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See page 21 for full disclosures and analyst certification
DATALOGIC
Strong EBITDA Margin in New 3-Year Plan
DATALOGIC - Key estimates and data
Y/E December Y/E December Y/E December Y/E December 2010A2010A2010A2010A 2011E2011E2011E2011E 2012E2012E2012E2012E 2013E2013E2013E2013E
Revenues EUR M 392.74 420.00 447.00 476.00 EBITDA EUR M 49.76 53.77 76.71 85.79
EBIT EUR M 34.68 30.37 60.69 69.65 Net income EUR M 18.03 14.54 40.01 48.37
Dividend ord. EUR 0.15 0.13 0.15 0.15
Adj. EPS EUR 0.31 0.25 0.68 0.83 EV/EBITDA x 8.47 7.66 4.85 3.88
Adj. P/E x 19.13 23.72 8.62 7.13 A: actual; E: estimates; Source: Company data and Intesa Sanpaolo Research
� New supply chain for Automatic Data Capturing (ADC). A key point in the new three-
year plan will be the development of a new integrated global supply chain for the ADC
segment, hinging upon: 1) locating manufacturing where it is logistically cost-effective, aiming
at having a large part of production based in Vietnam by 2012; 2) simplifying manufacturing
platforms; and 3) improving service levels to customers (e.g. on-time delivery), and proximity
in terms of service and logistics. In management’s view, the new supply chain should require
one-off costs of around EUR 11M (subject to union agreements). On the other hand, it should
produce cost savings from 2012 onwards of around EUR 12.5M.
� Strategy and 3-year plan. Management indicated 4 key drivers in its plan presented at end-
2010, which are: 1) a strategic positioning focused on the ADC and IA markets; 2) an
international expansion in BRIC through strategic alliances and foreign investments in large
mature markets by addressing high-end products/solutions and higher technology businesses;
3) investing 7% of revenue in R&D, with a focus on Vision and Imaging technologies, and
aiming to produce 25% of sales from new products; 4) efficiency and productivity through
the adoption of best-in-class supply chain management and the development of economies of
scale. The key points of the 3-year business plan are: 2013 organic revenues of
EUR 470-480M, on top of this, external growth could bring a further EUR 100M in 2013;
2013 EBITDA of EUR 80-85M (from EUR 49.8M in FY10A), with a margin of 17-18% (from
12.7% in FY10A); and R&D investments of 7% of revenues per year; investment in capex
stable at around 2% of revenues per year; a 2013 ROE target of 23-24%.
� Estimates and valuation. In our 2011E-13E estimates we assumed that: 1) revenue would
increase at a CAGR 2010-13E of around 6.6%; 2) the 2011E EBITDA margin should be
broadly in line with 2010, to incorporate supply chain restructuring one-off costs (12.8%),
then rise to over 17% in 2012E, and to 18% in 2013E; and 3) we expect a strong cash
generation bringing the 2013E net financial position to cash (EUR 12.2M in our estimates),
driven by the abovementioned operating trends, by capex conservatively at 3% of revenue,
and a trade working capital to revenue ratio broadly stable at around 16%. We valued
Datalogic with a DCF model, an 8.1% WACC (risk-free rate of 4.75%, equity risk premium of
5.75%, gearing of approx. 32%), and a conservative 0% terminal value growth. We obtain a
target price of EUR 9.55/share (EUR 7.15/share previously) and rate the company a
BUY. On 2012E, P/E at current prices trades at an approx. 43% discount vs. peers, at our
target price it would still trade at an around 8% discount on 2012E P/E.
� Key risks. The Datalogic reference market is fragmented and characterised by intense
competition. To survive in these markets substantial R&D investments are needed (certain
cost), the launch of successful innovative commercial products is uncertain. The ongoing
delocalisation of some important clients could require entry to the Latin American and Asian
(China and India) geographical markets. The company is exposed to foreign currency
translation impacts: around 50% of revenues are non-EUR denominated.
28 June 2011
BUY
Target Price: EUR 9.5Target Price: EUR 9.5Target Price: EUR 9.5Target Price: EUR 9.55555 (from EUR 7.15(from EUR 7.15(from EUR 7.15(from EUR 7.15))))
IT & Technology Company Update
Intesa Sanpaolo Research Department
Alberto Francese Research Analyst +39 02 8794 9815
Price performance, -1Y 28/06/11
J A S O N D J F M A M J
3.00
3.50
4.00
4.50
5.00
5.50
6.00
6.50
7.00
DATALOGIC
FTSE ITALIA ALL SHARE - PRICE INDEX
Source: Thomson Reuters
Data priced on 27.06.2011 Target price (€) 9.55 Target upside (%) 61.80 Market price (€) 5.90 52-week range (€) 6.5/3.3 Market cap (€ M) 344.83
No. of shares (M) 58.45
Free float (%) 24.6
Major shareholder (%)
Hydra, 66.9
Reuters DAL.MI
Bloomberg DAL IM FTSE It All Shares 20002
Performance % Absolute Rel. to FTSE All Sh
-1M 3.6 -1M 11.0 -3M 0.2 -3M 11.8
-12M 78.2 -12M 80.6
Source: Intesa Sanpaolo Research estimates and Thomson Reuters
Equity Company Note
Corporate Broking Team Alberto Francese Marta Caprini Serena Polini
DATALOGIC 28 June 2011
2 Intesa Sanpaolo Research Department
Contents
The Reference Markets 3
Strategy and Three-Year Plan 6
Change of Estimates 8
Financials 9
Valuation 10
Appendix I: Group Profile 12
Appendix II: Latest Results 18
DATALOGIC 28 June 2011
Intesa Sanpaolo Research Department 3
The Reference Markets
Datalogic’s reference markets are Automatic Data Capture (ADC) and Industrial Automation (IA).
The global trends in these markets are technological (from analogue to digital, penetration of
wireless technology), macroeconomic (globalisation, delocalisation), microeconomic (efficiencies
and cost-reduction in supply chains), and social (safety and security).
The challenge is to provide customers with better and faster information, to help improve real
time decisions, to grant reliable tools to make operations more efficient and less expensive, and
to increase safety, security and compliance.
ADC market
According to VDC Research, Datalogic ADC’s worldwide addressable market should grow by
8% per year in 2009-13, driven by:
� Mobility (outdoor application);
� New applications for government, healthcare and retail sectors;
� More data needed to effectively manage supply chains;
� Increased efficiency and the reduction of scanning errors at the point-of-sale;
� Adoption of core retail automation technologies in emerging country markets.
In particular, the POS retail scanner and handheld scanner segments should grow by around
5%, and mobile computers by around 9%.
ADC market trend 2009-13
0.3 0.4
0.6 0.8
1.9
2.7
0.0
1.0
2.0
3.0
4.0
2009 2013
USD Bn
USD Bn
USD Bn
USD Bn
POS retail scanners Hand Held scanner Mobile computers
2.92.92.92.9
3.93.93.93.9
Source: VDC Research data
Within this market, Datalogic holds an approx. 10% share (company data on 2009 market),
with some specific leaderships:
� POS Retail Scanners: worldwide leader with 31.5% share;
� Handheld Scanners: leader in EMEA with a 30.7% share, 3rd worldwide with a 15.9% share;
� Mobile Computers: ranking 4th in EMEA (7.9% share) and worldwide (4.0% share).
