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Masterflex SE — Investor Presentation 2016
Feb 26, 2016
276_rns_2016-02-26_d29dfb59-41c5-4de9-aab9-01fefff2e48d.pdf
Investor Presentation
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WGZ BANK RESEARCH
Update
Masterflex SE 3) 4) February 26, 2016
| Recommendation: | Buy | Company data | |||
|---|---|---|---|---|---|
| before: | - | as of | - | Sector | Industry |
| Target price (EUR) | 7.00 (before: 7.50) | Market segment | Prime Standard | ||
| Share price (Xetra) (EUR) | 5.75 | ISIN | DE0005492938 | ||
| 02/25/16 5:36 PM |
Reuters | MZXG.DE | |||
| Share price potential | 22% | Bloomberg | MZX | ||
Profitability enhancement is the focus of the current business year
- Q The preliminary 2015 sales growth of 2.6% (our forecast: 3.0%) was within the company target of 2%-4%. EBIT fell, however, stronger than expected to EUR4.9m (6.3; our forecast: 5.8; Masterflex target: slightly below 6.3; among others, special items in Q4). After the 2015 margin underperformed the historical average the main focus of the current year lies on profitability enhancement. For this purpose a combination of measures consisting of in-house cost reductions, product portfolio optimisation as well as efficiency enhancements in production and warehouse announced recently are mainly to be implemented in 2016 according to the CFO. We thus expect in 2016 a recovery of the EBIT margin to 9.5% (so far: 10.0%) given sales of EUR66.2m (so far: 67.5). In 2017 we expect an EBIT margin of 10.1% (so far: 10.9%) given sales of EUR68.5m (so far: 72.0; in our opinion, a slower than expected pace of internationalisation).
- Q We have cut our price target to EUR7.00 (before: 7.50; DCF model). However, we reiterate our Buy recommendation (attractive 2016E valuation assuming successful implementation of the efficiency and optimisation measures).
| 2012 | 2013 | 2014 | 2015(E) | 2016E | 2017E | |
|---|---|---|---|---|---|---|
| Gross revenue | 55.0 | 57.9 | 62.5 | 64.1 | 66.2 | 68.5 |
| Growth in revenue | 3.7% | 5.3% | 7.9% | 2.6% | 3.2% | 3.5% |
| EBIT | 7.6 | 6.1 | 6.3 | 4.9 | 6.3 | 6.9 |
| EBIT margin | 13.7% | 10.6% | 10.1% | 7.6% | 9.5% | 10.1% |
| Net income | 3.4 | 2.6 | 3.0 | 2.4 | 3.1 | 3.4 |
| Net margin | 6.3% | 4.5% | 4.9% | 3.7% | 4.8% | 5.0% |
| EPS | 0.39 | 0.29 | 0.34 | 0.27 | 0.35 | 0.39 |
| DPS | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Net financial debt / EBITDA |
2.0 | 2.2 | 1.8 | 2.1 | 2.0 | 1.9 |
| Net gearing | 1.1 | 0.8 | 0.7 | 0.6 | 0.7 | 0.6 |
| Free cash flow (FCF) | 0.9 | 4.0 | 3.0 | 0.4 | -2.6 | 2.6 |
| FCF per share | 0.10 | 0.45 | 0.34 | 0.05 | -0.29 | 0.30 |
| EV/sales | 1.2 | 1.2 | 1.3 | 1.2 | 1.0 | 1.0 |
| EV/EBITDA | 6.2 | 7.7 | 8.7 | 9.8 | 7.1 | 6.6 |
| EV/EBIT | 8.4 | 11.0 | 12.6 | 15.6 | 10.6 | 9.8 |
| EV/FCF | 57.6 | 16.0 | 26.2 | 174.5 | -26.6 | 24.7 |
| P/E | 13.1 | 19.1 | 20.4 | 24.8 | 16.2 | 14.8 |
| P/B | 2.4 | 2.3 | 2.6 | 2.2 | 1.7 | 1.6 |
| Dividend yield | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% |
Figures in EURm except EPS, DPS and FCF per share (EUR); source: Masterflex SE, own estimates Authors: A. Vashkevich, S. Röhle (analysts)
| Share data | ||
|---|---|---|
| Shares (m) | 8.866 | |
| Freefloat | 54.9% | |
| Market cap. (EURm) | 51.0 | |
| ∅ Trading volume (shares) | 3.294 | |
| 52W High 03/03/2015 |
EUR7.41 | |
| 52W Low 01/25/2016 |
EUR5.45 | |
| Events | ||
| final Q4 results | 03/30/16 | |
| Q1 results | 05/09/16 | |
| Performance | ||
| absolute | relative to | |
| DAX | ||
| 1M | 0.9% | 6.2% |
| 3M | -4.2% | 16.2% |
| 6M | -11.9% | -5.7% |
| 12M | -21.4% | -4.6% |
Index weighting
No index membership
Source: Bloomberg
Contact
Research Department
Head: Dr. Frank Wohlgemuth, CIIA/CEFA
Equity Sales Team +49 (0) 211 778-3370
Thomas Aldenrath / [email protected] Jörg Eberhardt / [email protected] Oliver Garbe / [email protected] Dorothee Hönes / [email protected] Ansgar Krekeler / [email protected] Thomas Reher / [email protected] Udo Zartner / [email protected]
1)2)3)4)6) Please notice the advice regarding possible conflicts of interests as well as the disclaimer at the end of this document Please notice the indications concerning the preparation of this document, the indications concerning potential conflicts of interest, the compulsory information required by paragraph 34b WpHG (Wertpapierhandelsgesetz - Securities Trade Act) and the liability declaration at the end of this document. This financial analysis in the meaning of paragraph 34b WpHG shall only be distributed to professional clients or eligible counterparties according to § 31a WpHG.
