Quirin Bank research news as of April 10, 2015

Transcription

Capital Stage AG
quirin bank Equity Research
9 April 2015
CAPITAL STAGE AG
Rating
Share price (EUR)
Target price (EUR)
Bloomberg
Sec tor
Buy
6.34
7.40
CAP GR
Renewables
S ha re da ta
Shares out (m)
Daily volume shs (m)
Free float (%)
Market c ap (EUR m)
EV (EURm)
Dividend/share (EUR)
Dividend yield (%)
Payout ratio
73.8
0.06
56.7
468
894
0.1
1.6
0.4
P e rforma nc e
ytd (%)
12 months (%)
12 months (%) rel
Index
31.8
67.7
48.0
SDAX
S ha re pric e pe rforma nc e
2015 guidance points to further strong
growth for Capital Stage
Capital Stage has issued guidance for 2015, slightly below consensus but
the former is based on the existing portfolio whereas the latter reflects the
likely contribution from future acquisitions. In our view the track record is
well proven. With fresh investment capital now available from the Gothaer
JV, the parameters are in place to at least double the size of operations on
a two year basis. Buy rating maintained.
Good spread of renewable energy assets across Germany, Italy, France and UK
Over the past five years, Capital Stage has evolved from a venture capital business to an
SDAX-quoted company engaging in solar and wind farm ownership and management
with EUR 468m market capitalization. Rather than develop projects itself, management
has been delivering to a well-publicized plan of growth by acquisition of turnkey facilities.
Including this week’s bolt-on acquisition in the UK, the current portfolio comprises 62
photovoltaic parks with 390 MWp capacity plus six wind farms with 60 MWp.
Significant increase to generating capacity to double the business inside 3 years
The recent acquisition of three major PV portfolios using EUR 65m mezzanine capital
provided by Gothaer (27 MWp in Italy, 51 MWp in France and 58 MWp in the UK) adds
67% to generating capacity and we understand similar investments are in the pipeline for
the months ahead. Stemming from this, our model assumes close to 50% revenue growth
in 2015, followed by 30%, then 20% in 2017- the group will double in size! Beyond that,
the growth potential remains huge.
6.5
We confirm our Buy rating on Capital Stage with EUR 7.4 target (+17% upside)
In a market environment when investors in other sectors need to show concern with
respect to forward sales & profit budgets, we remain convinced that our existing Capital
Stage forecasts are relatively sound. Given the reliability of the income stream from
existing assets, typically underpinned by FIT (in Germany, Italy and France) and
Renewable Obligation Certificates (in the UK), we have a DCF price target of EUR 7.4 up
from EUR 6.2 previously. With the TP some 17% above last night’s closing price, we
maintained our Buy rating.
6.0
5.5
5.0
4.5
4.0
3.5
3.0
04.14
06.14
08.14
10.14
12.14
02.15
04.15
Ke y figure s
2 0 11
2 0 13
2 0 14
2 0 15 e
2 0 16 e
2 0 17 e
Sales
EUR m
57
78
114
152
182
Operating EBITDA
EUR m
36
54
83
114
138
Ne xt trigge rs
Q1- 15 results on 5 May 2015
Operating EBIT
EUR m
22
34
52
72
87
FFO
EUR m
23
36
45
63
78
Ana lysts
Ma rk Jose fson
T + 4 9 (0 ) 6 9 2 4 7 5 0 4 9 - 2 6
ma rk. jose fson@ quirinba nk. de
FFO/share
EUR
0.41
0.50
0.61
0.86
1.05
EPS
EUR
0.24
0.35
0.40
0.46
0.52
Sales growth
%
26
37
46
34
20
EBITDA growth
%
101
52
53
38
20
FFO growth
%
53
55
26
40
23
EBITDA margin
%
88.4
109.6
79.5
77.8
77.3
FFO margin
%
40.5
45.9
39.7
41.5
42.7
Net margin
%
23.5
32.8
25.9
22.4
21.3
EV/Sales
ratio
8.9
11.1
10.7
8.9
7.7
EV/adj. EBITDA
ratio
14.2
15.8
14.6
11.8
10.2
EV/adj. EBIT
ratio
23.4
25.6
23.2
18.7
16.1
P/E
ratio
15.7
13.8
15.9
13.7
12.1
P/FFO
ratio
9.1
7.6
8.0
7.4
6.0
Div. Yield
%
2.7
3.1
2.8
3.3
3.8
Sourc e: Bloomberg
Harald Eggeling
T +49 (0) 69 2 47 50 49- 28
harald.eggeling@quirinbank.de
Felix Lutz
T +49 (0) 69 2 47 50 49- 29
felix.lutz@quirinbank.de
Klaus Soer
T +49 (0) 69 2 47 50 49- 27
klaus.soer@quirinbank.de
Please see final page for important disc laimers
and disc losures
Source: Bloomberg, company data, quirin bank estimates
Capital Stage AG
quirin bank AG
Investment case, TP calculation and valuation
DCF is a solid basis for valuation
We continue to view a DCF approach as providing a reliable basis for valuation given the
20 year feed-in tariff (FIT) period guaranteeing the income for the majority of the group’s
assets. We apply our detailed model through 2018 and currently presume a stable capital
investment programme thereafter. The latter assumption is probably conservative and
(given the proven track record of finding suitable wind farms or solar parks to manage,
adding value for shareholders) would thus result in a much higher valuation were we to
incorporate the potential pipeline of generating capacity in our model.
And points to at least 17% upside
We later review the game-changing nature of the financing deal with Gothaer and resulting
upgrade to forecasts which triggers our EUR 7.4 DCF (up from EUR 6.2), a 17% increase
over the EUR 6.34 closing price on 8 March. We rate the shares a Buy and see them as
particularly attractive for investors reviewing opportunities in the renewable energy sector.
DCF Model
DCF mode l (EUR m)
Sales
yoy change (%)
EBIT
EBIT margin (%)
Depreciation
Net working capital
Tax
Tax rate (%)
2 0 14
2 0 15 e
2 0 16 e
2 0 17 e
2 0 18 e
2 0 19 e
78
114
152
182
209
230
2020e
251
2 0 2 1e
2022e
2023e
2024e
290
308
314
37%
46%
34%
20%
15%
10%
9%
8%
7%
6%
2%
16
46
68
84
100
109
117
125
133
139
102
20%
41%
45%
46%
48%
47%
47%
46%
46%
45%
33%
39
37
46
53
60
63
66
68
71
73
74
1
-2
-2
-2
-2
-2
-2
-2
-2
-2
-1
271
2
-5
- 10
- 14
- 19
- 23
- 26
- 29
- 32
- 34
- 26
- 14%
11%
14%
17%
19%
21%
22%
23%
24%
25%
25%
CF operating activities
58
76
103
122
140
147
156
163
170
175
150
CF investing activities
- 85
- 296
- 212
- 134
- 81
- 77
- 73
- 71
- 68
- 66
- 74
Free cash flow
TV
- 27
- 220
- 109
- 12
59
70
82
93
102
109
76
1,740
5.4%
5.4%
5.4%
5.4%
5.4%
5.4%
5.4%
5.4%
5.4%
5.4%
5.4%
5.4%
0
- 211
- 100
- 10
48
55
61
65
68
69
46
978
Contribution to EV
0.0%
- 19.8%
- 9.3%
- 1.0%
4.5%
5.1%
5.7%
6.1%
6.4%
6.5%
4.3%
91.5%
Disc ounte d EV
1, 0 6 9
WACC (%)
Discounted FCF
Net cash(+)/ debt(- ) per Dec 14
Minorities (- ) per Dec 2014
S ha re holde r va lue
Fa ir va lue pe r sha re
- 503
- 20
547
7.4
WACC c a lc ula tion
TV growth rate
1.0%
Risk free interest rate
0.5%
Risk premium
7.0%
Beta
Company interest rate
Company tax rate
Shareholders' equity
1.00
5.5%
S e nsitivity a na lysis
21.0%
243
Net debt
503
Total capital
746
WACC
4.4%
4.9%
5.4%
5.9%
6.4%
0.326327
0.3%
10.1
7.5
5.5
3.8
2.4
0.673673
0.5%
11.1
8.3
6.0
4.2
2.7
Te rmina l
0.8%
12.2
9.1
6.7
4.7
3.1
growth ra te
1. 0 %
13.6
10.1
7.4
5.3
3.6
Cost of equity
7.5%
Cost of debt
4.3%
1. 3 %
15.1
11.2
8.2
5.9
4.0
5.4%
1. 5 %
16.9
12.4
9.1
6.6
4.6
WACC
So urce: quirin bank estimates
Strong 2015 guidance
2
Capital Stage AG
quirin bank AG
Background to the DCF parameters
The basis is our detailed model through 2018. We regard the revenue and operating EBIT
basis for 2015 and 2016 as underpinned by the recent acquisitions and the pipeline
outlined by management: we assume that all of the GIS mezzanine finance is utilized in
this period and our forecasts may prove conservative if the deals are closed more quickly
than this (see background to quirin bank model, page 11). For EBIT, we take operating
EBITDA (i.e. stripping.-out other income – the non-cash PPA revaluation effects) less all
depreciation and amortization of FIT contracts. Note that the 2014 D&A figure include EUR
12.5m impairment charges – adding these back would have yielded a 36% EBIT margin
compared to just 20% reported.
For 2017, our model incorporates the momentum of planned deals (annualisation effects);
thereafter we currently assume a return to more modest investment, albeit that there may
well be a Gothaer version 2.0 or some other alliance that provides additional funding for
investment beyond this. Excluding the latter at this point, free cash flow should allow
funding for rolling new investment in parks supporting mid-single digit sales growth even
beyond the period covered by FIT for existing projects.
For the ten year defined period in our DCF, we model slightly declining EBIT margin, again
supported by guaranteed FIT payment process. Given declining FIT payments on new
projects and the likelihood that future revenues will eventually reflect market prices without
subsidies, we assume that margins drop from 45% to 33% beyond this first ten years.
The depreciation of physical assets is modest (there may be some degradation of solar
panels, more so with wind turbines and rotor blades) but the bulk of D&A actually reflects
the amortization of the FIT contracts over (typically) 20 years. The current cost of financing
is 4% on debt provided by German banks for the first ten years, with 6% applied for the
second ten year period: our model assumes 5.5% pretax cost of debt, or 4.3% post-tax.
The resulting WACC applied throughout is 5.4%.
A much higher TP conceivable if
one extends the asset lifespan
We increase our target to EUR 7.4 (from 6.2)
The DCF model reflects a significant upfront burden given the assumption of peak
investment from the GIS funding in the current year and a 20 year recovery of financing,
after which the plants are written-down to zero. We understand that management itself
believes it conservative to evaluate projects on the basis of FIT remaining plus a further
five years of operation whereby it applies the stock exchange forward energy price
(currently 4cents per KWh). Those investors believing that prolongation of asset
assumptions to be appropriate would probably target fair value above EUR 9, rather than
the 17% upside to EUR 7.4 implied by our DCF model.
Capital Stage divisional structure
Five operating segments
Germany’s largest independent
solar park operator
The core business of Capital Stage (CAP) involves the purchase and operation of solar or
photovoltaic (PV) parks of which there were 48 at the last year end (but signed contracts
has extended this to 61 subsequently) and wind farms (six at the moment) in Germany,
Italy, France and soon in the UK. Thus, it is Germany’s largest independent solar park
operator with a peak capacity of 445 MWp today (385 MWp solar; 60 MWp wind) and last
year fed some 319,214,511 KWh energy into the relevant power grids.
445 MWp capacity now but potential
pipeline for additional 200 MWp
Rather than finance the building of new installations, the focus of strategy is to further
expand its portfolio by acquiring completed turnkey projects. Management claim a pipeline
today of 200 MWp across key OECD markets where feed-in tariff systems (FIT) are in
place, guaranteeing the rate of remuneration per kilowatt hour over a period of 15 to 25
years. The group is also active in the technical operation and commercial management
(O&M) of existing parks, both group-owned and for third-party landlords.
3
Capital Stage AG
Minimum IRR 7.5% targeted in PV
or >8% for onshore wind projects
quirin bank AG
Given this predictable revenue flow and relatively low risk, our understanding is that the
internal rate of return (IRR) over the life of the project is the most important decisionmaking consideration. For example at least 7.5% IRR is required on photovoltaic parks in
Germany and 8% for onshore wind farms. Given the country risk, 11.5% IRR after tax is
required on PV installations in Italy and 9% return in France, with 10.5% indicated on the
recent PV portfolio acquired in the UK.
The operating return on equity (ROE) is reviewed to determine the financing of the
investment in terms of equity versus debt. The greater the equity element, the stronger the
cash flows attributable to shareholders. However, to take full opportunity of the potential
pipeline, higher debt financing will be required going forward.
Non-recourse debt often secured at
below 4% on many German SPVs
This is normally secured against the project in an individual SPV (special purpose vehicle)
and thus the financing would typically be non-recourse debt as far as Capital Stage is
concerned. However, the group’s track record and high standing, as well as the
guaranteed revenue stream accruing during the remaining FIT period normally makes
these projects attractive to financial institutions such as the KfW with financing terms (on
German investments) fixed below 4% over a ten year loan period; closer to 4% in France
and a little higher on Italian projects.
The divisional organization comprises 61 subsidiaries in five operating segments:

Administration comprises the group's parent company Capital Stage AG and central
functions. It recorded just EUR 0.7m sales in 2014 but reported a loss of EUR 5.2m at
the EBITDA level.

PV Parks comprises all German, Italian, French and from this year UK photovoltaic
parks, as well as holding companies of such parks. In 2014 it accounted for 82% of
group sales and reported EUR 80m at the EBITDA level (94% of group total).

PV Services includes Capital Stage Solar Service GmbH and Eneri PV Services (49%
stake), involved in the technical and commercial management of existing parks, both
group owned and for third-parties. In 2014 the division accounted for 4% of group sales
and reported EUR 1.1m at the EBITDA level (1% of group total).

Wind Farms comprises all wind farms in Germany and Italy plus the holding
companies Capital Stage Wind IPP GmbH and Capital Stage Windpark Betriebs- und
Verwaltungs GmbH. It accounted for 10% of 2014 sales and EUR 9m EBITDA (11%).

Financial Investments comprises Helvetic Energy GmbH and Calmatopo Holding AG.
Helvetic Energy is a leading supplier of roof-mounted solar thermal energy and PV
systems in Switzerland. The segment accounted for 7% of 2014 sales and broke-even
at the EBITDA level.
Excellent track record and even better prospects
2014: a very strong PV performance
especially with respect to expansion
2014 is seen as a very successful year for Capital Stage. Revenues rose by 37% to EUR
78m with the slight shortfall (vs. qb est. and guidance of EUR 80m) due to a disappointing
year for wind power generally, plus a dip at Helvetica (the Swiss solar thermal business,
the investment in which has now be written-down).
2014: a successful year particularly for the PV division
Divisional P & L
(EUR m)
Administration
PV Parks
PV Services
Wind Farms
Financial investments
Reconciliation
Sum of divisions
Sales
2013
0.0
39.4
2.2
7.7
9.7
-2.0
57.0
Sales
2014
0.7
64.1
2.9
7.6
5.7
-3.0
77.8
% ch
yoy
n.a.
63%
32%
-1%
-41%
56%
37%
EBITDA
2013
-4.0
43.9
1.1
9.9
-0.6
0.0
50.4
EBITDA
2014
-5.2
80.4
1.1
8.9
0.0
0.0
85.3
% ch
yoy
32%
83%
4%
-10%
-102%
n.a.
69%
So urce: Capital Stage; quirin bank estimates
4
Capital Stage AG
quirin bank AG
EBITDA jumped 69% to EUR 85m significantly above guidance (>67m) but this included
EUR 32m of other income, predominantly IFRS valuation effects (PPA adjustments). The
latter typically reflects a (non-cash) write-up between the price paid for new assets by CAP
and the auditor’s idea of fair value. Excluding other income, adjusted EBITDA of EUR 54m
(+52%) was a slight beat to qb forecast: as was EBIT at EUR 24m (guidance >23m).
Diluted EPS rose by 46% to 35 cents and a dividend of 15 cents (+50%) will be proposed
at the forthcoming AGM. There will again be the option for shareholders to accept shares
as an alternative to a cash dividend (a facility accepted by 57% of shareholders in 2013).
That means that for the three years between 2011 and 2014 CAP has recorded an
impressive growth strategy that has included:
Significant prospects in solar power,
which is the group’s priority today

30% p.a. compound annual growth rate in sales.