DATALOGIC 28 June 2011
4 Intesa Sanpaolo Research Department
Datalogic - Positioning in ADC market
$100 M $300 M $950 M
>30%
>10%
<2%
4%
$200 M
2009 Revenues
$50 M
Source: Company on VDC Research data
IA market
According to VDC Research, Datalogic’s IA worldwide addressable market should grow in 2009-
13 by 8% per year, with a potential additional market worth USD 3.2Bn.
Key demand drivers are:
� More demand for traceability of processes and goods, also due to delocalisation;
� Supply chain restructuring, to reduce costs and increase productivity and quality control;
� New regulations (e.g. traceability, safety and security);
� Adoption of technological solutions in industrial segments in emerging markets.
IA market trend 2009-13
0.3 0.41.0 1.10.3
0.60.30.40.4
3.2
0.6
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
2009 2013
USD Bn
USD Bn
USD Bn
USD Bn
Stationary barcode scanner Sensor Safety Vision Lasermarking Additional markets
2.32.32.32.3
6.36.36.36.3
Source: VDC Research data
Within this market, Datalogic holds an approx. 4% share (company data on 2009 market), with
a leading position in Industrial Stationary Scanners, ranking 2nd in EMEA with a 29% share, and
3rd worldwide with a 14.6% share.
DATALOGIC 28 June 2011
Intesa Sanpaolo Research Department 5
Datalogic - Positioning in IA market
10%
>12%
5%
<2%
$50 M $100 M $200 M $300 M
2009 Revenues
Source: Company on VDC Research data
DATALOGIC 28 June 2011
6 Intesa Sanpaolo Research Department
Strategy and Three-Year Plan
Management indicated 4 key drivers in its end-2010 plan, and confirmed them in the new plan:
� Strategic positioning:
o Focus on Automatic Data Capture (ADC) and Industrial Automation (IA) markets;
o External growth mainly in IA.
� International expansion:
o Strategic alliances and foreign investments in BRIC countries;
o Increase penetration in large mature markets (Western Europe, North America) by
addressing high-end products/solutions and higher technology businesses.
� Innovation:
o Invest 7% of revenue in R&D;
o Become a value-added solution provider (e.g. software for intelligent products);
o Focus on Vision and Imaging technologies;
o 25% of sales from new products.
� Efficiency and productivity:
o Adoption of best-in-class supply chain management for world class performance;
o Improve operational efficiencies and leverage global footprint;
o Activate economies of scale.
The ADC market
Looking specifically at the ADC market, management plans to focus on the development of a
new integrated global supply chain, hinging upon:
� Locating manufacturing where it is logistically cost-effective, aiming at having a large part of
production based in Vietnam by 2012;
� Simplifying manufacturing platforms;
� Improving service levels to customers (e.g. on-time delivery) and proximity in terms of service
and logistics.
The new integrated supply chain is planned to be a seamless process, starting from the forecast
of sales and actual sales to customers, passing through the planning phase, the manufacturing
phase (scheduling and production) and sourcing (purchasing/procurement), to reach a
warehouse where order processing, shipment planning, transport and delivery are finalised.
The new supply chain will be located to optimise manufacturing, logistic & distribution (L&D)
and sourcing purposes:
� Slovakia (Trnava): Presence of a secondary manufacturing line and of the EMEA L&D centre;
� Ho Chi Minh (Vietnam): Presence of a primary manufacturing line and of the APAC L&D
centre. Sourcing from Asian low-cost countries;
� Eugene (US): Presence of the Americas L&D centre. Sourcing from high technology districts.
In management’s view, the new supply chain should require one-off costs of around EUR 11M
(subject to union agreements).
DATALOGIC 28 June 2011
Intesa Sanpaolo Research Department 7
On the other hand, it should produce cost savings from 2012 onwards of around EUR 12.5M.
Moreover, we think that the shift of a large part of ADC production to Vietnam should
determine a reduction in the tax rate (no more IRAP paid in Italy).
Management’s target is to outperform market growth in 2009-13, reaching a CAGR 2009-13 of
over 11% (vs. 8% of the market) by:
� Fully exploiting the new supply chain, leveraging on a larger critical mass and serving
customers’ needs more effectively and rapidly;
� Focusing of retail products, such as self-shopping solutions and evolution robotics;
� Focusing on vertical markers like healthcare and convenience;
� Increasing penetration in mobile computers by geography (Western Europe and North
America), by industry (retail, T&L), by applications (in-store, warehouse, field force
automation);
� Transforming R&D investments in breakthrough products, in particular in self-checkout
solutions and automatic scanning solutions.
The IA market
The IA reference market in 2013 is expected to be extremely large, over USD 6Bn as explained
above.
Within this market, management aims at developing vision and safety products, miniature/sub-
miniature technology for sensors, and new fibre laser technology.
As in the ADC segment, the adoption of state-of-the-art supply chain management should drive
efficiency gains and leverage on the global footprint.
Working capital management should improve, thanks to the rationalisation of SKUs and
warehouse processes re-engineering.
The new plan guidance
The key points in the 2011-13 business plan are:
� 2013 organic revenues of EUR 470-480M (from EUR 393M in FY10A). On top of this, external
growth could bring a further EUR 100M in 2013;
� 2013 EBITDA of EUR 80-85M (from EUR 49.8M in FY10A), with a margin of 17-18% (from
12.7% in FY10A);
� R&D investments of 7% of revenues per year;
� Stable investment in capex at around 2% of revenues per year;
� A 2013 ROE target of 23-24%.
Compared with the previous plan, for 2012 the new 3-year plan implies an improvement of
revenues of around 5%, mainly thanks to the improvement in supply chain efficiency, and
improved EBITDA and net profit of around 21% and 63% respectively, thanks also to the cost
savings related to ADC production delocalisation.
DATALOGIC 28 June 2011
8 Intesa Sanpaolo Research Department
Change of Estimates
In the table below we report the main changes to our 2011E-13E estimates. In particular:
� 2011E: We confirmed our old target of EUR 420M revenue, while we incorporated the effect
of the supply chain restructuring described above. In particular, we assumed an increase in
operating costs of around EUR 3.9M, which implied an EBITDA w/o non-recurring items
decrease of 6.8% to EUR 53.8M. We also posted EUR 7.5M non-recurring costs, thus implying
an overall reduction in EBIT by 27.5% to EUR 30.4M. Net income should be
EUR 14.5M vs. EUR 22.9M in previous estimates. Following the abovementioned one-off
costs, net debt should increase by 12.8% vs. previous estimates, to EUR 67.1M;
� 2012E-13E: We slightly revised upwards revenue (+1.6% in FY12E and + 3.5% in FY13E vs.
previous estimates) to better align with reference market trends. The delocalisation of
production should bring the EBITDA margin to over 17% in 2012E, and to 18% in 2013E.
Finally, we reduced the tax rate from 35% to 30% to incorporate a large shift in ADC
production to Vietnam (no more IRAP paid in Italy);
� We expect a strong cash generation bringing the 2013E net financial position to cash
(EUR 12.2M in our estimates), driven by the abovementioned operating trends, by a capex
conservatively at 3% of revenue and a working capital to revenue ratio stable vs. FY10A
(around 2%), thus implicitly assuming a trade working capital to revenue ratio broadly stable
at around 16%.
