Capital Stage AG. More to come. Buy (Buy) EUR (8.40 EUR ) BANKHAUS LAMPE // 1 10/09/2015

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1 BANKHAUS LAMPE // 1 Capital Stage AG More to come 10/09/2015 Buy (Buy) EUR (8.40 EUR ) Close 08/09/ EUR Bloomberg: CAP GY WKN: Sector Share price performance Financial Services 52 week high 8.64 EUR 52 week low 3.57 EUR Compared to SDAX YTD 53.7% 1 month 10.3% 12 months 93.0% Our roadshows in Zurich and Frankfurt with CFO Dr Christoph Husmann support our positive view on the stock. As the company is still optimising the terms and conditions of its financing, we have decreased the interest rate assumption in our DCF model from 6% to 4.25%. We clearly reiterate our BUY rating with a new price target of (old: 8.40). INVESTMENT CASE Low-risk business model: Capital Stage runs a broadly diversified portfolio of 73 solar and six wind farms in Germany, France, Italy and the UK with a maximum capacity of 498 MWp. We expect the company to increase its capacity to 600 MWp in the near term. During our roadshow, the management stated that it is going for a capacity of 1 GWp by the end of High-quality portfolio limits risks: Capital Stage is focused on investments in highquality plants in select European markets with both secure and attractive operating conditions. Guaranteed feed-in tariffs (FIT) provide stable revenues and attractive yields. High-quality installed base: The existing parks have premium equipment from firsttier manufacturers ensuring a high-quality portfolio. The 100% subsidiary in charge of the technical management ensures high system availability. CATALYSTS In light of a well-filled acquisition pipeline, we expect to see steady positive newsflow. The company s guidance is always based on the current portfolio, which means that acquisitions should lead to a steady uptrend in business projections. Share data EV (m EUR; 2015) 1,490 Market Cap (m EUR) 625 No. of shares (m) 74 Free float 52.0% VALUATION We derive our new price target from a DCF model, which suggests additional upside potential of 26% even after the strong rally. The dilution of our EPS estimates is due to the scrip dividend. The majority of investors (80%) decided to take new shares instead of cash. Next event Quarterly Results 30/11/2015 Change in model Sales EBIT EPS 2015e % 2016e % 2017e % Analyst Christoph Schlienkamp, Investmentanalyst DVFA Phone: +49 (0) christoph.schlienkamp@bankhaus-lampe.de See end of document for disclaimer. in m EUR e 2016e 2017e Sales EBIT EBIT margin 55.6% 59.6% 60.1% 60.9% 57.7% Net financial debt ,047 1,184 Free cash-flow EPS (in EUR) DPS (in EUR) Dividend yield 2.7% 3.1% 2.4% 3.0% 3.0% EV/Sales EV/EBIT Price Earnings ratio (P/E)

