PDF - Sarantis

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Sarantis
Greece/ Personal Goods
Company update
Buy
unchanged
Share price*: EUR
Target price: EUR
Reuters/Bloomberg
Accounting Standard/Since
8.72
10.10
SRSr.AT/SAR GA
IFRS/2004
Market capitalisation (EURm ) 333.0
No. of shares (m) 38.1
Free float 52.0%
Daily avg. no. trad. sh. 12 mth 78,100
Daily avg. trad. vol. 12 mth (m) 0.62
Price high 12 mth (EUR) 8.94
Price low 12 mth (EUR) 6.60
Abs. perf. 1 mth 4.6%
Abs. perf. 3 mth 12.4%
Abs. perf. 12 mth -3.1%
(EUR) 12/07e 12/08e 12/09e
Sales (m) 244 278 319
EBITDA (m) 37 44 51
EBITDA margin 15.2% 15.7% 16.0%
EBIT (m) 34 40 46
EBIT margin 13.8% 14.5% 14.3%
Net Profit (adj.)(m) 24 28 33
ROCE 14.3% 15.7% 16.5%
Net debt/(cash) (m) 57 48 36
Debt Equity 58.7% 39.7% 24.4%
Debt/EBITDA 1.5 1.1 0.7
Int. cover(EBITDA/Fin. int 12.3 15.1 18.3
EV/Sales 1.5 1.3 1.1
EV/EBITDA 9.8 8.1 6.7
EV/EBIT 10.8 8.8 7.5
P/E (adj.) 13.8 11.8 10.2
P/BV 3.4 2.8 2.3
OFCF yield 0.7% 3.8% 5.0%
Dividend yield 1.5% 1.9% 2.2%
EPS (adj.) 0.63 0.74 0.86
BVPS 2.56 3.14 3.81
DPS 0.13 0.16 0.19
10.0
9.5
9.0
8.5
8.0
7.5
7.0
6.5
Apr 06 May 06 Jun 06 Jul 06 Aug 06 Sep 06 Oct 06 Nov 06 Dec 06 Jan 07 Feb 07 Mar 07 Apr 07 May 07
Source: Datastream
SARANTIS
ASE (Rebased)
Shareholders: Irina Investments 32%; Jason
Enterprises 15%; Fidelity Investments
10%;
*closing price as of 18/ 05/ 2007
21 May 2007
Signs of recovery for the new markets and new agreements
dismiss uncertainty
‣ We proceed with changes in our forecasts in order to include: a) the impact
of the change in the penetration method of the group in the new markets,
b) its partnership with Estee Lauder for the launch of the male fragrance
Mustang in North America, c) the change of Theodoridis S.A. (its car
accessories division) consolidation method, while d) we also take into
account the favourable trends of the old foreign markets during the first
quarter of the year.
‣ We conclude with sales at EUR244.3m in FY:07, implying a 13.4% y-o-y,
while EBIT is seen at EUR33.8m (+15.3% y-o-y). Bottom line in the current
year is seen at EUR24.2m, recording an annual growth of 6.6%. Note that
our estimates still incorporate losses from the new markets, which are
expected to reach EUR4.8m in FY:07, while they are seen breakeven in
FY:08.
‣ Our estimates stand slightly higher compared to the management’s
guidance - especially for the current year, +3.4% in bottom line - partially
explained by the contribution of operations in US (included in our
forecasts), while we also adopt a more optimistic stance for the new
markets in FY:07 and consider a slightly better performance for the old
foreign countries.
‣ We proceed with an upward revision of our valuation from EUR8.70 per
share to EUR10.10 per share, retaining our ‘Buy’ recommendation, since
our target price implies a 15.8% upside potential. We note that our
valuation is no longer affected by the high capital expenses of the group
(as previously, given the acquisition plans of the group).
‣ Sarantis continues to trade at attractive multiples, offering significant
discounts to its peers. P/E(07e) and P/E(08e) for Sarantis stands at 13.8x
and 11.8x respectively, implying a discount of 28.5% and 31.3% compared
to its peers.
‣ Sarantis reported a strong set of Q1:07 financial results with sales at
EUR54.4m, +11.4% y-o-y (2% below our estimates). EBIT grew by 34.0%
at EUR7.6m (16% above our estimates), while net income settled at
EUR5.5m vs. EUR4.5m in Q1:06 (18% higher than our estimates). On a
comparable basis, bottom line reported an annual growth of 72.7%. At
operational level, results were above our estimates, mainly on the back of
the strong performance of the old foreign countries and a better than
expected performance of the new markets.
Head of Research Costis Sinanidis +30 210 817 3386 csinanidis@ibg.gr
Analyst(s): Maria Psyllou +30 210 817 3381 mpsyllou@ibg.gr
Produced by:
In cooperation with
All ESN research is available
on Bloomberg: “ESNR”
Distributed by the Members of ESN
(see last page of this report)

Sarantis
Forecasts Revision
Latest Developments of the Group
• Partnership with Estee Lauder for the launch of male fragrance in North America
Sarantis Group has announced its partnership with Estee Lauder for the launch of Mustang
(fragrance for men) in North America. Sarantis Group bears the responsibility of the
exclusive production of Mustang, while has also created its advertising campaign. The
Mustang fragrance will be launched in July 2007 to North American retailers as well as to
mass merchandisers and a chain of drug stores. We welcome this development, since any
positive effect will come on top of the normal performance, while the group had minimal
CAPEX for this cooperation.
There are not official numerical estimates from Sarantis management on the impact of the
agreement, however there is definitely significant upside potential. In our estimates for the
current year, we include an additional amount of EUR2.5m in sales from USA, which
however may be conservative given the positive prospects of the agreement. We
incorporate an ΕΒΙΤ margin which is higher than the group’s products, even from its own
products portfolio, since the production of Mustang allows the creation of synergies, which
are enhanced proportional to the quantity of production. Given the size of the American
market, if this pilot program proves successful it can significantly support the financial
performance of the group and alter its business profile. However – at least for the time –
we prefer to account for a small contribution in sales and operational performance from this
activity.
