M. M. Warburg research news as of April 1, 2015

Transcription

Capital Stage
(SDAX, Renewables)
Value Indicators:
Buy
EUR
7.90
EUR
DCF:
7.90
Price
Bloomberg:
Reuters:
ISIN:
(EUR 5.25)
Market Snapshot:
EUR 6.10
Upside
29.4 %
Market cap:
No. of shares (m):
EV:
Freefloat MC:
Ø Trad. Vol. (30d; EUR):
EUR m
439.5
72.0
1,241.9
238.6
386.29 th
Share data:
Description:
CAP GR
HWAG
DE0006095003
Shareholders:
Freefloat
Albert Büll BeteiligungsGmbH
AMCO Service GmbH
Dr. Liedtke VV
Blue Elephant Venture
54.3 %
6.1 %
22.0 %
8.1 %
7.3 %
Germany's biggest solarpark holding
Risk Profile (WRe):
2014e
Beta:
Price / Book:
Equity Ratio:
Net Fin. Debt / EBITDA:
Net Debt / EBITDA:
0.9
1.1 x
25 %
6.2 x
6.2 x
A strong pipeline and low interest rates pave the way for future growth
Sweet spot in the value chain: Capital Stage (CS) is operating in the sweet spot of the value chain in the renewable energy sector. The
operation of renewable energy parks comes along with highly visible and long-term guaranteed revenue streams that generate predictable
cash flows. Since CS is an independent operator, the company is not influenced by any subsidiaries or parent companies that operate along
other parts of the value chain. Therefore CS can focus on the most attractive projects on the market. Additionally, CS is not exposed to
additional risk factors, which are immanent in other parts of the value chain.
Attractive business model: Since CS is operating in different countries, IRR rates also differ according to the local situations in each country.
IRR rates are currently decreasing due to increasing demand for projects, which is triggered by low risk and stable returns. However, IRR rates
still remain rewarding because of the attractive spread between the IRRs, the current low refinancing costs and the opportunity to invest in
existing parks that have high IRRs. The attractiveness of the business model further increases against the backdrop of current interest rates,
which also ease financing efforts for CS’ project pipeline.
Strong acquisition pipeline: The current acquisition pipeline looks promising. CS is currently in advanced negotiation stages for the
acquisition of additional parks primarily in the UK and Italy that would push the current portfolio to an additional 120MW (~1MW = EUR 1.4m).
Overall, a total capacity for 2015 of 600-660MW is achievable. The current portfolio has about 445MW. Even if the capacity growth looks quite
optimistic at a first glance, the current policies of low interest in Europe provide the company with cheap financing opportunities which make the
projected growth achievable. In addition, the company currently still has roughly EUR 70m left of the issuance of participation rights to the
German insurer Gothaer and about EUR 30m cash available to finance further acquisitions. This amounts to a leveraged investment size of
between EUR 400m and EUR 450m according to the management. Therefore we expect sales growth of c. 66% for 2015.
Striking track record: CS has proven a strong track record in terms of growth and value-enhancing acquisitions in past years. Besides the
cash injection from Gothaer, the last years’ enormous growth was predominantly fed on eight capital increases, whereas the share price
performance easily compensated for the dilution effect due to the attractiveness of investment opportunities. The last years’ P&L was
substantially impacted by one-off effects from PPAs, which significantly boosted CS’ EBITDA. In FY 2014 for instance EBITDA accounted for
EUR 85m while the adjusted EBITDA accounted for EUR 60m (WRe).
DCF shows attractive upside: In the DCF valuation, we adjusted non cash-effective PPA effects which resulted in lower EBIT margins. Sales
growth estimations for 2015e-2017e are 9.6% on average per year. Sales growth estimations in the terminal value are conservative. They
account for 0.2% and do not include any further park acquisitions from 2017 onwards due to CS’ unpredictable investment quote in the long
term. The FCF in the TV was divided by four due to expiring FiTs. Furthermore, we are adjusting the risk-free return rate to 1.5% and have a
market return of 7.0%. This leads to a WACC of 3.8%. Our current PT yields an upside potential of 29%. We confirm our Buy recommendation.
FY End: 31.12.
in EUR m
2010
2011
2012
2013
2014
2015e
2016e
13.0
1136.2 %
99.4 %
13.6
10.1
7.0
54.1 %
1.8
13.7 %
1.7
35.5
173.2 %
85.1 %
24.8
17.6
13.3
37.6 %
5.2
14.7 %
-0.9
45.1
27.2 %
84.8 %
33.7
18.6
20.5
45.5 %
9.5
21.0 %
8.6
57.0
26.3 %
88.7 %
50.4
36.6
31.7
55.6 %
15.8
27.8 %
13.4
77.8
36.6 %
95.1 %
85.3
60.2
46.4
59.6 %
23.9
30.7 %
18.2
129.3
66.1 %
96.0 %
114.4
97.7
62.1
48.1 %
24.8
19.2 %
20.1
147.1
13.8 %
96.2 %
118.4
113.7
62.4
42.4 %
22.4
15.3 %
17.9
0.06
0.00
0.0 %
-0.02
0.05
2.1 %
0.18
0.08
2.5 %
0.24
0.10
2.6 %
0.25
0.15
3.9 %
0.28
0.15
2.5 %
0.25
0.18
2.9 %
P/E
FCFPS
32.4 x
0.02
n.a.
0.01
17.4 x
-1.01
15.9 x
-2.94
15.3 x
-4.06
21.8 x
-3.52
24.4 x
-0.65
Net Debt
ROE
ROCE (NOPAT)
Guidance:
88.7
2.8 %
7.2 %
156.2
-1.2 %
3.2 %
245.7
8.3 %
6.3 %
275.3
8.3 %
6.5 %
532.5
8.4 %
6.7 %
802.4
8.4 %
5.8 %
838.4
7.2 %
4.9 %
Sales
Change Sales yoy
Gross profit margin
EBITDA
EBITDA adj.
EBIT
Margin
EBT
Margin
Net income
Rel. Performance vs SDAX:
1 month:
15.0 %
6 months:
39.2 %
Year to date:
Trailing 12 months:
9.8 %
45.2 %
Company events:
29.05.15
25.06.15
31.08.15
CAGR
(14-16e)
EPS
DPS
Dividend Yield
37.5 %
17.8 %
-0.9 %
0.0 %
9.5 %
2015: n.a.
Q1
AGM
Q2
Analyst
L uca s B o v e nt e r
lboventer@warburg-research.com
+49 40 309537-290
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Capital Stage
Sales by segments
Sales development
in EUR m
2015e; in %
Source: Warburg Research
EBIT development
in EUR m
Company Background
Germany’s largest independent solar park operator with 61 solar parks (86.5% of portfolio) and six wind parks (13.5% of portfolio) and
total installed capacity of about 445MW.
New projects in UK further improve CS's regional diversification.
An investment in CS offers investors the opportunity to participate in high-yield solar parks and onshore wind parks without the
restrictions of closed-end funds.
Competitive Quality
Highly visible cash flows thanks to guaranteed feed-in tariffs for 20 years, longer operation of the plants possible because of
extension options and land ownership.
Experienced management with broad contact network.
Core competence in the field of environmental technologies/renewable energies.
CS Solar Services GmbH is a 100% subsidiary and is responsible for the in-house technical management and supports the technical
due diligence for new projetcs.
CF development
in EUR m
Portfolio capacity
Net income development
in MW
in EUR m
150
100
50
0
2012
2013
2014
2015
2016
2017
2018
2019
2020
-50
-100
-150
-200
-250
FCF (m)
-300
NOTE
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2
Capital Stage
Investment Case
4
Brief company description
Quality and growth opportunities
Challenge
Company structure
Market development of Solar and Wind installations
Solar in Europe
Wind in Europe
Stable cash flows pave the way for attractive yields and growth
CS investment and expansion strategy; current focus markets
The participation rights structure
CS pipeline strong for 2015
Financing opportunities
IRR rates are decreasing but remain attractive
Financials
15
Capital expenditure outlook
Badwill increases EBITDA
15
16
Valuation
17
DCF approach
NOTE
4
4
6
7
8
9
10
12
12
13
14
14
15
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3
Capital Stage
Attractive business model with
reliable and predictable cash flows
Investment Case
Brief company description
Capital Stage AG is a German investment company with a main focus on solar parks
and minor exposure to wind parks. Current business operations are in Germany, France,
Italy and the United Kingdom. As a result of its increasing focus on renewable energy
projects, the company is in the process of making the move from being a holding
company to solely an operator of renewable energy parks as CS intends to sell its stake
in Helvetic Energy GmbH, a Swiss solarthermics company.
