BG's Wake Up Call - Bryan, Garnier & Co

25th March 2013
BG’s Wake Up Call
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Economic releases :
Date
25th-Mar US - Ben Bernanke speaks
US - Dallas fed manufacturing survey (3.4
exp.)
IT - Consumer confidence Index Mar. (85.5
exp.)
Upcoming BG events :
Date
18th-Apr
Recent reports :
Date
21st-Mar
20th-Mar
8th-Mar
8th-Mar
7th-Mar
6th-Mar
300
290
280
270
260
Nuclear - Costs & Financial risks (BG Paris Lunch
with B. Dessus)
Pennon Group (BUY, FV 800p) The benefits of
inflation!
Grifols (Buy, FV EUR31 vs. 29.5) Don't forget
Alzheimer's
Adocia (Corporate, FV EUR19.5) An ally of choice in
diabetes
Roche (Neutral, FV CHF208) GA-101 holds the keys
to the CD20 franchise
Sorin (Buy, FV EUR2.4) 2013 : a decisive year for
M&A ?
Veolia Environnement (Buy, FV EUR13) Roadshow
25/3/13
TEMENOS GROUP BUY, Fair Value CHF26 vs. CHF24 (+20%)
TriNovus acquisition conference call feedback: the US opportunity
We reiterate our Buy rating and increase our DCF-derived fair value to CHF26 from
CHF24, as we increase our medium-term sales lfl growth assumption (+11% vs. +10%)
following last Friday’s conference call regarding the acquisition of TriNovus. We estimate
that, altogether, the renewal of T24 10-year licences and the acquisition of TriNovus will
add respectively 2%, 3% and 5% to our sales projections for 2013, 2014 and 2015. We
also expect the deal will have a neutral impact to our 2013 adj. EPS est. but will be
accretive by respectively 1% and 3% for 2014 and 2015.
ASTRAZENECA BUY, Fair Value 3540p vs. 3400p (+9%)
2018 substantially too low, 2013 potentially the bottom
As we said several times before it took place, last week’s Investors Day had two
objectives: 1) to restore confidence over the medium to long term which was pretty
much dependent on the quality of the teams at work and the ability of R&D to deliver; 2)
to offer upside to consensus numbers in a not-too-distant future and see whether a
return to growth was by any means possible as early as in 2014. Although the first goal
was in our view more convincingly achieved, the second was deemed achievable but is
not yet granted and will depend on a few parameters including Brilinta and one or two
tailored bolt-on acquisitions.
BUREAU VERITAS BUY, Fair Value EUR125 vs. EUR100 (+29%)
Far from over (full report published today
Following a particularly enviable stockmarket performance, the share's current multiples
could prompt profit-taking moves. However, we believe the share could clearly continue
its uptrend in view of the quality of fundamentals, which justify higher valuation
assumptions in our DCF calculation. On this basis our Fair Value works out to EUR125.
PHARMACEUTICALS
CHMP: MS treatments in the heart of recommendations
Last Friday, two multiple sclerosis drugs were recommended by the CHMP for approval:
Aubagio from Sanofi and Tecfidera (BG-12) from Biogen. The landscape of MS drugs
completely moves from subcutaneous treatments (IFN) to oral treatments. These two
drugs come on the European market in direct competition with interferons such as Rebif
from Merck but also with Gilenya the first oral compound in this pathology.
LUXURY GOODS
Tiffany’s Q4 earnings ahead of estimates and more optimism for 2013
Last Friday Tiffany posted Q4 sales globally in line with market expectations and with
Xmas season (stable at same-store). Despite ongoing poor trends in the U.S., TIF
delivered an upbeat guidance for 2013 (“high-single digit increase”), mainly thanks to
Asia-Pacific that showed some positive signs, leading to an optimistic guidance for 2013
(“mid-teens sales increase”).
In brief...
AXA, Exclusive talks for the potential sale of a majority stake in AXA Private Equity
AXA received an irrevocable offer from an investor group for its entire stake in AXA
Private Equity.