DATALOGIC - Change of estimates 2011E-13E
EUR MEUR MEUR MEUR M 2011E old2011E old2011E old2011E old 2011E new2011E new2011E new2011E new var. (%)var. (%)var. (%)var. (%) 2012E old2012E old2012E old2012E old 2012E new2012E new2012E new2012E new var. (%)var. (%)var. (%)var. (%) 2013E old2013E old2013E old2013E old 2013E new2013E new2013E new2013E new var. (%)var. (%)var. (%)var. (%)
Revenue 420.0 420.0 0.0 440.0 447.0 1.6 460.0 476.0 3.5
EBITDA w/o non-recurring 57.7 53.8 -6.8 61.4 76.7 24.9 65.2 85.8 31.6 EBITDA margin (%) 13.7 12.8 14.0 17.2 14.2 18.0
EBIT 41.8 30.4 -27.3 45.4 60.7 33.7 49.0 69.7 42.1 EBIT margin (%) 9.9 7.2 10.3 13.6 10.7 14.6 Net profit 22.9 14.5 -36.5 27.2 40.0 47.1 30.7 48.4 57.5
Net financial debt 59.5 67.1 12.8 36.0 27.1 -24.9 10.7 -12.2 NM Source: Intesa Sanpaolo Research estimates
DATALOGIC 28 June 2011
Intesa Sanpaolo Research Department 9
Financials
DATALOGIC - P&L
EUR MEUR MEUR MEUR M 2011E2011E2011E2011E 2012E2012E2012E2012E 2013E2013E2013E2013E
Revenue 420.0 447.0 476.0
Cost of sales -228.9 -230.2 -240.4 Gross profit 191.1 216.8 235.6 Other revenue 2.1 2.1 2.1
R&D expenses -31.5 -33.5 -35.7 Distribution -81.9 -82.7 -88.1 G&A -35.7 -35.8 -38.1
Other costs -2.0 -2.0 -2.0 EBITANR 42.1 65.0 73.9 on revenue (%) 10.0 14.5 15.5
Amortization &depreciation of assets -11.6 -11.8 -11.9 EBITDA w/o non recurring 53.8 76.7 85.8 EBITDA margin (%) 12.8 17.2 18.0
Non recurring costs and revenue -7.5 0.0 0.0 Depreciation & Amortisation for acquisitions -4.3 -4.3 -4.3 EBIT 30.4 60.7 69.7
EBIT margin (%) 7.2 13.6 14.6 Forex impact 0.0 0.0 0.0 Subsidiaries earnings 0.0 0.0 0.0
Net financial charges -8.0 -3.5 -0.6 Results from discontinued activities 0.0 0.0 1.0 Profit before tax/minorities 22.4 57.2 69.1
Taxes -7.8 -17.1 -20.7 Minorities 0.0 0.0 0.0 Net profit 14.5 40.0 48.4 Source: Intesa Sanpaolo Research estimates
DATALOGIC - -Balance sheet
EUR MEUR MEUR MEUR M 2011E2011E2011E2011E 2012E2012E2012E2012E 2013E2013E2013E2013E
Fixed assets 216.4 209.3 202.7
Trade working capital 67.2 71.5 76.2 Other working capital -71.4 -76.0 -80.9 Net invested capital 212.2 204.8 197.9
Group shareholders’ equity 145.0 177.8 210.1 Net financial debt 67.1 27.1 -12.2 Total cover 212.2 204.8 197.9 Source: Intesa Sanpaolo Research estimates
DATALOGIC - Cash flow
EUR MEUR MEUR MEUR M 2011E2011E2011E2011E 2012E2012E2012E2012E 2013E2013E2013E2013E
Net fin debt beg of year 76.5 67.1 27.1 Net income 14.5 40.0 48.4
Depreciation 15.9 16.0 16.1 Change in working capital -3.0 0.3 0.3 Operating cash flow 27.4 56.3 64.8
Capex -8.4 -8.9 -9.5 Investments -1.5 0.0 0.0 Disposals 0.0 0.0 0.0
Free cash flow 17.5 47.4 55.3 Dividends -8.2 -7.3 -16.0 Other movements 0.0 0.0 0.0
Cash flow 9.4 40.1 39.3 Net fin debt end of year 67.1 27.1 -12.2 Source: Intesa Sanpaolo Research estimates
DATALOGIC 28 June 2011
10 Intesa Sanpaolo Research Department
Valuation
We value Datalogic with a DCF model, using the following key assumptions in our valuation:
� An 8.1% WACC, incorporating a risk-free rate of 4.75% (4% in previous research) and an
equity risk premium of 5.75%;
� A gearing of around 32%;
� A conservative 0% terminal value growth;
� LT EBIT is calculated starting from 2013E EBITDA, and depreciation equals capex.
We obtain a target price of EUR 9.55/share (EUR 7.15/share previously) and rate the
company a BUY.
DATALOGIC – DCF calculation (2011E-13E)
EUR MEUR MEUR MEUR M 2011E2011E2011E2011E 2012E2012E2012E2012E 2013E2013E2013E2013E LTLTLTLT
EBIT 30.4 60.7 69.7 76.3
Tax -7.8 -17.1 -20.7 -26.5 Depreciation 15.9 16.0 16.1 0.0 NOPAT 38.4 59.6 65.1 49.8
WC -3.0 0.3 0.3 0.0 Capex -8.4 -8.9 -9.5 0.0 FCF 27.0 50.9 55.8 49.8
Discounted FCF 27.0 47.1 47.8 39.4 WACC (%) 8.1 TV growth (%) 0.0
Sum 122 TV 488 EV 610
Debt FY10A 76 Treasury shares 24 Equity 557
Shares 58.4 Share price 9.55 Source: Intesa Sanpaolo Research estimates
In the following table we show Datalogic’s peers’ key financial indicators and P/E and EV/EBITDA
multiples.
DATALOGIC - Key financial indicators
Price (EUR)Price (EUR)Price (EUR)Price (EUR) Mkt cap (EUR M)Mkt cap (EUR M)Mkt cap (EUR M)Mkt cap (EUR M) RevenueRevenueRevenueRevenue CAGR CAGR CAGR CAGR 10101010----12E12E12E12E EBITDA CAGREBITDA CAGREBITDA CAGREBITDA CAGR 10101010----12E12E12E12E Net income CAGRNet income CAGRNet income CAGRNet income CAGR 10101010----12E12E12E12E Debt/EBITDA 2011EDebt/EBITDA 2011EDebt/EBITDA 2011EDebt/EBITDA 2011E
Intermec 7.55 448 16.0 90.0 NM -1.6
Zebra Tech. 28.23 1,543 2.4 12.8 16.1 -0.7 Psion 0.99 140 5.3 45.2 115.3 -1.8
Zetes Industries 17.60 95 4.5 5.8 12.0 -0.3 Datalogic* 5.93 347 6.7 24.2 49.0 1.2 Source: Factset consensus *Intesa Sanpaolo estimates
Looking at peers, 2011E is affected by the one-off costs related to the supply chain
restructuring, but 2012E P/E trades at an around 43% discount. At our target price
(EUR 9.55/share), Datalogic would still trade at an around 8% discount on 2012E P/E.
