RESEARCH UPDATE. Strong First Half, with Some Real Issues. Fair Value: 4.22 (Prev. 4.76) Market Data:

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1 October 16, 2018 RESEARCH UPDATE Fair Value: 4.22 (Prev. 4.76) Kevin TEMPESTINI ktempestini@ktepartners.com Giancarlo DI VONA gdivona@ktepartners.com Mauro IACCINO miaccino@ktepartners.com Volume FTSE AIM Italia BOMI ITALIA S.P.A. Nov-17 Feb-18 May-18 Aug Market Data: Current Price ( ) 2.55 Fair Value ( ) 4.22 Market Cap ( mn) Wk High ( ) Wk Low ( ) 2.51 Free Float (%) Avg. Daily Trading 90d 7,659 Price Change 1w (%) Price Change 1m (%) Price Change YTD (%) P/E 2018E 14.1x P/E 2019E 9.8x 400, ,000 0 Healthcare Goods and Services Strong First Half, with Some Real Issues Real headwinds Year to date, the Brazilian real depreciated by almost 9%; political risks and a lackluster economy could continue pressuring the currency and negatively affecting Bomi s results. In October, a new president will be elected (the first round was in October 7 th, the second round will be held in October 28 th ). The two presidential frontrunners are Jair Bolsonaro, a far-right, evangelical politician and member of the Social Liberal Party (PSL), and Fernando Haddad, the former mayor of São Paulo and a member of the center-left Workers Party (PT). Bolsonaro is a Trump-style populist and apparently is the market s favorite candidate. The recent strength of the real is due to Bolsonaro s advance in the pools and victory of the first round. However, this election is very hard to call since the electorate is very disaffected and polarized. Strong 1H2018. In 1H2018 Bomi s revenues came in at 62.09mn (+5.9% YoY) and 2.7% lower than our estimates but 67.3mn (+14.8% YoY) at constant currency and 5.5% higher than our estimates. Emerging markets currencies represented a substantial headwind for Bomi s 1H2018 results. Without considering the currency effect Bomi enjoyed 5.5% organic growth and the consolidation of De Salute added 9.3% to the company s growth. 1H2018 EBITDA came in at 5.5mn (-2.5% YoY), 16% lower than our estimates. EBITDA was particularly impacted by the currency depreciations since the Brazilian business is characterized by a higher marginality. Indeed, at constant currency EBITDA would have been 6.3mn (+11.9% YoY) and just 4.0% lower than our estimates. Table 1: BOMI Italia S.p.A. 1H2018 Results vs KT&Partners Estimates thousand 1H2018 expected 1H2018 actual act vs exp % 1H2018 actual cc act CC vs exp % Total Revenues % % EBITDA % % EBITDA margin% 10.26% 8.86% 9.34% EBIT % % EBIT margin% 6.52% 4.74% 5.29% Net Income % % Net Income margin% 2.55% 1.88% 2.24% Source: KT&Partners elaboration Italian inorganic expansion continued in 1H2018 In June Bomi announced the acquisition of Farma Logistica, a logistic and transportation operator active in the Central-Southern area of Italy. The company had 5.3mn in sales and 0.8mn in EBITDA and was acquired at almost 4x EV/EBITDA. Estimates revision. We revised our estimates, taking into account the negative impact of the real depreciation that, on the top line is almost compensated by the full-year contribution of the Farma Logista acquisition. However, we expect the real s depreciation to have a substantial impact on marginality. Therefore, we lowered 2018 EBITDA and net income by 3.8% and 10.5%, respectively. Fair value fine-tuned. Bomi is currently trading at significant discount with respect to the Median P/E of its peers for both FY18 (P/E of 13.6x against 17.1x) and FY19 (P/E 9.4x against 15.7x). As a result of our changes in estimates, we suggest a fair value equal to 4.22ps corresponding to a market cap equal to 71.6mn. Million Total Revenues EBITDA EBITDA Margin EBIT Bomi Net Profit Net Margin EPS 2015A % % A % % A % % E % % E % % 0.27 Source: Company data, KT&Partners estimates KT&Partners Srl Via della Posta, 10 - Piazza Affari, Milano - Italy Tel: Fax: segreteria@ktepartners.com