TRANSGENE, An important production deal with Sanofi
Transgene and Sanofi jointly announced this morning an agreement for the production of
immunotherapy products on a newly-created state of the art platform. The industrial site
is located on Genzyme’s polyclonals site in Lyon
250
240
230
M A M J J A S O N D J F M
STOXX EUROPE 600 E - PRICE INDEX

BG’s Wake Up Call
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IT Software & Services
Temenos Group
TriNovus acquisition conference call feedback: the US opportunity
Price CHF21.70 Fair Value CHF26 vs. CHF24 (+20%) BUY
Bloomberg
TEMN SW
Reuters
TEMN.SW
12-month High / Low (CHF) 21.7 / 10.3
Market Cap (CHF) 1,562
Ev (BG Estimates) (CHF) 1,629
Avg. 6m daily volume (000) 342.5
3y EPS CAGR 30.5%
We reiterate our Buy rating and increase our DCF-derived fair value to CHF26 from CHF24, as we
increase our medium-term sales lfl growth assumption (+11% vs. +10%) following last Friday’s
conference call regarding the acquisition of TriNovus. We estimate that, altogether, the renewal
of T24 10-year licences and the acquisition of TriNovus will add respectively 2%, 3% and 5% to our
sales projections for 2013, 2014 and 2015. We also expect the deal will have a neutral impact to
our 2013 adj. EPS est. but will be accretive by respectively 1% and 3% for 2014 and 2015.
1 M 3 M 6 M 31/12/12
Absolute perf. 8.8% 35.6% 47.1% 35.6%
Softw.& Comp. 2.7% 5.3% 10.6% 5.1%
SVS
DJ Stoxx 600 1.9% 4.7% 6.6% 5.1%
YEnd Dec. (US$m) 2012 2013e 2014e 2015e
Sales 450.2 477.3 522.2 589.0
% change 6.0% 9.4% 12.8%
EBITDA 131 155 180 212
EBIT 48.1 87.9 110.2 139.5
% change 82.7% 25.3% 26.6%
Net income 62.4 94.7 113.4 138.8
% change 51.7% 19.7% 22.4%
2012 2013e 2014e 2015e
Operating margin 21.5 25.2 26.9 28.8
Net margin 5.4 13.6 16.1 18.6
ROE 6.2 15.0 17.3 18.4
ROCE 17.1 20.9 24.8 30.7
Gearing 25.0 16.5 0.6 -20.7
(US$) 2012 2013e 2014e 2015e
EPS 0.79 1.19 1.43 1.75
% change - 51.7% 19.7% 22.4%
P/E 29.3x 19.3x 16.2x 13.2x
FCF yield (%) 1.9% 4.3% 5.7% 7.3%
Dividends (US$) 0.3 0.4 0.5 0.6
Div yield (%) 1.3% 1.7% 2.2% 2.6%
EV/Sales 3.9x 3.6x 3.2x 2.6x
EV/EBITDA 13.4x 11.2x 9.2x 7.3x
EV/EBIT 18.1x 14.4x 11.8x 9.1x
ANALYSIS
• No excessive acquisition price. Temenos expects TriNovus to contribute USD8m to 2013 sales.
TriNovus’s revenue structure is typical of SaaS vendors, i.e. 70-80% in SaaS and 20-30% in
Services. Customers pay for 5-year subscriptions and TriNovus’s USD17m contracted revenues
are due within the next 3-3.5 years. Temenos will pay 1.5x contracted revenues, i.e. c.USD26m,
which represents c.2.6x 2013 est. annualised 2013 revenue, which we estimate at c.USD10m.
Such a multiple is way below the average of listed SaaS vendors (Salesforce.com’s EV/sales
multiple is above 8x).
• Technical integration under way. Temenos has already started the process of integrating its
T24 platform with TriNovus’s services, of which the most important is TriComply, which helps
compliance officers to keep abreast of the latest regulatory requirements. What is helping
Temenos to make such integration pretty easy - it is planned to be achieved some time in 2013
- is the fact the pre-packaged US functionality (model bank) already exists as it had been
developed in cooperation with Metavante (purchased by FIS since) between 2007 and 2009.
• How to get to c.USD30-60m sales by 2016? While TriNovus is expected to account for 2% of
sales, Temenos anticipates it would account for 5-10% in under 3 years, i.e. an est. USD30-60m.
This is expected to be achieved through cross-selling between TriNovus’s installed base (800
banks of all sizes, of which 75-80% are based in the Southern part of the US) and Temenoss’
products (T24, BI, Private Wealth, Payments) on a SaaS or hosted mode, and, if the customer
asks for, on premise. This will require some investments in sales and marketing, which should
not prevent TriNovus from increasing margins and reach Temenos’s levels in under 3 years.
Such cross-selling is deemed to significantly increase the average selling price (which is very
low) thanks to Temenos’s products.
• Opportunity to benefit from the consolidation of the US market. The US Core banking
solutions market is dominated by FIS, Fiserv and Jack Henry Associates, who primarily through
their solutions provide transaction processing services with outdated technologies (including
“batch” processing) and multiple inflexible core systems. Given that changing customer
behaviour and new regulations are serious challenges for US banks, there is a chance Temenos
may be successful in dislodging incumbents in some cases as it could be a serious alternative to
them.