Sales for FY 2014 were EUR 77.8m (2013: EUR 57.0m), EBITDA came in at EUR 85.3m
(2013: EUR 50.4m) and EBIT at EUR 46.4m (2013 EUR 31.7m). In recent years, the
company enjoyed substantial growth on the sales and operating side, which is shown in
the table below.
Sales and EBIT development (EURm)
90.0
77.8
80.0
70.0
57.0
60.0
46.6
45.1
50.0
35.5
40.0
31.7
30.0
20.6
20.0
10.0
13.0
13.3
7.0
0.0
2010
2011
2012
2013
2014
Sales
EBIT
Source: Capital Stage, Warburg Research
Quality and growth opportunities
Capital Stage business model is the sweet spot of the renewable energy value
chain
Along the value chain of the renewable energy sector, CS is operating in the most
attractive part, the operation of solar and wind parks. This part presents only few risks
and highly visible and guaranteed revenue streams which generate stable cash flows.
However, other parts of the value chain such as module and turbine manufacturers or
project managers are confronted with highly competitive environments, price
competitions and regulatory hurdles.
Stable cash flows, high business visibility and top management constitute the
basis for growth
The business environment in which CS is operating provides certain advantages for
investors. First of all, every park in the portfolio generates predictable stable cash flows
over a long period of time (up to 20 years) that allow long-term planning and generate
attractive yields. Second of all, since the earnings derive from electricity sales in the form
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Capital Stage
of a feed-in tariff system, the visibility of revenue streams is very high and power take-up
is generally guaranteed as well. Thirdly, the assets in the current portfolio are very young
throughout, with the first feed-in tariff expiring in 2026, meaning risks are rather limited
given that projects bear next to no development risks.
With regards to the management, CS has highly qualified and experienced managers
with a strong track record on board. Management boasts a broad network of contacts
and a great reputation, which set the base for an attractive deal flow.
Capital Stage Solar Services GmbH assures quality of parks
Active in the growing business of technical service and commercial management, CS
subsidiary Capital Stage Solar Services ensures the sound operation of the solar parks.
Furthermore, as a non-proprietary service provider Capital Stage Solar Services also
manages third party-owned solar parks. However, external services are provided solely
in Germany and only to a marginal extent. For 2015, we expect revenue contributions of
c. 3% by the service subsidiary.
Besides the service operation, Capital Stage Solar Services also assists in the
consideration phase of potential new acquisition and investment targets and therefore
serves as a competitive advantage for CS. The team of ten highly educated and
experienced engineers supports the due diligence with its qualified know-how and is a
key to achieving favourable deal conditions.
Policy of low interest rates offers striking access to financing
Since CS is operating in a capital intensive industry, they depend highly on external
sources of financing in order to acquire new assets. All assets, or, in other words all solar
and wind parks, function as special purpose vehicles (SPV) which are leveraged with
non-recourse debt. They are currently facing an attractive environment. The policy of low
interest rates in Europe offers cheap leverage opportunities which make acquisitions of
parks less expensive. In addition, low interest rates make alternatives to capital
increases such as issuances of convertible bonds or participation rights also attractive
since interest payments are low and durations are long term. So the current access to
financing is attractive and sets the base for further acquisitions.
Participation rights are an attractive alternative to capital increases
CS’ business model, the acquisition and operation of renewable energy parks, is very
capital intensive. Thus, in order to further grow the company needs investable capital.
The recent initiated partnership with the German insurer Gothaer brought an additional
EUR 150m of capital in the form of participation rights. This was a smart move by CS. In
the balance sheet the participation rights are outlined as debt capital, however since all
parks serve as individual SPVs, they can use it as equity for the acquisition of new parks.
Capital increases in the form of participation rights either with Gothaer or other
institutions will be considered in the future. But the company remarks that these
structures reduce CS’ equity ratio and will be only considered if an aimed equity ratio of
15% is not at risk, which is deemed as sufficient by capital markets for CS’ low-risk
business. For FY 2014 the equity ratio is expected to be about 25%.
Attractive vehicle for investors to participate in renewable energy sector
An investment in CS shares presents certain advantages for the investor compared with
competing opportunities for participation in the renewable energy sector. These
advantages include a higher fungibility and liquidity of the investment. Moreover,
investors participate in the solar market without the restrictions than are involved in
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Capital Stage
traditional private equity funds or closed-end funds. These restrictions include pre-fixed
maturities, lock-up periods or minimum investment volumes that often constitute serious
hurdles for investors.
Furthermore, solar and wind parks are stable cash-generating business models that
should allow for above-average dividend yields which are more attractive in view of the
markets policy of low interest rates.
Generation of bad will from acquired parks proves management quality
A closer look at CS’ income statement reveals that the EBITDA shows large proportions
of other operating income. This consists mainly of bad will which was generated in the
acquisition processes. After a mandatory fair value determination IFRS accounting
standards require the company to recognise potential gains from acquisitions (bad will)
as other operating income.
According to the company, the management prefers acquisitions of target parks where
current operators are facing special situations such as insufficient financing sources. Due
to CS management’s strong negotiation abilities, they can often achieve positive PPA
(purchase price allocation) effects due to a fair value consideration of the FiT contracts
(often due to higher electricity prices compared to market prices). This is supposed to be
the prerequisite to achieve the targeted IRRs. The track record of past acquisitions
proved that CS was able to buy most parks with positive PPA effects, especially in Italy.
In the UK PPA effects are likely to be lower since the compensation model is rather
market-price oriented.
In the course of the provisional PPA process, CS indentifies all assets and debts and
determines their fair value.
Challenge
Regulatory changes can have adverse effects on cash flows
Operators of wind and solar parks enjoy being secured by the guaranteed feed-in tariff
structure for renewable energies which enables stable cash flow forecasts. However, this
advantage is at the same time a risk or threat for the business. Regulatory changes such
as retroactive declines of feed-in tariffs, as seen in Italy and Spain, can have adverse
effects on the company’s cash flows. In addition to retroactive declines, generally
decreasing feed-in tariffs in CS’ core markets, such as Germany, do not impact existing
projects but rather, slow down growth and reduce the attractiveness of investment
opportunities in these markets.
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Capital Stage
Company structure
Capital Stage Wind and Solar facts
Capital Stage AG
Solar
Wind
Total 385 MWp
Total 60 MWp
Germany
18 parks
Total 134 MWp
France
7 parks
Total 140 MWp
Italy
14 parks
Total 58 MWp
United Kingdom
7 parks
Total 53 MWp
Germany
5 parks
Total 54 MWp
Italy
Italy
11 park
parks
Total
Total 65,95
MWp
MWp
Capital Stage is primarily focusing on investments in solar and wind parks in countries
with stable feed-in tariffs such as Germany, France, Italy and the United Kingdom. In
Germany, CS is among the largest independent solar park operators.
As an investor and owner, CS operates renewable energy parks and manages them.
Currently the portfolio consists of 61 solar and six wind parks with a total capacity of
about 445MW which can supply ca. 140k households with electricity. A partnership with
Google for a 19MW solar park in Brandenburg for instance underlines the company’s
reputation and its excellent track record in the field of renewable energies and underpins
its management quality.
The Capital Stage Solar Service GmbH is a 100% subsidiary and is responsible for the
technical management, project development and general contracting. As a vendor,
independent service provider CS Solar Service also starts taking over the management
of third-party solar parks operators. The current maintained volume is about 185MW.
Furthermore, CS is shareholder of a Swiss solarthermics company, although it does
intend to sell this stake in 2015 according to the management.
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Capital Stage
Portfolio by sector (445MW)
Wind
13.0%
PV
87.0%
Market development of Solar and Wind installations
The introduction of the feed-in tariffs has created a very favourable environment for
investments in renewable energies and triggered a boom for solar and wind systems.
The regulatory environment for new projects in Europe has worsened partially since
feed-in tariffs came under pressure. The expansion targets of Europe’s largest solar
markets, Germany and Italy, were significantly exceeded and government subsidies
have been and will further be reduced in the coming years.
However, the solar market is expected to grow significantly also in the medium to long
term as the decreasing system prices have brought generation costs down to grid parity
levels. Furthermore, globally emerging PV markets will pave the way for significant
further growth. The decline in Germany or Italy will be compensated for by other markets
gaining momentum like Asia or North America. New feed-in tariff policies or investment
tax credits (ITC) have led to a dramatic increase of the markets there. Furthermore,
several countries from large Sunbelt regions like Africa, Middle East, South East Asia
and Latin America are on the way to starting their development.
The future development of the global wind and photovoltaic markets will enlarge the
screening portfolio for Capital Stage and therefore offer further potential investment
opportunities. However, according to the company, CS will stick to European markets at
least in the short term.
