE 0.0% 1.0% 1.8%
Net debt/(cash) (m) (99) (92) (106)
Net Debt/Equity -0.1 -0.1 -0.1
Debt/EBITDA -0.8 -0.7 -0.7
Int. cover(EBITDA/Fin. int) 133.8 138.2 220.3
EV/Sales 2.6 1.7 1.6
EV/EBITDA 20.8 12.2 10.9
EV/EBITDA (adj.) 20.8 12.2 10.9
EV/EBIT nm nm 61.6
P/E (adj.) nm 42.1 33.8
P/BV 2.7 1.8 1.8
OpFCF yield 0.4% 1.2% 2.2%
Dividend yield 0.0% 1.6% 1.4%
EPS (adj.) 0.21 0.18 0.23
BVPS 4.23 4.17 4.17
DPS 0.00 0.12 0.11
Mixed news from French car markers in 3Q16
The facts: Yesterday PSA Citroen reported weak numbers in unit sales for the
key European market. Sales in 3Q16 in Europe, which is where most of the
models with TomTom technology are sold, were down 4.3% yoy, a steep drop
versus previous quarters. Year to date sales in units were still up 4.1%. PSA
Citrien is planning a commercial offensive in 4Q16 building upon the launch of the
Peurgeot 5008 and 4 other new models including the high selling Peugeot 3008
and the Citroen C8.
Renault in its 3Q16 numbers reported an 11.3% increase in unit sales in the 3rd
quarter, building upon the strong performance so far in the year. Renault, as PSA
Citroen, also reported strong numbers in Eurasia (including Iran), but we do not
assume that models with TomTom technology are sold in that particular market or
at least not in high volumes.
Our analysis: The PSA Citroen numbers for the 3rd
quarter are not positive nut
we assume that that is already included in the 3Q16 numbers of TomTom as the
payment becomes due upon completion of fabrication, meaning it will have been
recognized as revenue by TomTom. The statements about a commercial
offensive in the 4th
quarter obviously bode well for TomTom in 4Q16 and 1Q17 as
model penetration of high selling units continues.
Renault’s numbers have been strong throughout the year (ytd volume in Europe
up 13.3%) due to the success of the Talisman, Espace and especially the
updated Megane and the new Kadjar and Kaptur. Renault is planning some new
models for the 4th
quarter (the Kwid, a small economy car) but continued volume
growth should come from the models mentioned. As Renault’s partner for maps,
traffic and other components, TomTom’s revenue from Renault is set to remain
strong and a material component of overall TomTom Automotive revenue.
We also note that the Renault-Nissan alliance (Renault owns 43.4%of Nissan and
has effective control) issued a press release yesterday that it intends to launch 10
autonomous (electric) vehicles by the year 2020, see http://bit.ly/2dVeVd0. During
the 3Q16 call, CEO Goddijn mentioned that TomTom had won Nissan as a client,
a statement that was later labelled as incorrect by investor relations. However, if
Renault and Nissan want to launch an autonomous vehicle in 2020, they must
have the design ready in 2017. That suggests that suppliers must have already
been chosen and bodes well for TomTom in relation to Nissan. So perhaps it was
not a mistake after all.
Conclusion & Action: Mixed news from PSA Citroen with a weak global 3Q16
and especially a weak 3Q6 in Europe. However, this is offset by the
announcement of a commercial offensive in 4Q16 including new high selling
models and the continued strength of Renault, both in Europe and other markets.
On top of that, it seems as though TomTom has also won Nissan as a client
because of its relationship with Renault.
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vvdsvdvsdy
TOMTOM EuroNext (Rebased)Source: Factset Shareholders: H.Goddijn 11%; C.Goddijn 11%; P.F.
Pauwels 11%; P.Geelen 11%;
Analyst(s):
Martijn den Drijver, NIBC Markets N.V.
+312 0 5508636
Page 50 of 63
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STMicroelectronics
Italy/Technology Hardware & Equipment Analyser
TECHNOLOGY HARDWARE & EQUIPMENT
STMicroelectronics (Neutral) Mixed news from French car markers in 3Q16
Q3 & 9M 16 preview
The facts: STM will release its Q3 & 9M 2016 results on October 27th before
market opening. A webcast presentation is scheduled at 9:30 a.m. CET. A live
webcast of the conference call will be available by accessing
http://investors.st.com.
Our analysis: In the two following tables we provide our estimates on Q3-16 and
9M-16 P&L figures.
We project a 5.0% Q/Q top line growth - slightly above the middle of the guidance
provided by ST (+5.5% +/- 3.5%) – coupled with a sequential improvement in
gross and EBIT margins driven by higher volumes and better product mix.
Data in USD m Q2-16A Q3-16E Q/Q Chg Q3-15A Y/Y Chg
Net revenues 1,703.0 1,797.0 5.5% 1,764.0 1.9%
Gross profit 577.3 636.1 10.2% 613.0 3.8%
Gross margin 33.9% 35.4%
34.8%
EBIT 28.0 98.8 253.0% 91.0 8.6%
EBIT margin 1.6% 5.5%
5.2%
Source: Banca Akros estimates
Q3 should show first recovery signs in top line with a ca. 2% Y/Y net revenues
growth, thus leading to -2.2% Y/Y in 9M 16 vs. -4.2% in H1 16. Gross margin and
EBIT should record initial benefits from restructuring initiatives and products focus
on Smart Driving and IoT solutions.
Data in USD m 9M-15A 9M-16E Y/Y Chg
Sales 5,229.0 5,113.0 -2.2%
Gross profit 1,774.0 1,752.2 -1.2%
Gross margin 33.9% 34.3%
EBIT 84.0 93.8 11.7%
EBIT margin 1.6% 1.8%
Source: Banca Akros estimates
Finally, on the back of our estimates and taking into account an expected USD
180m Capex in Q3 (higher than Q1 and Q2) and USD 54.7m dividend payment
(or USD 0.06/sh paid in September-16) we believe NFP in Sep-16 could be
almost in line with June’s level (USD 426m):
Conclusion & Action: We have prudentially set our estimates at the middle of
the guidance provided by STM. Q3’s top line growth would support our
assumption of ST coming back to net revenues growth in 2016 after a 5-year in a
row decline; the company should also benefit from a recovery in profitability
related to a better product mix that should grant higher returns even on similar top
line.
Analyst(s):
Francesco Previtera, Banca Akros
+39 02 4344 4033
Enrico Filippi, CEFA Banca Akros
+39 02 4344 4071
Neutral
7.24
closing price as of 25/10/2016
7.30
Target Price unchanged
Recommendation unchanged
Target price: EUR
Share price: EUR
Reuters/Bloomberg STM.MI/STM IM
Market capitalisation (EURm) 6,588
Current N° of shares (m) 911
Free float 72%
Daily avg. no. trad. sh. 12 mth 4,261
Daily avg. trad. vol. 12 mth (m) 33,666
Price high 12 mth (EUR) 7.51
Price low 12 mth (EUR) 4.59
Abs. perf. 1 mth 0.56%
Abs. perf. 3 mth 24.63%
Abs. perf. 12 mth 1.56%
Key financials (USD) 12/15 12/16e 12/17e
Sales (m) 6,897 6,928 7,143
EBITDA (m) 900 857 1,021
EBITDA margin 13.0% 12.4% 14.3%
EBIT (m) 109 239 405
EBIT margin 1.6% 3.4% 5.7%
Net Profit (adj.)(m) 104 186 332
ROCE 3.1% 6.7% 8.8%
Net debt/(cash) (m) (494) (487) (551)
Net Debt/Equity -0.1 -0.1 -0.1
Debt/EBITDA -0.5 -0.6 -0.5
Int. cover(EBITDA/Fin. int) 40.9 57.1 68.1
EV/Sales 0.8 0.9 0.9
EV/EBITDA 6.0 7.5 6.3
EV/EBITDA (adj.) 5.6 6.5 5.7
EV/EBIT 49.7 27.1 15.8
P/E (adj.) nm 38.5 21.5
P/BV 1.3 1.6 1.5
OpFCF yield 1.8% 4.0% 3.9%
Dividend yield 5.1% 3.1% 3.1%
EPS (adj.) 0.11 0.20 0.36
BVPS 5.15 5.04 5.16
DPS 0.40 0.24 0.24
3.5
4.0
4.5
5.0
5.5
6.0
6.5
7.0
7.5
8.0
Oct 15 Nov 15 Dec 15 Jan 16 Feb 16 Mar 16 Apr 16 May 16 Jun 16 Jul 16 Aug 16 Sep 16 Oct 16
vvdsvdvsdy
STMICROELECTRONICS Stoxx Telecom Equipment (Rebased)Source: Factset
Shareholders: STMicroelectronic holding 28%;
Page 51 of 63
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Spanish Telecommunications
Analyser
TELECOMMUNICATIONS
Q3 & 9M 16 preview SPAIN: Orange, Strong growth in 3Q’16
The facts: ORA Spain presented 3Q’16 results.