2 BANKHAUS LAMPE // 2 Meeting highlights from our roadshows Well-filled acquisition pipeline Conservative acquisition strategy No increase of risk profile Capital Stage has a well-filled acquisition pipeline for the expansion of its activities comprising a capacity of about 200 MWp. The company confirmed that it is on track to increase its current capacity from 498 MW to 600 MW by the end of For the first time, we heard the CFO announce that the company was going for a capacity of 1 GWp by the end of The key objective is profitable growth. Capital Stage pursues a conservative acquisition strategy based on well-researched country analyses. The company takes account of the following investment criteria: Limited country risk Reliable remuneration systems (FIT) Professional market environment Attractive terms and conditions for funding Use of high-quality components Special deal access for the group CFO clearly stated that the company does not intend to increase its risk profile by diversifying into other markets (e.g. PV in South Africa or wind in Poland) to achieve a higher internal rate of return (IRR). The company is aiming for a regional distribution of its business with 40% in Germany and 60% abroad. Its key target markets are currently photovoltaics in Denmark, Australia, North America and/or Chile. These countries fit the company s return/risk profile. The medium-term goal is a split of up to 25% wind activities and 75% solar business. The CFO also clearly stated that the company is only seeking on-shore activities and is not interested in anything off-shore. Looking for further financing alternatives In light of the previous investments and an attractive acquisition pipeline, we assume that the current funds (equity 70 m, transaction volume 280 m) will be fully invested by the end of As a result, we believe the acquisition announcements should systematically provide positive newsflow in the coming months. In addition, the company is always looking for options (equity, debt, hybrid) to fund its future growth. Our channel checks suggest that shortage of capital is unlikely to be a problem for this business for the time being. CFO Husmann ruled out a large capital increase. A smaller capital increase could be an option for balance sheet reasons. An equity ratio of 20% would probably be a solid figure. He also stated that, if the company decides to go for equity, it will design the acquisitions so that the capital increase will not be dilutive for existing shareholders. Opportunities from co-operation The company already has a broad international network including, but not limited to, renowned project developers, general contractors, operators, business partners, service providers, brokers, advisors, and banks. Capital Stage is the largest independent solar farm operator in Germany today. The company was therefore able

3 BANKHAUS LAMPE // 3 to further improve its reputation and awareness levels. This also raises its chances of being proactively offered attractive solar and/or wind farms. For example, following the recent takeover of solar farms from Austria s Stumpf group, Capital Stage confirmed that it was currently looking into further options for co-operation with Stumpf. Benefiting from lower interest rates Dividend increases ahead CEO to leave for personal reasons No change in strategy with new CEO Capital Stage is also in the process of refinancing parts of the parks to benefit from the currently low interest rates. In August, for example, the company announced that it successfully negotiated favourable interest rates with Deutsche Kreditbank for eight loans concerning five solar parks and a wind park in Germany. These parks went onto the grid between 2008 and In some cases, the rates are considerably below those previously agreed (BHLe: up to 100 bp). The new interest rates apply from 2018 until the loans are fully repaid. These refinancing arrangements underscore, in our view, the strength of the long-standing partnership with Deutsche Kreditbank, which provides financing for 16 Capital Stage solar parks and three Capital Stage wind parks in Germany. We assume that the company will increase its future pay-out (BHLe: after 0.15 for 2014, BHLe: ). In recent years, the company offered its dividend payments via shares or in cash. In 2015, 80% of the shareholders chose new shares (2014: 50%), which indicates a solid investor base. We understood that Capital Stage would also offer the scrip dividend in the future. Current CEO, Felix Goedhart, will leave Capital Stage at the end of October for personal reasons. Last week, Goedhart sold his 2.39% stake in Capital Stage to Lobelia Beteiligungs GmbH, the investment vehicle of supervisory board member Dr Jörn Kreke (price: 7.65). Lobelia just published that it now owns 3.76%. In our view, this transaction can be viewed as positive as it is a clear sign that the supervisory board is confident about Capital Stage s growth prospects. As of 1 November 2015, Klaus-Dieter Maubach will take over as the new CEO. Previously, he was a member of E.ON SE s executive board. There, he was responsible, among other things, for innovative energy concepts and implementing a new business model for decentralised and renewable energies. CFO Husmann stated very clearly during our roadshow that the company will not change its strategy. In future, Capital Stage will also focus on investments in high-quality plants in selected European markets with both secure and attractive operating conditions. For example, investing in biomass or bioethanol is not on the agenda.

