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Evotec SE — Investor Presentation 2010
Nov 11, 2010
151_rns_2010-11-11_d9237bbb-0d41-4679-b235-d5db4ddcd3eb.pdf
Investor Presentation
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Evotec AG Evotec AG
Recommendation: BUY(Company Update)
Risk: Medium (Medium)
Price Target: EUR 3.00 (3.00)
3Q figures: Strong operating result
- Today Evotec has published very strong 3Q figures. Revenues increased by 33% to EUR 38.8m (PY: EUR 29.1m) in 9M/2010, which was completely in line with our expectations (CBSR Estimate: EUR 38.9m). On an operating level (EBIT in 9M/10: EUR 1m (PY: EUR -32.9m)), Evotec performed notably better than we expected (CBSR Estimate: EUR -0.6m). The increase in the top line was driven by growth in drug discovery alliances business and milestone achievements. Gross margin improved to 44.0% (PY: 38.3%). The improvement on the operating level is mostly attributable to R&D expenses which declined by 79% to EUR 4.2m (PY: EUR 19.5m). SG&A costs also declined by 12% to EUR 11.6 m (PY: EUR 13.1m). Liquidity including cash, cash equivalents and investments at the end of September 2010 increased from end of June 2010 to EUR 70.2m.
- Evotec confirms its financial guidance for FY 2010 with the only minor adjustment that R&D expenses are now expected to be slightly lower than originally anticipated (~EUR 8m instead of EUR 10m) due to successful partnering: Total Group revenues are expected to grow by more than 20% to EUR 52 to 54m. This growth target is supported by a strong 2010 order book of EUR 51m in October. Evotec also confirms its 2010 year-end liquidity target of >EUR 64 m at constant year-end 2009 currencies.
- Given the strong 3Q results we have slightly adjusted our estimates upward for 2010E. However, we expect that in 4Q/10 R&D expenses will be higher than in the previous quarters of the ongoing year which will burden operating result in the last quarter. All in all for 2010E we expect EBIT to be slightly negative EUR -0.6m (Previous estimate: EUR -2.3m). We also adjusted our estimates for 2011E, and expect now turnaround in 2011E (EBIT estimate: New: EUR 0.2m; Old EUR -1.0m).
- We retained our price target at EUR 3.00/share and leave BUY recommendation.
| Key data | |||||
|---|---|---|---|---|---|
| Y/E 31.12., EUR m | 2008 | 2009 | 2010E | 2011E | 2012E |
| Revenues | 39.6 | 42.7 | 53.5 | 62.0 | 71.1 |
| Gross profit | 17.6 | 18.4 | 23.7 | 29.1 | 34.9 |
| EBITDA | -68.4 | -38.2 | 1.7 | 2.9 | 5.3 |
| EBIT | -73.2 | -42.3 | -0.6 | 0.2 | 2.3 |
| Net income/loss | -78.3 | -45.5 | -1.0 | 0.3 | 2.3 |
| EPS | -0.82 | -0.43 | -0.01 | 0.00 | 0.02 |
| CPS | -0.43 | -0.20 | -0.03 | 0.03 | 0.04 |
| Gross margin | 44.5% | 43.2% | 44.3% | 47.0% | 49.0% |
| EBITDA margin | -172.7% | -89.6% | 3.3% | 4.7% | 7.5% |
| EBIT margin | -184.8% | -99.1% | -1.0% | 0.3% | 3.2% |
Source: Evotec AG; CBS Research AG;
11 November 2010
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.
Appendix
| Financial review for 3Q/2010 | ||||||
|---|---|---|---|---|---|---|
| 3Q figures reported | Market consensus* | CBSR Estimates | ||||
| Revenue | 13,872.0 | 13,350.0 | 13,900.0 | |||
| EBIT | 672.0 | -1,000.0 | -904.0 | |||
| Net income | 647.0 | -1,100.0 | -847.0 | |||
Source: Evotec AG; CBS Research AG; *Bloomberg estimates
| 2010 Estimates: Quarterly breakdown | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| IFRS | EUR 1,000 1Q 2010E | 2Q 2010 | 1H 2010 | 3Q 2010 | 9M 2010 | 4Q 2010E | 2H 2010E | FY 2010E | |
| Revenues | 9,841.0 | 15,127.0 | 24,968.0 | 13,872.0 | 38,840.0 | 14,655.5 | 28,527.5 | 53,495.5 | |
| Gross profit | 3,729.0 | 7,525.0 | 11,254.0 | 5,827.0 | 17,081.0 | 6,595.0 | 12,422.0 | 23,676.0 | |
| as % of revenue | 37.9% | 49.7% | 45.1% | 42.0% | 44.0% | 45.0% | 43.5% | 44.3% | |
| EBIT | -1,474.0 | 1,816.0 | 342.0 | 672.0 | 1,014.0 | -1,568.2 | -896.2 | -554.2 | |
| as % of revenue | -15.0% | 12.0% | 1.4% | 4.8% | 2.6% | -10.7% | -3.1% | -1.0% | |
| EBT | -1,358.0 | 1,869.0 | 511.0 | 860.0 | 1,371.0 | -1,709.6 | -849.6 | -338.6 | |
| as % of revenue | -13.8% | 12.4% | 2.0% | 6.2% | 3.5% | -11.7% | -3.0% | -0.6% | |
| Net result | -1,247.0 | 1,342.0 | 95.0 | 647.0 | 742.0 | -1,709.6 | -1,062.6 | -967.6 | |