The table below shows the estimated cumulative total capacity development of wind and
solar according to the European Photovoltaic Industry Association (EPIA) and the Global
Wind Energy Council (GWEC). By 2018 the estimated cumulative global solar capacity is
expected to almost double which signals further growth opportunities for Capital Stage.
NOTE
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Capital Stage
Global PV and Wind cumulative scenario until 2018 in GW
700.0
600.0
500.0
400.0
300.0
200.0
100.0
0.0
2014e
2015e
2016e
2017e
2018e
Wind
PV
Source: EPIA, GWEC, Warburg Research
Solar in Europe
With regards to the market development of PV installations in Europe, the future will
benefit from the grid parity. Self-generated power through, for example rooftop PV
installations, is becoming cheaper and constitutes an attractive alternative to
conventional power from utilities. Due to this fact, numbers of PV installations are
continuously increasing. By 2018 the installations in Europe are projected to increase by
about 10,000MW per year which will lead to a capacity of about 130,000MW in 2018
compared to roughly 90,000 in 2014. After wind, PV is the number two in the European
renewable energy mix in terms of new installations and provides roughly 3% of electricity
demand in Europe.
Germany and Italy are currently major markets for PV installations. In 2013, Germany
noted new installations of 3,300MW and a total of nearly 36,000MW installed modules
(estimated at ~4.5% of German electricity generation). In Italy, there were about
1,400MW of new installations and almost 18,000MW of installed total capacity. However,
these markets slowed down within recent years due to regulatory changes and
decreasing feed-in tariffs. A closer look at countries that installed about 1,000MW each
year reveals that the United Kingdom is stepping up. While the UK has approached the
1,000MW mark in recent years, 2013 could be considered as a record year for the
country. About 1,500MW were installed in 2013 which made the country the second
largest in terms of installations in the European market ahead of Italy.
The current market development in Europe is positive and shows attractive growth
potential for CS. Even if CS’ major markets such as Germany or Italy are slowing down,
other markets are gaining momentum like the UK. According to the management, CS is
currently focusing on the UK market: The company already acquired the first parks at the
end of 2014 and has further targets in the pipeline which are in advanced stages in terms
of negotiations.
The tables below show new global PV installations and the current footprint of CS. From
2014 onwards new installations in Europe are expected to slowly increase, which is
beneficial for CS since it is currently solely operating in Europe.
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Capital Stage
Development of new global PV installations in MW
60,000
50,000
40,000
30,000
20,000
10,000
0
2011
2012
2013
2014e
2015e
2016e
Europe
2017e
APAC
2018e
Americas
China
M EA
Source: EPIA, Warburg Research
Capital Stage PV market footprint (385MWp)
U.K.
13.9%
Germany
34.6%
It aly
15.0%
France
36.5%
Wind in Europe
The European wind market development is expected to grow in the upcoming years. The
ongoing reduction of the levelised cost of energy is driving new installations and makes
wind energy a striking alternative to conventionally generated power. In 2014, new on
and off-shore installations reached about 11,800MW and marked the number one among
renewable energy installations. The total European market accounted approximately for
128,800MW which is enough to cover roughly 10% of the EU’s electricity consumption.
However, market concentration remains high. About 60% of the new installations in 2014
are dedicated to Germany and the United Kingdom. In Germany, new installations
accounted for 5,280MW and added to a total of 38,100MW installed wind turbines
(estimated to roughly 8% of German power generation). In the UK, the volume of new
installations was about 1,740MW and added to a total of just under 12,000MW. By 2020
the total European market size is pessimistically estimated to be at 165,000MW but
experts expect scenarios of more than 200,000MW. However, it is not just the European
wind market that is booming, on a global scale the volume of new installations reached
51,477MW in 2014, a world record. Major markets in particular are China, the US and
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Capital Stage
Germany.
CS’ portfolio consists mainly of solar parks (86.5% of total installed capacity); they have
only six wind parks. Even if the company is currently cautious with regards to wind, the
above-mentioned market development signals important growth potential to increase the
stake in wind parks. The table below shows new global wind installations and supports
the notion that the wind market in Europe will remain attractive in the upcoming years.
Development of new global wind installations in MW
60,000
50,000
40,000
30,000
20,000
10,000
0
2011
2012
2013
2014e
2015e
2016e
Europe
2017e
APAC
2018e
Americas
China
M EA
Source: GWEC, Warburg Research
Capital Stage wind market footprint (60MWp)
It aly
10%
Germany
90%
NOTE
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Capital Stage
Stable cash flows pave the way for attractive yields and growth
Solar parks
Solar parks are attractive investment vehicles for CS. First of all, due to guaranteed feedin tariffs CS generates stable cash flows over long-term periods. Second of all, the
associated risks are rather low. The solar modules are very robust and degradation rates
are low. Consequently, the modules are generally long-lasting, usually more than 20
years and entail low replacement costs since module prices fell drastically within the last
years. Levelised cost of energy for PV is at around 0.09 EUR on average in Germany,
which makes it comparable to electricity of conventional power plants. Moreover, the
volatility of power generation is marginal in solar parks since the forecast of sunshine
hours is fairly accurate.
The market development for the near future is growing steadily in Europe. Solar capacity
per year is expected to increase from 9.400MW in 2014 to 15.600MW in 2018 which
signals further growth opportunities in terms of park acquisitions for CS.
Wind parks
Wind parks are also an attractive investment opportunity due to the guaranteed feed-in
tariffs which generate stable cash flows over long periods. Especially, the development
of the wind energy market is promising. In Europe, the market reached a size of
11,800MW in 2014 which is equivalent to a growth of 5.3% yoy. The core markets in
Europe are Germany and the United Kingdom, which make up almost 60% (GER: ca.
5,280MW; UK: ca. 1,740MW) of the total European market.
Furthermore, the competitiveness of wind energy compared to conventional power
stations has to be highlighted. The levelised costs of energy for onshore wind are
between 0.06 – 0.08 EUR/kWh so that they are in the range of conventional power
stations which are between 0.04 and 0.08 EUR/kWh.
However, the maintenance of wind parks is slightly more complex than solar parks and
comes with service issues. Wind power is exposed to larger risks from natural forces
which might lead to technical problems. Secondly, volatility is high because wind reports
are often too positive and there is the simple risk that there is no wind on some days.
Due to the factors mentioned above, while wind parks do remain in the current CS
portfolio, the company is currently focusing more on the extension of its solar park
portfolio.
CS investment and expansion strategy; current focus markets
CS is currently present in four countries:
Germany
France
Italy
United Kingdom
With the recently announced long-term partnership (20 years) with German insurance
company Gothaer, CS established a new access to growth capital. The partnership sets
the basis for further expansion and implies that a further capital increase will not take
place in 2015. The granted participation rights provided CS with EUR 150m investable
capital which is sufficient to finance acquisitions with a total leveraged value of
EUR 600m based on a 25% equity ratio. CS already invested about EUR 80m of the
participation rights and, according to management, it is planning to invest the remaining
EUR 70m by the end of 2015 with returns similar to those from the current portfolio.
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Capital Stage
Since CS already invested 1/2 of the capital within a few months, which was faster than
expected, we assume that the remaining EUR 70m will be invested within the first half of
2015.
The current target markets for further investments are primarily countries within Europe.
CS focuses on turnkey or already existing solar and wind parks that have stable feed-in
tariff systems or similar. The minimum size should be around 5-10MW. The current focus
is on a further expansion in the United Kingdom. There are growth opportunities here
given the favourable conditions for solar and wind parks in this region. Germany is
currently not in CS’s focus in terms of new affiliated parks as returns here are lower due
to decreasing feed-in tariffs. However, Germany should still have a lot of potential,
especially for acquisitions of existing parks since it has the highest capacity in terms of
MW in Europe. The EU current-carrying capacity was about 78,000MW in 2013, of which
36,000MW stemmed from Germany. Considering that current CS market share in
Germany is less than 1%, there is certain growth potential in CS’ domestic market.
Eastern Europe is not an option for acquisitions at the moment due to unfavourable
conditions especially in terms of political instability. Spain is also not currently an option
since the government ended the feed-in tariff system and replaced it with a remuneration
system of the treasury.
Markets outside of Europe are currently out of scope because the European market
offers sufficient attractive investment opportunities as of today. However, in the long
term, CS considers North America, especially Canada, to hold further expansion
opportunities but only with reliable local partners.