VALUATION
• Our new DCF-derived fair value of CHF26 (vs. CHF24) is based on medium-term lfl revenue
growth rate of 11% (vs. 10%) and a medium-term adj. EBIT margin of 29% (vs. 30%).
• Temenos’ shares are trading at est. 14.4x 2013 and 11.8x 2014 EV/EBIT multiples.
• Net debt on 31 st December 2012 was USD96.7m (net gearing: 25%).
NEXT CATALYSTS
• Q1 13 results on 23 rd April before markets open.
• TCF 2013 user conference on 14 th -16 th May in Abu Dhabi (UAE).
Analyst :
Gregory Ramirez
33(0) 1 56 68 75 91
gramirez@bryangarnier.com
25 March 2013 2

BG’s Wake Up Call
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Healthcare
AstraZeneca
2018 substantially too low, 2013 potentially the bottom
Price 3,236p Fair Value 3540p vs. 3400p (+9%) BUY
Bloomberg
AZN LN
Reuters
AZN.L
12-month High / Low (p) 3,236 / 2,591
Market Cap (GBP) 40,390
Ev (BG Estimates) (GBP) 39,855
Avg. 6m daily volume (000) 2,318
3y EPS CAGR -4.6%
1 M 3 M 6 M 31/12/12
Absolute perf. 9.6% 10.1% 10.0% 11.2%
Healthcare 3.9% 9.5% 10.2% 10.2%
DJ Stoxx 600 1.9% 4.7% 6.6% 5.1%
YEnd Dec. (USDm) 2012 2013e 2014e 2015e
Sales 27,973 26,447 26,693 26,988
% change -5.5% 0.9% 1.1%
EBITDA 10,666 7,791 9,631 9,989
EBIT 8,148 5,141 6,981 7,339
% change -36.9% 35.8% 5.1%
Net income 8,662 6,679 6,992 7,260
% change -22.9% 4.7% 3.8%
2012 2013e 2014e 2015e
Operating margin 29.1 19.4 26.2 27.2
Net margin 22.3 13.6 19.0 20.1
ROE 26.4 15.1 20.8 21.2
ROCE 21.0 13.1 17.8 26.0
Gearing 10.9 0.0 -7.2 -21.1
(USD) 2012 2013e 2014e 2015e
EPS 6.87 5.34 5.70 5.96
% change - -22.2% 6.8% 4.5%
P/E 7.2x 9.2x 8.6x 8.3x
FCF yield (%) 1.9% 9.9% 10.3% 12.1%
Dividends (USD) 2.8 2.8 2.8 2.8
Div yield (%) 5.7% 5.7% 5.7% 5.7%
EV/Sales 2.3x 2.3x 2.2x 2.0x
EV/EBITDA 5.9x 7.8x 6.1x 5.5x
EV/EBIT 7.8x 11.8x 8.4x 7.5x
As we said several times before it took place, last week’s Investors Day had two objectives: 1) to
restore confidence over the medium to long term which was pretty much dependent on the
quality of the teams at work and the ability of R&D to deliver; 2) to offer upside to consensus
numbers in a not-too-distant future and see whether a return to growth was by any means
possible as early as in 2014. Although the first goal was in our view more convincingly achieved,
the second was deemed achievable but is not yet granted and will depend on a few parameters
including Brilinta and one or two tailored bolt-on acquisitions.
ANALYSIS
• What AstraZeneca was very good at during this Investors Day was to convince that something
had already happened within the company that makes it more likely to succeed in the future
compared to its poor track-record, notably in R&D. We met many people that either joined the
company over the last 3 years or are reviving under the new management which includes not
only Pascal Soriot who is the architect we heard a lot of positives about but also other key
leaders like Briggs Morrison (Head of Development and Chief Medical Officer) or previous
MedImmune people. We found the team both enthusiastic and very knowledgeable.
• The various presentations about R&D left us convinced that AstraZeneca has now adjusted and
adapted to the requirements of the science and regulations of the various agencies around the
world. We found many similarities with what was wrong at Sanofi when Chris Viehbacher joined:
complexity, bureaucracy, inability to kill and to select projects, lack of openness to the external
world, mistrust in biology and sequencing, etc … A lot has been turned in the right direction over
the last 2 years and the first fruit should be ready to be picked in the next 2 years. In the oncology
and respiratory fields, AstraZeneca showed very interesting new data which should give rise to
assets which are currently not meaningfully or not at all valued by the Street. On the first hand,
moxetumomab (hairy cell leukaemia), selumetinib (lung cancer) and olaparib (ovarian cancer)
could all start phase III in 2013 and some to go filing with phase II data. On the other hand,
benralizumab (anti-IL5) and tralokinumab (anti-IL13) are fast followers behind GSK and Roche
respectively whereas AZD2115 and AZD5423 could be respectively first MABA and first SGRM to
market.
