Template for HA Research Notes · 2016-11-03 · paragon AG 3 Hauck & Aufhäuser Privatbankiers KGaA Executive Summary Historically, paragon has developed and produced electrical,

paragon AG Germany - Automobile

Buy (old: Buy) 20-September-16

Christian Glowa Price target: EUR 42.00 (old: EUR 42.00)

Analyst

Price: EUR 31.05 Next result: Q3 18.11.16

Bloomberg: PGN:GR Market cap: EUR 127.8 m [email protected]

Reuters: PGNG.DE Enterprise Value: EUR 170.4 m

Tel.: +49 40 414 3885 95

Electromobility business the free option

It's a unique opportunity: Investors who are buying paragon at current levels are basically getting the Electromobility business as a free option. Indeed, a sum of the party analysis (SOTP) strongly supports our BUY recommendation and PT of € 42 (FCFY 2018E) which only marginally accounts for the significant growth potential of the Electromobility business. The SOTP analysis shows that the current valuation is justified by the traditional automotive business alone yielding an implied PT of € 32 based on FCFY 2018E.

paragons’ prospects in the field of e-mobility are seen to be a game changer for the company. The Electromobility business (Voltabox) only generated sales of € 7.4m in 2015 but managed to accumulate an order backlog of c. € 0.5bn in less than 4 years. Frame contracts and exclusive partnerships e.g with the leading mining equipment manufacturer Joy Global or a German car OEM underline paragon's success and provide high visibility into substantial growth. Based on these contract we expect

divisional sales to grow exponentially to € 100m by 2019E.

Voltabox develops and produces lithium-ion battery packs (Voltabox is # 1 globally for large battery packs) targeting a broad variety of special vehicle end-markets outside the automotive industry such as buses, forklifts, mining vehicles or starter batteries for motorcycles. These markets require customised solutions in contrast to the automotive e-battery market. This prevents competition with classical battery producer such as Samsung, LG or BYD focusing on standardised products and high quantities serving the automotive market and other industrial applications.

paragon possesses unique capabilities embedded in its own in-house developed simulation/ testing software as well as its ability in system engineering, electronics and software development. As a result, Voltabox is in a position to provide the optimal battery set up for individual use case resulting in superior efficiency and ultimately lower total cost of ownership. However, Voltabox’s sound business quality is temporarily concealed by ramp-up costs and lack of scale.

Based on the significant growth potential of Voltabox, the DCF valuation implies a fair value per share of € 43.50 for the Electromobility business alone.

The stock remains a BUY with a PT of € 42 based conservatively on FCFY 2018E only marginally accounting for the potential value of Voltabox.

Y/E 31.12 (EUR m) 2012 2013 2014 2015 2016E 2017E 2018E

Sales 70.4 73.9 79.0 95.0 103.3 122.7 147.6

Sales growth 5 % 5 % 7 % 20 % 9 % 19 % 20 %

EBITDA 11.8 12.5 10.5 14.2 16.2 20.8 25.3

EBIT 7.8 7.9 6.2 7.8 9.2 12.4 15.7

Net income 4.6 3.9 2.8 3.4 4.0 6.2 8.4

Net debt 2.1 5.9 16.0 38.3 40.6 34.3 26.8

Net gearing 16.1 % 37.4 % 92.9 % 197.3 % 157.0 % 100.8 % 61.0 %

Net Debt/EBITDA 0.2 0.5 1.5 2.7 2.5 1.7 1.1

EPS pro forma 1.16 1.02 0.68 0.83 0.98 1.52 2.04

CPS 0.85 0.60 1.05 2.19 1.97 2.72 3.16

DPS 0.35 0.25 0.25 0.16 0.20 0.30 0.41

Dividend yield 1.1 % 0.8 % 0.8 % 0.5 % 0.6 % 1.0 % 1.3 %

Gross profit margin 49.4 % 52.2 % 50.8 % 49.2 % 51.3 % 51.5 % 51.5 %

EBITDA margin 16.8 % 16.9 % 13.3 % 15.0 % 15.7 % 16.9 % 17.2 %

EBIT margin 11.1 % 10.7 % 7.9 % 8.2 % 8.9 % 10.1 % 10.6 %

ROCE 25.0 % 21.7 % 14.0 % 13.4 % 12.3 % 14.9 % 17.5 %

EV/sales 1.9 1.8 1.8 1.8 1.6 1.3 1.1

EV/EBITDA 11.2 10.8 13.8 11.8 10.5 7.9 6.2

EV/EBIT 17.0 17.0 23.3 21.6 18.5 13.2 10.0

PER 26.7 30.3 45.8 37.5 31.6 20.4 15.2

Adjusted FCF yield 5.6 % 5.6 % 4.5 % 5.3 % 5.8 % 7.7 % 9.7 %

Source: Company data, Hauck & Aufhäuser Close price as of: 19.09.2016

Source: Company data, Hauck & Aufhäuser

High/low 52 weeks: 35.05 / 20.90

Price/Book Ratio: 4.9

Relative performance (SDAX):

3 months 8.4 %

6 months 8.8 %

12 months 19.8 %

Changes in estimates

Sales EBIT EPS

�� 103.3 9.2 0.99 2016

∆ - - -

�� 122.8 12.4 1.52 2017

∆ - - -

�� 147.6 15.7 2.04 2018

∆ - - -

Key share data:

Number of shares: (in m pcs) 4.1

Authorised capital: (in € m) -

Book value per share: (in €) 6.3

Ø trading volume: (12 months) 20,500

Major shareholders:

Klaus Dieter Frers 52.0 %

Free Float 48.0 %

Otus Capital 5.0 %

TBF Global 0.7 %

Lupus alpha 0.6 %

Metzler 0.2 %

Company description:

paragon develops and produces advanced automotive electronics solutions for primarily premium OEMs. Its key focus is on offering superior quality solutions for automotive interiors and sensors. paragon also develops solutions in the field of electromobility.

paragon AG

2 Hauck & Aufhäuser Privatbankiers KGaA

Table of Contents

Executive Summary 3�

Valuation – sum of the parts 5�

Voltabox - Electromobility Business 7�

Competitive Quality 7�

Growth 11�

Valuation Electromobility 17�

Sensitivity analysis DCF 18�

Theme 19�

Automotive Business 20�

Competitive Quality 20�

Growth 24�

Valuation 28�

Financials 31�

Contacts: Hauck&Aufhäuser Privatbankiers KGaA 38�

paragon AG


Executive Summary

Historically, paragon has developed and produced electrical, electronic and electromechanical components for the automotive industry (c. 90% of total sales) where it has established leading positions in niche applications. Its key focus is on offering superior quality solutions for premium automotive interiors and specific sensors for niche applications such as air quality control. All of the products have in common that they serve to improve motoring health, comfort and efficiency and thus address long-term structural growth trends. Even more interesting are however the products and prospects for paragon in the field of e-mobility, which should become a game changer for the company. paragon’s Electromobility business (Voltabox) develops and produces lithium-ion battery packs. The key for the business unit’s strategy is focusing on a highly modular approach to its lithium-ion battery pack offering, combined with its unique capabilities thanks to its own in-house developed simulation/ testing software. As a result, Voltabox is in a position to provide the optimal battery set up for the individual use case resulting in superior efficiency and ultimately lower total cost of ownership. This concept along with the firm’s production automation know-how allows the company to produce at low unit costs while also providing scalable solutions to meet different power needs (end markets). While having generated only € 7.4m in sales in 2015, an order book of € 0.5bn in electromobility and an exclusive partnership with the leading mining equipment company Joy Global (US) as well as a frame a contract with a German premium OEM underlines paragon’s success and provides high visibility into substantial growth which should boost divisional sales to about € 100m by 2019E.

paragon AG


Se

ns

ors

Ac

ou

sti

cs

Co

ckp

itB

od

y K

ine

mati

cs

Vo

lta

bo

x G

erm

an

yV

olt

ab

ox

US

AG

rou

p

Me

gatr

en

dH

ealt

h

Pro

du

cts

pa

rag

on d

eve

lop

s a

nd

ma

rkets

so

luti

on

s f

or

imp

rovin

g a

ir q

ua

lity

with

in t

he v

eh

icle

cab

in.

Th

e p

rod

uct

solu

tions p

reven

t h

arm

ful s

ub

sta

nces

fro

m p

en

etr

atin

g in

to t

he

ve

hic

le

inte

rior

or

act

ive

ly e

limin

ate

ne

ga

tive

influ

en

ces

on

air

qu

alit

y. M

ore

ove

r,

the

com

pa

ny

de

velo

ps

so

luti

on

s f

or

op

tim

isin

g d

rive

tra

in c

on

tro

l

sys

tem

s (

e.g

. p

ositi

on s

en

sors

, a

ll

ge

ar

sen

sors

, sta

rt-s

top

se

nso

rs,

3-D

sen

sors

).

Pro

du

cts d

esi

gne

d to

en

sure

the

tran

sm

issi

on o

f spe

ech

with

out

loss

of

qu

alit

y such

as h

igh

qu

ali

ty m

icro

ph

on

es w

ith n

ois

e

sen

sing

& in

teg

rate

d s

eatb

elt

mic

rop

hon

es.

Bro

ad

pro

du

ct

po

rtfo

lio

de

sig

ne

d f

or

the

co

ckp

it

chara

cte

rise

d b

y exc

ep

tion

al

de

sig

n &

hig

h q

ualit

y m

ate

ria

ls

such a

s m

ed

ia &

sm

art

ph

one

ine

rfaces,

contr

ol p

ane

ls o

r

reve

rsin

g c

am

era

sys

tem

s.

Inn

ova

tive t

ech

no

log

y s

olu

tio

ns

en

ha

ncin

g t

he e

ffic

ien

cy a

nd

co

mfo

rt o

f th

e m

ovin

g p

art

s of

the

au

tom

ob

ile b

od

y, b

oth

ext

eri

or

an

d inte

rior.

The

ran

ge o

f

pro

du

cts o

ffere

d to

date

incl

ud

es

spo

iler

syste

ms a

nd

ste

eri

ng

colu

mn p

ad

dle

sh

ifte

rs.

Th

e

pro

du

cts

help

OE

Ms

red

uc

ing

em

issio

ns b

y

ad

va

nc

ed

ae

rod

yn

am

ic s

yste

ms

.

Sale

s 1

6E

(€

m)

35

.81

6.5

32

.04.0

5.0

10.0

10

3.3

Sale

s s

ha

re3

5%

16

%3

1%

4%

5%

10

%

EB

IT 1

6E

(€

m)

9.2

EB

IT-m

arg

in 1

6E

8

.9%

En

d m

ark

ets

Ma

rke

t p

osit

ion

s

Cu

sto

mers

Co

mp

eti

tors

Sa

msu

ng,

Sh

arp

, P

an

aso

nic

, B

osch

,

Ko

tsa

l, S

GX

, H

ella

, D

enso

, N

TK

,

AE

C,

etc

.

AK

G,

Peik

er

Pe

ike

r, N

ove

ro,

Con

tine

nta

l,

S1

nn,

Pa

rrot,

Pre

h,

Bosch

, K

ost

al,

etc

.

Su

spa,

HS

Ge

nio

n

Pro

du

cti

on

sit

es

RO

CE

16E

12

.3%

��

��

��

�

�

�

��

��

��

��

��

��

��

��

��

�

In J

un

e 2

01

6 a

gre

ed o

n a

n e

xc

lus

ive p

art

ners

hip

wit

h t

he

le

ad

ing

US

min

ing

eq

up

me

nt

an

d s

erv

ice p

rovid

er

Jo

y G

lob

al.

Th

e o

rder

aim

s to

eq

uip

on

e u

nd

erg

rou

nd

-min

ing

ve

hic

le w

hic

h s

ho

uld

be w

ort

h €

20

0-

25

0m

sa

les

with

initia

l re

ven

ues s

een

to m

ate

ria

lise

in 2

01

8E

(lif

etim

e

up

to

10

yrs

). W

e e

xpe

ct th

is c

oo

pera

tio

n t

o b

e e

xp

an

de

d a

cro

ss a

ll

pla

tfo

rms

, se

rvin

g e

lect

ro b

att

ery

pa

cks fo

r a

ll so

rts

of m

inin

g v

ehic

les/

en

d p

rod

ucts

. T

his

sh

ould

be

ba

cke

d b

y th

e a

cq

uis

tio

n o

f Jo

y G

lob

al

thro

ug

h K

om

ats

u.