The participation rights structure
EUR 150m investable capital in form of participation rights
Duration 20 years
Coupon payment at 4% plus variable upside sharing facility
The initiated long-term partnership with the German insurer Gothaer at the end of 2014
gives CS access to further capital of about EUR 150m in form of participation rights. The
capital can be used ‘on demand’ for new projects but interest payments are only paid on
drawn capital. The sum can be leveraged to a total investable sum of roughly
EUR 600m, based on an average equity stake of 25% for upcoming acquisitions. The
rights capital has a duration of 20 years and has to be paid back upon maturity. The
coupon payments are fixed at 4% and include an upside sharing facility. The variable
upside sharing facility is structured as follows: CS calculates its cash flows of the
respective parks according to a base case scenario. This is based on forecasted solar
radiation or wind forces. For instance, if real solar radiation is higher than forecasted,
power production would increase. Consequently CS cash flows for respective parks
would grow and entail the activation of the variable upside sharing facility. However, the
variable kicker is capped at 2% which would lead to an overall interest rate of about 6%.
Thus, the variable upside sharing facility will not have an adverse effect for CS.
Furthermore, it has to be mentioned that interest costs are only due when CS uses the
capital.
The deal structure also included the formation of CSG IPP (independent power
producer) GmbH, which serves as a 100% subsidiary of CS. The ownership of 14
German solar parks (exact ones not disclosed) will be transferred to CSG as an anchor
investment, while Gothaer will provide the EUR 150m. The following table highlights the
structure of the Gothaer partnership in more detail:
NOTE
P u bl i s h e d 0 1 . 0 4 . 2 0 1 5
13
Capital Stage
Gothaer partnership
Capital Stage AG
Gothaer
Acquisition from
existing portfolio
EUR 150m profit
participation rights
CSG IPP GmbH
100% subsidiary of Capital Stage
EUR 150m equity/leverage at project level
Anchor
Investment
14 German
PV parks
New
Investment in
PV parks
CS pipeline strong for 2015
For the current year the company’s pipeline is well filled. According to management
further exclusive acquisition projects in Italy and the UK are already at advanced stages,
in terms of negotiations and due diligence processes, but not yet completed. The
targeted acquisitions would be financed with parts of the remaining Gothaer capital on
the equity side and could enlarge the current portfolio by about 120MW. The completion
of the deals would bring CS much closer to the full-year targeted volume of 660MW
(current size 445MW). Moreover, CS also has other acquisition projects in the pipeline
but further details are not yet disclosed since negotiations and due diligence are at very
early stages.
Financing opportunities
The business model of Capital Stage is very capital intense and therefore highly
depends on access to financing opportunities. The company already made eight capital
increases within the last four years and raised equity amounting to EUR 150m. The
recent initiated partnership with German insurer Gothaer brought another EUR 150m in
the form of a participation rights structure and was another positive step that allowed CS
to add further solar capacity to its portfolio. However, about half of the investable capital
from Gothaer (~EUR 80m) is already invested in solar parks in Italy, France and the UK.
The remaining capital will be invested until the end of 2015. Consequently, in order to
grow further, the company will need a new round of financing by no later than 2016.
According to management, alongside additional capital increases, CS looks for
alternative ways to find growth capital without tapping capital markets each time. The
Gothaer deal was a first step and could potentially attract other institutions that have
similar return requirements. Another step could be the issue of convertible bonds which
could bring along attractive opportunities. First of all, the current low interest rates would
make this a cheap alternative. Second of all, the duration would be longer. However, the
adverse effects of both alternatives are that they would be entered as debt capital and
therefore endanger the aimed equity ratio of at least 15% required by capital markets.
Nevertheless, the alternatives to access additional equity capital make us confident and
optimistic to receive further firepower in the mid term.
NOTE
P u bl i s h e d 0 1 . 0 4 . 2 0 1 5
14
Capital Stage
Although CS made eight capital increases in the past, the share price performance easily
compensated for the dilution effect due to the attractiveness of investment opportunities.
The table below shows that shareholders benefitted in the long term. The stock has more
than doubled since 2010.
Capital Stage has already made eight capital increases
5,5
Gothaer Deal
of EUR 150m
5
Cap increase
of EUR 15.8m
Cap increase
of EUR 49.3m
4,5
Cap increase
of EUR 30.9m
4
3,5
3
Cap increase
of EUR 2.6m
Cap increase
of EUR 14.6m
Cap increase
of EUR 5m
Cap increase
of EUR 17.1m
Cap increase
of EUR 8.3m
2,5
2
1,5
01/2010
01/2011
01/2012
01/2013
01/2014
Source: FactSet Prices
IRR rates are decreasing but remain attractive
With regards to current expected IRR rates, the company is facing a decreasing trend.
The reason behind this is that investments into these assets are considered very
attractive due to low risk and stable returns. Consequently demand has increased, and
this was also amplified due to lower interest rates. IRR target rates differ in each country
depending on local risks. For example, CS considers Germany as absolutely safe.
Political risks are low and there is a 100% feed-in tariff. Therefore lower IRR rates of 78% are accepted compared to an average of about 10% in the past. France is also
considered to be safe with average IRR rates of 9%. Rates are slightly higher due to a
lack of market knowledge, which carries uncertainty, and higher administrative costs. In
the United Kingdom, average IRR rates are 10%. The compensation system for
renewable energies is slightly different. CS for instance has Purchase Power
Agreements (PPA) with the utilities Total and British Telecom who buy 100% of the
generated power: 75% based on ROCs and 25% based on market price. Italy is
considered the riskiest market of CS. IRR rate targets are between 12-14%. First of all,
feed-in tariffs were retroactively reduced in 2014 and second of all, the local political
instability evolves doubts about further adverse interferences.
Financials
Capital expenditure outlook
The table below illustrates the historical and future investment activities of CS. According
to the management CS could achieve a portfolio size of 660MW by the end of 2015.
However, the company invests according to opportunities and not with a pure growth
strategy. Currently, CS’ portfolio generates roughly 440MW, which indicates strong
investment activity for the rest of the year. Nevertheless we are confident that CS could
achieve a portfolio size of nearly 660MW for the following reasons: First of all, the
NOTE
P u bl i s h e d 0 1 . 0 4 . 2 0 1 5
15
Capital Stage
Gothaer deal provided the company with EUR 150m equity capital which can be
leveraged to an investable amount of about EUR 600m. In addition the company also
has about EUR 30m cash on hand that can also be leveraged to about EUR 120m.
Second of all, as part of the deal a further extension of the amount can be negotiated in
the case of sound cooperation. Third of all, the company has proven in the past that it
managed to achieve necessary funding.
Under these circumstances CS could manage to increase its portfolio by about 200MW
in 2015. However, we look at the long-term future a bit more conservatively. This is firstly
because the company is extremely dependant on further equity funding in order to grow
and maintain a reasonable equity ratio at the same time. Secondly, the sector is strongly
influenced by potential regulatory changes. And finally, investment opportunities should
become less attractive due to investors’ growing interest in infrastructure projects.
Capex development in EURm
400
350
300
250
200
150
100
50
0
2011
2012
2013
2014e
2015e
2016e
2017e
2018e
2019e
2020e
Badwill increases EBITDA
Besides the positive development with regards to top-line growth and FCF generation,
CS’ EBITDA is boosted by large shares of badwill. For FY 2014, EBITDA was EUR 85m
and included roughly EUR 25m (WRe) of badwill which resulted from fair value
determinations of acquired parks. Due to this fact we adjusted the EBITDA with the
proportions of bad will since they are characterised as non-cash write ups. The adjusted
EBITDA for FY 2014 should therefore be EUR 60m (WRe). Since these differences
occur every year we do not outline these effects as one-offs. In the valuation approach
we calculated with an adjusted EBITDA. The following table illustrates the difference
between the adjusted EBITDA in comparison with reported sales and EBITDA from
recent years.
NOTE
P u bl i s h e d 0 1 . 0 4 . 2 0 1 5
16
Capital Stage
Badwill generation
90,0
80,0
70,0
60,0
50,0
40,0
30,0
20,0
10,0
0,0
2010
2011
2012
2013
Sales
2014e
EBITDA
EBITDA adj.
Valuation
DCF approach
In the DCF valuation, we adjusted the non cash-effective PPA effects (bad will) which
resulted in lower EBITDA margins. For instance in FY 2014 the EBITDA margin stood at
109.6% whereas the adjusted EBITDA margin stood at 77.5%.
With regards to sales growth, estimations for 2015e-2017e are 9.6% on average per
year based on: the company’s growth projections, their current financial situation and the
current policy of low interest rates.
However, sales growth estimations in the terminal value are quite conservative and
account for 0.2%. They do not include any further growth investments from 2017
onwards, due to the unpredictable investment quote of CS in the long term, and potential
regulatory changes that could affect future investments. For the Free Cash Flow we
expect that only ¼ will be generated in the TV. This estimation is based on expiring FiTs
and the fact that parks only sell generated power at market prices.