• At this stage, there is a dilemma with a company like AstraZeneca, i.e. a pure play where R&D is
facing an upturn which is likely to translate into a re-rating. We are not capturing well the
potential growth ahead because only phase III assets are included into our models. We thus
decided to at least add compounds in late phase III whose proof of concept had previously been
made by competitors: this is true for selumetinib (although not in mutated kras lung cancer,
hence with a POS of only 20%), for benralizumab (POS of 40% vs 50% for mepolizumab at GSK),
for tralokinumab (POS of 20%, equal to Roche’s lebrikizumab) and we are re-introducing
olaparib (only in ovarian cancer) whose data will be presented at ASCO but sound very good
already with a potential filing based on phase II in Europe.
• All those ignored or undervalued assets in R&D form the base of management’s confidence to
“substantially beat the 2018 consensus” of USD21.5bn in revenues. We were around that level
too, mainly because we gave no value to assets prior to phase III.
• Now the second origin for a better-than-expected performance relies on the growth platforms,
o/w Brilinta and emerging markets will play a more significant role. This is where AstraZeneca
has to accelerate to capture more available growth. We are very comfortable with our
assumptions about Brilinta and above consensus numbers although a bit aggressive for 2013. In
emerging markets, we are likely to be too shy but it is always more difficult to reflect
performance as the reporting of sales is product-oriented rather geography-driven. However,
with new manufacturing capacities coming on-stream in India, in China and in Russia, with
increasing support, new products being approved and launched in key segments like COPD,
diabetes and thrombosis, we are not fully appreciating the opportunity of emerging markets for
AstraZeneca. The same is true for Japan where Nexium, Symbicort COPD and Brilinta are huge
opportunities. Just a word on diabetes to say that the excitement is maximum with Forxiga at
AstraZeneca and so this drug will to be carefully monitored. The drug which should be re-filed
in the US by mid-2013 could be approved by year-end. We have a USD600m contribution in
2020 (as a reminder this is a 50% share of gross profits as a consequence of the agreement with
BMS).
• And so in the end, what does that mean for AstraZeneca in 2014 and 2015? When asked
whether there could be a chance for 2013 to be the bottom year, CFO Simon Lowth answered
positively. But it is far from certain. First, AstraZeneca has to make sure it will be able to regain
25 March 2013 3

BG’s Wake Up Call
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momentum in emerging markets, even more importantly to successfully re-launch Brilinta in
the US. Second, P&L top and bottom lines could not behave in parallel as new cost-cutting
initiatives will deliver significant savings in 2014 and 2015 (USD450m and USD650m
respectively in the two years). Third, in order to be more comfortable with an objective of
stability or growth for the top-line in 2014, AstraZeneca would need one or two business
development initiatives themselves able to translate into immediate extra growth.
VALUATION
• In conclusion, AstraZeneca has set the scenario for the upcoming years. Not all will change in
the short term but we identify different elements that can surprise positively. So, from now on,
either we wait and see and act on facts or we confirm that AstraZeneca is starting on its new
journey and that it is worth jumping on the train sooner rather than later.
• We made various changes to our model, not all positive. We factored in the new restructuring
programmes both in R&D and in SG&A. We included new R&D assets as illustrated above,
although with low POS as of yet. All in all, our new FV stands at 3,540 p which represents a 9%
upside to the current share price without any change to our valuation metrics. Hence we could
have argued that AstraZeneca could deserve a lower specific risk premium (currently 75bp on
top of the equity risk premium) or that a 1% long-term growth rate is too low but we did not
want anything to be seen as artificial. Moreover it is our belief that the re-rating will be gradual
and that part of it will only happen once the company starts delivering on promises. So our
WACC remains at 8.29% i.e. the highest in our universe. Our BUY rating is maintained.