51% p.a. CAGR in EBITDA.

57% p.a. CAGR with operating EBITDA

52% p.a. CAGR in EBIT.

66% p.a. CAGR in pretax.

Diluted EPS have moved from 3 cent loss to 35 cent profit

8% p.a. CAGR in FFO per share.

49% p.a. CAGR in the balance sheet total.

39% p.a. CAGR in shareholders’ total equity
As can be seen in the table above, last year was an excellent period for the Photovoltaic
Park segment with revenues jumping 63% to EUR 64m. We understand that radiation
levels were above plan in all three countries and by 3% in total for the group. However, the
key determinant of the strong growth reflects the acquisition of new solar parks which is a
subject that we shall address in more detail later in this review. Here it is worth noting that
CAP currently operates less than 1% of the installed PV parks in Germany and there
remains a huge opportunity for additional expansion.
Reported EBITDA in PV jumped 83% to EUR 85m in 2014, way above guidance. Aside
from the revenue expansion, divisional EBITDA included EUR 27m of other income,
primarily IFRS PPA adjustments for initial consolidation of parks at fair value. Again we
review this subject in more detail later. Excluding non-cash items, we estimate operating
EBITDA for PV Parks segment grew by 59% to EUR 53m (a margin of 83%).
Significant prospects in wind power,
but not the group’s top priority today
As can be seen in the table above, last year was a dull one for Wind Farms with revenues
declining 1% despite higher capacity on board and EBITDA down 10%. We understand
that the Italian facility is trading modestly above budget whereas the five wind farms in
Germany missed targets by c.10%. Rather than any fundamental problem this reflects
wind speeds dropping below the long term average and a significant improvement is likely
in the current year. We see significant prospects for CAP in this sector going forward,
although it is not seen as the number 1 priority today given a higher return-risk scenario
currently in solar compared to wind energy.
PV Services likely to be fastest
growing division, from low basis
The second fastest growing segment was PV Services, which provides for technical
operation and management of photovoltaic parks, making for 40% CAGR p.a. since 2010,
albeit from a modest base. We expect this division to be the fastest growing in future
years, but it is currently viewed as a lucrative add-on to the main business of owning
renewable energy assets. As per the last year end, PV Services oversaw 160 MWp
volume of internally operated parks and 25 MWp externally operated.
5
Capital Stage AG
quirin bank AG
Some background on renewable energy
Compelling arguments for
expanding renewable energy
At least since 1997 there have been targets set within the EU for the promotion of
renewable energy. It is seen as “clean”; it utilizes natural assets without depleting them; it
reduces the need for importing costly fossil fuels; it strengthens the economic situation of
the EU vis-à-vis oil exporting nations; and since Fukushima has been emphasized as a
safer alternative to nuclear. The initial 1997 goal set a target of providing 12% of the EU’s
energy consumption from renewable sources by 2010.
EU targets 20% of energy
consumption being covered by 2020
Subsequently there were several attempts to incorporate a more global policy at promoting
renewable energy (e.g. summits at Johannesburg or at Rio), but these have been subject
to conflicting interests. At a European Conference for Renewable Energy in Berlin in 2004,
the EU laid down ambitious goals extending to 2020. The key assumption was that the EU
as a whole would strive towards a target of 20% of energy consumption being generated
from renewable sources (from a 2004 base of 8.3%), with individual targets being set for
each member state.
Renewable sources now expanding
in every member state
In a Eurostat news release from 9 March 2015, it was claimed that 15% of final energy
consumption in the (now) EU28 was generated from renewable sources in 2013. Since
2004, there had been an increase in renewable energy capacity in every member state,
with the largest increase during the period being recorded in Sweden, Denmark, Austria
and Italy. Estonia was the first member state to hit its 2020 target (achieving 25% in 2011)
with Bulgaria (16%) and Sweden (49%) surpassing their respective 2020 targets in 2012.
Share of energy provided from renewable sources: 2004-2013, plus 2020 targets
Source: Eurostat news release 9 March 2015; quirin bank estimates
Italy and Germany close to
achieving the 2020 targets set
For an overview of the EU targets by country see Appendix on page 13. Of the three
countries in which Capital Stage currently operates, Italy is closest to achieving its goal
(generating 16.7% from renewable supplies in 2013 vs. 17% 2020 target), with Germany
at 12.4% (vs. 18% target). Furthermore, the German government has the following longterm targets calling for 30% by 2030 and 60% by 2050 of energy consumption supplied
from renewable sources.
France and the UK are a long way
from achieving the 2020 targets set
France is still a long way adrift from its 2020 target generating 14.2% in 2013 (vs. 23%
goal) of its energy from renewable sources. In the UK, a market where CAP is about to
enter, the figure was even more disappointing: at 5.1% in 2013, the renewable share is
almost ten percentage points below the 2020 target.
According to Bloomberg New Energy Finance (BNEF) total capital spend last year on
renewable energies rose to more than EUR 255bn (+16% from EUR 221bn in 2013).
Within Europe, growth amounted to just 1% at EUR 66bn, however, close to 60% of this
was in the four countries where Capital Stage is targeting.
6
Capital Stage AG
quirin bank AG

Germany invested EUR 15.3bn (+3% yoy) in renewable energies

UK invested EUR 15.2bn (+3% yoy) in renewable energies

France invested EUR 7.0bn (+26% yoy) in renewable energies

Italy invested EUR 2bn (down 60% yoy) in renewable energies
In all of these countries there has been government financial support. Most widely
established is the system of guaranteed payments by means of long-term feed-in tariffs
(FIT) as currently prevails in Germany and France and used to be the case in Italy.
Elsewhere there are bonus models, as applied in Denmark and the Netherlands, whereby
a premium over the market price is provided. By contrast, the quota model adopted by the
UK and Sweden obliges power companies to include a fixed proportion of electricity from
renewable sources.
The political scene in Germany
26% of German 2014 electricity
produced from renewable sources
up from 20% in 2011
When looking at renewables in the supply of electricity (as opposed to total energy
consumption highlighted above) the share of electricity produced from renewable sources
in Germany has increased from 6.3% of the national total in 2000 to 25.8% in 2014. Now
with the planned phasing-out of nuclear power by 2022, the target range is for 40%-45% of
electricity sales to be generated by renewable energies by 2025, rising to 55%-60% by
2035.
EEG makes clear that no change to
existing FIT payments will happen
As elsewhere various measures of government support have been required in order
encourage this investment in renewable energy. In Germany, the main political framework
behind the development of renewable energy is the EEG (Erneuerbare Energien Gesetz,
or Renewable Energy Sources Act) which was first established in 2000 and renewed in
2014. Importantly for the Capital Stage business model, in the latter has confirmed that
there will be no retrospective cuts in existing subsidies.
To begin with, the EEG guaranteed a fixed feed-in payment, but came in for criticism for
lacking focus in terms of volume of investment. Having achieved targets set in recent
years, an optional market premium (akin to the fixed payment) has been in place since
2012. Systematic volume management is also now integrated into the EEG for solar power
by means of adjustments to subsidy rates depending on the pace of new installations.
The FIT for fresh installed capacity
is reducing, but once set is
guaranteed for 20 years
A flexible cap defines expansion corridors and over- or under-performance from that has a
direct impact on subsidy rates. For solar energy, the annual corridor is 2,400 MW to 2,600
MW, although according to the German Federal Network Agency (Budesnetzagentur) the
level of new PV installations in 2014 amounted to only 1,899 MW. Given ever increasing
more efficient modules, the FIT payments for solar power goes down by 0.5% per month
and by an additional amount if the expansion corridor is exceeded. However, once
connected to the grid the FIT is guaranteed at that amount for 20 years.
As noted above, Germany was the largest market for new wind energy with 4.75 GW
newly installed capacity last year, a rise of 59% yoy. According to Capital Stage Accounts,
the German Wind Energy Association attributes this to the zoning of new areas that can be
used for onshore wind power. This development is likely to slow with the EEG now setting
a range similar to solar of 2,400 MW to 2,600 MW. Again the FIT on newly installed wind
power is reduced once the expansion corridor is exceeded.
The political scene in Italy
Italy has also been strongly supported by long-term feed-in tariff model known in recent
years as the Conto Energia V. By June 2013 the EUR 6.76bn annual subsidy ceiling had
been reached, so since 2014 electricity has to be sold at the free market price.
7
Capital Stage AG
quirin bank AG
More worryingly for investors in Capital stage, the Italian government also reduced the
existing FIT for solar power retroactively with effect from 1 January 2015. Park operators
were thus given a choice of three options:

Extend the subsidy period from 20 to 24 years, but with a FIT reduction on the
outstanding period (up to 20%)

Retain the subsidy for 20 years, but with regular (and lower) FIT rates

Keep the subsidy for 20 years and reduce the FIT by a fixed amount (6% to 8%
depending on size of installation and duration remaining)
Retrospective cut to Italian FIT hits
2015 revenue by >2%
Our best understanding of the situation at Capital Stage is that the third choice was made
resulting in close to 8% reduction in the level of feed-in tariff applicable. In our model, we
have assumed that the Italian 2014 base goes down by this amount effective 1 January
2015, resulting in 2-3% revenue cut at the group level, before capacity expansion. (See
business model, page 10).
The FIT for fresh installed capacity
is reducing, but once set is
guaranteed for 20 years
With the 2014 Accounts, there was a EUR 7.75m impairment charge against the lower FIT
now expected from the existing CAP facilities in Italy. Rather than being discouraged by
this situation, management at Capital Stage actually see increased movement in the
secondary market for PV facilities and is actively seeking fresh investment opportunities.
At the same time, it stresses that it will continue to insist that the higher country risk is
reflected in higher anticipated IRR.
The political scene in France
FIT subsidy for French PV growth
President Francois Hollande has endorsed a report calling for a reduction in the French
dependence on nuclear from 75% now to 50% by 2025. This necessarily would require a
significant boost to capacities generated from renewable sources. Like Germany and Italy,
the subsidy system in France is characterized by fixed FIT structure guaranteed for 15 to
20 years. Since March 2014, the available FIT varies between 7 cent and 29 cent per
kilowatt hour, but with the lowest level granted to the large ground-mounted installations
that CAP typically operates.
There may be additional support, for example for parks using components or modules
manufactured in the EU including the wafer transformation process (amounting to 5% for
residential buildings and 10% for larger ground-mounted parks) but this appears to
contravene EU regulation and could soon end.
No retrospective cutting of FIT likely
Since the FIT is passed on to the end French consumer by means of a distribution
mechanism, any subsequent change in the law would have no impact on the government’s
budgets. Like Germany and unlike the case in Italy therefore, we do not view the risk of
retrospective action impacting the CAP business model in France.
The political scene in the UK
Although there is FIT system in the UK similar to the schemes that have spurred the
development of renewable energies in Germany, Italy and France, these are only available
for very small facilities which would not be considered appropriate for the Capital stage
business model Instead there is a quota system obliging power companies to include a
minimum ratio of electricity from renewable sources.
UK quota system can be difficult for
outside investors to follow
Thus revenue is more complicated to calculate than on the continent since UK users of
electricity have to acquire renewable energy rights as part of their power obligation. Hence
plant operators like CAP usually benefit from contractually guaranteed offtake of their
electricity by industrial customers (in this first instance by Capital stage by BT and Total)
as well as government subsidies in the form of Renewable Obligation and Levy Exemption
certificates.
8
Capital Stage AG
quirin bank AG
Rapidly developing portfolio still with huge
growth potential
349 MWp facilities fed 319k kilowatt
hours into the grid
Over the past five years, Capital Stage has evolved from a venture capital business to an
SDAX-quoted company engaging in solar and wind farm ownership and management with
EUR 468m market capitalization. As per December 2014 the portfolio consisted of 48 PV
parks with 289 MWp capacity plus six wind farms with 60 MWp. Together these fed 319
MW hours into the electricity grids in 2014.
Subsequently, the option on Wolgast PV park in Mecklenburg-West Pomerania (8 MWp)
has not been taken-up since a final proof of the facility showed that it did meet Capital
Stage’ requirements. However two large acquisitions and one small bolt-on deal have
more than compensated. Signed in December but completed in January, the first deal saw
CAP dramatically expand its position in France (to 141 MWp) after taking control of a
portfolio of five PV parks in south-west France with 50.8 MWp generating capacity.
This was closely followed by the group’s entry into the British renewable energy sector
with the purchase of a portfolio of seven PV parks in the south-west with a total capacity of
53.4 MWp. This deal has just closed and will be consolidated into the group accounts from
Q2-15. Then just this week Capital Stage announced that it has signed another deal to
acquire a facility in south-east England that should provide 5 MWp. This deal will also
close shortly.
In addition CAP has secured an exclusive option on the purchase of two further British
solar parks with an aggregate generation of 10 MWp. The latter, which are expected to
connect to the grid in June, are part of a portfolio pipeline of 50 MWp being constructed by
German park developer F&S and with both sides mentioning closer ties, one might
speculate that CAP could end up acquiring the whole package.
Current portfolio dominated by PV
Thus excluding the latter the power balance is currently split 86% PV and 14% wind
generation. Of the total solar capacity, 35% is based in Germany, 15% in Italy, 36% in
France and now 14% in the UK. However, sunnier conditions in Italy mean that the assets
there are more productive than PV parks in Germany (25% more effective is often
suggested). Of the wind capacity, 90% is found in Germany and 10% in Italy with no wind
farms in France not the UK as of today.
Overview of the current PV Parks and Wind Farms of Capital Stage
Group Portfolio
Project
Country
Type
MWp
Solar
Germany
18 PV
133.13
Wind Farms
Germany
5 WF
54.00
Solar
Italy
20 PV
57.70
Wind Farms
Italy
1 WF
5.95
Solar
France
14 PV
140.72
Wind Farms
France
0WF
0.00
Solar
UK
7 PV
53.40
Wind Farms
UK
0WF
0.00
Solar
Group
59 PV
384.95
Wind Farms
Group
6 WF
59.95
Group generating capacity
444.90
Households
39,570
40,300
13,270
4,600
30,700
0
n.a.
0
83,540
44,900
128,440
Source: Capital Stage; quirin bank estimates per end March 2014
Management has flagged a pipeline of over 200 MWp currently being considered, with the
likelihood of more than half of this being realized within the next 12 months. Given the
possibility offered by the F&S UK portfolio highlighted above plus several projects
indicated in Italy, it is not unreasonable to predict PV generating capacity above 100 MWp
in both of these countries. Thus it could be the case that Capital Stage will soon have a
portfolio with a fairly even spread of solar asset across the four countries of operation.
9
Capital Stage AG
quirin bank AG
Gothaer finance likely to be game-changer
A constant requirement for fresh capital
Must acquire new assets to grow
So, a key feature of ownership of renewable energy sources still today is that future
income streams are pretty much guaranteed by fixed feed-in tariffs received per kilowatthour of electricity generated by these assets. That also means that Capital Stage must
acquire additional wind farms and solar parks in order to grow. Fortunately, there are a
huge number of potential acquisitions in a highly fragmented market: CAP’s German PV
base today represents less than 1% of the country’s solar capacity and yet it is the leading
independent player there!
PV parks are numerous, typically
small, and found all over the country
The domestic photovoltaic market is dominated by relative small solar parks with less than
20 MWp capacity spread through-out the country. Some of these parks were developed by
small groups utilizing German tax breaks to encourage investment in renewable energy.
Once these projects are complete, these developers look for purchasers like CAP to buy
the turnkey operation on the secondary market. This is precisely the market that Capital
Stage has historically tended to focus on with the Brandenburg solar park (51% owned)
being the largest controlled in Germany.
Favoured size for Capital Stage is
often too small for insurance co.s
and utilities to consider
When bidding for new parks or wind farms CAP competes with insurance companies and
utilities, as well as other private equity or venture capital firms. Prior to 2014, Capital Stage
tended to be active in the 2 MWp to 12 MWp size categories; whereas insurance
companies need a volume of 35 MWp whilst the utilities might begin to review projects
once capacity is above 100 MWp. We draw the reader’s attention to the example of Allianz
Capital which has a specialist fund (estimated above EUR 1bn) seeking investment
opportunities in renewable energies. It has a team of six specialists reviewing acquisition
projects which realistically means that it can only consider solar parks or wind farms above
50 MWp.
Capital Stage probably the most
nimble in terms of negotiating with
sellers of small PV parks
Capital Stage does not have the bidding field to itself, but we remind readers that it is the
most important player in this niche (projects < 20 MWp) and is probably one of the more
nimble in reacting when parks come on the market from distressed sellers. We point to the
regular occurrence of other income often comprising exceptional profit attributable to the
initial consolidation of badwill of assets purchased (the difference between price paid and
the higher market value – see next Financials section) as evidence of CAP’s bargaining
position.
Long-term strategic partnership with Gothaer Insurance Group
Last November, Capital Stage and Gothaer Insurance Group announced a strategic
partnership whereby CAP will identify and manage solar parks, purchased via funds
partially provided by GIS. During a conference call to explain the economic background,
CAP management indicated that this partnership has the scope to double the scale of its
existing operations within a relative short timeframe.
Established in 1820 and now with over EUR 4bn of premium income and 3.5m insured
members, Gothaer is one of Germany’s largest insurance groups. It offers a wide range of
insurance classes and has been involved in renewable assets for many years. Back in July
2014 GIS outlined plans to invest a further EUR 200-300m in renewable energies, so this
deal with Capital Stage is just one element of this strategy.
Investment criteria of GIS identifies
Capital Stage as a good fit in terms
of security, return and horizon
What is important for CAP is that Gothaer has good working knowledge of the planned
business model investing in solar parks and has a time horizon that allows projects
purchased to be seen through the feed-in-tariff period applicable. The strategic partnership
involves paying-back the capital is full after 20 years. Important for GIS is predictable and
stable returns over a prolonged period: it is a good match.
10
Capital Stage AG
quirin bank AG
The structure of the partnership involves a 50-50 JV into which all new PV parks in
Germany, France, Italy and the UK will go. GIS provides participation rights capital of EUR
150m which the JV will draw-down as acquisitions are identified. This mezzanine capital
has a fixed 4% coupon with an upside sharing agreement (maximum 6% in total) with a
financial leverage at project level anticipated to be 25/75 equity to debt capital.
Half gone in just three months
Huge investment potential just
within its existing field of operation
Thus the EUR 150m available could be leveraged to a total investment sum of EUR 600m,
sufficient to double the size of the business to over 600 MWp generating capacity. Within
just three months, slightly less than half (EUR 63m of the 150m) had been utilized in just
three purchases:

The 51 MWp acquisition in France for a total investment volume of EUR 70m

The 27 MWp acquisition in Italy for a total investment volume of EUR 30m

The 53 MWp acquisition in the UK for a total investment volume of EUR 90m
Management expects to have identified projects which could fully utilize the participation
capital by the end of the current year! Beyond then, it might extend the current financing
deal with GIS (another EUR 150m or probably more); it might enter a new agreement with
a new financial partner; or it might seek alternative sources of capital for additional
investments. Rather than speculate at this stage, we just alert investors to the fact that
there is a huge investment potential in its existing areas of operation and even more
significant opportunities should it consider expansion to new geographical areas.
Consolidated Capital Stage forecasts
When reviewing individual investment opportunities, management give priority to IRR and
ROE anticipated from those projects and builds bottom-up planning on a project level. For
investors, management provides annual guidance which is more easily monitored in terms
of group revenues and EBITDA. Since the latter include significant valuation effects which
are highly unpredictable (determined in the course of purchase price allocations when
acquired facilities are first consolidated) management has refined guidance provided to
investors.
In future CAP will publish an earnings figure adjusted for these non-cash IFRS valuation
effects. Cynics might say that following an exceptional contribution from “other income” in
2014 (accounting for EUR 29m of the EUR 85m reported EBITDA), this new guidance
avoids a yoy downturn. However, we view as being more transparent for investors in a
period ahead likely to be heavily influenced by the acquisition of additional capacity
(resulting in a wider than normal range of analysts’ forecasts).
In future, “operating EBITDA” will be highlighted as IFRS EBITDA less profit or loss on the
disposal of investments, less other non-cash income (essentially badwill from PPA), less
share-based remuneration.
So for 2015 fresh guidance now include:
quirin bank forecasts remain above
2015 guidance

