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Hes Beheer<br />
Netherlands/Industrial Transportation & Motorways Analyser<br />
Hes Beheer (Buy)<br />
Buy<br />
from Accumulate<br />
Share price: EUR<br />
closing price as of 07/05/2012<br />
Target price: EUR<br />
from Target Price: EUR<br />
Reuters/Bloomberg<br />
39.50<br />
51.00<br />
41.50<br />
HESA.AS/HES NA<br />
Market capitalisation (EURm) 346<br />
Current N° of shares (m) 9<br />
Free float 31%<br />
Daily avg. no. trad. sh. 12 mth 1,354<br />
Daily avg. trad. vol. 12 mth (m) 0<br />
Price high 12 mth (EUR) 39.80<br />
Price low 12 mth (EUR) 31.31<br />
Abs. perf. 1 mth 6.64%<br />
Abs. perf. 3 mth 7.50%<br />
Abs. perf. 12 mth 5.33%<br />
Key financials (EUR) 12/11 12/12e 12/13e<br />
Sales (m) 78 87 93<br />
EBITDA (m) 19 24 29<br />
EBITDA margin 24.5% 27.3% 31.0%<br />
EBIT (m) 13 16 18<br />
EBIT margin 16.4% 17.9% 19.7%<br />
Net Profit (adj.)(m) 24 28 31<br />
ROCE 14.2% 13.9% 14.2%<br />
Net debt/(cash) (m) 49 59 66<br />
Net Debt/Equity 0.5 0.5 0.5<br />
Debt/EBITDA 2.6 2.5 2.3<br />
Int. cover(EBITDA/Fin. int) 1,062.9 12.8 13.2<br />
EV/Sales 3.7 3.7 3.4<br />
EV/EBITDA 14.9 13.5 11.1<br />
EV/EBITDA (adj.) 14.9 13.5 11.1<br />
EV/EBIT 22.3 20.5 17.4<br />
P/E (adj.) 12.8 12.3 11.1<br />
P/BV 3.0 2.9 2.6<br />
OpFCF yield 8.2% 7.9% 9.0%<br />
Dividend yield 3.3% 4.1% 4.5%<br />
EPS (adj.) 2.78 3.22 3.55<br />
BVPS 11.93 13.55 15.32<br />
DPS 1.32 1.61 1.78<br />
40 vvdsvdvsdy<br />
38<br />
36<br />
34<br />
32<br />
30<br />
28<br />
26<br />
24<br />
22<br />
Apr 11 May 11 Jun 11 Jul 11 Aug 11 Sep 11 Oct 11 Nov 11 Dec 11 Jan 12 Feb 12 Mar 12 Apr 12 May 12<br />
Source: Factset<br />
HES BEHEER Midkap (Rebased)<br />
Shareholders: Westerduin 21%; Strating/Gestion 12%;<br />
PPF 10%; Plimsoll 10%; Menor<br />
Investments 7%; Parkland 5%; Onderdijk<br />
5%;<br />
Analyst(s):<br />
Martijn den Drijver, SNS Securities<br />
martijn.dendrijver@snssecurities.nl<br />
+312 0 5508636<br />
A coal fired growth engine – part II<br />
The facts: Although the FY11 OBA results were impacted by adverse weather<br />
conditions, impacting group EBITDA modestly, the HES Beheer group did rather<br />
well in FY11 with solid revenue (+12%) and net profit growth (+17%) that<br />
exceeded our expectations.<br />
The group is benefiting from the investments made in efficiency and capacity in<br />
2010 and 2011 as well as from strong demand for coal from German customers,<br />
which are using the well positioned Amsterdam and Rotterdam ports for imports<br />
now that German coal mine output is declining and a significant number of nuclear<br />
plants have stooped operations.<br />
The HES Beheer group has also successfully diversified now that the Botlek Tank<br />
Terminal, a JV with Noble Ltd, has started operations. This liquid bulk facility is<br />
focusing on high margin products like biofuels and middle distillates, markets<br />
which are expected to grow substantially. This explains why Noble Ltd has already<br />
indicated that phase 2 will commence soon, leading to a total capacity of 550,000<br />
cbm that will be expanded (at least that is what we assume) 750,000 cbm.<br />
The acquisition of a stake in ATIC Services strengthens the control of HES Beheer<br />
on its affiliates EMO, OBA and Ovet but we are not entirely sure that the other<br />
activities of ATIC Services will be beneficial to the HES Beheer group as a whole.<br />
Our analysis: In FY12, HES Beheer will see substantial growth from EMO<br />
(because of higher capacity in terms of transhipment equipment), EBS (due to<br />
investments in new terrain and equipment), Ovet (because of the quays<br />
expansion) and BTT (full year of operations). HES Beheer will also see net profit<br />
increase because of the contributions from ATIC Services.<br />
In the years thereafter we forecast continued growth in net profit due to the starting<br />
up of 2 new coal fired electricity plants in Rotterdam (both serviced by EMO), the<br />
expansion plans of EMO and the expansion plans at BTT. In other words, the<br />
future for HES Beheer is looking bright because of coal and liquid bulk, even<br />
though steel production may become structurally lower outside Germany.<br />
Conclusion & Action: Both the FY11 and the 1Q12 results show continued<br />
strong growth at HES Beheer. Demand for coal (and storage thereof) continues to<br />
increase with HES Beheer companies being in an excellent position to profit from<br />
that trend. On top of that, HES Beheer is showing that it can successfully diversify<br />
in liquid bulk and other services (BTT and to a lesser extent ATIC), which opens<br />
up new growth areas. Although there are long term risks in relation to the<br />
increased use of renewable energy sources, in the near and medium term (20<br />
years or even more) the outlook is very positive, even if steel production in Europe<br />
continues to decline. This results in a new price target of EUR 51 per share versus<br />
our old target of EUR 41.50. With further positive news flow from earnings ahead,<br />
we raise our rating to Buy.<br />
Page 57 of 80 European Securities Network<br />
Please refer to important disclaimer on the last page
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