2 Table 2: BOMI Italia S.p.A. - Key Figures Current price ( ) Fair Value ( ) Sector Free Float (%) Healthcare and Services Per Share Data 2014A 2015A 2016A 2017E 2018E 2019E 2020E Total shares outstanding (mn) n.a EPS n.a Dividend per share (ord) Dividend pay out ratio (%) 0% 34% 35% 20% 20% 20% 20% Profit and Loss (EUR thousand) Revenues 67,004 78, , , , , ,920 EBITDA 7,618 8,250 8,747 11,290 13,122 15,257 16,596 EBIT 5,559 5,668 5,290 6,766 7,945 9,529 10,398 EBT 3,093 2,918 2,534 3,984 4,906 6,986 7,641 Taxes - 1,434-1,045-1,080-1,223-1,570-2,166-2,369 Tax rate -46% -36% -43% -31% -32% -31% -31% Net profit attributable to minority Net profit after minorities 738 1, ,082 3,169 4,580 5,009 Balance Sheet (EUR thousand) Total fixed assets 17,932 23,217 32,732 35,354 41,943 41,464 40,516 Net Working Capital (NWC) 2,667 4,196 2, ,441 1,834 1,995 Provisions ,855-1,633-1,495-2,083-2,726-3,426 Other asset and liabilities 1,752 1,590 1, ,011 Total Net capital employed 21,489 27,147 35,015 34,369 42,236 41,554 40,096 Net financial position (NFP) 14,316 9,632 15,953 25,548 25,496 20,627 14,813 Group Shareholder's Equity 5,021 14,881 15,440 3,350 11,103 15,048 19,141 Minorities 2,151 2,633 3,621 5,471 5,638 5,879 6,142 Total Shareholder's Equity 7,172 17,514 19,061 8,821 16,740 20,927 25,283 Cash Flow (EUR thousand) Net operating cash flow 4,671 5,239 7,667 9,739 12,698 14,067 14,227 Change in NWC - 2,204-1,529 1,340-1, Capital expenditure - 1,388-5,635-5,782-11,766-5,250-5,250-5,800 Other cash items/uses of funds Free cash flow - 4,915-3,002-3,657-3,087 6,648 8,017 8,427 Enterprise Value (EUR thousand) Market Cap n.a. 28,963 51,409 38,831 43,079 43,079 43,079 Minorities 2,151 2,633 3,621 5,471 5,638 5,879 6,142 Net financial position 14,316 9,632 15,953 25,548 25,496 20,627 14,813 Enterprise value n.m. 41,228 70,983 69,850 74,213 69,585 64,035 Ratios (%) EBITDA margin 11.4% 10.5% 8.7% 9.6% 10.0% 10.6% 10.6% EBIT margin 8.3% 7.2% 5.2% 5.7% 6.0% 6.6% 6.6% Gearing - Debt/equity 285.2% 64.7% 103.3% 762.7% 229.6% 137.1% 77.4% Interest cover on EBIT 27.2% 32.5% 23.0% 23.2% 24.9% 19.3% 17.9% NFP/EBITDA 187.9% 116.8% 182.4% 226.3% 194.3% 135.2% 89.3% ROCE 25.9% 20.9% 15.1% 19.7% 18.8% 22.9% 25.9% ROE 14.7% 7.9% 3.0% 62.2% 28.5% 30.4% 26.2% EV/Sales n.m EV/EBITDA n.m P/E n.m Free cash flow yield n.m % -7.1% -7.9% 15.4% 18.6% 19.6% Growth Rates (%) Sales 2.6% 18.0% 29.1% 16.3% 11.2% 9.5% 8.8% EBITDA 23.1% 8.3% 6.0% 29.1% 16.2% 16.3% 8.8% EBIT 23.4% 2.0% -6.7% 27.9% 17.4% 19.9% 9.1% Net profit -3.9% 13.0% -22.4% 89.9% 20.8% 44.5% 9.4% Source: Company data, KT&Partners estimates October 16,