Valuation
Valuation summary
Our valuation of the Masterflex share is further based solely on a DCF model. This produces a fair value of EUR62.7m (among others, reduction of the sales forecast for phase I and II; announced expansion investments mainly in 2016). This corresponds to a fair value per share of EUR7.07. Our adjusted price target is EUR7.00 (before: 7.50).
New price target of EUR7.00 (before: EUR7.50)
| Masterflex SE | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| DCF model | ||||||||||
| in EURm | 2016E | 2017E | 2018E | 2019E | 2020E | 2021E | 2022E | 2023E | 2024E | 2025E |
| Sales | 66.2 | 68.5 | 71.5 | 75.2 | 79.6 | 84.8 | 89.9 | 94.8 | 99.6 | 104.1 |
| Growth yoy | 3.2% | 3.5% | 4.5% | 5.2% | 5.8% | 6.5% | 6.0% | 5.5% | 5.0% | 4.5% |
| EBIT margin | 9.5% | 10.1% | 10.8% | 11.5% | 12.5% | 13.0% | 12.9% | 12.8% | 12.6% | 12.5% |
| EBIT | 6.3 | 6.9 | 7.7 | 8.7 | 10.0 | 11.0 | 11.6 | 12.1 | 12.6 | 13.0 |
| - Income taxes | -1.9 | -2.1 | -2.3 | -2.6 | -3.0 | -3.3 | -3.5 | -3.6 | -3.8 | -3.9 |
| + Amortisation and depreciation | 3.1 | 3.3 | 3.3 | 3.3 | 3.4 | 3.4 | 3.5 | 3.5 | 3.5 | 3.6 |
| +/- Other non cash items | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Gross operating cash flow | 7.5 | 8.1 | 8.7 | 9.4 | 10.4 | 11.2 | 11.6 | 12.0 | 12.3 | 12.8 |
| -/+ Change in net working capital | -0.8 | -1.1 | -0.8 | -1.0 | -1.2 | -1.4 | -1.3 | -1.3 | -1.3 | -1.2 |
| - Investments in fixed assets | -9.3 | -4.5 | -3.6 | -3.6 | -3.6 | -3.6 | -3.6 | -3.6 | -3.5 | -3.6 |
| Free cash flow | -2.6 | 2.6 | 4.3 | 4.9 | 5.6 | 6.2 | 6.7 | 7.1 | 7.5 | 7.9 |
| Present values | -2.4 | 2.2 | 3.4 | 3.5 | 3.8 | 3.8 | 3.8 | 3.7 | 3.6 | 3.5 |
| Total present values | 29.0 | |||||||||
| Terminal value | 54.4 | in % of total value: | 65% | |||||||
| Value of operating business + Cash and cash equivalents |
83.4 4.1 |
Model parameters: | ||||||||
| - Financial debt | -24.5 | Target capital structure: | Equity: | 70% | Financial debt: | 30% | ||||
| - Pension provision | 0.0 | |||||||||
| - Minority interests | -0.4 | |||||||||
| Fair market value of equity | 62.7 | Risk-free Rate | 3.0% | Beta: | 1.6 | Risk prem. debt: | 1.8% | |||
| Risk premium | 5.0% | Tax shield: | 30.0% | |||||||
| Number of shares outstanding (m) | 8.866 | Cost of equity | 10.8% | Cost of debt: | 3.4% | |||||
| Fair value per share (EUR) | 7.07 | Growth FCF (TV): | 2.0% | WACC: | 8.6% | Date | 02/26/16 |
Source: own estimates
| Sensitivity analysis (EUR) | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Discount rate (WACC) | ||||||||||
| 7.6% | 8.1% | 8.6% | 9.1% | |||||||
| 1.0% | 7.78 | 6.96 | 6.26 | 5.64 | ||||||
| FCF (TV) Growth |
1.5% | 8.32 | 7.41 | 6.63 | 5.96 | |||||
| 2.0% | 8.97 | 7.94 | 7.07 | 6.32 | ||||||
| 2.5% | 9.74 | 8.56 | 7.57 | 6.74 | ||||||
| Source: own estimates |
Strategic perspectives
After the successful phase of restructuring in 2008-2010 the leading supplier of high-tech hoses and connection systems began to implement its growth strategy in 2011. The two main pillars of this strategy are internationalisation and innovation. In the frames of internationalisation strategy Masterflex, whose focus has historically been set on Europe, plans to diversify geographically. Regions such as especially North America as well as Asia that have a total market volume of several hundred million euros and demonstrate an above-average market growth compared to Europe are to be specifically targeted. Masterflex has both production and distribution sites in North America (US) and since 2012 in Asia (China, Singapore). Mainly larger customers (OEMs as distribution channel) should be targeted while expanding into future markets.
