ROFIN-SINAR Technologies

04 February 2011
Capital Goods - Engineering
ROFIN-SINAR Technologies
- Share price has outpaced earnings surprise, downgrade to Market Weight -
♦ Downgrade to Market Weight: We downgrade Rofin-Sinar from Overweight to
Market Weight. 1Q10/11 results beat our revenue forecast by 4.7% and our net income
forecast by 17.9%. Management guidance has been raised and we have
lifted our earnings forecasts by 9.2% to US$2.01 (FY2011) and 8.5% to US$2.30
(FY2012). But the share price has rallied by over 35% in the last quarter and the
shares now trade in line with our new target.
♦ Changes to guidance and outlook: Thanks to improved demand from the machine
tool sector management increased its FY11 revenue target to US$540-560m
(+27-32% YoY) from US$500-520m. The EBT margin target was raised to 14-16%
from 13-15%. We see these targets as achievable given for instance recently improved
VDMA data and we have lifted our FY11 and FY12 estimates. Revenue estimates
are US$556.2m for FY11 (prev. US$523.5m) and US$597.9m for FY12
(prev. US$562.8m).
♦ TP now in line with market: Given higher estimates we have increased our DCFbased
target price from US$36.00 to US$39.00. Our price target implies a FY12E
PER of 17x, which is in line with Rofin-Sinar’s historical 1-year-forward PER range of
16-17x. Upside risks to our rating include higher-than-expected revenues in the fibre
lasers business. Downside risks include worsening of the business environment in
major end markets such as the machine tool and semiconductor/solar/consumer
electronics industries.
Key ratios 2009 2010 2011F 2011F 2012F
(US$m) Actua Actual BHF-BANK Consensus* BHF-BANK
Sales 350 424 556 559 598
EBITDA 22 56 103 100 117
EPS (rep.) (US$) 0.31 1.02 2.01 2.04 2.30
EPS (adj.) (US$) 0.31 1.02 2.01 2.04 2.30
Dividend per share (US$) 0.00 0.00 0.00 0.00 0.00
EV/Sales 1.5 2.5 1.8 - 1.6
EV/EBITDA 23.5 18.7 9.5 - 7.9
EV/EBIT 58.6 23.7 11.4 - 9.3
PER Neg. 44.3 20.9 19.5 18.2
Dividend yield 0.0% 0.0% 0.0% 0.0% 0.0%
FCF yield 4.2% 2.0% 3.2% - 7.2%
Net debt(-) / net cash(+) 70 87 124 - 184
* Bloomberg Finance LP
Source: Company data, BHF-BANK estimates
Old: Overweight
Please see the important disclaimer & company disclosures at the end of this report
Market Weight
Target price: US$39.00
Old: €36.00
Current price:
(03 February 2011
Share data
US$39.75
Next event:
16 March: AGM
Share price performance
40
30
20
10
0
Free float (%) 95
Daily volume ('000, 3M avg.) 179.5
Shares outstanding ('000) 28,4
Reuters code RSTI.DE
Bloomberg code RSI GR
Index Prime Standard
Key data
Market cap (US$m) 1129.1
EV (€m) 1,006
5y EPS CAGR 8.4%
5y Total Return/TecDAX 2.3%
Performance (%)
ROFIN-SINAR
Technologies (lhs)
Rel. to TecDAX (rhs)
1 M 6 M 12 M
Absolute 8.4 84.9 81.3
Relative 6.5 72.5 76.3
Source: Datastream, BHF-BANK
0%
02/09
06/09
11/09
04/10
09/10
02/11
Stephan Bauer
Financial Analyst
Phone: +49 69 718-3871
E-mail: stephan.bauer@bhf-bank.com
160%
120%
80%
40%

ROFIN-SINAR Technologies 04 February 2011
Healthy 1Q10/11 results and raise in management guidance
2
Please see the important disclaimer & company disclosures at the end of this report
BHF-BANK Research
Rofin-Sinar’s 1Q10/11 results came in higher than we expected and above management’s guidance. Revenues of
US$137.1m (vs. BHF-BANK estimate of US$131.1m) increased by 10.3% QoQ and reached pre-crisis levels. With
the exception of the machine tool industry, where revenues remained flat QoQ, all end markets contributed to sequential
growth, i.e. automotive & sub-suppliers +47%, semiconductor/electronics/solar +14%, others +10%.