| as % of revenue | -12.7% | 8.9% | 0.4% | 4.7% | 1.9% | -11.7% | -3.7% | -1.8% |
Source: Evotec AG; CBS Research AG
Profit and loss account
| IFRS EUR 1,000 | 2008 | 2009 | 2010E | 2011E | 2012E |
|---|---|---|---|---|---|
| Total revenues YoY grow th |
39,613 -27.2% |
42,683 7.7% |
53,495 25.3% |
62,010 15.9% |
71,132 14.7% |
| Cost of revenue | -21,977 | -24,262 | -29,819 | -32,865 | -36,277 |
| as % of sales | -55.5% | -56.8% | -55.7% | -53.0% | -51.0% |
| Gross profit | 17,636 | 18,421 | 23,676 | 29,145 | 34,855 |
| as % of sales | 44.5% | 43.2% | 44.3% | 47.0% | 49.0% |
| Research and development expenses | -42,537 | -20,947 | -7,975 | -10,000 | -13,017 |
| as % of sales | -107.4% | -49.1% | -14.9% | -16.1% | -18.3% |
| Selling, general and administrative (S,G&A) | -19,950 | -16,695 | -15,826 | -18,603 | -19,206 |
| as % of sales | -50.4% | -39.1% | -29.6% | -30.0% | -27.0% |
| Other operating expenses | -28,359 | -23,078 | -429 | -325 | -340 |
| as % of sales | -71.6% | -54.1% | -0.8% | -0.5% | -0.5% |
| EBITDA | -68,404 | -38,234 | 1,742 | 2,907 | 5,319 |
| as % of sales | -172.7% | -89.6% | 3.3% | 4.7% | 7.5% |
| Depreciation and amortisation | -4,806 | -4,065 | -2,296 | -2,690 | -3,027 |
| as % of sales | -12.1% | -9.5% | -4.3% | -4.3% | -4.3% |
| EBIT | -73,210 | -42,299 | -554 | 217 | 2,292 |
| as % of sales | -184.8% | -99.1% | -1.0% | 0.3% | 3.2% |
| Net financial results | -2,760 | -2,520 | 216 | 239 | 238 |
| EBT (Earnings before income taxes) | -75,970 | -44,819 | -339 | 455 | 2,530 |
| as % of sales | -191.8% | -105.0% | -0.6% | 0.7% | 3.6% |
| Income taxes | -2,317 | -678 | -629 | -114 | -253 |
| as % of EBT | 3.0% | 1.5% | 185.8% | -25.0% | -10.0% |
| Net income/loss | -78,287 | -45,497 | -968 | 342 | 2,277 |
| as % of sales | -197.6% | -106.6% | -1.8% | 0.6% | 3.2% |
| Shares outstanding (in tsd.) | 95,199 | 106,846 | 111,060 | 115,595 | 115,595 |
| Basic earnings per share (EUR) | -0.82 | -0.43 | -0.01 | 0.00 | 0.02 |
Source Evotec AG; CBS Research AG
Research
Schillerstrasse 27 - 29 60313 Frankfurt am Main
Phone: +49 (0)69 – 977 8456-0
| Roger Peeters CEO |
+49 (0)69 -977 8456- 12 [email protected] |
||
|---|---|---|---|
| Martin Decot | +49 (0)69 -977 8456- 13 [email protected] |
Rabeya Khan | +49 (0)69 -977 8456- 10 [email protected] |
| Igor Kim | +49 (0)69 -977 8456- 15 [email protected] |
Ralf Marinoni | +49 (0)69 -977 8456- 17 [email protected] |
| Manuel Martin | +49 (0)69 -977 8456- 16 [email protected] |
Enid Omerovic | +49 (0)69 -977 8456- 19 [email protected] |
| Marcus Silbe | +49 (0)69 -977 8456- 14 [email protected] |
Veysel Taze | +49 (0)69 -977 8456- 18 [email protected] |
Institutional Sales
60313 Frankfurt am Main 25 Dowgate Hill
Phone: +49 (0)69 – 9 20 54-400 Phone: +44 20 3100 0281
Raimar Bock +49 (0)69 -9 20 54-115 Head of Sales [email protected]
Rüdiger Eich +49 (0)69 -9 20 54-119 Uwe Gerhardt +49 (0)69 -9 20 54-168
Klaus Korzilius +49 (0)69 -9 20 54-114 Stefan Krewinkel +49 (0)69 -9 20 54-118
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(Germany, Switzerland) [email protected] (Germany, Switzerland) [email protected]
(Austria, Benelux, Germany) [email protected] (Execution, UK) [email protected]
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Phone: +1 201 216 0100
Tom Higgins +1 201 706 6013 [email protected]
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.
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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 |
|---|---|---|---|
| 30 July 2010 | BUY (Initiating Coverage) | EUR 2.00 | EUR 2.80 |
| 12 August 2010 | BUY (Company Update) | EUR 2.26 | EUR 2.90 |
| 05 October 2010 | BUY (Company Update) | EUR 2.22 | EUR 2.90 |
| 28 October 2010 | BUY (Company Update) | EUR 2.30 | EUR 3.00 |
| 11 November 2010 | BUY (Company Update) | EUR 2.49 | EUR 3.00 |
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. In addition, market moods influence the valuation of companies. The figures taken from the income statement, the cash flow statement and the balance sheet upon which the evaluation of companies is based are estimates referring to given dates and therefore subject to risks. These may change at any time without prior notice.
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