DCF valuation
Multiples comparison
DATALOGIC 28 June 2011
Intesa Sanpaolo Research Department 11
DATALOGIC - Multiples comparison
EV/EBITDAEV/EBITDAEV/EBITDAEV/EBITDA P/EP/EP/EP/E xxxx Price (EUR)Price (EUR)Price (EUR)Price (EUR) Mkt cap (EUR M)Mkt cap (EUR M)Mkt cap (EUR M)Mkt cap (EUR M) 2011E2011E2011E2011E 2012E2012E2012E2012E 2011E2011E2011E2011E 2012E2012E2012E2012E
Intermec 7.5 448 6.9 4.6 21.4 15.2 Zebra Tech. 28.2 1,543 9.5 8.0 16.7 15.3
Psion 1.0 140 5.2 4.0 34.7 17.8 Zetes Industries 17.6 95 4.4 4.0 9.9 8.9 Median 6.0 4.3 19.0 15.2
Datalogic* 5.9 347 7.7 4.9 23.8 8.7 Premium/(Discount) vs. peers 28.0 12.4 25.2 -43.1 Source: Factset consensus *Intesa Sanpaolo estimates
DATALOGIC 28 June 2011
12 Intesa Sanpaolo Research Department
Appendix I: Group Profile
Datalogic is one of the most important producers of bar code readers, data collection mobile
computers, RFID and vision systems, offering innovative applications in the manufacturing,
transportation & logistics and retail industries.
The company had 2,000 staff members across Europe, the US, Asia and Oceania, with a strong
focus on R&D developed through 9 centres which produced a portfolio of 898 patents.
Datalogic has a direct presence in 30 countries around the world that sell to over 100 countries
and has over 1,000 partners worldwide.
The two reference markets are Automatic Data Capture (ADC) and Industrial Automation,
served through three divisions:
� Datalogic Scanning and Datalogic Mobile for the ADC market (68% of revenue);
� Datalogic Automation for the Industrial Automation market (23% of revenue).
To improve commercial efficiency, the scanning division CEO was recently also appointed CEO
of the mobile division.
Moreover, the BU Development (which includes the companies: Informatics, USA; Evolution
Robotics Retail, USA; and the Self-Shopping Solutions Business Unit, Italy) works transversally
with the abovementioned 3 divisions and develops new business platforms and values new
merger and acquisition opportunities.
In the graph below we show Datalogic’s geographical footprint. It is important to highlight the
concept of serving the local market through a local presence, in order to better perceive and
satisfy clients’ specific needs. The last R&D centre and manufacturing plant was opened in
Vietnam in 2009 to cover the entire Asian region.
DATALOGIC - Geographical footprint
Direct presence in 30 countries worldwide
7 Manufacturing Plants 9 R&D Centers
EUROPE 40%
ITALY 11%
NORTH AMERICA 29%
APAC 13%
ROW 7%
Direct presence in 30 countries worldwide
7 Manufacturing Plants7 Manufacturing Plants 9 R&D Centers9 R&D Centers
EUROPE 40%
ITALY 11%
NORTH AMERICA 29%
APAC 13%
ROW 7%
Source: Company data
DATALOGIC 28 June 2011
Intesa Sanpaolo Research Department 13
Revenue breakdown
Datalogic posted revenues of around EUR 393M in 2010, with the scanning segment taking the
lions share (around 46.2% of revenue), and automation and mobile representing 23% and
22.3%, respectively. Informatics weighed 8.5% of revenue.
Geographically, over 50% of revenues came from Europe (11% in Italy), North America weighed
around 28.8%, Asia Pacific and rest of the world weighed 12.6% and 7.8%, respectively.
DATALOGIC - Revenue by business units DATALOGIC - Revenue by geography
22.3%
23.0%46.2%
8.5%
Mobile Automation Scanning Informatics
11.0%
39.8%28.8%
12.6%
7.8%
Italy Europe North America Asia Pacific RoW
Source: Company data Source: Company data
Innovation and R&D
Innovation and R&D are the keys to gaining and maintaining clients in a very competitive
market. Datalogic’s track record in producing innovative products and making them a
commercial product is shown in the table below.
Datalogic - Product innovation trend Datalogic - Innovative commercial milestones
1974 1st grocery store scanner in the world
1978 1st industrial bar code reader in Europe
1984 1st airport application in Europe (Milano-Linate Airport)
1994 1st 360° scanner/scale
1997 1st industrial high speed bar code reader designed for sorting applications in the material handling sector with electronic
auto-focus and no moving parts
1999 1st RFID post office application in the world
Source: Company data Source: Company data
Datalogic spent EUR 26.3M on R&D in 2010, i.e. 6.7% of revenue (8% and 6.7% in 2009 and
2008, respectively). In particular:
Datalogic mobile: invested about EUR 5.8M in 2010 (6.7% revenues), which resulted in the
launch of some retail, warehouse and field force automation product lines, which will be largely
commercialised in the next few years.
Datalogic automation: invested EUR 6.6M in 2010, after the intense R&D investments carried
out in 2008 and 2009 (EUR 7.5M per year). The main outcomes were:
� Fixed scanners for the industrial market (USS): a new product for entry-level OEM (original
equipment manufacturer) applications, the re-engineering of existing products, aimed at
lowering production costs;
DATALOGIC 28 June 2011
14 Intesa Sanpaolo Research Department
� Radiofrequency readers (RFID): re-engineering of existing products, to rationalise and optimise
offerings across all the main product families, development of the electronic ticketing offering;
� Industrial marking products: focus on the full integration of the production offering for
industrial marking within the Automation division's portfolio, the development of laser
markers based on fibre technology;
� Photoelectric sensors and devices: development of large-format (MAXI) sensors, typically used
in long-distance applications/ extreme conditions, development of tubular products,
development of intelligent vision sensors (DataVS), an innovative project to build an artificial
vision research laboratory.
Datalogic scanning: invested EUR 12.2M ( 6.7% of revenues) in the two sectors in which the
Scanning division operates:
� Hand-held readers (HHR): new products in bluetooth technology and laser technology,
integrated deactivation of anti-shoplifting tags, products for industrial purposes and low-
energy applications, products made from antibacterial materials resistant hospital
disinfectants, the red/blue readers designed for applications requiring the reading of code
stamped with special and/or coloured inks;
� Checkout scanners: new systems able to capture images and read bar codes, even bi-
dimensional, directly on to mobile phones and PDAs.
The R&D department run by Datalogic, has a track record of innovative commercial milestones,
as shown in the following tables.
The acquisition of Evolution Robotics Retail, leader in the field of visual pattern recognition will
be a key technology building block in Datalogic industrial focused businesses.
The clients
Datalogic revenue is highly fragmented between clients, retail segment counts around 40% of
revenue, manufacturing segment around 30% and logistic around 20%.
Innovation and system reliability are key elements to start and maintain long relationship with
clients, such as:
� Identification solutions: at Roissy Charles de Gaulle and Fiumicino airports, respectively,
over 53M and 33M passengers and their baggage are handled each year;
� Scanners and camera systems: over 10 billion letters and packages delivered annually to 31
million Canadians by Canada Post;
� 2D Imagers: over 360k trays per day processed at United States Postal Service;
� Industrial/mobile PDA: several deliveries on behalf of several major third party parcel carriers
at the Isle of Man post office, PDAs to read RFID wristbands in a Milan hospital;
� Mobile computers: handling over 100k spectators at 2010 F1 Singapore Grand Prix;
� RFID products: just-in-time production method supported by RFID in a Mexican automotive
facility producing 400k trucks and cars;
� POS bar code scanners: installed in leading supermarket retailers in the US, with 140 stores
working 24 hours a day, 7 days a week;
� Scanning and security tag deactivation: installed in one of the US’ largest food retailers,
over 2,400 stores in 32 states;
� Mix of industrial handheld readers, scanners and mobile computers: management of
180k cubic meters of world’s largest warehouse of a famous Swedish furniture retailer.