• Agreement with local distributor in Ukraine
Sarantis signed an agreement with the local distributor Cornil in Ukraine, according to
which Cornil will distribute Sarantis' products for a 3-year period, starting as of May 11th.
Sarantis will be responsible for advertising expenses proportional to the sales of Cornil,
while will also pay a distribution fee to Cornil (we assume c.25%). Cornil is a top local
distributor with a distribution network across all the major cities in Ukraine. The agreement
is in line with the overall revised penetration model of Sarantis in the new markets (Russia,
Turkey and Ukraine). More specifically, the agreement is expected to benefit the group by
maximizing efficiency in distribution, increasing market shares of its products and
improving profitability. At the same time, it offsets inefficiencies of the model used so far
(which was based on high marketing expenses and lacked mass market penetration) and
ensures high return on advertising and promotion expenses through Cornil. According to
the managerment, the completion of the agreement is expected to fully offset the high fixed
operating expenses of the current model. Note that Sarantis distributes its own products of
mass-market cosmetics (C-THRU, BU and STR8) as well as household products (Fino,
Grosik and Camel) in Ukraine. Recall also that in FY:06 Sarantis reported Ukraine sales of
EUR0.5m and losses of EUR1m at EBIT level.
Overall, the focus of new established countries is among the top priorities of Sarantis,
targeting to limit the high fixed operating expenses and increased losses based on the
strengthening of its distribution network potentials. The new penetration model in the new
countries of Turkey, Ukraine and Turkey is based on the delegation of distribution and
sales to a national distributor. Consequently, costs allocation will not be fixed – as currently
– but proportional to sales. Moreover, products distribution is guaranteed resulting to a
more efficient advertisement expense and support. According to the management, after the
completion of the new distribution method operational fixed cost for these markets will not
exist.
Additionally, the group is currently under negotiations with three top distributors in Turkey
and Russia, while we understand the agreements are expected to be announced very
soon. According to the management - and based on its revised guidance (announced in
March of the current year) – the new markets are expected to generate a total loss of
EUR5.2m (partially generated by the operation of the old model and partially by the
in cooperation with
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Sarantis
downsizing of the existing premises). All the agreements are expected to run as of July of
the current year. Given the results of the first quarter of the year, which imply a more
optimistic scenario for the full year results of these countries (in Q1:07 losses of
EUR1.14m) and the conclusion of the agreement in Ukraine which came earlier than July,
we include in our estimates a loss for the full year in the new markets of EUR4.8m, i.e.
slightly lower compared to the estimate of the company. Based on the current market
trends the risk on our estimates is on the upside (lower losses).
The decision for the implementation of the new penetration model in the new countries
alters the plans of the group for potential acquisitions in Ukraine and Turkey, which were
already included in our previous forecasts. The positive aspect of this development is that
the strategic choice of the agreements with national distributors - instead of acquisitions -
ammends the problems of the new markets without requiring significant CAPEX
(c.EUR30m on our assumptions). Consequently, although we do not conclude with
significant changes in operational performance from this factor, this development has a
positive effect in our target price.
• Change of Theodoridis S.A. consolidation method
Sarantis announced the change in the consolidation method of Theodoridis S.A. (its car
accessories division – Oto Top). The group will use the "joint control method"
(consolidation in proportion to Sarantis’ participation) instead of the full consolidation
method until now. Recall that Sarantis holds a 50% stake in Theodoridis S.A. in Greece
and an indirect 25% stake in Bulgaria. Based on this development, Sarantis provided an
adjusted guidance for the period 2007-2009 (compared to the guidance announced at the
end of March). The change in the consolidation method implies a decrease in sales and
EBIT level by c.3% and c.1% respectively, however there are no changes in bottom line
estimates of the management.
We underline that the adjustments in guidance are exclusively related to the change of
consolidation method of Theodoridis, while the company has also provided adjusted figures
for the years 2005 and 2006.
Sarantis adjusted guidance (including Theodoridis with the joint control method)
Adj. Actual Adj. Actual
2005 2006
% ch. (*) Adj. 2007e % ch. (**) Adj. 2008e % ch. (**) Adj. 2009e % ch. (**)
Sales 201.50 215.34 -3.5% 241.50 -3.4% 273.50 -3.2% 313.00 -2.8%
y-o-y 6.9% 12.1% 13.3% 14.4%
EBITDA 31.28 32.84 -1.8% 36.12 -1.0% 42.95 -1.2% 50.40 -1.0%
EBITDA margin 15.5% 15.3% 15.0% 15.7% 16.1%
y-o-y 5.0% 10.0% 18.9% 17.3%
EBIT 27.71 29.29 -1.8% 32.62 -1.2% 39.35 -1.3% 44.80 -1.1%
EBIT margin 13.8% 13.6% 13.5% 14.4% 14.3%
y-o-y 5.7% 11.4% 20.6% 13.9%
EBT 24.97 29.29 -1.2% 29.62 -1.6% 36.65 -0.3% 42.00 -0.2%
EBT margin 12.4% 13.6% 12.3% 13.4% 13.4%
y-o-y 17.3% 1.1% 23.7% 14.6%
EAT 19.07 22.01 -1.2% 22.32 -1.5% 27.83 -0.3% 32.13 -0.2%
Net Margin 9.5% 10.2% 9.2% 10.2% 10.3%
y-o-y 15.4% 1.4% 24.7% 15.5%
Minorities -0.26 -0.66 -1.06 0.13 0.18
on sales -0.1% -0.3% -0.4% 0.0% 0.1%
y-o-y 60.6% -112.3% 38.5%
EATAM 19.33 22.67 0.0% 23.38 0.0% 27.70 0.0% 31.95 0.0%
Net Margin 9.6% 10.5% 9.7% 10.1% 10.2%
y-o-y 17.3% 3.1% 18.5% 15.3%
Source: Marfin Analysis / Egnatia Finance, Sarantis
* refer to the change of adjusted figures compared to the reported figures
**refer to the changes of adjusted figures compared to the latest communicated guidance of the group (March, 2007)
in cooperation with
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Sarantis
Given the latest developments of the group – as analysed above – and taking into account
the trends of the first quarter of the year, we conclude with sales at EUR244.3m in FY:07,
implying a 13.4% y-o-y, while EBIT is seen at EUR33.8m (+15.3% y-o-y). Bottom line in the
current year is seen at EUR24.2m, recording an annual growth of 6.6%.