Our analysis: Strong results with positive revenues for the 5th
consecutive
quarter. Mobile services grew 9.8% in 3Q vs. +8.9% 2Q and +4.4% 1Q. This
performance is due to the greater variety in the commercial offer (especially
since 2015) and 4G development reaching 7.2m customers at 9m’16 (1.6x in a
year).
Fixed services +4.6% with 3.9m customers in fixed BB (+5.3% Y/Y) and
ARPU rising +2.6% Q/Q (+8.4% Y/Y to EUR30.9). Sales +7.8% Y/Y to
EUR1.3bn in 3Q (vs. +6.2% 2Q). For 9m’16 data, sales reached EUR3.7bn
(+5.3% Y/Y) due to the high customer capturing, in which Spain is the most
important behind France. On the negative side, mobile ARPI dropped from
EUR14.1 to EUR13.7.
In Spain, the French operator captured +194k customers in FttH BB in 3Q (9m
homes passed, 2.5x in a year) and 1.41m accumulated. Fibre represents 36%
total fixed BB and increased +21pp in the year (bearing in mind the
organic growth thanks to the acquisition of Jazztel).
Pay TV services also increased, +458k customers 9m’16 (2.1x in the year)
thanks to the premium content offered (football). 83% of its fixed BB base are
convergent (+2.4pp in a year).
Mobile contracts: +94k net adds in 3Q, performing well if compared to 3Q’15:
+5.4% Y/Y up to 12.5m customers. Prepaid increased +1% Y/Y to 3.3m. 4G
coverage spans 89% of the customer base.
The number of customers coming from VMOs increased from 1,487m to
1,923m at 9m’16 (+29.3% Y/Y).
Finally, we highlight the global collaboration agreement (similar with TEF in
local NEBA/VULA) signed with MasMovil, in which ORA Spain
substantially increases wholesale revenues, reduces costs as the mobile
BB infrastructure is shared and more efficient FttH deployments as
investments are also shared (the press also points to a possible agreement
with Euskaltel in this matter).
No visibility was shed regarding a possible listing of its affiliate in Spain
as realised in Belgium and Poland.
Conclusion: Strong results and positive reaction on behalf of the market
yesterday (+4.2% ORA). ORA Spain will continue to be the Group’s crown
jewel being the highest growing operator in Spain together with MasMovil. The
parent company bet on its affiliate not only when it acquired Jazztel but also in
capex used to develop FTTH in Spain. We expect ORA Spain’s business
model to be replicated in France with the implementation of convergence.
This fact will decelerate the price war that exists in the neighbouring country.
---------- Stoxx Telecommunications,
DJ Stoxx TMI rebased on sector
Analyst(s):
Victor Peiro Pérez, GVC Gaesco Beka
+34 91 436 7812
Eduardo Garcia Arguelles, GVC Gaesco Beka
+34 914 367 810
280
300
320
340
360
380
400
Oct 15 Nov 15 Dec 15 Jan 16 Feb 16 Mar 16 Apr 16 May 16 Jun 16 Jul 16 Aug 16 Sep 16 Oct 16
vvdsvdvsdy
Page 52 of 63
Produced & Distributed by the Members of ESN (see last page of this report)
Euskaltel
Spain/Telecommunications Analyser
TELECOMMUNICATIONS
Euskaltel (Buy) SPAIN: Orange, Strong growth in 3Q’16
Possible agreement with Orange in terms of FttH
The facts: According to Bloomberg, Orange Spain is negotiating with Euskaltel a
collaboration agreement.
Our analysis: It would be a co-investment agreement for the FttH deployment
in Basque Country and Galicia. They didn’t disclose financial or operational
details.
Remember that Euskaltel is one of the largest MVNO customers (with
Másmovil/Yoigo) in the Orange Spain’s wholesale segment.
This agreement would be win-to-win for both parties since the cities in the
Basque Country and Galicia are not “free” cities (VULA’s regulation), so
Telefónica must share their FttH with consequent slowdown of new deployments.
Conclusion: If the agreement is confirmed for both parties, this would be a step
for signing a global collaboration agreement (Másmovil’s style) based on the
following four pillars: (1) national hosting contract OMV, (2) co-investment in FttH,
(3) FttH sharing (IRUs) already deployed and (4) cohabitation in mobile
broadband sites. In our opinion, ORA is preparing the ground for a possible
EKT acquisition in the medium term. It tries to do companies as much
complementary as possible.
Analyst(s):
Eduardo Garcia Arguelles, GVC Gaesco Beka
+34 914 367 810
Buy
9.37
closing price as of 25/10/2016
12.00
Target Price unchanged
Recommendation unchanged
Target price: EUR
Share price: EUR
Reuters/Bloomberg EKT.MC/EKT SM
Market capitalisation (EURm) 1,423
Current N° of shares (m) 152
Free float 61%
Daily avg. no. trad. sh. 12 mth 710
Daily avg. trad. vol. 12 mth (m) 2,821
Price high 12 mth (EUR) 11.72
Price low 12 mth (EUR) 7.69
Abs. perf. 1 mth 6.09%
Abs. perf. 3 mth 12.35%
Abs. perf. 12 mth -10.33%
Key financials (EUR) 12/15 12/16e 12/17e
Sales (m) 327 570 580
EBITDA (m) 143 277 290
EBITDA margin 43.6% 48.6% 50.0%
EBIT (m) 64 154 169
EBIT margin 19.5% 26.9% 29.2%
Net Profit (adj.)(m) 7 77 89
ROCE 2.3% 5.5% 5.8%
Net debt/(cash) (m) 1,358 1,238 1,132
Net Debt/Equity 1.9 1.6 1.2
Debt/EBITDA 9.5 4.5 3.9
Int. cover(EBITDA/Fin. int) 2.7 6.5 7.5
EV/Sales 9.0 4.5 4.3
EV/EBITDA 20.7 9.2 8.6
EV/EBITDA (adj.) 20.7 9.2 8.6
EV/EBIT 46.2 16.7 14.7
P/E (adj.) nm 15.5 13.4
P/BV 2.1 1.5 1.3
OpFCF yield 5.6% 7.2% 7.5%
Dividend yield 0.0% 0.0% 5.8%
EPS (adj.) 0.05 0.61 0.70
BVPS 5.56 6.16 7.39
DPS 0.00 0.00 0.55
7.5
8.0
8.5
9.0
9.5
10.0
10.5
11.0
11.5
12.0
Oct 15 Nov 15 Dec 15 Jan 16 Feb 16 Mar 16 Apr 16 May 16 Jun 16 Jul 16 Aug 16 Sep 16 Oct 16
vvdsvdvsdy
EUSKALTEL Stoxx Telecommunications (Rebased)Source: Factset
Shareholders: Kutxabank 25%; Corp. Financ. Alba 10%;
JP Morgan Chase 4%;
Page 53 of 63
Produced & Distributed by the Members of ESN (see last page of this report)
Int. Airlines Group
Spain/Travel & Leisure Analyser
TRAVEL & LEISURE
Int. Airlines Group (Buy) Possible agreement with Orange in terms of FttH
Extension of Heathrow backed
The facts: Following decades of debate, the new British government has issued
a recommendation to build a third runway and sixth terminal in Heathrow, the
largest airport in the UK with 75m PB/year, thus increasing capacity by 30% (the
number of flights increasing from current 480,000 to 740,000/year). Initially the
investment would be of GBP18-21.6bn. The decision must be ratified by the
British parliament prior to the public survey and the investment is not expected to
be finalised before 2025.