DATALOGIC 28 June 2011
Intesa Sanpaolo Research Department 15
Key retailer clients Key banner clients
Source: Company data Source: Company data
Key postal/courier clients Key healthcare clients
Source: Company data Source: Company data
Key entertainer clients Key auto and tyre manufacturer clients
Source: Company data Source: Company data
DATALOGIC 28 June 2011
16 Intesa Sanpaolo Research Department
Key packaging and automated warehouse clients Key airport clients
������� ������������ ������������ ������������ ������������ ������������ ������������ ������������ ��������� ������ ��������� ������ ��������� ������ ��������� ������ ����������������� ����� ����� ����� ����� ������������������������� ������� �� ����������� ������� �� ����������� ������� �� ����������� ������� �� ������ �������������������������� ������������� ������������� ������������� ������� �������������������������� ��������� ��������� ��������� ��� ������� ��!�������� ��!�������� ��!�������� ��!���� "�� #$% �������� "�� #$% �������� "�� #$% �������� "�� #$% ��������� �����&� ��������� �����&� ��������� �����&� ��������� �����&� �����
�������������������� '���'���'���'��� ��������������������%���� ��!�� ������������ �����%���� ��!�� ������������ �����%���� ��!�� ������������ �����%���� ��!�� ������������ ���������� ���������� ���������� ���������� ���������� ���&�� ���������� ���&�� ���������� ���&�� ���������� ���&�� �������� ������ �������� ������ �������� ������ �������� ������ �����(!�(!�(!�(!� $��!�&��$��!�&��$��!�&��$��!�&�� ���������������������� �� ������� �� ������� �� ������� �� �������������� �������������� �������������� �������������� ������������ ������������ ������������ ������������ ������������ ������������ ������������ ������������ ��������� ������ ��������� ������ ��������� ������ ��������� ������ ����������������� ����� ����� ����� ����� ������������������������� ������� �� ����������� ������� �� ����������� ������� �� ����������� ������� �� ������ �������������������������� ������������� ������������� ������������� ������� �������������������������� ��������� ��������� ��������� ��� ������� ��!�������� ��!�������� ��!�������� ��!���� "�� #$% �������� "�� #$% �������� "�� #$% �������� "�� #$% ��������� �����&� ��������� �����&� ��������� �����&� ��������� �����&� �����
�������������������� '���'���'���'��� ��������������������%���� ��!�� ������������ �����%���� ��!�� ������������ �����%���� ��!�� ������������ �����%���� ��!�� ������������ ���������� ���������� ���������� ���������� ���������� ���&�� ���������� ���&�� ���������� ���&�� ���������� ���&�� �������� ������ �������� ������ �������� ������ �������� ������ �����(!�(!�(!�(!� $��!�&��$��!�&��$��!�&��$��!�&�� ���������������������� �� ������� �� ������� �� ������� �� �������������� �������������� �������������� �������������� ����� Source: Company data Source: Company data
The cost structure
The most relevant cost is sales, which in 2008-10 weighed around 55% of revenue, except in
2009 when the economic worldwide crisis produced a revenue contraction, which management
promptly dealt with, by implementing strong efficiency actions which commenced the
turnaround as soon as 1Q10.
Management regard procurement risks as limited, as components are usually sourced from
several suppliers. In the few cases when components are sourced from a single supplier,
adequate inventories of those components are maintained.
Datalogic - Cost breakdown
EUR MEUR MEUR MEUR M 2008A2008A2008A2008A 2009A2009A2009A2009A 2010A2010A2010A2010A
Cost of sales 211.8 181.6 213.5 R&D expenses 25.3 24.9 26.3
Distribution 77.2 68.1 77.2 G&A 38.8 29.6 37.7
Payroll* 104.0 104.1 114.1
Non-recurring costs and revenue 0.7 7.8 -0.8 Depreciation & Amortisation for acquisitions 3.9 4.0 4.3 Weight on revenue (%)Weight on revenue (%)Weight on revenue (%)Weight on revenue (%)
Cost of sales 55.8 58.2 54.4 R&D expenses 6.7 8.0 6.7 Distribution 20.3 21.8 19.7
G&A 10.2 9.5 9.6 Payroll* 27.4 33.4 29.1
Source: Company data *Payroll costs are allocated into the abovementioned cost items
The second most important cost is distribution, which weighed around 20% in the last 3 years
(slightly higher in 2009). Distribution costs include sales commissions and bonuses, transport
costs, travel and accommodation expenses and marketing expenses.
As previously mentioned, R&D is the key to producing innovative products able to gain and
maintain clients. The company invests around 6.7% of revenue in R&D.
G&A costs weighed between 9.5-10% of revenue.
Payroll costs, which are allocated to the abovementioned cost items, weighed 27.4% in 2008,
33.4% in 2009 (characterised by a revenue contraction) and 29.1% in 2010.
DATALOGIC 28 June 2011
Intesa Sanpaolo Research Department 17
Acquisitions and goodwill
Acquisitions made by Datalogic to support growth have produced EUR 106M of goodwill which
we detail below, together with the key parameters used for the impairment test.
Datalogic - Goodwill breakdown
Year of acquisitionYear of acquisitionYear of acquisitionYear of acquisition GoodwillGoodwillGoodwillGoodwill WACCWACCWACCWACC LT growthLT growthLT growthLT growth Revenue CAGR11Revenue CAGR11Revenue CAGR11Revenue CAGR11----15151515
PSC 2005 70.1
of which: scanning 2005 60.7 10.2 2 5.4 mobile 2005 9.4 10.2 2 5
Informatics 2005 11.8 10.2 2 7 Laservall 2004 5.1 12.9 2 2.8 Infra 2008 1.7 12.9 2 2.8
Idware 1998 3.4 12.9 2 5 Minec 2002 0.3 12.9 2 2.5 Evolution Robotics Retail 2010 13.7 10.2 2 59.3 Source: Company data
The shareholders’ structure
Datalogic’s main shareholder is Hydra, with a 67.3% stake. Hydra is chaired by Romano Volta,
the person who started Datalogic in the 70’s.
Datalogic owns 6.9% of own shares.
Datalogic - Shareholders’ structure
67.3%6.4%
2.0%
6.9%
17.4%
Hydra Tamburi Investment Partner D'Amico Treasury shares Free float
Source: Company data
DATALOGIC 28 June 2011
18 Intesa Sanpaolo Research Department
Appendix II: Latest Results
Datalogic has been growing since 2001 at a 15% CAGR, through organic growth and external
acquisitions.
Historical growth trend
Completed transformation into 3 divisions: Scanning, Mobile, and Automation
Acquisition of Datasensor SpA
Listing on the Milan Stock Exchange
Acquisition of MinecAB (Sweden)
Acquisition of Laservall SpA (AO, I)
Acquisition of Informatics Inc. (TX, U.S.A.)
Acquisition of PSC Inc. (OR, U.S.A.)
REVENUES: ~15% 2001-2010 CAGR
2010 SALES REVENUES (392.7 M Euro) UP BY 26% VS 2009
2001 2002 2003 20052004 2006 2007 2008 2009 2010
Acquisition of Evolution Robotics Retail, USA
Completed transformation into 3 divisions: Scanning, Mobile, and Automation
Acquisition of Datasensor SpA
Listing on the Milan Stock Exchange
Acquisition of MinecAB (Sweden)
Acquisition of Laservall SpA (AO, I)
Acquisition of Informatics Inc. (TX, U.S.A.)