We note that for the current year we incorporate a low digit growth for sales in Greece, with
improved however growth rates for the old foreign countries – also supported by their good
performance in the first quarter of the year – while new markets contribution in sales
reaches almosts EUR8m for the current year. We remind that 2007 is the first year to
account for the whole contribution of the four new countries, since Ukraine and Turkey
started operation in 2005, while Hungary and Russia in April and November of 2006
respectively. At EBIT level, we see improved margins for the old foreign countries, however
we anticipate a total loss of EUR4.8m in FY:07 for the new markets which are expected to
breakeven in FY:08.
For the next years, we anticipate an average top line growth of 14.3% for the period 2007e-
2009e, while bottom line is seen recording a 16.3% CAGR for the same period. Although
our current forecasts seem to stand lower compared to our previous estimates, we repeat
that part of this change is attributed to the change of consolidation method of Theodoridis
(that’s why changes in bottom line seem smaller compared to changes in bottom line).
Sarantis changes in Forecasts (in EURm) – Our new estimates do not include acquisitive
growth as was the case with our previous forecasts
2006 New 2007f Old 2007f % ch. New 2008f Old 2008f % ch.
Sales 215.3 244.3 260.8 -6.3% 278.1 304.9 -8.8%
EBITDA 32.8 37.1 39.4 -5.9% 43.8 47.5 -7.9%
margin 15.3% 15.2% 15.1% 15.7% 15.6%
EBIT 29.3 33.8 35.3 -4.4% 40.2 42.4 -5.2%
margin 13.6% 13.8% 13.5% 14.5% 13.9%
EBT 29.3 30.7 30.8 -0.1% 37.3 37.7 -1.0%
margin 13.6% 12.6% 11.8% 13.4% 12.4%
EAT 22.7 24.2 23.9 1.0% 28.2 29.5 -4.2%
margin 10.5% 9.9% 9.2% 10.2% 9.7%
Source: Marfin Analysis / Egnatia Finance, Sarantis
Compared to the management’s guidance, our estimates stand slightly higher compared to
the management’s guidance, especially for the current year partially explained by the
contribution of operations in US (included in our forecasts, not included in the guidance),
while we also adopt a more optimistic stance for the new markets and we consider a
slightly better performance of the old foreign countries.
Our estimates compared to the management’s guidance (in EURm)
2007
Guidance
2007 MAe
MAe vs.
Guid.
2008
Guidance
2008 MAe
MAe vs.
Guid.
Sales 241.5 244.3 1.1% 273.5 278.1 1.7%
EBITDA 36.1 37.1 2.7% 43.0 43.8 1.9%
EBITDA margin 15.0% 15.2% 15.7% 15.7%
EBIT 32.6 33.8 3.5% 39.4 40.2 2.2%
EBIT margin 13.6% 13.8% 13.4% 14.5%
Net Profits 23.4 24.2 3.4% 27.7 28.2 1.9%
Source: Marfin Analysis / Egnatia Finance, Sarantis
in cooperation with
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Sarantis
Valuation
We value Sarantis using a 3-stage DCF model with a WACC assumption for the first stage
at 9.2% and for the second stage at 8.8%. Our higher WACC assumption for the first stage
accounts for the increased risk of the group’s exposure in the new markets in the short
term. Our valuation also incorporates a 0.5% perpetuity growth rate.
Sarantis DCF Valuation (in EURm)
1st stage
2nd stage
Long Term Free Risk Rate 4.5% 4.5%
Estimated Beta 1.2 1.2
Equity Risk Premium 5.5% 5.0%
Cost of Equity 10.8% 10.3%
Target Capital Gearing 25.0% 25.0%
WACC 9.2% 8.8%
Average growth to perpetuity 0.5%
EURm
Sum of FCFs (07e-11f) 74.65
Sum of FCFs 2nd stage (12f-18f) 152.08
FCF to perpetuity 190.71
Total FCF 417.44
plus cash & market value of investments minus
minorities:
54.32
minus current borrowings -86.83
Implied value of equity 384.93
Implied value per share 10.10
Source: Marfin Analysis / Egnatia Finance
We proceed with an upwards revision of our valuation from EUR8.70 per share to
EUR10.10 per share, retaining our ‘Buy’ recommendation, since our target price implies a
15.8% upside potential. We note that our valuation is no longer affected by the high capital
expenses of the group (as previously, given the acquisition plans of the group).
Sarantis continues to trade at attractive multiples, offering significant discounts to its peers.
P/E(07e) and P/E(08e) for Sarantis stands at 13.8x and 11.8x respectively, implying a
discount of 28.5% and 31.3% compared to its peers.
