Berenberg Research Report as of November 28

Transcription

BERENBERG EQUITY RESEARCH
Capital Stage AG
Buy
A kick-start to growth
Stanislaus von Thurn und Taxis
Analyst
+44 20 3465 2631
stanislaus.thurnundtaxis@berenberg.com
28 November 2013
Diversified Financials
For our disclosures in respect of section 34b of the German Securities Trading Act (Wertpapierhandelsgesetz – WpHG) and
our disclaimer please see the end of this document.
Please note that the use of this research report is subject to the conditions and restrictions set forth in the disclosures and
the disclaimer at the end of this document.
Table of contents
A kick-start to exponential growth
4
Capital Stage – investment thesis in pictures
5
6
Capital Stage – investment thesis
15
Key investment point one: recurring revenues at low
operational risk
24
Key investment point two: proven track record and existing
portfolio
26
Key investment point three: non-recourse debt and cheap
financing conditions
30
Key investment point four: strong growth potential in a niche
market
32
Regulatory framework
36
Valuation and sensitivity analysis
42
Financials
48
Disclosures in respect of section 34b of the German Securities
Trading Act (Wertpapierhandelsgesetz – WpHG)
54
Contacts: Investment Banking
57
3
Capital Stage AG
Small/Mid-Cap: Diversified Financials
● Capital Stage (CS) has issued 13.5m new shares of common stock in a
●
●
●
●
4:1 rights offering at a subscription price of EUR3.65 with
subscription rights to existing shareholders. Three core shareholders
agreed to waive their rights. The new shares have been placed with
institutional investors via an accelerated bookbuilding process. The
rights issue has increased free float from 45% to 55%, boosted
liquidity and makes the equity story more accessible to the capital
markets. The equity raised will be used to finance the company’s large
pipeline. In the last two years, CS has raised EUR78m of equity.
Use of proceeds: CS successfully raised EUR49.3m which will be
used to add further capacity to the existing 200MW solar and wind
portfolio. Management confirms that the company has a pipeline of
400MW. The company plans to allocate EUR37m to its core markets,
Germany and northern Italy, and EUR12m to new markets, eg
France. The equity could potentially be levered to EUR245m but CS
estimates EUR166m, which is an overall D/E ratio of 70/30. This
includes all-equity deals which can be re-levered in the future. CS has
recently announced the acquisition of an 8MW German PV plant at
an IRR of 8% and is thus delivering on promises do far.
Exponential growth of intact investment case: CS acquires turnkey
projects on the secondary market. The company has access to cheap
financing, special-purpose vehicle (SPV) leverage is around 80% at an
average interest rate of 4.1%. The recurring and cash-generative nature
of the business in combination with EUR166m of fresh investments
will kick-start exponential growth as newly added capacity will add
further financial means for the next round of acquisitions.
Revised guidance: CS has released its preliminary Q3 numbers and
revised its guidance from EUR60m to EUR55m revenue and
EUR44m to EUR48m of EBITDA in 2013. The numbers reflect the
weak performance of the non-core financial investment segment and
lower revenue from energy production in the first half of the year. The
EBITDA upgrade reflects lower material expenses as well as positive
one-offs from the acquisitions of PV plants and wind parks in 2013.
Valuation: We expect a net profit CAGR13-16E of 22% due to a
sales shift towards more profitable income from PV plants. Our
estimates imply a PT of EUR5.4 based on a CFRoEV15E and DCF.
Y/E 31.12., EUR m
Sales
EBITDA
EBIT
Net profit
Y/E net debt (net cash)
EPS (reported)
EPS (recurring)
CPS
DPS
EBITDA margin
EBIT margin
Dividend yield
ROCE
EV/sales
EV/EBITDA
EV/EBIT
P/E
Cash flow RoEV
Source: Company data, Berenberg
2011
2012
2013E
2014E
2015E
2016E
35
25
13
-1
155
-0.01
-0.01
0.75
0.05
69.9%
37.4%
1.4%
5.8%
7.7
11.1
20.7
-241.9
4.3%
45
34
21
9
247
0.18
0.12
0.56
0.08
74.7%
45.5%
2.2%
5.9%
9.3
12.5
20.5
26.8
7.6%
55
48
30
16
183
0.24
0.24
0.50
0.08
87.7%
54.9%
2.2%
6.6%
7.9
9.0
14.4
15.3
9.7%
83
64
38
16
331
0.24
0.24
0.63
0.08
77.0%
45.9%
2.1%
6.8%
7.0
9.1
15.2
15.5
9.1%
100
81
50
22
419
0.33
0.33
0.80
0.11
80.8%
49.7%
3.0%
7.3%
6.7
8.2
13.4
11.1
9.8%
115
97
61
30
463
0.44
0.44
0.97
0.15
84.2%
53.4%
4.0%
7.9%
6.2
7.4
11.6
8.3
10.9%
4
Buy
Current price
Price target
EUR 3.69
EUR 5.40
27/11/2013 XETRA Close
Market cap EUR 249 m
Reuters
HWAG.DE
Bloomberg
CAP GY
Changes made in this note
Rating
Buy (no change)
Price target EUR 5.40 (4.70)
Chg
2013E
2014E
old Δ% old Δ%
61 -10.6 87
-4.9
Sales
28
6.7
39
-2.5
EBIT
0.22 12.1 0.26 -7.5
EPS
Source: Berenberg estimates
Share data
Shares outstanding (m)
Enterprise value (EUR m)
Daily trading volume
2015E
old Δ%
105 -4.1
51
-1.5
0.35 -4.5
68
433
50,000
Performance data
High 52 weeks (EUR)
Low 52 weeks (EUR)
Relative performance to SXXP
1 month
-3.6 %
3 months
-13.5 %
12 months
-13.1 %
4
3
DAX
-5.7 %
-15.7 %
-15.3 %
Key data
Price/book value
Net gearing
CAGR sales 2012-2016
CAGR EPS 2012-2016
1.2
91.6%
26.3%
24.6%
Business activities:
Acquisition and operation of solar plants
and wind parks
Non-institutional shareholders:
AMCO Service GmbH 23%
Blue Elephant Venture 8%
Dr Liedtke GmbH 8%
Albert Buell 5%
RTG GmbH 2%
Free Float 55%
28 November 2013
Stanislaus Thurn - Taxis
Analyst
+44 20 3465 2631
stanislaus.thurnundtaxis@berenberg.com
Capital Stage AG
Capital Stage – investment thesis in pictures
Group sales pre- versus post-capital increase (EURm)
120
Group net profit pre- versus post-capital increase (EURm)
35
115
110
30
30
100
100
92
90
25
25
83
81
23
80
20
70
19
65
17
60
55
16
15
13
50
10
40
2013e
2014e
2015e
Sales post-cap increase
2013e
2016e
2014e
Sales pre-cap increase
2015e
Net profit post-cap increase
2016e
Net profit pre-cap increase
Solar sales and EBT post-capital increase (EURm)
Wind sales and EBT post-capital increase (EURm)
100
25
90
86
80
20.1
19.4
20
72
18.0
70
60
57
15
50
40
39
35
10
8.3
28
30
20
20
5.4
4.5
5
13
10
5.2
1.2
0
2013e
2014e
2015e
Revenue
2016e
0
2013e
2014e
EBT
2015e
Revenue
2016e
EBT
Group sales split post-capital increase investment (2015E)
Total capacity post-capital increase split solar/wind (MW)
600
8%
3%
500
105
400
19%
99
300
91
449
200
49
41
70%
236
100
0
35
2010
Solar Parks
Wind Parks
Investments
90
2011
2012
2013e
Solar
5
153
133
PV Services
351
Wind
2014e
2015e
2016e
Capital Stage AG
•
Gross proceeds of EUR49.3m based on a 4:1 rights issue and a
subscription price of EUR3.65/share. The company has access to cheap
financing which allows the amount raised to be levered to EUR166m.
•
Capital increases are part of CS’s business model. In the past two years,
the company has raised EUR78m in six consecutive increases of its share
capital. Management has been able to convert the proceeds into valueaccretive growth.
•
CS plans to allocate EUR18m to Germany, EUR18m to Italy and
EUR12m to other European growth markets. The company has a
400MW pipeline and ample opportunities to grow even further in a
highly fragmented market.
•
The proceeds from the capital increase will add about 110-120MW of
capacity. The operation of solar and wind assets is highly cashgenerative – the added capacity will provide additional income, kickstarting exponential growth.
Details of the capital increase and effect on shareholder structure
CS has successfully raised EUR49.3m in fresh equity by means of a capital increase
with subscription rights. The company issue 13.5m new shares at a subscription
ratio of 4:1 (one new share for every four old shares) at a minimum subscription
price of EUR3.65/share. This will increase the shares outstanding from a total of
54.1m to 67.6m shares. The following table gives an overview of the changes to
the number of shares.
Details capital increase
% Capital Increase
Change in share numbers
Total number of shares pre-capital increase
Total number of new shares
Thereof: waived rights in pre-placement
25.00%
4:1
Number of shares
Equity in EUR
54,064,999
13,516,249
49,334,309
6,211,533
22,672,095
67,581,248
Total number of shares
Source: Company, Berenberg
The core shareholders which make up 53.6% of total share capital have agreed to
waive their subscription rights. The only exception to this is Blue Elephant
Venture, the investment vehicle of the Wacker family, which holds 7.7% at
present. The table below gives a comprehensive overview of the ownership
structure pre-capital increase, splitting the share capital into shareholders waiving
their subscription rights (46%) and the remaining shares including Blue Elephant
Venture (54%).
6
Capital Stage AG
Ownership structure pre-capital increase split between waived subscription
rights and remaining shares
Status Quo
Shares
% of share capital
54,064,999
100%
AMCO Service (Büll family)
Dr. Liedtke
Albert Büll
RTG (CEO F. Goedhart)
TOTAL
15,183,999
5,469,186
2,982,948
1,210,000
24,846,133
28.1%
10.1%
5.5%
2.2%
46.0%
Remaining shares (incl. Blue Elephant)
29,218,866
54.0%
Total share capital
Shareholder waiving supscription rights
The agreement to waive rights is based on the core shareholders’ support for an
increase in the stock’s liquidity, which has been a factor inhibiting investments of
outside investors in the share. The core shareholders are Mr Albert Buell (Albert
Buell Beteiligungsgesellschaft, 5.5%) and family (AMCO Service GmbH, 28.1%),
Dr Cornelius Liedke (Dr Liedke Vermoegensverwaltung, 10.1%), Dr PeterAlexander Wacker (Blue Elephant Venture, 7.7%) and the CEO Felix Goedhart
(RTG, 2.2%). Mr Buell and Dr Liedtke are well-known German entrepreneurs
who have their roots in real estate, having founded one of the largest German real
estate developers. In 2007, they sold that business to Pirelli for EUR465m and
have since been closely involved in CS. The second large core shareholder is Dr
Wacker, who is the long-time CEO of Wacker Chemie AG and a current
supervisory board member. In the past two years, the shareholders have
subscribed to six consecutive rights issues, which have raised a total of EUR77.6m.
The following chart gives more details of the transactions including date,
subscription price and proceeds, and shows the positive effect of the capital
increases on stock performance.
7
Capital Stage AG
CS’s history of rights issues
5
7 July 2010
- Si ze: 10%
- Pri ce: EUR2.0
- Proceeds: EUR5m
4.5
15 June 2011
- Si ze: 25%
- Pri ce: EUR2.1
- Proceeds: EUR15m
16 Sept 2011
- Si ze: 10%
- Pri ce: EUR2.4
- Proceeds: EUR8m
30 Jan 2012
- Si ze: 27%
- Pri ce: EUR3.0
- Proceeds: EUR31m
16 Sept 2012
- Si ze: 8.5%
- Pri ce: EUR3.8
- Proceeds: EUR16m
21 June 2013
- Si ze: 1.3%
- Pri ce: EUR3.8
- Proceeds: EUR2.6m
4
3.5
3
2.5
2
Last price (EUR)
Source: Company, Berenberg estimates
Of the total 13.5m shares issued, 6.2m are waived rights (45% of new shares) with
a total volume of EUR22.3m. This has resulted in a shift in shareholder structure
towards a more diverse shareholder base. The 53.6% core shareholdings are
diluted down to 45% of total share capital; this corresponds with an increase in
free float to 55% up from only 46% before the rights issue. The improved
shareholder structure and the larger volume of shares should improve liquidity and
make CS’s equity story more accessible. The following charts show the shift in
shareholder structure pre- to post-capital increase.
Shift of shareholder structure – increase in free float after rights issue
Post-capital increase
Pre-capital increase
AMCO Service (Büll
family)
28%
AMCO Service (Büll
family)
23%
Dr. Liedtke
Dr. Liedtke
Blue Elephant (Wacker
family)
Blue Elephant (Wacker
family)
46%
10%
2% 6%
8%
8%
55%
Albert Büll
8%
RTG Beteiligungsges.
(CEO F. Goedhart)
2%
Free Float
8
4%
Albert Büll
RTG Beteiligungsges.
(CEO F. Goedhart)
Free Float
05/09/2013
05/08/2013
05/07/2013
05/06/2013
05/05/2013
05/04/2013
05/02/2013
05/03/2013
05/01/2013
05/12/2012
05/11/2012
05/10/2012
05/09/2012
05/08/2012
05/07/2012
05/06/2012
05/05/2012
05/04/2012
05/03/2012
05/02/2012
05/01/2012
05/12/2011
05/11/2011
05/10/2011
05/09/2011
05/08/2011
05/07/2011
05/06/2011
05/05/2011
05/04/2011
05/02/2011
05/03/2011
05/01/2011
05/12/2010
05/11/2010
05/10/2010
05/09/2010
05/08/2010
05/07/2010
1.5
Capital Stage AG
The following chart gives a more detailed overview of the shareholder structure
after the rights issue. The only core shareholder which has not agreed to waive
subscription rights has been marked.
Ownership structure post-capital increase split between core shareholders
and free float
Shareholder structure post-capital increase
AMCO Service GmbH
Dr. Liedtke VV
Blue Elephant Venture
Albert Büll Beteiligungsges.
CEO (F. Goedhart)
Remaining free float
15,183,999
5,469,186
5,193,825
2,982,948
1,572,500
37,178,790
22.5%
8.1%
7.7%
4.4%
2.3%
55.0%
During our roadshows with CS’s CEO Felix Goedhart in Frankfurt, Zurich,
London and Benelux, the main investor concern was the low liquidity of the stock.
We think the rights issue and the ensuing dilution of the core shareholdings is a
positive step that will help investors find a better entry point to CS’s growth story
and highly recurring income from the company’s existing asset base.
Implications on the business – inorganic and exponential “organic”
capacity growth
The business can only grow through acquisitions of new PV and wind plants. The
capital increase has a gross volume of EUR49m which management is confident
can be invested into new solar and wind capacity by Q3 2014. The recent
acquisition of the Wolgast solar plant (see key investment point two for more
details) underlines this ambition. The investment plan for the proceeds outlines
that the EUR49m of equity can be levered to EUR166m (potential of EUR245m)
depending on the country mix. The company has access to cheap non-recourse
financing on a project level at average interest rates of 4%. We estimate that the
company will add 66MW PV (excluding 8MW from the recent Wolgast
acquisition) and 37MW wind capacity to its portfolio on top of our old growth
assumptions. The chart below gives a more comprehensive overview of the
capacity additions that we are expecting over the next few years. The figures for
2014 do not only include capacity that will be financed by the capital increase but
also underlying growth funded by the existing asset base and residual investable
capital.
9
Capital Stage AG
Solar and wind capacity in MW pre- versus post-capital increase
600
500
400
300
200
100
0
2013e
2014e
2015e
Capacity additions post-capital increase
2016e
Capacity additions pre-capital increase
At present, the company owns 200MW of solar and wind assets. The additional
10MW in the table are a result of expected M&A activity before the end of this
year. The overall addition to the portfolio in 2014 is 117MW, 124MW in 2015. The
company has set out an investment plan that allocates the EUR49m in equity it
wants to raise to its two core markets, Germany and Italy, and a third growth
market which is most likely going to be France.
The company aims to allocate the raised capital as follows.

