European small and mid caps-Stock picks Q4 2007-Q1 2008 - Fourlis

Mid cap
European small and mid caps
17 October 2007
abc
Financials & valuation: Deutz
Financial statements
Year to 12/2006a 12/2007e 12/2008e 12/2009e
Profit & loss summary (EURm)
Revenue 1490.0 1550.0 1749.0 1840.6
EBITDA 154.1 161.7 191.2 202.4
Depreciation & amortisation -65.3 -62.4 -66.9 -69.3
Operating profit/EBIT 88.8 99.3 124.3 133.1
Net interest -22.1 -16.0 -12.2 -11.2
PBT 71.4 272.0 111.8 127.5
HSBC PBT 71.4 82.0 111.8 127.5
Taxation -9.9 -16.5 -22.0 -27.4
Net profit 62.1 252.5 89.8 100.1
HSBC net profit 60.9 68.5 89.8 100.1
Cash flow summary (EURm)
Cash flow from operations 104.6 66.3 123.8 157.3
Capex -85.8 -100.0 -80.0 -80.0
Cash flow from investment -85.2 -3.0 -103.0 -103.0
Dividends 0.0 -15.9 -15.6 -22.4
Change in net debt -68.3 -327.9 0.6 -26.2
FCF equity 39.2 48.5 49.2 71.0
Balance sheet summary (EURm)
Intangible fixed assets 100.3 103.6 106.7 109.6
Tangible fixed assets 377.0 254.3 287.3 315.3
Current assets 605.2 898.9 969.4 1001.9
Cash & others 49.4 349.4 349.4 349.4
Total assets 1162.9 1397.2 1503.8 1567.2
Operating liabilities 322.0 331.6 363.5 378.2
Gross debt 378.7 350.8 351.4 325.3
Net debt 329.3 1.4 2.0 -24.1
Shareholders funds 358.5 611.0 685.2 760.1
Invested capital 711.1 575.7 650.5 699.3
Ratio, growth and per share analysis
Year to 12/2006a 12/2007e 12/2008e 12/2009e
Y-o-y % change
Revenue 12.6 4.0 12.8 5.2
EBITDA -12.2 4.9 18.2 5.8
Operating profit -19.4 11.8 25.2 7.1
PBT -17.2 281.0 -58.9 14.1
HSBC EPS 220.5 12.5 31.0 11.5
Ratios (%)
Revenue/IC (x) 2.1 2.4 2.9 2.7
ROIC 11.3 12.9 16.7 15.7
ROE 20.1 14.1 13.9 13.9
ROA 7.4 21.6 7.4 7.6
EBITDA margin 10.3 10.4 10.9 11.0
Operating profit margin 6.0 6.4 7.1 7.2
EBITDA/net interest (x) 7.0 10.1 15.7 18.0
Net debt/equity 91.9 0.2 0.3 -3.2
Net debt/EBITDA (x) 2.1 0.0 0.0 -0.1
CF from operations/net debt 31.8 4662.2 6070.5
Per share data (EUR)
EPS Rep (fully diluted) 0.52 2.13 0.76 0.85
HSBC EPS (fully diluted) 0.51 0.58 0.76 0.85
DPS 0.00 0.13 0.19 0.20
NAV 3.02 5.16 5.78 6.41
Valuation data
Overweight
Year to 12/2006a 12/2007e 12/2008e 12/2009e
EV/sales 0.9 0.7 0.6 0.5
EV/EBITDA 9.2 6.3 5.3 4.9
EV/IC 2.0 1.8 1.6 1.4
PE* 18.3 16.3 12.4 11.1
P/NAV 3.1 1.8 1.6 1.5
FCF yield (%) 3.6 4.7 4.8 7.0
Dividend yield (%) 0.0 1.4 2.0 2.1
Note: * = Based on HSBC EPS (fully diluted)
Issuer information
Share price (EUR) 9.42 Target price (EUR) 11.00 Potent'l tot rtn (%) 16.8
Reuters (Equity) DEZG.DE Bloomberg (Equity) DEZ GR
Market cap (USDm) 1565.9 Market cap (EURm) 1105.0
Free float (%) 60 Enterprise value (EURm) 1022.2
Country Germany Sector Machinery
Analyst Juergen Siebrecht Contact +49 211 910 3350
Price relative
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13
12
11
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9
8
7
6
Oct-06 Apr-07 Oct-07
Deutz Rel to DAX-100
Source: HSBC
Note: price at close of 12 Oct 2007
14
13
12
11
10
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8
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6
32