In the emergent market Asia, where China is primarily addressed, Masterflex generated a clearly seven-digit sales volume in 2014. The focus market North America has so far been proportionally the largest market outside Europe (sales of about EUR4m; activities since 2000). In the long run the expansion potential here is comparable to that of in Europe. The broad and highquality product portfolio bears a competitive edge for the German hightech hose manufacturer in the development of the North American market. However, in the past two years the US site demonstrated only a stable development. One of the reasons was the weak distribution owed to the local management. Masterflex has introduced measures to improve distribution in North America (among others, change in local management as of September 1, 2015; active participation in trade fairs). According to management the first positive effects of these measures may show already in 2016. In general we consider the internationalisation outside Europe as a long-term process (gradual expansion in the customer network). However, the expansion outside Europe can be accelerated by selected company acquisitions especially in North America in the mid-term (not part of our forecasts).
Since 2011 focus on growth driven by internationalisation and innovation
Focus of internationalisation on North America and Asia (especially China)
Internationalisation outside Europe is a long-term process, but…
could be accelerated by possible acquisitions, especially in North America, in our opinion
Innovation is also important for the growth. Masterflex performs its R&D activities mainly in cooperation with its clients and partly with its suppliers. Among the noteworthy examples of innovative products that Masterflex launched in the past years are the Master-PUR Performance (spiral hose used in bulk good transportation; launched in 2013), the Master-PUR Trivolution (launched in 2014) and the high-temperature exhaust hose FireFlex (used in fire departments; US market; launched in 2014).
The growth strategy having been implemented since 2011 has reaped the first fruit on the topline level. Till 2014 sales rose above average with a CAGR of 5.6% to EUR62.5m (2011: 53.0). The 2014 EBIT fell to EUR6.3m (2011: 7.5), which, however, was mainly due to the staff expansion as part of the internationalisation strategy (2013 - completion of the first stage; personnel expenses ratio in 2014 of 37.1% (2013: 37.5%; 2011: 33.9%)). Although the 2014 EBIT margin fell to 10.1% (2011: 14.1%), it still remained in the double-digit area. Due to the already communicated weakness of the US business and internal problems at the Novoplast Schlauchtechnik subsidiary (see our update of November 30, 2015) the preliminary 2015 sales growth of 2.6% (our forecast: 3.0%; Masterflex target: 2%-4%) was only moderate. The 2015 EBIT fell stronger than expected to EUR4.9m (our forecast: 5.8; Masterflex target: slightly below 6.3; several negative one-off items). The EBIT margin decreased to 7.6% (2014: 10.1%). To prevent the disappointing development of the preceding year in future and successfully continue the growth strategy followed since 2011 in the mid-term, Masterflex will mainly focus on its profitability enhancement in 2016. In addition to inhouse cost reductions (among others, in the personnel area) and optimisation of the product portfolio Masterflex has recently announced efficiency enhancements within its production and warehouse. With this respect Innovations are mostly client-driven
First success of the growth strategy on the topline level; double-digit EBIT margin till 2014
Below-average development in 2015 burden on profitability
Focus on profitability enhancement in 2016 by…
1)2)3)4)6) Please notice the advice regarding possible conflicts of interests as well as the disclaimer at the end of this document
Masterflex SE February 26, 2016 P. 5
Masterflex plans the capacity expansion at the headquarters in Gelsenkirchen, which aims at improving the delivery capacity especially for clients from the "Rest of Europe" region as well as optimising warehouse and logistics processes. The planned expansion investments of about EUR7m will mostly be made in the current year and mainly financed via a bank line (for buildings). Assuming a successful implementation of the optimisation and efficiency measures we consider a rebounding EBIT margin of 9.5% (so far: 10.0%) given sales of EUR66.2m (so far: 67.5) in 2016 realistic (EBIT of EUR6.3m (so far: 6.8). In 2017 we expect an EBIT margin of 10.1% (so far: 10.9%) given sales of EUR68.5m (so far: 72.0; EBIT of EUR6.9m (so far: 7.9)). We slightly cut our short-term sales forecasts, since the markets outside Europe should be developed at a slower pace than assumed so far.
