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KTG Agrar
Germany/Food & Beverage Analyser
KTG Agrar (Accumulate)
Accumulate
Recommendation unchanged
Share price: EUR
closing price as of 07/05/2012
Target price: EUR
Target Price unchanged
Reuters/Bloomberg
13.52
16.00
7KTG.DE/7KT GY
Market capitalisation (EURm) 77
Current N° of shares (m) 6
Free float 54%
Daily avg. no. trad. sh. 12 mth 6,812
Daily avg. trad. vol. 12 mth (m) 0
Price high 12 mth (EUR) 17.00
Price low 12 mth (EUR) 13.37
Abs. perf. 1 mth -3.46%
Abs. perf. 3 mth -7.56%
Abs. perf. 12 mth -20.03%
Key financials (EUR) 12/10 12/11e 12/12e
Sales (m) 45 62 65
EBITDA (m) 18 24 25
EBITDA margin 39.2% 39.1% 37.8%
EBIT (m) 13 19 17
EBIT margin 29.9% 30.5% 26.7%
Net Profit (adj.)(m) 2 9 7
ROCE 10.6% 11.0% 6.7%
Net debt/(cash) (m) 87 95 128
Net Debt/Equity 1.4 1.4 1.7
Debt/EBITDA 4.9 3.9 5.2
Int. cover(EBITDA/Fin. int) 6.3 3.5 3.3
EV/Sales 3.9 2.9 3.2
EV/EBITDA 9.9 7.5 8.5
EV/EBITDA (adj.) 7.3 6.5 8.5
EV/EBIT 13.0 9.5 12.0
P/E (adj.) 37.9 9.0 10.3
P/BV 1.4 1.2 1.1
OpFCF yield -30.8% 32.0% 7.9%
Dividend yield 1.1% 1.5% 1.8%
EPS (adj.) 0.39 1.59 1.31
BVPS 10.70 11.56 12.56
DPS 0.15 0.20 0.25
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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
Source: Factset
KTG AGRAR CDAX (Rebased)
Shareholders: Beatrice Ams 46%;
Analyst(s):
Michael Schaefer, Equinet Bank
michael.schaefer@equinet-ag.de
+49 69 58997 419
Weak FY 11 results; biogas expansion and Frenzel weigh
The facts: KTG Agrar reported weaker than expected headline results with EBIT
of EUR 15.1m just gaining 13% y-y. This compares to our forecast of
EUR 18.91m. Acquired Frenzel frozen food division may have generated an
operating loss of EUR -1m rather than the break-even we‟ve hoped for. Not yet
disclosed EPS 11 may have amounted to EUR 1.12 compared to our forecast of
EUR 1.59. Group results imply a flat EBIT of EUR 8.85m in H2 11 y-y despite a
52% surge in output. Consequently, suggested DPS of EUR 0.18 fell also short
our forecast of EUR 0.20.
KTG Agrar - Review FY 2011 results
EUR m H2 11 H2 10 y-y (%) 2011 2010 y-y (%) 2011e
Total Output 66.07 43.50 52% 112.20 70.77 59% 76.74
EBITDA 12.36 10.93 13% 21.10 17.60 20% 24.19
EBIT 8.85 8.86 0% 15.10 13.42 13% 18.91
Margin (% of output) 13.4% 20.4% 13.5% 19.0% 24.6%
o/w Farming * n.a. n.a. 11.10 7.85 41% 9.30
o/w Bioenergy * n.a. n.a. 4.00 5.56 -28% 8.89
EBT (e) 4.61 1.26 265% 4.60 4.18 10% 8.36
Net income attr. to shareh. 4.50 -0.35 -1380% 3.24 1.74 87% 5.89
Adj. net income (e) 4.76 1.09 335% 6.35 2.14 9.00
Weighted avrg. # of shares 5.68 5.68 0% 5.68 5.55 2% 5.68
Adj. EPS (EUR per share) 0.84 0.19 336% 1.12 0.39 187% 1.59
Our analysis: Improvement of disclosure starts – bioenergy segment didn’t
show full earnings power, though ... However, we welcome KTG Agrar‟s
response to our long-term criticism on limited disclosure of earnings drivers while
the group structure became significantly more complex in recent years. KTG Agrar
for the first time reported a Bioenergy-EBIT of EUR 4m for FY 11, falling short our
forecast of EUR 8.9m, though. We reckon that later than expected availability of
new capacity and higher than expected ramp-up costs associated to the doubling
of installed biogas capacity to 30 MW currently weighed significantly. We expect
burden from ramp-up costs to ease in upcoming quarters as capacity expansion
decelerates.
... while farming segment outperformed: Implied EBIT at farming activities of
EUR 11.1m outperformed out segment forecast of EUR 9.3m.
Outlook for earnings acceleration in years to come – focus on optimization,
cash generation, value generation: Five years of strong growth across the
farming and bioenergy divisions may reach a plateau in 2012e. Hence, KTG looks
forward to a focus on optimisation and cash flow generation in the upcoming
years. Without being specific, management hints on strong growth in operating
earnings and cash generation in the years to come. Hence, our 2011e forecast of
EUR 19m in EBIT may materialize in 2012e. KTG may also realize part of the
hidden reserves in the landbank, another trigger for KTG shares.
Conclusion & Action: Earnings came in below expectations as the company‟s
strong growth weighed on EBIT. However, improved disclosure, which we expect
to improve further, as well as growth deceleration may show the true earnings
power in the years to come. Assuming 2012e earnings in-line with our 2011estimates
translates into 8.5x PE, an attractive re-entry-level, we believe. With
more positive earnings momentum about to kick-in, KTG shares may start
outperform from this level as the crop market outlook remains bright. Confirm
Accumulate.
Page 63 of 80 European Securities Network
Please refer to important disclaimer on the last page
Source: KTG Agrar, equinet (* estimates for 2010)