The

latt

er

ma

nufa

ctu

res

an

d s

ale

s con

stru

ctio

n a

nd

min

ing

equ

ipm

en

t (K

om

ats

u a

nd

Ca

pte

rpill

ar

toge

ther

cap

ture

c.

85%

glo

ba

l ma

rke

t sh

are

), u

tilit

ies, fo

rest

mach

ines a

nd

indu

str

ial m

ach

ine

s.

Ge

rma

ny,

US

A,

Chin

a (

sta

rte

d in

20

15

)G

erm

an

y, U

SA

(st

art

ed

in 2

01

5)

para

go

n A

G

Vis

eo

n (

US

A),

AC

TIA

(F

rance),

NA

VIT

AS

(U

SA

), E

ne

rde

l (U

SA

),

Aka

sol,

(Ge

rma

ny)

, X

ALT

(U

SA

)

Follo

win

g t

he in

itial co

ntr

act

para

gon

est

ablis

hed

a s

tra

tgic

re

lati

on

sh

ip

wit

h V

os

slo

h-K

iep

e,

wh

ich p

rovi

de

s re

ady-

mad

e a

cce

ss t

o tro

lley

bu

ses &

hyb

rid

bu

ses

thro

ug

h t

he w

orl

d's

lea

din

g s

pe

cia

list

in t

he f

ield

of

com

ple

te e

quip

men

t fo

r b

use

s w

ith s

ale

s o

f c. €

20

0m

in F

Y15

E (

eh

&A

).

As a

re

sult,

Vo

ltab

ox

(U

SA

) re

ce

ive

d a

majo

r o

rder

(eH

&A

wort

h c

.

mid

dou

ble

dig

it m

illio

n)

for

ba

tte

ry p

ac

ks i

n M

ay 2

01

4 w

ith

initi

al

pro

du

ctio

n c

om

men

ced

in 2

01

4 a

nd

due

for

deliv

ery

th

roug

hou

t 20

15

and

201

6.

In M

arc

h 2

01

5 p

ara

gon

ann

oun

ced

a f

urt

he

r s

tra

teg

ic p

art

ne

rsh

ip

wit

h T

rait

ho

lon

Ba

tte

rien

in a

n e

xclu

siv

e a

gre

em

en

t fo

r th

e s

upp

ly o

f

lithiu

m io

n b

atte

ries fo

r th

e intr

alo

giti

cs m

ark

et.

Tri

ath

lon

is

on

e o

f th

e

lea

din

g p

rovi

de

rs in

Germ

an

y of

trd

ition

al l

ea

d a

cid

ba

tteri

es

to th

is

mark

et

an

d w

ants

to

exp

an

d th

is t

hro

ugh

the

use

of

Voltab

ox'

s h

igh

pe

rform

an

ce li

hiu

m-i

on b

att

erie

s.

Init

ial

co

ntr

act

wit

h V

os

slo

h-K

iep

e in

Ju

ne 2

01

3 to

deliv

er

42

ba

ckup

po

we

r pa

cks

for

bu

ses

in S

witze

rlan

d. T

he g

roup

th

en c

om

me

nced

the

exp

an

sion

of

a h

igh

ly a

uto

mate

d m

an

ufa

curi

ng

facili

ty in

De

lbrü

ck.

To

p 5

cu

sto

me

rs a

cco

un

t fo

r 8

0%

of

sale

s

In J

uly

20

15 p

ara

gon

re

ceiv

ed

ist

first s

eri

es

pro

du

cti

on

ord

er

for

sta

rte

r b

att

eri

es

fro

m a

lea

din

Ge

rma

n p

rem

ium

OE

M. T

he o

rde

r is

wo

rth €

72

m o

ver

a life

time o

f 6 y

ears

. S

OP

is

sch

ed

ule

d fo

r Q

4 2

01

6.

Ele

ctr

om

ob

ilit

y b

us

ine

ss

Deve

lop

me

nt

of

Li-

ion

ba

tte

ry p

ac

ks p

rod

uce

d a

nd d

istr

ibu

ted

thro

ugh

two

su

bsi

dia

rie

s V

olta

box

Ge

rma

ny

and

Voltab

ox

US

. p

ara

gon

als

o

pla

ns

ente

ring

the

Chin

ese

mark

et

in 2

01

6.

Glo

ba

l le

ad

er

(#1

for

air

qu

alit

y sen

sors

with

c.

90

% m

ark

et

sha

re)

by

focusin

g o

n n

ich

e m

ark

ets

an

d h

igh

ly inn

ova

tive p

rodu

ct s

olu

tio

ns. A

s a

re

sult,

pa

rago

n is

2/3

of

gro

up

's s

ale

s a

re s

up

plie

d u

nd

er

sin

gle

so

urc

e

con

tra

cts

.

Fo

cus

on t

he p

rem

ium

se

gm

en

t w

ith G

erm

an

OE

Ms (

aa

coun

ting

fo

r 7

0%

of

the

glo

ba

l pre

miu

m c

ar

pro

du

ctio

n)

Ele

ctr

ic &

hyb

rid

bu

ses

(e.g

. V

oss

loh),

intr

alo

gis

tics

(e.g

. fo

rk li

fts f

or

com

pan

ies s

uch

as J

ung

hein

rich,

Kio

n),

sta

rte

r b

att

erie

s (c

ars

, b

ike

s,

scoo

ters

), p

ow

er

gen

era

tors

(m

ilita

ry, fire

serv

ice

s, h

osp

itals

) o

r

sta

tion

ary

sys

tem

s (s

ola

r b

ack

-up

)

Inte

rac

tio

n

CO

2 r

ed

uc

tio

n

VW

, 20.6

%

Po

rsch

e,

13

.5%

Aud

i, 2

6.9

%

BM

W,

9.7

%

Daim

ler,

9.6

%

Sko

da,

2.9

%V

osslo

h,

2.7

%

Oth

ers

, 1

4.1

%

paragon AG


Valuation – sum of the parts

The sum of the parts (SOTP) valuation is strongly supporting our BUY recommendation and PT of € 42 based on FCFY 2018E which is only marginally accounting for the significant growth potential of the Electromobility business. The SOTP analysis shows that current valuation is justified alone by the traditional automotive business yielding a PT of € 32 based on FCFY 2018E. Hence, investors who are buying paragon shares up to € 32 are basically getting the Electromobility business as a free option. Our SOTP analysis of the Electromobility business and the Automotive business yields an implied fair value per share of € 75.50.

Standalone valuation Voltabox and Automotive business

Electromobility - DCF sensitivity analysis Automotive business - FCFY sensitivity analysis

��

30

137

179

242

7.2

33.243.5

58.9

0

50

100

150

200

250

300

EBIT margin 5% EBIT margin 10% EBIT margin 12% EBIT margin 15%

Implied equity Value Implied fair value per share (in €)

114121

131

27.8 29.6 32.0

0

20

40

60

80

100

120

140

FCFY 2016E FCFY 2017E FCFY 2018E

Implied equity value (in m €) Implied fair value per share (in €)

SOTP valuation Voltabox and Automotive business

Sum of the parts analysis - implied fair value per share in €

��

43.50

32.00

75.50

7.20

27.80

35.00

58.90

32.00

90.90

0

10

20

30

40

50

60

70

80

90

100

Electromobility Automotive Sum of the parts

Base case Bearish Bullish

paragon AG


Scenario analysis

Even in a bearish scenario assuming a terminal EBIT margin of only 5% of the Electromobility business AND ONLY valuing the Automotive business on FCFY 2016E, the SOTP valuation would yield an implied fair value per share of € 35 providing c. 15% upside to the current share price.

Scenario Analysis Electromobility Automotive Fair value per share Electromobility Automotive Sum of the parts

Base case Terminal EBIT margin of 12% FCFY 2018E Base case 43.50 32.00 75.50

Bearish Terminal EBIT margin of 5% FCFY 2016E Bearish 7.20 27.80 35.00

Bullish Terminal EBIT margin of 15% FCFY 2018E Bullish 58.90 32.00 90.90

��

paragon AG


Voltabox - Electromobility Business

Competitive Quality

paragon’s newly (sales of € 7.4m in 2015) established Electromobility business (Voltabox) looks set to be a game changer for the entire group. Voltabox managed to build-up a sound order backlog of about € 550m in less than 4 years of which c. 85% or > € 450m (eH&A) are manifested in signed frame contracts exceeding its 2016E sales of € 15m by the factor of 30x. This provides high visibility into outstanding growth (90% Electromobility sales CAGR 2015-18E) AND sales diversification (Electromobility sales share c. 35% by 2018E). Furthermore, potential with existing customers and new end-markets yields additional potential and should continue to provide positive newsflow.

Applicability to multiple industries introduces an exponential element

Voltabox’s solid competitive quality is proved by its market leadership (# 1 globally for large battery packs) as well as its sound order backlog of € 550m of which >85% or > € 450m are based on signed long-term frame contacts with global leading companies such as Joy Global (leading player in the field of mining equipment). Importantly, Voltabox strictly targets special vehicle end-markets outside the automotive industry such as buses, intralogistics vehicles (e.g. forklifts) or mining vehicles. In these markets e-batteries are commonly in use since decades (though predominantly lead acid batteries) and require customised solutions in contrast to the automotive e-battery market. This prevents competition with classical battery producers such as Samsung, LG or BYD focusing on standardised products and high quantities serving the automotive market and other industrial applications.

1. Unique capabilities provide cost & quality advantages: Generally, the battery packing is the most complex process among the li-ion battery value chain capturing c. 40% of the battery value. Having said that, the feature of a battery pack is fundamentally rooted in the entire system not just the cell, incorporating control electronics, software and cooling tailor-made to the vehicle housing.

Here, Voltabox is in a position to leverage its unique (automotive) capabilities across system engineering, electronics and software development. As such, Voltabox has developed its own simulation software, which assesses the optimal battery set up for the individual use case. This USP allows for a superior battery efficiency (longer duration, less maintenance, less assembly time) and ultimately enables Voltabox’ customers to reduce their total cost of ownership.

paragon AG


40% of the value for the Li-ion battery development lies in the packiging

�� 2. The module approach (‘�� ’) allows to produce at low

unit costs: The key for the business unit’s strategy is focusing on a highly modular system to its lithium-ion battery pack offering. Voltabox’ modular approach allows the company to target a variety of different end-markets/ platforms. At present, Voltabox has concluded large frame contracts worth > € 450m in sales.

Electromobility - existing orders and frame contracts

Customer / strategic partner End-market / platform Country SOP* Total order volume Lifetime

Vossloh-Kiepe Trolley & transit buses Germany, US 2013 / 2014

low to mid 3 digit

million € in sales > 10 yrs

Triathlon Batterien

Intralogitic market ( e.g.

forklifts for Jungheinrich) Germany 2015

mid double digit


German Premium OEM

Starter batteries for motor

cycles Germany Q4 2016E € 72m 6 yrs

Joy Global Underground mining vehicle US 2018E € 200-250m 10 yrs

��

��

While these different production platforms/ end-markets have generally little in common and have different requirements on the batteries, they are allowing Voltabox to rapidly expand its business while benefitting from economies of scale based on a high degree of automation. Thanks to this, Voltabox is in a position to produce at low unit costs while providing scalable solutions to meet different power needs/ end markets.

3. Partnerships which are based on excellent reputation & track record:

Voltabox managed to win strong partners (e.g. Vossloh-Kiepe and Triathlon Batterien) with established distribution networks allowing the company to rapidly secure revenues without the need to establish its own distribution networks and incurring the associated costs.

Significant entry barriers embedded in high capital requirements AND process complexity

High entry barriers are embedded in • High capex requirements for setting up a local production set-up as

shipment of especially large battery packs is neither feasible nor economically sensible (eH&A Voltabox invested c. € 56m from 2012-16E setting up its own production facilities in Germany, the US and China).

paragon AG


• The complexity of a battery pack. Importantly, with the group’s expertise in electronics, power management and systems integration, Voltabox is in a position to develop entire power systems solutions.

• Regulatory roadblocks mainly with regard to safety and handling/ disposal of lithium.