…optimisation and efficiency enhancement programme
Our short-term forecasts
Appendix
Masterflex SE
Consolidated income statement
| EURm | 2012 | 2013 | 2014 | 2015(E) | 2016E | 2017E |
|---|---|---|---|---|---|---|
| Sales | 55.0 | 57.9 | 62.5 | 64.1 | 66.2 | 68.5 |
| Changes in inventory of finished goods and work in progress | 0.8 | 0.3 | 0.3 | 0.2 | 0.3 | 0.0 |
| Work performed by the enterprise and capitalised | 0.3 | 0.0 | 0.3 | 0.0 | 0.0 | 0.0 |
| Other operating income | 1.6 | 0.4 | 0.9 | 0.9 | 0.6 | 0.7 |
| Gross revenue | 57.7 | 58.7 | 63.9 | 65.2 | 67.1 | 69.1 |
| Cost of materials | -17.8 | -18.1 | -20.4 | -20.7 | -21.2 | -22.0 |
| Staff costs | -20.1 | -21.8 | -23.3 | -24.5 | -24.5 | -24.8 |
| Depreciation | -2.6 | -2.7 | -2.9 | -2.9 | -3.1 | -3.3 |
| Other expenses | -9.6 | -10.0 | -11.1 | -12.2 | -11.9 | -12.1 |
| EBIT | 7.6 | 6.1 | 6.3 | 4.9 | 6.3 | 6.9 |
| Other interest and similar results | 0.0 | -0.1 | 0.0 | 0.1 | 0.1 | 0.1 |
| Interest and similar expenses | -1.6 | -1.5 | -1.2 | -1.1 | -1.4 | -1.5 |
| Net profit/loss from investments carried at equity | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Other financial results | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Net financial income/expense | -1.6 | -1.6 | -1.1 | -1.1 | -1.3 | -1.4 |
| Extraordinary result | -0.2 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| EBT | 5.8 | 4.5 | 5.2 | 3.8 | 5.0 | 5.5 |
| Income tax expense | -1.9 | -1.7 | -2.0 | -1.4 | -1.8 | -1.9 |
| Net income | 3.9 | 2.9 | 3.2 | 2.4 | 3.2 | 3.5 |
| Extraordinary result (after taxes) | -0.3 | -0.1 | -0.2 | 0.0 | 0.0 | 0.0 |
| Minority interests | -0.2 | -0.2 | 0.0 | 0.0 | -0.1 | -0.1 |
| Net income after minority interests | 3.4 | 2.6 | 3.0 | 2.4 | 3.1 | 3.4 |
| Number of shares (m) | 8.87 | 8.87 | 8.87 | 8.87 | 8.87 | 8.87 |
| Earnings per share (basic, EUR) | 0.39 | 0.29 | 0.34 | 0.27 | 0.35 | 0.39 |
Source: Masterflex SE; own estimates
Masterflex SE
Consolidated income statement (as percentage of sales)
| 2012 | 2013 | 2014 | 2015(E) | 2016E | 2017E | |
|---|---|---|---|---|---|---|
| Sales | 100.0% | 100.0% | 100.0% | 100.0% | 100.0% | 100.0% |
| Changes in inventory of finished goods and work in progress | 1.4% | 0.6% | 0.5% | 0.3% | 0.5% | 0.0% |
| Work performed by the enterprise and capitalised | 0.5% | 0.1% | 0.4% | 0.0% | 0.0% | 0.0% |
| Other operating income | 3.0% | 0.8% | 1.4% | 1.4% | 0.9% | 0.9% |
| Gross revenue | 104.9% | 101.4% | 102.4% | 101.7% | 101.4% | 100.9% |
| Cost of materials | -32.4% | -31.3% | -32.6% | -32.3% | -32.1% | -32.1% |
| Staff costs | -36.5% | -37.7% | -37.2% | -38.3% | -37.1% | -36.2% |
| Depreciation | -4.8% | -4.6% | -4.6% | -4.5% | -4.7% | -4.8% |
| Other expenses | -17.5% | -17.3% | -17.8% | -19.0% | -18.0% | -17.7% |
| EBIT | 13.7% | 10.6% | 10.1% | 7.6% | 9.5% | 10.1% |
| Other interest and similar results | 0.1% | -0.1% | 0.0% | 0.1% | 0.1% | 0.1% |
| Interest and similar expenses | -2.9% | -2.6% | -1.8% | -1.8% | -2.1% | -2.2% |
| Net profit/loss from investments carried at equity | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% |
| Other financial results | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% |
| Net financial income/expense | -2.8% | -2.7% | -1.8% | -1.7% | -2.0% | -2.1% |
| Extraordinary result | -0.3% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% |
