AUGUSTA Technologie AG

Transcription

1 Recommendation: BUY (BUY) Risk: MEDIUM (HIGH) Price Target: EUR (23.00) 21 November 2011 On the way to global No. 1 Share price (dark) vs. TecDAX in industrial digital cameras? AUGUSTA recently published figures for the first nine months of 2011, characterised by an impressive sales growth and earnings figures (see next page), adjusted for the Sensortechnics Group. The sale of Sensortechnics Group finalised in October is nothing less than a milestone in AUGUSTA s strategy to focus on its Vision Technologies segment. The sale will lead to an immediate cash-inflow of EUR 47m. During the conference call, management explained that the book gain will amount to at least EUR 30m with an underlying tax rate in the single-digit area. The advantages of the disposal are: 1) significant improvement in balance sheet figures: By the end of the current business year, cash should amount to approx. EUR 74m and net cash at EUR 40m. Equity should amount to more than EUR 140m with a ratio near 70%, 2) Higher profitability: margins in the Vision segment are higher compared to its former Sensors unit, 3) Strengthened position in industrial digital cameras: During the 9M 2011 period, revenues from the camera business amounted to about EUR 38m (AVT with the integrated VDS Vosskühler), while revenues in the complete Vision segment including LMI were 48m. Its cash position gives AUGUSTA the financial scope to further expansion via acquisitions, which is part of its business model. Additionally, after having acquired a vision company, margins may rise further, resulting from higher purchasing power. Depending on the size of its target, AUGUSTA may become the #1 camera producer. During AUGUSTA s capital markets day at VISION 2011 fair, CEO Mr. Harman highlighted some new product lines, e.g. the easy to use Gocator 3D-series from its latest acquisition LMI Technologies. At AVT s stand, one could observe the performance of its Prosilica and -eye product lines that address the high-end camera market. We change our estimates following the sale of Sensortechnics Group and still remain with a BUY recommendation. Our price target rises from EUR to EUR Our dividend estimate for 2011 does not include a bonus payment. Key data FY 12/31, EUR m E* 2012E* 2013E* Sales EBITDA Net result EPS DPS EBITDA margin 17.0% 15.0% 15.6% 18.1% 18.3% 18.4% EBIT margin 14.8% 9.9% 12.6% 12.8% 13.3% 13.7% ROE 12.8% 5.5% 10.3% 5.4% 6.8% 7.0% ROA 8.5% 3.7% 6.5% 3.7% 4.8% 4.9% EV/EBITDA EV/EBIT P/E Source: AUGUSTA Technologie AG, CBS Research AG *continued operations Shares outstanding (m): Ø daily trading volume (3 m., no. of shares): Absolute performance (12 months): Relative performance vs. TecDAX: 1 month 3 months 6 months 12 months Shareholders: Treasury shares Management Free float Financial calendar: Equity Forum, Frankfurt 22 November 2011 Author: Close Brothers Seydler Research AG Ralf Marinoni, CEFA (Analyst) Phone: +49 (0) Source: CBS Research AG, Bloomberg, AUGUSTA Change 2011E 2012E 2013E new old new old new old Sales EBITDA EPS Internet: augusta-ag.de WKN: A0D661 Reuters: ABE1G.DE Short company profile: AUGUSTA is a technology company with focus on the machine vision market. In the field of digital, industrial cameras, AUGUSTA is among the key players worldwide. Share data: Share price (EUR, latest closing price): Performance data: High 52 weeks (EUR): Low 52 weeks (EUR): research@cbseydlerresearch.ag Sector: Industrial Equipm. ISIN: DE000A0D6612 Bloomberg: ABE1 GY 8.5 Market capitalisation (EUR m): Enterprise value (EUR m): , % 0.0% 12.7% 9.7% 15.5% 10.0% 0.3% 89.7% Please notice the information on the preparation of this document, the disclaimer, the advice regarding possible conflicts of interests, and the mandatory information required by 34b WpHG (Securities Trading Law) at the end of this document. This financial analysis in accordance with 34b WpHG is exclusively intended for distribution to individuals that buy or sell financial instruments at their own account or at the account of others in connection with their trading activities, occupation, or employment.