4 BANKHAUS LAMPE // 4 Company valuation Our valuation of Capital Stage mainly focuses on a DCF model, which we believe best reflects the company s business model and its specific features. Focusing on DCF model Specific features One must bear in mind that the cash-flow estimates in our analysis are based on the MWp-weighted average remaining term of the feed-in tariff system. For Capital Stage, we estimate a term of some 17 years. Our assumptions imply constant cash flow growth in the period This is based on the conservative assumption that there will be no further growth through acquisitions. We add a "terminal cash value" of 50.5 m to the calculated present value. This is based on the assumption that the plants will still be generating power after 20 years of operation. We consider this approach to be conservative. Because after 20 years of guaranteed feed-in tariffs, the solar and wind farms, which will be fully written down by then, should still feed into the grid albeit at lower tariffs. Our calculation of the residual cash value is based on the following assumptions: Expected power price of 6 eurocents/kwh EBIT margin: 60% of revenue Discount rate of 4.25% Future availability of plants: 10 years Annual degradation of 5%

5 BANKHAUS LAMPE // 5 Discounted Cash-flow model Capital Stage AG DCF model (EUR m) 2015e 2016e 2017e 2018e 2019e 2020e 2021e 2022e 2023e 2024e 2025e 2026e 2027e 2028e 2029e 2030e 2031e 2032e EBIT adj EBIT Non-Operating / FD EBIT Industrial Business Taxes NOPAT Depreciation Capex /- Change in working capital /- Other cash items Net Cashflow Discounting period in years WACC 3.8% 3.8% 3.8% 3.8% 3.8% 3.8% 3.8% 3.8% 3.8% 3.8% 3.8% 3.8% 3.8% 3.8% 3.8% 3.8% 3.8% 3.8% Present value Calculation of fair value per share WACC model Sum of all present values 1,320 Risk-free rate 0.67% thereof Terminal Value 4% Market risk premium 6.5% + Financial Assets 0.0 Beta Minorities -7.8 Expected return on investment 6.1% - Pension provisions 0.0 Cost of debt 4.25% - Net financial debt (start of year) Tax rate 25.0% - Others 0 Cost of debt after taxes 3.19% Fair equity value No. of shares [in mio.] 74.5 Terminal Value Fair value per share [in ] Sensitivity of fair value per share Model assumptions WACC Short-term CAGR (first 3 years) 28.4% ### -100 Bp -50 Bp 3.8% +50 Bp +100 Bp Medium-term CAGR (next 5 years) 0.0% Fair Value/Share Terminal value growth (ad infinity) 0.0% Terminal value EBIT margin 60.0% Source: Company information, Bankhaus Lampe Research DCF-based price target of Overall, the aforementioned parameters lead us to a DCF-based price target of This clearly confirms our BUY recommendation.

6 BANKHAUS LAMPE // 6 Key figures Capital Stage AG Income statement in m EUR e 2016e 2017e Sales Own work capitalised Total sales Material expenses Personnel expenses Unusual or infrequent items Other operating result EBITDA Depreciation EBITA Amortisation of goodwill Amortisation of intangible assets EBIT Financial result Income on ordinary activities Extraordinary income/loss EBT Taxes Net income from cont. operations Net income from discont. operations Minority interest Net income (adj.) No. of shares EPS e 2016e 2017e Gross margin 88.7% 95.1% 96.7% 98.6% 98.8% EBITDA margin 88.4% 109.6% 99.2% 96.9% 88.8% EBITA margin 55.6% 59.6% 60.1% 60.9% 57.7% EBIT margin 55.6% 59.6% 60.1% 60.9% 57.7% EBT margin 27.8% 30.7% 34.1% 31.0% 30.7% Net profit margin 24.6% 33.5% 29.0% 26.3% 23.0% Tax rate 11.3% -9.2% 15.0% 15.0% 25.0% Growth rates yoy e 2016e 2017e Sales 26.3% 36.6% 47.8% 27.8% 15.8% EBITDA 49.4% 69.2% 33.8% 24.9% 6.1% EBIT 54.1% 46.4% 49.0% 29.5% 9.7% EBT 66.8% 50.7% 64.4% 16.0% 14.7% Net income (adj.) 53.6% 85.5% 28.0% 16.0% 1.2% EPS 53.6% 44.0% 23.8% 14.6% 1.2%