3 FY Estimates Revision We revised our projections on the back of the Brazilian real depreciation. In particular, our new estimates are based on a 4.30 euro/real exchange rates for 2018, 2019 and 2020 instead of the previous 3.9, 4.04 and Moreover, we considered Farma Logistica to contribute integrally to the full-year 2018 results and almost compensate the negative currency effect on the top line. Therefore, we lowered the top line by 0.9% in 2018, 1.4% in 2019 and 2.3% in Since the Brazilian business has a higher marginality, we lowered 2018 EBITDA by 3.8% to 13.12mn and 2018 net income by 10.5% to 3.17mn. We now expect 2020 EBITDA to be 16.6mn or 5.0% lower than our previous forecasts, while 2020 net income should now stand at 5.01mn or 11.4% lower than our previous estimates. We increased 2018 net financial position by 3.8mn to 25.5mn on the back of: i) the Farma Logistica acquisition that we expect to contribute 1.3mn; ii) the negative impact of the real s depreciation that contributes 1.0mn; and iii) the higher than expected CAPEX that contributes 1.5mn. Table 3: New Forecasts thousand FY18E old FY18E new % FY19E old FY19E new % FY20E old FY20E new % Total Revenues % % % EBITDA % % % EBITDA margin% 10.3% 10.0% 10.9% 10.6% 10.9% 10.6% EBIT % % % EBIT margin% 6.5% 6.0% 7.1% 6.6% 7.1% 6.6% Net Income % % % Net Income margin% 2.8% 2.5% 3.4% 3.3% 3.5% 3.4% Bomi's Net Income % % % Bomi's Net Income margin% 2.7% 2.4% 3.4% 3.2% 3.5% 3.2% EPS % % % CAPEX & M&A % % % Net Financial Position % % % Source: KT&Partners elaboration October 16,

4 Valuation Basis Based on our estimates, we have carried out our valuation on a multiple and DCF analysis basis and have taken the average price provided by these two models. This has led to a fair value of 4.22 per share. Our fair value takes the average of the following methods: P/E multiple, with a 10% liquidity discount, which returns a value of 3.53 per share. DCF analysis based on WACC of 8.6% and 1.5% perpetual growth, which returns a value of 4.92 per share. Table 5: Peer Group Valuation Table Multiples Multiples Valuation To value Bomi, we identified a series of comparables (see Appendix). We have chosen our peers by taking into consideration the business activity and the services provided. Thanks to the Brazilian acquisition, we start to value Bomi on P/E basis in order to better capture the company s earning power. However, we should note that the selected companies are quite different in terms of revenue size. For this reason, we applied a 10% size and liquidity discount to the P/E peers average. Table 4: Multiples Valuation Multiples valuation P/E liquidity/size discount 10% 10% 10% P/E post discount EPS Price Fair Value 3.53 Source: Company data, KT&Partners estimates Company Name Exchange Market Cap ( mn) EV/SALES 2018 EV/SALES 2019 DSV A/S OMX Copenhagen 13, x 1.3x 1.2x 16.8x 15.5x 14.5x 19.0x 17.5x 16.3x 23.9x 21.3x 19.0x Kuehne & Nagel International AG SIX Swiss 14, x 0.8x 0.8x 13.6x 12.6x 11.9x 16.4x 15.1x 14.1x 21.2x 19.6x 18.3x United Parcel Service, Inc. Class B NYSE 85, x 1.5x 1.5x 12.0x 10.9x 10.1x 15.5x 14.1x 13.1x 16.0x 14.6x 13.5x Deutsche Post AG XETRA 34, x 0.8x 0.7x 7.6x 6.6x 6.1x 15.3x 11.7x 10.2x 15.9x 12.4x 11.1x Owens & Minor, Inc. NYSE x 0.2x 0.2x 8.7x 8.0x 7.8x 12.2x 11.1x 10.6x 10.7x 9.8x 8.7x UDG Healthcare Plc London 1, x 1.5x 1.5x 12.0x 11.3x 10.4x 15.6x 13.8x 12.3x 18.3x 16.8x 15.4x Average peer group 25, x 1.0x 1.0x 11.8x 10.8x 10.1x 15.7x 13.9x 12.8x 17.7x 15.8x 14.3x Median peer group 13, x 1.0x 1.0x 12.0x 11.1x 10.3x 15.5x 14.0x 12.7x 17.1x 15.7x 14.4x BOMI ITALIA S.P.A. Milan x 0.5x 0.5x 6.0x 5.2x 4.5x 10.0x 8.6x 7.1x 13.6x 9.4x 8.6x EV/SALES 2020 EV/EBITDA 2018 EV/EBITDA 2019 EV/EBITDA 2020 EV/EBIT EV/EBIT EV/EBIT 2020 P/E 2018 P/E 2019 P/E 2020 Source: KT&Partners elaboration on FactSet data October 16,

