Embed Size (px)
Citation preview
Softing (CDAX, Technology)
CO M M E N T Publ ished 30 .03 .2015 1
A n a l y s t
Andreas Wolf [email protected]
+49 40 309537-140
Value Indicators: EUR Share data: Description:
DCF: 18.30
FCF-Value Potential 17e: 18.70
Bloomberg: SYT GR
Reuters: SYTG
ISIN: DE0005178008
Software solutions (e.g. error diagnosis) for industrial plants and automotive electronics
Market Snapshot: EUR m Shareholders: Risk Profile (WRe): 2015e
Buy
EUR 18.00
Price EUR 12.68
Upside 42.0 %
Market cap: 88.2
No. of shares (m): 7.0
EV: 97.3
Freefloat MC: 65.3
Ø Trad. Vol. (30d; EUR): 160.86 th
Freefloat 74.0 %
Trier Asset Mgmt 26.0 %
Beta: 1.3
Price / Book: 2.2 x
Equity Ratio: 49 %
Net Fin. Debt / EBITDA: 0.5 x
Net Debt / EBITDA: 0.7 x
Getting ready for higher organic top-line growth
Stated Figures Q4/2014: Comment on Figures:
in EUR m Q4/14 Q4/13 yoy 2014 2013 yoy
Sales 21.3 14.3 49.5% 74.5 52.6 41.8%
EBITDA 2.2 2.7 -15.8% 10.1 9.4 7.8%
margin 10.5% 18.6% 13.5% 17.8%
EBIT 1.3 2.0 -34.4% 5.9 6.2 -5.1%
margin 6.1% 14.0% 7.9% 11.8%
EPS in EUR 0.12 0.23 -47.8% 0.58 0.69 -15.9%
Industrial Automation 15.4 7.1 116.4% 46.9 26.5 77.1%
EBIT Industrial Automation 0.2 0.4 -43.2% 1.7 2.3 -26.7%
margin 1.4% 5.2% 3.6% 8.6%
Automotive Electronics 5.9 7.1 -17.2% 27.6 26.1 6.0%
EBIT Automotive Electronics 1.1 1.6 -32.4% 4.2 3.9 7.3%
margin 18.6% 22.8% 15.3% 15.1%
� The recent acquisitions OLDI and Psiber contributed to Softing’s soaring top line.
� Growth in the Automotive Electronics segment was fully organic. Orders for maturing products had a positive impact on top line development in this segment during 2014. Q4, however, had to face high comparables.
� M&A-related costs negatively impacted the bottom line to the tune of EUR 1m. These are reflected in the Industrial Automation segment.
� PPA-related amortisations negatively impacted the bottom line to the tune of EUR 0.8m. These are also reflected in the Industrial Automation segment.
� Softing’s annual report has confirmed preliminary figures. From an earnings perspective, 2014 was clearly a transitional year given M&A-
related costs, which were mainly related to OLDI, and significantly increased R&D efforts. The latter were raised to nearly EUR 15m (from
EUR 11.5m in 2013) while own work capitalised remained approximately unchanged at EUR 4m. This indicates that the company is preparing
new product launches.
� 2015 sales in the Industrial Automation segment should benefit from the market launch of new products (e.g. new gateways, new diagnosis
tools for Industrial Ethernet). In the medium term, Softing will focus on growth in North America. The US is expected to contribute approx.
EUR 30m to Softing’s top line in 2015. New products (e.g. the introduction of new generation VCIs) in the Automotive Electronics segment as
well as increasing presence in the Emerging Markets should also have a positive impact on top-line growth.
� The momentum from new products should materialise during the second half of 2015 and accelerate growth in the upcoming years. Given
inorganic top line contributions, our 2015 top-line estimates are a low threshold. 2017 estimates are being introduced. For 2015, management
expects top and bottom-line growth; a detailed guidance will be published in the framework of the Q1 figures release.
Given the upside of > 40% to our PT, the Buy rating is being reiterated.