| EBT | 10.6% | 7.8% | 8.3% | 5.9% | 7.5% | 8.0% |
| Income tax expense | -3.4% | -2.9% | -3.1% | -2.2% | -2.7% | -2.8% |
| Net income | 7.1% | 5.0% | 5.2% | 3.7% | 4.8% | 5.2% |
| Extraordinary result (after taxes) | -0.5% | -0.1% | -0.2% | 0.0% | 0.0% | 0.0% |
| Minority interests | -0.4% | -0.3% | -0.1% | 0.0% | -0.1% | -0.1% |
| Net income after minority interests | 6.3% | 4.5% | 4.9% | 3.7% | 4.8% | 5.0% |
Source: Masterflex SE; own estimates
1)2)3)4)6) Please notice the advice regarding possible conflicts of interests as well as the disclaimer at the end of this document
Consolidated balance sheet
| EURm | 2012 | 2013 | 2014 | 2015(E) | 2016E | 2017E |
|---|---|---|---|---|---|---|
| Goodwill | 3.3 | 3.3 | 3.3 | 3.3 | 3.3 | 3.3 |
| Other intangible assets | 0.9 | 1.0 | 0.8 | 0.9 | 1.0 | 1.1 |
| Property, plant and equipment | 21.2 | 21.8 | 22.6 | 23.2 | 29.3 | 30.4 |
| Non-current financial assets | 0.4 | 0.3 | 0.3 | 0.3 | 0.3 | 0.3 |
| Other non-current receivables and assets | 0.1 | 0.1 | 0.0 | 0.0 | 0.0 | 0.0 |
| Deferred taxes | 4.3 | 3.5 | 2.6 | 2.7 | 2.5 | 2.4 |
| Non-current assets | 30.2 | 29.9 | 29.6 | 30.4 | 36.5 | 37.6 |
| Inventories | 11.1 | 10.7 | 11.7 | 13.0 | 13.8 | 14.7 |
| Trade receivables | 5.5 | 5.1 | 5.4 | 6.2 | 6.7 | 7.3 |
| Other current assets | 1.2 | 1.3 | 0.9 | 1.4 | 1.2 | 1.0 |
| Cash and cash equivalents | 2.8 | 4.7 | 4.4 | 5.8 | 7.7 | 8.4 |
| Current assets | 20.6 | 21.8 | 22.4 | 26.4 | 29.4 | 31.4 |
| Assets held for sale | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Total assets | 50.8 | 51.7 | 52.0 | 56.8 | 65.9 | 69.0 |
| Subscribed capital | 8.7 | 8.7 | 8.7 | 8.7 | 8.7 | 8.7 |
| Capital reserve | 26.3 | 26.3 | 26.3 | 26.3 | 26.3 | 26.3 |
| Other comprehensive income | -15.3 | -12.7 | -9.7 | -9.7 | -9.7 | -9.7 |
| Other components of equity | -1.4 | -1.8 | -1.9 | -1.9 | -1.9 | -1.9 |
| Treasury shares | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Consolidated profit | 0.0 | 0.0 | 0.0 | 2.4 | 5.5 | 8.9 |
| Dividend payment | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Shareholder's equity | 18.3 | 20.5 | 23.4 | 25.8 | 28.9 | 32.4 |
| Minority interests | 0.5 | 0.6 | 0.4 | 0.4 | 0.4 | 0.4 |
| Total equity | 18.9 | 21.1 | 23.8 | 26.2 | 29.3 | 32.8 |
| Other non-current provisions | 0.2 | 0.2 | 0.2 | 0.2 | 0.2 | 0.2 |
| Non-current financial liabilities | 17.1 | 18.2 | 15.1 | 16.8 | 22.7 | 22.2 |
| Deferred tax liabilities | 0.8 | 0.6 | 0.6 | 0.6 | 0.6 | 0.6 |
| Other non-current liabilities | 1.5 | 1.5 | 1.3 | 1.3 | 1.4 | 1.5 |
| Non-current liabilities and provisions | 19.6 | 20.4 | 17.2 | 18.9 | 24.8 | 24.5 |
| Current provisions | 2.6 | 2.5 | 2.3 | 2.5 | 2.6 | 2.4 |
| Current financial liabilities | 6.1 | 4.4 | 5.2 | 5.7 | 5.4 | 5.1 |
| Trade payables | 1.7 | 1.6 | 1.5 | 1.6 | 1.7 | 2.0 |
| Other current liabilities | 1.5 | 1.5 | 1.8 | 1.7 | 1.8 | 1.9 |
| Current liabilities | 11.9 | 10.0 | 10.8 | 11.5 | 11.5 | 11.5 |
| Liabilities directly connected with assets held for sale | 0.4 | 0.2 | 0.2 | 0.2 | 0.2 | 0.2 |
| Total equity and liabilities | 50.8 | 51.7 | 52.0 | 56.8 | 65.9 | 69.0 |
Consolidated balance sheet (as percentage of total assets)
| 4.8% | |
|---|---|
| Goodwill 6.5% 6.4% 6.3% 5.8% 5.0% |
|
| Other intangible assets 1.8% 1.8% 1.5% 1.6% 1.5% |
1.6% |
| Property, plant and equipment 41.8% 42.1% 43.6% 40.9% 44.5% |
44.1% |
| Non-current financial assets 0.8% 0.7% 0.6% 0.5% 0.5% |