Our analysis: Unblocking the decision to build the new capacity in Heathrow is
positive news for IAG as it will solve the current congestion problems (IAG holds
51% in said airport) in which the Holding has the majority of the slots. Extending
the airport could increase routes from London to other markets, beyond the EU
where British Airways has an extensive network (i.e America and Africa).
However, there are still many doubts to be clarified:
Final amount of investment considering that IAG and other Airlines forming
the “Airlines for Europe” defend substantially lower costs, GBP180m (10% of
the amount indicated by the Davies Commission).
The distribution of the new slots. If the “grandfather’s rights” is respected, BA
will have similar quota to the current one in the new infrastructure which would
solve the current lack of slots and which was intended to be solved with the
acquisition of British Midland in 2012.
The effects on airport fees charged to Airlines (landing fees), a very sensitive
aspect for BA considering it has the largest presence in Heathrow. We recall
that the airport is currently one of the most costly for airlines around the world
(including the Air Passenger Duty) and increasing the cost would not be
positive to maintain BA’s current margins (EBITDA mg 12.2% and ROCE
13.2% at 2015). At the moment it seems that the authorities are in favour of
maintaining current tariffs but it will in correlation to the final investment.
Conclusion: Although there are still important aspects to be specified (final
approval of the project, investment and impact on current tariffs in Heathrow),
initially the backing by the current government to increase capacity solves one of
the problems suffered by BA in recent decades and could extend its network
beyond the European Union.
Analyst(s):
Sonia Ruiz De Garibay, GVC Gaesco Beka
+34 91 436 7841
Buy
4.47
closing price as of 25/10/2016
5.80
Target Price unchanged
Recommendation unchanged
Target price: EUR
Share price: EUR
Reuters/Bloomberg ICAG.MC/IAG SM
Market capitalisation (EURm) 9,528
Current N° of shares (m) 2,133
Free float 48%
Daily avg. no. trad. sh. 12 mth 6,391
Daily avg. trad. vol. 12 mth (m) 15,594
Price high 12 mth (EUR) 8.69
Price low 12 mth (EUR) 4.03
Abs. perf. 1 mth -4.92%
Abs. perf. 3 mth -7.11%
Abs. perf. 12 mth -46.37%
Key financials (EUR) 12/15 12/16e 12/17e
Sales (m) 22,858 23,154 23,166
EBITDA (m) 3,642 3,894 4,043
EBITDA margin 15.9% 16.8% 17.5%
EBIT (m) 2,335 2,582 2,702
EBIT margin 10.2% 11.2% 11.7%
Net Profit (adj.)(m) 1,539 1,833 1,963
ROCE 12.2% 13.3% 13.7%
Net debt/(cash) (m) 2,774 1,784 925
Net Debt/Equity 0.5 0.3 0.1
Debt/EBITDA 0.8 0.5 0.2
Int. cover(EBITDA/Fin. int) 14.5 15.0 18.0
EV/Sales 0.9 0.5 0.5
EV/EBITDA 5.5 3.0 2.7
EV/EBITDA (adj.) 5.5 3.0 2.7
EV/EBIT 8.6 4.5 4.0
P/E (adj.) 11.0 5.2 4.9
P/BV 3.2 1.4 1.2
OpFCF yield 1.8% 17.9% 17.6%
Dividend yield 4.5% 4.8% 5.4%
EPS (adj.) 0.75 0.86 0.92
BVPS 2.56 3.13 3.84
DPS 0.20 0.21 0.24
4.0
4.5
5.0
5.5
6.0
6.5
7.0
7.5
8.0
8.5
9.0
Oct 15 Nov 15 Dec 15 Jan 16 Feb 16 Mar 16 Apr 16 May 16 Jun 16 Jul 16 Aug 16 Sep 16 Oct 16
vvdsvdvsdy
INT. AIRLINES GROUP IBEX 35 (Rebased)Source: Factset
Shareholders: Qatar Airways 20%; Lansdowne 7%;
Standard Life Investment 6%;
Page 54 of 63
Produced & Distributed by the Members of ESN (see last page of this report)
A2A
Italy/Utilities Analyser
UTILITIES
A2A (Buy) Extension of Heathrow backed
Brescia may reduce its quota
The facts: Brescia municipality has approved the change in the shareholders
pact in A2A.
Our analysis: according to “Corriere della Sera”, Brescia Municipality was eager
to change the shareholders pact in A2A in order to reduce its quota.
The goal is to change the rule according to which Brescia (25% stake + 1 share in
A2A) cannot reduce its quota in the public company if Milan (25% stake + 1 share
in A2A) doesn’t do the same and for the same amount.
In fact, Brescia would be eager, according to “Corriere della Sera”, to reduce its
quota in A2A up to a maximum of a 4% for budget reasons. Milan would not be
eager to do that but the municipality is going to approve the modification in the
shareholders’ pact as Brescia did.
For both the municipalities the change in the shareholders’ pact does not mean
they are obliged to sell the stake in A2A reducing the controlling quota at 42%.
This ought to be an opportunity.
Conclusion & Action: the overhang risk is not positive news for the stock, but
we have already seen municipalities reducing their stakes in the company in the
recent past, with no major impacts in terms of stock prices. On the contrary, we
argue that an increase in the free-float would be positively perceived from
investors. We reiterate our positive stance on the stock and we believe that any
possible negative reaction to the overhang risk represents a buy opportunity.
Analyst(s):
Dario Michi, Banca Akros
+39 02 4344 4237
Buy
1.24
closing price as of 25/10/2016
1.50
Target Price unchanged
Recommendation unchanged
Target price: EUR
Share price: EUR
Reuters/Bloomberg A2.MI/A2A IM
Market capitalisation (EURm) 3,875
Current N° of shares (m) 3,133
Free float 50%
Daily avg. no. trad. sh. 12 mth 11,768
Daily avg. trad. vol. 12 mth (m) 8,188
Price high 12 mth (EUR) 1.35
Price low 12 mth (EUR) 0.96
Abs. perf. 1 mth -0.48%
Abs. perf. 3 mth -0.48%
Abs. perf. 12 mth -1.83%
Key financials (EUR) 12/15 12/16e 12/17e
Sales (m) 4,921 5,032 5,416
EBITDA (m) 1,048 1,057 1,137
EBITDA margin 21.3% 21.0% 21.0%
EBIT (m) 215 635 666
EBIT margin 4.4% 12.6% 12.3%
Net Profit (adj.)(m) 73 376 341
ROCE 1.9% 6.0% 6.0%
Net debt/(cash) (m) 2,897 3,156 3,023
Net Debt/Equity 0.9 0.9 0.8
Debt/EBITDA 2.8 3.0 2.7
Int. cover(EBITDA/Fin. int) 7.8 8.2 8.5
EV/Sales 1.6 1.6 1.5
EV/EBITDA 7.5 7.8 7.1
EV/EBITDA (adj.) 7.5 7.8 7.1
EV/EBIT 36.6 12.9 12.0
P/E (adj.) nm 10.3 11.4
P/BV 1.5 1.4 1.1
OpFCF yield 9.7% -2.3% 6.5%
Dividend yield 3.3% 4.1% 4.9%
EPS (adj.) 0.02 0.12 0.11
BVPS 0.84 0.91 1.17
DPS 0.04 0.05 0.06
0.95
1.00
1.05
1.10
1.15
1.20
1.25
1.30
1.35
1.40
set 15 ott 15 nov 15 dic 15 gen 16 feb 16 mar 16 apr 16 mag 16 giu 16 lug 16 ago 16 set 16 ott 16
vvdsvdvsdy
A2A Stoxx Utilities (Rebased)Source: Factset
Shareholders: Milan City Council 25%; Brescia City
Council 25%;
Page 55 of 63
Produced & Distributed by the Members of ESN (see last page of this report)
Fortum
Q3/2015a Growth
M€ Q2a vs. Cons. OP Cons. Diff. OP Cons. Diff.