NEXT CATALYSTS
• Q2-2013: phase II data for benralizumab (asthma) and phase III start, phase II data for
tralokinumab (asthma), presentation of phase II data for olaparib in BCRAm ovarian cancer and
selumetinib in KRASm lung cancer at ASCO, phase III start for moxetumomab in hairy cell
leukemia (orphan designation);
• H2-2013: tralokinumab (asthma) phase III start, brodalumab (psoriasis) phase III start, olaparib
filing in Europe in BCRAm ovarian cancer
Two selected charts from AstraZeneca’s pack of slides (Investor Day, March 2013)
Click here to download document
Analyst :
Eric Le Berrigaud
33(0) 1 56 68 75 33
eleberrigaud@bryangarnier.com
Sector Team :
Mathieu Chabert
Martial Descoutures
25 March 2013 4

BG’s Wake Up Call
Back to front page
Business Services
Bureau Veritas
Far from over (full report published today
Price EUR97.15 Fair Value EUR125 vs. EUR100 (+29%) BUY
Bloomberg
BVI FP
Reuters
BVI.PA
12-month High / Low (EUR) 100.1 / 64.2
Market Cap (EURm) 10,731
Ev (BG Estimates) (EURm) 11,923
Avg. 6m daily volume (000) 141.5
3y EPS CAGR 12.8%
1 M 3 M 6 M 31/12/12
Absolute perf. 0.5% 14.8% 25.4% 14.8%
Industry 1.9% 4.7% 6.6% 5.1%
DJ Stoxx 600 1.9% 4.7% 6.6% 5.1%
YEnd Dec. (EURm) 2012 2013e 2014e 2015e
Sales 3,903 4,343 4,685 5,084
% change 11.3% 7.9% 8.5%
EBITDA 661 790 871 976
EBIT 639.2 718.4 794.8 885.7
% change 12.4% 10.6% 11.4%
Net income 402.6 459.8 513.1 576.8
% change 14.2% 11.6% 12.4%
2012 2013e 2014e 2015e
Operating margin 16.4 16.5 17.0 17.4
Net margin 10.3 10.6 11.0 11.3
ROE 35.2 33.4 32.0 30.3
ROCE 19.8 19.9 20.3 20.7
Gearing 100.0 84.9 71.5 56.9
(EUR) 2012 2013e 2014e 2015e
EPS 3.65 4.17 4.66 5.23
% change - 14.3% 11.6% 12.4%
P/E 26.6x 23.3x 20.9x 18.6x
FCF yield (%) 3.3% 4.1% 4.5% 5.1%
Dividends (EUR) 1.8 1.9 2.1 2.4
Div yield (%) 1.9% 1.9% 2.2% 2.4%
EV/Sales 3.0x 2.7x 2.5x 2.3x
EV/EBITDA 18.0x 15.1x 13.7x 12.1x
EV/EBIT 18.6x 16.6x 15.0x 13.4x
Following a particularly enviable stockmarket performance, the share's current multiples could
prompt profit-taking moves. However, we believe the share could clearly continue its uptrend in
view of the quality of fundamentals, which justify higher valuation assumptions in our DCF
calculation. On this basis our Fair Value works out to EUR125.
ANALYSIS
• In addition to the adjustments made to our forecasts following the publication of 2012
earnings, we have decided to factor the effects of acquisitions into our figures for the next
three years. We have assumed an annual contribution to revenue of 3%, which is at the lowend
of the range indicated by the group. Note that acquisitions contributed average growth of
7% a year between 2001 and 2012.
• With fundamentals remaining particularly attractive, we believe the group has the ability to
maintain a high level of organic growth without denting margins. As such, we have now
included growth to infinity of 2.5% vs. 2% previously in our DCF assumptions. Note that
between 2001 and 2012, organic growth averaged nearly 8% a year.
VALUATION
• The share has had an excellent ride (+50.4% 2012 +14.8% ytd) and valuation multiples are well
ahead of historical average levels (2007/2013 EV/EBIT of 13.4x and P/E of 17.2x). However, we
believe the share's stockmarket status could change considerably and move closer to that of
Essilor and Luxottica if we compare their growth profiles. Over the next three years, our
forecasts point to a 2012-15 CAGR in sales and EPS of 9.2% and 12.8%, respectively, after 2006-
12 levels of 13% and 16%.
NEXT CATALYSTS
• Q1 revenues on 30 th April 2013;
• AGM on 22 nd May 2013;
• HI results on 28 August 2013.
Click here to download document
Analyst :
Bruno de La Rochebrochard
33(0) 1 56 68 75 88
bdelarochebrochard@bryangarnier.com
25 March 2013 5

BG’s Wake Up Call
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Sector View
Pharmaceuticals
CHMP: MS treatments in the heart of recommendations
1 M 3 M 6 M 31/12/12
Healthcare 3.9% 9.5% 10.2% 10.2%
DJ Stoxx 600 1.9% 4.7% 6.6% 5.1%
*Stoxx Sector Indices
Companies covered
ASTRAZENECA BUY 3400p
Last Price 3236p Market Cap. GBP40,390m
BAYER BUY EUR75
Last Price EUR78.34 Market Cap. EUR64,783m
GLAXOSMITHKLINE NEUTRAL 1580p
Last Price 1524p Market Cap. GBP74,807m
IPSEN BUY EUR29
Last Price EUR27.755 Market Cap. EUR2,338m
MERCK KGaA NEUTRAL EUR100
Last Price EUR115 Market Cap. EUR25,002m
NOVARTIS BUY CHF70
Last Price CHF66.45 Market Cap. CHF179,826
NOVO NORDISK NEUTRAL DKK920
Last Price DKK927.5 Market Cap. DKK419,706
ROCHE HOLDING NEUTRAL CHF208
Last Price CHF217.5 Market Cap. CHF152,807
SANOFI BUY EUR80
Last Price EUR77.5 Market Cap. EUR102,792
SHIRE PLC BUY 2250p
Last Price 1978p Market Cap. GBP11,020m
UCB
Under
U.R.