Furthermore, we adjusted the risk-free return rate to 1.5% and have a market return of
7.0%. This results in a WACC of 3.8%. The change of the risk-free return rate had an
upside effect for the PT of about EUR 1. Our current PT yields a total upside potential of
27%.
Solar and wind parks constitute the main revenue source for CS. Other revenue sources
include the 100% subsidiary Capital Stage Solar Services GmbH, which will make up
roughly 3% of revenue in 2015 according to our estimations. Shareholdings are expected
to make up c. 4% of revenue in 2015e, however CS intends to sell the stake in Helvetic
Energy GmbH by the end of the year which makes revenue proportions from
shareholdings equal to zero from 2016 onwards.
Below we have outlined the current portfolio of parks with respective sales volumes per
year and the commission date. The portfolio of Capital Stage is rather young and first
feed-in schemes expire in 2026.
NOTE
P u bl i s h e d 0 1 . 0 4 . 2 0 1 5
17
Capital Stage
Individual parks
Solar parks
Solarpark Brandenburg
Asperg Sechste Solar
Solarpark Roitzsch
Solarpark Lettewitz
Solarpark Neuhausen
Asperg Funfte Solar
Solarpark Ramin
Solarpark Bad Endbach
Solarpark Rassnitz
Asperg Erste Solar
Solarpark Pfeffenhausen
Solarpark Glebitzsch
Asperg Zweite Solar
Solarpark Lochau
Krumbach Photoltaik
Krumbach Zwei Photoltaik
Solarpark Bad Harzburg
Solarpark PVA
Solarpark Udine (Friaul)
DE Stern 10 (Parma)
Solarpark Polesine
MTS4 (Noceto)
Solar Farm FC1 (Cesena)
Notaresco Solar
Casette (Fresa)
Alameda (Suvereto)
Fano Solar 1
Fano Solar 2
Sant Omero Solar
Solar Farm FC3 (Forli)
Vallone (Cupello)
Oetzi (Resina 1)
Solar Energy (Resina II)
Solarparkportfolio Biscaya
Solarparkportfolio Pompogne
Solarpark Murles
Solarpark Ille-sur-Têt
Solarpark Centre
Solarpark Arsac 4
Solarpark Arsac 7
7x UK solar assets
Wind parks
Boreas Windfeld Greußen
Windkraft Kirchheilingen
Windkraft Olbersleben
Windkraft Sohland
Windkraft Gauaschach
Parco Eolico Monte Vitalba
Total
Country Comission Date Capacity Ownership
Germany
Apr. 11
18,7
51%
Germany
Feb. 10
14,8
100%
Germany
Aug. 11
12,7
100%
Germany
Jan. 13
12,6
100%
Germany
Dec 12
10,6
100%
Germany
Feb. 10
9,1
100%
Germany
May 13
9,0
100%
Germany
March 14
7,3
100%
Germany
Apr. 11
7,1
100%
Germany
Feb. 10
6,8
100%
Germany
Nov. 14
5,6
100%
Germany
Jul. 12
3,9
100%
Germany
Feb. 10
3,8
100%
Germany
Apr. 11
3,3
100%
Germany
Aug. 09
3,1
100%
Germany
Sep. 09
2,0
100%
Germany
March 12
1,9
100%
Germany
Jun. 12
1,0
100%
Italy
Feb. 15
26,7
100%
Italy
May 12
6,2
100%
Italy
Jan. 13
4,6
100%
Italy
Jan. 14
4,5
100%
Italy
Jun. 12
4,0
100%
Italy
Dec 13
2,0
100%
Italy
Jan. 11
1,5
100%
Italy
Jan. 11
1,5
100%
Italy
Dec 13
1,0
100%
Italy
Dec 13
1,0
100%
Italy
Dec 13
1,0
100%
Italy
Jun. 12
1,0
100%
Italy
Jan. 11
1,0
100%
Italy
Feb. 11
0,9
100%
Italy
Feb. 11
0,8
100%
France
Dec 14
50,8
100%
France
March 14
40,0
100%
France
Jan. 14
12,0
100%
France
Jan. 14
11,0
85%
France
Dec13
10,8
100%
France
Jul. 14
9,2
100%
France
Jul. 14
6,8
100%
UK
53,4
100%
Germany
Germany
Germany
Germany
Germany
Italy
Nov. 12
Jun. 13
Nov. 12
Jan. 11
Oct 12
22,0
12,0
8,0
6,0
6,0
6,0
Workload MWh/year (WRe)
19.004
15.473
12.543
13.230
11.098
9.626
9.270
7.386
7.380
6.915
7.219
4.109
3.952
3.425
3.520
2.286
1.814
968
36.018
8.106
5.730
5.742
5.217
3.376
2.287
2.227
1.591
1.596
1.677
1.295
1.520
1.335
1.245
76.200
60.000
17.664
16.192
12.960
13.671
10.105
53.720
Sales in EURm/year (WRe)
2,5
5,5
2,8
2,4
2,3
3,1
1,0
1,6
1,6
2,5
2,5
0,7
1,3
1,0
1,1
0,7
0,3
0,2
4,7
2,8
1,0
0,8
1,8
1,2
0,8
0,8
0,6
0,6
0,6
0,4
0,5
0,5
0,4
8,4
19,6
1,5
1,2
4,5
1,4
1,1
9,79
39.886
22.800
17.600
16.200
8.400
11.305
2,4
2,1
1,1
1,0
0,8
1,6
104,3
71%
100%
75%
74%
100%
100%
NOTE
P u bl i s h e d 0 1 . 0 4 . 2 0 1 5
18
Capital Stage
DCF model
Detailed forecast period
Transitional period
Term. Value
2014
2015e
2016e
2017e
2018e
2019e
2020e
2021e
2022e
2023e
2024e
2025e
2026e
Sales
Sales change
77.8
36.6 %
129.3
66.1 %
147.1
13.8 %
155.3
5.6 %
158.5
2.0 %
159.6
0.7 %
160.9
0.8 %
162.2
0.8 %
162.5
0.2 %
162.9
0.2 %
163.2
0.2 %
163.5
0.2 %
163.8
0.2 %
EBIT
EBIT-margin
21.4
27.5 %
45.5
35.2 %
57.7
39.2 %
66.4
42.7 %
70.1
44.2 %
72.1
45.1 %
74.1
46.1 %
76.3
47.0 %
74.7
45.9 %
73.1
44.9 %
71.6
43.9 %
70.1
42.9 %
68.6
41.9 %
9.2 %
14.0 %
15.0 %
25.0 %
25.0 %
25.0 %
25.0 %
25.0 %
25.0 %
25.0 %
25.0 %
25.0 %
25.0 %
19.4
39.1
49.1
49.8
52.5
54.1
55.6
57.2
56.0
54.8
53.7
52.6
51.5
38.9
82.1 %
52.3
53.3 %
56.0
41.3 %
56.2
36.4 %
56.3
35.8 %
56.5
35.6 %
56.7
35.5 %
56.8
35.3 %
56.8
35.0 %
56.8
34.9 %
56.8
34.8 %
56.8
34.8 %
56.8
34.7 %
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
Change in Liquidity from
- Working Capital
-6.5
9.2
- Capex
348.5
350.0
Capex in % of Sales
447.8 % 270.7 %
0.4
98.5
66.9 %
0.2
4.4
2.8 %
0.1
4.5
2.8 %
0.0
4.5
2.8 %
1.0
4.5
2.8 %
0.0
4.6
2.8 %
1.6
4.9
3.0 %
0.0
4.9
3.0 %
0.0
4.9
3.0 %
0.0
4.9
3.0 %
0.0
4.9
3.0 %
Figures in EUR m
Tax rate (EBT)
NOPAT
Depreciation
in % of Sales
Changes in provisions
Other
Free Cash Flow (WACC
Model)
PV of FCF
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
-283.7
-267.8
6.2
101.3
104.3
106.0
106.7
109.4
106.4
106.8
105.6
104.5
103.4
-261.2
5.8
91.7
90.9
88.9
86.2
85.1
79.7
77.0
73.4
69.9
66.6
0.0
-15.98 %
share of PVs
76.25 %
Model parameter
WACC
24
407
39.73 %
Valuation (m)
Derivation of WACC:
Debt ratio
Cost of debt (after tax)
Market return
Risk free rate
0.2 %
Derivation of Beta:
85.00 %
3.4 %
7.00 %
1.50 %
3.84 %
Financial Strength
Liquidity (share)
Cyclicality
Transparency
Others
1.00
1.10
0.70
0.70
1.00
Beta
0.90
Present values 2026e
Terminal Value
Financial liabilities
Pension liabilities
Hybrid capital
Minority interest
Market val. of investments
Liquidity
Equity Value
618
407
651
0
0
8
0
168
534
No. of shares (m)
Value per share (EUR)
67.6
7.90
Sensitivity Value per Share (EUR)
Beta
2.11
1.51
1.20
0.90
0.60
0.29
-0.31
WACC
4.8 %
4.3 %
4.1 %
3.8 %
3.6 %
3.3 %
2.8 %
Terminal Growth
-0.55 % -0.30 % -0.05 %
4.63
4.81
5.00
5.66
5.89
6.14
6.24
6.50
6.79
6.87
7.17
7.51
7.56
7.91
8.31
8.32
8.73
9.20
10.11
10.69
11.38
0.20 %
5.21
6.42
7.12
7.90
8.76
9.75
12.19
0.45 %
5.45
6.74
7.50
8.34
9.30
10.39
13.17
0.70 %
5.72
7.11
7.93
8.86
9.92
11.16
14.39
0.95 %
6.02
7.53
8.43
9.46
10.66
12.08
15.93
Beta
2.11
1.51
1.20
0.90
0.60
0.29
-0.31
WACC
4.8 %
4.3 %
4.1 %
3.8 %
3.6 %
3.3 %
2.8 %
Delta EBIT-margin
-1.5 pp -1.0 pp -0.5 pp +0.0 pp +0.5 pp +1.0 pp +1.5 pp
4.88
4.99
5.10
5.21
5.33
5.44
5.55
6.06
6.18
6.30
6.42
6.54
6.66
6.79
6.75
6.87
7.00
7.12
7.25
7.37
7.50
7.90
7.51
7.64
7.77
8.03
8.16
8.29
8.36
8.49
8.63
8.76
8.90
9.04
9.17
10.03
10.17
9.32
9.47
9.61
9.75
9.89
11.72
11.88
12.03
12.19
12.35
12.51
12.66
Investments are extremely front-end loaded, which leads to negative FCF until 2015.