Generation 371.0 #DIV/0! 389 #DIV/0! 377 3% 1,667 #DIV/0!
City Solutions 237.0 #DIV/0! 215 #DIV/0! 185 16% 1,247 #DIV/0!
Russia 175.0 #DIV/0! 152 #DIV/0! 154 -2% 845 #DIV/0!
Other operations 29.0 #DIV/0! 25 #DIV/0! 28 -11% 109 #DIV/0!
Eliminations -81.0 #DIV/0! -94 #DIV/0! -83 13% -467 #DIV/0!
Total sales 732.0 7% 687 686.0 0% 661 4% 3,401 3,479 -2%
Sales growth -1.7 % 0.6 %
EBIT
Generation 77.0 #DIV/0! 104.6 #DIV/0! 102 2% 469 #DIV/0!
City Solutions -16.0 #DIV/0! -8.0 #DIV/0! -13 -38% 117 #DIV/0!
Russia 12.0 #DIV/0! 15.0 #DIV/0! 0 #DIV/0! 208 #DIV/0!
Other operations -15.0 #DIV/0! -15.0 #DIV/0! -10 50% -61 #DIV/0!
Eliminations #DIV/0! 0.0 #DIV/0! -761 -100% 0 #DIV/0!
Total EBIT 58.0 -24% 96.6 76.0 27% 79.5 21% 734 717 2%
Total EBIT margin #DIV/0! 14.1 % 11.1 % 12.0 % 21.6 % 20.6 %#DIV/0!
PTP 22 -56% 60.6 50.0 21% 46.5 30.3 % 715 701 2%
EPS 0.03 -40% 0.05 0.05 6% 0.04 19.6 % 0.66 0.65 2%#DIV/0!
DPS #DIV/0! 1.10 0.82 34%
Source : OP and SME Direkt
Q3/2016e 2016e
Fortum
Finland/Utilities Analyser
UTILITIES
Fortum (Reduce) Brescia may reduce its quota
Attention on the CMD next
The facts: Fortum's Q3 comparable EBIT (EUR 58m) was clearly below
consensus (EUR 76m) and even more clearly below our forecast (EUR 97m). The
biggest surprise relative to our forecasts was that the Generation division's
hydropower volumes decreased by as much as 2.3 TWh (~35%) YoY. The Russia
division's EBIT was in line with our estimate. The positive impact of the stronger
RUB was EUR 4m YoY.
Our analysis: Our 2017 EBIT forecast rises by one per cent and our 2018 EBIT
forecast rises by two per cent. Our revised earnings forecast for 2017 is 4% lower
than the pre-results consensus and our 2018 forecast is almost 7% lower than
consensus.
Fortum hosts a Capital Markets Day (CMD) in Espoo on 16 November.
Beforehand the most interesting themes at the CMD will be the detailed
presentation of the new strategy and the timetable for planned measures as well
as the company's comments on how it intends to utilise the excessively liquid
balance sheet in growth and/or repayments of equity to shareholders.
Conclusion & Action: Our target price is based on the peer group valuation (P/E
14.8), historical valuation (last three years' average EV/EBITDA 11.3) and a 6%
dividend yield requirement (calculated on the average of our dividend projections
for 2016–2017). As a result of our updated earnings forecasts and on the basis of
our 2017 forecasts, we maintain our target price at EUR 14.50 and our Reduce
recommendation.
Analyst(s):
Henri Parkkinen, OP Corporate Bank
+358 10 252 4409
Reduce
15.36
closing price as of 25/10/2016
14.50
Target Price unchanged
Recommendation unchanged
Target price: EUR
Share price: EUR
Reuters/Bloomberg FUM1V.HE/FUM1V FH
Market capitalisation (EURm) 13,645
Current N° of shares (m) 888
Free float 49%
Daily avg. no. trad. sh. 12 mth 2,384
Daily avg. trad. vol. 12 mth (m) 54,096
Price high 12 mth (EUR) 15.66
Price low 12 mth (EUR) 10.99
Abs. perf. 1 mth 11.39%
Abs. perf. 3 mth 1.72%
Abs. perf. 12 mth 9.09%
Key financials (EUR) 12/15 12/16e 12/17e
Sales (m) 3,458 3,486 3,760
EBITDA (m) 399 1,038 1,111
EBITDA margin 11.5% 29.8% 29.6%
EBIT (m) 54 684 763
EBIT margin 1.6% 19.6% 20.3%
Net Profit (adj.)(m) 480 548 616
ROCE 5.3% 4.2% 4.8%
Net debt/(cash) (m) (1,591) 82 171
Net Debt/Equity -0.1 0.0 0.0
Debt/EBITDA -4.0 0.1 0.2
Int. cover(EBITDA/Fin. int) 2.3 5.4 7.3
EV/Sales 3.1 3.9 3.7
EV/EBITDA 27.0 13.2 12.4
EV/EBITDA (adj.) 9.3 13.2 12.4
EV/EBIT nm 20.1 18.1
P/E (adj.) 25.8 24.9 22.1
P/BV 0.9 1.0 1.0
OpFCF yield -5.4% 1.0% 2.9%
Dividend yield 7.2% 7.2% 2.9%
EPS (adj.) 0.54 0.62 0.69
BVPS 15.61 15.12 14.72
DPS 1.10 1.10 0.45
10.5
11.0
11.5
12.0
12.5
13.0
13.5
14.0
14.5
15.0
15.5
16.0
Sep 15 Oct 15 Nov 15 Dec 15 Jan 16 Feb 16 Mar 16 Apr 16 May 16 Jun 16 Jul 16 Aug 16 Sep 16 Oct 16
vvdsvdvsdy
FORTUM Stoxx Utilities (Rebased)Source: Factset
Shareholders: Finnish state 51%; Ilmarinen Mutual
Pension Insurance Company 1.20%;
Varma-Sampo Mutual Pension Insurance
Company 1.00%;
Page 56 of 63
Produced & Distributed by the Members of ESN (see last page of this report)
Iren
Italy/Utilities Analyser
UTILITIES
Iren (Buy) Attention on the CMD next
Salerno Energia Vendite due to be merged
The facts: the municipal council of Salerno has provided its green light to the
merger process of Salerno Energia Vendite and Iren Mercato.
Our analysis: the Municipal Council of Salerno has resolved upon the explicit
approval of the content of all the annexed documents to the framework
agreement, already signed by Salerno Energia Vendite and Iren Mercato on 6th
July 2016. With this Resolution the municipal council authorized the parties to
proceed with the merger process.