Rel. Performance vs CDAX:
1 month: -12.5 %
6 months: -38.7 %
Year to date: -34.5 %
Trailing 12 months: -43.4 %
Company events: 06.05.15 AGM
15.05.15 Q1
14.08.15 Q2
13.11.15 Q3
FY End: 31.12. in EUR m
CAGR (14-17e) 2011 2012 2013 2014 2015e 2016e 2017e
Sales 10.3 % 41.1 49.4 52.6 74.5 81.0 91.0 100.0
Change Sales yoy 29.9 % 20.0 % 6.4 % 41.8 % 8.7 % 12.3 % 9.9 %
Gross profit margin 75.6 % 76.3 % 78.7 % 68.5 % 71.0 % 71.2 % 71.4 %
EBITDA 17.8 % 7.4 8.3 9.4 10.1 12.8 14.8 16.5
Margin 17.9 % 16.7 % 17.8 % 13.5 % 15.8 % 16.3 % 16.5 %
EBIT 24.3 % 4.2 4.9 6.2 5.9 7.7 9.6 11.3
Margin 10.3 % 10.0 % 11.8 % 7.9 % 9.5 % 10.6 % 11.3 %
EBIT adj. 23.3 % 4.2 4.9 6.2 6.2 8.0 9.9 11.6
Net income 27.6 % 3.1 3.5 4.3 3.8 5.2 6.7 7.9
EPS 25.3 % 0.58 0.59 0.69 0.58 0.75 0.96 1.14
DPS 17.0 % 0.27 0.27 0.35 0.25 0.30 0.35 0.40
Dividend Yield 6.9 % 4.6 % 3.4 % 1.6 % 2.4 % 2.8 % 3.2 %
FCFPS 0.60 0.53 0.14 0.10 1.56 0.73 0.92
EV / Sales 0.4 x 0.5 x 1.0 x 1.6 x 1.2 x 1.0 x 0.9 x
EV / EBITDA 2.0 x 2.9 x 5.7 x 11.8 x 7.6 x 6.4 x 5.5 x
EV / EBIT 3.5 x 4.9 x 8.7 x 20.2 x 12.6 x 9.8 x 8.0 x
EV / EBIT adj. 3.5 x 4.9 x 8.7 x 19.2 x 12.1 x 9.5 x 7.8 x
P / E 6.7 x 9.9 x 15.0 x 26.3 x 16.9 x 13.2 x 11.1 x
FCF Yield Potential 25.6 % 13.8 % 6.8 % 3.4 % 7.2 % 8.9 % 10.4 %
Net Debt -5.8 -10.4 -11.2 18.3 9.1 6.1 2.1
ROE 19.1 % 17.8 % 17.9 % 12.0 % 13.6 % 16.0 % 17.1 %
ROCE (NOPAT) 26.5 % 30.0 % 32.4 % 11.4 % 10.4 % 13.7 % 15.7 % Guidance: 2014: sales: > EUR 70m; EBIT: EUR 5.5-6.5m
Softing
CO M M E N T Publ ished 30 .03 .2015 2
Sales development in EUR m
Source: Company
Sales by regions 2014; in %
Source: Company
EBIT development in EUR m
Source: Company
Company Background
� Softing has the necessary expertise on information exchange between various devices, sensors, plant and software solutions in
automated processes. The business activity comprises two segments.
� Industrial Automation: hardware and software solutions for the exchange of information in all kinds of production including montage
lines, chemical plants, oil and gas extraction or refineries.
� Automotive Electronics: The solutions allow engineers and workshop mechanics to test automotive electronics in the development
phase, production or repair, and to recognise errors through data evaluation.
� The solutions in the automotive segment are not for application within the vehicles and therefore do not pose a product re-call risk for
the company.
� Softing focuses on established standards and reaches a coverage of ca. 70% of the market.
Competitive Quality
� World market leader in tools to recognise errors in production plant (so called field bus diagnostics)
� European market leader in the networking of various production plant elements as well as in business-related software (so-called
OPC products).
� World market leader for components for the exchange of information in gas and oil plants. Some >50% of all devices registered
worldwide that are used in these plants include components from Softing.
� Through participation in international committees that set standards for the exchange of information, a short time-to-market is
achieved.
� The high complexity of the business activity of Softing is the single most important barrier to market entry for potential competitors.