5 DCF Valuation We believe that DCF analysis is an interesting way, in addition to our multiples valuation, to highlight the company s positive and visible cash flow generation for the forthcoming years. Our DCF analysis is based on an 8.6% WACC, which was revised upward by 0.1% with respect to our previous estimates mainly due to a slightly increase in the risk-free rate and in the equity risk premium. In detail, WACC estimate was derived by using: i) a risk-free rate of 1.9%, obtained as the average of the 10-Year BTP yield over the last three years in order to balance the impact of the recent Italian interest rates volatility; ii) a market risk premium of 7.89% based on July 2018 estimates by Damodaran. Further inputs include a beta of 0.87 and a 2.0% size premium. We set a terminal growth rate of 1.5% and 2017 net financial position of 25.50mn. This results in an equity value of 83.29mn or 4.92 per share. Table 7: DCF Valuation million 2018E 2019E 2020E 2021E EBIT Taxes D&A Change in Net Working Capital Net Operating Cash Flow Capex Nonrecurring items FCFO g 1.5% Wacc 8.6% FCFO (discounted) Discounted Cumulated FCFO TV TV (discounted) Enterprise Value NFP FY Equity Value Current number of shares Value per share ( ) 4.92 Source: KT&Partners elaborations October 16,

6 Appendix Peer Description DSV A/S provides transport and logistics solutions. It operates through the following business segments: Air and Sea, Road, and Solutions. The Air and Sea segment specializes in the handling of air and sea freight through a global network. The Road segment offers road freight services including full and part loads, temperature-controlled transport, and other specialized services across Europe. The Solutions segment covers specialized logistics solutions such as freight management, customs clearance, warehousing and distribution, information management, and e-business support. The company was founded on 13 July 13 th, 1976 and has its headquarters in Hedehusene, Denmark. Kühne & Nagel International AG is engaged in the provision of logistic services. It also offers strategic solutions such as hotel logistics and emergency and relief logistics. It operates through the following segments: Seafreight, Airfreight, Road and Rail Logistics, Contract Logistics, Real Estate, and Insurance Brokers. The company was founded by August Kühne and Friedrich Nagel in 1890 and has its headquarters in Schindellegi, Switzerland. United Parcel Service, Inc. (UPS) is a logistics company which provides global package delivery and supply chain management services. It offers logistics services to the global market, including: transportation; distribution; forwarding; ground, ocean and airfreight; brokerage; and financing. The company operates its business through three segments: U.S. Domestic Package, International Package, and Supply Chain & Freight. UPS was founded by James E. Casey and Claude Ryan on August 28 th, 1907 and has its headquarters in Atlanta, GA. Deutsche Post AG provides mail and logistics services. It operates through the following business segments: Mail, Express, Global Forwarding Freight, and Supply Chain. The Mail segment, specialized in dialogue marketing, nationwide press distribution services, and all the electronic services associated with mail delivery, provides domestic and international mail and parcels. The Express segment offers courier and express services to business customers. The Global Forwarding Freight segment handles the carriage of goods by rail, road, air and sea. The Supply Chain segment provides warehousing, managed transport, and value-added services at every link in the supply chain for customers in a variety of industries, including life sciences and healthcare. The Retail and Life Sciences & Healthcare sectors accounted for the majority of the Supply Chain gains. In 2014, Supply Chain division revenues amounted to 14.7bn and the contribution of the Life Sciences & Healthcare sector was about 2.9bn (20%). The company was founded in 1995 and has its headquarters in Bonn, Germany. Owens & Minor, Inc. is a healthcare logistics company that connects the world of medical products to the point of care. It provides services to the manufacturers of healthcare products, supplies, and devices in the United States and Europe. The company operates through two segments: Domestic and International. The Domestic segment provides all services in the United States relating to medical supply, while the logistics company serves healthcare providers and manufacturers. The International segment, comprised of the Movianto Group, provides third-party logistics for the pharmaceutical, biotechnology, and medical device services in the European market. Owens & Minor was founded by Otho O. Owens and G. Gilmer Minor in 1882 and has its headquarters in Mechanicsville, VA. October 16,