Salerno Energia Vendite’s share capital is currently held by: 39.4% GEA
Commerciale S.p.A (100% Iren Mercato), 59.0% by Salerno Energia Holding and
1.6% by Gescom S.r.l.
After the merger, which will take place through the incorporation of GEA
Commerciale S.p.A into Salerno Energia Vendite, the shareholding structure of
the latter will be as follows: Iren Mercato 50.0%, Salerno Energia Holding 48.8%
and Gescom 1.2%. The corporate governance of the company resulting from the
merger process will allow Iren to fully consolidate it.
The acquired and acquiring companies are both active in the natural gas sales
sector and in geographical areas of interest to Iren: GEA Commercial operates
mainly in the provinces of Grosseto in Tuscany and Frosinone in Lazio, while
Salerno Energia operates in almost all the provinces of Campania and in a
number of Municipalities in Basilicata and Calabria regions. The cumulative
portfolio of the two companies is equal to approximately 115,000 clients,
strengthening Iren’s presence in the Tyrrhenian area.
Conclusion & Action: the operation is part of the corporate rationalization
process targeted by the company in its recently unveiled business plan.
Furthermore, the deal is due to favour the achievement of customer-base growth,
with positive effects in terms of efficiency, competitiveness and the quality of the
services offered not only in gas sector but also in the electricity free market. Even
though the deal is not sizeable, we believe the management team is strictly
focused on the business plan targets achievement, as already proved in the
recent past. We reiterate our positive stance on the stock. Buy.
Analyst(s):
Dario Michi, Banca Akros
+39 02 4344 4237
Buy
1.64
closing price as of 25/10/2016
1.80
Target Price unchanged
Recommendation unchanged
Target price: EUR
Share price: EUR
Reuters/Bloomberg IREE.MI/IRE IM
Market capitalisation (EURm) 1,934
Current N° of shares (m) 1,182
Free float 32%
Daily avg. no. trad. sh. 12 mth 1,836
Daily avg. trad. vol. 12 mth (m) 3,250
Price high 12 mth (EUR) 1.67
Price low 12 mth (EUR) 1.27
Abs. perf. 1 mth 11.36%
Abs. perf. 3 mth 14.48%
Abs. perf. 12 mth 9.50%
Key financials (EUR) 12/15 12/16e 12/17e
Sales (m) 3,094 4,287 3,454
EBITDA (m) 678 767 775
EBITDA margin 21.9% 17.9% 22.4%
EBIT (m) 347 369 373
EBIT margin 11.2% 8.6% 10.8%
Net Profit (adj.)(m) 118 156 160
ROCE 4.4% 5.3% 5.5%
Net debt/(cash) (m) 2,169 2,529 2,544
Net Debt/Equity 1.1 1.2 1.1
Debt/EBITDA 3.2 3.3 3.3
Int. cover(EBITDA/Fin. int) 7.1 9.1 8.5
EV/Sales 1.4 1.3 1.6
EV/EBITDA 6.5 7.2 7.1
EV/EBITDA (adj.) 6.5 7.2 7.1
EV/EBIT 12.7 14.9 14.8
P/E (adj.) 14.9 12.4 12.1
P/BV 16.4 5.3 7.2
OpFCF yield 8.7% 10.3% 10.6%
Dividend yield 3.4% 3.4% 3.7%
EPS (adj.) 0.10 0.13 0.14
BVPS 0.09 0.31 0.23
DPS 0.06 0.06 0.06
1.25
1.30
1.35
1.40
1.45
1.50
1.55
1.60
1.65
1.70
Sep 15 Oct 15 Nov 15 Dec 15 Jan 16 Feb 16 Mar 16 Apr 16 May 16 Jun 16 Jul 16 Aug 16 Sep 16 Oct 16
vvdsvdvsdy
IREN Stoxx Utilities (Rebased)Source: Factset
Shareholders: Finanziaria Sviluppo Utilities (FSU) 33%;
Reggio Emilia Council 8%; Parma
Council 6%;
Page 57 of 63
Produced & Distributed by the Members of ESN (see last page of this report)
Red Electrica De Espana
Spain/Utilities Analyser
UTILITIES
Red Electrica De Espana (Accumulate) Salerno Energia Vendite due to be merged
Results 9M16 in line with strategic targets
The facts: Red Eléctrica has published 9M16 results: revenues -0.8%, EBITDA
+2.3% and net profit +5.0%. Figures are in line with strategic targets and our
estimates (-0.8%, +2.1% y +4.9%, respectively).
Our analysis: We highlight the following:
Revenues and Costs: Even the decrease in revenues (-0.8% 9M16 due to
non-regulated components), the EBITDA achieves +2.3% thanks to
efficiency measures which have led to opex decrease of -9.8% (vs. -12.6
1H16). Consequently EBITDA margin improves +230 bps reaching 77% (vs.
+120 pbs 1Q16 and +250 bps 1H16) and in line with strategic target of at
least surpassing +200 pbs.
Depreciations and Financial Result: The former registers +3.2% due to
the new asset commissioned during 2015. The latter registers a -3.6% due
to the improved average financial cost to 2.99% (vs. 3.0% 1H16 and 3.21%
9M15). Figures incorporate a negative entry in equity method due to the
Chilean investments.
Capex: EUR 458.1m, +39% vs. 9M15 and due to the inclusion of the 50%
stake purchased in TEN Chile. 52% of the total capex has been dedicated to
network investment.
Net Debt: EUR 5.17bn, +2.1% vs. 1H16 as in this quarter there has been
dividend payment, negative working capital and temporary finance granted
to TEN Chile. All in all FFO +6.0% in 3Q16 and +1.9% 9M16. 84% of the
total debt in at fixed rate and 97.7% l/t. Cash in balance sheet EUR 293m.
Conclusion and Action: Results with no relevant surprises, in line with
estimates and with strategic targets. We reiterate our recommendation on the
stock and our preference on Enagas within the regulated Spanish utilities.