Order entries in EUR m
Source: Company
Sales by segments 2014; in %
Source: Company
Order book in EUR m
Source: Company
Softing
CO M M E N T Publ ished 30 .03 .2015 3
DCF model
Detailed forecast period Transitional period Term. Value
Figures in EUR m 2015e 2016e 2017e 2018e 2019e 2020e 2021e 2022e 2023e 2024e 2025e 2026e 2027e
Sales 81.0 91.0 100.0 110.0 119.4 128.1 136.1 143.4 150.0 155.8 161.0 165.6 168.9
Sales change 8.7 % 12.3 % 9.9 % 10.0 % 8.6 % 7.3 % 6.3 % 5.3 % 4.6 % 3.9 % 3.3 % 2.9 % 2.0 % 2.0 %
EBIT 7.7 9.6 11.3 10.5 11.3 12.2 12.9 13.6 14.2 14.8 15.3 15.7 16.0
EBIT-margin 9.5 % 10.6 % 11.3 % 9.5 % 9.5 % 9.5 % 9.5 % 9.5 % 9.5 % 9.5 % 9.5 % 9.5 % 9.5 %
Tax rate (EBT) 30.0 % 30.0 % 30.0 % 30.0 % 30.0 % 30.0 % 30.0 % 30.0 % 30.0 % 30.0 % 30.0 % 30.0 % 30.0 %
NOPAT 5.4 6.7 7.9 7.3 7.9 8.5 9.1 9.5 10.0 10.4 10.7 11.0 11.2
Depreciation 5.1 5.2 5.2 7.2 7.8 8.3 8.8 9.3 9.7 10.1 10.5 10.8 11.0
in % of Sales 6.3 % 5.7 % 5.2 % 6.5 % 6.5 % 6.5 % 6.5 % 6.5 % 6.5 % 6.5 % 6.5 % 6.5 % 6.5 %
Changes in provisions 0.0 0.0 0.0 0.8 0.1 0.1 0.0 0.0 0.0 0.0 -0.1 -0.1 -0.1
Change in Liquidity from
- Working Capital -5.4 2.0 1.8 2.1 1.6 1.5 1.4 1.3 1.1 1.0 0.9 0.8 0.6
- Capex 4.8 4.8 4.9 7.4 8.0 8.6 9.1 9.6 10.0 10.4 10.8 11.1 11.3
Capex in % of Sales 5.9 % 5.3 % 4.9 % 6.7 % 6.7 % 6.7 % 6.7 % 6.7 % 6.7 % 6.7 % 6.7 % 6.7 % 6.7 %
Other 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
Free Cash Flow (WACC Model)
11.1 5.1 6.4 5.9 6.1 6.8 7.4 8.0 8.5 9.0 9.4 9.8 10.2 11
PV of FCF 11.1 4.8 5.6 4.8 4.7 4.8 4.9 4.9 4.9 4.8 4.7 4.6 4.5 90 share of PVs 13.53 % 29.95 % 56.52 %
Model parameter Valuation (m)
Derivation of WACC: Derivation of Beta: Present values 2027e 69
Terminal Value 90
Debt ratio 20.00 % Financial Strength 1.25 Financial liabilities 38
Cost of debt (after tax) 2.2 % Liquidity (share) 1.25 Pension liabilities 2
Market return 7.00 % Cyclicality 1.25 Hybrid capital 0
Risk free rate 1.50 % Transparency 1.25 Minority interest 0
Others 1.25 Market val. of investments 0
Liquidity 9 No. of shares (m) 7.0
WACC 7.15 % Beta 1.25 Equity Value 127 Value per share (EUR) 18.28
Sensitivity Value per Share (EUR)
Terminal Growth Delta EBIT-margin
Beta WACC 1.25 % 1.50 % 1.75 % 2.00 % 2.25 % 2.50 % 2.75 % Beta WACC -1.5 pp -1.0 pp -0.5 pp +0.0 pp +0.5 pp +1.0 pp +1.5 pp
1.48 8.1 % 13.52 13.84 14.19 14.57 14.98 15.42 15.91 1.48 8.1 % 11.34 12.41 13.49 14.57 15.65 16.72 17.80
1.36 7.6 % 14.95 15.35 15.79 16.26 16.77 17.34 17.96 1.36 7.6 % 12.74 13.91 15.08 16.26 17.43 18.61 19.78
1.31 7.4 % 15.76 16.21 16.69 17.22 17.80 18.44 19.15 1.31 7.4 % 13.53 14.76 15.99 17.22 18.45 19.68 20.91
1.25 7.1 % 16.64 17.14 17.68 18.28 18.94 19.67 20.48 1.25 7.1 % 14.41 15.70 16.99 18.28 19.57 20.86 22.15
1.19 6.9 % 17.60 18.16 18.77 19.45 20.20 21.03 21.97 1.19 6.9 % 15.38 16.73 18.09 19.45 20.81 22.17 23.52
1.14 6.6 % 18.65 19.28 19.98 20.75 21.61 22.57 23.65 1.14 6.6 % 16.45 17.88 19.31 20.75 22.18 23.61 25.04
1.02 6.1 % 21.07 21.89 22.80 23.82 24.96 26.27 27.77 1.02 6.1 % 18.99 20.60 22.21 23.82 25.42 27.03 28.64
� The cyclical components of the business activity and the low liquidity of the share raise the capital costs.