Germany: An allocation of EUR18m which can be levered to EUR91m
(a 80/20 D/E ratio) and will roughly be divided 50/50 between wind and
solar assets. The company estimates that it can acquire about 70MW at
IRR of between 8-9%.

Northern Italy: An allocation of EUR18m which can be levered to
EUR42m (a 57/43 D/E ratio) to acquire about 21MW of new capacity at
IRR of 11-12%.

Other European growth markets: The allocation of the remaining
EUR12m which can be levered to EUR30m (a 60/40 D/E ratio) into
new markets, most likely France, to acquire 20MW solar as well as wind
capacity at IRRs of 9.5%.
The company is in the final stages of negotiations (share purchase agreements –
SPAs) on three projects with a total capacity of 26MW and has issued or is in the
process of issuing letters of intent for another 367MW of solar and wind capacity.
The table below sheds more light on the individual projects in the company’s
pipeline.
10
Capital Stage AG
CS’s solar and wind pipeline
Deal pipeline
Status
Country Type
Coordination of SPA
IT
PV
Exclusivity and DD phase
IT
PV
Exclusivity and DD phase
FR
PV
LOI*
FR
Wind
LOI*
D
Wind
LOI*
IT
PV
LOI*
IT
PV
LOI*
FR
PV
LOI*
FR
PV
LOI*
D
Wind
Preparation of LOI*
D
PV
Preparation of LOI*
D
Wind
Total
* Dependent on due diligence and SPA negotiations
MW
6
12
8
34
51
7
9
36
3
150
8
70
393
Equity (EUR)
15m
25.5m
5m
7.8m
20.7m
7.2m
10.5m
16.5m
8.8m
50m
1.4m
25m
193m
Management has indicated that the company has ample opportunities to grow
beyond the current pipeline. The market the company is screening is highly
fragmented and provides CS with a constant volume of possible acquisition
targets. In 2012, the total PV capacity in the EU was 64,000MW, of which
32,698MW is located in Germany. CS is the largest independent German solar
plant operator with a less than 0.5% market share, which indicates how much
opportunity there is for the company to grow.
We think that the equity investment coupled with excellent growth opportunities
provides a kick-start for exponential “organic” growth over the next few years. By
organic growth, we refer to the jump in income generated from the additional solar
and wind parks financed by the capital raising. This will allow the company to
finance more acquisitions than originally possible from running operations. We
estimate that instead of adding 73MW in 2016, CS will be able to add 103MW to
its portfolio. This trend is set to continue in the coming years at a high rate. This
effect of the capital increase on the build-up of the portfolio is significant. The
effect on sales and earnings will be discussed in the next paragraph.
Impact on sales and earnings
The capital increase has a significant impact on CS’s top and bottom line. The
company will more than double its capacity from 190MW at present to 450MW by
the end of 2015. This increases the sales CAGR13-16E from 19% to 28% and the
net profit CAGR13-16E from 14% to 22%. The following chart displays the
estimated sales post- versus pre-capital increase from 2013 to 2016.
11
Capital Stage AG
Estimated sales post- versus pre-capital increase (EURm)
120
115
110
100
100
92
90
83
81
80
70
60
65
55
50
40
2013e
2014e
2015e
Sales post-cap increase
2016e
Sales pre-cap increase
From our top line excluding rights issue estimates, this represents a sales
improvement of 28% in 2014 and 23% in 2015. The operation of solar and wind
parks is not associated with extensive operational costs – depreciation and
financing costs are the decisive headline numbers. On the earnings side, we expect
an EBIT improvement of 31% in 2014 and 25% in 2015 on top of our underlying
inorganic growth assumptions. The following chart displays the EBIT post- versus
pre-capital increase from 2013 to 2016.
Estimated EBIT post- versus pre-capital increase (EURm)
65
61
60
55
50
50
48
45
40
40
38
35
30
30
29
25
20
2013e
2014e
2015e
EBIT post-cap increase
2016e
EBIT pre-cap increase
The net profit increases to EUR16m in 2014 which is a 23% premium to our precapital increase estimates. We forecast that the net profit will rise to EUR23m in
2015, which represents 19% upside from the pre-rights issue estimate of EUR19m.
The slightly improved margins are a result of the shift towards higher margin solar
and wind operations tilting the revenue distribution away from the lower margin
12
Capital Stage AG
investment segment. The following chart displays the net profit post- versus precapital increase from 2013 to 2016.
Estimated net profit post- versus pre-capital increase (EURm)
35
30
30
25
25
23
20
19
17
16
15
13
10
2013e
2014e
2015e
Net profit post-cap increase
2016e
Net profit pre-cap increase
Our estimates suggest that the EUR49.3m equity will not only boost the immediate
sales and margin expansion but could kick-start exponential growth by providing a
meaningful asset base which generates enough cash to finance the next round of
acquisitions. The company has an excellent track record delivering a sales
CAGR10-13E of over 61% and net profit CAGR10-13E of over 100% – we
believe that the company can continue this impressive growth story. The following
tables give an overview of key numbers pre- versus post-capital increase.
13
Capital Stage AG
Headline numbers post- versus pre-capital increase
Post-capital increase
2010
2011
2012
2013e
2014e
2015e
2016e
13
14
7
2
89
35
25
13
3
155
45
34
21
9
247
55
48
30
17
181
83
64
38
16
328
100
81
50
23
414
115
97
61
30
457
EPS reported
0.06
-0.03
0.18
0.24
0.24
0.33
0.44
EPS recurring
0.02
-0.01
0.12
0.24
0.24
0.33
0.44
CPS
0.43
0.75
0.56
0.50
0.63
0.80
0.97
DPS
0.00
0.05
0.08
0.08
0.08
0.11
0.15
105%
70%
75%
88%
77%
81%
84%
EBIT margin
54%
37%
45%
55%
46%
50%
53%
Net profit margin
13%
7%
20%
30%
20%
23%
26%
Dividend yield
ROCE
EV/sales
EV/EBITDA
EV/EBIT
PER
Cash flow RoEV
0.0%
6.1%
14.2
13.6
26.3
86.5
7.8%
1.4%
5.8%
7.7
11.1
20.7
-241.9
4.3%
2.2%
5.9%
9.3
12.5
20.5
26.8
7.6%
2.2%
6.6%
7.9
9.0
14.4
15.3
9.7%
2.1%
6.8%
6.9
9.0
15.1
15.5
9.1%
3.0%
7.3%
6.6
8.2
13.3
11.1
9.9%
4.0%
7.9%
6.2
7.3
11.5
8.3
11.0%
Pre-capital increase
2010
2011
2012
2013e
2014e
2015e
2016e
13
14
7
2
89
0.06
0.02
0.43
0.00
105%
54%
13%
0.0%
6.1%
14.3
13.6
26.4
86.5
7.8%
35
25
13
3
155
-0.03
-0.01
0.75
0.05
70%
37%
7%
1.4%
5.8%
7.7
11.1
20.7
-241.9
4.3%
45
34
21
9
247
0.18
0.12
0.56
0.08
75%
45%
20%
2.2%
5.9%
9.3
12.5
20.5
26.8
7.6%
55
48
30
17
181
0.24
0.24
0.50
0.08
88%
55%
30%
2.2%
6.6%
7.9
9.0
14.4
15.3
9.7%
65
48
29
13
209
0.19
0.19
0.48
0.07
74%
45%
20%
2.0%
5.8%
7.1
9.5
15.8
19.2
8.6%
81
64
40
19
292
0.28
0.28
0.64
0.11
79%
49%
23%
2.9%
7.3%
6.7
8.4
13.6
13.3
9.5%
92
75
48
25
313
0.36
0.36
0.76
0.14
82%
53%
27%
3.8%
7.7%
6.2
7.5
11.7
10.3
10.8%
Sales
EBITDA
EBIT
Net profit
EBITDA margin
Sales
EBITDA
EBIT
Net profit
EPS reported
EPS recurring
CPS
DPS
EBITDA margin
EBIT margin
Net profit margin
Dividend yield
ROCE
EV/sales
EV/EBITDA
EV/EBIT
PER
Cash flow RoEV
14
Capital Stage AG
Capital Stage – investment thesis
What’s new: The company has released its preliminary Q3 numbers and revised
its guidance. The old company estimates indicated 2013 revenue of EUR60m and
EBITDA of EUR44m. The top-line guidance has now been reduced by over 10%
to EUR55m on the back of weaker numbers from CS’s Swiss subsidiary Helvetic
and unfavourable weather conditions in the solar and wind segment. Nevertheless,
despite the lower revenue guidance, the company expects to earn more, upgrading
expectations to EUR48m from the previous EUR44m. Management has only
released headline numbers, therefore a detailed evaluation is not possible, but we
assume that the higher earnings most likely reflect lower material expenses and
write-offs in the financial investments segment as well as positive one-offs from
the acquisitions of PV plants and wind parks in 2013.
In our view, the revenue reduction driven by the lower sales levels of the financial
investments segment is not problematic as we the company considers the financial
investments (Helvetic & Bluetec) as non-core. For next year we conservatively
estimate a similar development. In the medium term, we expect CS to divest its
financial investments and concentrate on its core business. This move will drive
margins as the lower margin Helvetic and Bluetec operations would not add to the
sales and earnings mix any longer. We have therefore adjusted our numbers and
now expect 5% less revenue and 7.5% less net profit in 2014. However, in 2016
the trend will reverse and we expect the company to make 1% more profit despite
generating 4% less revenue than we estimated before the guidance was revised.
This reflects the more positive sales mix as revenue from non-core operations
decrease.
German politics: The German elections resulted in a clear majority for the
governing Christian Democratic Party (CDU), with Chancellor Angela Merkel at
its helm. Since 2011, the CDU and the chancellor have been the driving force
behind the shift from fossil and nuclear power towards renewable energy sources.
The election results can thus be regarded as a positive, in particular because the
Liberal Party, the most renewable-critical fraction of the Bundestag, has not
managed to enter parliament and will thus not be able to renew the coalition with
the CDU. The main contender to the new coalition is the Social Democratic Party
(SPD), which is in favour of the energy reform. There will be some forwardlooking changes to the renewable energy legislation (EEG) after the new
government is formed but all relevant parties have ruled out retrospective cuts.
The table below displays the energy policy of the relevant German parties.
15
Capital Stage AG
Energy policy of the German parties
CDU
FDP
SPD
Greens
41%
5%
22%
11%
Overall assessment
Current opinion polls
Probable coalition
X
X
Renewables
Retrospective cuts ruled out,
phase-out FIT scheme for new
capacity in mid-term, couple
renewable built-up to grid
expansion
phase-out FIT scheme for new
projects rapidly, transition to
direct marketing with premium
on wholesale prices
Supply business
Intra-day price differences for
retail consumers, consumer
investments in grid
Reduction of electricity tax
maintain rapid built-up, gradual
reduction of FIT
accelerate renewables built-up,
target 2030: 100% renewables,
gradual reduction of FIT
Reduction of electricity tax,
Reduce energy prices by requiring
reduce energy prices by requiring
utilities to pass on wholesale
utilities to pass on wholesale
prices
prices
Power system costs
Redistribution of power system
costs between stakeholders, retain costs between stakeholders, retain costs between stakeholders, retain costs between stakeholders, retain
tageted exemptions of industrial tageted exemptions of industrial tageted exemptions of industrial tageted exemptions of industrial
customers from surcharges
Fossil
Support gas, coaland lignite-fired Support gas, coaland lignite-fired Support gas, coaland lignite-fired
generation as back-up for
renewables, new market design
over the mid-term
over the mid-term
over the mid-term
Nuclear
Phase-out
Phase-out
Phase-out
Phase-out coal and lignite-fired
capacity rapidly, new market
design for gas
Phase-out but more rapidly than
scheduled
Source: Election programmes, Bloomberg, Berenberg
The likely outcome of the coalition negotiations will be in the framework of the
parties’ election programmes outlined above. So far, the talks between Ms Merkel’s
CDU and the SPD have resulted in a reduction in the 2030 renewable energy
production target share to 55-60%. The election has thus reconfirmed Germany as
the politically most stable country in the world in terms of alternative energy
policy. The majority (85%) of CS’s total capacity is located in Germany. The other
15% is located in Italy, which has proved to have a functioning shared
contribution system in place, where the end-consumer pays subsidies in the form
of an additional charge levered on electricity bills. This is an effective shield from
cuts, as this would not improve the fiscal situation but would reduce taxes raised
from electricity revenues. In the long term, the federal government is looking to
reduce the FIT in a fixed schedule and eventually abolish the system altogether
when alternative energy production is at grid parity (fully competitive) with
conventional energy sources. The IAE forecasts that grid parity could be achieved
by 2017 if the current reduction in system prices continues.
Two-minute summary: CS is Germany’s largest independent operator of solar
power plants. In addition to its 149 MW PV operations, the company also operates
in the wind energy sector, having added 49MW of capacity to its portfolio since
2010/11 in Germany and northern Italy. The company mainly acquires turnkey
projects on the secondary market and focuses on the operation of the plants. The
investment in alternative energy production yields attractive, highly visible returns
16
Capital Stage AG
due to national regulations that guarantee the purchase of the total electricity
output over a 20-year period at fixed FITs.
The operation of solar and wind plants is not extensive and is associated with low
levels of operational risk, allowing the company an EBITDA margin of 75% in