Total revenues to rise by at least 35% to an amount above EUR 105m

Operating EBITDA likewise to rise one-third to an amount above EUR 73m

Operating EBIT to rise at least 28% to an amount above EUR 43m

Cash flow from operating activities up by 34% to an amount above EUR 75m

FFO per share is predicted to grow by 10% to above EUR 0.55
Our detailed P&L forecasts are provide at the end of this report. Our bottom-up model is
based on forecasts on a divisional basis, but at a consolidated level are a little ahead of
the general guidance highlighted above. We believe that the key difference is that
management forecasts reflect plans for the current portfolio whereas our model assumes
fruition of acquisitions in utilizing the GIS mezzanine finance.
11
Capital Stage AG
quirin bank AG
The table below provides an overview of the divisional importance, both on a historical
basis and our underlying forecasts for the next three years.
Divisional P & L
Sales
Administration
PV Parks
PV Services
Wind Farms
Reconciliation
Sum of divisions
EBITDA
Administration
PV Parks
PV Services
Wind Farms
Reconciliation
Sum of divisions
Adjustments
Non cash IFRS items
Operating EBITDA
EBITDA margin (%)
PV Parks
PV Services
Wind Farms
Sum of divisions
EBITDA ex other inc.
2012
2013
2014
2015e
2016e
2017e
0.0
30.5
1.3
2.5
12.1
-1.3
45.1
0.0
39.4
2.2
7.7
9.7
-2.0
57.0
0.7
64.1
2.9
7.6
5.7
-3.0
77.8
0.5
97.8
4.0
9.7
5.2
-3.5
113.6
0.5
132.6
5.8
11.6
5.7
-4.0
152.3
0.5
159.2
7.3
13.7
6.1
-4.5
182.2
CAGR %
2012-17
n.a.
39%
41%
41%
-13%
29%
32%
-3.1
40.6
0.7
3.6
-8.0
0.0
33.7
-4.0
43.9
1.1
9.9
-0.6
0.0
50.4
-5.2
80.4
1.1
8.9
0.0
0.0
85.3
-5.5
87.0
1.5
7.0
0.3
0.0
90.3
-5.5
113.0
2.0
8.5
0.5
0.0
118.5
-5.5
133.0
2.5
10.0
0.7
0.0
140.7
12%
27%
29%
23%
-161%
n.a.
33%
15.9
17.8
14.6
35.8
30.8
54.5
7.1
83.2
4.1
114.4
3.1
137.6
n.a.
50%
133%
54%
146%
-66%
75%
40%
111%
51%
129%
-6%
88%
63%
125%
40%
118%
0%
110%
70%
89%
37%
72%
6%
79%
73%
85%
34%
73%
9%
78%
75%
84%
34%
73%
11%
77%
76%
So urce: Capital Stage; quirin bank estimates
46% projected sales growth driven
by new PV parks, including UK
In total we forecast EUR 114 sales in 2015, some EUR 9m above guidance. The main
driver is additional revenues from the PV parks acquired during 2014 (Italy, Germany and
France) and earlier this year, most notably the move into UK. Wind Farms likewise benefit
from the initial consolidation of Kirchheilingen which came on-stream right at the end of
2014. This total assumes close to 8% reduction in FIT revenues from existing PV parks in
Italy.
53% increase in operating EBITDA
Given that personnel expenses and other operating costs are relatively modest in
comparison to sales, the biggest uncertainty with respect to profitability concerns the level
of other income. We now assume EUR 7m heavily weighted to H1, compared to EUR 31m
in 2014. Thus we forecast EUR 90m EBITDA (+6%). On an underlying basis before other
income, we forecast a 53% jump in operating EBITDA to EUR 83m for an underlying
margin of 70% (from 63%) reflecting a slightly more favourable weather pattern in 2015,
particularly with respect to wind totals.
15% rise in net income, with EPS
growth of 14%
Following EUR 37m depreciation / amortization, we forecast EUR 53m reported EBIT
(+15%) and EUR 52m operating EBIT (+56%). After EUR 23m financing costs we forecast
EUR 35m pretax (+48%). Taxation is made complicated by the extent of tax free gains
within other income, but we model a 18% tax rate on profit before other income, so
forecasting EUR 29m attributable net income (+15%). Given the additional share base,
diluted EPS are estimated at 40 cents (+14%).
FFO projected at EUR 45m (+28%)
and FFO / share at 61cents (+21%)
As already announced CAP will take control of five PV parks in France, six in Italy and
eight in the UK for an investment sum of EUR 200m. This was reflected in EUR 65m
equity capex and EUR 135m debt assumed at time of acquisition and alone added 80% to
the group’s solar capacity This will thus support growth in 2015 and 2016, as well as
providing strong cash flows for future expansion.
Our best guess at FFO this year is EUR 45m (+28%) although the heavy expansion
programme will mean that net debt rises (qb est. EUR 747m +240m). However the cash
flows generated from projects already belonging to Capital Stage will mean significant FFO
streams from 2016.
12
Capital Stage AG
quirin bank AG
Appendix
Share of energy from renewable sources in Europe
Appendix: Share of energy from renewable sources in % of final energy consumption
2004
2007
2010
2012
2013
Austria
22.7
27.5
30.8
32.1
32.6
Belgium
1.9
3.4
5.7
7.4
7.9
Bulgaria
9.6
9.2
14.1
16.0
19.0
Croatia
13.2
12.1
14.3
16.8
18.0
Czech Rep.
5.9
7.4
9.5
11.4
12.4
Cyprus
3.1
4.0
6.0
6.8
8.1
Denmark
14.5
17.8
22.0
25.6
27.2
Estonia
18.4
17.2
24.6
25.8
25.6
Finland
29.2
29.8
32.5
34.5
36.8
France
9.4
10.3
12.8
13.6
14.2
Germany
5.8
9.0
10.4
12.1
12.4
Greece
7.2
8.5
9.8
13.4
15.0
Hungary
4.4
5.9
8.6
9.6
9.8
Ireland
2.4
3.6
5.6
7.3
7.8
Italy
5.6
6.4
10.5
15.4
16.7
Latvia
32.8
29.6
32.5
35.8
37.1
Lithuania
17.2
16.7
19.8
21.7
23.0
Luxembourg
0.9
2.7
2.9
3.1
3.6
Malta
0.3
0.4
1.0
2.7
3.8
Netherlands
1.9
3.1
3.7
4.5
4.5
Poland
7.0
7.0
9.2
10.9
11.3
Portugal
19.2
21.9
24.2
25.0
25.7
Romania
16.8
18.3
23.4
22.8
23.9
Slovakia
5.3
7.3
9.0
10.4
9.8
Slovenia
16.1
15.6
19.2
20.2
21.5
Spain
8.3
9.7
13.8
14.3
15.4
Sweden
38.7
44.1
47.2
51.0
52.1
UK
1.2
1.8
3.3
4.2
5.1
EU28
8.3
10.0
12.5
14.1
15.0
2020
34
13
16
20
13
13
30
25
38
23
18
18
13
16
17
40
23
11
10
14
15
31
24
14
25
20
48
15
20
So urce: Euro stat news release 9 M arch 2015
13
Capital Stage AG
quirin bank AG
Company description
Capital stage is Germany’s largest independent solar park operator: the core business is the purchase and operation of solar parks
and wind farms. Per end March, Capital Stage operated 54 PV parks and six wind farms across Germany, Italy and France, with a
contract signed for the purchase of seven solar parks in the UK. This portfolio has a capacity of 445 MWp and the indicated pipeline
might extend this to over 600 MWp within the next 12 months. Altogether 319,214,511 kWh was fedinto the power grid in 2014.
Due to their stable predictable revenue typicaly supported by pre-agreed feed-in tariffs, these parks offer a good risk-return ratio. In
order to grow, management actively seeks new turnkey investments in additional solar parks or wind farms in the core countries of
operation. A JV with Gothaer provides equity funding for the 2015 planned PV expansion.
Revenues by segment 2014
MWp by product mix 2014
PV
services
4%
Invests
7%
Equity investment by energy 2014
PV Fr
32%
Wind
farms
11%
Wind
Ger.
9%
PV Fr
13%
Wind
Ger.
12%
PV parks
78%
PV Ger.
36%
Wind
Italy
1%
PV UK
12%
PV Italy
39%
PV Ger.
30%
PV Italy
13%
Source: Company data
Wind
Italy
3%
S e gme nt da ta (EUR m)
###
2 0 13
78.7
38%
2 0 15 e
113.6
2 0 16 e
2 0 17 e
Re ve nue s (growth in % )
45.1 27%
57.0
44%
152.3
34%
182.1
20%
PV Parks
PV Services
Wind farms
Invest./other
30.5
1.3
2.5
10.8
35%
84%
- 6%
39.4 29%
2.2 69%
7.7 212%
7.8 - 28%
64.1 63%
2.9 32%
7.6
- 1%
4.2 - 46%
97.8 53%
4.0 40%
9.7 28%
2.2 - 47%
132.6
5.8
11.6
2.2
36%
45%
20%
0%
159.2
7.3
13.6
2.1
20%
25%
17%
- 5%