Note however that bottom line for Sarantis is suppressed this year, since we will continue
to see new markets delivering losses (EUR4.8m on our assumptions), however we expect
breakeven in the next year.
in cooperation with
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Sarantis
Sarantis Peer Group Comparison
Price Market Cap. P/E 07 (x) P/E 08 (x)
EV/EBITDA 07
(x)
EV/EBITDA 08
(x)
Procter & Gamble 47.0 148,433.2 18.2 16.2 11.1 10.6
Colgate Palmolive Co. 49.9 25,605.1 20.3 18.1 12.0 10.9
Reckitt Benckiser 40.6 29,111.0 22.4 20.1 15.6 14.0
Henkel 114.6 15,830.2 17.7 15.5 10.2 9.0
Beiersdorf AG 53.3 13,444.2 28.0 24.1 14.5 12.5
Estee Lauder 34.8 7,314.4 18.9 16.8 10.1 9.3
Clarins S.A. 61.6 2,510.5 23.7 21.5 13.5 12.3
Unilever Plc 23.3 30,496.6 17.0 15.9 5.2 4.9
Mcbride 3.7 658.9 16.7 15.1 8.2 7.5
Robertet Sa 134.8 293.8 18.4 17.4 8.2 7.7
Mirato SpA 8.9 153.9 16.3 13.7 6.9 7.9
Weigthed Average 19.2 17.2 11.1 10.3
Simple Average 19.8 17.7 10.5 9.7
Sarantis 8.72 332.6 13.8 11.8 9.5 7.8
Premium / Discount
Sarantis vs Peer group
(weight avg)
Sarantis vs Peer group
(simple avg)
Source: Marfin Analysis / Egnatia Finance, JCF
-28.5% -31.3% -14.7% -24.8%
-30.4% -33.3% -10.0% -20.0%
We continue being positive especially on the long term prospects of the group, given its
ambitious expansion plan. The mature Greek market is expected to continue offering a
cushion of cash for the group. The developing foreign markets have started bearing the
fruits of an effort that initiated at the beginning of the decade. The ‘emerging markets’ have
started showing signs of recovery, while new favourable agreements constitute positive
catalysts for the future, leaving space for further support in the valuation.
in cooperation with
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Sarantis
Risks to our Valuation
• Execution risks for Sarantis’ expansion in the new markets
• Higher than expected marketing and promotion expenses in the E.E. markets could
hurt the bottom line
• Intensified competition from multinationals in the Eastern European markets where
Sarantis is operating.
• A faster than expected slowdown in the Greek operations
• A possible loss of high-end cosmetics brands (especially Estee Lauder) would hurt
profitability.
• Increased interest rate environment could hurt Sarantis due to its high leverage
in cooperation with
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Sarantis
Q1:07 Financial Results
Sarantis reported a strong set of Q1:07 financial results with sales at EUR54.4m, +11.4%
y-o-y (2% below our estimates). EBIT grew by 34.0% at EUR7.6m (16% above our
estimates), while net income settled at EUR5.5m vs. EUR4.5m in Q1:06 (18% higher than
our estimates). However, note that results are not directly comparable since Q1:06
included one off revenues of EUR1.3m due to capital gains generated by Multirama
transaction. Excluding one-off items, bottom line reported an annual growth of 72.7%.
At operational level, results were above our estimates, mainly on the back of the strong
performance of the old foreign countries, which reported a 28.9% y-o-y increase in sales
with EBIT margin significantly improving at 11.1% in Q1:07 vs. 4.9% in the respective
period last year. Total margin also improved by 2.4 pps compared to the respective period
last year, statnding at 13.9%.
Note that Q1:06 financial statements include Theodoridis using the full consolidation
method, while Q1:07 results include Theodoridis S.A. using the joint control method. For
comparison reasons, the group has also provided pro forma accounts for Q1:06, as they
are depicted in the next table.
Sarantis Q1:07 Results Review (in EURm)
Q1:07a Q1:06a y-o-y
Q1:06 pro
Actual vs.
y-o-y
forma
MAe
Sales 54.38 48.83 11.4% 47.13 15.4% -1.7%
COGS 25.89 23.89 22.93
Gross Profit 28.49 24.94 14.3% 24.20 17.7%
margin 52.4% 51.1% 51.3%
Other Income 2.72 1.86 46.4% 1.83 48.3%
G&A 22.77 20.25 12.4% 19.52 16.6%
EBITDA 8.44 6.54 29.1% 6.51 29.6% 12.3%
margin 15.5% 13.4% 13.8%
Depreciation 0.87 0.89 -1.8% 0.87 0.3%
EBIT 7.57 5.65 34.0% 5.64 34.2% 16.0%
margin 13.9% 11.6% 12.0%
Net Interest Inc. / (Exp.) -0.25 0.46 n.a. 0.48 n.a.
EBT 7.32 6.10 19.9% 6.12 19.5%
margin 13.5% 12.5% 13.0%
Taxes 2.10 1.66 26.6% 1.64 28.1%
EAT 5.22 4.45 17.3% 4.48 16.4%
Minorities -0.26 -0.03 0.01
EAT after minorities 5.48 4.47 22.5% 4.47 22.5% 18.2%
margin 10.1% 9.2% 9.5%
Source: Marfin Analysis / Egnatia Finance, Sarantis
in cooperation with
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Sarantis
Q1:07 Geographical Breakdown
Sales
Q1:07
Focusing on Q1:07 financial performance of the group on a divisional and geograpical
basis, we highlight the following:
• The strong performance of the old foreign countries. Sales for the old countries
increased by 28.9% y-o-y, while EBIT almost tripled.
• Sales in Turkey almost halved on the back of the new penetration model in this
country, as the group didn’t include seasonal products in its portfolio during Q1:07 as it
was the case in the respective period last year.
Sales
Q1:06
y-o-y
Sales
proforma
Q1:06
y-o-y
EBIT
Q1:07
EBIT
Q1:06
y-o-y
EBIT
Q1:06
pro
forma
y-o-y
EBIT
margin
Q1:07
EBIT
margin
Q1:06
EBIT
margin
Q1:06
pro
forma
Greece 26.2 26.8 -2.3% 25.7 1.7% 5.8 5.1 12.7% 3.8 7.4% 22.0% 19.1% 14.6%
% of total 48.1% 54.9% 54.6% 76.1% 90.5% 66.6%
Old Countries
Poland 11.7 8.9 32.6% 0.7 -0.1 n.a. 5.8% -1.4%
Romania 8.9 6.7 33.6% 1.2 0.6 118.5% 13.6% 8.4%
Bulgaria 2.6 2.6 -0.3% 1.9 32.6% 0.2 0.1 74.5% 0.1 352.0% 8.9% 5.0% 2.6%
Serbia 2.1 1.6 28.9% 0.6 0.4 68.5% 30.1% 22.8%
Czech Republic 0.9 0.7 40.4% 0.1 0.0 188.1% 11.8% 6.1%
FYROM 0.4 0.3 39.1% 0.1 0.0 104.6% 24.3% 14.8%
Total Old Countries 26.7 20.7 28.9% 20.0 33.0% 3.0 1.0 189.4% 0.9 217.2% 11.1% 4.9% 4.6%
% of total 49.0% 42.4% 42.5%
New Countries
Ukraine 0.2 0.2 30.4% -0.1 -0.2 - -55.0% -100.0%
Turkey 0.5 1.2 -56.2% -0.5 -0.1 - -86.8% -4.1%
Russia 0.6 0.0 - -0.5 0.0 - -87.7% n.a.