2012. The company has a project pipeline of over 400MW in Germany, Italy and
other European countries. The company has access to cheap state-funded
financing and a track record of value-accretive acquisitions. Every plant or park
(SPV) is essentially kept independent from the holding, which prevents any
recourse of debt coming back to the holding level (with more than 90% equity in
the holding company). The average gearing of solar and wind parks in CS’s
portfolio is 80%. Thus D&A and financing costs are the most relevant headline
numbers in the company’s business model. In 2012, the group’s EBIT margin was
45% and EBT margin was 21%.
Key investment point one: recurring revenues in a high-margin
business at low operational risk
CS’s business model is based on the stability of highly visible cash flows which are
guaranteed by national regulation. Once a PV or wind park is operational, the
revenues and earnings are recurring up to a period of 20 years which is covered by
the German and Italian FIT scheme. We have conducted a thorough analysis of
the political risk in both of CS’s core market and conclude that the shared
contribution system (for details, see the regulatory framework section) in place in
both countries shields the company from retrospective cuts and supports the
recurring nature of the income stream. The following chart shows the sales, EBIT
and net profit of the current portfolio ex-growth and displays the recurring highly
visible nature of CS’s cash flows.
Recurring sales and EBITDA of existing portfolio
60.0
50.0
40.0
30.0
20.0
10.0
0.0
2012
2013e
2014e
Sales
2015e
2016e
EBITDA
The chart above is a result of our grass-roots modelling approach under which we
analyse on a project-by-project basis which gives us a very detailed understanding
of operations.
17
Capital Stage AG
Key investment point two: proven track record and existing portfolio
The existing portfolio is of high quality and has been amassed within a very short
timeframe. Management and indeed the whole team in Hamburg has proven to be
able to invest shareholder funds in a value-accretive and timely manner. The
positive track record was supported by the PV Services segment where the
company bundles its technical and acquisition expertise. The following chart gives
an overview of the portfolio from 2010 to 2013.
Track record: capacity additions from 2010 to 2013 (MW)
250
200
49
41
150
Wind
Solar
100
161
133
50
90
35
0
2010
2011
2012
2013e
The set-up of the PV Services segment makes it straightforward and profitable for
CS to operate plants and gives technological insights to management on its plants
but most importantly allows the company to conduct a thorough, cheap and fast
due diligence on the numerous projects it is analysing. The company has built a
network in the small and mid-sized solar and wind niche market that provides it
with a good supply of new projects all over the EU. The company has a cautious
and disciplined investment strategy. It focuses on small ticket investments and
concentrates on the two renewables technologies (solar and wind) which it regards
as the safest options with the lowest amount of operational risk. This is also the
underlying reason for the heavier solar share in the portfolio (75%) – the variability
caused by unfavourable weather is only five percentage points as opposed to other
technologies that have more operational exposure. The well balanced investment
approach has amassed a high-quality portfolio that has even attracted attention
from large players in the big ticket renewable market which would be willing to buy
a minority stake for a premium.
Management has been successful in building a high-quality portfolio in a short
timeframe. However, there has been considerable support from core shareholders
and the high-profile supervisory board. The board is chaired by Dr Manfred
Krueper, who was member of the board of directors of Eon AG until 2006, and is
a well-connected and insightful supporter of the company’s strategy. The
supervisory board also includes Professor Vahrenholz, known as “Mr Renewable”
18
Capital Stage AG
to the German public and long-time CEO of RWE Innogy: he is the current
chairman of the supervisory board of RWE Innogy.
Key investment point three: non-recourse debt and financing
conditions
The average leverage on the project level (SPVs) across the whole portfolio is 80%.
The company has access to cheap state-funded finance that allows CS to bear a
high level of debt. However, all the debt is non-recourse while the holding level is
virtually debt-free. Financing conditions in Germany have been excellent in the
past while the company has experienced and expects further substantial
improvement in southern Europe. In Italy, the company has access to kfW loans
for projects on the primary market at similar conditions but at slightly higher
interest rates (4.2%). The company is also able to secure financing for projects on
the secondary market, albeit at a 6% interest charge. The following table gives a
brief overview of financing conditions and debt structuring in the two countries
where CS operates.
Financing conditions and debt structuring of existing portfolio
Total Debt Capital
Average project leverage ratio
Average interest period
Average initial fixed interest period
Interest rate
Structure of debt financing
Germany
Italy
EUR260m
EUR52m
82%
72%
18 years
18 years
10 years kfW loans/ 15 years for
commercial bank loans
4.05%
4.20%
Project financing, non-recourse loans, no debt at holding level, no
corporate bonds
Key investment point four: strong growth potential in a niche market
The company focuses on a niche market of small and mid-sized solar and wind
plants where competition is limited. The large ticket renewable space has been
dominated by insurance companies looking for recurring and highly visible returns,
which have put IRRs under pressure. However, in the small ticket space, this trend
is more muted. Average IRRs on German solar plants have decreased to about 8%
from 11% but there are still numerous profitable opportunities in a market with a
total capacity of 32,000MW (capacity in Germany) and growing solar capacity. It is
noteworthy that CS is the largest independent German solar plant operator with
0.06% of market share.
The niche market strategy and the growing and highly fragmented industry offer
abundant opportunities to grow. The secondary market is huge but even the
primary market will provide upside as module prices have collapsed and will
decrease even further to levels where operating a solar plant in high irradiance
19
Capital Stage AG
locations can be competitive by 2017 or before. The big utilities are traditionally
centralising energy production; however, the future lies in CS’s approach of
decentralised energy production.
Regulatory framework (details in regulatory framework section)
In both of CS’s core markets, investments in renewable energy projects are
incentivised by national regulation to promote the steady expansion of power
capacity gained from renewable sources. The current German and Italian FIT
schemes, and their development over the next few years, is the single most
important factor when analysing CS. The FIT system in both countries is not
reliant on state subsidies but is financed by grid operators charging end-consumers
a premium on their standard electricity bills. In both of CS’s markets, but
particularly in Germany, the political will to promote renewable energy by creating
and maintaining an attractive regulatory environment is strong. In Germany, all the
major parties are united behind the turnaround in energy policy that Chancellor
Merkel initiated in 2011. The abolishment of nuclear power and the enormous
investments in alternatives is a massive political, economic and financial risk to the
country. We think that the political caste, and above all Chancellor Merkel, would
not dare do anything that could potentially endanger this project of a generation.
We regard the political risk in Germany as low, whereas there is moderate but
decreasing risk in Italy due to the fading euro crisis and the less uncertain
economic outlook.
The key point in both countries is the good funding structure which means that
the end-consumer is paying the bill and not the national government. This system
shields operators from cuts, as we have seen in Spain, where the government
directly subsidises and thus had to enact cuts when its fiscal situation deteriorated.
Company background and management
CS has evolved from a listed venture capital entity which invested in a range of
companies active in the renewable energy and cleantech space to the largest
independent solar power producer in Germany. This transformation has been
initiated under the tenure of the CEO Felix Goedhart, who joined in 2006 and
took a minority stake in the company. CS now owns 26 PV plants including the
most recent acquisition of the 8MW Wolgast plant and on top operates five wind
farms across Germany and Italy with a total capacity of 200MW. The split between
solar and wind is 75% PV and 25% wind capacity. The majority of the company’s
operations are located in Germany (85% of total capacity), but it also entered the
Italian market by acquiring eight PV plants and one wind park to take advantage of
the higher FITs and irradiance. The following map shows the geographical
distribution of CS’s operations.
20
Capital Stage AG
Map of CS’s solar and wind assets
Solar park
Wind farm
The Italian share represents 15% of its total solar capacity but 27% of total solar
output. In addition to the solar and wind segment, the company also provides
technical and commercial administration services to PV plants through its PV
Services division. The services offered mainly cover activities post-construction,
but in the past the service segment has in some cases also managed the complete
project from the acquisition of suitable land to the construction of the plant. CS
manages most of its own parks and has also attracted third-party operators. A
good part of the Italian business is under the technical administration of Eneri
SpA, which is 49%-owned by CS. In the long term, management strives to expand
the service segment by pooling all of the company’s PV assets and will increasingly
target third-party solar parks.
The remnants of the company’s previous private equity business are collected
together in the non-core Financial Investments segment. The portfolio includes a
15% share in the BlueTec GmbH & Co. KG, which is a leading producer of highly
selective absorber coatings and thin-layer technology for the residential solar
thermal market. Furthermore, CS has within the framework of a buyout taken over
Switzerland-based Helvetic Energy GmbH from Conergy AG. Helvetic is a leading
provider of thermal and PV solar systems. Its product portfolio comprises mainly
solar thermal systems, but also PV systems. In the last year, CS has sold its holding
in Inventux Technologies AG after the latter, a producer of silicon-based
micromorph thin-film panels, was forced to file for insolvency following the
collapse of module prices. The administration of the business is pooled in the
Management segment. The following organogram gives a comprehensive overview
of the company’s segmental structure.
21
Capital Stage AG
Organogram: PV parks, wind parks and PV services core business
Capital Stage
PV Parks
Wind Parks
PV Services
Investments
Management
Management
CEO Felix Goedhart and his team have managed to transform the company from
a corporate shell into Germany’s largest solar plant operator. From 2008 onwards,
the company has focused on the acquisition of solar capacity and in 2011/12
added wind to the portfolio. The value-accretive investments of the past make us
confident that management, supported by the core shareholder, will be able to
deliver further growth and earnings expansion. The CEO holds a stake of over 2%
in the company which he has not earned through option/share plans but has
invested from private sources, which underlines the commitment to the equity
story.
Mr Felix Goedhart – CEO
Mr Goedhart has been CEO of CS in Hamburg since 1 November 2006. After
completing his studies in business administration at the University of St Gallen and
the University of Chicago (MBA), Mr Goedhart worked for four years at Booz &
Co, a leading international business consulting company, in Düsseldorf and
Munich. As senior project manager, he led a number of consultancy projects both
in Germany and overseas.
In mid-1995, Mr Goedhart joined the Kirch Group, one of the leading media
companies in Europe at the time. At the end of 1997, Mr Goedhart became an
executive director at Premiere (now Sky) in Hamburg. In mid-1999, he assumed
the chairmanship of the board at equitrust AG in Hamburg. Here he developed
the equity investment and funds management business. One of equitrust’s most
successful investments was in Ersol Solar Energy AG (now Bosch Solar) in Erfurt.
In the fund business, equitrust manages EUR500m for private and institutional
investors.
22
Capital Stage AG