0.4% |
| Other non-current receivables and assets 0.2% 0.2% 0.0% 0.0% 0.0% |
0.1% |
| Deferred taxes 8.4% 6.7% 4.9% 4.7% 3.9% |
3.5% |
| Non-current assets 59.4% 57.9% 57.0% 53.6% 55.4% |
54.5% |
| Inventories 21.9% 20.7% 22.5% 22.9% 20.9% |
21.3% |
| Trade receivables 10.8% 9.9% 10.3% 10.9% 10.2% |
10.6% |
| Other current assets 2.4% 2.4% 1.7% 2.5% 1.8% |
1.4% |
| Cash and cash equivalents 5.5% 9.2% 8.5% 10.2% 11.7% |
12.2% |
| Current assets 40.6% 42.1% 43.0% 46.4% 44.6% |
45.5% |
| Assets held for sale 0.0% 0.0% 0.0% 0.0% 0.0% |
0.0% |
| Total assets 100.0% 100.0% 100.0% 100.0% 100.0% |
100.0% |
| Subscribed capital 17.2% 16.9% 16.8% 15.4% 13.3% |
12.7% |
| Capital reserve 51.7% 50.8% 50.5% 46.2% 39.8% |
38.1% |
| Other comprehensive income -30.2% -24.6% -18.6% -17.0% -14.7% |
-14.0% |
| Other components of equity -2.7% -3.5% -3.6% -3.3% -2.8% |
-2.7% |
| Treasury shares 0.0% 0.0% 0.0% 0.0% 0.0% |
0.0% |
| Consolidated profit 0.0% 0.0% 0.0% 4.2% 8.4% |
13.0% |
| Dividend payment 0.0% 0.0% 0.0% 0.0% 0.0% |
0.0% |
| Shareholder's equity 36.1% 39.6% 45.1% 45.4% 43.9% |
47.0% |
| Minority interests 1.1% 1.2% 0.8% 0.7% 0.6% |
0.6% |
| Total equity 37.1% 40.7% 45.9% 46.1% 44.5% |
47.5% |
| Other non-current provisions 0.4% 0.4% 0.4% 0.4% 0.3% |
0.3% |
| Non-current financial liabilities 33.7% 35.1% 29.0% 29.5% 34.4% |
32.2% |
| Deferred tax liabilities 1.6% 1.1% 1.2% 1.1% 0.9% |
0.9% |
| Other non-current liabilities 3.0% 2.9% 2.5% 2.3% 2.1% |
2.2% |
| Non-current liabilities and provisions 38.6% 39.5% 33.0% 33.2% 37.7% |
35.5% |
| Current provisions 5.1% 4.8% 4.4% 4.4% 3.9% |
3.5% |
| Current financial liabilities 12.0% 8.4% 9.9% 10.0% 8.2% |
7.4% |
| Trade payables 3.3% 3.1% 2.9% 2.9% 2.6% |
2.9% |
| Other current liabilities 3.0% 2.9% 3.5% 3.0% 2.8% |
2.8% |
| Current liabilities 23.4% 19.3% 20.7% 20.3% 17.5% |
16.6% |
| Liabilities directly connected with assets held for sale 0.8% 0.5% 0.4% 0.4% 0.3% |
0.3% |
| Total equity and liabilities 100.0% 100.0% 100.0% 100.0% 100.0% |
100.0% |
Consolidated cash flow statement
| EURm | 2012 | 2013 | 2014 | 2015(E) | 2016E | 2017E |
|---|---|---|---|---|---|---|
| EBIT | 7.0 | 5.6 | 6.1 | 4.9 | 6.3 | 6.9 |
| Depreciation | 2.1 | 2.7 | 2.9 | 2.9 | 3.1 | 3.3 |
| Paid/received income tax | -1.8 | -0.9 | -1.3 | -1.4 | -1.8 | -1.9 |
| Other non-cash expenses/income | -0.1 | 0.1 | -0.3 | 0.0 | 0.0 | 0.0 |
| Changes in pension provisions and other non-current liabilities | -0.8 | -0.1 | -0.2 | 0.0 | 0.0 | 0.0 |
| Gross cash flow | 6.4 | 7.4 | 7.2 | 6.3 | 7.6 | 8.3 |
| Change in inventories, trade receivables and other assets | -1.8 | 1.1 | -0.4 | -2.7 | -1.1 | -1.3 |
| Change in trade payables and other liabilities | -1.0 | -0.6 | 0.0 | 0.4 | 0.3 | 0.2 |
| Other non-cash items | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Net cash from operating activities | 3.6 | 8.0 | 6.8 | 4.0 | 6.8 | 7.2 |
| Payments to acquire property, plant and equipment | -2.1 | -3.4 | -3.6 | -3.5 | -9.2 | -4.4 |
| Payments to acquire financial assets | -0.1 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Payments to acquire intangible assets | -0.4 | -0.4 | -0.1 | -0.1 | -0.1 | -0.1 |
| Payments made for investments in non-current assets | -2.6 | -3.8 | -3.7 | -3.6 | -9.3 | -4.5 |