EBITDA (ma rgin in % )
PV Parks
PV Services
Wind farms
Invest./other
33.7
40.6
0.7
3.6
- 11.1
75%
133%
54%
145%
50.4 88%
43.9 111%
1.1 51%
9.9 129%
- 4.5
n.a
85.3 108%
80.4 125%
1.1 40%
8.9 118%
- 5.2
n.a
90.3
87.0
1.5
7.0
- 5.2
118.5
113.0
2.0
8.5
- 5.0
78%
85%
34%
73%
n.a
140.7
133.0
2.5
10.0
- 4.8
77%
84%
34%
73%
n.a
-102%
26%
2 0 14
79%
89%
37%
72%
n.a
Source: Company data, quirin bank estimates
Shareholder structure
AMCO
Service
22.0%
CEO
2.2%
Other
free
float
54.3%
Recommendation overview
0.60
0.50
17%
0.40
Albert
Büll
6.1%
in %
Dr
Liedkte
8.1%
EPS: quirin bank vs. consensus
0.30
0.20
83%
0.10
Blue
Elephant
7.3%
0.00
2015
2016
quirin bank
2017
00%
20%
Sell
Consensus
Source: quirin bank Research, Bloomberg
40%
60%
Hold
80%
100%
Buy
Source: Bloomberg
Compa ny guida nc e 2 0 15
Group sales
Operating EBITDA
Operating EBIT
operating cash flow
Ta rge ts
>EUR 105m
>EUR 73m
>EUR 43m
>EUR 75m
quirin ba nk
EUR 115m
EUR 83m
EUR 54m
EUR 78m
Conse nsus
EUR 122m
n.a.
n.a.
n.a.
Source: Company data, quirin bank estimates
14
Capital Stage AG
quirin bank AG
Profit & Loss Statement
P rofit & Loss sta te me nt (EUR m)
Sales
2 0 12
45.1
yoy
2 0 13
yoy
2 0 14
yoy
2 0 15 e
yoy
2 0 16 e
yoy
27%
57.0
26%
77.8
37%
113.6
46%
152.3
34%
2 0 17 e
182.1
Cost of goods
- 6.9
- 6.5
- 3.8
- 3.6
- 4.1
- 4.5
Gross profit
38.2
50.5
74.0
110.0
148.2
177.7
Gross profit margin (%)
85%
89%
95%
97%
97%
98%
Other operating earnings
15.9
15.0
32.2
7.1
4.1
3.1
Personnel expenses
- 5.9
- 6.3
- 6.6
- 7.6
- 9.6
- 11.2
Other operating expenses
- 14.5
- 8.8
- 14.3
- 19.2
- 24.2
- 28.9
EBITDA
33.7
36%
50.4
49%
85.3
69%
90.3
6%
118.5
31%
140.7
EBITDA margin (%)
75%
4.9 pp
88%
13.7 pp
110%
21.2 pp
79%
- 30.1 pp
78%
- 1.6 pp
77%
Depreciation
- 13.2
- 18.7
- 38.9
- 36.8
- 46.1
- 53.5
EBIT
20.5
31.7
46.4
53.5
72.4
87.2
EBIT margin (%)
46%
56%
60%
47%
48%
48%
Net financial result
- 11.1
- 15.8
- 22.5
- 18.1
- 27.7
- 33.1
Exceptional items
0.0
Pretax profit
9.5
82%
15.8
67%
23.9
51%
35.4
48%
44.7
26%
54.1
21.0%
6.4 pp
27.8%
6.7 pp
30.7%
2.9 pp
31.1%
0.5 pp
29.3%
- 1.8 pp
29.7%
Pretax margin (%)
Taxes
0.0
- 0.4
0.0
0.0
0.0
0.0
- 1.8
2.2
- 5.3
- 9.8
- 14.1
Tax rate (%)
4%
11%
- 9%
15%
22%
26%
Earnings after taxes
9.1
14.0
26.1
30.1
34.9
40.0
- 0.6
- 0.7
- 0.5
- 0.7
- 0.8
Minorities
Group attributable income
8.6
- 1052%
13.4
56%
25.5
15%
- 1.3
16%
0.18
- 753%
0.24
30%
0.35
48%
0.40
13%
0.46
16%
0.52
Adjusted EBITDA
17.8
26%
35.8
101%
54.5
52%
83.2
53%
114.4
38%
137.6
Adj. EBITDA margin (%)
40%
Adj. EBIT margin (%)
17%
42%
21.7
38%
70%
184%
33.7
43%
73.8
38.7
46.8
63%
73.8
34.1
Earnings per share (EUR)
7.6
72.1
29.4
No. of shares (m)
Adjusted EBIT
55.9
91%
73%
55%
52.4
46%
73.8
75%
56%
72.3
48%
76%
38%
87.1
48%
So urce: Co mpany data, quirin bank estimates
15
Capital Stage AG
quirin bank AG
Balance Sheet
Ba la nc e she e t (EUR m)
2 0 12
yoy
2 0 13
yoy
2 0 14
yoy
2 0 15 e
yoy
2 0 16 e
yoy
2 0 17 e
Asse ts
Cash and cash equivalents
34.2
55.7
118.7
49.7
51.2
130.1
Accounts receivables
3.2
4.5
9.3
12.8
17.3
22.8
Inventories
2.5
2.1
1.9
1.9
1.9
1.9
Other current assets
1.4
3.1
10.0
10.0
10.0
10.0
Tax claims
12.7
Tota l c urre nt a sse ts
53.9
Fixed assets
317.1
408.1
675.9
933.9
1097.8
6.9
6.8
2.6
2.6
2.6
2.6
69.3
91.4
145.4
146.4
148.4
151.4
Financial assets
3.1
7.8
0.0
0.0
0.0
0.0
Deferred Taxes
2.8
5.6
13.5
13.5
13.5
13.5
Goodwill
Other intangible assets
Other fixed assets
Tota l fixe d a sse ts
Tota l a sse ts
3.6
25%
2.0
401.1
455.0
68.9
2.3
28%
4.5
142.3
- 0.3
106%
6.0
74.2
10.0
- 48%
6.0
90.4
26.4
22%
191.2
1148.3
6.0
6.0
56%
524.2
31%
843.5
61%
1102.4
31%
1268.4
15%
1321.9
52%
593.2
30%
985.8
66%
117 6 . 6
19 %
13 5 8 . 8
15 %
15 13 . 1
Equity & Lia bilitie s
Subscribed capital
48.4
67.7
73.8
73.8
73.8
73.8
Reserves & other
73.7
131.3
161.8
175.7
214.8
240.2
S ha re holde rs' e quity
122.1
199.0
235.7
249.5
288.7
314.0
8.1
8.4
7.8
7.8
7.8
Minorities
S ha re holde rs' e quity with minoritie s
130.3
42%
207.4
59%
243.5
17%
257.3
6%
296.5
7.8
15%
321.8
Long- te rm lia bilitie s
Pension provisions
Other Provisions
Financial liabilities
Tax liabilities
Other liabilities
Tota l long- te rm de bt
2.6
4.0
12.0
12.0
12.0
17.9
17.9
17.0
17.0
17.0
17.0
243.8
286.1
578.3
753.3
893.3
1018.3
32.0
42.2
60.8
60.8
60.8
60.8
1.7
4.5
8.3
8.3
8.3
298.0
57%
354.7
19%
676.3
91%
851.3
26%
991.3
12.0
8.3
16%
1116.3
S hort- te rm de bt
Other provisions
0.9
0.9
1.0
1.0
1.0
1.0
Trade payables
2.1
2.1
13.3
15.3
18.3
22.3
Financial debt
17.4
22.0
43.1
43.1
43.1
43.1
Other liabilities
6.4
6.0
8.7
8.7
8.7
Tota l short- te rm de bt
Tota l e quity & lia bilitie s
26.8
43%
455.0
52%
31.1
593.2
8.7
16%
66.0
112%
68.0
3%
71.0
4%
75.0
30%
985.8
66%
117 6 . 6
19 %
13 5 8 . 8
15 %
15 13 . 1
16
Capital Stage AG
quirin bank AG
Financial Key Ratios
Ke y Ra tios
2 0 12
2 0 13
2 0 14
2 0 15 e
2 0 16 e
2 0 17 e
EPS
0.18
0.24
0.35
0.40
0.46
0.52
Book value per share
2.67
3.06
3.30
3.48
4.01
4.36
P e r sha re Da ta
Free cash flow per share
- 0.57
- 0.19
- 0.41
- 2.95
- 1.51
- 0.22
FFO per share
0.32
0.41
0.50
0.61
0.86
1.05
Dividend per share
0.08
0.10
0.15
0.18
0.21
0.24
9.10
8.90
11.09
10.69
8.89
7.68
EV/EBITDA
23.04
14.19
15.84
14.60
11.83
10.17
EV/EBIT
53.74
23.39
25.65
23.17
18.71
16.06
Price Earnings Ratio (P/E)
V a lua tion ra tios
EV/Sales
20.53
15.74
13.79
15.92
13.75
12.09
Price/FFOpS
11.66
9.11
7.59
8.00
7.41
6.02
Dividend Yield
2.1%
2.7%
3.1%
2.8%
3.3%
3.8%
Sales growth (%)
27%
26%
37%
46%
34%
20%
EBITDA growth (%)
26%
101%
52%
53%
38%
20%
EBIT growth (%)
26%
101%
52%
53%
38%
20%
EPS growth (%)
n.a.
53%
55%
26%
40%
23%
EBITDA margin (%)
75%
88%
110%
79%
78%
77%
EBIT margin (%)
33%
41%
46%
40%
41%
43%
Net return on sales (%)
19%
23%
33%
26%
22%
21%
6%
7%
7%
6%
6%
7%
130
207
243
257
296
322
29%
35%
25%
22%
22%
21%
227
253
503
747
885
931
174%
122%
206%
290%
299%
289%
- 1.9
- 2.0
- 2.1
- 2.9
- 2.6
- 2.6
6.7
5.0
5.9
8.3
7.5
6.6
44%
42%
42%
45%
46%
46%
G rowth
P rofita bility ra tios
ROCE (%)
Fina nc ia l ra tios
Total Equity
Equity ratio (%)
Net financial debt
Net debt / Equity
Interest Cover
Net debt / EBITDA
Dividend pay out ratio (%)
Working Capital
Working Capital / Sales
Capital employed
3
4
-2
-1
1
2
8%
8%
- 3%
0%
1%
1%
405
529
841
1,102
1,269
1,324
17
Capital Stage AG
quirin bank AG
Legal Disclaimer
This document has been prepared by quirin bank AG (hereinafter referred to as „the Bank“). This document has been prepared by its author(s) independently of
the company analysed in this report. The opinions, estimates and projections or forward-looking statements expressed in this document are entirely those of the
author(s) hereof and are not given as an agent of the company.
The document may include certain descriptions, statements, estimates, projections or other forward-looking statements and conclusions underlying potential
market and company developments. These reflect assumptions, which may turn out to be incorrect and no reliance should be placed on any information, opinions
or assumptions contained herein. In particular, there can be no assurance that actual results will not differ materially from those set out in any forward-looking
statements contained in this document or that future results or events will be consistent with any opinions, estimates, projections or other forward-looking