Softing
CO M M E N T Publ ished 30 .03 .2015 4
Free Cash Flow Value Potential Warburg Research's valuation tool "FCF Value Potential" reflects the ability of the company to generate sustainable free cash flows. It is based on the "FCF potential" - a FCF "ex growth" figure - which assumes unchanged working capital and pure maintenance capex. A value indication is derived via the perpetuity of a given year’s “FCF potential” with consideration of the weighted costs of capital. The fluctuating value indications over time add a timing element to the DCF model (our preferred valuation tool). in EUR m 2011 2012 2013 2014 2015e 2016e 2017e
Net Income before minorities 3.1 3.5 4.3 3.8 5.2 6.7 7.9
+ Depreciation + Amortisation 3.1 3.3 3.2 4.2 5.1 5.2 5.2
- Net Interest Income 0.0 0.0 -0.1 -0.3 -0.3 -0.1 0.0
- Maintenance Capex 2.3 3.5 3.9 4.2 3.6 3.6 3.7
+ Other 0.0 0.0 0.0 0.0 0.0 0.0 0.0
= Free Cash Flow Potential 3.9 3.3 3.7 4.1 7.0 8.4 9.4 Free Cash Flow Yield Potential 25.6 % 13.8 % 6.8 % 3.4 % 7.2 % 8.9 % 10.4 %
WACC 7.15 % 7.15 % 7.15 % 7.15 % 7.15 % 7.15 % 7.15 %
= Enterprise Value (EV) 15.0 24.2 53.7 119.1 97.3 94.3 90.4 = Fair Enterprise Value 53.9 46.9 51.1 56.8 97.9 117.2 132.0
- Net Debt (Cash) 16.1 16.1 16.1 16.1 6.9 4.0 0.0
- Pension Liabilities 2.2 2.2 2.2 2.2 2.2 2.2 2.2
- Other 0.0 0.0 0.0 0.0 0.0 0.0 0.0
- Market value of minorities 0.0 0.0 0.0 0.0 0.0 0.0 0.0
+ Market value of investments 0.0 0.0 0.0 0.0 0.0 0.0 0.0
= Fair Market Capitalisation 35.7 28.6 32.9 38.5 88.7 111.1 129.9
No. of shares (total) (m) 7.0 7.0 7.0 7.0 7.0 7.0 7.0
= Fair value per share (EUR) 5.12 4.11 4.72 5.54 12.75 15.96 18.66
premium (-) / discount (+) in % 0.6 % 26.0 % 47.2 %
Sensitivity Fair value per Share (EUR)
10.15 % 2.83 2.12 2.55 3.12 8.60 10.99 13.05
9.15 % 3.43 2.64 3.12 3.75 9.68 12.28 14.51
8.15 % 4.17 3.28 3.82 4.53 11.03 13.90 16.33
WACC 7.15 % 5.12 4.11 4.72 5.54 12.75 15.96 18.66 6.15 % 6.38 5.21 5.92 6.86 15.04 18.70 21.74
5.15 % 8.13 6.73 7.58 8.71 18.22 22.51 26.03
4.15 % 10.73 8.98 10.04 11.44 22.92 28.15 32.38
� Capitalised own work is a significant element of the capex.
� The earnings quality has clearly improved over the last years.
� Increasing share of software revenues should have a positive effect on the FCF Value.
Softing
CO M M E N T Publ ished 30 .03 .2015 5
Valuation
2011 2012 2013 2014 2015e 2016e 2017e Price / Book 1.2 x 1.6 x 2.5 x 2.7 x 2.2 x 2.0 x 1.8 x
Book value per share ex intangibles 1.96 2.43 2.62 -0.60 -0.03 0.66 1.50
EV / Sales 0.4 x 0.5 x 1.0 x 1.6 x 1.2 x 1.0 x 0.9 x
EV / EBITDA 2.0 x 2.9 x 5.7 x 11.8 x 7.6 x 6.4 x 5.5 x
EV / EBIT 3.5 x 4.9 x 8.7 x 20.2 x 12.6 x 9.8 x 8.0 x
EV / EBIT adj.* 3.5 x 4.9 x 8.7 x 19.2 x 12.1 x 9.5 x 7.8 x
P / FCF 6.5 x 11.0 x 72.4 x 149.6 x 8.1 x 17.4 x 13.8 x
P / E 6.7 x 9.9 x 15.0 x 26.3 x 16.9 x 13.2 x 11.1 x
P / E adj.* 6.7 x 9.9 x 15.0 x 26.3 x 16.9 x 13.2 x 11.1 x
Dividend Yield 6.9 % 4.6 % 3.4 % 1.6 % 2.4 % 2.8 % 3.2 %
Free Cash Flow Yield Potential 25.6 % 13.8 % 6.8 % 3.4 % 7.2 % 8.9 % 10.4 %
*Adjustments made for: -
Company Specific Items
2011 2012 2013 2014 2015e 2016e 2017e
order entries n.a. n.a. n.a. n.a. n.a. n.a. n.a. book-to-bill n.a. n.a. n.a. n.a. n.a. n.a. n.a. order book n.a. n.a. n.a. n.a. n.a. n.a. n.a.