Acquisition of PSC Inc. (OR, U.S.A.)
REVENUES: ~15% 2001-2010 CAGR
2010 SALES REVENUES (392.7 M Euro) UP BY 26% VS 2009
2001 2002 2003 20052004 2006 2007 2008 2009 20102001 2002 2003 20052004 2006 2007 2008 2009 2010
Acquisition of Evolution Robotics Retail, USA
Source: company data
The recent worldwide economic crisis has resulted in a contraction of Datalogic revenue in 2009
(17.9%), promptly recovered in 2010 with a 25.9% growth.
To sterilise results from non-recurring costs and revenue and administrative costs arising from
acquisitions, we have introduced EBITDA and EBIT net of these effects (EBITDANR and EBITANR,
respectively).
Datalogic - Key financial data 2008A-10A
EUR MEUR MEUR MEUR M 2008A2008A2008A2008A 2009A2009A2009A2009A 2222010A010A010A010A
Revenue 379.8 312.0 392.7
yoy gwt (%) -17.9 25.9 EBITDANR w/o non recurring 47.8 19.6 49.8
EBITDANR margin w/o non recurring (%) 12.6 6.3 12.7 EBITANR 35.3 6.2 38.1 EBITANR margin (%) 9.3 2.0 9.7
EBIT 30.7 -5.6 34.7 Net profit 17.8 -12.2 18.0 Capex 0.0 7.3 7.9
Investments 0.0 1.8 23.1 Net debt 106.9 100.5 76.5 Equity 135.8 116.7 140.2
Trade WC on revenue (%) 19.5 14.8 Source: Company data
Adjusted EBITDA margin, except for the negative 2009, was between 12.6% and 12.7% in
2008-10.
Adjusted EBIT margin, except for the negative 2009, was, between 9.3% and 9.7% in 2008-10.
Net income was around EUR 18M in both 2008 and 2010, but a EUR 12.2M loss in 2009.
Capex were broadly stable at EUR 7-8M, a significant investment was made in 2010 for the
acquisition of Evolution Robotics Retail for USD 25.5M, an American company with unique
DATALOGIC 28 June 2011
Intesa Sanpaolo Research Department 19
expertise in visual pattern recognition technology for use in retail loss prevention and
productivity applications, and which posted revenue of USD 5.1M and an EBITDA loss of USD
2.7M in 2009.
Net debt remained at approximately EUR 100M in 2008-09, then declined to EUR 76.5M in
2010, benefiting from a good control of trade working capital, whose ratio to revenue declined
from 19.5% in 2009 to 14.8% in 2010.
1Q11 results
In 1Q11 revenue grew by 17.2% to EUR 105M, driven by the scanning segment (48.5%
weighting on total revenue, 21% growth) and by the automation segment (23.3% weighting
on total revenue, 28.5% growth). Mobile and business development lagged behind in terms of
revenue growth (2.4% and 8.1%, respectively).
Datalogic - 1Q11A key financial data
EUR MEUR MEUR MEUR M 1Q10A1Q10A1Q10A1Q10A 1Q11A1Q11A1Q11A1Q11A % chg% chg% chg% chg
Revenue 89.5 105.0 17.2
Gross operating margin 40.5 49.4 22.1 Gross operating margin/revenue (%) 45.2 47.1
EBITDA 10.6 14.9 40.4 EBITDA margin 11.8 14.2 EBITANR 7.7 12.2 58.7
EBITANR margin 8.6 11.6 EBIT 6.7 11.1 65.2 Net income 4.1 5.7 36.9
Net debt 76.5 71.2 -7.0 Source: Company data
The EBITDA was EUR 14.9M, a 40.4% growth yoy, driven by the good performance of scanning
and automation segments, which posted strong revenue growth as previously explained, and
have margins higher than the group (15.7% and 14.8%).
Datalogic - Revenue and EBITDA margin by segments Datalogic - R&D and trade WC by segments
EUR MEUR MEUR MEUR M 1Q10A1Q10A1Q10A1Q10A 1Q11A1Q11A1Q11A1Q11A %%%% chg chg chg chg
RevenueRevenueRevenueRevenue
Total 89.5 105.0 17.2 Mobile 20.7 21.2 2.4
Automation 19.0 24.4 28.5 Scanning 42.1 50.9 21.0 Business dev. 7.9 8.6 8.1
EBITDA margin (%)EBITDA margin (%)EBITDA margin (%)EBITDA margin (%) Total 11.8 14.2 Mobile 12.6 10.8
Automation 6.8 14.8 Scanning 11.9 15.7 Business dev. 13.9 9.3
%%%% 1Q10A1Q10A1Q10A1Q10A 1Q11A1Q11A1Q11A1Q11A
R&D/revenueR&D/revenueR&D/revenueR&D/revenue
Total 6.8 6.5 Mobile 6.8 6.6
Automation 8.9 7.0 Scanning 6.7 6.1 Business dev. 0.1 5.8
Trade WC/revenueTrade WC/revenueTrade WC/revenueTrade WC/revenue Total 18.4 15.4 Mobile 13.7 11.3
Automation 28.8 20.8 Scanning 16.0 13.0 Business dev. 9.5 11.9
Source: Company data Source: Company data
Looking at R&D expenses, the group ratio to revenue was 6.5%, with slightly higher investments
in automation (7% of revenue) and slightly lower investments in scanning (6.1% of revenue).
In the quarter a good control of trade working capital was achieved, with a ratio to revenue
down from 18.4% in 1Q10 to 15.4% in 1Q11. In particular the control was particularly effective
in the automation segment (an 800bps reduction).
Net debt declined by 7% to EUR 71.2M, thanks to the good operating cash flow (EUR 9.5M)
and the positive effect of the exchange rate (EUR 2.9M) and taxes (EUR 2.5M).