7 BANKHAUS LAMPE // 7 Capital Stage AG Balance sheet Assets (in m EUR) e 2016e 2017e Fixed assets ,305 1,540 1,740 Property, plant and equipment ,015 1,255 1,430 Intangible assets Financial assets Other long-term assets Current assets Inventories Accounts receivable Other current assets Securities Cash Total assets ,400 1,640 1,799 Equity and liabilities in m EUR Shareholders equity Shareholders equity (before minority) Minorities Non-current liabilities ,036 1,226 1,336 Pension provisions Other provisions Long-term financial debt ,020 1,100 Other long-term debt Current liabilities Short-term debt Other accruals short-term Accounts payable Other liabilities Total equity and liabilities ,400 1,640 1,799 Capital Stage AG Balance sheet structure Assets e 2016e 2017e Fixed assets 88.4% 85.5% 93.2% 93.9% 96.7% Property, plant and equipment 68.8% 68.5% 72.5% 76.5% 79.5% Intangible assets 16.6% 15.0% 19.3% 16.2% 16.1% Current assets 11.6% 14.5% 6.8% 6.1% 3.3% Inventories 0.3% 0.2% 0.2% 0.2% 0.3% Accounts receivable 0.8% 0.9% 1.2% 1.2% 1.3% Cash 9.4% 12.0% 3.8% 3.2% 0.3% Equity and liabilities Shareholders equity 35.0% 24.7% 19.0% 17.7% 17.2% Non-current liabilities 59.8% 68.6% 74.0% 74.7% 74.3% Pension provisions 0.0% 0.0% 0.0% 0.0% 0.0% Long-term financial debt 51.3% 60.4% 60.7% 62.2% 61.1% Current liabilities 5.2% 6.7% 7.0% 7.6% 8.5% Short-term debt 3.9% 4.5% 4.3% 4.9% 5.0% Accounts payable 0.4% 1.3% 1.8% 1.7% 1.7%

8 BANKHAUS LAMPE // 8 Capital Stage AG Cash flow statement in m EUR e 2016e 2017e Net income (adj.) Depreciation Amortisation of goodwill & intangible assets Change of provisions Other Operating Cash-flow before changes in w/c Change in inventory Change in accounts receivable Change in accounts payable Change in other working capital positions Operating Cash-flow Capex, excluding maintenance Payments for acquisitions Financial investments Income from asset disposals Income from financial investments Cash-flow from investing activities Free cash-flow Capital measures Increase/decrease in debt position Purchase of own shares Other financing Cash-flow Dividend paid Cash-flow from financing activities Increase/ decrease in liquid assets Effects of exchange rate changes Cash at beginning of period Change in total cash and cash equivalents Cash at end of period

9 BANKHAUS LAMPE // 9 Capital Stage AG Ratios e 2016e 2017e Per Share Data EPS Book value per share Free Cash-flow per share Dividend per share Valuation ratios EV/Sales EV/EBITDA EV/EBIT Price Earnings ratio (P/E) Price to book (total equity) Dividend yield 2.7% 3.1% 2.4% 3.0% 3.0% Profitability ratios EBITDA margin 88.4% 109.6% 99.2% 96.9% 88.8% EBIT margin 55.6% 59.6% 60.1% 60.9% 57.7% Net return on sales 24.6% 33.5% 29.0% 26.3% 23.0% Return on capital employed (ROCE) 5.9% 5.3% 5.9% 6.4% 6.5% Productivity ratios Capital turnover 927.7% 1,080.9% 1,130.4% 1,044.9% 1,020.6% Operating leverage Sales per employee 850,612 1,179,182 1,642,857 2,100,000 2,431,429 EBIT per employee 472, , ,143 1,278,571 1,402,857 Number of employees (in thousands) Financial ratios Equity ratio 35.0% 24.7% 19.0% 17.7% 17.2% Net financial debt (in m EUR) ,047 1,184 Net debt / Equity 130.8% 213.8% 322.2% 361.3% 381.7% Interest cover > 10 > 10 > 10 > 10 > 10 Net debt / EBITDA Working Capital (in m EUR) Change Working Capital (in m EUR) WC /sales 7.8% -2.6% -4.3% -2.7% -1.8% Stocks in days of sales Trade debtors in days of sales Trade creditors in days of COGS/Material cost Cash conversion cycle Invest. (property/plant/equity) / Depreciation 3.6% 91.8% 570.7% 260.4% 194.3% Others Sales CAGR (last 3 years) 63.7% 30.0% 36.6% 37.1% 29.8% EBIT CAGR (last 3 years) 65.2% 51.6% 49.8% 41.4% 28.4% Net income CAGR (last 3 years) 103.9% 118.5% 53.9% 40.2% 14.5% Pay out ratio 39.8% 41.5% 44.7% 48.7% 48.1% Free cash-flow (in m EUR) Free cash flow yield -56.8% -8.5% -68.6% -30.8% -23.3%