| Payments received from the disposal of consolidated subsidiaries | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Proceeds from the disposal of non-current assets | 0.0 | 0.3 | 0.3 | 0.0 | 0.0 | 0.0 |
| Proceeds/payments relating to financial assets | 0.2 | 0.2 | 0.0 | 0.0 | 0.0 | 0.0 |
| Payments received from the sale of consolidated subsidiaries | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Other non-current assets | -0.1 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Net cash from/used in investing activities | -2.5 | -3.3 | -3.4 | -3.6 | -9.3 | -4.5 |
| Increase/decrease from financial liabilities | -0.9 | -0.5 | -2.3 | 2.2 | 5.6 | -0.7 |
| Payments to owners and minority interests | -0.3 | -0.2 | -0.2 | 0.0 | 0.0 | 0.0 |
| Dividend payout | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Change in deferred taxes | 0.0 | 0.0 | 0.0 | -0.2 | 0.1 | 0.1 |
| Proceeds/payments from capital measures | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Interest payments/interest received | -1.5 | -1.5 | -1.0 | -1.1 | -1.3 | -1.4 |
| Proceeds/payments of financial assets | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Net cash from/used in financing activities | -2.7 | -2.2 | -3.6 | 0.9 | 4.4 | -2.0 |
| Changes in cash and cash equivalents | -1.6 | 2.5 | -0.2 | 1.3 | 1.9 | 0.7 |
| Exchange rates/consolidation/others | -0.2 | -0.6 | -0.1 | 0.0 | 0.0 | 0.0 |
| Cash and cash equivalents at the beginning of the period | 4.6 | 2.8 | 4.8 | 4.4 | 5.8 | 7.7 |
| Cash and cash equivalents at the end of the period | 2.8 | 4.8 | 4.4 | 5.8 | 7.7 | 8.4 |
| Payments/debt positions held for sale | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Funds balance | 2.8 | 4.8 | 4.4 | 5.8 | 7.7 | 8.4 |
| Key figures | ||||||
|---|---|---|---|---|---|---|
| 2012 | 2013 | 2014 | 2015(E) | 2016E | 2017E | |
| Growth rates | ||||||
| Gross revenue growth | ||||||
| EBITDA growth | 3.7% | 5.3% | 7.9% | 2.6% | 3.2% | 3.5% |
| EBIT growth | 2.1% 0.8% |
-13.8% -19.1% |
4.6% 3.3% |
-15.1% -22.7% |
20.6% 28.7% |
8.8% 10.0% |
| EBT growth | -6.0% | -21.8% | 14.5% | -26.8% | 31.4% | 10.0% |
| EPS growth | -6.4% | -24.7% | 17.2% | -22.5% | 33.2% | 9.5% |
| Margins | ||||||
| EBITDA margin | 18.5% | 15.1% | 14.7% | 12.1% | 14.2% | 14.9% |
| EBIT margin | 13.7% | 10.6% | 10.1% | 7.6% | 9.5% | 10.1% |
| EBT margin | 10.6% | 7.8% | 8.3% | 5.9% | 7.5% | 8.0% |
| Net margin | 6.3% | 4.5% | 4.9% | 3.7% | 4.8% | 5.0% |
| Yield analysis | ||||||
| ROI | 6.8% | 5.1% | 5.9% | 4.3% | 5.1% | 5.1% |
| ROCE | 15.7% | 11.6% | 11.1% | 8.3% | 9.7% | 9.7% |
| ROE | 19.7% | 13.0% | 13.5% | 9.4% | 11.3% | 11.1% |
| ROIC | 15.0% | 11.3% | 11.0% | 8.3% | 9.7% | 9.8% |
| Balance sheet analysis | ||||||
| Equity ratio | ||||||
| Equity/Non-current assets ratio | 37.1% 62.5% |
40.7% 70.4% |
45.9% 80.5% |
46.1% 86.1% |
44.5% 80.4% |
47.5% 87.2% |
| Equity + non-current debt/Non-current assets ratio | 127.5% | 138.7% | 138.5% | 148.1% | 148.4% | 152.5% |
| Asset intensity | 59.4% | 57.8% | 57.0% | 53.6% | 55.4% | 54.5% |
| Inventory turnover | 5.4 | 5.3 | 5.6 | 5.2 | 4.9 | 4.8 |
| Receivables turnover | 10.6 | 10.9 | 12.0 | 11.1 | 10.3 | 9.8 |
| Days of sales outstanding | 34.5 | 33.4 | 30.5 | 32.9 | 35.6 | 37.3 |
| Working capital/Sales ratio | 18.7% | 20.9% | 19.8% | 21.9% | 23.6% | 24.2% |
| Days of payables outstanding | 32.8 | 33.2 | 27.6 | 27.6 | 28.7 | 30.7 |
| Debt ratios | ||||||
| Net financial debt (EURm) | 20.4 | 17.8 | 15.8 | 16.7 | 20.3 | 18.9 |