As investments are extremely front-end loaded, capex and depreciations substantially differ in the subsequent periods.
EBIT estimates are adjusted for PPA.
NOTE
P u bl i s h e d 0 1 . 0 4 . 2 0 1 5
19
Capital Stage
Valuation
Price / Book
Book value per share ex intangibles
EV / Sales
EV / EBITDA
EV / EBIT
EV / EBIT adj.*
P / FCF
P/E
P / E adj.*
Dividend Yield
Free Cash Flow Yield Potential
2010
2011
2012
2013
2014
2015e
2016e
0.8 x
1.90
n.a.
n.a.
n.a.
n.a.
82.9 x
32.4 x
32.4 x
0.0 %
n.a.
1.0 x
1.18
7.0 x
10.0 x
18.7 x
18.7 x
307.7 x
n.a.
n.a.
2.1 %
8.9 %
1.1 x
0.98
8.7 x
11.6 x
19.1 x
19.1 x
n.a.
17.4 x
17.4 x
2.5 %
8.5 %
1.0 x
1.80
8.6 x
9.7 x
15.4 x
15.4 x
n.a.
15.9 x
15.9 x
2.6 %
9.9 %
1.1 x
1.22
10.4 x
9.5 x
17.4 x
37.9 x
n.a.
15.3 x
15.3 x
3.9 %
10.2 %
1.8 x
1.11
9.7 x
11.0 x
20.2 x
27.6 x
n.a.
21.8 x
21.8 x
2.5 %
8.6 %
1.7 x
1.14
8.8 x
10.9 x
20.7 x
22.3 x
n.a.
24.4 x
24.4 x
2.9 %
8.6 %
2010
2011
2012
2013
2014
2015e
2016e
82
105
182
300
390
n.a.
n.a.
*Adjustments made for: -
Company Specific Items
Portfolio capacity in MW
NOTE
P u bl i s h e d 0 1 . 0 4 . 2 0 1 5
20
Capital Stage
Consolidated profit & loss
2010
2011
2012
2013
2014
2015e
2016e
13.0
1136.2 %
35.5
173.2 %
45.1
27.2 %
57.0
26.3 %
77.8
36.6 %
129.3
66.1 %
147.1
13.8 %
0.0
0.0
13.0
0.1
12.9
99.4 %
0.0
0.0
35.5
5.3
30.2
85.1 %
0.0
0.0
45.1
6.9
38.2
84.8 %
0.0
0.0
57.0
6.5
50.5
88.7 %
0.0
0.0
77.8
3.8
74.0
95.1 %
0.0
0.0
129.3
5.2
124.1
96.0 %
0.0
0.0
147.1
5.6
141.5
96.2 %
1.2
3.7
1.8
0.0
13.6
104.7 %
4.5
10.6
11.5
0.0
24.8
69.9 %
5.9
15.9
14.5
0.0
33.7
74.8 %
6.3
15.0
8.8
0.0
50.4
88.4 %
6.6
32.2
14.3
0.0
85.3
109.6 %
7.7
16.7
18.7
0.0
114.4
88.5 %
8.5
4.7
19.2
0.0
118.4
80.5 %
Depreciation of fixed assets
EBITA
Amortisation of intangible assets
Goodwill amortization
EBIT
Margin
EBIT adj.
6.0
7.6
0.6
0.0
7.0
54.1 %
7.0
10.1
14.7
1.4
0.0
13.3
37.6 %
13.3
10.7
23.1
2.5
0.0
20.5
45.5 %
20.5
14.8
35.6
3.9
0.0
31.7
55.6 %
31.7
38.9
46.4
0.0
0.0
46.4
59.6 %
21.3
52.3
62.1
0.0
0.0
62.1
48.1 %
45.5
56.0
62.4
0.0
0.0
62.4
42.4 %
57.7
Interest income
Interest expenses
Other financial income (loss)
EBT
Margin
0.2
5.4
0.0
1.8
13.7 %
0.7
8.8
0.0
5.2
14.7 %
0.7
11.7
0.0
9.5
21.0 %
1.1
16.9
0.0
15.8
27.8 %
1.1
23.6
0.0
23.9
30.7 %
0.7
38.0
0.0
24.8
19.2 %
0.7
40.7
0.0
22.4
15.3 %
Total taxes
Net income from continuing operations
Income from discontinued operations (net of tax)
Net income before minorities
Minority interest
Net income
Margin
0.1
1.7
0.0
1.7
0.0
1.7
12.8 %
2.7
2.5
0.0
2.5
3.4
-0.9
-2.5 %
0.4
9.1
0.0
9.1
0.6
8.6
19.0 %
1.8
14.0
0.0
14.0
0.7
13.4
23.5 %
2.2
21.7
0.0
18.7
0.5
18.2
23.4 %
3.5
21.3
0.0
21.3
1.2
20.1
15.6 %
3.4
19.1
0.0
19.1
1.2
17.9
12.2 %
26.0
0.06
0.06
38.1
-0.02
-0.02
46.8
0.18
0.18
55.9
0.24
0.24
72.0
0.25
0.25
72.0
0.28
0.28
72.0
0.25
0.25
2014
2015e
2016e
In EUR m
Sales
Change Sales yoy
Increase / decrease in inventory
Own work capitalised
Total Sales
Material Expenses
Gross profit
Gross profit margin
Personnel expenses
Other operating income
Other operating expenses
Unfrequent items
EBITDA
Margin
Number of shares, average
EPS
EPS adj.
*Adjustments made for:
Guidance: 2015: n.a.
Financial Ratios
Total Operating Costs / Sales
Operating Leverage
EBITDA / Interest expenses
Tax rate (EBT)
Dividend Payout Ratio
Sales per Employee
2010
2011
2012
2013
-4.7 %
n.a.
