Leifheit AG. Management Meeting confirms our positive view. Buy (Buy) EUR (60.00 EUR ) BANKHAUS LAMPE // 1 16/02/2016

Transcription

1 BANKHAUS LAMPE // 1 Leifheit AG Management Meeting confirms our positive view 16/02/2016 Buy (Buy) EUR (60.00 EUR ) Close 12/02/ EUR Bloomberg: LEI GY WKN: Sector Consumer Share price performance 52 week high EUR 52 week low EUR Compared to Prime All Share YTD 7.3% 1 month 2.7% 12 months 8.1% We met CEO Thomas Radke and CFO Dr Claus-O. Zacharias at the world largest consumer trade fair, the Ambiente in Frankfurt. These meetings and the impression made by Leifheit s presentation at the fair confirm our positive view. We clearly confirm our BUY rating with an unchanged price target of INVESTMENT CASE Ahead of the Ambiente, Leifheit has released some preliminary figures for FY Sales rose by 5.0% to m in This was slightly ahead of our forecast of +4.7% and above the management s guidance of ~ 4%. Leifheit confirmed that the 2015 EBIT will be above the guidance indication of 20 m. We believe that our current forecast of 20.5 m (including a 2.5 m positive dollar FX effect) is too conservative and we have therefore upped it by 3.4% to 21.3 m. At the same time, we have also raised our dividend forecast for 2015 from 1.95 to 2.00 (2014: 1.80), which leads to a dividend yield of 4.4% based on the current share price. The company has not yet decided how to use its liquidity, or parts thereof, which by the end of 2015 should be above 60 m (BHLe: 61 m), which equals per share. Nevertheless, we believe that the management team will work out how to use of the net liquidity well in the months ahead. CATALYSTS Leifheit is due to release a full set of figures for 2015 on 31 March The numbers, guidance and dividend increase should be well received by the market. Share data EV (m EUR; 2016) Market Cap (m EUR) No. of shares (m) 4.7 Free float 76.6% VALUATION Our valuation is based on a DCF model and a cash-flow-yield model, to which we have assigned an equal weighting. Even though the share is too expensive in terms of traditional multiples (EV/EBIT, PER), the dividend (current yield ~4%) and the expectation of higher pay-outs make the share attractive. Next event Annual Results 31/03/2016 Change in model Sales EBIT EPS 2015e 0.3% 3.8% 4.1% 2016e % 7.0% 2017e % 9.6% Analyst Christoph Schlienkamp, Investmentanalyst DVFA Phone: +49 (0) christoph.schlienkamp@bankhaus-lampe.de See end of document for disclaimer. in m EUR e 2016e 2017e Sales EBIT EBIT margin 6.8% 9.8% 9.2% 9.5% 9.7% Net financial debt Free cash-flow EPS (in EUR) DPS (in EUR) Dividend yield 5.3% 3.9% 4.0% 4.9% 5.3% EV/Sales EV/EBIT Price Earnings ratio (P/E)

2 BANKHAUS LAMPE // 2 Changes in our estimates Bankhaus Lampe EUR m 2015e old 2015e new Change 2016e old 2016e new Change 2017e old 2017e new Change Sales % % % EBIT % % % EBIT margin 8.9% 9.2% 0.3 PP 9.0% 9.5% 0.6 PP 8.9% 9.7% 0.8 PP EPS ( ) % % % DPS ( ) % % % Source: Bankhaus Lampe Research BHL vs. Consensus 2015e 2016e 2017e EUR m BHL Consensus Delta BHL Consensus Delta BHLe Consensus Delta Sales % % % EBIT % % % EBIT margin 9.2% 8.8% 0.4 PP 9.5% 8.7% 0.8 PP 9.7% 8.7% 1 PP EPS ( ) % % % DPS ( ) % % % Source: Company information, Consensus FactSet, Bankhaus Lampe Research