Last Price EUR49.38
review
Market Cap. EUR9,057m
Last Friday, two multiple sclerosis drugs were recommended by the CHMP for approval: Aubagio
from Sanofi and Tecfidera (BG-12) from Biogen. The landscape of MS drugs completely moves
from subcutaneous treatments (IFN) to oral treatments. These two drugs come on the European
market in direct competition with interferons such as Rebif from Merck but also with Gilenya the
first oral compound in this pathology.
ANALYSIS
• Today the paradigm of MS treatments has two aims: to improve the efficacy, measured in
terms of decrease in relapses and time to disability; and specifically to bring some additional
convenience for the patient with less infusion to no infusion at all with the oral route gaining
ground. Since last Friday, two new treatments have received green light to enter the market,
namely Aubagio from Sanofi and Tecfidera (formerly BG12) from Biogen.
• As a reminder, Aubagio was launched in the US at the end of 2012 where the first indicators
were “very encouraging” with 80% of MS specialists having prescribed the drug to patients with
the majority of them switching from Copaxone or Avonex whereas 20% were treatment-naïve.
However Aubagio has not received the designation for a new active substance which could
make Sanofi unable to apply the price expected on its drug and limit the patent protection
previously expected. So far we have EUR538m peak sales for Aubagio in 2020. Sanofi thinks
that the concept of a more fragmented MS market offers a greater number of therapeutic
options. As a reminder Sanofi is currently building a strong MS franchise with two consecutive
launches lined up for Aubagio and then Lemtrada. The group should be able to position the two
products at either end of the value chain, i.e. with Aubagio being used to treat mild to
moderate forms of the disease, as a substitute for interferons, and Lemtrada used to treat
more severe or advanced forms. Besides during the AAN congress, Sanofi underlined that more
than 80% of patients did not receive further treatment with Lemtrada in the first year of the
extension of CARE MS study. Even if Lemtrada is infused intravenously, the drug presents the
advantage of being only administered on 5 consecutive days and the second course given on 3
consecutive days 12 months later. We expect the approval of Lemtrada in Q2 in Europe and for
the end of this year in the US.
• Thanks to its efficacy and the knowledge of the MS market from Biogen-Idec, Tecfidera,
recommended as a first-line oral treatment for adults, could become a serious competitor in
this landscape. The PDUFA date of BG12 in the US is expected on March 28th after a first threemonth
delay.
• In parallel, we can underline that the CHMP also recommended the extension of indication for
Xarelto from Bayer for the prevention of atherothrombotic events after an Acute Coronary
Syndrome.
NEXT CATALYSTS
• (new) CHMP decision on April 22-25 th
• PDUFA date of BG 12 on 28 th March
• Approval of Lemtrada in Europe in Q2 2013 and in the US in H2.
Click here to download
Analyst :
Martial Descoutures
33(0) 1 56 68 75 18
mdescoutures@bryangarnier.com
Sector Team :
Mathieu Chabert
Eric Le Berrigaud
25 March 2013 6

BG’s Wake Up Call
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Sector View
Luxury Goods Tiffany’s Q4 earnings ahead of estimates and more optimism for 2013
1 M 3 M 6 M 31/12/12
Pers & H/H Gds 3.1% 6.5% 12.2% 6.8%
DJ Stoxx 600 1.9% 4.7% 6.6% 5.1%
*Stoxx Sector Indices
Companies covered
CHRISTIAN DIOR BUY EUR145
Last Price EUR127,75 Market Cap. EUR23,216m
HERMES Intl NEUTRAL EUR200
Last Price EUR262,5498 Market Cap. EUR27,717m
LVMH
9
BUY EUR160
Last Price EUR130,85 Market Cap. EUR66,429m
PPR NEUTRAL EUR166
Last Price EUR171,95 Market Cap. EUR21,686m
PRADA BUY HKD82
Last Price EUR77,3 Market Cap. EUR197,797
RICHEMONT BUY CHF82
Last Price CHF73,15 Market Cap. CHF38,184m
SALVATORE FERRAGAMO NEUTRAL EUR20
Last Price EUR21,72 Market Cap. EUR3,658m
THE SWATCH GROUP BUY CHF555
Last Price CHF533 Market Cap. CHF27,974m
TOD'S GROUP SELL EUR80
Last Price EUR110,2 Market Cap. EUR3,373m
Last Friday Tiffany posted Q4 sales globally in line with market expectations and with Xmas season
(stable at same-store). Despite ongoing poor trends in the U.S., TIF delivered an upbeat guidance
for 2013 (“high-single digit increase”), mainly thanks to Asia-Pacific that showed some positive
signs, leading to an optimistic guidance for 2013 (“mid-teens sales increase”).