Zoltan Bognar, PhD – member of the management board
Dr Bognar has been a board member of CS since January 2010. Following his
university degree and doctoral studies in law, he started his career as a solicitor at
Freshfields in Hamburg, Paris and Stuttgart. From 1996 to 2002, he was a business
consultant at McKinsey & Company, with positions in Hamburg and Tokyo,
where he led a number of local and international projects in the role of senior
project manager.
In early 2002, Dr Bognar became a partner in Inventages SA, a private equity firm
based in Lausanne that is part-financed by Nestlé SA. Here he shared responsibility
for the development of the business as well as the acquisition and allocation of
resources for three private equity funds with a total capital of more than
EUR700m. In mid-2006, Dr Bognar became a consultant for private investors and
family offices in the areas of renewable energy and life sciences. In spring 2007, he
transferred to H.I.G. Capital, one of the world’s leading private equity investment
companies dealing with SMEs with equity capital in excess of EUR5.5bn. Here, as
principal, he shared responsibility for the development of the Hamburg office and
was involved in a variety of expansion financing, buy-out and restructuring
projects in Germany, Switzerland and Austria. One of his specialisations when
employed at H.I.G. Capital was in the area of renewable energies.
23
Capital Stage AG
Key investment point one: recurring revenues at low
operational risk
•
Must-have stock for investors seeking exposure to listed FIT business
model.
•
Highly-visible cash flows guaranteed by national regulation. Our projectby-project model shows reliability of income stream.
•
High-margin business with virtually no operational risk – high solar
share limits weather risk.
A durable technology with stable, guaranteed returns
The investment in alternative energy production yields attractive, highly visible
returns due to national regulations (details in regulatory framework section) that
guarantee the purchase of the total electricity output over a 20-year period at fixed
FITs. CS focuses on the acquisition of turnkey projects which minimises the risk
with which renewable energy production companies are normally associated. The
company states that on average its PV parks in Germany have an IRR of 10%. In
Italy, the IRR is considerably higher at 12-14%. The consolidated EBITDA margin
in 2012 was 74.7%, and is driven by the fact that once a renewable energy plant has
been connected to the grid, operating costs remain low. Also, due to the fixed
FITs, which are guaranteed by the respective government, the revenues of an
operational project are recurring with no real downside risk.
The CS model is based on a grass roots approach (data available on request) – we
modelled each of the company’s solar and wind plants before consolidating the
respective income and cash flow statements on a segmental basis. This has enabled
us to easily strip out estimated growth at the segmental level, leaving us with the
pure numbers from the existing asset base. The table below shows the recurring
nature of the revenues and other numbers which persist well over the years
displayed here. There is only a slight revenue reduction over the years, mainly due
to degradation (performance reduction) of solar panels. We expect a very slight
degradation of the PV parks’ output pa, leaving the solar panels on average with
93% effectiveness after 20 years.
CS’s current portfolio – no growth shows recurring cash flows
Capital Stage AG
2012
2013e
2014e
2015e
2016e
Sales
EBITDA
EBIT
Net profit
Gross profit margin
45
34
21
9
85%
53
38
20
9
92%
54
38
20
9
93%
54
37
20
9
92%
54
38
21
9
92%
EBITDA margin
75%
80%
69%
69%
71%
EBIT margin
45%
47%
36%
36%
38%
Net profit margin
20%
17%
17%
17%
17%
Dividend yield
ROCE
2.2%
5.9%
2.2%
5.5%
1.0%
4.1%
1.1%
4.2%
1.4%
4.6%
24
Capital Stage AG
The secured cash flows of the solar and wind parks are especially interesting in the
current macroeconomic environment. CS is aiming to steadily increase the
dividend. In the coming years, the dividend will be gradually raised in line with
earnings. We think that the total equity value of the existing portfolio amounts to
about EUR210m based on a mix of DCF and CFRoEV2014E including the
organic growth financed by internal cash flows and combined with the pipeline the
value is much higher. The additional upside to the current equity value is a result of
the expected growth rates in the next few years financed from the recurring cash
flows of the existing portfolio.
25
Capital Stage AG
Key investment point two: proven track record and
existing portfolio
•
The company has within five years managed to accumulate a highquality portfolio of 200MW of solar and wind capacity.
•
The PV Services segment plays a key role in the acquisition process. The
in-house operation of its plant provides insight and allows for more a
more informed and fast due diligence.
•
The asset base is well diversified between two renewable technologies
and geographically which shields from weather and political risk,
•
The well-staffed supervisory board and the core shareholder have proven
to be valuable supporters of the business.
A focused player in a niche market
CS operates in the renewable energy niche of the European utilities sector. The
company focuses on small and mid-sized solar and wind plants. The market for
these assets is highly fragmented and characterised by lower competition than the
bigger ticket renewable energy market. The company competes with a great
number of small, focused niche players. In contrast to the major utilities
companies, most niche players not only operate renewable energy projects but are
also involved in the development process. However, CS focuses on the lower risk
acquisition of turnkey projects and only to a lesser extent on the late stage
development of new projects.
Management has a very cautious investment approach and relies heavily on its
network and industry insight in its PV Services segment. CS has pooled a high level
of operating expertise in the PV Services segment which is a huge competitive
advantage when considering new projects (due diligence) and the cost effective
post-transaction management of assets. The built up of the current portfolio and
corresponding boost to revenues and earnings is the best indicator of wellbalanced investment approach in a niche market. The following chart displays the
capacity addition next to the revenue and earnings development.
26
Capital Stage AG
CS’s capacity (MW), sales and earnings (EURm) development
70
250
60
200
50
EURm
150
40
30
100
20
50
10
0
0
2010
2011
Sales
2012
Net profit
2013
Capacity MW (rhs)
High-quality existing portfolio
In recent years, CS has built up a strong track record of successful acquisition in
the secondary market of wind and solar energy projects. The company today
benefits from a regionally diversified asset portfolio which reduces operational
(sun/wind) and political risks and provides a strong base in two of the most
attractive European markets – Germany and Italy – both of which provide a stable
environment in which to develop the business further. The following tables give a
more detailed overview of the current asset base split into wind and solar plants.
27
Capital Stage AG
CS’s portfolio
Solar Parks
Name
Brandenburg
Construction Capacity Output (2012) Share (%) FIT (EUR/MW) Years lease Country
2010
18.6
19687.4
51%
253.7
owned
GE
Koethen
2008
14.8
14495.8
100%
354.9
22
GE
Roitzsch
2012
13.5
4419.1
100%
220.7
21
GE
Lettewitz
2012
12.6
0.0
100%
179.4
owned
GE
Neuhausen
2011
10.6
3123.8
100%
211.1
20
GE
Stedten
2009
9.1
9550.6
100%
319.4
25
GE
Rassnitz
2011
7.0
7468.4
100%
220.7
21
GE
Roedgen
2009
6.8
9550.6
100%
367.3
21
GE
Glebitzsch
2012
3.9
1374.9
100%
179.4
owned
GE
Halberstadt
2009
3.8
3598.1
100%
319.4
21
GE
Lochau
2010
3.3
3472.7
100%
284.3
21
GE
Krumbach I
2009
3.0
3445.6
100%
319.4
20
GE
Krumbach II
Bad Harzburg
2009
2011
2.0
1.9
2297.0
801.8
100%
100%
319.4
187.6
20
owned
GE
GE
PVA
2012
1.0
0.0
100%
187.6
20
GE
Ramin
2013
9.0
0.0
100%
113.0
21
GE
Wolgast
2013
8.0
0.0
100%
97.4
26
GE
Parma
2010
6.2
8590.4
100%
421.0
21
IT
Polesine
2012
4.6
4497.0
100%
252.0
25
IT
Cesena
2011
4.0
5273.4
100%
252.0
21
IT
Resina I+II
2010
1.7
2226.8
100%
346.0
25
IT
Suvereto
2010
1.5
2124.9
100%
346.0
25
IT
Fresa
2010
1.5
2139.2
100%
346.0
20
IT
Cupello
2010
1.0
1374.4
100%
346.0
20
IT
Forli
2011
1.0
1269.8
100%
382.1
21
IT
Wind Parks
Name
Greussen
Gauaschach
Sohland
Vitalba
Olbersleben
Construction Capacity Output (2012) Share (%) FIT (EUR/MW) Years lease Land
2006
22.0
38481.1
71%
96.3
30
GE
2011
7.0
7605.3
100%
96.3
27
GE
2006
6.0
14744.0
74%
96.3
30
GE
2006
6.0
10952.4
85%
140.0
22
IT
2013
8.0
75%
97.0
28
GE
The current asset base has (as of 2013) an average lifetime under the FIT scheme
of 17 years for solar plants and 14.5 years for wind farms. The date of construction
and commissioning of PV plants and wind farms is of great significance when
valuing CS. The older the asset, the higher the FIT; however, the older the project,
the earlier it falls out of the FIT scheme. It is therefore very important to have a
well balanced portfolio. CS has managed to accumulate assets which have a well
adjusted “age mix”. Management’s determination to only acquire projects of high
quality should ensure that the plants still produce good returns after the cessation
of the FITs. The following chart displays the duration of the FIT contracts for
CS’s portfolio.
28
Capital Stage AG
Duration of FIT contracts for CS’s portfolio
Today
2020
2030
The company notes that interest in high-quality PV projects has reached a level
where some investors are ready to accept IRR of 6% or even less. This stand is in
stark contrast to the average 10% IRR generated by CS’s German portfolio. The
increasing demand for the secured cash flows of renewable energy plants has been
a catalyst for solar and wind plant prices in Germany and northern Italy, and this
has led to an appreciation in the value of the company’s assets which, against the
backdrop of the slow moving macroeconomic environment, has proved a catalyst
for the stock’s value.
The excellent existing asset base is the best proof of CS’s ability to invest new
equity in a value accretive and timely manner. We believe that the management and
the investment and technical team in Hamburg and Halle are on the right track to
grow the operations even further beyond the current scope at similar profitability
rates. The cash flows from the high-quality asset base will support the further
build-up of the portfolio.
29
Capital Stage AG
Key investment point three: non-recourse debt and
cheap financing conditions
•
The company has access to cheap state-funded finance. In Germany, the
company only pays an interest rate of 4.05% and has an average 80%
leverage.
•
All debt is on a project-by-project basis and non-recourse which shields
shareholders from balance sheet risk.
•
In southern Europe, the financing conditions are improving and the
company is able to use German state-funded finance.
All the advantages of high leverage without the downsides
The average leverage on the SPV level across the whole portfolio is 80%. The
following charts display the respective D/E ratio of the solar and wind assets.
Average debt and equitySolar
for solar and wind assets
Solar
Solar
21%
WindWind
Wind
21%
33%
Debt
33%
Debt
Debt
Equity Equity
67%
79%
Debt
Equity Equity
67%
79%
The high reliability of income and additional government support makes it possible
to leverage investments on a high ratio. The state-owned kfW development bank
provides cheap access to finance in Germany. The average interest rate across the
German portfolio is 4.05%. We have estimated that this finance rate will increase
to 6-7% after 10 years for the remaining eight years of the payback period. In
Germany, the financing environment is the most favourable but the situation in
CS’s second core market, Italy, looks promising. Whereas two years ago there was
no financing available for solar and wind capacity in southern Europe the
conditions have somewhat improved. The company has access to kfW loans in
Italy on similar conditions as in Germany but only for projects in the primary
market. The interest charges on these loans are a little higher at 4.2%. However,
the economic climate in Italy now also allows financing of projects on the
secondary market at an estimated 6%.
The company is now confident that it can leverage at a roughly 60/40 debt/equity
ratio and at an interest rate of 4.2%. It is noteworthy that owned kfW funding is
also available outside Germany on similar terms. The cheap financing is a distinct
feature of the business model which allows for more effective equity employment.
The high leverage ratio for the SPV of course reflects on the balance sheet. We
estimate that the 2013 net debt/EBITDA ratio excluding the capital increase will
30
Capital Stage AG
stand at 5x (including the rights issue at 3.2x). However, the holding company is