3 BANKHAUS LAMPE // 3 Key figures Leifheit AG Income statement in m EUR e 2016e 2017e Sales Cost of Sales Gross profit Sales and marketing General and administration Research and development Other operating result EBITDA Depreciation EBITA Amortisation of goodwill Amortisation of intangible assets EBIT Financial result Income on ordinary activities Extraordinary income/loss EBT Taxes Net income from cont. operations Net income from discont. operations Minority interest Net income (adj.) No. of shares EPS (in EUR) e 2016e 2017e Gross margin 44.9% 47.7% 47.6% 47.0% 44.8% EBITDA margin 9.8% 12.6% 12.0% 12.3% 12.4% EBITA margin 6.8% 9.8% 9.2% 9.5% 9.7% EBIT margin 6.8% 9.8% 9.2% 9.5% 9.7% EBT margin 6.0% 9.0% 8.6% 9.0% 9.1% Net profit margin 4.6% 6.4% 6.1% 6.4% 6.5% Tax rate 23.1% 28.7% 29.0% 29.0% 29.0% Growth rates yoy e 2016e 2017e Sales -1.5% -0.1% 5.0% 3.5% 4.2% EBITDA 4.4% 27.8% -0.1% 6.6% 5.1% EBIT 5.3% 44.3% -1.2% 7.6% 5.7% EBT 9.2% 48.7% 0.5% 8.2% 6.0% Net income (adj.) 9.4% 37.7% 0.2% 8.2% 6.0% EPS 9.4% 37.7% 0.2% 8.2% 6.0%

4 BANKHAUS LAMPE // 4 Leifheit AG Balance sheet Assets (in m EUR) e 2016e 2017e Fixed assets Property, plant and equipment Intangible assets Financial assets Other long-term assets Current assets Inventories Accounts receivable Other current assets Securities Cash Total assets Equity and liabilities (in m EUR) Shareholders equity Shareholders equity (before minority) Minorities Non-current liabilities Pension provisions Other provisions Long-term financial debt Other long-term debt Current liabilities Short-term debt Other accruals short-term Accounts payable Other liabilities Total equity and liabilities Leifheit AG Balance sheet structure Assets e 2016e 2017e Fixed assets 32.6% 30.7% 29.9% 28.9% 28.0% Property, plant and equipment 17.4% 15.7% 15.7% 15.1% 14.5% Intangible assets 9.1% 8.3% 7.9% 7.6% 7.5% Current assets 67.4% 69.3% 70.1% 71.1% 72.0% Inventories 16.5% 15.9% 18.3% 19.4% 19.8% Accounts receivable 23.4% 23.6% 22.5% 22.3% 22.2% Cash 25.0% 26.3% 25.9% 26.1% 26.8% Equity and liabilities Shareholders equity 46.5% 42.5% 42.6% 43.8% 45.2% Non-current liabilities 29.7% 33.0% 31.9% 31.0% 30.3% Pension provisions 27.7% 30.9% 29.3% 28.5% 27.9% Long-term financial debt 0.0% 0.0% 0.0% 0.0% 0.0% Current liabilities 23.8% 24.5% 25.5% 25.2% 24.4% Short-term debt 0.0% 0.0% 0.4% 0.4% 0.4% Accounts payable 19.3% 21.4% 20.8% 20.6% 20.6%

5 BANKHAUS LAMPE // 5 Leifheit AG Cash flow statement in m EUR e 2016e 2017e Net income (adj.) Depreciation Amortisation of goodwill & intangible assets Change of provisions Other ,0 0,0 0,0 Operating Cash-flow before changes in w/c Change in inventory Change in accounts receivable Change in accounts payable Change in other working capital positions Operating Cash-flow Capex, excluding maintenance Payments for acquisitions Financial investments Income from asset disposals Income from financial investments Cash-flow from investing activities Free cash-flow Capital measures Increase/decrease in debt position Purchase of own shares Other financing Cash-flow Dividend paid Cash-flow from financing activities Increase/ decrease in liquid assets Effects of exchange rate changes Cash at beginning of period Change in total cash and cash equivalents Cash at end of period