ANALYSIS
• Q4 12 sales (ending January 31, 2013) came in at EUR1.2bn, a touch below consensus of
EUR1.25bn, up 5% at constant FX but SSSG remained stable. Comparable-store growth
showed no improvement compared to the holiday season (November & December), as its
domestic market (US: 52% of sales) still weighed on its quarterly performance.
• US activity (52% of sales) remained sluggish with comparable-store sales down 2% in Q4. This
performance was explained by disappointing sales figures at the NYC flagship store (-3% samestore),
which are hit by: (i) lingering pressure in the entry-level-priced silver segment,
consequence of the trade-up strategy carried-out by Tiffany and (ii) less European tourists
travelling to the U.S. because of the crisis in Europe.
• Good trends in Asia-Pacific (21% of sales) despite the negative calendar effect. Indeed,
compared to last year when the Chinese New Year happened on January 23, the later CNY this
year (February 23) did not fuelled activity in Q4 12. Despite this negative calendar shift, Tiffany
posted a 6% same-store growth and witnessed positive signs in Greater China. In our view, the
jewelry segment is less exposed to the current “gift-giving market” slowdown compared to the
watch segment.
• Soft activity in Europe (12% of sales): stable same-store sales in Q4. Whilst the trends
remained surprisingly good until Q3, the last quarter was soft, notably in the U.K. Indeed the
U.K. luxury group Mulberry released a profit warning last Friday because of a disappointing
trading and lower spending by tourists in London. This confirms our cautious stance on Europe
ahead of the Q1 13 publications.
Quarterly comparable same store growth:
% Q1 12 Q2 12 Q3 12 Nov-Dec 12 Q4 12
Americas 0 -5 1 -2 -2
Asia-Pacific 10 -5 -4 7 6
Japan 12 8 5 1 2
Europe 0 2 8 Stable Stable
Total worldwide 4 1 1 Stable Stable
Source: Tiffany
• Tiffany delivered an upbeat 2013 outlook. Although Tiffany predicted a soft Q1 13 coming off a
disappointing Q4 12, the group is more optimistic for 2013 and forecasts 6-8% reported sales
growth (consensus: +6%e) and a high-single digit increase at constant FX, fuelled by a mid-teens
sales growth in Asia-Pacific (vs. +8% in 2012). The EPS guidance is expected to be in the range of
$3.43-$3.53 (consensus: $3.46), implying a 6-9% increase.
READ-ACROSS TO OUR COMPANIES
• Read-across to other Luxury groups is unmeaningful. Tiffany is not a pure luxury player
compared to our luxury sample coverage, as its product offer varies from the high-end to the
very low-end segment. However we can highlight two interesting things from Tiffany’s
publication: (i) Start of the year is soft in Europe: beyond challenging comps in Q1, some luxury
groups have also noticed a soft activity since tourists are less present in Europe (negative FX
evolution and price hikes) and domestic customers are badly hit by the crisis; (ii) Rebound
expected in Asia-Pacific: Tiffany is more optimistic about Greater China, Burberry, Hugo Boss
and Swatch have also been upbeat about China in recent weeks.
NEXT CATALYSTS
• Tiffany will report its Q1 13 earnings on May 28 th , 2013.
Analyst :
Cédric Rossi
33(0) 1 70 36 57 25
crossi@bryangarnier.com
Consumer Analyst Team :
Loïc Morvan
Peter Farren
25 March 2013 7

BG’s Wake Up Call
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Insurance
AXA
Exclusive talks for the potential sale of a majority stake in AXA Private Equity
Price EUR13.97 Fair Value EUR16.5 (+18%) BUY
ANALYSIS
Bloomberg
Reuters
CS FP
AXAF.PA
12-month High / Low (EUR) 14.6 / 8.8
Market Cap (EURm) 33,357
Avg. 6m daily volume (000) 6,961
1 M 3 M 6 M 31/12/12
Absolute perf. 2.6% 4.5% 12.0% 4.6%
Insurance 3.8% 4.5% 12.3% 5.1%
DJ Stoxx 600 1.9% 4.7% 6.6% 5.1%
2011 2012e 2013e 2014e
P/E 9.1x 7.4x 7.1x 6.8x
Div yield (%) 4.9% 5.4% 5.6% 5.9%
• AXA received an irrevocable offer from an investor group for its entire stake in AXA Private
Equity. The acquiring investors would be composed of AXA Private Equity’s senior
management, a group of institutions and French family offices. AXA should become a minority
shareholder (vs. 95.8% currently). Upon the completion of the proposed transaction, AXA
Private Equity’s voting share capital would be held as follows: AXA Private Equity’s
management and employees 40%, external investors 33.1%, and AXA Group 26.9%.
