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

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Mid cap European small and mid caps 17 October 2007 abc Financials & valuation: Fourlis Financial statements Year to 12/2006a 12/2007e 12/2008e 12/2009e Profit & loss summary (EURm) Revenue 487.0 596.5 760.7 934.9 EBITDA 49.5 62.3 92.4 119.6 Depreciation & amortisation -7.1 -7.7 -10.9 -13.8 Operating profit/EBIT 42.4 54.6 81.5 105.8 Net interest -5.1 -5.7 -7.4 -9.0 PBT 47.9 55.9 92.7 96.8 HSBC PBT 37.9 56.8 74.1 96.8 Taxation -20.6 -12.5 -17.0 -21.2 Net profit 27.4 43.5 74.6 72.9 HSBC net profit 25.5 44.1 56.0 72.9 Cash flow summary (EURm) Cash flow from operations 15.1 31.9 40.0 67.6 Capex -13.9 -43.0 -65.5 -71.8 Cash flow from investment -26.4 -43.8 -60.2 -69.6 Dividends -9.2 -16.3 -20.4 -22.9 Change in net debt 2.4 20.9 23.0 27.6 FCF equity 1.2 -11.2 -25.6 -4.3 Balance sheet summary (EURm) Intangible fixed assets 4.3 4.2 4.2 4.1 Tangible fixed assets 101.9 137.2 191.9 249.8 Current assets 221.8 256.1 302.0 343.0 Cash & others 25.5 29.7 21.0 12.8 Total assets 386.5 456.5 552.7 652.1 Operating liabilities 125.8 143.8 170.4 197.7 Gross debt 141.3 166.4 180.7 200.2 Net debt 115.8 136.7 159.7 187.3 Shareholders funds 114.1 141.3 195.5 245.4 Invested capital 176.7 224.1 306.7 386.4 Ratio, growth and per share analysis Year to 12/2006a 12/2007e 12/2008e 12/2009e Y-o-y % change Revenue 17.8 22.5 27.5 22.9 EBITDA 15.5 25.9 48.3 29.5 Operating profit 18.5 28.6 49.4 29.8 PBT 67.8 16.6 65.9 4.4 HSBC EPS 33.4 72.9 27.0 30.1 Ratios (%) Revenue/IC (x) 2.9 3.0 2.9 2.7 ROIC 14.2 21.1 25.1 23.8 ROE 24.5 34.5 33.3 33.1 ROA 7.6 10.3 15.0 12.5 EBITDA margin 10.2 10.4 12.1 12.8 Operating profit margin 8.7 9.1 10.7 11.3 EBITDA/net interest (x) 9.6 10.9 12.4 13.2 Net debt/equity 101.4 96.8 81.3 75.2 Net debt/EBITDA (x) 2.3 2.2 1.7 1.6 CF from operations/net debt 13.0 23.3 25.0 36.1 Per share data (EUR) EPS Rep (fully diluted) 0.54 0.85 1.46 1.43 HSBC EPS (fully diluted) 0.50 0.87 1.10 1.43 DPS 0.18 0.32 0.40 0.45 NAV 2.24 2.77 3.84 4.82 New IKEA stores 2008-2010 Overweight Location Opening Investment (HSBCe) IKEA Athens West (Rentis) Mar-08 EUR10m IKEA Ioannina (NW Greece) Oct-08 EUR24m IKEA Larissa (central Greece) Feb-09 EUR24m IKEA Bulgaria 1 (Sofia) May-09 EUR22m IKEA Bulgaria 2 (Burgas) Oct-09 EUR21m IKEA Heraclion (Crete) Nov-09 EUR27m IKEA Bulgaria 3 (Plovdiv) Sep-10 EUR20m Valuation data Year to 12/2006a 12/2007e 12/2008e 12/2009e EV/sales 3.0 2.4 1.9 1.6 EV/EBITDA 29.0 23.4 16.0 12.6 EV/IC 8.1 6.5 4.8 3.9 PE* 52.1 30.2 23.7 18.2 P/NAV 11.7 9.4 6.8 5.4 FCF yield (%) 0.1 -0.8 -1.9 -0.3 Dividend yield (%) 0.7 1.2 1.5 1.7 Note: * = Based on HSBC EPS (fully diluted) Issuer information Share price (EUR) 26.10 Target price (EUR) 31.30 Potent'l tot rtn (%) 19.9 Reuters (Equity) FRLr.AT Bloomberg (Equity) FOYRK GA Market cap (USDm) 1884.6 Market cap (EURm) 1329.9 Free float (%) 70 Enterprise value (EURm) 1457.2 Country Greece Sector Household Durables Analyst Spiros Tsangalakis Contact 30 210 6965 212 Price relative 29 27 25 23 21 19 17 15 13 11 Oct-06 Apr-07 Oct-07 Fourlis Rel to ATHENS SE Source: HSBC Note: price at close of 12 Oct 2007 29 27 25 23 21 19 17 15 13 11 40
Mid cap European small and mid caps 17 October 2007 abc Hochtief Coverage of the entire construction value chain on a global scale Growth catalysts are an increased focus on attractive service areas, synergies between the different business lines and globalisation Our sum-of-the-parts valuation shows a new target price of EUR108 (EUR101 previously), implying 19% potential return; Overweight Investment summary Hochtief offers a broad portfolio of international construction activities and construction-related services. The main element of this strategy is an integrated approach offering solutions for the entire life cycle of construction activities: from developing, designing, financing and construction to the operational management of buildings. Hochtief is also able to manage complex projects cross border. Given this set-up, we think the company is well positioned to benefit from the increasing market volume for complex infrastructure and building projects, not only in emerging regions, but also in developed countries (PPP, facility management, project development). In recent weeks Hochtief has taken four important steps both to broaden its business opportunities and focus on more stable and higher-margin business: 1 The merger of activities in the Gulf region of Leighton with Al Habtoor, (Hochtief’s Leighton stake is 45% with EUR1.65bn revenues enables Hochtief/Leighton to play a leading role in one of the fastest growing regions globally. 2 With the acquisition of aurelis from Deutsche Bahn, Hochtief gains access to a real estate portfolio of 27m sqm. We are convinced that Hochtief will be able to generate relatively quickly a substantial return both in the rental and development parts of the portfolio. Key facts ____________________Financial summary _____________________ ___________ Valuation summary ___________ Analyst: Thomas Teetz Year to Revenue EBITDA HSBC HSBC HSBC Yield HSBC EV/ EV/ IC ROIC HSBC Tel: +49 211 910 2353 (EURm) (EURm) net profit EPS EPS growth (%) PE EBITDA (x) (%) REP Email: thomas.teetz@hsbc.de (EURm) (EUR) (%) (x) (x) (x) Current price (EUR) 91.1 12/2006 15,508.0 651.8 89.1 1.27 41.5 1.2 71.6 7.7 3.0 10.8 2.2 Target price (EUR) 108.0 12/2007e 15,910.2 712.3 106.6 1.52 19.7 1.3 59.8 7.1 2.9 13.9 1.7 Mkt cap (EURm) 5,747.5 12/2008e 16,305.4 845.2 156.1 2.23 46.4 1.4 40.8 6.0 2.8 16.2 1.4 Bloomberg HOT GR 12/2009e 17,454.6 869.6 158.7 2.27 1.6 1.5 40.2 4.0 1.9 16.5 0.9 Reuters HOTG.DE Source: HSBC estimates 41
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European small and mid caps-Stock picks Q4 2007-Q1 2008 - Fourlis

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