DATALOGIC 28 June 2011
20 Intesa Sanpaolo Research Department
DATALOGIC - Key figures OrdinaryOrdinaryOrdinaryOrdinary RatingRatingRatingRating Sector IT & TechnologyIT & TechnologyIT & TechnologyIT & Technology Mkt price EUR/ShareMkt price EUR/ShareMkt price EUR/ShareMkt price EUR/Share 5.905.905.905.90 BUY REUTERS CODE DAL.MIDAL.MIDAL.MIDAL.MI TargetTargetTargetTarget price EUR/Share price EUR/Share price EUR/Share price EUR/Share 9.559.559.559.55 Values per share (EUR)Values per share (EUR)Values per share (EUR)Values per share (EUR) 2009A2009A2009A2009A 2010A2010A2010A2010A 2011E2011E2011E2011E 2012E2012E2012E2012E 2013E2013E2013E2013E No. ordinary shares (M) 58.45 58.45 58.45 58.45 58.45 No. NC saving/preferred shares (M) - - - - - Total no. of shares (M) 58.45 58.45 58.45 58.45 58.45 Adj. EPS -0.21 0.31 0.25 0.68 0.83 CFPS 0.09 0.58 0.52 0.96 1.10 BVPS 2.00 2.40 2.48 3.04 3.60 Dividend Ord - 0.15 0.13 0.15 0.15 Dividend SAV Nc - - - - - Income statemeIncome statemeIncome statemeIncome statement (EUR M)nt (EUR M)nt (EUR M)nt (EUR M) 2009A 2009A 2009A 2009A 2010A 2010A 2010A 2010A 2011E 2011E 2011E 2011E 2012E 2012E 2012E 2012E 2013E 2013E 2013E 2013E Sales 311.97 392.74 420.00 447.00 476.00 EBITDA 19.63 49.76 53.77 76.71 85.79 EBIT -5.58 34.68 30.37 60.69 69.65 Pre-tax income -12.84 28.18 22.37 57.15 69.09 Net income -12.16 18.03 14.54 40.01 48.37 Adj. net income -12.16 18.03 14.54 40.01 48.37 Cash flow (EUR M)Cash flow (EUR M)Cash flow (EUR M)Cash flow (EUR M) 2009A 2009A 2009A 2009A 2010A 2010A 2010A 2010A 2011E 2011E 2011E 2011E 2012E 2012E 2012E 2012E 2013E 2013E 2013E 2013E Net income before minorities -12.16 18.03 14.54 40.01 48.37 Depreciation and provisions 17.43 15.90 15.90 16.02 16.14 Change in working capital 11.51 20.53 -3.00 0.27 0.29 Operating cash flow 16.78 54.46 27.44 56.30 64.79 Capital expenditure -7.30 -7.86 -8.40 -8.94 -9.52 Other (uses of Funds) -1.10 -22.61 -1.53 - - Free cash flow 8.38 24.00 17.52 47.36 55.27 Dividends and equity changes -1.93 - -8.16 -7.27 -16.00 Net cash flow 6.45 24.00 9.36 40.09 39.27 Balance sheet (EUR M)Balance sheet (EUR M)Balance sheet (EUR M)Balance sheet (EUR M) 2009A 2009A 2009A 2009A 2010A 2010A 2010A 2010A 2011E 2011E 2011E 2011E 2012E 2012E 2012E 2012E 2013E 2013E 2013E 2013E Net capital employed 217.19 216.66 212.16 204.81 197.90 of which associates - - - - - Net debt/-cash 100.50 76.50 67.14 27.05 -12.22 Minorities - - - - - Net equity 116.70 140.16 145.02 177.75 210.12 Market cap 344.83 344.83 344.83 344.83 344.83 Minorities value - - - - - Enterprise value (*) 445.33 421.33 411.97 371.89 332.62 Stock market ratios (x) Stock market ratios (x) Stock market ratios (x) Stock market ratios (x) 2009A 2009A 2009A 2009A 2010A 2010A 2010A 2010A 2011E 2011E 2011E 2011E 2012 2012 2012 2012E E E E 2013E 2013E 2013E 2013E Adj. P/E -28.35 19.13 23.72 8.62 7.13 P/CEPS 65.45 10.16 11.33 6.15 5.35 P/BVPS 2.96 2.46 2.38 1.94 1.64 Dividend yield (% ord) - 2.54 2.14 2.54 2.54 Dividend yield (% sav) EV/sales 1.43 1.07 0.98 0.83 0.70 EV/EBITDA 22.68 8.47 7.66 4.85 3.88 EV/EBIT -79.88 12.15 13.57 6.13 4.78 EV/CE 2.05 1.94 1.94 1.82 1.68 D/EBITDA 5.12 1.54 1.25 0.35 -0.14 D/EBIT -18.03 2.21 2.21 0.45 -0.18 Profitability & financial ratios (%)Profitability & financial ratios (%)Profitability & financial ratios (%)Profitability & financial ratios (%) 2009A 2009A 2009A 2009A 2010A 2010A 2010A 2010A 2011E 2011E 2011E 2011E 2012E 2012E 2012E 2012E 2013E 2013E 2013E 2013E EBITDA margin 6.29 12.67 12.80 17.16 18.02 EBIT margin -1.79 8.83 7.23 13.58 14.63 Tax rate 5.24 36.03 35.00 30.00 30.00 Net income margin -3.90 4.59 3.46 8.95 10.16 ROE -10.42 12.86 10.03 22.51 23.02 Debt/equity ratio 0.86 0.55 0.46 0.15 -0.06 Growth (%)Growth (%)Growth (%)Growth (%) 2010A 2010A 2010A 2010A 2011E 2011E 2011E 2011E 2012E 2012E 2012E 2012E 2013E 2013E 2013E 2013E Sales 25.89 6.94 6.43 6.49 EBITDA 153.43 8.07 42.64 11.84 EBIT 722.10 -12.43 99.82 14.77 Pre-tax income 319.54 -20.62 155.49 20.89 Net income 248.21 -19.34 175.14 20.89 Adj. net income 248.21 -19.34 175.14 20.89 (*) EV = Mkt cap+ Net Debt + Minorities Value - Associates A: actual; E: estimates; Source: Company data and Intesa Sanpaolo Research
DATALOGIC 28 June 2011
Intesa Sanpaolo Research Department 21
Disclaimer
Analyst certification
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(1) The views expressed on companies mentioned herein accurately reflect independent, fair and balanced personal views; (2) No direct or indirect
compensation has been or will be received in exchange for any views expressed.
Specific disclosures
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3. The analyst named in the document is a member of AIAF.
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DATALOGIC 28 June 2011
22 Intesa Sanpaolo Research Department
Valuation methodology (long-term horizon: 12M)
The Intesa Sanpaolo SpA Equity Research Department values the companies for which it assigns recommendations as follows:
We obtain a fair value using a number of valuation methodologies including: discounted cash flow method (DCF), dividend discount model (DDM), embedded value methodology, return on allocated capital, break-up value, asset-based valuation method, sum-of-the-parts, and multiples-based models (for example PE, P/BV, PCF, EV/Sales, EV/EBITDA, EV/EBIT, etc.). The financial analysts use the above valuation methods
alternatively and/or jointly at their discretion. The assigned target price may differ from the fair value, as it also takes into account overall market/sector conditions, corporate/market events, and corporate specifics (ie, holding discounts) reasonably considered to be possible drivers of the company’s share price performance. These factors may also be assessed using the methodologies indicated above.
Equity rating key: (long-term horizon: 12M)
In its recommendations, Intesa Sanpaolo SpA uses an “absolute” rating system, which is not related to market performance and whose key is reported below:
Equity rating key (long-term horizon: 12M)
LongLongLongLong----termtermtermterm rating rating rating rating DefinitionDefinitionDefinitionDefinition
BUY If the target price is 20% higher than the market price
ADD If the target price is 10%-20% higher than the market price HOLD If the target price is 10% below or 10% above the market price REDUCE If the target price is 10%-20% lower than the market price
SELL If the target price is 20% lower than the market price RATING SUSPENDED The investment rating and target price for this stock have been suspended as there is not a sufficient
fundamental basis for determining an investment rating or target. The previous investment rating and
target price, if any, are no longer in effect for this stock. NO RATING The company is or may be covered by the Research Department but no rating or target price is assigned
either voluntarily or to comply with applicable regulations and/or firm policies in certain circumstances,
including when Intesa Sanpaolo is acting in an advisory capacity in a merger or strategic transaction involving the company.