Geographically, demand from European customers rebounded the strongest compared to the previous quarter
(+19%), while North America (+8% QoQ) and Asia (+2% QoQ) also showed further improvements in demand. Quarterly
order intake of US$144.6m matched our forecasts and also recovered to pre-crisis levels. In its conference
call, management stated that order intake to date in the second quarter is encouraging (BHF-BANK estimate:
US$151.0m, +4.4% QoQ). Mainly due to the improvement in the top line, 1Q10/11 operating profit of US$21.5m
and net income of US$14.9m beat our estimates of US$ 21.0m and US$12.6m, respectively.
Largely due to stronger demand coming from the machine tool sector as well as very healthy order intakes from all
end markets in January, management raised its FY11 guidance, which now targets revenues of US$540-560m, up
from US$500-520m. Moreover, management raised its EBT-margin goal by 1 percentage point to 14-16%.
Lifting estimates
Due to the better quarterly results as well as further improvements in the mechanical engineering sector (which is
underscored by recent VDMA data), we have lifted our FY11 and FY12 estimates as follows:
Fig 1 Raising estimates
(US$m)
FY2010 FY2011 FY2012
New Company
guidance
Old Change New Old Change
Revenues 423.6 556.2 540-560 523.5 6.2% 597.9 562.8 6.2%
Gross margin 39.3% 41.1% 40-41% 40.5% 0.6% 41.8% 41.6% 0.2%
Income from operations 44.0 86.8 - 79.8 8.8% 99.4 92.4 7.6%
Operating income margin 10.4% 15.6% - 15.2% 0.4% 16.6% 16.4% 0.2%
EBT 45.9 88.3 75.6-89.6 81.3 8.6% 101.0 94.0 7.5%
EBT margin 10.8% 15.9% 14.0-16.0% 15.5% 0.4% 16.9% 16.7% 0.2%
Net income 29.8 57.7 - 52.7 9.5% 66.0 60.9 8.4%
Diluted EPS (US$) $1.02 2.01 - 1.84 9.2% 2.30 2.12 8.5%
Source: Company data, BHF-BANK estimates
_
Raising target price to US$39.00 in line with current market values
Given higher estimates we have increased our DCF-based (WACC: 9.4%, beta 1.1x, terminal value growth rate: 2.0%
[based on GDP], sustainable EBIT margin: 14.5%) target price from US$ 36.00 to US$ 39.00. Our price target implies a
FY12F PER of 17x, in line with Rofin-Sinar’s historical 1-yr-forward PER range of 16-17x. However, after the strong rally of
the share price in the past few months and given that the stock now trades in line with our target, we downgrade to Market
Weight from Overweight. The key upside risk to our rating is higher-than-expected revenues in the fibre lasers business.
Downside risk include worsening of the business environment in major end markets such as the machine tool and
semiconductor/solar/consumer electronics industries.

BHF-BANK Research
Sales and Sales growth
700
600
500
400
300
200
100
0
2003
2004
2005
2006
2007
2008
2009
2010F
2011F
2012F
Sales Sales growth
Source: Company data, BHF-BANK estimates
EBIT and EBIT margin
