SILVER BULLETS - Espirito Santo Investment Bank incorporating ...

THIRD QUARTER 2010
Prysmian
Valuation Metrics 2008 2009 2010E 2011E 2012E
Recommendation: BUY Execution P/E 11.5 10.0 12.0 8.2 6.8
Fair Value: 17.5 Reported P/E 10.5 8.0 12.1 8.2 6.8
EV / Sales 0.6 0.7 0.7 0.6 0.5
Share Price: EUR 11.8 EV / EBITDA 5.8 6.6 7.2 5.4 4.5
Upside / Downside 47.6% EV / EBITA 6.7 8.1 8.9 6.4 5.3
FCF Yield 15.6% 12.7% 9.9% 15.0% 14.0%
Previous Fair Value EUR 18.5 Dividend yield 3.5% 3.5% 2.5% 3.7% 4.5%
% change to fair value -5.5%
Bloomberg: PRY IM Key ratios 2008 2009 2010E 2011E 2012E
T-One: I:PRY
Model Published On: 03 July 2010 EBITDA margin 10.5% 10.8% 10.2% 11.1% 11.7%
Adj. EBITA margin 9.2% 9.0% 8.3% 9.4% 10.1%
Capex / Revenue 2.3% 2.9% 1.8% 1.8% 1.8%
Shares In Issue 182m Capex / Depreciation 1.66 1.55 0.95 1.04 1.10
Market Cap 2,155 Net Debt / EBITDA 1.2 1.3 1.0 0.3 -0.1
Net Debt 410 EBITDA / Net Interest 3.3 7.8 6.8 16.9 66.1
Adjustments For Associates & Minorities 23 ROE 53% 37% 23% 27% 26%
Net Pension Deficit 148
Tax Loss carry forward -97
Umbilicals fine 100 P&L Summary 2008 2009 2010E 2011E 2012E
Enterprise Value (Dec 2010E) 2,738
Revenue 5,144 3,731 3,881 4,254 4,530
% change 0.5% -27.5% 4.0% 9.6% 6.5%
Forthcoming Catalysts Adj. EBITDA 542 403 394 473 531
% change 2.4% -25.6% -2.2% 20.1% 12.3%
Q2 2009 Results 03 August 2010 % margin 10.5% 10.8% 10.2% 11.1% 11.7%
Q3 2009 Results 10 November 2010 Depreciation & Amortisation -70 -69 -74 -73 -74
Adj. EBIT 472 334 320 400 457
% change 3.0% -29.2% -4.1% 24.7% 14.4%
% margin 9.2% 9.0% 8.3% 9.4% 10.1%
Operating Profit 448 386 307 394 451
Execution Analyst Associates 3 3 2 2 2
Nick Paton, CFA Net Financials -165 -52 -58 -28 -8
(44) 20 7456 1190 Pre Tax Profit 286 337 251 368 445
nick.paton@executionlimited.com Income Tax Expense -51 -85 -72 -105 -127
Minority Interests 2 -4 -2 -1 -1
Net Income 237 248 177 262 317
Revenue Breakdown Execution Net Income 218 198 180 262 317
Reported EPS 1.30 1.36 0.97 1.44 1.74
Execution EPS 1.20 1.09 0.99 1.44 1.74
DPS 0.42 0.42 0.30 0.44 0.53
Payout Ratio 32.0% 30.6% 30.6% 30.6% 30.6%
Shares in Issue 182m 182m 182m 182m 182m
Cash Flow Summary 2008 2009 2010E 2011E 2012E
Pre Tax Profit 286 337 251 368 445
Depreciation & Amortisation 66 71 74 73 74
Taxes Paid -83 -62 -72 -105 -127
EBIT Breakdown Net Financials 165 52 58 28 8
Change in Working Capital 66 36 25 50 -20
Other Operating Cash Flow 5 -75 -52 -14 2
Operating cash flow 505 359 284 400 382
Capital Expenditure -116 -107 -70 -77 -82
Free Cash Flow 389 252 214 324 300
Acquisitions & Disposals -12 11 -4 -4 -5
Dividends Paid To Shareholders -76 -75 -76 -54 -80
Equity Raised / Bought Back 0 0 0 0 0
Other Financing Cash Flow -167 -61 0 0 0
Net Cash Flow 134 127 134 265 216
Balance Sheet Summary 2008 2009 2010E 2011E 2012E
Margin Trends Cash & Equivalents 492 492 626 891 1,107
Tangible Fixed Assets 806 872 874 882 895
14%
Goodwill & Intangibles 31 43 41 40 40
12%
Associates & Financial Investments 76 62 64 68 72
10%
Other Assets
Total Assets
1,693
3,098
1,575
3,044
1,588
3,193
1,633
3,516
1,724
3,838
8%
Interest Bearing Debt 1,158 1,036 1,036 1,036 1,036
6%
Other Liabilities 1,477 1,310 1,356 1,470 1,554
4%
Total Liabilities 2,635 2,346 2,392 2,506 2,590
2%
Shareholders' Equity
Minority Interests
447
16
677
21
779
23
986
24
1,223
25
0%
2008 2009 2010E 2011E 2012E
Total Equity 463 698 802 1,010 1,248
Adj. EBITDA margin Adj. EBITA margin
Net Debt 666 544 410 145 -71
Margin
Industrial
17%
Trade and
Installer
27%
Telecom
6%
Industrial
11%
Telecom
11%
Other
24%
Trade and
Installer
4%
Other
2%
Utilities
43%
Utilities
55%
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