Hence, while there appear to be a handful key competitors across the globe, in reality there are only very few rivals with a similar production set-up AND capabilities (oligopolistic market structure).

Selected TOP 10 competitors

Competitor Location Strenghts + Weaknesses -

USA+ Market share and global presence - biggest provider of lead acid starter batteries

- No tailormade solutions due to its size- Focus on starter batteries, no pouch cells

UK+ Big offering of cell chemistires & manuf. + Processing >70m battery cells per year

- Focus on smaller battery systems

USA+ Strong presence in "Government & Defense

Battery Applications"

- Little customer awareness outside the USA,

and outside defense applications

��

Poland+ Patented cooling, high charge & discharge+ Partner of Polish bus manufacturer Solaris

- Limited market presence via Poland only - Not profitable, weak financial situation

France+ Access to funding: planning an IPO for 2016+ Three EV Bus contracts using modular sys.

- Focus on bus market, limited cell offering- Not profitable

USA+ Market share: revenue of $2.5bn in 2015across all segments

- No customisation due to ist size- Market strenght is based on lead acid

USA+ Joint Venture with leading ChineseAutomotive Supplier, cooperation with OEM

- Focus on Hybrid solutions

+ Innovative thermal managament solutions

+ Inhouse testing services- Weak presence on motive battery systemsUSA

+ Good market access to different publictransport means via Bombardier Primove

Germany- Focus on Dow Kokam pouch cells & NMC- Limited success record

Germany+ Quick order response & prototype provision+ Strong and validated LTO solutions for Bus

- Only LFP and LTO as cell chemistries

Expansion of the Electromobility business accelerates diversification

Voltabox follows a clear strategy to strictly target special vehicle end-markets outside the automotive industry such as buses, intralogistics vehicles (e.g. forklifts) or mining vehicles where e-batteries are commonly in use since decades (though predominantly lead-acid batteries), require customised solutions (in contrast to the automotive e-battery market) and where lithium-ion batteries provide an advantage over traditional lead-acid batteries, with 60% lower weight, better cold start characteristics and longer life.

On the back of its proven technology Voltabox has already secured a massive order volume of € 550m providing high visibility for a successful ramp-up. The Electromobility business is expected to grow dynamically from a low base of c. € 7m in 2015 at a 90% CAGR 2015-18E to € 51m representing 35% of total sales (40% of total EBIT) already by 2018E while not at all reflecting the full growth potential of the new segment. Overall, the strong growth outlook for Electromobility also makes the company less dependent from the automotive industry.

paragon AG


Business quality temporary muted by ramp-up costs, weak fix cost coverage and capacity built up not reflecting Voltabox’s strong market position

The business quality of Voltabox should improve significantly mainly driven by (1) an improving profitability and (2) increasing capital efficiency which should drive ROCE to 14% already by 2018E.

• Investments into production facilities should be increasingly utilised driving capital efficiency: The ramp-up in capacities for the Electromobility business in Germany and the US explains the increase in net debt of the paragon group from € 2m in 2012 to a peak level of € 41m in 2016E (eH&A net debt Electromobility standalone at about € 38m in 2016E).

Importantly, Voltabox’ capacities should be sufficient now to process the order backlog as well as new orders. Hence, the capital turn of Voltabox is seen to improve significantly to 1.1x by 2018E from 0.3x in 2015 which more accurately reflects the high degree of automation within the production set-up and Voltabox’s scalable modular approach. At present, the capital turn is biased as the significant investments (eH&A cumulated capex c. € 56m from 2012-16E) have not yet meaningfully contributed to sales.

Voltabox - capital employeed turnover and sales

��

0

10

20

30

40

50

60

14 15 16E 17E 18E

0.0

0.2

0.4

0.6

0.8

1.0

1.2

Sales Electromobility (l.s.) Capital turn Electromobility (r.s.)

• Profitability should improve on back of the sales ramp-up. The ramp up of sales backed by the huge order backlog should allow to (1) increasingly benefit from economies of scale and (2) to benefit from a favourable product mix effect driven by the SOP (start of production) for Joy Global. Generally, the larger the battery packs, the more complex the manufacturing, which in turn requires specific know-how and capabilities. This is seen to provide higher sales per unit and superior profitability.

� Benefits from a different end market mix: The pricing for the

battery packs largely depends on the size and consequently the number of battery modules processed. While the price of a fork-lift battery pack is seen to be around € 10k, that for an electro bus should be around € 40k while stationary applications such as for network operators are worth up to million € of sales per unit.

Scale effects of the Electromobility division are particularly routed in the modular approach allowing to serve a variety of different end markets AND a high degree of automation.

paragon AG


Voltabox - ROCE & EBIT development Voltabox - Capex

��

-0.4

0.2 -0.13.2

6.24.17.4

15.1

32.3

50.7

-10.0

0.0

10.0

20.0

30.0

40.0

50.0

60.0

14 15 16E 17E 18E-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

EBIT Electromobility (l.s.) Sales Electromobility (l.s.)

EBIT margin Electromobility (r.s.) ROCE Electromobility (r.s.)

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

12 13 14 15 16E 17E 18E

Total capex paragon group (l.s) Capex Electromobility (l.s.)

Growth High visibility backed by a lifetime order backlog of € 550m of which 85% or > € 450m are based on signed frame contracts

The Electromobility business is expected to grow dynamically from a low base of c. € 7m in 2015 at a c. 90% CAGR 2015-18E to € 51m by 2018E explaining c. 90% of the growth of the paragon group. The lifetime order backlog provides high visibility into dynamic growth which should allow Voltabox to grow significantly also beyond 2018.

Split of lifetime order backlog of € 1.2bn

��

Sensors, 22%

Acoustics, 10%

Cockpit, 16%

Body Kinematics,

6%

Electromobility,

46%

We estimate that about

70% or € 830m of the

total lifetime order

backlog are signed

contracts while the

remaining 30% are

calculated by means of

probability (e.g. for follow-

up orders considering that

paragon generates 2/3 of total sales as a single

source supplier).

Lithium-ion battery market poised for growth

Lithium-ion batteries are commonly used since the early 90s though the introduction to the mass market was dedicated to the consumer market only driven by mobile devices such as smart phones and tablet computers. With the gradual improvement of key features such as energy density, improving safety and overall lifetime as well as ultimately costs, lithium-ion batteries are increasingly commoditised through a variety of different end market applications. Importantly, lithium-ion batteries are seen to be at a tipping point becoming suitable for a lot of other (also larger) applications explaining exceptional high growth rates.

paragon AG


��Key mile stones of lithium-ion batteries becoming suitable for the mass market

��!"��!��

Importantly, lithium has the highest electrochemical potential of all metals. Lithium-ion batteries provide very high energy and power densities for long useful life in small and comparatively lightweight packages that is driving growth in demand. According to market research (� # ��$), the strong growth of lithium-ion batteries following its introduction to the consumer mass market should be replicated driven by the transportation and energy storage sector thanks to unprecedented technological and regulatory changes over the next years.

Li-ion battery market continues to find new applications

��!"��!�� Increasing focus on environmental standards & costs reduction – excurse to the mining industry

Despite recent positive movements in commodity prices, the commodity/ mining industry continues to face prolonged headwinds and challenging market conditions because

• commodity prices remain near multi-year lows

• supply curtailments are offset by weak end-user demand and excess unused equipment

• mining equipment users focus on reducing capex

Moreover, the increasing focus on environmental standards globally accelerates shift to renewable energy sources. Especially governments such as in Chile put a lot of pressure on mining companies to improve their environmental footprint. At the same time global financial investors enforce a higher focus on sustainability.

In this environment, mining equipment customers are focused on productivity and demand cost effective and innovative solutions powered by advanced analytics systems on a global basis which creates

paragon AG


advantages for larger, more diversified and global companies to win in this increasingly challenging industry. Voltabox’s exclusive partnership with Joy Global underpins the company’s superior battery pack offering based on its unique capabilities meeting the demanding requirements of the industry.

limthium-ion battery market driven by the transportation sector and energy storage

�� # �"�%&�'()*�� We expect Voltabox’ sales to grow 90% annually throughout 2018E

By 2019E we expect Voltabox to exceed the € 100m sales for the first time. Notably, our estimates only consider existing orders and frame contracts but even existing contracts/customers bear significant additional growth potential:

1. Increased cross-selling across customers' platforms. E.g. starter batteries for several or all motor cycles of the OEM. In the case of Joy Global the frame order relates to only 6 underground vehicles, however Joy Global's fleet is much larger including vehicles for open-cast mining. Generally it is intended to upgrade all kinds of mining vehicles under the exclusive partnership.

2. Exploration of clients' international footprint. E.g. it is intended to

start serving the intralogistics market via Triathlon Batterien also in the US. Importantly, we also do not consider the Electromobility market entrance in China which is providing huge growth potential.

Alone the exclusive frame contract with Joy Global (US) for mining underground vehicles should contribute sustainable sales of about € 25m annually from 2019E onwards (total order volume worth c. € 250m sales over a period of 10 years with initial sales to materialise in 2018E).

Electromobility - existing orders and frame contracts

Customer / strategic partner End-market / platform Country SOP* Total order volume Lifetime

Vossloh-Kiepe Trolley & transit buses Germany, US 2013 / 2014

low to mid 3 digit


Triathlon Batterien

Intralogitic market ( e.g.

forklifts for Jungheinrich) Germany 2015

mid double digit


German Premium OEM

Starter batteries for motor

cycles Germany Q4 2016E € 72m 6 yrs

Joy Global Underground mining vehicle US 2018E € 200-250m 10 yrs

��

��

paragon AG


Current production capacities sufficient to process existing and new orders

The expansion of the Electromobility business to the US (Voltabox, SOP July 2015) with own production had been started in 2015. Moreover, Voltabox should start operating fully automated in the production plant in Germany from H2 2016. The same automation line should be installed in the US in Q1 2017. Hence, capacities should be sufficient to process the order backlog as well as new orders while ramp-up costs should gradually ease off.

• Ramp-up costs: c. € 4m in 2015, c. € 3m and c. € 2m in 2016E and 17E respectively (eH&A) on group level. As such, in 2014 paragon took on more engineers than ever before in a single year.

Significant upside for the Electromobility business not yet reflected

• The cross selling opportunities with Joy Global have increased after the takeover by Komatsu: The frame order with Joy Global worth c. € 250m in sales only consist of the equipment for some underground mining vehicles. We expect this cooperation to be expanded across all platforms, serving electro battery packs for all sorts of mining vehicles/ end products. This is backed by the exclusivity of the partnership.

Importantly, the cross selling opportunities for battery packs across other platforms are seen to have increased after Joy Global has been taken over by Komatsu (Japan). The latter is the global leading manufacturer of construction and mining equipment (Komatsu and Caterpillar together capture c. 85% global market share), utilities, forest machines and industrial machinery.

� Komatsu intends to operate Joy Global as a separate subsidiary of

Komatsu and retain the strength of the Joy Global brand names. � Komatsu and Joy Global’s products and services are seen to be highly

complementary. According to a company statement, the key focus of the combined organisation will continue to focus on safety, productivity and life cycle cost improvement for customers meeting exactly Voltabox’ value add for its clients.

� Komatsu plans to leverage both companies leading technologies to

purse product and service innovation to enhance mine safety and productivity as well as to improve sustainable aspects. Again Voltabox’ battery packs very well suit this demand.

• China offers tremendous growth potential: In a first step paragon started to produce air quality sensors and systems in its new production facility in China. In a second step, Voltabox could also expand its Electromobility business to China with battery packs for electric buses and commercial vehicles as well as starter batteries for cars and motorcycles targeting the largest lithium-ion end consumer market globally. It is estimated that China will demand c. 73% of total lithium-ion battery consumption by 2020 followed by Europe with c. 14% driven by the urgent need to cut emissions.

Given that the production set-up is based on highly automated production lines the ramp-up of the Electromobility business in China could be easily carried out with capital investments while not being dependent on hiring additional engineers or sales people.

paragon AG


CO2 emission output development by country in million tonnes Emissions in % of gloabl output by country - China is responsible for 2/3 of global emissions

��+ ��,�!�� + ��,�!��

• Expansion of customer base: Within a short time, Voltabox has built up a track record with well recognised firms serving a variety of different end markets (electro busses, intra-logistic market and starter batteries for the automotive market, mining vehicles) with high quality lithium-ion battery packs. That should not only allow the generation of follow-up orders with existing customers but also to attract new clients.