120
100
80
60
40
20
0
2003
2004
2005
2006
2007
2008
2009
2010F
2011F
2012F
EBIT EBIT margin
Source: Company data, BHF-BANK estimates
Shareholder structure
Free float
100%
Source: Company data, BHF-BANK estimates
Segment division
Semiconductor
& Electronics
24%
Automotive
Industry
5%
Machine Tool
39%
Sales 2010
Source: Company data, BHF-BANK estimates
Others
30%
40%
30%
20%
10%
0%
-10%
-20%
-30%
-40%
-50%
20%
18%
16%
14%
12%
10%
8%
6%
4%
2%
0%
ROFIN-SINAR Technologies 04 February 2011
Profit & loss 2008 2009 2010F 2011F 2012F
Order backlog / Inflow 143.4 89.6 138.9 145.0 155.1
Sales 575.3 349.6 423.6 556.2 597.9
YoY 19.9% -39.2% 21.2% 31.3% 7.5%
EBITDA 112.7 21.7 56.0 103.3 116.9
EBITDA growth YoY 17.8% -80.7% 157.9% 84.6% 13.2%
EBITDA margin 19.6% 6.2% 13.2% 18.6% 19.6%
EBIT 96.3 8.7 44.0 86.8 99.4
EBIT growth YoY 13.7% -91.0% 404.3% 97.5% 14.6%
EBIT margin 16.7% 2.5% 10.4% 15.6% 16.6%
Net income (rep.) 60.8 -2.8 26.0 54.7 62.8
Net income (adj.) 60.8 -2.8 26.0 54.7 62.8
EPS 1.96 -0.10 0.90 1.91 2.19
EPS growth YoY 29.2% -104.9% n.a. 112.1% 14.9%
Gross profit margin 43.1% 37.5% 39.3% 41.1% 41.8%
Pre-tax margin 16.5% 0.8% 9.9% 15.3% 16.4%
Net income margin (adj.) 10.6% -0.8% 6.1% 9.8% 10.5%
Balance sheet data 2008 2009 2010F 2011F 2012F
Intangibles / Goodwill 103.2 105.0 105.0 105.0 105.0
Total non-current assets 177.3 184.6 158.9 154.4 149.9
Cash & equivalents 116.5 119.0 125.4 164.0 225.2
Total current assets 406.4 354.9 389.0 468.4 549.6
Shareholder's equity 402.3 418.3 417.8 477.5 544.5
Minority interests 2.3 3.4 3.8 4.2 4.4
Net debt(-) / net cash(+) -49.8 -87.6 -104.8 -143.4 -204.6
Cash flow statement 2008 2009 2010F 2011F 2012F
Net income, as rep. 60.8 -2.8 26.0 54.7 62.8
Depreciation & amortization 16.4 13.0 12.0 16.5 17.5
NWC changes -53.4 28.4 -13.0 -25.3 -10.5
Other non-cash items 5.8 4.9 8.1 1.7 1.2
Operating cash flow 29.6 43.4 33.1 47.6 71.0
Capex -14.5 -7.8 -10.0 -12.0 -13.0
Others 66.7 -10.4 0.0 0.0 0.0
Free cash flow 81.9 25.2 23.1 35.6 58.0
Dividends 0.0 0.0 0.0 0.0 0.0
Others -90.5 -35.7 -10.3 0.0 0.0
Change in Net cash -137.8 37.8 17.2 38.6 61.2
Operating cash flow / sales 5.1% 12.4% 7.8% 8.6% 11.9%
Free cash flow / sales 14.2% 7.2% 5.5% 6.4% 9.7%
Key financials matrix 2008 2009 2010F 2011F 2012F
BVPS ($) 13.21 14.33 14.46 16.64 18.97
PBR (x) 2.6 1.4 2.7 2.4 2.1
ROE 15.1% -0.7% 6.2% 11.5% 11.5%
NOPAT/EV 6.5% 0.7% 2.7% 5.7% 6.9%
WACC 9.4% 9.4% 9.4% 9.4% 9.4%
NOPAT/EV-WACC -2.9% -8.7% -6.7% -3.7% -2.5%
Goodwill/Equity 22.8% 22.4% 22.4% 19.6% 17.2%
Net working capital / Sales 42.7% 56.6% 52.3% 47.4% 47.1%
Current ratio 2.7 4.4 4.5 4.7 5.1
Gearing (net) -12.4% -20.9% -25.1% -30.0% -37.6%
Equity ratio 68.9% 77.5% 76.1% 76.7% 77.8%
Net debt / EBITDA n.a. n.a. n.a. n.a. n.a.
Interest cover (x) EBITDA n.a. n.a. n.a. n.a. n.a.