Softing
CO M M E N T Publ ished 30 .03 .2015 6
Consolidated profit & loss In EUR m 2011 2012 2013 2014 2015e 2016e 2017e Sales 41.1 49.4 52.6 74.5 81.0 91.0 100.0 Change Sales yoy 29.9 % 20.0 % 6.4 % 41.8 % 8.7 % 12.3 % 9.9 %
Increase / decrease in inventory 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Own work capitalised 2.0 3.2 4.0 3.9 3.2 2.9 2.9
Total Sales 43.2 52.6 56.5 78.5 84.2 93.9 102.9 Material Expenses 12.1 14.9 15.2 27.4 26.7 29.1 31.5
Gross profit 31.1 37.7 41.3 51.1 57.5 64.8 71.4 Gross profit margin 75.6 % 76.3 % 78.7 % 68.5 % 71.0 % 71.2 % 71.4 %
Personnel expenses 19.4 23.6 25.8 32.1 35.0 39.0 43.2
Other operating income 1.7 0.9 0.7 0.8 0.8 0.8 0.8
Other operating expenses 6.1 6.8 6.8 9.7 10.4 11.7 12.5
Unfrequent items 0.0 0.0 0.0 0.0 0.0 0.0 0.0
EBITDA 7.4 8.3 9.4 10.1 12.8 14.8 16.5 Margin 17.9 % 16.7 % 17.8 % 13.5 % 15.8 % 16.3 % 16.5 %
Depreciation of fixed assets 0.3 0.5 0.5 0.6 1.1 1.2 1.2
EBITA 7.1 7.8 8.9 9.5 11.7 13.6 15.3 Amortisation of intangible assets 2.8 2.9 2.7 3.7 4.0 4.0 4.0
Goodwill amortization 0.0 0.0 0.0 0.0 0.0 0.0 0.0
EBIT 4.2 4.9 6.2 5.9 7.7 9.6 11.3 Margin 10.3 % 10.0 % 11.8 % 7.9 % 9.5 % 10.6 % 11.3 %
EBIT adj. 4.2 4.9 6.2 6.2 8.0 9.9 11.6 Interest income 0.3 0.3 0.2 0.2 0.0 0.1 0.1
Interest expenses 0.3 0.2 0.2 0.4 0.3 0.2 0.1
Other financial income (loss) 0.0 0.0 0.0 0.0 0.0 0.0 0.0
EBT 4.2 4.9 6.2 5.6 7.4 9.5 11.3 Margin 10.3 % 10.0 % 11.7 % 7.5 % 9.2 % 10.5 % 11.3 %
Total taxes 1.2 1.4 1.9 1.8 2.2 2.9 3.4
Net income from continuing operations 3.1 3.5 4.3 3.8 5.2 6.7 7.9 Income from discontinued operations (net of tax) 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Net income before minorities 3.1 3.5 4.3 3.8 5.2 6.7 7.9 Minority interest 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Net income 3.1 3.5 4.3 3.8 5.2 6.7 7.9 Margin 7.5 % 7.1 % 8.2 % 5.1 % 6.4 % 7.3 % 7.9 %
Number of shares, average 5.3 5.9 6.3 6.6 7.0 7.0 7.0
EPS 0.58 0.59 0.69 0.58 0.75 0.96 1.14 EPS adj. 0.58 0.59 0.69 0.58 0.75 0.96 1.14
*Adjustments made for:
Guidance: 2014: sales: > EUR 70m; EBIT: EUR 5.5-6.5m
Financial Ratios 2011 2012 2013 2014 2015e 2016e 2017e Total Operating Costs / Sales 87.0 % 89.7 % 89.7 % 91.7 % 88.1 % 86.9 % 86.4 %
Operating Leverage 5.9 x 0.8 x 4.1 x -0.1 x 3.6 x 2.0 x 1.7 x
EBITDA / Interest expenses 29.1 x 33.7 x 45.7 x 23.3 x 42.7 x 74.2 x 165.0 x
Tax rate (EBT) 28.1 % 29.0 % 30.2 % 32.3 % 30.0 % 30.0 % 30.0 %
Dividend Payout Ratio 47.1 % 45.8 % 51.1 % 43.4 % 40.2 % 36.5 % 35.2 %
Sales per Employee 159,488 166,851 155,936 181,345 180,000 189,583 208,333
Sales, EBITDA in EUR m
Source: Warburg Research
Operating Performance in %
Source: Warburg Research
Performance per Share
Source: Warburg Research
Softing
CO M M E N T Publ ished 30 .03 .2015 7
Consolidated balance sheet In EUR m 2011 2012 2013 2014 2015e 2016e 2017e Assets Goodwill and other intangible assets 6.7 7.8 9.7 41.0 39.8 39.1 38.5
thereof other intangible assets 0.7 0.6 0.5 22.2 21.6 21.0 20.4
thereof Goodwill 2.4 2.4 2.4 14.5 14.5 14.5 14.5
Property, plant and equipment 1.1 1.4 1.4 1.9 1.9 1.8 1.7
Financial assets 0.9 0.7 0.0 0.0 0.0 0.0 0.0
Other long-term assets 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Fixed assets 8.7 9.9 11.1 42.9 41.7 40.9 40.2 Inventories 3.6 3.3 4.7 8.7 4.5 5.4 6.3
Accounts receivable 8.3 9.8 10.0 14.2 13.3 15.0 16.4
Liquid assets 8.5 12.6 12.9 8.8 18.9 18.9 17.9
Other short-term assets 1.7 2.3 1.5 2.4 2.4 2.4 2.4