6 BANKHAUS LAMPE // 6 Leifheit AG Ratios e 2016e 2017e Per Share Data EPS Book value per share Free Cash-flow per share Dividend per share Valuation ratios EV/Sales EV/EBITDA EV/EBIT Price Earnings ratio (P/E) Price to book (total equity) Dividend yield 5.3% 3.9% 4.0% 4.9% 5.3% Profitability ratios EBITDA margin 9.8% 12.6% 12.0% 12.3% 12.4% EBIT margin 6.8% 9.8% 9.2% 9.5% 9.7% Net return on sales 4.6% 6.4% 6.1% 6.4% 6.5% Return on capital employed (ROCE) 9.9% 13.1% 12.5% 13.0% 13.3% Productivity ratios Capital turnover 49.1% 49.3% 50.7% 50.4% 48.9% Operating leverage Sales per employee 216, , , , ,645 EBIT per employee 14,669 20,997 20,165 21,604 22,617 Number of employees (in thousands) Financial ratios Equity ratio 46.5% 42.5% 42.6% 43.8% 45.2% Net financial debt (in m EUR) Net debt / Equity -53.8% -62.0% -59.7% -58.6% -58.3% Interest cover > 10 > Net debt / EBITDA Working Capital (in m EUR) Change Working Capital (in m EUR) WC /sales 19.0% 18.2% 20.3% 21.3% 21.2% Stocks in days of sales Trade debtors in days of sales Trade creditors in days of COGS/Material cost Cash conversion cycle Invest. (property/plant/equity) / Depreciation 52.4% 98.3% 129.3% 92.5% 89.9% Others Sales CAGR (last 3 years) 1.5% -0.2% 1.1% 2.8% 4.2% EBIT CAGR (last 3 years) 19.3% 15.6% 14.5% 15.3% 4.0% Net income CAGR (last 3 years) -14.5% 5.4% 14.7% 14.3% 4.7% Pay out ratio 76.5% 60.6% 67.2% 68.3% 70.3% Free cash-flow (in m EUR) Free cash flow yield 15.9% 7.0% 3.5% 5.5% 6.3%

7 BANKHAUS LAMPE // 7 Disclaimer Analyst declaration The relevant research analysts, as named on the front cover of this research report, certify that (a) all of the views expressed in this research report accu rately reflect their personal views about the securities and companies mentioned in this research report; and (b) that no part of their compensation was, is or will be directly or indirectly related to the specific recommendation(s) or views expressed by them in this research report. Rating system Shares are rated based upon analyst forecasts with regard to the performance of the share during a period of twelve months. The rating Buy within this general concept means that the share s forecast performance is at least 10%. Hold means a price movement in a bandwidth of -10% to 10%. Sell means that the share s forecast performance is less than -10%. Explanation of valuation Unless shown otherwise, the stated upside targets are based upon either a discounted cash-flow pricing or upon a comparison of the performance ratios of companies that the respective analyst considers to be comparable, or upon a combination of these two analyses. Analysts modify the result of this fundamental assessment to incorporate the potential trend in market sentiment. Overview of changes in our recommendations/price targets in the previous twelve months for: Leifheit AG (LEI GY), Close (12/02/2016): EUR, Analyst: Christoph Schlienkamp (Investmentanalyst DVFA). Date of publication Price at recommendation Rating Price target 24/04/ EUR Buy EUR 18/02/ EUR Buy EUR The distribution of recommendations in our investments universe is currently as follows (date: 01/01/2016) Rating Basis: all analysed companies Basis: companies with investment banking relationships Buy Hold Sell Under Review 54.0% 37.5% 42.6% 62.5% 4.4% 0.0% 0.0% 0.0%

8 BANKHAUS LAMPE // 8 Prevention and dealing with conflicts of interest The measures taken by Bankhaus Lampe KG within the framework of its management of conflicts of interest in order to prevent and handle conflicts of interest are based, among other things, on the functional separation of sensitive business units, the establishment of confidentiality units by setting up information barriers, the establishment of organisational regulations regarding the treatment of confidential and sensitive information both inside and outside the confidentiality units and the monitoring and limitation of private securities transactions conducted by employees working in sensitive areas of Bankhaus Lampe KG. Conflicts of interest that cannot be avoided despite the measures taken are disclosed. Compliance with the internal and organisational provisions to prevent and handle conflicts of interest is monitored by the independent Compliance unit. Conflict of interest Disclosures of potential conflicts of interest relating to Bankhaus Lampe KG, its affiliates and subsidiaries in the following companies named in this research report are valid as of the end of the month prior to the publication of this report (updating this information may take up to ten days after the month comes to an end). Potential conflicts of interests may exist in the following companies named in this research report. Company Disclosure Leifheit AG 6 6. The author or a person contributing to the production of this financial analysis directly holds financial instruments or related derivatives of this company. Responsible regulatory authority: Federal Financial Supervisory Authority Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin), Marie-Curie-Str , D Frankfurt