7 UDG Healthcare Plc. provides commercialization solutions to international healthcare companies. The company operates through three segments: Supply Chain services, Sharp Packaging services and Ashfield Commercial and Medical services. The Supply Chain services segment combines all the group's healthcare logistics-based businesses. The Sharp Packaging services segment provides outsourced commercial and clinical trial packaging services to healthcare companies. The Ashfield Commercial and Medical services segment provides sales and marketing services, healthcare communications, event management, medical affairs, and regulatory services to healthcare manufacturers. The company was founded in 1948 and has its headquarters in Dublin, Ireland. October 16,

8 DISCLAIMER THIS DOCUMENT WAS PREPARED BY KT&PARTNERS S.R.L., WITH REGISTERED OFFICE AT VIA DELLA POSTA 10, MILAN, ITALY, MILAN COMPANY REGISTER NO , SPECIALIZING IN FINANCIAL RESEARCH AND ANALYSIS (HEREINAFTER, KT&PARTNERS ). KT&PARTNERS PREPARED THIS DOCUMENT ON BEHALF OF BOMI ITALIA SPA ACCORDING TO AN AGREEMENT ENTERED WITH THE SAME AND ON THE BASIS OF THE DATA AND PUBLIC INFORMATION PROVIDED BY THE SAME OR DERIVED FROM SOURCES DEEMED SERIOUS AND RELIABLE ON THE FINANCIAL MARKET BUT WHOSE ABSOLUTE TRUSTWORTHINESS, COMPLETENESS, AND ACCURACY CANNOT BE GUARANTEED. THIS DOCUMENT IS A SOURCE OF INFORMATION ONLY, AND IS NOT PART OF, AND IN NO WAY MUST IT BE CONSIDERED, AN OFFER TO SELL, SUBSCRIBE OR TRADE, OR A SOLICITATION TO PURCHASE, SUBSCRIBE OR TRADE, FINANCIAL INSTRUMENTS/PRODUCTS, OR IN GENERAL TO INVEST, NOR MUST IT BE CONSIDERED ANY FORM OF CONSULTING FOR AN INVESTMENT IN FINANCIAL INSTRUMENTS. THE INFORMATION PROVIDED IN THIS DOCUMENT MUST NOT BE UNDERSTOOD AS A REQUEST OR SUGGESTION TO CONDUCT OR CARRY OUT A SPECIFIC TRANSACTION. EACH INVESTOR MUST FORM HIS/HER OWN OPINION BASED EXCLUSIVELY ON HIS/HER ASSESSMENT OF THE ADVISABILITY OF INVESTING. ANY INVESTMENT DECISION MADE ON THE BASIS OF THE INFORMATION AND ANALYSES IN THIS DOCUMENT IS THE EXCLUSIVE RESPONSIBILITY OF THE RECIPIENTS OF THIS DOCUMENT, WHO MUST CONSIDER THIS DOCUMENT MERELY AS A SOURCE OF INFORMATION AND ANALYSIS TO SUPPORT SUCH DECISION. ANY OPINIONS, FORECAST, OR ESTIMATES CONTAINED HEREIN CONSTITUTE A JUDGEMENT AS AT THE DATE OF THIS DOCUMENT, AND THERE CAN BE NO ASSURANCE THAT THE FUTURE RESULTS OF THE COMPANY AND/OR ANY FUTURE EVENTS WILL BE CONSISTENT WITH ANY OF SUCH OPINIONS, FORECAST OR ESTIMATES. KT&PARTNERS MAKES NO EXPLICIT OR IMPLICIT GUARANTEE WITH RESPECT TO PERFORMANCE OR THE OUTCOME OF ANY INVESTMENT OR PROJECTIONS MADE. THEREFORE, KT&PARTNERS, ITS REPRESENTATIVES AND/OR EMPLOYEES WILL NOT BE LIABLE FOR ANY EFFECT DERIVING FROM THE USE OF THIS DOCUMENT, AND HEREBY DECLINE ALL LIABILITY FOR ANY DIRECT OR INDIRECT DAMAGES, FINANCIAL OR OTHERWISE, DERIVING FROM ANY USE OF THE INFORMATION IT CONTAINS. KT&PARTNERS AIMS TO PROVIDE CONTINUOUS COVERAGE OF THE COMPANY IN CONJUNCTION WITH ANY EXCEPTIONAL EVENT THAT OCCURS AFFECTING THE ISSUER S SPHERE OF OPERATIONS AND IN ANY CASE AT LEAST TWICE PER YEAR. October 16,

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