Hungary 0.3 0.0 - -0.1 -0.3 - -34.6% n.a.
Total New Countries 1.6 1.4 14.6% 1.4 -1.1 -0.5 - -0.5 -73.1% -35.3% -35.3%
% of total 2.9% 2.8% 2.9%
Total Sales / EBIT 54.4 48.8 11.4% 47.1 15.4% 7.6 5.7 34.0% 5.6 34.2% 13.9% 11.6% 12.0%
Source: Marfin Analysis / Egnatia Finance
• Fragnances and cosmetics reported a growth rate of 20.8% y-o-y, while household
products improved by 18.7% on an annual basis.
• Health & care products’ EBIT decreased by 21.7% at EUR0.6m on the back of
increased expenses for the promotion of new products (brand name Origins).
Q1:07 Divisional Breakdown
Sales
Q1:07
Sales
Q1:06
Sales
y-o-y
growth
Q1:07
EBIT
Q1:06
EBIT
y-o-y
growth
Q1:07 EBIT
margin
Q1:06 EBIT
margin
Fragnances & Cosmetics 21.6 17.9 20.8% 2.8 2.4 15.6 % 13.0% 13.6%
Household Products 21.9 18.5 18.7% 2.1 1.5 35.9% 9.4% 8.3%
Health & Care Products 5.0 4.6 7.6% 0.6 0.8 -21.7% 11.8% 16.4%
Strategic Alliances 5.9 7.8 -25.0% 2.1 0.9 124.0% 35.5% 11.9%
Total 54.4 48.8 11.4% 7.6 5.7 34.0% 13.9% 11.6%
Source: Marfin Analysis / Egnatia Finance
in cooperation with
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Sarantis
Finally, note that own products (fragnances & cosmetics and household products)
increased by 19.5% y-o-y reaching EUR35.0m accounting for an increased 64.4% of total
sales (vs. 60.0% one year before). However, the contribution of own products in EBIT
decreased at 54.3% (EUR4.1m) vs. 59.5% (EUR3.4m) in Q1:06 mainly on the back of the
high fixed operating expenses in the new markets (Turkey, Russia & Ukraine).
in cooperation with
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Sarantis
Sarantis: Summary tables
PROFIT & LOSS (EURm) 2004 2005 2006e 2007e 2008e 2009e CAGR 09/04
Sales 187.6 208.7 215.3 244.3 278.1 319.1 11.2 %
Cost of Sales & Operating Costs (excl. Pers. Expenses) -159.6 -176.9 -182.5 -207.2 -234.3 -267.8
Personnel Expenses 0.0 0.0 0.0 0.0 0.0 0.0
Non Recurrent Expenses/Income 0.0 0.0 0.0 0.0 0.0 0.0
EBITDA 28.1 31.8 32.8 37.1 43.8 51.2 12 .8 %
Depreciation, Amortisation & Write Downs -3.5 -3.6 -3.6 -3.4 -3.6 -5.5
EBIT (reported) 24.6 28.1 29.3 33.8 40.2 45.7
Net Financial Interest -2.6 -2.9 0.0 -3.0 -2.9 -2.8
Other Financials 0.0 0.0 0.0 0.0 0.0 0.0
Associates 0.0 0.0 0.0 0.0 0.0 0.0
Other Non Recurrent Items 0.0 0.0 0.0 0.0 0.0 0.0
Earnings Before Tax (EBT) 22.0 25.3 29.3 30.7 37.3 42.9 14 .3 %
Tax -4.6 -6.1 -7.3 -7.6 -9.0 -10.1
Tax rate 21.1% 24.2% 24.9% 24.6% 24.1% 23.5%
Discontinued Operations 0.0 0.0 0.0 0.0 0.0 0.0
M inorities -0.4 0.2 0.7 1.0 -0.1 -0.1
Net Profit (reported) 17.0 19.3 22.7 24.2 28.2 32.7 14 .0 %
Net P ro fit (adj.) 17.0 19.3 20.4 24.2 28.2 32.7
CASH FLOW (EURm)
Net profit (reported) + M inorities 17.3 19.2 22.0 23.2 28.3 32.8
Non cash items 3.5 3.6 3.6 3.4 3.6 5.5
Cash Flow 20.9 22.8 25.6 26.5 31.9 38.3 13 .0 %
Change in Net Working Capital 32.6 -15.3 -6.5 -19.1 -16.2 -18.5
Capex 86.9 -2.6 1.7 -5.0 -3.0 -3.0
Operating Free Cash Flow (OpFCF) 140.4 4.9 20.7 2.4 12.6 16.8 -34.6%
Net Financial Investments 0.0 0.0 0.0 0.0 0.0 0.0
Dividends -3.7 -4.8 -5.0 -5.1 -6.2 -7.2
Other (incl. Capital Increase & share buy backs) 0.0 0.0 0.0 0.0 0.0 0.0
Free Cash Flow 136.7 0.1 15.8 -2.6 6.4 9.6
NOP LA T 19.4 21.3 22.0 25.5 30.5 34.9
BALANCE SHEET & OTHER ITEMS (EURm)
Net Tangible A ssets 44.4 44.8 42.1 43.8 43.3 40.8
Net Intangible Assets (incl.Goodwill) 0.0 0.0 0.3 0.2 0.2 0.2
Net Financial Assets & Other 19.7 25.2 26.9 26.9 26.9 26.9
Total Fixed Assets 64.2 70.0 69.3 70.9 70.4 67.8 1.1%
Net Working Capital 71.9 82.8 88.3 107.2 124.2 143.8
Total capital invested/employed 116.3 127.6 130.7 151.3 167.7 184.7