2.5 x
6.6 %
0.0 %
2,596,000
30.1 %
0.5 x
2.8 x
52.0 %
76.0 %
5,066,143
25.2 %
2.0 x
2.9 x
3.7 %
40.9 %
5,639,750
11.6 %
2.1 x
3.0 x
11.3 %
39.8 %
7,123,875
Sales, EBITDA
Operating Performance
in EUR m
in %
NOTE
P u bl i s h e d 0 1 . 0 4 . 2 0 1 5
-9.6 %
11.5 %
19.5 %
1.3 x
0.5 x
0.0 x
3.6 x
3.0 x
2.9 x
9.2 %
14.0 %
15.0 %
49.9 %
50.7 %
67.9 %
9,728,250 16,163,403 18,391,092
Performance per Share
21
Capital Stage
Consolidated balance sheet
In EUR m
2010
2011
2012
2013
2014
2015e
2016e
13.6
12.0
1.6
120.3
23.3
0.0
157.1
0.0
0.1
22.6
1.6
24.4
181.5
39.9
33.1
6.9
203.7
11.6
0.0
255.2
1.9
6.0
31.8
5.0
44.7
300.0
76.2
46.4
6.9
317.1
3.0
4.7
401.1
2.5
3.2
35.0
13.7
54.3
455.4
98.3
91.4
6.8
408.1
7.8
10.1
524.2
2.1
4.5
55.7
6.7
69.0
593.2
148.0
145.4
2.6
675.6
0.0
19.5
843.2
1.9
9.3
118.7
12.6
142.6
985.8
164.7
162.1
2.6
956.7
0.0
0.0
1,121.4
3.2
5.5
148.9
4.0
161.6
1,283.0
169.4
166.8
2.6
994.5
0.0
0.0
1,163.9
3.6
5.5
178.5
4.0
191.6
1,355.5
27.7
5.0
30.3
0.1
63.1
0.0
63.1
0.2
0.0
111.4
7.0
2.4
4.5
118.4
181.5
38.1
17.2
29.4
0.1
84.8
6.9
91.7
0.4
0.0
188.0
10.2
4.5
15.3
208.3
300.0
48.4
37.7
36.1
0.0
122.1
8.1
130.3
2.6
0.0
280.7
17.4
2.1
39.7
325.1
455.4
67.7
85.7
45.5
0.1
199.0
8.4
207.4
3.7
0.0
331.0
22.0
2.1
49.1
385.8
593.2
73.8
100.8
63.8
-2.8
235.7
7.8
243.5
6.5
0.0
651.2
43.1
13.3
71.3
742.3
985.8
73.8
100.8
72.9
-2.8
244.7
7.8
252.5
6.5
0.0
951.2
43.1
1.5
71.3
1,030.5
1,283.0
73.8
100.8
79.7
-2.8
251.5
7.8
259.3
6.5
0.0
1,016.9
43.1
1.5
71.3
1,096.2
1,355.5
2010
2011
2012
2013
2014
2015e
2016e
0.1 x
0.1 x
1.1 %
0.2 x
0.1 x
-0.3 %
0.1 x
0.1 x
2.1 %
0.1 x
0.1 x
2.5 %
0.1 x
0.1 x
2.2 %
0.1 x
0.1 x
1.8 %
0.1 x
0.1 x
1.5 %
7.2 %
2.8 %
2.8 %
3.2 %
-1.2 %
-1.2 %
6.3 %
8.3 %
8.3 %
6.5 %
8.3 %
8.3 %
6.7 %
8.4 %
8.4 %
5.8 %
8.4 %
8.4 %
4.9 %
7.2 %
7.2 %
88.7
88.7
140.6 %
652.9 %
2.4
1.9
156.2
156.2
170.4 %
630.6 %
2.2
1.2
245.7
245.7
188.6 %
728.5 %
2.6
1.0
275.3
275.3
132.7 %
546.2 %
3.6
1.8
532.5
532.5
218.7 %
624.4 %
3.3
1.2
802.4
802.4
317.7 %
701.4 %
3.4
1.1
838.4
838.4
323.3 %
707.9 %
3.5
1.1
Assets
Goodwill and other intangible assets
thereof other intangible assets
thereof Goodwill
Property, plant and equipment
Financial assets
Other long-term assets
Fixed assets
Inventories
Accounts receivable
Liquid assets
Other short-term assets
Current assets
Total Assets
Liabilities and shareholders' equity
Subscribed capital
Capital reserve
Retained earnings
Other equity components
Shareholder's equity
Minority interest
Total equity
Provisions
thereof provisions for pensions and similar obligations
Financial liabilites (total)
thereof short-term financial liabilities
Accounts payable
Other liabilities
Liabilities
Total liabilities and shareholders' equity
Financial Ratios
Efficiency of Capital Employment
Operating Assets Turnover
Capital Employed Turnover
ROA
Return on Capital
ROCE (NOPAT)
ROE
Adj. ROE
Balance sheet quality
Net Debt
Net Financial Debt
Net Gearing
Net Fin. Debt / EBITDA
Book Value / Share
Book value per share ex intangibles
ROCE Development
Net debt
Book Value per Share
in EUR m
in EUR
NOTE
P u bl i s h e d 0 1 . 0 4 . 2 0 1 5
22
Capital Stage
Consolidated cash flow statement
In EUR m
2010
2011
2012
2013
2014
2015e
2016e
Net income
Depreciation of fixed assets
Amortisation of goodwill
Amortisation of intangible assets
Increase/decrease in long-term provisions
Other non-cash income and expenses
Cash Flow
Increase / decrease in inventory
Increase / decrease in accounts receivable
Increase / decrease in accounts payable
Increase / decrease in other working capital positions
Increase / decrease in working capital (total)
Net cash provided by operating activities
Investments in intangible assets
Investments in property, plant and equipment
Payments for acquisitions
Financial investments
Income from asset disposals
Net cash provided by investing activities
Change in financial liabilities
Dividends paid
Purchase of own shares
Capital measures
Other
Net cash provided by financing activities
Change in liquid funds
Effects of exchange-rate changes on cash
Cash and cash equivalent at end of period
1.7
6.0
0.0
0.6
0.0
2.4
10.6
0.0
-0.1
0.0
0.0
-0.1
10.5
0.0
-9.9
0.0
8.4
0.0
-18.3
-0.2
0.0
0.0
5.0
0.0
4.8
-3.0
0.0
22.6
2.5
10.1
0.0
1.4
0.0
16.1
30.1
-1.9
-5.9
2.1
0.0
-5.7
24.3
0.0
-24.0
0.0
11.6
3.0
-32.6
-5.6
0.0
0.0
22.9
0.4
17.7
9.4
0.0
32.0
9.1
10.7
0.0
2.5
0.0
0.0
22.3
-0.5
2.9
-2.4
0.0
-0.1
22.3
-15.9
-53.7
0.0
0.0
0.0
-69.6
92.7
1.9
0.0
30.9
0.0
125.5
78.2
0.0
110.0
14.0
14.8
0.0
3.9
0.0
0.0
32.8
0.4
-1.4
0.0
0.0
-1.0
31.8
-35.0
-161.2
0.0
0.0
0.0
-196.2
50.2
3.9
0.0
15.8
0.0
69.9
-94.5
0.0
-59.5
23.1
38.9
0.0
0.0
0.0
-12.6
49.4
0.1
-4.8
11.2
0.0
6.5
55.9
-32.2
-316.3
0.0
0.0
0.0
-348.5
320.3
6.8
0.0
0.0
1.3
328.3
35.7
0.0
91.4
20.1
52.3
0.0
0.0
0.0
33.2
105.6
-1.3
3.8
-11.8
0.0
-9.2
96.4
-16.7
-333.3
0.0
0.0
0.0
-350.0
300.0
11.1
0.0
0.0
0.0
311.1
57.5
0.0
148.9
17.9
56.0
0.0
0.0
0.0
-22.1
51.8
-0.4
0.0
0.0
0.0
-0.4
51.3
-4.7
-93.8
0.0
0.0
0.0
-98.5
65.6
11.1
0.0
0.0
0.0
76.7
29.6
0.0
178.5
2010
2011
2012
2013
2014
2015e
2016e
0.6
4.7 %
n.a.
4.7 %
36.8 %
0.6 %
9.7 %
0.3
0.8 %
22.1
0.8 %
-33.8 %
2.6 %
5.9 %
-47.3
-104.9 %
33.4
-104.9 %
-551.6 %
2.1 %
5.0 %
-164.4
-288.5 %
48.6
-288.5 %
-1229.9 %
2.4 %
5.5 %
-292.6
-376.0 %
82.6
-376.0 %
-1608.5 %
1.3 %
4.8 %
-253.6
-196.1 %
107.6
-196.1 %
-1260.6 %
0.5 %
4.7 %
-47.1
-32.0 %
111.3
-32.0 %
-263.6 %
0.4 %
4.1 %
76.4 %
n.a.
151.0 %
-46.5 %
4.5 %
n.a.
3
12,000
n.a.