10 BANKHAUS LAMPE // 10 Disclaimer Analyst declaration The relevant research analysts, as named on the front cover of this research report, certify that (a) all of the views expressed in this research report accurately reflect their personal views about the securities and companies mentioned in this research report; and (b) that no part of their compensation was, is or will be directly or indirectly related to the specific recommendation(s) or views expressed by them in this research report. Rating system Shares are rated based upon analyst forecasts with regard to the performance of the share during a period of twelve months. The rating Buy within this general concept means that the share s forecast performance is at least 10%. Hold means a price movement in a bandwidth of -10% to 10%. Sell means that the share s forecast performance is less than -10%. Explanation of valuation Unless shown otherwise, the stated upside targets are based upon either a discounted cash-flow pricing or upon a comparison of the performance ratios of companies that the respective analyst considers to be comparable, or upon a combination of these two analyses. Analysts modify the result of this fundamental assessment to incorporate the potential trend in market sentiment. Overview of changes in our recommendations/price targets in the previous twelve months for: Capital Stage AG (CAP GY), Close (08/09/2015): 8.40 EUR, Analyst: Christoph Schlienkamp (Investmentanalyst DVFA). Date of publication Price at recommendation Rating Price target 02/07/ EUR Buy 8.40 EUR The distribution of recommendations in our investments universe is currently as follows (date: 01/07/2015) Rating Basis: all analysed companies Basis: companies with investment banking relationships Buy 52.1% 75.0% Hold 37.9% 25.0% Sell 10.0% 0.0% Under Review 0.0% 0.0%

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13 BANKHAUS LAMPE // 13 Contacts HEAD OF CAPITAL MARKETS & ADVISORY Ute Gerbaulet + 49 (0) ute.gerbaulet@bankhaus-lampe.de HEAD OF EQUITY Ralf Menzel + 49 (0) ralf.menzel@bankhaus-lampe.de VIA INTERNATIONAL KBR FINANCE LLC CHAPERONE OF BANKHAUS LAMPE KG IN THE US EQUITY SALES CONTINENTAL EUROPE Ulrich Klingmüller + 49 (0) ulrich.klingmueller@bankhaus-lampe.de EQUITY SALES IN GB Yusuf Bilgic + 44 (0) yb@lampe-capital.com EQUITY SALES IN US Jörg Hagenbuch jh@ikbrfinance.com EQUITY SALES TRADING CONTINENTAL EUROPE Nils Carstens + 49 (0) nils.carstens@bankhaus-lampe.de EQUITY SALES TRADING IN GB Chris Ford + 44 (0) cf@lampe-capital.com EQUITY SALES TRADING IN US Kim Last kl@ikbrfinance.com Bankhaus Lampe Research Jägerhofstraße 10 D Düsseldorf research@bankhaus-lampe.de + 49 (0) (0)