Current assets 22.2 28.0 29.1 34.1 39.1 41.7 43.0 Total Assets 31.0 37.9 40.2 77.0 80.8 82.6 83.2 Liabilities and shareholders' equity Subscribed capital 5.6 6.4 6.4 7.0 7.0 7.0 7.0
Capital reserve 1.7 4.4 4.4 12.3 12.3 12.3 12.3
Retained earnings 10.6 12.1 15.6 18.0 23.2 29.9 37.8
Other equity components -0.8 -0.8 -0.3 -0.2 -2.9 -5.4 -8.1
Shareholder's equity 17.2 22.2 26.2 37.0 39.6 43.8 48.9
Minority interest 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Total equity 17.2 22.2 26.1 37.0 39.5 43.7 48.9 Provisions 1.7 3.0 2.3 3.9 3.9 3.9 3.9
thereof provisions for pensions and similar obligations 1.0 1.8 1.5 2.2 2.2 2.2 2.2
Financial liabilites (total) 1.8 0.5 0.2 24.8 25.9 22.9 17.9
thereof short-term financial liabilities 0.0 0.0 0.0 7.0 7.0 7.0 7.0
Accounts payable 2.9 3.0 2.5 4.2 4.4 5.0 5.5
Other liabilities 7.4 9.3 9.0 7.1 7.1 7.1 7.1
Liabilities 13.8 15.7 14.1 40.0 41.2 38.8 34.3 Total liabilities and shareholders' equity 31.0 37.9 40.2 77.0 80.8 82.6 83.2
Financial Ratios 2011 2012 2013 2014 2015e 2016e 2017e Efficiency of Capital Employment Operating Assets Turnover 4.0 x 4.2 x 3.9 x 3.6 x 5.3 x 5.3 x 5.3 x
Capital Employed Turnover 3.6 x 4.2 x 3.5 x 1.3 x 1.7 x 1.8 x 2.0 x
ROA 35.1 % 35.6 % 38.9 % 8.9 % 12.5 % 16.3 % 19.7 %
Return on Capital ROCE (NOPAT) 26.5 % 30.0 % 32.4 % 11.4 % 10.4 % 13.7 % 15.7 %
ROE 19.1 % 17.8 % 17.9 % 12.0 % 13.6 % 16.0 % 17.1 %
Adj. ROE 19.1 % 17.8 % 17.9 % 12.0 % 13.6 % 16.0 % 17.1 %
Balance sheet quality Net Debt -5.8 -10.4 -11.2 18.3 9.1 6.1 2.1
Net Financial Debt -6.8 -12.1 -12.7 16.1 6.9 4.0 0.0
Net Gearing -33.5 % -46.7 % -42.9 % 49.4 % 23.0 % 14.0 % 4.4 %
Net Fin. Debt / EBITDA n.a. n.a. n.a. 159.4 % 54.2 % 26.7 % n.a.
Book Value / Share 3.2 3.7 4.2 5.6 5.7 6.3 7.0
Book value per share ex intangibles 2.0 2.4 2.6 -0.6 0.0 0.7 1.5
ROCE Development
Source: Warburg Research
Net debt in EUR m
Source: Warburg Research
Book Value per Share in EUR
Source: Warburg Research
Softing
CO M M E N T Publ ished 30 .03 .2015 8
Consolidated cash flow statement In EUR m 2011 2012 2013 2014 2015e 2016e 2017e Net income 3.1 3.5 4.3 3.8 5.2 6.7 7.9
Depreciation of fixed assets 0.3 0.5 0.5 0.6 1.1 1.2 1.2
Amortisation of goodwill 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Amortisation of intangible assets 2.8 2.9 2.7 3.7 4.0 4.0 4.0
Increase/decrease in long-term provisions 0.2 0.0 -0.1 0.0 0.0 0.0 0.0
Other non-cash income and expenses 1.1 1.4 0.7 0.5 0.0 0.0 0.0
Cash Flow 7.5 8.2 8.0 8.5 10.3 11.9 13.1 Increase / decrease in inventory -0.8 0.3 -1.3 -1.6 4.2 -0.9 -0.9
Increase / decrease in accounts receivable -0.2 -1.8 -0.2 -0.7 0.9 -1.7 -1.4
Increase / decrease in accounts payable -0.2 1.1 -0.4 -0.9 0.2 0.6 0.5
Increase / decrease in other working capital positions 0.0 0.0 -0.1 0.9 0.0 0.0 0.0
Increase / decrease in working capital (total) -1.2 -0.5 -2.0 -2.2 5.4 -2.0 -1.8
Net cash provided by operating activities 6.3 7.8 6.0 6.3 15.7 9.9 11.3 Investments in intangible assets -2.4 -3.9 -4.6 -4.3 -3.7 -3.7 -3.8
Investments in property, plant and equipment -0.7 -0.7 -0.5 -1.4 -1.1 -1.1 -1.1
Payments for acquisitions 0.0 0.0 0.0 -21.9 0.0 0.0 0.0
Financial investments 0.6 0.2 0.0 0.0 0.0 0.0 0.0
Income from asset disposals 0.0 0.0 0.2 0.8 0.0 0.0 0.0
Net cash provided by investing activities -2.5 -4.4 -4.9 -26.7 -4.8 -4.8 -4.9 Change in financial liabilities 0.0 -1.2 0.0 10.6 1.0 -3.0 -5.0
Dividends paid -0.6 -1.4 -1.7 -1.3 -1.7 -2.1 -2.4