| Net financial debt/EBITDA | 2.0 | 2.2 | 1.8 | 2.1 | 2.0 | 1.9 |
| Net gearing | 1.1 | 0.8 | 0.7 | 0.6 | 0.7 | 0.6 |
| EBITDA interest coverage | 6.3 | 5.8 | 8.0 | 6.8 | 6.9 | 6.8 |
| EBIT interest coverage | 4.7 | 4.0 | 5.5 | 4.3 | 4.6 | 4.6 |
| Cash flow analysis | ||||||
| Free cash flow (FCF) | 0.9 | 4.0 | 3.0 | 0.4 | -2.6 | 2.6 |
| FCF/Sales | 1.6% | 6.9% | 4.8% | 0.7% | neg. | 3.9% |
| FCF/Net income | 26.1% | 154.6% | 98.8% | 18.5% | neg. | 76.6% |
| FCF per share (EUR) | 0.10 | 0.45 | 0.34 | 0.05 | -0.29 | 0.30 |
| FCF yield | 2.0% | 8.1% | 4.9% | 0.7% | neg. | 5.2% |
| Capex (EURm) | 2.6 | 3.8 | 3.7 | 3.6 | 9.3 | 4.5 |
| Capex/Depreciation | 1.0% | 1.3% | 1.3% | 1.2% | 3.0% | 1.4% |
| Capex/Sales | 4.7% | 5.4% | 6.0% | 5.6% | 14.1% | 6.6% |
| Valuation multiples | ||||||
| EV/Sales | 1.2 | 1.2 | 1.3 | 1.2 | 1.0 | 1.0 |
| EV/EBITDA | 6.2 | 7.7 | 8.7 | 9.8 | 7.1 | 6.6 |
| EV/EBIT | 8.4 | 11.0 | 12.6 | 15.6 | 10.6 | 9.8 |
| EV/FCF | 57.6 | 16.0 | 26.2 | 174.5 | neg. | 24.7 |
| P/E | 13.1 | 19.1 | 20.4 | 24.8 | 16.2 | 14.8 |
| P/B | 2.4 | 2.3 | 2.6 | 2.2 | 1.7 | 1.6 |
| P/CF | 12.6 | 6.2 | 9.1 | 14.5 | 7.5 | 7.0 |
| P/S | 0.8 | 0.9 | 1.0 | 0.9 | 0.8 | 0.7 |
| Dividend yield | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% |
Source: Masterflex SE; own estimates
1)2)3)4)6) Please notice the advice regarding possible conflicts of interests as well as the disclaimer at the end of this document
⇒ Successful restructuring in years 2008-2010
⇒ 2015: only moderate sales growth of 2.6%. For 2016 and 2017 we expect growth rates of 3.2% and 3.5%, respectively
Distribution of sales by region (2014)
⇒ ⇒ Europe (including Germany) is Masterflex´ main market for historical reasons Mid-term growth focus on North America and Asia (especially China)
Sales development by region (EURm)
⇒ Sales in the German region contain indirect exports, among others
⇒ Above-average growth in the "Rest of Europe" region (success from efficiency enhancement in production and warehouse)
⇒ The operating profit in 2013 was temporarily burdened by the upfront costs of internationalisation
⇒ 2015: weak sales dynamics and one-off items weighed down on the operating result; 2016E: Focus on optimisation and efficiency enhancement
Number of employees and sales/employees
Investments (EURm)
⇒ 2016E: largest share of expansion investments of EUR7.0m (mainly new warehouse capacities and expansion of production area at the headquarters) ⇒ 2011-2013: strong staff expansion (first level of internationalisation strategy); 2015: weak sales dynamics burdened sales/employee
⇒ From 2016 on increase in sales per employee (according to the CFO growth without further staff expansion (excluding the production and warehouse area))
0 100 200 300 400 500 600 700 2012 2013 2014 2015(E) 2016E 2017E 100 104 108 112 116 120 124 128 Number of employees - left axis Sales per employee (EURk) - right axis
Disclaimer
Recommendations concerning particular shares
- Buy: According to our assessment, the stock should register an absolute profit of at least 15% within a 6-month period.
- Hold: According to our assessment, the stock should register an absolute profit between 0 and 15% within a 6-month period.
- Sell: According to our assessment, the stock should register an absolute loss within a 6-month period.
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