virtually debt-free (more than 90% equity) and the debt on SPV level is all nonrecourse. The following table gives an overview over the existing financing
conditions and debt structuring.
Financing conditions and debt structuring of existing portfolio
Total Debt Capital
Germany
Italy
EUR260m
EUR52m
82%
72%
18 years
18 years
4.05%
4.20%
Average project leverage ratio
Average interest period
Average initial fixed interest period
Interest rate
Structure of debt financing
Project financing, non-recourse loans, no debt at holding level, no
corporate bonds
Source: Company
Relationship to banks
CS ensures the smooth functioning of its capital-intensive project development
process via close relationships with its house bank and the state-owned owned
kfW bank. Funding for a new project needs to be secured in the early stage of
development, when uncertainty about future cash flows is high. Therefore CS’s
strong relationship with well-capitalised banks is a vital precondition for competing
in the primary and secondary PV and wind market. CS has worked with several
banks in Italy, but in Germany, kfW and DKB have financed or co-financed nearly
all of CS’s projects.
As a consequence of its good banking relationships, the average project is highly
geared, which helps the company increase the number of projects it can acquire at
any point in time. Management has proved that this lever has not led to wasteful
spending but rather funded a fast and sustainable growth. CS has in the past also
carried out all-equity deals. However, in general, the company is looking to gear
projects at a high rate leveraging its access to cheap finance conditions as much as
it can.
31
Capital Stage AG
Key investment point four: strong growth potential in a
niche market
•
CS’s business model is not dependent on the prolongation of the FIT
schemes. The secondary market is massive and as system prices decline
renewables become more and more competitive.
•
The European Commission (EC) target is for a 20% share of energy from
renewable sources in the EU by 2020.
•
Europe is the largest solar market in world with more than 70,000MW
capacity as of 2012.
•
Wind energy plays a vital role in achieving the EU 2020 product mix
targets. The EC estimates that of the 20% renewable target, wind energy
will contribute 12%.
The right growth strategy in a booming industry
The company’s growth strategy of small and mid-sized ticket acquisitions on a
project-by-project basis has been very successful in the past. When looking at the
industry and the wider trends, we do not see any reason why this should change in
the foreseeable future. The growth rates of the solar and wind sectors remain
impressive and Europe still is the biggest market worldwide for these renewable
technologies and will be for some time to come. From 2000-2010, electricity
generation worldwide from wind grew by 27% and solar energy by 42% per year.
In 2012, wind energy capacity increased at a slightly lower rate of 20% – bringing it
up to 282GW globally. The development of the PV market has been even more
dynamic – capacity has doubled in the last two years and now amounts to over
100GW. According to the International Energy Agency, electricity production
from alternative energy sources will nearly triple from 2010 to 2035, reaching 31%
of total generation. In 2035, PV energy will provide up to 7.5%, and wind almost a
quarter, of total energy. The forecast PV growth rates are also impressive, leading
to a 26-fold growth from 2010-2035. The fast build-up of renewable energy
sources will require investment of USD6.4trn over the specified period to 2035.
These investments include USD1.3trn for additional solar capacity and USD4.1trn
for investments in wind energy. The persistent dynamic of the renewable energy
market represents an enormous opportunity for the company.
Renewable energy in Europe
The European landscape for renewable energy has developed significantly over the
past 15 years. In 1997, the EC proposed the target of 12% of energy production
coming from renewable sources by 2010. After achieving 9% by 2006, the EC
refined its targets in 2008. In its directive on renewable energy, the EC once again
set ambitious targets for all member states so that the EU will reach a 20% share
of energy from renewable sources by 2020. The chart displays the shares of energy
consumption for the respective countries versus the national targets.
32
Capital Stage AG
Renewable energy target by country (2008-2011)
25%
20%
20%
20%
18%
17%
15%
15%
10%
5%
0%
10% 11% 12% 13%
6% 8% 10% 12%
7% 8% 11% 12%
10% 12% 14% 15%
European Union
Italy
Germany
Spain
2008
2009
2010
2% 2%
3% 4%
United Kingdom
2011
Source: Eurostat
The chart highlights the strong need for further developments of the renewable
energy space. According to Eurostat, at the end of 2011, the EU as a whole
generated 13% of its energy consumption by renewable methods, up from 8.5% in
2006. There are a few major European markets which lag behind, such as the UK,
which need to upscale investments to reach the European targets. This could in
the future develop into a promising entry opportunity for CS.
We expect the strong European trend to increase capacity will continue in the
coming years. The momentum for investment in the renewable energy sector
remains strong, supported by the very ambitious EU target; this has resulted in a
strong political will at a country level and a speeding up of the permit delivery
process for new projects in order to reach the 2020 country targets. In addition,
the ongoing decommissioning of conventional energy sources will lead to a natural
increase in demand for increased renewable energy capacity. The energy mix has
changed dramatically in recent years: in 2000, solar capacity only made up 3% of
the total, but this figure had increased to 17% in 2011.
Solar energy in Europe
According to EPIA, Europe remains the world’s leading region in terms of
cumulative installed capacity, with more than 70GW as of 2012. This represents
about 70% of the world’s cumulative PV capacity and is the direct market of CS. A
lot of the European PV capacity is split into small and mid-sized installations
representing enormous opportunities for CS.
Europe’s market has progressed rapidly over the past decade: from an annual
market of less than 1GW in 2003 to a market of over 13.6GW in 2010 and
22.4GW in 2011 – even in the face of difficult economic circumstances and
varying levels of opposition to PV in some countries. But the record performance
of 2011, driven by the fast expansion of PV in Italy and again a high level of
installations in Germany, could not be emulated in 2012 and the market fell to
17.2GW additional PV capacity installed. For the first time in the last 12 years, the
PV market in Europe decreased in terms of new connected capacity. Nonetheless,
in 2012 the PV market in Europe again exceeded all expectations, since analysts
had expected even lower even lower growth rate due to the difficult
macroeconomic environment. The following map displays the expected global
capacity (GW) by continent in 2020.
33
Capital Stage AG
Estimated global PV capacity (GW; 2020)
85 -150
135 -180
80 -130
Europe
North America
50 -60
35 -45
Asia
Middle East
30 -40
Africa
South America
Source: Bloomberg, Berenberg
Wind energy in Europe
According to EPIA, Europe remains the world’s leading region in terms of
cumulative wind energy plays a vital role in achieving the EU 2020 product mix
targets. The EC estimates that of the 20% renewable target, wind energy will
contribute 12%, explaining the very high capacity additions during the last decade.
In 1995 the total installed wind capacity stood at 2.5GW and increased to 83GW in
2010, an average annual increase of 26%.
In addition to the strong overall increase in wind-generated electricity capacity, the
installation momentum has accelerated significantly since 2005. In 2005, wind
power installations had a volume of 6.2GW, compared to 7.6GW, 8.5GW and
even 10.5GW in 2006, 2007 and 2010, respectively. In 2011, wind power
installation grew by 9.6GW, at which level installations are valued at
EUR12.6bn.The following chart shows the impressive growth of global wind
energy capacity.
34
Capital Stage AG
Global wind power cumulative capacity (GW)
282.4
300
238
250
197.7
200
158.9
150
120.3
100
50
6.1
47.6
31.1 39.4
23.9
17.4
7.6 10.2 13.6
59
74
93.6
0
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Global wind capacity
Source: GWEC, Berenberg
Wind power is set to continue to expand rapidly as it becomes more costcompetitive with conventional sources of electricity generation, driven to a large
degree by supportive government policies. The International Energy Agency states
that the incremental electricity output from wind is greater than that of any other
renewable source. According to the agency, global generation from wind will
increase dramatically from 342TWh in 2010 to around 2,680TWh in 2035, pushing
up its share in total electricity generation from 1.6% to 7.3%. Furthermore, the
IEA estimates that wind energy will penetrate most in the EU, where it will
account for almost one-fifth of electricity generated in 2035, compared with less
than 5% in 2010.
CS has established itself as the largest independent German solar plant operator
and has the unique chance to establish itself as a specialist in a profitable, strongly
growing industry which the bigger players avoid due to its fragmented and
decentralised nature.
35
Capital Stage AG
Regulatory framework
•
Thorough analysis of German political landscape let us to believe that
retrospective cuts are very unlikely.
•
The German and Italian political framework is stable due to the shared
contribution system that sets the situation apart from countries such as
Spain.
•
The forward-looking changes to the German renewable legislation do
not harm CS’s business model.
Regulatory changes and the significance of module prices
In both of CS’s core markets investments in renewable energy projects are
incentivised by national regulation to promote the steady expansion of power
capacity gained from renewable sources. The current German and Italian FIT
scheme and its development over the next years is the single most important factor
when analysing CS. The FIT system in both countries is not reliant on state
subsidies but is financed by grid operators charging end-consumers a premium on
their standard electricity bills. In both of CS’s markets, but particularly in
Germany, the political will to promote renewable energy by creating and
maintaining an attractive regulatory environment is strong. The political risk in
Germany is low, whereas there is only a somewhat higher risk in Italy due to the
more uncertain economic outlook. Entry into other markets such as France needs
to be carefully assessed by the company in terms of the regulatory framework. This
section focuses on the German and Italian regulations.
The amount of the FIT depends on the development of manufacturing prices for
solar and wind systems and the underlying raw materials. Policymakers adjust the
FIT based on the prices of PV and wind technology. The rapid development of
the Chinese solar industry and the renewables boom of the last decade have led to
overcapacity in the market which has led to a collapse of solar system prices.
Between the first quarter of 2010 and the first quarter of 2012, solar PV generating
costs fell by 44%. The following chart shows the price development of polysilicon,
the most important raw material.
36
Capital Stage AG
Polysilicon price development (USD/kg)
400
350
300
250
200
150
100
50
0
2006
2007
2008
2009
2010
2011
2012
2013
Polysilicon
Source: Bloomberg, Berenberg
This situation has gradually pushed capacity out of the market and will eventually
lead to a normalisation in pricing. In our model, we have provided for a
conservative 5% decrease of capital expenditure. The EU has set fixed targets for
the build-up of renewable energy production. The EU’s overarching goal is for the
region to generate 50% of its total energy from renewable sources by 2030. This
ambitious plan is to be realised by EU national governments through direct
subsidies and FIT schemes which are to be adjusted to account for market
parameters such as changes in the price of renewable technology. The correlation
and interplay between solar panel prices and the FIT is strong and has to kept in
mind when analysing the regulatory framework and likely changes.
German national renewables regulation (EEG)
The EEG is widely regarded as the most successful piece of legislation promoting
renewable energy production. The act was passed in 2000, and since then it has
been amended a number of times to reflect changes in market conditions and
capacity quotas set by the German government. The EEG’s purpose is to support
renewable energy investments by securing and stabilising electricity prices from
clean sources. The targets are to scale renewable electricity production up from the
20.5% of total energy production achieved in H1 2012 to 50% in 2030, 65% in
2040 and 80% in 2050 (subject to coalition negotiations). The core elements of the
EEG are:

renewable energy receives preferential treatment – the grid operators
are obliged to prioritise clean power in terms of connection, transmission
and acceptance; and

FIT – the EEG ensures the payment of constant FITs over a 20-year
period for electricity produced by installations commissioned by the grid
operator.
The following table shows the degression of PV FITs for ground-mounted
greenfield systems between 2004 and 2012.
37
Capital Stage AG
Degression of solar FITs (EURct/kWh)
PV FIT
2007
E UR c t/kW h
Agricultural land
Contaminated land
Others
38.0
38.0
38.0
2008
35.5
35.5
35.5
2009
31.9
31.9
31.9
July
28.4
28.4
28.4
2010
2011
October
25.4
22.1
24.3
21.1
January
18.8
17.9
2012
April
13.5
-
* From October 2010 no FIT for agricultural land; Source: German Federal Environment Ministry (BMU)
In 2012, there were some major amendments to the act due to the progressively
decreasing prices for renewable energy systems. In addition, the development of
renewables entered a new strategic phase. The government would like to have
more active control over the PV FIT, in order to improve flexibility and control
the volume of installed PV capacity more tightly. This encompasses:

more frequent FIT reductions;

PV capacity quotas which reduce tariffs at certain thresholds;

52GW PV total capacity threshold.
It was noteworthy that in the 2012 review the 10MW size limitation on plants
eligible for remuneration stayed in place. Another significant addition to the
already existing regulatory act was the market premium option which allows
renewable energy producers to market electricity directly to the market. Instead of
receiving a FIT, the operator receives the spot rate and an additional market
premium payment which is calculated on a monthly basis and is equal to the
difference between the FIT price and the reference price at the end of each month.
The following table shows the new FIT compensation for ground-mounted
greenfield projects and the newly established reduction rate for 2013.
Degression schedule for ground-mounted greenfield projects in 2013
(EURct)
16.0
14.0
13.5
13.1
12.8
12.4
12.0
11.8
11.3
10.0
8.0
6.0
Avg. spotmarket px 5-7EURct/kWh
4.0
2.0
FIT (EURct/ kWh)
Source: German Federal Environment Ministry (BMU)
38
10.8
10.4
10.1
9.9
Capital Stage AG
The PV degression certainly puts pressure on all market participants to operate
more cost efficiently. However, the transparent nature of the reductions will give
participants enough time to react to changes. The following chart displays the
reductions of the PV/wind FIT on its path to “grid parity” (ability to compete in
free market).
Development of German FIT (2000-2016E)
60
50
40
30
20
10
0
2000
2002
2004
2006
Onshore Wind DE
2008
2010
2012
2014
2016
PV DE
The 2012 EEG also modified the compensation structure for wind-generated
electricity. In general, all onshore wind projects receive the same FIT payment for
an initial period of five years. After the initial payments, sites with the strongest
wind speeds are compensated at a lower base rate for the remaining 15 years of the
FIT contract. In line with this, the regulation awards the higher initial payment for
a longer period of time for those sites that have a weaker load factor. The
difference between the initial and the base payment is computed using a formula
that compares the respective projects to a “reference yield” benchmark. Details of
the FIT schedule are shown in the following table.
FIT scheme for wind energy EEG 2009 versus EEG 2012
Wind FIT
E UR c t/kW h
EEG 2009
EEG 2012
Initital payment
9.2
8.9
Base payment
5.0
4.9
Repowering bonus
0.5
0.5
System services bonus
0.5 installed before 1/1/14
0.48 installed before 1/1/15
Degression pa
1.00%
1.50%
Before the modification of the EEG in 2009, the initial payment was reduced
annually using a degression schedule. In response to a rise in copper and steel
prices, which led to an increase in installation costs, payments were adjusted to
reflect the decreasing attractiveness of wind projects to investors. The 2012 EEG
amendments included a further adjustment of the wind FIT – the current rate now
amounts to EUR0.089/kWh for the initial payment and EUR0.049/kWh for the
base compensation. The degression has been increased to 1.5%. However, in
contrast to PV energy, the compensation guaranteed by the government has been
39
Capital Stage AG
pretty stable, only decreasing at very moderate rates. From an investment
perspective, the 2012 EEG amendments have not significantly changed the
competitive environment in the wind market, as the payments are still fixed at
levels that are largely above the market rate and the revised regulation has provided
a transparent schedule for future price declines. The newly introduced market
premium proved to be attractive option for wind operators because it allows wind
farms to reap more profit than would be possible under the normal FIT regime.
The revised EEG can be viewed as a decisive step in the direction of a grid parity
future, where the policy is more flexible and offers less of a financial cushion to
investors. It is noteworthy that the EPIA expects PV energy to be fully
competitive by 2020. The outlook still provides ample leeway for CS to develop its
FIT-based portfolio further.
Italian national renewables regulation (Conto Energia)
The regulatory framework in Italy has for some years provided a stable foundation
for the development of alternative energy sources. In the face of the financial crisis
and the ensuing European debt crisis, the Italian government has tried to scale
down its expenses. While fiscal considerations have had no direct influence on the
FIT scheme, the ensuing economic difficulties have led to a review of the
renewable compensation structure. In general, the Italian scheme has been more
generous to operators of renewable energy plants in the past than other European
schemes. The structure of the Italian PV FIT scheme is similar to the German
system – the Italian government guarantees the off-take of renewable power from
commissioned plants for a 20-year period at fixed rates by the grid operators. The
market premium option is also available in Italy. As in Germany, instead of just
receiving the FIT, the PV operator can also sell the electricity on the open market
and receive an additional payment on top.
The economic downturn and the ensuing euro crisis have triggered severe cuts in
Italy. To relieve Italian consumers, the government drafted the Conto Energia V, a
new renewable energy resolution which was introduced in July 2012. The
resolution contains new regulations and reductions in quotas. The major changes
are as follows:

obligatory registration for PV installations of more than 12kWh;

FIT ceiling fixed at a total of EUR6.7bn pa;

self-consumption is no longer subsidised separately.
As a result of the new registration requirement, PV installations only receive FITs
if they are entered in the corresponding register and remain within the following
annual limits: first register: EUR140m; second register: EUR120m; subsequent
registers: EUR80m per register until the EUR6.76bn upper limit is reached.
Investors can apply to receive FIT from the respective registers until the funds are
used up. The FIT level is adapted every six months on the basis of the actual
capacity added and the resulting level of subsidies remaining. In 2013, the subsidy
system has been altered and now includes a unitary tariff for the amount of
electricity fed into the grid. In addition, the producer can receive a supplementary
premium for own consumption. The details are displayed in the following table.
40
Capital Stage AG
Italian solar FIT scheme
PV Capacity
E UR/kWh
1<P<3
3 < P < 20
20 < P < 200
200 < P < 1000
1000 < P < 5000
P > 5000
Building-mounted
Unitariy tariff
Own consumption
0.208
0.126
0.196
0.114
0.175
0.093
0.142
0.060
0.126
0.044
0.119
0.037
Unitariy tariff
0.201
0.189
0.168
0.135
0.120
0.113
Others
Own consumption
0.119
0.107
0.086
0.053
0.038
0.031
Source: GSE, Bloomberg
All installations coming online after 27 February 2015 will be subject to a tariff
reduction of 15% every six month. This reduction is dependent on the level of the
FIT that has already been paid. If the subsidy limit has not been reached by
February 2015, the FIT is reduced by 15% every six months.
The excessive build-up of onshore wind capacity has, with the help of generous tariff
schemes, produced a comparably inefficient Italian wind sector. The new regulations
passed in July 2012 are designed to improve the competitive landscape and increase
the effectiveness of future capacity. The key features of the new regulations are as
follows: 1) registration is required for all installations generating over 60kW; 2) the
total capacity of all registered installations is limited to 60MW per year; 3) a new
auction process has been introduced for wind power installations with a combined
capacity of over 10MW; and 4) total capacity of 500MW for all installations in the
annual meeting. Overall, we conclude that the subsidy changes leave the market for
both solar and wind energy in Italy in a favourable position. The following chart
displays the historical and expected PV/ wind FIT development.
Development of Italian FIT (EURct/kWh)
50
45
40
35
30
25
20
15
10
5
0
2007
2008
2009
2010
2011
2012
2013
PV-Greenfield IT
Onshore Wind IT
Source: GSE, Bloomberg
The new Conto Energia V has altered the competitive landscape, resulting in cutbacks on FIT payments and increasing pressure on the industry to become more
competitive. Nevertheless, CS still regards the Italian market as a promising
investment destination. The company states that the higher irradiance and the
lower but reasonable FIT level in conjunction with a relatively stable political and
improving economic environment have led the Italian solar industry close to grid
parity. However, the company will focus on the acquisition of existing plants to
avoid the risks associated with developing new PV and wind parks. The regulatory
changes and the general state of the economy have put a strain on Italian solar and
wind operators which gives rise to profitable M&A opportunities. In the past, CS
has managed to conclude value-accretive deals in the secondary market, and the
company will seek out similar opportunities in the future.
41
Capital Stage AG
Valuation and sensitivity analysis

We estimate a price target of EUR5.4/share based on a
CFRoEV15E and DCF.
Cash flow return on enterprise value (CFRoEV)
We believe that CFRoEV method is an appropriate method for valuing CS for two
reasons. Firstly, due to the FIT structure, CS’s cash flows are stable from year to
year, which leads us to believe that today’s cash flows are at the very least a base
case for next year’s cash flows. Secondly, the hurdle rate approach used by the
CFRoEV model allows us to set a target rate of return consistent with the quality
and risk of the assets within CS’s portfolio.
Our 2015E CFRoEV model indicates an implied fair market valuation of EUR5.5/
share, based on an 8.1% hurdle rate and an estimated FY15 adjusted cash flow of
EUR62.4m. Our hurdle rate estimates are based on the stability of the business,
financial stability, balance sheet/liquidity risk and the company’s track record. It is
noteworthy that maintenance capital expenditure is very low due to long-term
contracts with service providers which guarantee continuous operation of all of
CS’s capacity. Despite CS’s stable business model, high levels of debt pose some
balance sheet and financial risks, leading to a fairly high hurdle rate. However, as
mentioned above, the risk posed is relatively contained by the non-recourse nature
of the loans on the SPV basis. While CS’s high debt levels are nonetheless a factor,
we think the stability of cash flows should provide a sufficient cushion for equity
holders based on our current hurdle rate.
42
Capital Stage AG
CFRoEv 2015E post-capital increase
Capital Stage AG
Business year end: 31.12
2013
2014
2015
2016
2017
EBIT adj. for PPA
18.5
36.6
46.2
55.5
64.1
+ Depreciation of fixed assets
14.5
20.9
25.3
28.5
30.2
+ Amortisation of intangible assets
3.4
4.9
6.0
6.7
7.1
- Maintenance capex
0.3
0.4
0.5
0.6
0.6
= Adjusted EBIT
36.1
62.0
77.0
90.1
100.7
- Taxes (normalised tax rate)
4.2
10.8
14.3
16.5
19.2
- Minorities
0.2
0.2
0.3
0.4
0.4
= Adjusted cash flow after tax
31.7
51.0
62.4
73.3
81.1
Hurdle rate
8.1%
8.1%
8.1%
8.1%
8.1%
393
633
776
910
1008
181.1
328.1
414.3
456.7
450.2
- Pension provisions
0.1
0.2
0.3
0.3
0.3
- Off balance sheet financing
0.0
0.0
0.0
0.0
0.0
- Adjustments prepayments
0.0
0.0
0.0
0.0
0.0
- dilution convertible
0.0
0.0
0.0
0.0
0.0
+ Financial assets (JV)
0.0
0.0
0.0
0.0
0.0
+ Accumulated dividends outstanding
0.0
5.3
12.8
22.6
33.0
= Fair market capitalization
212.2
310.0
373.9
475.7
590.3
Number of shares (million)
67.56
67.56
67.56
67.56
67.56
Number of options / dilutive shares
0.00
0.00
0.00
0.00
0.00
Fully diluted no. of shares
67.56
67.56
67.56
67.56
67.56
3.1
4.6
5.5
7.0
8.7
= Fair EV
- Net debt (cash)
Fair value per share
(EUR)
We have rolled over the CFRoEV from 2014 to 2015 to include the full effect of
the rights issue which will only be visible after the full consolidation of the assets
acquired.
Discounted cash flow (DCF)
While we prefer the application of the CFRoEV method for valuing CS, the DCF
framework allows us to factor both possible growth and cash outflows attributable
to acquisitions made by CS. Under the DCF methodology, we arrive at a fair value
of EUR5.3/ share based on the following assumptions:

Beta of 1.0;

an equity risk premium of 6.0%;

a 10-year risk free rate of 4.0%;

an after-tax cost of debt at 4.4%; and

a terminal growth rate of 2.0%.
The cash flow profile over the forecast period follows a J-curve profile, forecasting
heavy capex in FY14-16 due to estimated acquisition costs during this period.
From FY16 onwards, we forecast a gradual decline in capex, assuming a return to a
long-term stable investment policy. The impact of our investment policy
assumptions leads to large negative outflows in the early stage of the valuation
followed by growing inflows diverted towards debt repayments.
43
Capital Stage AG
Cash flow profile over the forecast period
200.0
157.9
150.0
114.2
100.0
86.4
84.1
50.0
19.9
0.0
23.8
37.0
17.3
12.8
0.1
83.0
74.2
66.8
61.7
44.6
6.9
25.0
4.0
23.3
3.8
19.0
3.2
2.4
14.0
-12.7
-50.0
-60.9
-100.0
-126.5
-150.0
2013e
2014e
2015e
CAPEX
2016e
2017e
Net Cash Flow
2018e
2019e
2020e
2021e
Acquisitions
The outcome of the DCF valuation depends to a high degree on the estimate of,
and underlying assumptions about, the discount rate used. This is especially true
when 77% of the company’s value is captured by the terminal value, as in the case
of CS. In our model we use a 2013E WACC of 7.6%. Although this might seem
fairly low at first sight, in our view, there are a number of arguments that support
this choice.
(1) Non-recourse loans: In line with most companies in project-related
industries, CS operates on very high leverage, with net debt of
EUR247.4m in 2013. In analysing the company’s risk profile, it is
important to recognise the limited liability of the shareholders of the
holding company for the debt at the project level. In addition to the
limited liability factor, the holding company does not have any debt.
The fact that the majority of the company’s leverage stems from the
project level with no recourse to the holding company, along with the
non-existence of debt at the group level, reduces the perceived risk from
the aggregate balance sheet debt.
(2) No binary risks: CS operates a diversified business model with sizeable
installed capacity across two very different renewable energy technologies
and two countries which reduce political and regulative risks. Although
relatively small at present, other streams of revenue from the services and
investment segment should in the future cushion volatility in the power
producing divisions. This business model distinguishes the company from
the average competitor in the renewables sector. In addition, CS only
operates in countries that have FIT policies in place. This ensures longterm take-off agreements which secure constant revenue streams for long
periods. The combination of wind and solar acts as a natural hedge which,
in conjunction with the other revenue streams, reduces the company’s
volatility significantly while at the same time offering significant upside
potential during strong wind or sun years.
44
Capital Stage AG
(3) Financing conditions: CS has access to low-interest government loans.
The company pays interest rates as low as 4.05% during the initial 10 years
of projects subsequently switching to a moderate 6-7% interest charge. Of
the debt on CS’s balance sheet, the majority is sourced from government
lending programmes leading to an average after-tax interest charge of
4.4%. The effects of CS’s access to cheap debt financing are expected to
remain in the long run, with the debt trend reversing as we enter the cashgenerative phase of our valuation, nearly halving net debt by 2022 from its
peak in 2017.
(4) Golden end: We have modelled the company on a project-by-project
basis taking into account the respective length of the lease contracts. The
solar and wind plants CS acquires can easily be operational for more than
the 20 year FIT period. The period after 20 years is called the “golden
end” because the assets are fully depreciated and debt is paid down
improving the cash profile significantly. We have only valued in the length
of the lease contracts however we are conservative in regard to lease
extensions which are in place for most of the assets. We have not included
the lease extension period in our valuation.
In contrast to other renewable power producers, CS’s business model is relatively
well diversified, balancing out the company’s volatility. In particular, the beneficial
terms of financing and the stable nature of FIT contracts lead to a predictable
revenue stream. In conjunction with the non-recourse nature of the leverage, we
think the risk is moderate and therefore assume a beta of 1 to reflect the relative
stability of the business. The combination of both lower debt financing levels as
well as our low beta assumption leads us to a relatively low WACC of ~6.8%
throughout our forecast period.
DCF model 2013E post-capital increase
DCF model
EURm
Operating profit (NOPAT)
Change working capital
Depreciation
Acquisitions
Investments
Net cash flow
Present value
WACC
2013e
26.5
-0.7
17.9
19.9
0.1
89.4
88.8
7.7%
DCF per share derived from
Total present value
thereof terminal value:
Net debt at year start
Investments, minorities & others
Equity value
No. of outstanding shares
Discounted cash flow per share
2014e 2015e 2016e
31.5
40.6
50.1
-2.2
-1.3
-1.1
25.8
31.3
35.2
157.9 114.2
84.1
23.8
17.3
12.8
-126.5
-117.9
6.7%
-60.9
-53.2
6.7%
-12.7
-10.4
6.6%
2017e
51.8
-0.6
37.3
44.6
6.9
2018e
52.8
-0.4
38.4
25.0
4.0
2019e
54.9
-0.4
39.4
23.3
3.8
2020e
56.5
-0.4
40.3
19.0
3.2
2021e
58.9
-0.4
41.0
14.0
2.4
2022e
60.7
-0.4
2.3
13.4
2.3
Terminal value
37.0
28.5
6.6%
61.7
44.5
6.7%
66.8
45.0
6.7%
74.2
46.4
6.8%
83.0
47.8
7.1%
46.9
24.7
7.3%
900.8
474.0
7.7%
Long-term growth rate
2.0%
WACC derived from
618
77%
247
-10
360.7
67.6
5.3
Interest costs, pre-tax
5.0%
Tax rate
Interest costs, after taxes
Required ROE
Risk premium
Risk-free (10y. bond)
11.7%
4.4%
10.0%
6.0%
4.0%
Beta
1.0
45
Capital Stage AG
Sensitivity analysis DCF
Sensitivity analysis DCF
Long-term growth rate
1.5%
2.0%
2.5%
3.00%
1.2
8.3%
3.3
3.7
4.2
4.8
5.5
1.1
8.0%
3.7
4.2
4.7
5.4
6.2
7.7%
4.2
4.7
5.3
6.1
7.0
7.3%
4.7
5.3
6.0
6.9
8.0
7.0%
5.2
5.9
6.8
7.8
9.1
1.0
0.9
0.8
WACC
Beta
Fair value per share (EUR)
1.0%
Based on the outlined assumptions, we derive an fair value per share of EUR5.3
based on the DCF model represented above.
Consolidated valuation
Applying the CFRoEV15E and DCF valuation tools, we estimate an average value
per share of EUR5.4. The following chart gives an overview of the two
methodologies and current equity valuation.
Valuation summary – average share price of EUR5.4
6.0 EUR
5.5 EUR
5.3 EUR
5.0 EUR
4.0 EUR
3.0 EUR
2.0 EUR
1.0 EUR
0.0 EUR
CFRoEV15E
DCF
46
Capital Stage AG
Multiples valuation (not included in valuation)
In addition to cash flow methods, we also employ multiples-based methodologies
in valuing CS. Although we do not believe this is the best way to value the
company, we recognise the importance of benchmarking CS against its key peers.
To value the business on a multiples basis, we use a comparable company analysis
but do not include this in our final valuation.
Comparable company analysis
While CS does not have any directly comparable peers due to the hybrid nature of
the business (one part portfolio company, one part renewable energy firm), we
believe the company’s focus on renewables and its commitment to further
developing this business justifies comparison with major renewables energy firms,
using the following companies as our peer group.
Sechilienne-Sidec is a French company specialised in designing, constructing and
subsequently operating low- and medium-power plants. The company is mainly
involved in thermal, wind and PV energy not only in Europe but also in the Indian
Ocean and the Caribbean.
ENEL Green Power is an Italian company focusing on operating renewable
energy plants. The company is therefore not focused on a specific energy source
but operates a wide range of plants generating wind, solar, geothermal,
hydroelectric and biomass energy.
EDP Renováveis is a utilities company based in Spain. Similarly to CS, it develops
and operates its own plants. It is, however, active in a larger variety of market
segments such as hydroelectric and thermal solar energy. In particular, it is the
third-largest producer of wind energy in the world.
MVV Energie is made up of a variety of German municipal utilities companies.
MVV Energie also owns a natural gas grid which includes transportation and
distribution systems. In addition, the company provides a variety of related
services, mainly consulting.
To value CS, we use EV/EBITDA, EV/EBIT and P/E. We used the median
multiple for valuation.
Company
Country
EURm
Mkt Cap
EURm
Enel Green Power Spa
Italy
Sechilienne-Sidec
France
Edp Renovaveis SA
MVV Energie AG
EV/EBITDA
2013
2014
EV/EBIT
2015
2013
2014
P/E
2015
2013
2014
2015
7,695
7.5x
6.9x
6.2x
12.1x
10.8x
9.7x
15.5x
13.5x
11.7x
310
7.6x
7.4x
6.8x
11.8x
11.8x
10.2x
10.7x
10.9x
10.9x
Spain
3,484
7.7x
6.8x
6.1x
15.2x
12.8x
11.3x
22.7x
16.7x
13.4x
Germany
1,405
7.6x
7.3x
7.0x
14.7x
14.1x
13.4x
17.6x
17.2x
16.1x
Average
3,224
7.6x
7.1x
6.5x
13.5x
12.4x
11.1x
16.6x
14.6x
13.0x
Median
2,445
7.6x
7.1x
6.5x
13.4x
12.3x
10.7x
16.6x
15.1x
12.6x
9.0x
9.0x
8.2x
14.4x
15.1x
13.3x
17.6x
14.8x
10.7x
18.5%
27.2%
25.4%
6.8%
22.2%
19.6%
5.8%
1.6%
-17.9%
Capital Stage AG
Germany
122
Above/ below peers
47
Capital Stage AG
Financials
Profit and loss account
Year-end December (EUR m)
Sales
Own work capitalised
Total sales
Other operating income
Material expenses
Personnel expenses
Other operating expenses
Unusual or infrequent items
EBITDA
Depreciation
EBITA
Amortisation of goodwill
Amortisation of intangible assets
Impairment charges
EBIT
Interest income
Interest expenses
Other financial result
Financial result
Income on ordinary activities before taxes
Extraordinary income/loss
EBT
Taxes
Net income from continuing operations
Income from discontinued operations (net of tax)
Net income
Minority interest
Net income (net of minority interest)
Source: Company data, Berenberg estimates
2011
35
0
35
11
5
4
12
0
25
10
15
0
1
0
13
1
9
0
-8
5
0
5
3
2
0
3
3
-1
48
2012
45
0
45
16
7
6
15
0
34
11
23
0
3
0
21
1
12
0
-11
9
0
9
0
9
0
9
1
9
2013E
55
0
55
11
2
3
12
0
48
15
33
0
3
0
30
1
12
0
-11
19
0
19
2
17
0
17
0
16
2014E
83
0
83
2
4
4
12
0
64
21
43
0
5
0
38
1
19
0
-18
20
0
20
3
16
0
16
0
16
2015E
100
0
100
4
5
4
14
0
81
25
56
0
6
0
50
1
23
0
-22
28
0
28
5
23
0
23
0
22
2016E
115
0
115
6
5
4
15
0
97
29
68
0
7
0
61
1
25
0
-24
37
0
37
7
30
0
30
0
30
Capital Stage AG
Balance sheet
Year-end December (EUR m)
Intangible assets
Property, plant and equipment
Financial assets
Fixed Assets
Inventories
Accounts receivable
Other current assets
Liquid assets
Deferred taxes
Deferred charges and prepaid expenses
Current assets
TOTAL
Shareholders' equity
Minority interest
Pensions provisions
Other provisions
Provisions and accrued liabilities
Interest-bearing liabilities
Accounts payable
Advance payments
Other liabilities
Current liabilities
Deferred taxes
Other accruals
TOTAL
2011
40
204
12
255
2
6
4
32
1
1
45
300
85
7
0
0
0
187
5
0
4
8
12
0
300
49
2012
76
317
3
396
2
3
14
34
3
2
59
455
122
8
0
2
2
282
2
0
7
9
32
0
455
2013E
78
320
0
398
3
4
22
100
3
2
135
533
200
10
0
2
2
284
3
0
8
11
29
0
536
2014E
113
442
0
554
5
6
43
69
5
4
132
686
210
15
0
3
3
401
4
0
12
16
44
0
689
2015E
135
519
0
654
5
7
52
72
6
4
147
802
221
18
0
3
4
491
5
0
15
20
53
0
806
2016E
150
566
0
716
6
8
60
90
7
5
176
892
237
21
0
4
4
553
5
0
17
23
61
0
898
Capital Stage AG
Cash flow statement
EUR m
Net profit/loss
Depreciation of fixed assets (incl. leases)
Amortisation of goodwill
Amortisation of intangible assets
Change in long-term provisions
Other
Change in inventory
Change in accounts receivable
Change in accounts payable
Change in other working capital
Change in working capital
Cash flow from operating activities
CAPEX
Payments for acquisitions
Financial investments
Income from asset disposals
Cash flow from investing activities
Cash flow before financing
Increase/decrease in debt position
Purchase of own shares
Capital measures
Dividends paid
Others
Cash flow from financing activities
Effects of exchange rate changes on cash
Increase/decrease in liquid assets
Liquid assets at end of period
2011
3
17
0
1
0
3
0
0
0
0
1
24
24
20
1
12
-33
-9
11
0
23
0
-16
18
0
9
32
50
2012
9
11
0
3
0
4
0
0
0
0
1
27
24
30
0
0
-54
-28
38
0
31
2
-38
29
0
2
27
2013E
17
15
0
3
0
-1
-1
-1
0
0
-1
33
3
20
-3
0
-20
7
2
0
66
5
0
63
0
75