Purchase of own shares 0.0 0.0 1.3 0.5 0.0 0.0 0.0
Capital measures 0.0 3.5 0.0 7.5 0.0 0.0 0.0
Other -0.2 0.0 -0.1 -0.3 0.0 0.0 0.0
Net cash provided by financing activities -0.8 0.9 -0.5 17.0 -0.7 -5.1 -7.4 Change in liquid funds 3.0 4.2 0.6 -3.4 10.2 0.0 -1.0
Effects of exchange-rate changes on cash 0.0 0.0 0.0 0.1 0.0 0.0 0.0
Cash and cash equivalent at end of period 7.3 11.5 12.1 8.8 18.9 18.9 17.9
Financial Ratios 2011 2012 2013 2014 2015e 2016e 2017e Cash Flow FCF 3.2 3.1 0.9 0.7 10.9 5.1 6.4
Free Cash Flow / Sales 7.8 % 6.4 % 1.7 % 0.9 % 13.4 % 5.6 % 6.4 %
Free Cash Flow Potential 3.9 3.3 3.7 4.1 7.0 8.4 9.4
Free Cash Flow / Sales 7.8 % 6.4 % 1.7 % 0.9 % 13.4 % 5.6 % 6.4 %
Free Cash Flow / Net Profit 104.4 % 89.3 % 20.8 % 17.7 % 209.6 % 76.0 % 81.0 %
Interest Received / Avg. Cash 3.5 % 2.4 % 1.2 % 1.5 % 0.0 % 0.5 % 0.5 %
Interest Paid / Avg. Debt 14.8 % 21.9 % 56.9 % 3.5 % 1.2 % 0.8 % 0.5 %
Management of Funds Investment ratio 7.5 % 9.4 % 9.8 % 7.6 % 5.9 % 5.3 % 4.9 %
Maint. Capex / Sales 5.7 % 7.1 % 7.3 % 5.7 % 4.4 % 4.0 % 3.7 %
Capex / Dep 99.2 % 139.1 % 162.5 % 133.8 % 94.1 % 92.3 % 94.2 %
Avg. Working Capital / Sales 19.6 % 19.6 % 21.3 % 20.8 % 19.9 % 15.8 % 16.3 %
Trade Debtors / Trade Creditors 290.4 % 333.8 % 396.0 % 339.9 % 302.3 % 300.0 % 298.2 %
Inventory Turnover 3.3 x 4.5 x 3.3 x 3.1 x 5.9 x 5.4 x 5.0 x
Receivables collection period (days) 74 73 70 70 60 60 60
Payables payment period (days) 86 72 61 56 60 63 64
Cash conversion cycle (Days) 46 26 73 83 11 16 21
CAPEX and Cash Flow in EUR m
Source: Warburg Research
Free Cash Flow Generation
Source: Warburg Research
Working Capital
Source: Warburg Research
Softing
CO M M E N T Publ ished 30 .03 .2015 9
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
information and data ("the information") believed to be accurate and complete. Warburg Research GmbH neither does examine the information to be
accurate and complete, nor guarantees its accuracy and completeness. Possible errors or incompleteness of the information do not constitute grounds
for liability of M.M.Warburg & CO (AG & Co.) KGaA or Warburg Research GmbH for damages of any kind whatsoever, and M.M.Warburg & CO (AG &
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
(AG & Co.) KGaA and Warburg Research GmbH, their shareholders and employees are not liable for the accuracy and completeness of the
statements, estimations and the conclusions derived from the information contained in this document. Provided a research report is being transmitted in
connection with an existing contractual relationship, i.e. financial advisory or similar services, the liability of M.M.Warburg & CO (AG & Co.) KGaA and
Warburg Research GmbH shall be restricted to gross negligence and wilful misconduct. In case of failure in essential tasks, M.M.Warburg & CO (AG &
Co.) KGaA and Warburg Research GmbH are liable for normal negligence. In any case, the liability of M.M.Warburg & CO (AG & Co.) KGaA and
Warburg Research GmbH is limited to typical, expectable damages. This research report does not constitute an offer or a solicitation of an offer for the
purchase or sale of any security. Partners, directors or employees of M.M.Warburg & CO (AG & Co.) KGaA, Warburg Research GmbH or affiliated
companies may serve in a position of responsibility, i.e. on the board of directors of companies mentioned in the report. Opinions expressed in this
report are subject to change without notice. All rights reserved.