statements contained in this document.
The information contained in this document is based on data obtained from sources believed by the Bank to be reliable and in good faith. The Bank and/or its
employees make no representations, guarantees or warranties, express or implied, with regard to fairness, accuracy, completeness, correctness or suitability of
any information contained in this document and 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 reserves the right to determine whether or not to update this report, and, if such update is made, when and in
which intervals such update is made. 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
securities referred to in this document.
This document is not an advertisement, a solicitation or an offer or an invitation of an offer to buy or sell the stock mentioned in it or to participate in any particular
trading strategy. Nothing contained in this document will form the basis of any contract or commitment whatsoever.
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.
The Bank reserves all rights in this document.
The distribution of this document may be restricted by law or regulation in certain jurisdictions, including the United States, and persons into whose possession
this document comes should inform themselves about, and observe, any such restrictions. Any failure to comply with these restrictions may constitute a violation
of the laws of such jurisdiction.
The preparation of this document is subject to regulation by German Law.
Remarks regarding to U.K. clients: Distribution of this material in the U.K. is governed by the FSA Rules. This Report is intended only for distribution to
Professional Clients or Eligible Counterparties (as defined under the rules of the FSA) and is not directed at Retail Clients (as defined under the rules of the FSA).
Disclosures in respect of section 34b of the German Securities Trading Act (Wertpapierhandelsgesetz – WpHG) and the Regulation governing the
Analysis of Financial Instruments (Finanzanalyseverordnung – FinAnV)
Section 34b of the German Securities Trading Act in combination with the FinAnV requires an enterprise preparing a securities analyses to point possible conflicts
of interest with respect to the company that is the subject of the analyses.Catalogue of potential conflicts of interest:
1.
2.
3.
4.
5.
6.
7.
The Bank and/or its affiliate(s) holds 5% or more of the share capital of the analysed company
The Bank and/or its affiliate(s) was Lead Manager or Co-Lead Manager over the previous 12 months of a public offering of analysed company
The Bank and/or its affiliate(s) act as Designated Sponsor for the analysed company
The Bank and/or its affiliate(s) over the previous 12 months has been providing investment banking services for the analysed company for which a
compensation has been or will be paid
The Bank and/or its affiliate(s) effected an agreement with the analysed company for the preparation of the financial analysis
The Bank and/or its affiliate(s) holds a trading position in shares of the analysed company
The Bank and/or its affiliate(s) has other important financial interests in relation to the analysed company
In relation to the security or financial instrument discussed in this analyses the following possible conflict of interest exists: (-)
The Bank has set up effective organisational administrative arrangements to prevent and avoid possible conflicts of interest and, where applicable, to disclose
them.
The valuation underlying the rating of the company analysed in this report is based on generally accepted and widely used methods of fundamental valuation,
such as the DCF model, Free Cash Flow Value Potential, peer group comparison and – where applicable – a sum-of-the-parts model.
18
Capital Stage AG
quirin bank AG
We do not commit ourselves in advance to whether and in which intervals an update is made. The document and the recommendation and the estimations
contained therein are not linked – whether directly or indirectly – to the compensation of the analyst responsible for the document.
All share prices given in this equity analysis are closing prices from the last trading day before the publication date stated, unless another point in time is explicitly
stated.
The rating in this report are based on the analyst´s expectation of the absolute change in stock price over a period of 6 to 12 months and reflect the analyst´s view
of the potential for change in stock price as a percentage. The BUY and SELL ratings reflect the analyst´s expected high change in the value of the stock.
The levels of change expressed in each rating categories are:
BUY >= +10%
HOLD > −10% and < - 10%
SELL < = - 10%.
Analyst certification
Mark Josefson, 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.
Price and Rating History (last 12 months)
Date
08.05.2014
13.06.2014
16.10.2014
12.12.2014
10.03.2015
09.04.2015
Price target EUR
EUR 5.0
EUR 5.0
EUR 5.0
EUR 6.2
EUR 6.2
EUR 7.4
Rating
Buy
Buy
Buy
Buy
Buy
Buy
Initiation
09.05.2014
Bank distribution of ratings and in proportion to investment banking services can be found on the internet at the following address:
http://investment-banking.quirinbank.de/
Competent supervisory authority
Bundesanstalt für Finanzdienstleistungsaufsicht - BaFin – (Federal Financial Supervisory Authority), Marie-Curie-Straße 24-28, 60439 Frankfurt
Contact quirin bank AG Frankfurt am Main
Schillerhaus / Schillerstraße 20 / 60313 Frankfurt am Main
Management Board: Karl Matthäus Schmidt · Johannes Eismann · Dr. Marcel Morschbach · Stefan Spannagl
Contact Sales Team
Tel,: +49 69 2 47 50 49 – 46
Fax.:+49 69 2 47 50 49 – 44
Institutional-Sales-FFM@quirinbank.de
19
Capital Stage AG
quirin bank AG
Contact Details
quirin bank AG
Schillerhaus | Schillerstrasse 20 | 60313 Frankfurt am Main
Tel.Nr.:+49 69 2 47 50 49-0 | Fax: +49 69 2 47 50 49-44 | Institutional-Sales-FFM@quirinbank.de
Institutional Research & Sales
Equity Research
Tel.
Email
Klaus Soer
Harald Eggeling
Mark Josefson
Felix Lutz
+49 (0) 69 2475049-27
+49 (0) 69 2475049-28
+49 (0) 69 2475049-26
+49 (0) 69 2475049-29
klaus.soer@quirinbank.de
harald.eggeling@quirinbank.de
mark.josefson@quirinbank.de
felix.lutz@quirinbank.de
Equity Sales
Tel.
Email
Felix Schulte
Stefan Krewinkel
Rainer Jell
Klaus Messenzehl
+49 (0) 69 2475049-65
+49 (0) 69 2475049-53
+49 (0) 69 2475049-45
+49 (0) 69 2475049-46
felix.schulte@quirinbank.de
stefan.krewinkel@quirinbank.de
rainer.jell@quirinbank.de
klaus.messenzehl@quirinbank.de
Debt Sales
Tel.
Email
Jürgen Raabe
Klaus Linnebach
Benjamin Reul
Stefan Zeissler
+49 (0) 69 2475049-41
+49 (0) 69 2475049-47
+49 (0) 69 2475049-48
+49 (0) 69 2475049-42
juergen.raabe@quirinbank.de
klaus.linnebach@quirinbank.de
benjamin.reul@quirinbank.de
stefan.zeissler@quirinbank.de
Trading / Sales Trading
Tel.
Email
Thomas Flügel
Sebastian Schütt
+49 (0) 69 2475049-99
+49 (0) 69 2475049-99
thomas.fluegel@quirinbank.de
sebastian.schuett@quirinbank.de
Business Support
Tel.
Email
Research Info
+49 (0) 69 2475049-0
research@quirinbank.de
20

Quirin Bank research news as of April 10, 2015

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