103
2014E
16
21
0
5
0
0
-2
-2
1
0
-2
40
24
158
0
0
-182
-147
117
0
0
5
0
112
0
-30
73
2015E
23
25
0
6
0
0
-1
-1
1
0
-1
52
17
114
0
0
-131
-86
90
0
0
7
0
83
0
4
77
2016E
30
29
0
7
0
0
-1
-1
1
0
-1
64
13
84
0
0
-97
-42
62
0
0
10
0
52
0
19
96
Capital Stage AG
Growth rates yoy
(%)
Net sales
Organic
External
EBITDA
EBIT
Net income
EPS reported
EPS recurring
2011
173.2 %
0.0 %
173.2 %
82.3 %
92.7 %
54.2 %
n.a.
n.a.
51
2012
27.2 %
0.0 %
27.2 %
36.0 %
57.2 %
259.1 %
n.a.
n.a.
2013E
21.1 %
0.0 %
21.1 %
42.1 %
45.0 %
81.0 %
108.0 %
106.2 %
2014E
52.2 %
0.0 %
52.2 %
33.7 %
29.1 %
-1.5 %
-1.5 %
-1.5 %
2015E
20.9 %
0.0 %
20.9 %
26.8 %
29.6 %
39.5 %
39.5 %
39.6 %
2016E
14.1 %
0.0 %
14.1 %
18.9 %
21.8 %
33.1 %
33.1 %
33.1 %
Capital Stage AG
Regional sales
Regional Sales (EUR m)
Domestic
Rest of Europe
NAFTA
Asia Pacific
Rest of World
TTL
2011
-
2012
-
2013E
-
2014E
-
2015E
-
2016E
-
Regional sales shares
Domestic
Rest of Europe
NAFTA
Asia Pacific
Rest of World
TTL
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
52
Capital Stage AG
Ratios
Ratios
Asset utilisation efficiency
Capital employed turnover
Operating assets turnover
Plant turnover
Inventory turnover (sales/inventory)
Operational efficiency
Operating return
Total operating costs / sales
Sales per employee
EBITDA per employee
EBIT margin
Return on capital
EBIT/ Y/E capital employed
EBIT / avg. capital employed
EBITDA/ Y/E capital employed
EBITDA / avg. capital employed
Return on equity
Net profit / Y/E equity
Recurring net profit / Y/E equity
Net profit / avg. equity
Recurring net profit / avg. equity
Security
Net debt (if net cash=0)
Debt / equity
Net gearing
Interest cover
EBITDA / interest paid
Altman's z-score
Dividend payout ratio
Liquidity
Current ratio
Acid test ratio
Free cash flow
Funds management
Avg. working capital / sales
Cash flow / sales
Free cash flow/sales
Inventory processing period (days)
Receivables collection period (days)
Payables payment period (days)
Cash conversion cycle (days)
Trade creditors / trade debtors
Other
Interest received / avg. cash
Interest paid / avg. debt
Capex / dep'n
Cost per employee
Capex / sales
Maint. capex / sales
Cash flow
Cash ROCE
Free cash flow yield
53
2011
2012
2013E
2014E
2015E
2016E
0.1
0.2
0.2
18.6
0.1
0.1
0.1
18.4
0.1
0.2
0.2
18.4
0.1
0.2
0.2
18.4
0.1
0.2
0.2
18.4
0.1
0.2
0.2
18.4
12.0%
30.1%
669.1
467.4
37.4%
10.5%
25.3%
739.6
552.3
45.5%
14.7%
12.3%
778.0
682.0
54.9%
14.3%
23.0%
1028.6
792.3
45.9%
15.4%
19.2%
1080.0
872.6
49.7%
16.8%
15.8%
1232.8
1037.9
53.4%
4.7%
5.8%
8.9%
10.9%
5.0%
5.9%
8.1%
9.7%
6.0%
6.6%
9.7%
10.5%
6.1%
6.8%
10.2%
11.4%
6.8%
7.3%
11.1%
11.9%
7.5%
7.9%
11.8%
12.5%
-1.0%
-0.9%
-1.1%
-1.0%
7.0%
7.1%
8.3%
8.4%
8.2%
8.1%
10.1%
10.1%
7.7%
7.7%
7.9%
7.8%
10.2%
10.2%
10.4%
10.4%
12.6%
12.6%
13.1%
13.0%
155
221.0%
183.4%
1.5
2.8
0.7
100%
247
230.6%
202.6%
1.7
2.9
0.6
44%
183
141.8%
91.6%
2.6
4.1
0.8
33%
331
190.9%
157.9%
2.0
3.4
0.7
33%
419
222.6%
189.9%
2.2
3.6
0.7
33%
463
233.1%
195.2%
2.5
3.9
0.7
33%
0.9
0.9
-0.5
0.8
0.7
0.4
1.8
1.8
1.8
1.4
1.3
1.0
1.4
1.3
1.6
1.5
1.4
1.7
1.6%
31.9%
1.2%
132
62
312
-118
75.0%
7.7%
70.1%
7.1%
130
25
112
44
66.9%
7.1%
76.6%
54.4%
440
25
378
87
66.9%
6.4%
62.9%
19.5%
383
25
330
79
66.9%
7.1%
65.1%
35.3%
437
25
375
87
66.9%
7.3%
68.0%
45.0%
474
25
408
92
66.9%
2.6%
5.9%
136.0%
84
70.1%
1.3%
11
5.0%
0.4%
2.1%
5.0%
181.5%
97
53.0%
0.5%
32
9.1%
1.9%
0.8%
4.1%
0.5%
49
0.2%
0.5%
42
9.2%
11.9%
0.7%
5.5%
92.0%
51
28.6%
0.5%
52
9.3%
6.5%
1.0%
5.1%
55.3%
45
17.2%
0.5%
65
9.6%
14.2%
0.9%
4.8%
36.4%
45
11.2%
0.5%
78
10.1%
20.7%
Capital Stage AG
Please note that the use of this research report is subject to the conditions and restrictions set forth in the
“General investment-related disclosures” and the “Legal disclaimer” at the end of this document.
For analyst certification and remarks regarding foreign investors and country-specific disclosures, please
refer to the respective paragraph at the end of this document.
Disclosures in respect of section 34b of the German Securities Trading Act
(Wertpapierhandelsgesetz – WpHG)
Company
Capital Stage AG
(1)
(2)
(3)
(4)
(5)
Disclosures
1, 3, 5
Joh. Berenberg, Gossler & Co. KG (hereinafter referred to as “the Bank”) and/or its affiliate(s) was Lead
Manager or Co-Lead Manager over the previous 12 months of a public offering of this company.
The Bank acts as Designated Sponsor for this company.
Over the previous 12 months, the Bank and/or its affiliate(s) has effected an agreement with this company
for investment banking services or received compensation or a promise to pay from this company for
investment banking services.
The Bank and/or its affiliate(s) holds 5% or more of the share capital of this company.
The Bank holds a trading position in shares of this company.
Historical price target and rating changes for Capital Stage AG in the last 12 months (full coverage)
Date
16 May 13
03 September 13
28 November 13
Price target - EUR
5.00
4.70
5.40
Rating
Buy
Buy
Buy
Initiation of coverage
16 May 13
Berenberg distribution of ratings and in proportion to investment banking services
Buy
Sell
Hold
40.74 %
17.41 %
41.85 %
58.62 %
10.34 %
31.03 %
Valuation basis/rating key
The recommendations for companies analysed by Berenberg’s Equity Research department are made on an
absolute basis for which the following three-step rating key is applicable:
Buy: Sustainable upside potential of more than 15% to the current share price within 12 months;
Sell:
Sustainable downside potential of more than 15% to the current share price within 12 months;
Hold: Upside/downside potential regarding the current share price limited; no immediate catalyst visible.
NB: During periods of high market, sector, or stock volatility, or in special situations, the recommendation system
criteria may be breached temporarily.
Competent supervisory authority
Bundesanstalt für Finanzdienstleistungsaufsicht -BaFin- (Federal Financial Supervisory Authority),
Graurheindorfer Straße 108, 53117 Bonn and Marie-Curie-Str. 24-28, 60439 Frankfurt am Main, Germany.
54
Capital Stage AG
General investment-related disclosures
Joh. Berenberg, Gossler & Co. KG (hereinafter referred to as „the Bank“) has made every effort to carefully research
all information contained in this financial analysis. The information on which the financial analysis is based has been
obtained from sources which we believe to be reliable such as, for example, Thomson Reuters, Bloomberg and the
relevant specialised press as well as the company which is the subject of this financial analysis.
Only that part of the research note is made available to the issuer (who is the subject of this analysis) which is
necessary to properly reconcile with the facts. Should this result in considerable changes a reference is made in the
research note.
Opinions expressed in this financial analysis are our current opinions as of the issuing date indicated on this
document. The companies analysed by the Bank are divided into two groups: those under “full coverage” (regular
updates provided); and those under “screening coverage” (updates provided as and when required at irregular
intervals).
The functional job title of the person/s responsible for the recommendations contained in this report is “Equity
Research Analyst” unless otherwise stated on the cover.
The following internet link provides further remarks on our financial analyses:
http://www.berenberg.de/research.html?&L=1&no_cache=1
Legal disclaimer
This document has been prepared by Joh. Berenberg, Gossler & Co. KG (hereinafter referred to as „the Bank“). This
document does not claim completeness regarding all the information on the stocks, stock markets or developments
referred to in it.
On no account should the document be regarded as a substitute for the recipient procuring information for
himself/herself or exercising his/her own judgements.
The document has been produced for information purposes for institutional clients or market professionals.
Private customers, into whose possession this document comes, should discuss possible investment decisions with
their customer service officer as differing views and opinions may exist with regard to the stocks referred to in this
document.
This document is not a solicitation or an offer to buy or sell the mentioned stock.
The document may include certain descriptions, statements, estimates, and conclusions underlining potential market
and company development. These reflect assumptions, which may turn out to be incorrect. The Bank and/or its
employees accept no liability whatsoever for any direct or consequential loss or damages of any kind arising out of the
use of this document or any part of its content.
The Bank and/or its employees may hold, buy or sell positions in any securities mentioned in this document,
derivatives thereon or related financial products. The Bank and/or its employees may underwrite issues for any
securities mentioned in this document, derivatives thereon or related financial products or seek to perform capital
market or underwriting services.
Analyst certification
I, Stanislaus von Thurn und Taxis, hereby certify that all of the views expressed in this report accurately reflect my
personal views about any and all of the subject securities or issuers discussed herein.
In addition, I hereby certify that no part of my compensation was, is, or will be, directly or indirectly related to the
specific recommendations or views expressed in this research report, nor is it tied to any specific investment
banking transaction performed by the Bank or its affiliates.
Remarks regarding foreign investors
The preparation of this document is subject to regulation by German law. The distribution of this document in other
jurisdictions may be restricted by law, and persons into whose possession this document comes should inform
themselves about, and observe, any such restrictions.
United Kingdom
This document is meant exclusively for institutional investors and market professionals, but not for private customers.
It is not for distribution to or the use of private investors or private customers.
55
Capital Stage AG
United States of America
This document has been prepared exclusively by the Bank. Although Berenberg Capital Markets LLC, an affiliate of
the Bank and registered US broker-dealer, distributes this document to certain customers, Berenberg Capital Markets
LLC does not provide input into its contents, nor does this document constitute research of Berenberg Capital
Markets LLC. In addition, this document is meant exclusively for institutional investors and market professionals, but
not for private customers. It is not for distribution to or the use of private investors or private customers.
This document is classified as objective for the purposes of FINRA rules. Please contact Berenberg Capital Markets
LLC (+1 617.292.8200), if you require additional information.
Third-party research disclosures
Company
Disclosures
Capital Stage AG
no disclosures
(1)
(2)
(3)
(4)
(5)
Berenberg Capital Markets LLC owned 1% or more of the outstanding shares of any class of the subject
company by the end of the prior month.*
Over the previous 12 months, Berenberg Capital Markets LLC has managed or co-managed any public
offering for the subject company.*
Berenberg Capital Markets LLC is making a market in the subject securities at the time of the report.
Berenberg Capital Markets LLC received compensation for investment banking services in the past 12 months,
or expects to receive such compensation in the next 3 months.*
There is another potential conflict of interest of the analyst or Berenberg Capital Markets LLC, of which the
analyst knows or has reason to know at the time of publication of this research report.
* For disclosures regarding affiliates of Berenberg Capital Markets LLC please refer to the ‘Disclosures in respect of
section 34b of the German Securities Trading Act (Wertpapierhandelsgesetz – WpHG)’ section above.
Copyright
The Bank reserves all the rights in this document. No part of the document or its content may be rewritten, copied,
photocopied or duplicated in any form by any means or redistributed without the Bank’s prior written consent.
© May 2013 Joh. Berenberg, Gossler & Co. KG
56
Capital Stage AG
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57
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1

Berenberg Research Report as of November 28

Transcription

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