2 9M Key Figures Key Figures (EURm) 9M M 2010 change Sales revenues Group % Vision % Other divisions % EBITDA Group % Vision % Other divisions % Key figures Incoming orders % Order book % Net income % EPS (EUR) % Source: AUGUSTA Technologie AG, CBS Research AG Valuation Valuation summary We applied a multiple valuation and a discounted cash flow (DCF) model to derive the company s fair value. Our peer group comparison indicates a fair value of EUR per share. We focused on the earnings multiples for 2011E to 2013E, adjusted by PPA. Our DCF model results in a fair value of EUR per share. Valuation on the basis of a DCF model and a peer group comparison Weighting DCF valuation results at 50%, we derive a final fair value of EUR per share. Fair Value per share is EUR Consolidation of valuation methods Weighting factor Fair value per share (EUR) Peer group valuation 50.0% DCF valuation 50.0% Fair value per share (EUR) Source: CBS Research AG Close Brothers Seydler Research AG 2

3 8 AUGUSTA Technologie AG Peer Group: Multiples Company name EV / EBITDA EV / EBIT P / E 2011E 2012E 2013E 2011E 2012E 2013E 2011E 2012E 2013E BASLER AG COGNEX CORP n.a n.a ISRA VISION AG MOBOTIX AG AXIS COMMUNICATIONS AB Median (excl. Axis) Median EURm, except EPS (EUR) EBITDA EBIT EPS 2011E 2012E 2013E 2011E 2012E 2013E 2011E 2012E 2013E AUGUSTA Technologie AG: Financial estimates CBS Research Applied multiples: Peer group Median (excl. Axis) Enterprise value (derived) Excess cash and marketable securities Financial debt and minority interest Market capitalization (derived) MEDIAN Premium (discount) vs. Peer Group 0% Fair market capitalization (after discount) Number of shares (m) 8.5 Fair value per share (EUR) Axis is an IT company offering network video solutions for professional installations. The company is the global market leader in network video, driving the ongoing shift from analog to digital video surveillance. If we included Axis in our peer group approach we would have calculated a value of EUR for AUGUSTA shares. As currently the surveillance market contributes with a single-digit percentage rate to AUGUSTA s revenues, we decided not to use Axis for the time being. Discounted Cash Flow Model PHASE 1 PHASE 2 PHASE 3 EURm 2011E 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E Sales YoY grow th -22.3% 6.0% 5.6% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% EBIT EBIT margin 12.8% 13.3% 13.7% 13.5% 13.5% 13.5% 13.5% 13.5% 13.5% 13.5% Income tax on EBIT (cash tax rate) Depreciation and amortisation Other non-cash items Change in net working capital Net capital expenditure Free cash flow Present values Present value Phase Risk free rate 3.50% Target equity ratio 65.0% Present value Phase Equity risk premium 6.00% Beta (fundamental) 1.0 Present value Phase Debt risk premium 2.75% WACC 7.69% Total present value Tax shield 30.0% Terminal growth 2.0% + Excess cash/non-operating assets 77.9 Sensitivity analysis - Financial debt 34.3 Terminal growth (Phase 3) 1.0% 1.5% 2.0% 2.5% 3.0% Fair value of equity WACC 6.7% % Number of shares (m) % % Fair value per share (EUR) % Source: CBS Research AG Close Brothers Seydler Research AG 3

4 Outlook on segments in EUR m E 2012E 2013E Orders Sales Vision Other Segment (formerly "Sensors") Others and reconciliation DCO Group % of sales Vision 0% 29% 35% 63% 63% 64% Other Segment (formerly "Sensors") 63% 71% 65% 37% 37% 36% Others and reconciliation 0% 0% 0% 0% 0% 0% DCO 37% 0% 0% 0% 0% 0% Group 100% 100% 100% 100% 100% 100% EBIT Vision Other Segment (formerly "Sensors") Others and reconciliation DCO Group EBIT margin Vision n.m. 25.4% 23.4% 21.5% 21.8% 22.0% Other Segment (formerly "Sensors") 15.5% 7.1% 11.8% 8.8% 8.9% 9.0% Group 14.8% 9.9% 12.6% 12.8% 13.3% 13.7% % of EBIT Vision 0% 75% 65% 105% 104% 102% Other Segment (formerly "Sensors") 66% 50% 61% 26% 24% 24% Others and reconciliation -15% -27% -26% -31% -28% -26% DCO 49% 0% 0% 0% 0% 0% Group 100% 100% 100% 100% 100% 100% Source: AUGUSTA Technologie AG, CBS Research AG Geographical Breakdown in EURm E 2012E 2013E Sales Germany Rest of Europe North America Asia and RoW Total Proportion of group sales Germany 44.8% 41.0% 39.1% 34.0% 33.5% 33.0% Rest of Europe 35.9% 32.6% 29.9% 21.0% 20.5% 19.5% North America 11.9% 14.3% 12.7% 23.0% 23.0% 23.5% Asia and RoW 7.3% 12.2% 18.4% 22.0% 23.0% 24.0% Total 100% 100% 100% 100% 100% 100% Source: AUGUSTA Technologie AG, CBS Research AG Close Brothers Seydler Research AG 4