Shareholders Equity 34.6 60.9 77.4 97.8 119.8 145.3 33.2%
M inorities Equity 2.0 1.8 0.9 -0.1 0.0 0.1
Net Debt 79.0 74.2 61.7 57.4 47.6 35.5 -14.8%
Provisions 7.0 5.5 6.1 7.0 8.0 9.1
Other Liabilities 13.4 10.4 11.5 16.1 19.3 21.6
Total M arket Cap 160.3 236.2 308.3 332.6 332.6 332.6
Enterprise Value (EV adj.) 221.6 287.0 344.0 363.0 353.3 341.4
MARGINS AND RATIOS
Sales growth -19.2% 11.2% 3.2% 13.4% 13.9% 14.7%
EB ITDA gro wth -27.6% 13.1% 3.4% 13.0% 18.0% 17.0%
EB IT gro wth -29.7% 14.7% 4.1% 15.3% 19.2% 13.5%
EBITDA margin 15.0% 15.2% 15.3% 15.2% 15.7% 16.0%
EB IT margin 13.1% 13.5% 13.6% 13.8% 14.5% 14.3%
Debt/Equity (gearing) 215.7% 118.2% 78.7% 58.7% 39.7% 24.4%
Debt/EB ITDA 2.8 2.3 1.9 1.5 1.1 0.7
Interest cover (EBITDA/Fin.interest) 10.8 11.1 high 12.3 15.1 18.3
R OC E 14.2% 14.0% 14.0% 14.3% 15.7% 16.5%
WACC 9.2% 9.2% 9.2% 9.2% 9.2% 9.2%
ROCE/WACC 1.5 1.5 1.5 1.5 1.7 1.8
EV/CE 1.63 1.88 2.18 2.04 1.82 1.61
OpFCF/CE 103.1% 3.2% 13.2% 1.4% 6.5% 7.9%
EV/Sales 1.18 1.38 1.60 1.49 1.27 1.07
EV/EBITDA 7.9 9.0 10.5 9.8 8.1 6.7
EV/EBIT 9.0 10.2 11.7 10.8 8.8 7.5
P/E (adj.) 9.4 12.2 15.1 13.8 11.8 10.2
P/CF 7.7 10.3 12.1 12.5 10.4 8.7
P/BV 4.6 3.9 4.0 3.4 2.8 2.3
OpFCF yield 87.5% 2.1% 6.7% 0.7% 3.8% 5.0%
Payout ratio 21.8% 24.8% 21.9% 21.0% 22.0% 21.9%
Dividend yield (gross) 2.3% 1.4% 1.5% 1.5% 1.9% 2.2%
PER SHARE DATA (EUR)
EPS (reported) 0.45 0.51 0.59 0.63 0.74 0.86 13 .9 %
EPS (adj.) 0.45 0.51 0.53 0.63 0.74 0.86 13 .9 %
CFPS 0.55 0.60 0.67 0.70 0.84 1.00 12 .8 %
BVPS 0.91 1.60 2.03 2.56 3.14 3.81 33.0%
DP S 0.10 0.13 0.13 0.13 0.16 0.19 14 .0 %
Source: Company, M arfin Analysis/Egnatia Finance estimates
2004 restated as IFRS proforma
in cooperation with
Page 11

Sarantis
Recommendation system
From the 18 th October 2004, the Members of ESN use a New Recommendation System.
The new ESN Recommendation System is Absolute. It means that each stock is rated on the
basis of a total return, measured by the upside potential (including dividends) over a 6 months
time horizon.
The ESN spectrum of recommendations (or ratings) for each stock comprises 5 categories:
Buy, Accumulate (or Add), Hold, Reduce and Sell (in short: B, A, H, R, S).
Meaning of each rating or recommendation:
• Buy: the stock is expected to generate a total return of over 15% during the
next 6 months time horizon.
• Accumulate: the stock is expected to generate a total return of 5% to15%
during the next 6 months time horizon.
• Hold: the stock is expected to generate a total return of 0% to 5% during the
next 6 months time horizon
• Reduce: the stock is expected to generate a total return of 0 to -15% during the
next 6 months time horizon
• Sell: the stock is expected to generate a total return below -15% during the
next 6 months time horizon
• Rating Suspended: the rating is suspended due to a capital operation (takeover
bid, SPO, …) where the issuer or a related party of the issuer is or could
be involved or to a change of analyst covering the stock
• Not Rated: there is no rating for a company being floated (IPO) by the issuer or
a related party of the issuer
in cooperation with
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Sarantis
Disclosure Appendix
The information and opinions in this report were prepared by Investment Bank of Greece in cooperation with Egnatia Finance, as the two
companies operate under a merger agreement. Both Investment Bank of Greece and Egnatia Finance are regulated by the Hellenic Capital Market
Commission. Investment Bank of Greece and Egnatia Finance have not entered any agreement with the subject companies for the execution of
this analysis.