Analyst(s):
Sonia Ruiz De Garibay, GVC Gaesco Beka
+34 91 436 7841
Accumulate
19.10
closing price as of 25/10/2016
22.40
Target Price unchanged
Recommendation unchanged
Target price: EUR
Share price: EUR
Reuters/Bloomberg REE.MC/REE SM
Market capitalisation (EURm) 10,332
Current N° of shares (m) 541
Free float 80%
Daily avg. no. trad. sh. 12 mth 2,775
Daily avg. trad. vol. 12 mth (m) 23,069
Price high 12 mth (EUR) 20.55
Price low 12 mth (EUR) 17.47
Abs. perf. 1 mth -0.47%
Abs. perf. 3 mth -6.58%
Abs. perf. 12 mth -3.46%
Key financials (EUR) 12/15 12/16e 12/17e
Sales (m) 1,939 1,942 1,974
EBITDA (m) 1,458 1,490 1,528
EBITDA margin 75.2% 76.7% 77.4%
EBIT (m) 989 1,004 1,032
EBIT margin 51.0% 51.7% 52.3%
Net Profit (adj.)(m) 606 639 666
ROCE 7.7% 7.7% 7.8%
Net debt/(cash) (m) 4,906 5,085 5,026
Net Debt/Equity 1.8 1.7 1.6
Debt/EBITDA 3.4 3.4 3.3
Int. cover(EBITDA/Fin. int) 9.2 10.1 10.9
EV/Sales 8.0 8.0 7.8
EV/EBITDA 10.6 10.4 10.1
EV/EBITDA (adj.) 10.6 10.4 10.1
EV/EBIT 15.6 15.5 15.0
P/E (adj.) 17.2 16.2 15.5
P/BV 3.8 3.5 3.3
OpFCF yield 8.6% 2.5% 5.1%
Dividend yield 4.2% 4.5% 4.8%
EPS (adj.) 1.12 1.18 1.23
BVPS 5.07 5.45 5.83
DPS 0.80 0.86 0.92
16.5
17.0
17.5
18.0
18.5
19.0
19.5
20.0
20.5
21.0
Oct 15 Nov 15 Dec 15 Jan 16 Feb 16 Mar 16 Apr 16 May 16 Jun 16 Jul 16 Aug 16 Sep 16 Oct 16
vvdsvdvsdy
RED ELECTRICA DE ESPANA Stoxx Utilities (Rebased)Source: Factset
Shareholders: Spanish State 20%;
Page 58 of 63
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European Coverage of the Members of ESN
A ero space & D efense M em(*) Bcp CBI Kemira OPG Corbion NIBC
Airbus Group CIC Bnp Paribas CIC Linde EQB Danone CIC
Dassault Aviation CIC Bper BAK Tikkurila OPG Ebro Foods GVC
Latecoere CIC Bpi CBIElectro nic & Electrical
EquipmentM em(*) Enervit BAK
Leonardo BAK Caixabank GVC Alstom CIC Fleury M ichon CIC
Lisi CIC Commerzbank EQB Areva CIC Forfarmers NIBC
M tu EQB Credem BAK Euromicron Ag EQB Heineken NIBC
Ohb Se EQB Credit Agrico le Sa CIC Kontron EQB Hkscan OPG
Safran CIC Creval BAK Legrand CIC La Doria BAK
Thales CIC Deutsche Bank EQB Neways Electronics NIBC Lanson-Bcc CIC
Zodiac Aerospace CIC Deutsche Pfandbriefbank EQB Nexans CIC Laurent Perrier CIC
A irlines M em(*) Eurobank IBG Pkc Group OPG Ldc CIC
Air France Klm CIC Ing Group NIBC Rexel CIC Naturex CIC
Finnair OPG Intesa Sanpaolo BAK Schneider Electric Se CIC Olvi OPG
Lufthansa EQB M ediobanca BAK Vaisala OPG Parmalat BAK
A uto mo biles & P arts M em(*) M erkur Bank EQB Viscom EQB Pernod Ricard CIC
Bittium Corporation OPG National Bank Of Greece IBG F inancial Services M em(*) Raisio OPG
Bmw EQB Natixis CIC Anima BAK Refresco Group NIBC
Brembo BAK Nordea OPG Athex Group IBG Remy Cointreau CIC
Continental EQB Piraeus Bank IBG Azimut BAK Vidrala GVC
Daimler Ag EQB Poste Italiane BAK Banca Generali BAK Vilmorin CIC
Elringklinger EQB Societe Generale CIC Banca Ifis BAK Viscofan GVC
Faurecia CIC Ubi Banca BAK Banca Sistema BAK Vranken Pommery M onopole CIC
Ferrari BAK Unicredit BAK Bb Biotech EQB Wessanen NIBC
Fiat Chrysler Automobiles BAK B asic R eso urces M em(*) Binckbank NIBC F o o d & D rug R etailers M em(*)
Landi Renzo BAK Acerinox GVC Bolsas Y M ercados Espanoles Sa GVC Ahold NIBC
Leoni EQB Altri CBI Capman OPG Carrefour CIC
M ichelin CIC Arcelormittal GVC Christian Dior CIC Casino Guichard-Perrachon CIC
Nokian Tyres OPG Corticeira Amorim CBI Cir BAK Dia GVC
Norma Group EQB Ence GVC Comdirect EQB Jeronimo M artins CBI
Piaggio BAK Europac GVC Corp. Financiera Alba GVC Kesko OPG
Plastic Omnium CIC M etka IBG Deutsche Boerse EQB M arr BAK
Sogefi BAK M etsä Board OPG Deutsche Forfait EQB M etro CIC
Stern Groep NIBC M ytilineos IBG Eq OPG Sligro NIBC
Valeo CIC Outokumpu OPG Euronext CIC Sonae CBI
Volkswagen EQB Semapa CBI Ferratum EQB General Industria ls M em(*)
B anks M em(*) Ssab OPG Finecobank BAK 2G Energy EQB
Aareal Bank EQB Stora Enso OPG Grenke EQB Aalberts NIBC
Abn Amro Group Nv NIBC Surteco EQB Hypoport Ag EQB Accell Group NIBC
Aktia OPG The Navigator Company CBI M lp EQB Ahlstrom OPG
Alpha Bank IBG Tubacex GVC Ovb Holding Ag EQB Arcadis NIBC
Banca Carige BAK Upm-Kymmene OPG Patrizia Ag EQB Aspo OPG
Banca M ps BAK B io techno lo gy M em(*) Rallye CIC Huhtamäki OPG
Banco Popolare BAK 4Sc EQB Unipol Gruppo Finanziario BAK Kendrion NIBC
Banco Popular GVC Cytotools Ag EQB F o o d & B everage M em(*) Nedap NIBC
Banco Sabadell GVC Epigenomics Ag EQB Acomo NIBC Pöyry OPG
Banco Santander GVC Wilex EQB Atria OPG Prelios BAK
Bankia GVC C hemicals M em(*) Bonduelle CIC Rubis CIC
Bankinter GVC Air Liquide CIC Campari BAK Saf-Holland EQB
Bbva GVC Holland Colours NIBC Coca Cola Hbc Ag IBG Serge Ferrari Group CIC
Page 59 of 63
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Siegfried Holding Ag EQB H o useho ld Go o ds M em(*) Axa CIC Thermador Groupe CIC
Tkh Group NIBC Bic CIC Banca M edio lanum BAK Titan Cement IBG
Wendel CIC De Longhi BAK Catto lica Assicurazioni BAK Trevi BAK
General R etailers M em(*) Fila BAK Delta Lloyd NIBC Uponor OPG
Banzai BAK Osram Licht Ag EQB Generali BAK Vicat CIC
Beter Bed Holding NIBC Seb Sa CIC Hannover Re EQB Vinci CIC
Elumeo Se EQB Zumtobel Group Ag EQB M apfre Sa GVC Yit OPG
Fielmann EQB Industria l Engineering M em(*) M unich Re EQB M edia M em(*)
Folli Fo llie Group IBG Accsys Technologies NIBC Nn Group Nv NIBC Ad Pepper EQB
Fourlis Holdings IBG Aixtron EQB Sampo OPG Alma M edia OPG
Groupe Fnac Sa CIC Ansaldo Sts BAK Talanx Group EQB Atresmedia GVC
Inditex GVC Biesse BAK Unipolsai BAK Axel Springer EQB
Jumbo IBG Cargotec Corp OPGM aterials, C o nstruct io n &
InfrastructureM em(*) Brill NIBC
M acintosh NIBC Cnh Industrial BAK Abertis GVC Cofina CBI
Rapala OPG Danieli BAK Acs GVC Cts Eventim EQB
Stockmann OPG Datalogic BAK Aena GVC Editoriale L'Espresso BAK
Yoox Net-A-Porter BAK Deutz Ag EQB Aeroports De Paris CIC Gl Events CIC
H ealthcare M em(*) Dmg M ori Seiki Ag EQB Astaldi BAK Havas CIC
Amplifon BAK Duro Felguera GVC Atlantia BAK Impresa CBI
Bayer EQB Emak BAK Bilfinger Se EQB Ipsos CIC
Biotest EQB Exel Composites OPG Boskalis Westminster NIBC Jcdecaux CIC
Diasorin BAK Gesco EQB Buzzi Unicem BAK Lagardere CIC
Fresenius EQB Ima BAK Caverion OPG M 6-M etropole Television CIC