5 Appendix Financials AUGUSTA Technologie AG Profit and loss account IFRS EURm E* 2012E* 2013E* Sales YoY grow th n.a % 38.2% -22.3% 6.0% 5.6% Cost of sales in % of sales -59.8% -60.2% -58.9% -52.0% -51.8% -51.5% Gross profit in % of sales 40.2% 39.8% 41.1% 48.0% 48.2% 48.5% Selling expenses in % sales -12.7% -14.4% -13.0% -15.4% -14.7% -14.1% General and administrative expenses in % sales -8.0% -9.2% -10.5% -13.7% -13.3% -12.9% Other operating expenses/income in % sales -1.0% -0.6% -1.5% -0.5% 1.2% 3.4% EBITDA in % of sales 17.0% 15.0% 15.6% 18.1% 18.3% 18.4% EBIT in % of sales 14.8% 9.9% 12.6% 12.8% 13.3% 13.7% Interest and similiar expenses EBT in % of sales 14.3% 8.3% 12.2% 10.8% 13.6% 14.0% Taxes as % of EBT -29.9% -31.5% -29.7% -27.7% -28.0% -28.0% Net income including minorities Minority interests Net income attributable to shareholders in % of sales 10.0% 5.6% 8.5% 7.6% 9.6% 9.9% Shares outstanding (in millions) Earnings per share in EUR (continuing operations) Source: CBS Research AG, AUGUSTA Technologie AG * Continued operations Close Brothers Seydler Research AG 5

6 AUGUSTA Technologie AG Balance Sheet IFRS EURm * 2012E* 2013E* Assets Noncurrent assets as % of total assets 59.2% 62.1% 53.6% 42.9% 40.3% 37.8% Goodwill Intangable assets Property, plant and equipment Property from finance lease Other assets Current assets as % of total assets 40.8% 37.9% 46.4% 57.1% 59.7% 62.2% Inventories Accounts receivables Sundry financial assets Other assets Cash Total Assets Shareholders equity and liabilities Shareholders equity as % of total equity and liabilities 66.3% 67.0% 63.4% 69.2% 70.1% 70.9% Subscribed capital Capital and earnings reserves Retained earnings Treasury shares Currency translation/revaluation reserves Minorities Noncurrent liabilities as % of total equity and liabilities 13.2% 14.3% 16.1% 15.3% 14.8% 14.3% Pension provisions Deferred taxes Financial liabilities Other liabilities Current liabilities as % of total equity and liabilities 20.6% 18.7% 20.5% 15.5% 15.1% 14.8% Income tax liabilities Other provisions Financial liabilities Trade accounts payables Other liabilities Total equity and liabilities Source: CBS Research AG, AUGUSTA Technologie AG * Continued operations Close Brothers Seydler Research AG 6

7 AUGUSTA Technologie AG Cash flow statement IFRS EURm E* 2012E* 2013E* EBT Depreciation and amortisation Changes in inventories Change in trade receivables Chane in trade payables Change in other assets and liabilities Cash flow from operating activities Investment in long-term assets Income from disposal of long-term assets Expenses from purchases of other assets (net) Cash flow from investing activities Financing liabilties/interest payment Others Cash inflow from issuance of preferred stock Net borrowings/retirements of financial debt Dividends paid Cash flow from financing activities Total change in cash and cash equivalents Cash and cash equivalents at the start of the period currency effects / consolidation / others Cash and cash equivalents at the end of the period Source: CBS Research AG, AUGUSTA Technologie AG * Continued operations Close Brothers Seydler Research AG 7

8 Research Schillerstrasse Frankfurt am Main Phone: +49 (0) Roger Peeters +49 (0) Member of the Board Martin Decot +49 (0) Kristina Kardum +49 (0) Igor Kim +49 (0) Anna von Klopmann +49 (0) Gennadij Kremer +49 (0) Ralf Marinoni +49 (0) Manuel Martin +49 (0) Felix Parmantier +49 (0) Marcus Silbe +49 (0) Veysel Taze +49 (0) Ivo Višić +49 (0) Institutional Sales Schillerstrasse Frankfurt am Main Phone: +49 (0) Raimar Bock +49 (0) Head of Sales Raimar.Bock@cbseydler.com Rüdiger Eich +49 (0) Sule Erkan +49 (0) (Germany, Switzerland) Ruediger.Eich@cbseydler.com (Sales-Support) Sule.Erkan@cbseydler.com Ulf Homeyer +49 (0) Klaus Korzilius +49 (0) (Germany, Switzerland) Ulf.Homeyer@cbseydler.com (Benelux, Germany) Klaus.Korzilius@cbseydler.com Stefan Krewinkel +49 (0) Markus Laifle +49 (0) (Execution, UK) Stefan.Krewinkel@cbseydler.com (Execution) Markus.Laifle@cbseydler.com Bruno de Lencquesaing +49 (0) Thomas Rosen +49 (0) (Benelux, France) Bruno.deLencquesaing@cbseydler.com (Germany, Switzerland) Thomas.Rosen@cbseydler.com Christopher Seedorf +49 (0) Janine Theobald +49 (0) (Sales-Support) Christopher.Seedorf@cbseydler.com (Austria, Germany) Janine.Theobald@cbseydler.com Bas-Jan Walhof +49 (0) (Benelux) Bas-Jan.Walhof@cbseydler.com Close Brothers Seydler Research AG 8