This report is for informative purposes only. Under no circumstances is it to be used or considered as an offer to sell, or a solicitation of any offer to
buy, any security. While the information contained herein has been obtained from sources believed to be reliable, we do not represent that it is
accurate or complete and it should not be relied upon as such. In producing its research reports, members of Investment Bank of Greece and
Egnatia Finance SA research departments may have received assistance from the subject company(ies) referred to in this report. Any such
assistance may have included access to sites of the issuers, visits to certain operations of the subject company(ies), meetings with management,
employees or other parties associated with the subject company(ies) and the handing by them of historical data regarding the subject company(ies)
(financial statements and other financial data), as well as of all publicly available information regarding strategy and financial targets. Investment
Bank of Greece and Egnatia Finance SA research personnel are prohibited from accepting payment or reimbursement of travel expenses from site
visits to subject companies. It should be presumed that the author(s) of this report, in most cases, has had discussions with the subject
company(ies) to ensure factual accuracy prior to publication. All opinions, projections and estimates constitute the judgment of the author as of the
date of the report and are given in good faith, but are subject to change without notice. Prices and availability of financial instruments also are
subject to change without notice. Investment Bank of Greece and Egnatia Finance SA or one of their affiliates or persons connected with them may
from time to time buy and sell securities referred herein. Although Investment Bank of Greece and Egnatia Finance SA does not set a
predetermined frequency for publication, if this is a fundamental research report, it is the intention of Investment Bank of Greece and Egnatia
Finance SA to provide research coverage of the subject company(ies), including in response to news affecting this issuer, subject to applicable
quiet periods and capacity constraints. Investment Bank of Greece and Egnatia Finance SA may from time to time perform investment banking or
other services for, or solicit investment banking or other business from, any company mentioned in this report. Investment Bank of Greece and
Egnatia Finance SA do and seek to do business with companies covered in their research reports. Thus, investors should be aware that the firms
may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making
their investment decision. Securities referred to in this research report are subject to investment risks, including the possible loss of the principal
amount invested. This report is intended for professional investors only and it is not to be reproduced or copied or reprinted or transmitted for any
purpose without permission. We certify that this report has been published in accordance with our conflict management policy and guidelines.
According to Investment Bank of Greece as well as Egnatia Finance SA policies, the Analysis Departments of Investment Bank of Greece and
Egnatia Finance SA are bound by confidentiality, with the exception of data allowed to be published in accordance with the applicable laws.
Investment Bank of Greece and Egnatia Finance SA rely on information barriers to control the flow of information in one or more areas within
Investment Bank of Greece and Egnatia Finance SA organisations. The communication between the Analysis Department of Investment Bank of
Greece and Egnatia Finance SA and the other departments of the aforementioned companies is restricted by Chinese Walls set between the
different departments, so that Investment Bank of Greece and Egnatia Finance SA can abide by the provisions regarding confidential information
and market abuse.
Analyst Certification
The following analysts: Costis Sinanidis, Maria Psyllou hereby certify that the views about the companies and securities contained in this report
accurately reflect their personal views and that no part of their compensation was or will be directly or indirectly related to the specific
recommendations or views in this report.
The analysts mentioned above who prepared this report have the below mentioned financial interests in the companies covered in this
report……none……
Important Regulatory Disclosures on Subject Company
The information and opinions in this report were prepared by INVESTMENT BANK of GREECE and EGNATIA FINANCE SA, which are both
members of the Athens Exchange S.A. and regulated by the Hellenic Capital Market Commission.
The compensation of the research analysts, strategists, or research associates principally responsible for the preparation of this research report
may depend on various factors such as quality of work, stock picking, client feedback and overall firm profitability.
Stock Ratings
You should carefully read the definitions of all ratings used in the research report. Moreover, you should carefully read the entire research report to
obtain a clear view of the analyst’s opinions and not infer its contents from the rating alone.
Marfin Analysis/Egnatia Finance Research Rating Distribution
Data current as of 11/05/2007
Buy Accumulate Hold Reduce Sell
Marfin Analysis / Egnatia Finance Total Coverage 42% 28% 19% 2% 0%
% of companies in each rating category that are investment banking clients 5% 5% 2% 0% 0%
Note that 4 companies are currently under review
Wholesale 100% 0% 0% 0% 0%
% of companies in each rating category that are investment banking clients 0% 0% 0% 0% 0%
in cooperation with
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Sarantis
Regulatory Disclosures on Subject Companies
1. As of the date mentioned on the first page of this report, Investment Bank of Greece (or any of its affiliated companies) and/or Egnatia Finance
(or any of its affiliated companies) own 5% or more of a class of common equity securities in the following companies mentioned in this report:
Bank of Cyprus
2. As of the date mentioned on the first page of this report, the following subject companies mentioned in this report own 5% or more of a class of
common equity securities of Investment Bank of Greece (or any of its affiliated companies) and/or Egnatia Finance (or any of its affiliated
companies): Marfin FG
3. Investment Bank of Greece and/or Egnatia Finance act as a market maker for the following securities of the subject companies mentioned in this
report: Alpha Bank, CCHBC, CosmOTE, EFG Eurobank, Emporiki Bank, National Bank, OPAP, OTE, Piraeus Bank, PPC, Hellenic
Exchanges, Intralot, Mytilineos, Hellenic Technodomiki, GEK, Bank of Cyprus
4. Within the last 12 months, Investment Bank of Greece and/or Egnatia Finance have provided underwriting services to the following companies
mention in this report: GPSB
5. Within the last 12 months, Investment Bank of Greece and/or Egnatia Finance had a contractual relationship or have received compensation for
financial advisory services from the following subject companies mentioned in this report: Vivartia, GEK/Terna, GPSB, Motor Oil, Euroline,
Interinvest, Vivere, Hygeia
Rating History
1. 13/03/2007 Buy, Target Price EUR8.70
1. 21/12/2006 Buy, Target Price EUR9.90
2. 13/09/2006 Buy, Target Price EUR9.80
2. 04/07/2006 Buy, Target Price EUR10.10
3. 21/03/2006 Buy, Target Price EUR10.10
4. 15/09/2005 Buy, Target Price EUR7.20
Risks to our forecasts and valuation
• Execution risks for the group’s expansion in the new markets
• A faster than expected slowdown in the Greek operations
• A possible loss of high-end cosmetics brands (especially Estee Lauder) would hurt profitability.
• Intensified competition from multinationals in the Eastern European markets where Sarantis is operating.