Fresenius M edical Care EQB Interpump BAK Cramo OPG M ediaset BAK
Gerresheimer Ag EQB Kone OPG Eiffage CIC M ediaset Espana GVC
Korian CIC Konecranes OPG Ellaktor IBG Notorious Pictures BAK
M erck EQB Kuka EQB Eltel OPG Nrj Group CIC
Orio la-Kd OPG M anz Ag EQB Ezentis GVC Publicis CIC
Orion OPG M ax Automation Ag EQB Fcc GVC Rcs M ediagroup BAK
Orpea CIC M etso OPG Ferrovial GVC Relx NIBC
Pihlajalinna OPG Outotec OPG Fraport EQB Rtl Group EQB
Recordati BAK Pfeiffer Vacuum EQB Heidelberg Cement Ag CIC Sanoma OPG
Rhoen-Klinikum EQB Ponsse OPG Heijmans NIBC Solocal Group CIC
H o tels, T ravel & T o urism M em(*) Prima Industrie BAK Hochtief EQB Spir Communication CIC
Accor CIC Prysmian BAK Imerys CIC Syzygy Ag EQB
Autogrill BAK Smt Scharf Ag EQB Italcementi BAK Telegraaf M edia Groep NIBC
Beneteau CIC Technotrans EQB Lafargeholcim CIC Teleperformance CIC
Elior CIC Valmet OPG Lehto OPG Tf1 CIC
Europcar CIC Wärtsilä OPG Lemminkäinen OPG Ubisoft CIC
I Grandi Viaggi BAK Zardoya Otis GVC M aire Tecnimont BAK Vivendi CIC
Iberso l CBI Industria l T ranspo rtat io n M em(*) M ota Engil CBI Wolters Kluwer NIBC
Intralo t IBG Bollore CIC Obrascon Huarte Lain GVC Oil & Gas P ro ducers M em(*)
Kotipizza OPG Caf GVC Ramirent OPG Eni BAK
M elia Hotels International GVC Ctt CBI Royal Bam Group NIBC Galp Energia CBI
Nh Hotel Group GVC Deutsche Post EQB Sacyr GVC Gas Plus BAK
Opap IBG Hhla EQB Saint Gobain CIC Hellenic Petro leum IBG
Snowworld NIBC Logwin EQB Salini Impregilo BAK M aurel Et Prom CIC
Sodexo CIC Insurance M em(*) Sias BAK M otor Oil IBG
Sonae Capital CBI Aegon NIBC Sonae Industria CBI Neste Corporation OPG
Trigano CIC Allianz EQB Srv OPG Petrobras CBI
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Qgep CBI Wcm Ag EQB Enav BAK Falck Renewables BAK
Repsol GVC R enewable Energy M em(*) Fiera M ilano BAK Fortum OPG
Total CIC Daldrup & Soehne EQB Lassila & Tikanoja OPG Gas Natural Fenosa GVC
Oil Services M em(*) Gamesa GVC Openjobmetis BAK Hera BAK
Bourbon CIC So ftware & C o mputer Services M em(*)T echno lo gy H ardware &
EquipmentM em(*)Iberdro la GVC
Cgg CIC Affecto OPG Asm International NIBC Iren BAK
Fugro NIBC Akka Technologies CIC Asml NIBC Public Power Corp IBG
Saipem BAK Alten CIC Besi NIBC Red Electrica De Espana GVC
Sbm Offshore NIBC Altran CIC Elmos Semiconductor EQB Ren CBI
Technip CIC Amadeus GVC Ericsson OPG Snam BAK
Tecnicas Reunidas GVC Assystem CIC Gemalto CIC Terna BAK
Tenaris BAK Atos CIC Gigaset EQB
Vallourec CIC Basware OPG Ingenico CIC
Vopak NIBC Cenit EQB Nokia OPG
P erso nal Go o ds M em(*) Comptel OPG Roodmicrotec NIBC
Adidas EQB Ctac NIBC Slm Solutions EQB
Adler M odemaerkte EQB Digia OPG Stmicroelectronics BAK
Amer Sports OPG Docdata NIBC Suess M icrotec EQB
Basic Net BAK Econocom CIC Teleste OPG
Cie Fin. Richemont CIC Ekinops CIC T eleco mmunicat io ns M em(*)
Geox BAK Esi Group CIC Acotel BAK
Gerry Weber EQB Exprivia BAK Deutsche Telekom EQB
Hermes Intl. CIC F-Secure OPG Drillisch EQB
Hugo Boss EQB Gft Technologies EQB Elisa OPG
Interparfums CIC Ict Group NIBC Euskaltel GVC
Kering CIC Indra Sistemas GVC Freenet EQB
L'Oreal CIC Nemetschek Se EQB Kpn Telecom NIBC
Luxottica BAK Neurones CIC M asmovil GVC
Lvmh CIC Nexus Ag EQB Nos CBI
M arimekko OPG Novabase CBI Oi CBI
M oncler BAK Ordina NIBC Ote IBG
Puma EQB Psi EQB Tele Columbus EQB
Safilo BAK Reply BAK Telecom Italia BAK
Salvatore Ferragamo BAK Rib Software EQB Telefonica GVC
Sarantis IBG Seven Principles Ag EQB Telia OPG
Technogym BAK Software Ag EQB Tiscali BAK
Tod'S BAK Sopra Steria Group CIC United Internet EQB
R eal Estate M em(*) Tie Kinetix NIBC Vodafone BAK
Adler Real Estate EQB Tieto OPG Utilit ies M em(*)
Beni Stabili BAK Tomtom NIBC A2A BAK
Citycon OPG Visiativ CIC Acciona GVC
Deutsche Euroshop EQB Wincor Nixdorf EQB Acea BAK
Grand City Properties EQB Suppo rt Services M em(*) Albioma CIC
Hispania Activos Inmobiliarios GVC Asiakastieto Group OPG Direct Energie CIC
Igd BAK Batenburg NIBC Edp CBI
Lar España GVC Bureau Veritas S.A. CIC Edp Renováveis CBI
Realia GVC Cellnex Telecom GVC Enagas GVC
Sponda OPG Dpa NIBC Endesa GVC
Technopolis OPG Edenred CIC Enel BAK
Vib Vermoegen EQB Ei Towers BAK Eydap IBG
LEGEND: BAK: Banca Akros; CIC: CM CIC Market Solutions; CBI: Caixa-Banca de Investimento; GVC: GVC Gaesco Beksa, SV, SA; EQB: Equinet bank; IBG: Investment Bank of
Greece, NIBC: NIBC Markets N.V: OPG: OP Corporate Bank:; as of 1st September 2016
Page 61 of 63
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List of ESN Analysts (**)
Ari Agopyan CIC +33 1 53 48 80 63 [email protected] Victoria Kruchevska (CFA,FRM) EQB +49 69 5 89 97 416 [email protected]
Artur Amaro CBI +351 213 89 6822 [email protected] Jean-Christophe Lefèvre-Moulenq CIC +33 1 53 48 80 65 [email protected]
Helena Barbosa CBI +351 21 389 6831 [email protected] Konstantinos Manolopoulos IBG +30 210 817 3388 [email protected]
Javier Bernat GVC +34 91 436 7816 jav [email protected] Dario Michi BAK +39 02 4344 4237 [email protected]
Dimitris Birbos IBG +30 210 81 73 392 [email protected] Marietta Miemietz CFA EQB +49-69-58997-439 [email protected]
Agnès Blazy CIC +33 1 53 48 80 67 [email protected] José Mota Freitas, CFA CBI +351 22 607 09 31 [email protected]
Charles Edouard Boissy CIC +33 01 53 48 80 81 [email protected] Henri Parkkinen OPG +358 10 252 4409 [email protected]
Rafael Bonardell GVC +34 91 436 78 171 [email protected] Victor Peiro Pérez GVC +34 91 436 7812 [email protected]
Louise Boyer CIC +33 1 53 48 80 68 [email protected] Francis Prêtre CIC +33 4 78 92 02 30 [email protected]
Giada Cabrino, CIIA BAK +39 02 4344 4092 [email protected] Francesco Previtera BAK +39 02 4344 4033 francesco.prev [email protected]
Arnaud Cadart CIC +33 1 53 48 80 86 [email protected] Jari Raisanen OPG +358 10 252 4504 [email protected]
Niclas Catani OPG +358 10 252 8780 [email protected] Hannu Rauhala OPG +358 10 252 4392 [email protected]
Pierre Chedeville CIC +33 1 53 48 80 97 [email protected] Matias Rautionmaa OPG +358 10 252 4408 [email protected]
Emmanuel Chevalier CIC +33 1 53 48 80 72 [email protected] Eric Ravary CIC +33 1 53 48 80 71 [email protected]
David Consalvo CIC +33 1 53 48 80 64 [email protected] Iñigo Recio Pascual GVC +34 91 436 7814 [email protected]