COPYRIGHT NOTICE
This work including all its parts is protected by copyright. Any use beyond the limits provided by copyright law without permission is prohibited and
punishable. This applies, in particular, to reproductions, translations, microfilming, and storage and processing on electronic media of the entire content
or parts thereof.
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.
Softing
CO M M E N T Publ ished 30 .03 .2015 10
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.
-2-
Within the last twelve months, the company preparing the analysis or any of its affiliated companies have participated in the
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.
Company Disclosure Link to the historical price targets and rating changes (last 12 months) Softing 4, 5, 6 http://www.mmwarburg.com/disclaimer/disclaimer_en/DE0005178008.htm
Softing
CO M M E N T Publ ished 30 .03 .2015 11
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
Rating suspended 4 2
Total 188 100
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 82 59
Hold 46 33
Sell 6 4
Rating suspended 4 3
Total 138 100
PRICE AND RATING HISTORY SOFTING AS OF 30.03.2015
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.
Softing
CO M M E N T Publ ished 30 .03 .2015 12
EQUITIES Roland Rapelius +49 40 3282-2673 Head of Equities [email protected] RESEARCH Henner Rüschmeier +49 40 309537-270 Malte Räther +49 40 309537-185 Head of Research [email protected] Technology, Telco, Internet [email protected]
Christian Cohrs +49 40 309537-175 Jochen Reichert +49 40 309537-130 Engineering, Logistics [email protected] Telco, Internet, Media [email protected]
Felix Ellmann +49 40 309537-120 Christopher Rodler +49 40 309537-290 Software, IT [email protected] Utilities [email protected]
Jörg Philipp Frey +49 40 309537-258 Arash Roshan Zamir +49 40 309537-155 Retail, Consumer Goods [email protected] Engineering, Logistics [email protected]
Harald Hof +49 40 309537-125 Malte Schaumann +49 40 309537-170 Medtech [email protected] Technology [email protected]
Ulrich Huwald +49 40 309537-255 Oliver Schwarz +49 40 309537-250 Health Care, Pharma [email protected] Chemicals, Agriculture [email protected]
Thilo Kleibauer +49 40 309537-257 Marc-René Tonn +49 40 309537-259 Retail, Consumer Goods [email protected] Automobiles, Car Suppliers [email protected]
Eggert Kuls +49 40 309537-256 Björn Voss +49 40 309537-254 Engineering [email protected] Steel, Car Suppliers [email protected]
Frank Laser +49 40 309537-235 Andreas Wolf +49 40 309537-140 Construction, Industrials [email protected] Software, IT [email protected]
Andreas Pläsier +49 40 309537-246 Stephan Wulf +49 40 309537-150 Banks, Financial Services [email protected] Utilities [email protected] INSTITUTIONAL EQUITY SALES Holger Nass +49 40 3282-2669 Ömer Güven +49 40 3282-2633 Head of Equity Sales, USA [email protected] USA, Germany [email protected]
Klaus Schilling +49 40 3282-2664 Michael Kriszun +49 40 3282-2695 Dep. Head of Equity Sales, GER [email protected] United Kingdom [email protected]
Christian Alisch +49 40 3282-2667 Marc Niemann +49 40 3282-2660 Scandinavia, Spain [email protected] Germany [email protected]
Tim Beckmann +49 40 3282-2665 Sanjay Oberoi +49 69 5050-7410 United Kingdom [email protected] United Kingdom [email protected]
Matthias Fritsch +49 40 3282-2696 Philipp Stumpfegger +49 40 3282-2635 United Kingdom [email protected] Australia, United Kingdom [email protected]
Marie-Therese Grübner +49 40 3282-2630 Juliane Willenbruch +49 40 3282-2694 France [email protected] Roadshow/Marketing [email protected]
SALES TRADING Oliver Merckel +49 40 3282-2634 Bastian Quast +49 40 3282-2701 Head of Sales Trading [email protected] Sales Trading [email protected] Thekla Struve +49 40 3282-2668 Jörg Treptow +49 40 3262-2658 Dep. Head of Sales Trading [email protected] Sales Trading [email protected] Gudrun Bolsen +49 40 3282-2679 Jan Walter +49 40 3262-2662 Sales Trading [email protected] Sales Trading [email protected] Michael Ilgenstein +49 40 3282-2700 Sales Trading [email protected]
MACRO RESEARCH Carsten Klude +49 40 3282-2572 Dr. Christian Jasperneite +49 40 3282-2439 Macro Research [email protected] Investment Strategy [email protected] Matthias Thiel +49 40 3282-2401 Macro Research [email protected]
Our research can be found under: Warburg Research research.mmwarburg.com/en/index.html Thomson www.thomson.com Bloomberg MMWA GO Reuters www.knowledge.reuters.com FactSet www.factset.com Capital IQ www.capitaliq.com For access please contact:
Andrea Schaper +49 40 3282-2632 Kerstin Muthig +49 40 3282-2703 Sales Assistance [email protected] Sales Assistance [email protected]