• AXA should continue to invest in private equity through AXA Private Equity funds. The expected
total commitment is EUR4.8bn between 2014 and 2018. At end-2012, AXA Group had 1.4% of
its General Account assets invested in private equity through AXA Private Equity.
• The transaction would value AXA Private Equity at EUR510m for 100%, i.e. EUR488m for AXA
Group’s share, which should be divided into an upfront payment of EUR348m and a deferred
consideration of up to EUR140m, to be paid in instalments subject to achieving certain targets
and meeting certain conditions. Closing is expected in Q3 2013.
• Estimated impacts on AXA Group expected at the closing date: EUR0.2bn exceptional capital
gain, which will be accounted for in net income, and EUR0.2bn cash expected to be remitted to
the Group, net of reinvestment.
-> The transaction has been expected for a long time (discussions started in September 2011) and is
no breakthrough for the company.
VALUATION
• Based on our current 2013 estimates, our SOTP valuation is EUR16.5.
NEXT CATALYSTS
• AGM on 30th April 2013. Q1 2013 sales on 7th May 2013.
Olivier Pauchaut, opauchaut@bryangarnier.com
Healthcare
Transgene
An important production deal with Sanofi
Price EUR8.16 Fair Value EUR21 (+157%) CORPORATE
Bloomberg
TNG.FP
Reuters
TRNG PA
12-month High / Low (EUR) 11.2 / 6.8
Market Cap (EURm) 260
Avg. 6m daily volume (000) 34.60
1 M 3 M 6 M 31/12/12
Absolute perf. -6.2% 1.6% -5.7% 1.0%
Healthcare 3.9% 9.5% 10.2% 10.2%
DJ Stoxx 600 1.9% 4.7% 6.6% 5.1%
2010 2011e 2012e 2013e
P/E NS NS 6.2x 25.9x
Div yield (%) NM NM NM NM
ANALYSIS
• Transgene and Sanofi jointly announced this morning an agreement for the production of
immunotherapy products on a newly-created state of the art platform. The industrial site is
located on Genzyme’s polyclonals site in Lyon.
• Sanofi will therefore act as Transgene’s Contract Manufacturing Organisation (CMO) to
manufacture clinical and commercial batches of products such as MVA therapeutic vaccines.
Transgene will be a preferred customer of the platform for 15 years. As a reminder, Transgene
expects to file a BLA (Biological Licence Application) for its first product TG 4010 in 2016.
• An equally shared investment of EUR10m will be made by Transgene and Sanofi. We see this
agreement as pivotal for Transgene’s future manufacturing capabilities. While the first strategic
option would have been to build a manufacturing plant, it could have been an expensive cost
for Transgene (we estimate EUR40-50m). Also, today’s agreement is non exclusive and
therefore in case of the exercise of the option by Novartis for TG 4010, the Swiss pharma could
also decide to produce the drug in house.
VALUATION
• This agreement does not imply any change in our fair value. Nevertheless, we see it as positive
for Transgene mid to long term perspectives.
NEXT CATALYSTS
• EASL in April : strategic update on TG4040
• Pexa-Vec (JX594) : first interim data for Traverse mid 2013
• TG 4010 : Q4 phase IIb results
Click here to download
Mathieu Chabert, mchabert@bryangarnier.com
25 March 2013 8

BG’s Wake Up Call
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25 March 2013 9

25 March 2013
BG’s Wake Up Call
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Bryan Garnier Research Team
HealthcareTeam Eric Le Berrigaud 33 (0) 1 56 68 75 33 eleberrigaud@bryangarnier.com
Mathieu Chabert 33 (0) 1 70 36 57 45 mchabert@bryangarnier.com
Martial Descoutures 33 (0) 1 56 68 75 18 mdescoutures@bryangarnier.com
Consumer Goods Peter Farren 33 (0) 1 56 68 75 72 pfarren@bryangarnier.com
Loïc Morvan 33 (0) 1 70 36 57 24 lmorvan@bryangarnier.com
Cedric Rossi 33 (0) 1 70 36 57 25 crossi@bryangarnier.com
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