Edwin de Jong NIBC +312 0 5508569 [email protected] Gerard Rijk NIBC + 31 (0)20 550 8572 [email protected]
Martijn den Drijver NIBC +312 0 5508636 [email protected] André Rodrigues CBI +351 21 389 68 39 [email protected]
Christian Devismes CIC +33 1 53 48 80 85 [email protected] Jean-Luc Romain CIC +33 1 53 48 80 66 [email protected]
Andrea Devita, CFA BAK +39 02 4344 4031 [email protected] Jochen Rothenbacher, CEFA EQB +49 69 58997 415 [email protected]
Sebastian Droste EQB +49 69 58 99 74 34 [email protected] Vassilis Roumantzis IBG +30 2108173394 [email protected]
Enrico Esposti, CIIA BAK +39 02 4344 4022 [email protected] Sonia Ruiz De Garibay GVC +34 91 436 7841 [email protected]
Rafael Fernández de Heredia GVC +34 91 436 78 08 [email protected] Antti Saari OPG +358 10 252 4359 [email protected]
Enrico Filippi, CEFA BAK +39 02 4344 4071 [email protected] Paola Saglietti BAK +39 02 4344 4287 [email protected]
Gabriele Gambarova BAK +39 02 43 444 289 [email protected] Francesco Sala BAK +39 02 4344 4240 [email protected]
Eduardo Garcia Arguelles GVC +34 914 367 810 [email protected] Holger Schmidt, CEFA EQB +49 69 58 99 74 32 [email protected]
Alexandre Gérard CIC +33 1 53 48 80 93 [email protected] Cengiz Sen EQB +4969 58997 435 [email protected]
Philipp Häßler, CFA EQB +49 69 58997 414 [email protected] Pekka Spolander OPG +358 10 252 4351 [email protected]
Simon Heilmann EQB +49 69 58 997 413 [email protected] Kimmo Stenvall OPG +358 10 252 4561 [email protected]
Dr. Knud Hinkel EQB + 49 69 58997 419 [email protected] Natalia Svyrou-Svyriadi IBG +30 210 81 73 384 [email protected]
Marcell Houben NIBC +31 20 550 8649 [email protected] Luigi Tramontana BAK +39 02 4344 4239 [email protected]
Carlos Jesus CBI +351 21 389 6812 [email protected] Johan van den Hooven NIBC +312 0 5508518 [email protected]
Mark Josefson EQB +4969-58997-437 [email protected] Kévin Woringer CIC +33 1 53 48 80 69 [email protected]
(**) excluding: strategists, macroeconomists, heads of research not covering specific stocks, credit analysts, technical analysts
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ESN Recommendation System The ESN Recommendation System is Absolute. It means that each stock is rated on the basis of
a total return, measured by the upside potential (including dividends and capital reimbursement)
over a 12 month time horizon.
The ESN spectrum of recommendations (or ratings) for each stock comprises 5 categories: Buy
(B), Accumulate (A), Neutral (N), Reduce (R) and Sell (S).
Furthermore, in specific cases and for a limited period of time, the analysts are allowed to rate the
stocks as Rating Suspended (RS) or Not Rated (NR), as explained below.
Meaning of each recommendation or rating:
Buy: the stock is expected to generate total return of over 15% during the next 12 months time horizon
Accumulate: the stock is expected to generate total return of 5% to 15% during the next 12 months time horizon
Neutral: the stock is expected to generate total return of -5% to +5% during the next 12 months time horizon
Reduce: the stock is expected to generate total return of -5% to -15% during the next 12 months time horizon
Sell: the stock is expected to generate total return under -15% during the next 12 months time horizon
Rating Suspended: the rating is suspended due to a change of analyst covering the stock or a capital operation (take-over bid, SPO, …) where the issuer of the document (a partner of ESN) or a related party of the issuer is or could be involved
Not Rated: there is no rating for a company being floated (IPO) by the issuer of the document (a partner of ESN) or a related party of the issuer
Certain flexibility on the limits of total return bands is permitted especially during higher phases of volatility on the markets
ESN Ratings Breakdown
Date and time of production: 26th October 2016 9 :11am CET First date and time of dissemination: 26th October 2016 9 :13am CET
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etc (all such persons together being referred to as “relevant persons”).
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For disclosure upon “conflicts of interest” on the companies under
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recommendation history”, please visit the ESN website
(www.esnpartnership.eu) or refer to the ESN Members website. Additional
information is always available upon request. For additional information
and individual disclaimers please refer to www.esnpartnership.eu and
to each ESN Member websites:
www.bancaakros.it regulated by the CONSOB - Commissione Nazionale per le Società e la Borsa
www.caixabi.pt regulated by the CMVM - Comissão do Mercado de Valores Mobiliários
www.cmcicms.com regulated by the AMF - Autorité des marchés financiers
www.equinet-ag.de regulated by the BaFin - Bundesanstalt für Finanzdienstleistungsaufsicht
www.ibg.gr regulated by the HCMC - Hellenic Capital Market Commission
www.nibcmarkets.com regulated by the AFM - Autoriteit Financiële Markten
www.op.fi regulated by the Financial Supervision Authority
www.valores.gvcgaesco.es regulated by CNMV - Comisión Nacional del Mercado de Valores
Members of ESN (European Securities Network LLP)
Caixa-Banco de Investimento
Rua Barata Salgueiro, nº 33
1269-057 Lisboa
Portugal
Phone: +351 21 313 73 00
Fax: +351 21 389 68 98
GVC Gaesco Beka, SV, SA
C/ Marques de Villamagna 3
28001 Madrid
Spain
Phone: +34 91 436 7813
Investment Bank of Greece
32 Aigialeias Str & Paradissou,
151 25 Maroussi,
Greece
Tel: +30 210 81 73 383
Banca Akros S.p.A.
Viale Eginardo, 29
20149 MILANO
Italy
Phone: +39 02 43 444 389
Fax: +39 02 43 444 302
NIBC Markets N.V.
Nieuwezijds Voorburgwal 162
P.O.Box 235
1000 AE Amsterdam
The Netherlands
Phone: +31 20 550 8500
Fax: +31 20 626 8064
CM - CIC Market Solutions
6, avenue de Provence
75441 Paris
Cedex 09
France
Phone: +33 1 53 48 80 78
Fax: +33 1 53 48 82 25
equinet Bank AG
Gräfstraße 97
60487 Frankfurt am Main
Germany
Phone:+49 69 – 58997 – 212
Fax:+49 69 – 58997 – 299
OP Corporate Bank plc
P.O.Box 308
Teollisuuskatu 1, 00013 Helsinki
Finland
Phone: +358 10 252 011
Fax: +358 10 252 2703