• Bigger than expected marketing and promotion expenses in the E.E. markets could hurt the bottom line
• Increased interest rate environment could hurt Sarantis due to its high leverage
Additional disclosures
1. Additional note to our U.S. readers: This document may be distributed in the United States solely to “major US institutional investors” as defined
in Rule 15a-6 under the US Securities Exchange Act of 1934. Each person that receives a copy, by acceptance thereof, represents and agrees that
he/she will not distribute or otherwise make available this document to any other person.
2. All prices and valuation multiples are based on the closing of ATHEX’s last session prior to the issue of this report, unless otherwise indicated.
3. Our research reports are available upon request, at www.marfininvest.com, on Bloomberg’s IBGR and ESNR functions, and on Thomson One
Analytics website.
4. Additional information is available upon request.
in cooperation with
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Sarantis
Investment Bank of Greece
Research
Costis Sinanidis
Andreas Balaskas
Lillian Katelani
Anthony Kouleimanis
Konstantinos Manolopoulos
Chrissoula Moussiou
Maria Psyllou
Vassilis Roumantzis
Natalia Svyrou-Svyriadi
Dimosthenis Triggas
Konstantinos Tzoutzourakis
Konstantinos Zouzoulas
Derivatives
Nikos Kontaroudis
Kostas Kountos
Stavros Pavlidis
Marnia Stabouli
Christos Tsaousoglou
Ioanna Tsega
Thanos Varvitsiotis
Global Derivatives
Ilias Georgopoulos
Konstantinos Gravas
Tel. + 30 210 817 3000
Fax. +30 210 689 6322
email: research@ibg.gr
Sales
Iraklis Kounadis
Spiros Argyriou
Elias Calfoglou
Philipos Dragoumis
Thodoris Edipidis
Nick Katsanos
George Katimertzis
George Kounadis
Petros Mylonas
Thanos Trikatzis
Theodore Varelas
Foreign markets
Michael Andreadis
Michael Papoulis
Stelios Stavrakakis
Capital Markets, Director
European Securities Network
(ESN), Country Manager
Constantinos Xenos
Egnatia Finance
Institutional Equities Desk
Sales / Trading
Nikos Gavalakis
Ilias Dimitros
Evi Anagnostopoulou
John Tsigounis
Structured & Derivative Products
Alexis Roubas
Fedon Kachtitsis
Tel. +30 210 327 9200
Fax. + 30 210 3248694
email: research@egnasec.gr
International Equities Sales
Christos Kostopoulos
Asset Management
Themis Hantzaridis
Charis Papakonstantinou
in cooperation with
Page 15

Disclaimer:
Members of ESN (European Securities Network LLP)
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Members of European Securities Network LLP (‘ESN’).
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or employee thereof), are neither liable for the proper and
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reports are expressions of opinion and are given in good
faith, but are subject to change without notice. These reports
may not be reproduced in whole or in part or passed to third
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obtained from various sources. ESN, its Members and their
affiliates (and any director, officer or employee thereof) do not
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arising from such errors or omissions.
Neither the information contained in these reports nor any
opinion expressed constitutes an offer, or an invitation to
make an offer, to buy or sell any securities or any options,
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These reports are prepared for the clients of the Members of
ESN only. They do not have regard to the specific investment
objectives, financial situation and the particular needs of any
specific person who may receive any of these reports.
Investors should seek financial advice regarding the
appropriateness of investing in any securities or investment
strategies discussed or recommended in these reports and
should understand that statements regarding future prospects
may not be realised. Investors should note that income from
such securities, if any, may fluctuate and that each security’s
price or value may rise or fall. Accordingly, investors may
receive back less than originally invested. Past performance
is not necessarily a guide to future performance. Foreign
currency rates of exchange may adversely affect the value,
price or income of any security or related investment
mentioned in these reports. In addition, investors in securities
such as ADRs, whose value are influenced by the currency of
the underlying security, effectively assume currency risk.
Like all Members employees, analysts receive compensation
that is impacted by overall firm profitability.
For discussion, if applicable, of the valuation methods used to
determine the price targets included in this report/note,
please refer to the latest relevant published research on
single stock. Research is available through your sales
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ESN will provide periodic updates on companies or sectors
based on company-specific developments or
announcements, market conditions or any other publicly
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Unless agreed in writing with an ESN Member, this research
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For additional information and individual disclaimer
please refer to each ESN Member websites:
Banca Akros S.p.A.
Viale Eginardo, 29
20149 Milano
Italy
Phone: +39 02 43 444 389
Fax: +39 02 43 444 302
Bank Degroof
Rue de I’Industrie 44
1040 Brussels
Belgium
Phone: +32 2 287 91 16
Fax: +32 2 231 09 04
Caixa-Banco de Investimento
Rua Barata Salgueiro, 33-5
1269-050 Lisboa
Portugal
Phone: +351 21 389 68 00
Fax: +351 21 389 68 98
Caja Madrid Bolsa S.V.B.
Serrano, 39
28001 Madrid
Spain
Phone: +34 91 436 7813
Fax: +34 91 577 3770
CM - CIC Securities
Avenue de Provence 6
75441 Paris Cedex 09
France
Phone: +33 1 4596 7700
Fax: +33 1 4596 7788
Egnatia Finance S.A.
8 Dragatsaniou Str.
105 59 Athens
Greece
Phone: +302 10 32 79 200
Fax: +302 10 32 48 694
Equinet AG
Gräfstraße 97
60487 Frankfurt am Main
Germany
Phone:+49 69 – 58997 – 410
Fax:+49 69 – 58997 – 299
Mandatum Securities
Unioninkatu 22,
00130 Helsinki
Finland
Phone: +358 10 236 10
Fax: +358 10 236 4755
NCB Stockbrokers Ltd.
3 George Dock,
Dublin 1
Ireland
Phone: +353 1 611 5611
Fax: +353 1 611 5781
www.bancaakros.it,
www.degroof.be,
www.cajamadrid.es,
www.caixabi.pt,
www.cmcics.com,
www.egnatiabank.gr,
www.equinet-ag.de,
www.mandatum.fi,
www.ncb.ie
Sarantis
Greece
Personal Goods
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