Having said that, management already announced to prepare the next market entry for special battery systems for the use in automated guided vehicles (Kuka is one of the largest manufacturer of automated guided vehicles). Hence, serving an additional intralogistics market we estimate the potential of such an order to be in the mid double digit million €.

• Completion of further strategic partnerships: Against the background of Voltabox’ expertise in electronics, power management systems and system integration AND its modular approach the company is in a position to provide entire power system solutions allowing to target a wide range of different end markets. Additional potential end-market/ platforms could be small scale power generators and load levellers for stationary applications, lithium-ion battery packs for e-cars or forest and agricultural machines. Further strategic partnerships should allow Voltabox to quickly get access to established end markets and hence ramp up sales rapidly.

Notably, our estimates conservatively are based on existing contracts only. Further upside potential stemming from (1) any follow-up orders / cross selling via Joy Global/ Komatsu, (2) the possible expansion of the business to China, or (3) the market entry into another end-markets/ platforms (paragon already prepares the market entry for automated guided vehicles) is not reflected in our estimates.

EBIT should grow strongly disproportionately and arrive at € 6.3m by 2018E

Key KPIs Electromobility standalone (eH&A) 2015 2016E 2017E 2018E

CAGR

2015-18E

Sales 7.4 15.1 32.3 50.7 89.9%

EBITDA 1.3 1.7 5.9 9.8 96.1%EBITDA margin 17.6% 11.3% 18.3% 19.3%

EBIT 0.2 -0.2 3.2 6.3 215.8%EBIT margin 2.7% -1.3% 9.9% 12.4%

��

• The gross margin should normalise at about 40%: The two key cost drivers for the assembly of a lithium-ion battery pack is the cell (provided by 5 different Asian suppliers) as well as development costs. Cell costs should come down with an increasing output. Importantly, development costs are substantial pre the start of a series production and diminish over time. Generally, development costs increase with complexity and size of the battery packs.

paragon AG


� The mining vehicle battery packs are the largest and most complex packs out of the existing contracts/ orders. Voltabox is already in the process of the prototype production. However, the majority of development costs should occur in 2017E and 2018E respectively reducing the gross profit margin by c. 5pp yoy. After this ramp-up, gross margin should improve again to about 45% reflecting (1) Voltabox’ high value add thanks to its system solution and integration management based on its simulation/ testing software which is essential to gain efficiency gains & ultimately lower total cost of ownership and (2) its solid competitive position.

Electromobility - gross-margin development

��

48.0%43.4% 45.2%

39.9% 39.2%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2014 2015 2016E 2017E 2018E

Gross margin (%)

• D&A should normalise at about 7% of sales by 2018E: D&A looks set to be elevated by capitalised development costs driven by pre-development costs for the starter batteries (SOP in Q4 2016E) as well as for the prototyping of batteries for mining vehicles of Joy Global. Conservatively, Voltabox depreciates capitalised R&D costs within 4 years rather than over the life-time of the assets (frame contracts with durations > 10yrs). Hence, D&A should normalise at a sustainable level of 7% of sales by 2018E.

� IFRS 38 requires to capitalise development costs if (1) the future

economic benefits that are attributed to that asset will flow to the entity and (2) costs of the asset can be measured reliably.

Electromobility - D&A development in relation to sales Electromobility - EBITDA & EBIT margin development

��

4.17.4

15.1

32.3

50.7

0.3 1.1 1.8 2.7 3.5

0.0

10.0

20.0

30.0

40.0

50.0

60.0

2014 2015 2016E 2017E 2018E

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

Sales (l.s.) D&A (l.s.) D&A in % of total sales (r.s.)

0.0

10.0

20.0

30.0

40.0

50.0

60.0

2014 2015 2016E 2017E 2018E

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

Sales (l.s.) EBITDA margin (r.s.) EBIT margin (r.s)

• Scale effects should start to kick in: The operating performance of the Electromobility business has been muted by a weak fix cost coverage mainly due to a (1) significant ramp-up in head-count (mainly engineers, peak hiring in 2014) and (2) inflated other operating expenses for the production start.

paragon AG


Both personnel expenses and other operating expenses are expected to decline in relation to sales by 2018E reflecting the favourable impact of scale.

� There is limited need for additional personnel when sales grow thanks to the high degree of automation (start of fully automated production in H2 2016 in Germany).

Operating expenses are mainly rental expenses, sales & marketing expenses as well as legal & consultancy fees. Initially, Voltabox (US) operated in a rented building. However, with the start of production in its own production facility in mid 2015 rental costs should decline substantially from 2016E onwards. Moreover, also legal & consultancy costs should largely be non-recurring with the establishment of the Electromobility business. Ultimately, given that Voltabox’ focus should be on the execution of the huge order backlog for now, we expect the overall marketing & sales efforts to decline respectively. In any case Voltabox largely relies on partners and does not look to establish a huge sales organisation

Voltabox - EBIT & EBIT margin development

��

2.6%

-0.8%

9.9%

12.3%

-2

0

2

4

6

8

10

2014 2015 2016E 2017E 2018E

-15%

-10%

-5%

0%

5%

10%

15%

EBIT (l.s.) EBIT margin (r.s)

The bottom line is expected to rise strongly disproportionately

The net income should additionally benefit from financial leverage: We expect the net income to substantially turn positive to € 5.8m by 2018E from a small loss of about € 0.3m in 2016E.

Valuation Electromobility

In order to derive a fair value for the Electromobility business a DCF model was used. Only the DCF valuation approach seems to adequately captures the long-term growth potential which is backed by existing frame contracts (e.g. Joy Global exclusive contracts with a duration of 10 years with initial sales to materialise in 2018E). Based on an order backlog of € 550m of which c. 85% or > € 450m (eH&A) are signed contracts we expect sales to increase from € 7.4m in 2015 to about € 100m by 2019E driving earnings growth.

The DCF model indicates an equity value of € 179m implying € 43.50 per share

Our DCF model for the Electromobility business assumes a CAGR for sales growth of c. 137% in the forecast period (2015-2019E) which also considers about € 25m from exclusive contract with Joy Global in 2019E, a medium-term growth rate of 32% (2019E-2023E) and long-term growth rate of 2.0%. The

paragon AG


terminal EBIT margin is set at 12.0% which is comparable to the level estimated for 2018E. The discount factor (WACC) of 7.0% is made up of a risk free rate of 1.5%, a 6% equity risk premium and a beta of 1.0. The DCF model leads to a fair value of € 43.50 per share. Notably, our short- to medium term growth rates only consider the existing frame contracts.

2016E 2017E 2019E 2020E 2021E 2022E 2023ETerminal

value

-0.2 2.9 10.7 14.1 16.5 17.8 18.1 15.8

1.8 2.7 6.3 8.3 9.5 9.3 8.9 8.1

-2.0 -2.5 -3.5 -3.0 -2.8 -2.7 -2.6 -2.5

0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

-2.7 -2.0 -5.6 -5.7 -6.9 -7.6 -8.0 -8.1

0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

-3.1 1.1 7.9 13.7 16.3 16.8 16.4 13.3

-3.0 1.0 6.3 10.2 11.4 11.0 10.0 155.3

7.0% 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% 7.0%

DCF per share derived from DCF avg. growth and earnings assumptions

Total present value 206 Short term growth (2015-2019) 136.7%

�� !�-�!�� 76% Medium term growth (2019 - 2024) 32.0%

Net debt (net cash) at start of year 25 Long term growth (2024 - infinity) 2.0%

Financial assets 0 Terminal year EBIT margin 12.0%

Provisions and off balance sheet debt 2

Equity value 179 WACC derived from

Cost of borrowings before taxes 7.0%

Discounted cash flow per share 43.5 Tax rate 2.0%

upside/(downside) 42% Cost of borrowings after taxes 6.9%

Required return on invested capital 7.5%

Risk premium 6.0%

Risk-free rate 1.5%

Share price 30.64 Beta 1.0

Sensitivity analysis DCF Sensitivity analysis DCF

43.5 1.0% 1.5% 2.0% 2.5% 3.0% 43.5 10.0% 11.0% 12.0% 13.0% 14.0%

9.0% 25.8 27.2 28.9 30.8 33.0 9.0% 22.5 25.7 28.9 32.0 35.1

8.0% 30.4 32.5 34.9 37.7 41.0 8.0% 26.9 30.9 34.9 38.8 42.8

7.0% 36.9 39.9 43.5 47.9 53.4 7.0% 33.2 38.3 43.5 48.6 53.8

6.0% 46.1 50.9 56.8 64.4 74.5 6.0% 42.8 49.8 56.8 63.7 70.7

5.0% 60.4 68.5 79.4 94.6 117.5 5.0% 59.3 69.4 79.4 89.4 99.5

��

No. of shares outstanding

WA

CC

Long term growth

Capex

Acquisitions

Capital increase

-1.8

0.0

0.0

3.5

EBIT margin terminal year

WA

CC

4.1

DCF (EUR m)

(except per share data and beta)

NOPAT

Depreciation

Increase/decrease in working capital

Cash flow

Present value

WACC

Increase/decrease in long-term provisions and accruals

3.5

-3.0

0.0

7.0%

4.1

2018E

5.3

Sensitivity analysis DCF

Even in a much more bearish scenario assuming an EBIT-margin of only 5%, the DCF model yields an equity value of € 30m or € 7.20 per share.

Electromobility - DCF sensitivity analysis

��

30

137

179

242

7.2

33.243.5

58.9

0

50

100

150

200

250

300

EBIT margin 5% EBIT margin 10% EBIT margin 12% EBIT margin 15%

Equity Value Discounted cash flow per share

paragon AG


Notably, our estimates conservatively are based on existing contracts only. Further upside potential stemming from (1) the possible expansion of the business to China, (2) any follow-up orders / cross selling via Joy Global/ Komatsu or (3) the market entry into another end-markets/ platforms (paragon already prepare the market entry for automated guided vehicles) is not reflected in our estimates.

Voltabox - Sales & EBIT development

��

4.1 7.415.1

32.3

50.7

98.1

127.9

2.6%

-0.8%

9.9%

12.3%13.4%

13.8%

-2

18

38

58

78

98

118

138

2014 2015 2016E 2017E 2018E 2019E 2020E

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

Sales (r.s.) EBIT (l.s.) EBIT margin (r.s)

Theme Key milestone order with significant upside potential

At the end of June, Voltabox has announced having received a key milestone order (largest single order in company’s history) for its Electromobility business in the US. Voltabox agreed on an exclusive strategic partnership with the leading US mining equipment and service provider Joy Global. The order from a leading US company underlines Voltabox’ superior technology/ capabilities and provides confidence that the company should be able to exploit one of the fastest growing markets globally (the lithium battery market in transportation is expected to grow by 20-30% CAGR throughout 2020). Importantly, the exclusive frame order with Joy Global worth c. € 250m in sales only consist of the equipment for some underground mining vehicles. We expect this cooperation to be expanded across all platforms, serving electro battery packs for all sorts of mining vehicles/ end products incl. the vehicles for open cast mining (not reflected in our estimates). Moreover, the cross selling opportunities for battery packs across other platforms should have increased significantly after Joy Global has been taken over by Komatsu (Japan). The latter is the global leading manufacturer of construction and mining equipment (Komatsu and Capterpillar together capture c. 85% global market share), utilities and forest machines as well as industrial machinery.

paragon AG


Automotive Business

Competitive Quality Innovative niche market leader

paragon’s sound competitive quality is evidenced by its world market leadership in niche applications with up to 90% global market share (e.g. air quality sensors) as well as the fact that paragon generates 2/3 of total automotive sales as a single source supplier. This is backed by a lifetime order backlog of c. € 650m of which 70% or > € 450m are based on signed frame contracts (eH&A) providing high visibility into growth beyond 2018. The strong competitive position is the result of two main factors:

1. Superior product solutions: paragon focuses on the innovation of valuable high quality solutions targeting the disproportionately growing premium segment. The company provides superior product solutions based on (1) enhanced end user experience (e.g. improved air quality or quality of communication inside the car cabin) and (2) the best cost design approach for the OME allowing to reduce overall weight or assembly time for instance.