9 Disclaimer and statement according to 34b German Securities Trading Act ( Wertpapierhandelsgesetz ) in combination with the provisions on financial analysis ( Finanzanalyseverordnung FinAnV) This report has been prepared independently of the company analysed by Close Brothers Seydler Research AG and/ or its cooperation partners and the analyst(s) mentioned on the front page (hereafter all are jointly and/or individually called the author ). None of Close Brothers Seydler Research AG, Close Brothers Seydler Bank AG or its cooperation partners, the Company or its shareholders has independently verified any of the information given in this document. Section 34b of the German Securities Trading Act in combination with the FinAnV requires an enterprise preparing a security analysis to point out possible conflicts of interest with respect to the company that is the subject of the analysis. Close Brothers Seydler Research AG is a majority owned subsidiary of Close Brothers Seydler Bank AG (hereafter CBS ). However, Close Brothers Seydler Research AG (hereafter CBSR ) provides its research work independent from CBS. CBS is offering a wide range of Services not only including investment banking services and liquidity providing services (designated sponsoring). CBS or CBSR may possess relations to the covered companies as follows (additional information and disclosures will be made available upon request): a. CBS holds more than 5% interest in the capital stock of the company that is subject of the analysis. b. CBS was a participant in the management of a (co)consortium in a selling agent function for the issuance of financial instruments, which themselves or their issuer is the subject of this financial analysis within the last twelve months. c. CBS has provided investment banking and/or consulting services during the last 12 months for the company analysed for which compensation has been or will be paid for. d. CBS acts as designated sponsor for the company's securities on the basis of an existing designated sponsorship contract. The services include the provision of bid and ask offers. Due to the designated sponsoring service agreement CBS may regularly possess shares of the company and receives a compensation and/ or provision for its services. e. The designated sponsor service agreement includes a contractually agreed provision for research services. f. CBSR and the analysed company have a contractual agreement about the preparation of research reports. CBSR receives a compensation in return. g. CBS has a significant financial interest in relation to the company that is subject of this analysis. In this report, the following conflicts of interests are given at the time, when the report has been published: d, f CBS and/or its employees or clients may take positions in, and may make purchases and/ or sales as principal or agent in the securities or related financial instruments discussed in this analysis. CBS may provide investment banking, consulting, and/ or other services to and/ or serve as directors of the companies referred to in this analysis. No part of the authors compensation was, is or will be directly or indirectly related to the recommendations or views expressed. Recommendation System: Close Brothers Seydler Research AG uses a 3-level absolute share rating system. The ratings pertain to a time horizon of up to 6 months: BUY: The expected performance of the share price is above +10%. HOLD: The expected performance of the share price is between 0% and +10%. SELL: The expected performance of the share price is below 0%. Recommendation history over the last 12 months for the company analysed in this report: Date Recommendation Price at change date Price target 16 December 2010 BUY (Initiating Coverage) EUR EUR January 2011 BUY EUR EUR February 2011 BUY EUR EUR March 2011 BUY EUR EUR April 2011 BUY EUR EUR Close Brothers Seydler Research AG 9

10 08 August 2011 BUY EUR EUR October 2011 BUY EUR EUR November 2011 BUY EUR EUR Risk-scaling System: Close Brothers Seydler Research AG uses a 3-level risk-scaling system. The ratings pertain to a time horizon of up to 6 months: LOW: The volatility is expected to be lower than the volatility of the benchmark MEDIUM: The volatility is expected to be equal to the volatility of the benchmark HIGH: The volatility is expected to be higher than the volatility of the benchmark The following valuation methods are used when valuing companies: Multiplier models (price/earnings, price/cash flow, price/book value, EV/Sales, EV/EBIT, EV/EBITA, EV/EBITDA), peer group comparisons, historical valuation approaches, discounting models (DCF, DDM), break-up value approaches or asset valuation approaches. The valuation models are dependent upon macroeconomic measures such as interest, currencies, raw materials and assumptions concerning the economy. 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