67.8 %
0.0 %
209.9 %
1.6 %
133.4 %
2.8 x
62
312
-158
154.2 %
0.0 %
527.8 %
7.7 %
149.5 %
2.8 x
25
112
27
344.3 %
0.0 %
1047.5 %
7.0 %
213.2 %
3.1 x
29
120
6
447.8 %
2.6 %
895.3 %
1.6 %
70.3 %
2.0 x
44
1,266
-1,060
270.7 %
2.6 %
669.8 %
2.0 %
366.7 %
1.6 x
16
106
130
66.9 %
2.6 %
175.8 %
5.0 %
366.7 %
1.6 x
14
97
147
Financial Ratios
Cash Flow
FCF
Free Cash Flow / Sales
Free Cash Flow Potential
Free Cash Flow / Sales
Free Cash Flow / Net Profit
Interest Received / Avg. Cash
Interest Paid / Avg. Debt
Management of Funds
Investment ratio
Maint. Capex / Sales
Capex / Dep
Avg. Working Capital / Sales
Trade Debtors / Trade Creditors
Inventory Turnover
Receivables collection period (days)
Payables payment period (days)
Cash conversion cycle (Days)
CAPEX and Cash Flow
Free Cash Flow Generation
Working Capital
in EUR m
NOTE
P u bl i s h e d 0 1 . 0 4 . 2 0 1 5
23
Capital Stage
LEGAL DISCLAIMER
This research report was prepared by the Warburg Research GmbH, a subsidiary of the M.M.Warburg & CO (AG & Co.) KGaA and is passed on by the
M.M.Warburg & CO (AG & Co.) KGaA. It contains selected information and does not purport to be complete. The report is based on publicly available
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Co.) KGaA and Warburg Research GmbH are not liable for indirect and/or direct and/or consequential damages. In particular, neither M.M.Warburg &
CO (AG & Co.) KGaA nor Warburg Research GmbH are liable for the statements, plans or other details contained in these analyses concerning the
examined companies, their affiliated companies, strategies, economic situations, market and competitive situations, regulatory environment, etc.
Although due care has been taken in compiling this research report, it cannot be excluded that it is incomplete or contains errors. M.M.Warburg & CO
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DISCLOSURE ACCORDING TO §34B (1) OF THE GERMAN SECURITIES TRADING ACT (WHPG) AND THE ORDINANCE ON
THE ANALYSIS OF FINANCIAL INSTRUMENTS (FINANV)
The valuation underlying the investment recommendation for the company analysed here is based on generally accepted and widely used methods of
fundamental analysis, such as e.g. DCF Model, Free Cash Flow Potential, Peer Group Comparison or Sum of the Parts Model. The result of this
fundamental valuation is modified to take into consideration the analyst’s assessment as regards the expected development of investor sentiment and
its impact on the share price.
Independent of the applied valuation methods, there is the risk that the price target will not be met, for instance because of unforeseen changes in
demand for the company’s products, changes in management, technology, economic development, interest rate development, operating and/or
material costs, competitive pressure, supervisory law, exchange rate, tax rate etc. For investments in foreign markets and instruments there are further
risks, generally based on exchange rate changes or changes in political and social conditions.
This commentary reflects the opinion of the relevant author at the point in time of its compilation. A change in the fundamental factors underlying the
valuation can mean that the valuation is subsequently no longer accurate. Whether, or in what time frame, an update of this commentary follows is not
determined in advance.
In accordance with § 5 (4) of the Ordinance on the Analysis of Financial Instruments (FinAnV) Warburg Research GmbH has implemented additional
internal and organisational arrangements to prevent or to deal with conflicts of interest. Among these are the spatial separation of Warburg Research
GmbH from M.M.Warburg & CO (AG & Co.) KGaA and the creation of areas of confidentiality. This prevents the exchange of information, which could
form the basis of conflicts of interest for Warburg Research in terms of the analysed issuers or their financial instruments.
The analysts of Warburg Research GmbH do not receive a gratuity – directly or indirectly – from the investment banking activities of M.M.Warburg &
CO (AG & Co.) KGaA or of any company within the Warburg Group.
All prices of financial instruments given in this financial analysis are the closing prices on the last stock-market trading day before the publication date
stated, unless another point in time is explicitly stated.
M.M.Warburg & CO (AG & Co.) KGaA and Warburg Research GmbH are subject to the supervision of the Federal Financial Supervisory Authority,
BaFin.
SOURCES
All data and consensus estimates have been obtained from FactSet except where stated otherwise.
NOTE
P u bl i s h e d 0 1 . 0 4 . 2 0 1 5
24
Capital Stage
Reference in accordance with section 34b of the German Securities Trading Act (WpHG) and the Ordiance on the Analysis of
Financial Instruments (FinAnV) regarding possible conflicts of interest with the analysed company:
-1-
The company preparing the analysis or any of its affiliated companies hold over 5% of shares in the analysed company’s equity
capital.
Within the last twelve months, the company preparing the analysis or any of its affiliated companies have participated in the
-2-
management of a consortium for the public offering of financial securities, which are (or the issuer of which) is the subject of
the analysis.
-3-
The company preparing the analysis or any of its affiliated companies manage the securities of the analysed company on the
grounds of an existing contract.
-4-
On the grounds of an existing contract, the company preparing the analysis or any of its affiliated companies, have managed
investment banking services for the analysed company within the last twelve months, out of which a service or the promise of
a has service emerged.
-5-
The company preparing the analysis and the analysed company came to an agreement regarding the preparation of the
financial analysis.
-6-
The company preparing the analysis or any of its affiliated companies regularly trade in shares or derivatives of the analysed
company.
-7-
The company preparing the analysis as well as its affiliated companies and employees have other important interests in
relation to the analysed company, such as, for example, the exercising of mandates at analysed companies.
This report has been made accessible to the company analysed and was modified thereafter.
Company
Disclosure
Link to the historical price targets and rating changes (last 12 months)
Capital Stage
5
http://www.mmwarburg.com/disclaimer/disclaimer_en/DE0006095003.htm
NOTE
P u bl i s h e d 0 1 . 0 4 . 2 0 1 5
25
Capital Stage
INVESTMENT RECOMMENDATION
Investment recommendation: expected direction of the share price development of the financial instrument up to the given price target in the opinion of
the analyst who covers this financial instrument.
-B-
Buy:
The price of the analysed financial instrument is expected to rise over the next 12 months.
-H-
Hold:
The price of the analysed financial instrument is expected to remain mostly flat over the next 12
months.
-S-
Sell:
The price of the analysed financial instrument is expected to fall over the next 12 months.
“-“
Rating suspended:
The available information currently does not permit an evaluation of the company.
WARBURG RESEARCH GMBH – RESEARCH UNIVERSE BY RATING
Rating
Number of stocks
% of Universe
Buy
104
55
Hold
70
37
Sell
10
5
4
2
188
100
Rating suspended
Total
WARBURG RESEARCH GMBH – ANALYSED RESEARCH UNIVERSE BY RATING …
… Looking only at companies for which a disclosure according to § 34b of the Germany Securities Trading Act and the
FinAnV has to be made.
Rating
Number of stocks
% of Universe
Buy
83
59
Hold
48
34
Sell
6
4
Rating suspended
4
3
141
100
Total
PRICE AND RATING HISTORY CAPITAL STAGE AS OF 01.04.2015
The chart has markings if Warburg Research GmbH changed its
rating in the last 12 months. Every marking represents the date
and closing price on the day of the rating change.
NOTE
P u bl i s h e d 0 1 . 0 4 . 2 0 1 5
26
Capital Stage
EQUITIES
Roland Rapelius
+49 40 3282-2673
Head of Equities
rrapelius@mmwarburg.com
RESEARCH
Henner Rüschmeier
+49 40 309537-270
Head of Research
hrueschmeier@warburg-research.com
Lucas Boventer
+49 40 309537-290
Others
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Engineering, Logistics
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Software, IT
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Engineering, Logistics
Retail, Consumer Goods
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fellmann@warburg-research.com
Jörg Philipp Frey
Health Care, Pharma
Malte Räther
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+49 40 309537-246
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Klaus Schilling
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ogueven@mmwarburg.com
+49 40 3282-2664
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kschilling@mmwarburg.com
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United Kingdom
tbeckmann@mmwarburg.com
Matthias Fritsch
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United Kingdom
mfritsch@mmwarburg.com
Marie-Therese Grübner
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France
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Michael Kriszun
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United Kingdom
mkriszun@mmwarburg.com
Marc Niemann
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Germany
mniemann@mmwarburg.com
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United Kingdom
soberoi@mmwarburg.com
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Michael Ilgenstein
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Sales Trading
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Sales Trading
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Jan Walter
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Sales Trading
jwalter@mmwarburg.com
+49 40 3282-2700
Sales Trading
milgenstein@mmwarburg.com
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Carsten Klude
+49 40 3282-2572
Macro Research
cklude@mmwarburg.com
Matthias Thiel
Dr. Christian Jasperneite
Investment Strategy
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cjasperneite@mmwarburg.com
+49 40 3282-2401
Macro Research
mthiel@mmwarburg.com
Our research can be found under:
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research.mmwarburg.com/en/index.html
Thomson
www.thomson.com
MMWA GO
www.factset.com
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www.knowledge.reuters.com
www.capitaliq.com
Bloomberg
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NOTE
Kerstin Muthig
+49 40 3282-2703
Sales Assistance
P u bl i s h e d 0 1 . 0 4 . 2 0 1 5
kmuthig@mmwarburg.com
27

M. M. Warburg research news as of April 1, 2015

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