The company’s innovative edge is fundamentally routed in above average R&D spendings. While on average paragon spent c. 10% of sales on R&D within the past 5 years (with a peak of 13.4% in 2015 driven by development costs for ramping up the Electromobility business), the average spending on R&D of the automotive supplier industry is about 3% of sales only.

�R&D costs development (in% of sales) R&D costs in FY15 vs the average of our automotive coverage (in% of sales)

��

2.9% 3.2% 3.2% 3.2% 3.2% 3.1% 3.1%

10.0% 10.0% 10.0%

11.3% 11.0% 11.0%

13.4%

0%

2%

4%

6%

8%

10%

12%

14%

12 13 14 15 16E 17E 18E

Ø R&D costs of H&A automotive coverage paragon R&D costs

3.2%4.3%

13.4%

0%

3%

6%

9%

12%

15%

'00

paragon R&D costs Ø R&D costs of H&A automotive coverageØ R&D costs Daimler, BMW, VW (2014)

On the back of paragon’s innovative backbone the company is (1) constantly developing new products aiming to improve end-user experience but (2) also further enhancing existing product solutions. That allows paragon to increasingly transform towards a system supplier (vs product supplier) benefitting from a higher penetration of content per vehicle (more € per car).

2. Unique product development approach: Thanks to the fact that the founder/ CEO implemented an innovative culture that allows sporting technology trends that could serve well as potential disruptors, paragon develops products and systems usually before OEMs have started to look for such solutions. This puts paragon in a position to benefit from ‘first mover advantages’ and hence capture dominant market positions. The success of this unique product development approach is embedded in paragon’s long lasting experience and evidenced in the fact that 9 out of 10 prototypes are resulting in series productions.

paragon AG


High entry barriers embedded in superior product solutions

paragon’s innovative edge as well as its specific technological know-how (the group has unique capabilities across system engineering, electronics, software, sensor chemistry and physics as well as electromechanics) put the company in a position to develop superior products which set high entry barriers. Moreover, paragon’s focus on high volume niche applications combined with its highly automated production set-up allows the company to benefit from economies of scale. As a result, new market entrants would find it difficult to earn a sufficient return in the relevant niche markets.

Hence, while there appear to be many competitors (mainly large players such as Bosch, Panasonic or Sharp), in reality there are only very few competitors in more than one or two specific product lines (oligopolistic market structure).

Innovation edge translates into strong pricing power

• In fact, paragon’s innovative edge and product quality seem to be well perceived and valued especially by premium OEMs in these niche markets, which is reflected in global market shares of up to 90% and a solid profitability. The reason is seen to be the value-add for its clients (and the end user) based on functionality as the technologically advanced products provide the best cost-design e.g. allowing to reduce assembly time or weight at outstanding quality. Hence, paragon’s unique market position combined with its innovative power should continue to considerably support its pricing power, in our view.

� According to the company, the average product price increased by

22.4% within the past two years from H1 2014 to H1 2016. We expect paragon’s strong pricing power to continue throughout 2018E mainly driven by new product launches.

Automotive business- gross margin development

��

50.0%

52.4%

55.5%

57.7%

46%

48%

50%

52%

54%

56%

58%

60%

2015 2016E 2017E 2018E

Gross-margin

• Moreover, the focus on the premium segment reduces cyclicality and supports pricing power. With the majority of sales (c. 90%) still related to the automotive market, paragon is sensitive to economic conditions and automotive trends. However, by primarily focusing on the premium segment (c. 80% of sales are from German premium manufacturers) paragon’s performance is less correlated to the volume/ mass market and its associated higher cyclicality. Moreover, the increasing transition towards a system supplier (more € sales per car) provides a non-linear relationship to underlying automotive volume.

paragon AG


Furthermore, technological innovations normally find their way on the premium car segment first before entering the mass market. Hence, premium OEMs are forced to constantly seek new innovations, new technologies and customised concepts in order to protect their leading positions as premium OEMs. The high quality requirements of premium OEMs also support high entry barriers and consequently paragon’s pricing power.

Innovative edge AND strong market position translates into high business quality

paragon’s strong market position translates into high business quality that has been reflected in ROCE of up to 28% in the past (e.g. 2011 when sales were 100% exposed to the automotive industry). However, the (1) expansion of the new business segment (Body Kinematics) in combination with the internationalisation (build-up of own production facilities in China) as well as (2) elevated development costs in preparation for the start of several series productions look set to temporary subdue the underlying business quality.

Prepartion of automotive series productions

Automotive division Product/ Solution Planned start of production

Sensors CO2 sensor Already in trial period for a German premium OEM. The launch across platforms is planned in 2017

and 2018. Moreover, further OEMs have also

expressed their interest

Sensors Particle filiter 2017 for several OEMs

Acoustics Seatbelt microphones with seat-mounted speakers

close to the ear / next

generation sound system

2017/ 2018

Cockpit Mobile mirror reflection

display

2018

Body Kinematics several spoilers and

aerodynamic systems

paragon works on several series productions in

parallel to be laucnhed in 2017E. Series

productions are confirmed by the customer.

��

• Investments into the China production facility and new product lines should be increasingly utilised and drive capital efficiency: The build-up of the own production facility and capacities in China (predominately used for the Sensor business at present) as well as the ramp-up of the Body Kinematics business have recently subdued capital turn to 2.0x. Notably, the capital efficiency should improve with increasing utilisation following the start of production of other automotive product lines in China and the launch of new spoiler & aerodynamic solution scheduled for 2017.

Notably, to take a conservative stance we do not yet consider the ramp-up of the Chinese air quality sensor business (eH&A initial order backlog already of up to € 10m over the next 5-7 years) in our estimates which should improve overall utilisation rates and hence earnings. Also, the true upside potential should exceed the initial order backlog several times given that paragon has just started targeting the right market with the right product facing very limited competition (c. 90% global market share).

paragon AG


Automotive business - capital employeed turnover and sales

��

0

20

40

60

80

100

120

14 15 16E 17E 18E

1.8

1.9

1.9

2.0

2.0

2.1

2.1

2.2

2.2

2.3

2.3

Sales Automotive business(l.s.) Capital turn Automotive (r.s.)

Importantly, expansion capex should normalise from 2016E onwards. Moreover, the lifted development costs for new series productions look set to be largely compensated by a stronger penetration of content thanks to the increasing supply of entire systems (vs products) allowing paragon to generate more € per vehicle. Furthermore, paragon’s sound pricing power should support stable EBIT margins of about 10% throughout 2018E.

Automotive business - Sales & EBIT development

��

74.9

88.2 91.6

6.7 7.6 9.3 9.2 9.5

87.698.08.9% 8.7%

10.6%10.1% 9.7%

0

20

40

60

80

100

120

14 15 16E 17E 18E

0%

2%

4%

6%

8%

10%

12%

Sales Automotive business(l.s.) EBIT Automotive business (l.s.)

EBIT margin Automotive business (r.s.)

Overall, paragon’s Automotive business looks set to generate decent ROCE of about 20% throughout 2018E. • paragon’s Automotive business is seen to generate a ROCE of 21% in

2016E which compares to a ROCE of 12.3% on group level clearly showing the dilution stemming from elevated ramp-up cots for the Electromobility business and a temporary lack of scale respectively.

paragon AG


Automotive business - ROCE & EBIT development Automotive business - Capex

��

6.7 7.6 9.3 9.2 9.5

74.9

87.6 88.2 90.496.9

0.0

20.0

40.0

60.0

80.0

100.0

120.0

14 15 16E 17E 18E

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

EBIT Automotive business (l.s.) Sales Automotive business(l.s.)

EBIT margin Automotive business (r.s.) ROCE Automotive business (r.s.)

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

12 13 14 15 16E 17E 18E

Total capex paragon group (l.s) Capex Automotive business

Growth

High visibility backed by a lifetime order backlog of c. € 650m of which 70% or > € 450m are based on frame contracts

The Automotive business is expected to grow soundly at a 3.4% CAGR 2015-18E to c. € 97m by 2018E. The lifetime order backlog provides high visibility into solid growth beyond 2018. This is backed by the fact that paragon generates c. 2/3 of total sales as a single source supplier preliminary serving the German premium OEMs.

Split of lifetime order backlog of € 1.2bn

��

Sensors, 22%

Acoustics, 10%

Cockpit, 16%

Body Kinematics,

6%

Electromobility,

46%

We estimate that about

70% or € 830m of the

total lifetime order

backlog are signed

contracts while the

remaining 30% are calculated by means of

probability (e.g. for follow-

up orders considering that

paragon generates 2/3 of total sales as a single

source supplier).

The global automotive market is expected to grow by 2.7% yoy in 2016

According to .�� -�, the global automotive market is seen to grow solidly by 2.7% yoy to slightly less than 90m units in 2016. China is seen to remain the largest and hence most important car market (+7.2% yoy in 2015 to 21.1m vehicles) despite a somewhat slowing economy. .�� -� expects the Chinese market to grow by 5% to 6% p.a. throughout 2020. The momentum in Western Europe as well as in the US is expected to remain strong benefiting from ongoing release of pent-up demand and low gas prices as well as interest rates respectively.

Region

Car market growth rates

2016E

Global 2.7%

China 5-6%

Western Europe 2.5-3%

USA 3-5%Brazil -14%Russia continue to contract

��.�� -��

The premium car market looks set to outperform the underlying market by c. 4pp p.a.

paragon AG


The digitalisation and electrification are seen to drive the transition of the automotive industry and the electronics sector (e.g. digitalisation, autonomous driving and alternative powertrains). The ongoing electrification of powertrains and increased consumer demand for electric mobility solutions are driving increased automotive electronics usage levels. Technological innovations normally find their way to the premium car segment first. Around 40% of the world’s premium car production takes place in Germany, with around 70% of worldwide premium cars manufactured by Germany OEMs. This proves the enormous automotive electronics potential in Germany with increasing market share gains for premium OEMs.

Premium car production by country 2014

��#��

Japan, 6%UK, 6%

USA, 13%

China, 14%

Germany, 41%

Rest of the World, 20%

Hence, premium car sales should continue to outperform the underlying car market development and are expected to grow by 6-7% p.a.

New EU car registration (in m units) - Premium brands are constantly gaining market share New EU car registration growth rates - Premium brands outperform volume brands by 4pp p.a.

��

�� "�� /�#��0� ��1�-��&��2��3,�� &�� &�+� !��&��4,�� "�� /�#��0� ��1�-��&��2��3,�� &�� &�+� !��&��4,��

3�!��"�� 3,�"�� &��&�1� ��!�&�5 ��&�5��&��4��&�6��&�� 3�!��"�� 3,�"�� &��&�1� ��!�&�5 ��&�5��&��4��&�6��&��

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

Volume brands (l.s.) Premium brands (l.s.) Premium as a % of total market (r.s.)

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Yoy growth rate Volume brands Yoy growth rate Premium brands

We expect paragon’s Automotive business top line to grow by 3.4% annually throughout 2018E

The automotive segment is seen to outperform the underlying global car market given (1) paragon’s stringent focus on the premium segment, (2) several new product launches and (3) an increasing supply of entire systems allowing the company to generate more € sales per vehicle.

The automotive sales should be especially driven by the Body Kinematics division growing from a low level (14% CAGR to € 7.3m in 2018E). paragon received several series production orders for a variety of different rear spoilers and aerodynamic systems to be launched in 2017. Here, paragon benefits from OEMs need to further reduce emissions in order to reach the targets set for 2020.

For all other division we basically assume growth in line with the underlying market of 2.5% to 3.5% in the forecast period 2015-18E not yet reflecting the ramp-up of new product launches.

Substantial upside for the Automotive business not yet reflected

To be conservative, we do not yet reflect any other planned series productions with new customers for any of the automotive business lines at this stage. Additional series production (e.g. Audio system, mirror reflection display, particle filter) would provide additional 2 to 3pp growth upside p.a. to our sales estimates, in our view, lifting the total automotive sales to a 6% CAGR 2015-18E.

paragon AG


Prepartion of automotive series productions

Automotive division Product/ Solution Planned start of production

Sensors CO2 sensor Already in trial period for a German premium OEM. The launch across platforms is planned in 2017

and 2018. Moreover, further OEMs have also

expressed their interest

Sensors Particle filiter 2017 for several OEMs

Acoustics Seatbelt microphones with seat-mounted speakers

close to the ear / next

generation sound system

2017/ 2018

Cockpit Mobile mirror reflection

display

2018

Body Kinematics several spoilers and

aerodynamic systems

paragon works on several series productions in

parallel to be laucnhed in 2017E. Series

productions are confirmed by the customer.