TARGET PRICE The market price that the analyst believes the share may reach within a one-year time horizon
MARKET PRICE Closing price on the day before the issue date of the report, as indicated on the first page, except where otherwise indicated
Historical recommendations and target price trends (long-term horizon: 12M)
Target price and market price trend (-1Y) Historical recommendations and target price trend (-1Y)
2
4
6
8
10
Jun-10 Oct-10 Feb-11 Jun-11
I:DAL(P) Target Price
DateDateDateDate RatingRatingRatingRating TPTPTPTP Mkt PriceMkt PriceMkt PriceMkt Price
25-May-11 BUY 7.15 5.60
Equity rating allocations (long-term horizon: 12M)
Intesa Sanpaolo Research Rating Distribution (at May 2011)
Number of companies Number of companies Number of companies Number of companies subject to recommendations: subject to recommendations: subject to recommendations: subject to recommendations: 94 94 94 94 (**)(**)(**)(**) BUYBUYBUYBUY ADDADDADDADD HOLDHOLDHOLDHOLD REDUCEREDUCEREDUCEREDUCE SELLSELLSELLSELL
Total Equity Research Coverage % 29 38 30 2 1
of which Intesa Sanpaolo’s Clients % (*) 78 56 50 100 - (*) Companies on behalf of whom Intesa Sanpaolo and the other companies of the Intesa Sanpaolo Group have provided corporate and Investment banking services in the last 12 months; percentage of clients in each rating category. (**) The total number of companies covered is 101
Valuation methodology (short-term horizon: 3M)
Our short-term investment ideas are based on ongoing special market situations, including among others: spreads between share
categories; holding companies vs. subsidiaries; stub; control chain reshuffling; stressed capital situations; potential extraordinary deals (including capital increase/delisting/extraordinary dividends); and preys and predators. Investment ideas are presented either in relative terms (e.g. spread ordinary vs. savings; holding vs. subsidiaries) or in absolute terms (e.g. preys).
The companies to which we assign short-term ratings are under regular coverage by our research analysts and, as such, are subject to fundamental analysis and long-term recommendations. The main differences attain to the time horizon considered (monthly vs. yearly) and
DATALOGIC 28 June 2011
Intesa Sanpaolo Research Department 23
definitions (short-term ‘long/short’ vs. long-term ‘buy/sell’). Note that the short-term relative recommendations of these investment ideas may differ from our long-term recommendations. We monitor the monthly performance of our short-term investment ideas and follow them until their closure.
Equity rating key (short-term horizon: 3M)
Equity rating key (short-term horizon: 3M)
ShortShortShortShort----term rating term rating term rating term rating DefinitionDefinitionDefinitionDefinition
LONG Stock price expected to rise or outperform within three months from the time the rating was assigned due to a specific catalyst or event
SHORT Stock price expected to fall or underperform within three months from the time the rating was assigned due to a specific catalyst or event
Company specific disclosures
Banca IMI discloses interests and conflicts of interest, as defined by: Articles 69-quater and 69-quinquies, of Consob Resolution No.11971 of 14.05.1999, as subsequently amended and supplemented; the NYSE’s Rule 472 and the NASD’s Rule 2711; the FSA Policy Statement 04/06
“Conflicts of Interest in Investment Research – March 2004 and the Policy Statement 05/03 “Implementation of Market Abuse Directive”, March 2005. The Intesa Sanpaolo Group maintains procedures and organisational mechanisms (Information barriers) to professionally manage conflicts of interest in relation to investment research. We provide the following information on Intesa Sanpaolo Group’s conflicts of interest:
1 The Intesa Sanpaolo Group has a conflict of interest inasmuch as it plans to solicit investment banking business or intends to seek
compensation from the Company in the next three months.
2 The Intesa Sanpaolo Group has an equity stake above 1% in DATALOGIC S.p.A.
DATALOGIC 28 June 2011
24 Intesa Sanpaolo Research Department
Intesa Sanpaolo Research Department – Head of Research Gregorio De Felice Head of Equity & Credit ResearchHead of Equity & Credit ResearchHead of Equity & Credit ResearchHead of Equity & Credit Research
Giampaolo Trasi +39 02 8794 9803 [email protected] Equity ResearchEquity ResearchEquity ResearchEquity Research
Monica Bosio +39 02 8794 9809 [email protected] Luca Bacoccoli +39 02 8794 9810 [email protected] Laura Carmignani +39 02 8794 9813 [email protected] Sergio Ciaramella +39 02 8794 9814 [email protected] Manuela Meroni +39 02 8794 9817 [email protected] Gian Luca Pacini +39 02 8794 9818 [email protected] Bruno Permutti +39 02 8794 9819 [email protected] Fabio M. Picardi +39 02 8794 9820 [email protected] Roberto Ranieri +39 02 8794 9822 [email protected] Corporate BrokingCorporate BrokingCorporate BrokingCorporate Broking ResearchResearchResearchResearch
Alberto Francese +39 02 8794 9815 [email protected] Marta Caprini +39 02 8794 9812 [email protected] Serena Polini +39 02 8794 9821 [email protected] Research ProductionResearch ProductionResearch ProductionResearch Production
Anna Whatley +39 02 8794 9824 [email protected] Cinzia Bovina +39 02 8794 9811 [email protected] Bruce Marshall +39 02 8794 9816 [email protected] Annita Ricci +39 02 8794 9823 [email protected] Banca IMI Institutional SalesInstitutional SalesInstitutional SalesInstitutional Sales
Nicola Maccario +39 02 7261 5517 [email protected] Carlo Cavalieri +39 02 7261 2722 [email protected] Francesca Guadagni +39 02 7261 5817 [email protected] Robert Meier +39 02 7261 2158 [email protected] Alberto Sartori +39 02 7261 5880 [email protected] Daniela Stucchi +39 02 7261 5708 [email protected] Mark Wilson +39 02 7261 2758 [email protected] Corporate BrokingCorporate BrokingCorporate BrokingCorporate Broking
Carlo Castellari +39 02 7261 2122 [email protected]
Virginia Mortari +39 02 7261 5853 [email protected] Laura Spinella +39 02 7261 5782 [email protected] US Institutional SalesUS Institutional SalesUS Institutional SalesUS Institutional Sales
Stephane Ventilato +1 212 326 1233 [email protected] Jack Del Duca +1 212 326 1234 [email protected] Barbara Leonardi +1 212 326 1232 [email protected] Gregory Halvorsen +1 212 326 1237 [email protected] Sales TradingSales TradingSales TradingSales Trading
Roberto Gussoni +39 02 7261 5929 [email protected] Claudio Manes +39 02 7261 5542 [email protected] Lorenzo Pennati +39 02 7261 5647 [email protected] Equity Derivatives Institutional SalesEquity Derivatives Institutional SalesEquity Derivatives Institutional SalesEquity Derivatives Institutional Sales
Andrea Martini +39 02 7261 5977 [email protected] Emanuele Manini +39 02 7261 5936 [email protected] Massimiliano Murgino +39 02 7261 2247 [email protected] Market Hub Market Hub Market Hub Market Hub –––– Brokerage & Execution Brokerage & Execution Brokerage & Execution Brokerage & Execution
Italian Equities - Sergio Francolini +39 02 7261 5859 [email protected] Foreign Equities - Francesco Riccardi +39 02 7261 2901 [email protected] Market Hub Market Hub Market Hub Market Hub –––– Exchange Traded Derivatives Exchange Traded Derivatives Exchange Traded Derivatives Exchange Traded Derivatives
Biagio Merola - Milan +39 02 7261 2420 [email protected] Market Hub Market Hub Market Hub Market Hub –––– @ sales @ sales @ sales @ sales
Giovanni Spotti +39 02 7261 2339 [email protected]
Banca IMI SpA
Largo Mattioli, 3 20121 Milan, Italy Tel: +39 02 7261 1
Banca IMI Securities Corp.
1 William Street 10004 New York, NY, USA Tel: (1) 212 326 1230
Banca IMI London Branch
90 Queen Street London EC4N 1SA, UK Tel +44 207 894 2600