OCFPS ($) 0.97 1.49 1.15 1.66 2.47
P / OCF (x) 34.8 13.8 34.7 24.0 16.1
FCFPS ($) 2.69 0.86 0.80 1.24 2.02
FCF Yield 7.9% 4.2% 2.0% 3.1% 5.1%
Capex / sales 2.5% 2.2% 2.4% 2.2% 2.2%
Payout ratio
Source: Company data, BHF-BANK estimates
0.0% 0.0% 0.0% 0.0% 0.0%
Please see the important disclaimer & company disclosures at the end of this report
3

ROFIN-SINAR Technologies 04 February 2011
4
Research Team
Eckert, Thomas +49 69 718-4226 thomas.eckert@bhf-bank.com
Hirst, Roger +49 69 718-4460 roger.hirst@bhf-bank.com
Augustin, Stefan +49 69 718-2674 stefan.augustin@bhf-bank.com
Bauer, Stephan +49 69 718-3871 stephan.bauer@bhf-bank.com
Fischbeck, Götz +49 69 718-2445 goetz.fischbeck@bhf-bank.com
Jung, Jens +49 69 718-2417 jens.jung@bhf-bank.com
Machemehl, Nils +49 69 718-4326 nils.machemehl@bhf-bank.com
Reith, Hermann +49 69 718-2632 hermann.reith@bhf-bank.com
Steiner, Peter +49 69 718-3785 peter.steiner@bhf-bank.com
Tilev, Maxim +49 69 718-4315 maxim.tilev@bhf-bank.com
Weber, Annett +49 69 718-4324 annett.weber@bhf-bank.com
Wunrau, Aleksej +49 69 718-3388 aleksej.wunrau@bhf-bank.com
Equity Customer Advisory Team
Lockhart, Andrew +49 69 718-3018 andrew.lockhart@bhf-bank.com
Moussalli, Marc Antoine +49 69 718-5215 marc.moussalli@bhf-bank.com
Castro, Ann +49 69 718-2929 ann.castro@bhf-bank.com
Falkenstein, Gernot +49 69 718-6281 gernot.falkenstein@bhf-bank.com
Kaup, Jürgen +49 69 718-6287 juergen.kaup@bhf-bank.com
Landau, Marcus +49 69 718-2886 marcus.landau@bhf-bank.com
Lindner, Michael +49 69 718-5830 mike.lindner@bhf-bank.com
Mayer, Matthias +49 69 718-6210 matthias.mayer@bhf-bank.com
Röder, Thomas +49 69 718-5670 thomas.roeder@bhf-bank.com
Client Facilitation & Sales Trading Team
Stork, Carsten +49 69 718-2744 carsten.stork@bhf-bank.com
Hahn, Marcus +49 69 718-2871 marcus.hahn@bhf-bank.com
Frick, Sascha +49 69 718-3221 sascha.frick@bhf-bank.com
Gerdsen, Oliver +49 69 718-2872 oliver.gerdsen@bhf-bank.com
Götze, Björn +49 69 718-2872 bjoern.goetze@bhf-bank.com
Hechler, Markus +49 69 718-2750 markus.hechler@bhf-bank.com
Oslislok,Torsten +49 69 718-6169 torsten.oslislok@bhf-bank.com
Vargiu, Claudio +49 69 718-2512 claudio.vargui@bhf-bank.com
Corporate Access & Roadshowmanagement
Kopper, Petra +49 69 718-4122 petra.kopper@bhf-bank.com
Please see the important disclaimer & company disclosures at the end of this report
BHF-BANK Research
Equity rating key Equity rating dispersion and banking relationships
We have changed our stock recommendations with effect from
26 October 2010. Our ratings are now:
Overweight: We rate the share as significantly undervalued.
Market Weight: We rate the share valued in line with the market.
Underweight: We rate the share as significantly overvalued.
These ratings relate to our expected performance for each stock
relative to their respective sector within the German market over the
next twelve months. Our ratings are arrived at by comparing DCF
valuations, peer group multiples and asset based valuations across
analogue stocks within the sector and market.
Stocks previously rated Strong Buy are now rated Overweight. Stocks
previously rated Buy or Reduce are now rated Overweight, Market
Weight or Underweight, depending on the balance of expected relative
performance. Stocks previously rated Sell are now rated Underweight.
We will update our ratings on each stock with each new publication.
45
40
35
30
25
20
15
10
5
0
52%
53%
33%
30%
15%
17%
Overweight Market Weight Underweight
Companies Covered Cos. w/Banking Relationship
Company ISIN Price Disclosure
ROFIN-SINAR Technologies US7750431022 €29.05 (03/02/2011) -

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ROFIN-SINAR Technologies 04 February 2011
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5

ROFIN-SINAR Technologies 04 February 2011
6
Please see the important disclaimer & company disclosures at the end of this report
BHF-BANK Research
Within the last 12 months BHF-BANK has published dissenting recommendations (printed in bold type) with regard to the subject financial instruments as
follows:
ROFIN-SINAR Technologies
Date of statement Recommendation Date of statement Recommendation
First Take 23/11/2010 Overweight Update 07/05/2010 Buy
Update 08/11/2010 Overweight Preview 03/05/2010 Buy
Update 06/08/2010 Strong Buy Update 08/02/2010 Buy
Preview 22/07/2010 Buy
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