��

Moreover, we do not yet consider the ramp-up of the Chinese air quality sensor business (eH&A initial order backlog already of up to € 10m over the next 5-7 years) in our estimates, which should improve overall utilisation rates and hence earnings. Also, the true upside potential should exceed the initial order backlog several times given that paragon has just started targeting the right market with the right product facing very limited competition (c. 90% global market share).

EBIT should grow disproportionately by 7.5% CAGR to € 9.5m

Key KPIs Automotive standalone (eH&A) 2015 2016E 2017E 2018E

CAGR

2015-18E

Sales 87.6 88.2 90.5 96.9 3.4%

EBITDA 12.9 14.6 14.8 15.5 6.3%

EBITDA margin 14.7% 16.6% 16.4% 16.0%

EBIT 7.6 9.4 9.2 9.5 7.5%EBIT margin 8.7% 10.7% 10.2% 9.8%

��

• The gross profit margin should strongly improve to about 58%: The gross profit should strongly improve by about 8pp by 2018E driven by (1) paragon’s sound pricing power (average product price increase +22% within the last two years), (2) new product launches (CO2 sensors, Body Kinematics), (3) diminishing pre-production costs as well as (4) an increasing penetration of more content per vehicle.

Automotive business- gross margin development

��

50.0%

52.4%

55.5%

57.7%

46%

48%

50%

52%

54%

56%

58%

60%

2015 2016E 2017E 2018E

Gross-margin

• Gross profit gains are however largely eaten up by higher personnel and other operating expenses: The gross profit gains are seen to be

paragon AG


largely eaten up by higher personnel expenses for (1) the ramp-up in China and (2) for the development of new series productions. Moreover, other operating costs are seen to increase against the background of higher sales and marketing expenses in both Germany and China as well as higher logistic costs.

OPEX development in % of sales EBIT and EBIT margin development

��

82

84

86

88

90

92

94

96

98

2015 2016E 2017E 2018E

0%

5%

10%

15%

20%

25%

30%

35%

Total sales Personnel expenses in % of sales Other operating expenses in % of sales

0

1

2

3

4

5

6

7

8

9

10

2015 2016E 2017E 2018E

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

EBIT EBIT-margin

� D&A slightly up due to capitalised R&D: D&A looks set to be lifted by capitalised development costs driven by pre-development costs for several launches scheduled for 2017 of the Body Kinematics division. Conservatively, paragon depreciates capitalised R&D costs within 4 years rather than over the life-time of the assets (frame contracts within the automotive business are usually 6 years over lifetime).

Automotive business - D&A in relation to sales Automotive business - EBITDA & EBIT development

��

0

20

40

60

80

100

120

14 15 16E 17E 18E

4.8%

5.0%

5.2%

5.4%

5.6%

5.8%

6.0%

6.2%

6.4%

Sales Automotive business(l.s.)

Automotive business D&A

Automotive business D&A in % to sales (r.s.)

82.0

84.0

86.0

88.0

90.0

92.0

94.0

96.0

98.0

2015 2016E 2017E 2018E

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

Sales (l.s.) EBITDA margin (r.s.) EBIT margin (r.s.)

The bottom line is expected to rise disproportionately by a 11.7% CAGR 2015-18E

• The net income should benefit from a favourable financial leverage: Net debt has recently increased to c. € 13m in 2015 due to expansion capex for the set up of an own production facility in China. However, the internationalisation of the Automotive business should be completed by now. Based on paragon’s sound free cash flow generation (excl. ramp-up Electromobility) we expect the company to start deleveraging its balance sheet which should lead to an overall improved financial result.

paragon AG


Valuation

In order to derive a fair value for paragon’s Automotive business the adjusted FCF valuation were used.

The FCFY 2018E leads to a fair value per share of € 32

Due to the fact that companies rarely bear sufficient resemblance to peers in terms of geographical exposure, size or competitive strength and due to the fact that long-term returns often are flawed by the lack of sufficient visibility, an Adjusted Free Cash Flow analysis (Adjusted FCF) has been conducted. The main driver of this model is the level of return available to a �� !! # investor, influenced by the cost of that investors’ capital (opportunity costs) and the purchase price – in this case the enterprise value of the company. Here, the adjusted FCF yield is used as a proxy for the required return and is defined as EBITDA less minority interest, taxes and investments required to maintain existing assets (maintenance capex). Normally we would assume maintenance capex to be equal to D&A. However, considering the recent build-up of own production facilities in China (Sensors) D&A is seen to be inflated. Hence, we only consider the D&A for intangible assets (software, patents, and license) and technical equipment & machinery which is equal to c. 60% of total D&A. The (new) buildings are depreciated over 20 yrs however. Simply put, the model assumes that investors require companies to generate a minimum return on the investor’s purchase price. The required after tax return equals the model’s hurdle rate of 7.5%. Anything less suggests the stock is expensive; anything more suggests the stock is cheap.

The fair value per share of the Automotive business of € 32 is derived from the FCFY 2018E. Valuing paragon on 2018E figures is justified in our view, given the sound order back log of c. € 650m. Valuing the Automotive business on FCFY 2018E is rather conservative, in our view, given that the operating performance (EBIT-margin) looks set to be biased by about 1pp in the forecast period due to higher D&A and development costs in preparation for several series productions. Notably, to take a conservative stance we do not yet consider the ramp-up of the Chinese air quality sensor business (eH&A initial order backlog already of up to € 10m over the next 5-7 years) in our estimates which should improve overall utilisation rates and hence earnings. Also, the true upside potential should exceed the initial order backlog several times given that paragon has just started targeting the right market with the right product facing very limited competition (c. 90% global market share).

paragon AG


paragon AG

FCF yield, year end Dec. 31 2015 2016E 2017E 2018E

EBITDA 12.9 14.6 14.8 15.5

- Maintenance capex 3.2 3.1 3.3 3.6

- Minorities 0.0 0.0 0.0 0.0

- tax expenses 1.6 2.3 2.3 2.4

= Adjusted Free Cash Flow 8.1 9.2 9.2 9.4

Actual Market Cap 123.5 123.5 123.5 123.5

+ Net debt (cash) 13.3 6.8 0.8 -6.4

+ Pension provisions 2.0 1.8 1.8 1.8

+ Off balance sheet financing 0.0 0.0 0.0 0.0

+ Adjustments prepayments 0.0 0.0 0.0 0.0

- Financial assets -0.4 -0.4 -0.4 -0.4

- Dividend payment -1.0 -0.6 -0.9 -0.9

73�1�� ! �� )89: ;9* )98 <*9=

= Actual EV' 137.4 131.1 124.8 117.6

Adjusted Free Cash Flow yield 5.9% 7.0% 7.4% 8.0%

Sales 87.6 88.2 90.5 96.9

Actual EV/sales 1.6x 1.5x 1.4x 1.2x

Hurdle rate 7.5% 7.5% 7.5% 7.5%

FCF margin 9.3% 10.4% 10.2% 9.7%

Fair EV/sales 1.2x 1.4x 1.4x 1.3x

Fair EV 108.4 122.1 123.0 125.9

<�73�1�� ! �� )89: ;9* )98 <*9=

Fair Market Cap 94.6 114.5 121.6 131.8

No. of shares (million) 4.1 4.1 4.1 4.1

Fair value per share 23.0 27.8 29.6 32.0

Premium (-) / discount (+) in % -23.5% -7.3% -1.5% 6.7%

Sensitivity analysis fair value

7.5% 23.0 27.8 29.6 32.0

10.0% 16.4 20.4 22.1 24.4

12.5% 12.4 16.0 17.6 19.8

15.0% 9.8 13.0 14.6 16.7

��

Hurdle rate

Sensitivity analysis to FCFY 2016E – 2018E

Even a bearish scenario valuing paragon’s automotive business on FCFY 2016E yields a fair value per share of € 27.80.

Automotive business - FCFY sensitivity analysis

��

114121

131

27.8 29.6 32.0

0

20

40

60

80

100

120

140

FCFY 2016E FCFY 2017E FCFY 2018E

Equity value (in m €) Fair value per share (in €)

paragon AG


Automotive business - Sales & EBIT development

��

74.9

88.2 91.6

6.7 7.6 9.3 9.2 9.5

87.698.08.9% 8.7%

10.6%10.1% 9.7%

0

20

40

60

80

100

120

14 15 16E 17E 18E

0%

2%

4%

6%

8%

10%

12%

Sales Automotive business(l.s.) EBIT Automotive business (l.s.)

EBIT margin Automotive business (r.s.)

paragon AG


Financials

Profit and loss (EUR m) 2012 2013 2014 2015 2016E 2017E 2018E

Net sales 70.4 73.9 79.0 95.0 103.3 122.7 147.6

��!��#��>�� *9)�?� @9=�?� ;9(�?� '(9'�?� :9;�?� ):9:�?� '(98�?�

Increase/decrease in finished goods and work-in-process 2.6 1.9 5.9 14.2 8.0 8.5 9.0

Total sales 73.0 75.8 85.0 109.2 111.3 131.2 156.6

Other operating income 2.0 1.1 1.4 3.2 3.0 3.5 4.0

Material expenses 37.0 36.3 41.8 55.5 54.2 63.6 76.0

Personnel expenses 18.9 19.6 21.8 26.3 29.0 33.1 39.4

Other operating expenses 7.4 8.5 12.2 16.3 14.9 17.2 19.9

Total operating expenses 61.2 63.3 74.5 95.0 95.1 110.4 131.3

EBITDA 11.8 12.5 10.5 14.2 16.2 20.8 25.3

Depreciation 2.8 2.9 3.2 5.1 5.5 6.6 7.6

EBITA 9.0 9.6 7.4 9.1 10.7 14.1 17.7

Amortisation of goodwill 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Amortisation of intangible assets 1.1 1.4 1.1 1.3 1.5 1.7 2.0

Impairment charges 0.1 0.3 0.0 0.0 0.0 0.0 0.0

EBIT 7.8 7.9 6.2 7.8 9.2 12.4 15.7

Interest income 0.0 0.0 0.0 0.1 0.2 0.2 0.2

Interest expenses 1.1 1.5 2.0 2.9 3.2 3.0 3.0

Other financial result 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Financial result -1.1 -1.5 -2.0 -2.8 -3.0 -2.8 -2.8

Recurring pretax income from continuing operations 6.7 6.4 4.3 5.0 6.2 9.6 12.9

Extraordinary income/loss 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Earnings before taxes 6.7 6.4 4.3 5.0 6.2 9.6 12.9

Taxes 2.1 2.5 1.5 1.6 2.2 3.4 4.5

Net income from continuing operations 4.6 3.9 2.8 3.4 4.0 6.2 8.4

Result from discontinued operations (net of tax) 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Net income 4.6 3.9 2.8 3.4 4.0 6.2 8.4

Minority interest 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Net income (net of minority interest) 4.6 3.9 2.8 3.4 4.0 6.2 8.4

Average number of shares 4.1 4.1 4.1 4.1 4.1 4.1 4.1

EPS reported 1.13 0.96 0.67 0.82 0.98 1.52 2.04

Profit and loss (common size) 2012 2013 2014 2015 2016E 2017E 2018E

Net sales 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %

Increase/decrease in finished goods and work-in-process 3.7 % 2.6 % 7.5 % 14.9 % 7.7 % 6.9 % 6.1 %

Total sales 103.7 % 102.6 % 107.5 % 114.9 % 107.7 % 106.9 % 106.1 %

Other operating income 2.9 % 1.5 % 1.7 % 3.4 % 2.9 % 2.9 % 2.7 %

Material expenses 52.5 % 49.1 % 52.9 % 58.4 % 52.5 % 51.9 % 51.5 %

Personnel expenses 26.8 % 26.5 % 27.5 % 27.7 % 28.1 % 27.0 % 26.7 %

Other operating expenses 10.6 % 11.6 % 15.4 % 17.2 % 14.4 % 14.0 % 13.5 %

Total operating expenses 86.9 % 85.7 % 94.2 % 100.0 % 92.0 % 90.0 % 88.9 %

EBITDA 16.8 % 16.9 % 13.3 % 15.0 % 15.7 % 16.9 % 17.2 %

Depreciation 4.0 % 3.9 % 4.0 % 5.4 % 5.3 % 5.4 % 5.1 %

EBITA 12.7 % 13.0 % 9.3 % 9.6 % 10.4 % 11.5 % 12.0 %

Amortisation of goodwill 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 %

Amortisation of intangible assets 1.5 % 1.9 % 1.4 % 1.4 % 1.5 % 1.4 % 1.4 %

Impairment charges 0.2 % 0.4 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 %

EBIT 11.1 % 10.7 % 7.9 % 8.2 % 8.9 % 10.1 % 10.6 %

Interest income 0.1 % 0.0 % 0.0 % 0.2 % 0.2 % 0.2 % 0.1 %

Interest expenses 1.6 % 2.1 % 2.5 % 3.1 % 3.1 % 2.4 % 2.0 %

Other financial result 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 %

Financial result -1.5 % -2.0 % -2.5 % -2.9 % -2.9 % -2.3 % -1.9 %

Recurring pretax income from continuing operations 9.5 % 8.7 % 5.4 % 5.3 % 6.0 % 7.8 % 8.7 %

Extraordinary income/loss 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 %

Earnings before taxes 9.5 % 8.7 % 5.4 % 5.3 % 6.0 % 7.8 % 8.7 %

Tax rate 30.8 % 38.6 % 35.3 % 32.3 % 35.0 % 35.0 % 35.0 %

Net income from continuing operations 6.6 % 5.3 % 3.5 % 3.6 % 3.9 % 5.1 % 5.7 %

Income from discontinued operations (net of tax) 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 %

Net income 6.6 % 5.3 % 3.5 % 3.6 % 3.9 % 5.1 % 5.7 %

Minority interest 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 %

Net income (net of minority interest) 6.6 % 5.3 % 3.5 % 3.6 % 3.9 % 5.1 % 5.7 %


paragon AG


Balance sheet (EUR m) 2012 2013 2014 2015 2016E 2017E 2018E

Intangible assets 4.9 5.6 9.4 24.7 31.2 33.5 34.5

Property, plant and equipment 13.5 13.0 20.2 34.6 35.1 33.4 32.8

Financial assets 0.0 0.1 0.4 0.4 0.4 0.4 0.4

FIXED ASSETS 18.5 18.7 30.0 59.7 66.7 67.3 67.8

Inventories 7.3 7.5 6.9 11.2 12.9 15.3 18.5

Accounts receivable 1.8 6.0 9.8 10.4 11.6 12.8 14.6

Other current assets 1.8 1.6 1.9 1.5 1.5 1.5 1.5

Liquid assets 14.1 17.6 13.3 8.5 13.1 14.4 21.9

Deferred taxes 0.5 0.5 0.6 1.3 1.3 1.3 1.3

Deferred charges and prepaid expenses 0.0 0.0 0.0 0.0 0.0 0.0 0.0

CURRENT ASSETS 25.5 33.2 32.4 32.9 40.5 45.3 57.7

TOTAL ASSETS 44.0 51.9 62.4 92.6 107.2 112.6 125.5

SHAREHOLDERS EQUITY 13.0 15.9 17.2 19.4 25.8 34.1 44.0

MINORITY INTEREST 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Long-term debt 14.1 21.4 24.3 38.0 45.0 40.0 40.0

Provisions for pensions and similar obligations 2.7 1.2 1.9 2.1 2.1 2.1 2.1

Other provisions 0.3 0.1 0.1 0.0 0.0 0.0 0.0

Non-current liabilities 17.1 22.7 26.2 40.1 47.1 42.1 42.1

short-term liabilities to banks 2.1 2.2 5.0 8.7 8.7 8.7 8.7

Accounts payable 3.0 3.4 6.1 10.7 11.9 14.1 17.0

Advance payments received on orders 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Other liabilities (incl. from lease and rental contracts) 8.3 6.8 6.7 10.0 10.0 10.0 10.0

Deferred taxes 0.4 1.0 1.2 3.6 3.6 3.6 3.6

Deferred income 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Current liabilities 13.8 13.4 19.0 33.1 34.2 36.5 39.3

TOTAL LIABILITIES AND SHAREHOLDERS EQUITY 44.0 51.9 62.4 92.5 107.2 112.6 125.4

Balance sheet (common size) 2012 2013 2014 2015 2016E 2017E 2018E

Intangible assets 11.2 % 10.8 % 15.1 % 26.7 % 29.1 % 29.8 % 27.5 %

Property, plant and equipment 30.8 % 25.0 % 32.3 % 37.3 % 32.7 % 29.7 % 26.2 %

Financial assets 0.0 % 0.2 % 0.6 % 0.4 % 0.4 % 0.4 % 0.3 %

FIXED ASSETS 42.0 % 36.0 % 48.0 % 64.5 % 62.2 % 59.8 % 54.0 %

Inventories 16.6 % 14.4 % 11.1 % 12.1 % 12.0 % 13.6 % 14.7 %

Accounts receivable 4.1 % 11.6 % 15.6 % 11.2 % 10.8 % 11.3 % 11.6 %

Other current assets 4.2 % 3.0 % 3.0 % 1.7 % 1.4 % 1.4 % 1.2 %

Liquid assets 32.0 % 34.0 % 21.2 % 9.1 % 12.3 % 12.8 % 17.4 %

Deferred taxes 1.1 % 1.0 % 1.0 % 1.4 % 1.2 % 1.1 % 1.0 %

Deferred charges and prepaid expenses 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 %

CURRENT ASSETS 58.0 % 64.0 % 52.0 % 35.5 % 37.8 % 40.2 % 46.0 %

TOTAL ASSETS 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %

SHAREHOLDERS EQUITY 29.6 % 30.6 % 27.6 % 21.0 % 24.1 % 30.3 % 35.1 %

MINORITY INTEREST 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 %

Long-term debt 32.1 % 41.2 % 38.9 % 41.0 % 42.0 % 35.5 % 31.9 %

Provisions for pensions and similar obligations 6.2 % 2.4 % 3.0 % 2.3 % 1.9 % 1.9 % 1.7 %

Other provisions 0.7 % 0.1 % 0.1 % 0.0 % 0.0 % 0.0 % 0.0 %

Non-current liabilities 39.0 % 43.7 % 42.0 % 43.3 % 43.9 % 37.4 % 33.6 %

short-term liabilities to banks 4.7 % 4.2 % 8.0 % 9.4 % 8.1 % 7.7 % 7.0 %

Accounts payable 6.9 % 6.5 % 9.8 % 11.6 % 11.1 % 12.5 % 13.5 %

Advance payments received on orders 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 %

Other liabilities (incl. from lease and rental contracts) 18.8 % 13.1 % 10.7 % 10.8 % 9.3 % 8.9 % 8.0 %

Deferred taxes 1.0 % 1.9 % 2.0 % 3.9 % 3.4 % 3.2 % 2.9 %

Deferred income 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 %

Current liabilities 31.4 % 25.7 % 30.4 % 35.7 % 31.9 % 32.4 % 31.3 %

TOTAL LIABILITIES AND SHAREHOLDERS EQUITY 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %


paragon AG


Cash flow statement (EUR m) 2012 2013 2014 2015 2016E 2017E 2018E

Net profit/loss 4.6 3.9 2.8 3.4 4.0 6.2 8.4

Depreciation of fixed assets (incl. leases) 2.8 2.9 3.2 5.1 5.5 6.6 7.6

Amortisation of goodwill 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Amortisation of intangible assets 1.1 1.4 1.1 1.3 1.5 1.7 2.0

Others -0.9 0.9 0.3 3.4 3.0 2.8 2.8

Cash flow from operations before changes in w/c 7.6 9.2 7.3 13.2 14.0 17.4 20.8

Increase/decrease in inventory -0.4 -0.2 0.6 -4.3 -1.7 -2.4 -3.1

Increase/decrease in accounts receivable -1.3 -4.2 -3.7 -0.6 -1.2 -1.2 -1.8

Increase/decrease in accounts payable 0.0 0.3 2.8 4.6 1.2 2.2 2.9

Increase/decrease in other working capital positions 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Increase/decrease in working capital -1.8 -4.1 -0.4 -0.3 -1.8 -1.4 -2.0

Cash flow from operating activities 5.8 5.1 6.9 12.9 12.3 16.0 18.8

CAPEX 5.5 4.7 15.8 32.0 14.0 9.0 10.0

Payments for acquisitions 0.0 0.0 0.0 1.2 0.0 0.0 0.0

Financial investments 0.8 0.1 0.3 -0.1 0.0 0.0 0.0

Income from asset disposals 0.1 0.1 0.4 0.8 0.0 0.0 0.0

Cash flow from investing activities -6.2 -4.8 -15.7 -32.3 -14.0 -9.0 -10.0

Cash flow before financing -0.3 0.3 -8.8 -19.5 -1.7 7.0 8.8

Increase/decrease in debt position -1.3 7.4 5.6 17.5 7.0 -5.0 0.0

Purchase of own shares 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Capital measures 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Dividends paid 0.0 1.4 1.0 1.0 0.7 0.8 1.2

Others 0.5 -2.8 -0.1 -1.8 0.0 0.0 0.0

Effects of exchange rate changes on cash 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Cash flow from financing activities -0.8 3.2 4.5 14.7 6.3 -5.8 -1.2

Increase/decrease in liquid assets -1.1 3.4 -4.3 -4.8 4.6 1.2 7.5

Liquid assets at end of period 14.1 17.6 13.3 8.5 13.1 14.4 21.9


paragon AG


Key ratios (EUR m) 2012 2013 2014 2015 2016E 2017E 2018E

P&L growth analysis

Sales growth 5.1 % 4.9 % 7.0 % 20.2 % 8.7 % 18.8 % 20.3 %

EBITDA growth -8.7 % 5.9 % -15.8 % 35.0 % 14.1 % 28.0 % 21.9 %

EBIT growth -11.1 % 1.7 % -21.1 % 24.8 % 18.1 % 34.7 % 26.6 %

EPS growth -12.2 % -15.0 % -29.7 % 22.3 % 19.0 % 54.7 % 34.4 %

Efficiency

Total operating costs / sales 86.9 % 85.7 % 94.2 % 100.0 % 92.0 % 90.0 % 88.9 %

Sales per employee 181.1 188.5 167.5 169.3 175.4 202.2 236.2

EBITDA per employee 30.4 31.9 22.3 25.3 27.5 34.2 40.5

Balance sheet analysis

Avg. working capital / sales 7.3 % 11.0 % 13.1 % 11.3 % 11.4 % 10.8 % 10.2 %

Inventory turnover (sales/inventory) 9.6 9.9 11.4 8.5 8.0 8.0 8.0

Trade debtors in days of sales 9.3 29.8 45.1 39.9 41.0 38.0 36.0

A/P turnover [(A/P*365)/sales] 15.8 16.6 28.3 41.2 42.0 42.0 42.0

Cash conversion cycle (days) 51.5 71.2 52.0 43.2 47.9 45.0 43.0

Cash flow analysis

Free cash flow 0.4 0.3 -8.9 -19.1 -1.7 7.0 8.8

Free cash flow/sales 0.5 % 0.4 % -11.3 % -20.1 % -1.7 % 5.7 % 5.9 %

FCF / net profit 7.6 % 8.2 % -320.6 % -562.4 % -42.4 % 112.5 % 104.3 %

Capex / depn 162.0 % 112.9 % 376.2 % 498.1 % 200.0 % 107.9 % 104.2 %

Capex / maintenance capex 120.2 % 93.3 % 423.6 % 510.3 % 142.9 % 103.3 % 121.6 %

Capex / sales 8.9 % 6.6 % 20.3 % 33.6 % 13.6 % 7.3 % 6.8 %

Security

Net debt 2.1 5.9 16.0 38.3 40.6 34.3 26.8

Net Debt/EBITDA 0.2 0.5 1.5 2.7 2.5 1.7 1.1

Net debt / equity 0.2 0.4 0.9 2.0 1.6 1.0 0.6

Interest cover 6.9 5.2 3.2 2.7 2.9 4.1 5.2

Dividend payout ratio 31.0 % 26.1 % 37.1 % 20.0 % 20.0 % 20.0 % 20.0 %

Asset utilisation

Capital employed turnover 2.2 1.8 1.6 1.4 1.3 1.4 1.6

Operating assets turnover 3.6 3.2 2.6 2.1 2.2 2.6 3.0

Plant turnover 5.2 5.7 3.9 2.7 2.9 3.7 4.5

Inventory turnover (sales/inventory) 9.6 9.9 11.4 8.5 8.0 8.0 8.0

Returns

ROCE 25.0 % 21.7 % 14.0 % 13.4 % 12.3 % 14.9 % 17.5 %

ROE 35.7 % 24.8 % 16.1 % 17.5 % 15.6 % 18.3 % 19.1 %

Other

Interest paid / avg. debt 6.7 % 7.7 % 7.5 % 7.7 % 6.4 % 5.9 % 6.2 %

No. employees (average) 389 392 472 561 589 607 625

Number of shares 4.1 4.1 4.1 4.1 4.1 4.1 4.1

DPS 0.4 0.3 0.3 0.2 0.2 0.3 0.4

EPS reported 1.13 0.96 0.67 0.82 0.98 1.52 2.04

Valuation ratios

P/BV 9.8 8.0 7.4 6.6 4.9 3.7 2.9

EV/sales 1.9 1.8 1.8 1.8 1.6 1.3 1.1

EV/EBITDA 11.2 10.8 13.8 11.8 10.5 7.9 6.2

EV/EBITA 14.8 14.0 19.8 18.5 15.9 11.6 8.8

EV/EBIT 17.0 17.0 23.3 21.6 18.5 13.2 10.0

EV/FCF 374.6 416.5 -16.4 -8.8 -99.4 23.4 17.9

Adjusted FCF yield 5.6 % 5.6 % 4.5 % 5.3 % 5.8 % 7.7 % 9.7 %

Dividend yield 1.1 % 0.8 % 0.8 % 0.5 % 0.6 % 1.0 % 1.3 %


paragon AG


Disclosures regarding research publications of Hauck & Aufhäuser Privatbankiers KGaA pursuant to section 34b of the German Securities Trading Act (WpHG) and distributed in the UK under an EEA branch passport, subject to the FCA requirements on research recommendation disclosures

It is essential that any research recommendation is fairly presented and discloses interests of indicates relevant conflicts of interest. Pursuant to section 34b of the German Securities Trading Act (WpHG) a research report has to point out possible conflicts of interest in connection with the analysed company. Further to this, under the FCA’s rules on research recommendations, any conflicts of interest in connection with the recommendation must be disclosed. A conflict of interest is presumed to exist in particular if Hauck & Aufhäuser Privatbankiers KGaA

(1) or its affiliate(s) (either in its own right or as part of a consortium) within the past twelve months, acquired the financial instruments of the analysed company,

(2) has entered into an agreement on the production of the research report with the analysed company,

(3) or its affiliate(s) has, within the past twelve months, been party to an agreement on the provision of investment banking services with the analysed company or have received services or a promise of services under the term of such an agreement,

(4) or its affiliate(s) holds a) 5% or more of the share capital of the analysed company, or b) the analysed company holds 5% or more of the share capital of Hauck & Aufhäuser Privatbankiers KGaA or its affiliate(s),

(5) or its affiliate(s) holds a net long (a) or a net short (b) position of 0.5% of the outstanding share capital of the analysed company or derivatives thereof,

(6) or its affiliate(s) is a market maker or liquidity provider in the financial instruments of the issuer,

(7) or the analyst has any other significant financial interests relating to the analysed company such as, for example, exercising mandates in the interest of the analysed company or a significant conflict of interest with respect to the issuer,

(8) The research report has been made available to the company prior to its publication. Thereafter, only factual changes have been made to the report.

Conflicts of interest that existed at the time when this research report was published:

Company Disclosure

paragon AG 8

Historical target price and rating changes for paragon AG in the last 12 months

Initiation coverage

15-February-16

Company Date Analyst Rating Target price Close

paragon AG 16.08.2016 Buy EUR 42.00 -

09.08.2016 Buy EUR 40.00 -

28.06.2016 Buy EUR 40.00 -

27.04.2016 Buy EUR 40.00 -

26.04.2016 Buy EUR 40.00 -

15.03.2016 Buy EUR 40.00 -

paragon AG


16.02.2016 Buy EUR 40.00 -

15.02.2016 Buy EUR 40.00 -

Hauck & Aufhäuser distribution of ratings and in proportion to investment banking services

Buy 58.02 % 100.00 %

Sell 10.69 % 0.00 %

Hold 31.30 % 0.00 %

Date of publication creation: #ATTRIBUTE_DOC_RELEASED_DATE#

Date of publication dissemination: #ATTRIBUTE_DOC_DISTRIBUTION_DATE#

paragon AG


1. General Information/Liabilities This research report has been produced for the information purposes of institutional investors only, and is not in any way a personal recommendation, offer or solicitation to buy or sell the financial instruments mentioned herein. The document is confidential and is made available by Hauck & Aufhäuser Privatbankiers KGaA, exclusively to selected recipients [in DE, GB, FR, CH, US, UK, Scandinavia, and Benelux or, in individual cases, also in other countries]. A distribution to private investors in the sense of the German Securities Trading Act (WpHG) is excluded. It is not allowed to pass the research report on to persons other than the intended recipient without the permission of Hauck & Aufhäuser Privatbankiers KGaA. Reproduction of this document, in whole or in part, is not permitted without prior permission Hauck & Aufhäuser Privatbankiers KGaA. All rights reserved.

Under no circumstances shall Hauck & Aufhäuser Privatbankiers KGaA , any of its employees involved in the preparation, have any liability for possible errors or incompleteness of the information included in this research report – neither in relation to indirect or direct nor consequential damages. Liability for damages arising either directly or as a consequence of the use of information, opinions and estimates is also excluded. Past performance of a financial instrument is not necessarily indicative of future performance. 2. Responsibilities This research report was prepared by the research analyst named on the front page (the ʺProducerʺ). The Producer is solely responsible for the views and estimates expressed in this report. The report has been prepared independently. The content of the research report was not influenced by the issuer of the analysed financial instrument at any time. It may be possible that parts of the research report were handed out to the issuer for information purposes prior to the publication without any major amendments being made thereafter. 3. Organisational Requirements Hauck & Aufhäuser Privatbankiers KGaA took internal organisational and regulative precautions to avoid or accordingly disclose possible conflicts of interest in connection with the preparation and distribution of the research report. All members of Hauck & Aufhäuser Privatbankiers KGaA involved in the preparation of the research report are subject to internal compliance regulations. No part of the Producer’s compensation is directly or indirectly related to the preparation of this financial analysis. 4. Information Concerning the Methods of Valuation/Update The determination of the fair value per share, i.e. the price target, and the resultant rating is done on the basis of the adjusted free cash flow (adj. FCF) method and on the basis of the discounted cash flow – DCF model. Furthermore, a peer group comparison is made. The adj. FCF method is based on the assumption that investors purchase assets only at a price (enterprise value) at which the operating cash flow return after taxes on this investment exceeds their opportunity costs in the form of a hurdle rate of 7.5%. The operating cash flow is calculated as EBITDA less maintenance capex and taxes. Within the framework of the DCF approach, the future free cash flows are calculated initially on the basis of a fictitious capital structure of 100% equity, i.e. interest and repayments on debt capital are not factored in initially. The adjustment towards the actual capital structure is done by discounting the calculated free cash flows with the weighted average cost of capital (WACC), which takes into account both the cost of equity capital and the cost of debt. After discounting, the calculated total enterprise value is reduced by the interest-bearing debt capital in order to arrive at the equity value. Hauck & Aufhäuser Privatbankiers KGaA uses the following three-step rating system for the analysed companies: Buy: Sustainable upside potential of more than 10% within 12 months Sell: Sustainable downside potential of more than 10% within 12 months. Hold: Upside/downside potential is limited. No immediate catalyst visible. NB: The ratings of Hauck & Aufhäuser Privatbankiers KGaA are not based on a performance that is expected to be “relative“ to the market. The decision on the choice of the financial instruments analysed in this document was solely made by Hauck & Aufhäuser Privatbankiers KGaA. The opinions and estimates in this research report are subject to change without notice. It is within the discretion of Hauck & Aufhäuser Privatbankiers KGaA whether and when it publishes an update to this research report. 5. Major Sources of Information Part of the information required for this research report was made available by the issuer of the financial instrument. Furthermore, this report is based on publicly available sources (such as, for example, Bloomberg, Reuters, VWD-Trader and the relevant daily press) believed to be reliable. Hauck & Aufhäuser Privatbankiers KGaA has checked the information for plausibility but not for accuracy or completeness. 6. Competent Supervisory Authority Hauck & Aufhäuser Privatbankiers KGaA are under supervision of the BaFin – German Federal Financial Supervisory Authority Bundesanstalt für Finanzdienstleistungsaufsicht), Graurheindorfer Straße 108, 53117 Bonn and Marie-Curie-Straße 24 – 28, 60439 Frankfurt a.M. This document is distributed in the UK under a MiFID EEA branch passport and in compliance with the applicable FCA requirements. 7. Specific Comments for Recipients Outside of Germany This research report is subject to the law of the Federal Republic of Germany. The distribution of this information to other states in particular to the USA, Canada, Australia and Japan may be restricted or prohibited by the laws applicable within this state. 8. Miscellaneous According to Article 4(1) No. i of the delegated regulation 2016/958 supplementing regulation 596/2014 of the European Parliament, further information regarding investment recommendations of the last 12 months are published under: https://www.hauck-aufhaeuser.de/page/UVV_InstitutResearch

https://www.hauck-aufhaeuser.de/page/UVV_InstitutResearch

paragon AG


Contacts: Hauck&Aufhäuser Privatbankiers KGaA

Hauck & Aufhäuser Research

Hauck & Aufhäuser Privatbankiers KGaA Mittelweg 16/17 20148 Hamburg Germany

Tel.: +49 (0) 40 414 3885 93 Fax: +49 (0) 40 414 3885 71 Email: [email protected] www.ha-research.de

Sascha Berresch, CFA

Head of Research Tel.: +49 40 414 3885 85 E-Mail: [email protected]

Leonhard Bayer

Analyst Tel.: +49 40 414 3885 79 E-Mail: [email protected]

Henning Breiter


Lars Dannenberg


Nils-Peter Gehrmann


Pierre Gröning

Analyst Tel.: +49 40 450 6342 30 92 E-Mail: [email protected]

Christian Glowa


Aliaksandr Halitsa


Christian Salis


Christian Schwenkenbecher


Torben Teichler


Tim Wunderlich, CFA


Hauck & Aufhäuser Sales

Oliver Anderson

Sales Tel.: +44 207 408 1100 E-Mail: [email protected]

Toby Woods


Hugues Madelin

Sales Tel.: +33 1 78 41 40 62 E-Mail: [email protected]

Christian Alisch

Sales Tel.: +49 40 414 3885 99 E-Mail: [email protected]

Vincent Bischoff


Alexander Lachmann


Georgina Harrold


Jan Neynaber


Marco Schumann


JPP Eurosecurities Inc.

Sales North America Quinn Raftery Tel.: + 1 231 649 4998 E-Mail: [email protected]

Hauck & Aufhäuser Sales Trading

Hauck & Aufhäuser Privatbankiers KGaA Mittelweg 16/17 20148 Hamburg Germany

Tel.: +49 40 414 3885 75 Fax: +49 40 414 3885 71 Email: [email protected] www.hauck-aufhaeuser.de

Mirko Brueggemann

Trading Tel.: +49 40 414 3885 75 E.Mail: [email protected]

Joseph Kaselak


Christian von Schuler


Fin Schaffer


Kathleen Jonas

Middle-Office Tel.: +49 40 414 3885 97 E.Mail: [email protected]

Carolin Weber

Middle-Office Tel.: +49 40 414 3885 87 E.Mail: [email protected]

mailto:info@ha-research.

mailto:[email protected]


mailto:%[email protected]

mailto:%[email protected]






Documents

Template for HA Research Notes · 2016-11-03 · paragon AG 3 Hauck & Aufhäuser Privatbankiers KGaA Executive Summary Historically, paragon has developed and produced electrical,