9 BANKHAUS LAMPE // 9 Declaration of liability The information in this study is based on public sources which the author(s) believe(s) to be reliable. Nevertheless, neither Bankhaus Lampe KG, nor its affiliated companies, nor the legal representatives, supervisory board members and employees of these companies can assume an y guarantee for the correctness, completeness and accuracy of the information. All opinions and evaluations expressed in this study only reflect the current opinions and evaluations of the author(s), which do not necessarily correspond to the opinions and evaluations of other spheres of business of Bankhaus Lampe KG or its affiliated companies. All opinions and evaluations can be changed at any time without prior notice. They may differ from views set out in other documents, including research, published by Bankhaus Lampe KG. This study is directed to institutional investors with registered offices in the European Union as well as in Switzerland, Liechtenstein and the United States of America, to whom the Bank has deliberately made it available. Its contents are for information purposes only and are not to be regarded as an offer or invitation to buy or sell financial instruments. Private investors who come to know the contents of this study should, before making a concrete investment decision, consult the investment adviser of their bank on whether any recommendation for a certain investment decision contained in this study is suitable for them in view of their investment objectives and financial conditions. The adviser may not share the views contained herein on the financial instruments and their issuers. The completion and publication of this study is subject to the law of the Federal Republic of Germany. Its publication in other jurisdictions may be restricted by applicable laws or other legal regulations. Persons with residence outside the Federal Republic of Germany who come into possession of this study must inform themselves about any applicable restrictions that they are obligated to observe. They are recommended to contact the authorit ies of their country that are responsible for the monitoring of financial instruments and of markets in which financial instruments are traded, in order to find out whether there are any restrictions on acquisition regarding the financial instruments this study refers to. This study may neither be reprinted, in whole or in part, nor transferred into an information system, nor stored in any way whatsoever, be it electronically, mechanically, via photocopy, or by any other means, except with the prior written approval of Bankhaus Lampe KG. Additional information for clients in the United Kingdom Publications in the United Kingdom are distributed by Lampe Capital UK (Services) Limited, 2 Savile Row, London W1S 3PA, United Kingdom and this report is only directed at persons who are investment professionals under Article 19 of the Financial Services and Markets Act 2000 (Financial Promotions) Order 2005 and the investment or investment activity to which this report relates is only available to and will only be engaged in with such persons. Persons who do not have professional experience in matters relating to investments should not rely upon the contents of this report. Additional information for clients in the United States This research report has been prepared and approved by Bankhaus Lampe KG ("BHL"), a full-service bank in Germany. BHL is not a registered broker/dealer in the United States and therefore is not subject to U.S. rules regarding the preparation of research reports and the independen ce of research analysts. This research report is provided in the United States for distribution solely to "major U.S. institutional investors" in reliance on the exemption from registration provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended. Any recipient of this research report wishing to effect any transaction to buy or sell securities or related financial instruments based on the information provided in this research report should do so only throu gh International KBR Finance LLC, IKBR ( IKBR ). IKBR may be contacted in writing or by phone: International KBR Finance LLC, IKBR, 712 Fifth Avenue, 28th floor, New York, NY 10019, U.S. phone: IKBR is not an affiliate of BHL. Under no circumstances should any recipient effect any transaction to buy or sell securities or related financial instruments through BHL. Bankhaus Lampe KG, Jägerhofstraße 10, D Düsseldorf is responsible for this study. Further information may be obtained from Bankhaus Lampe KG. 16 February 2016

10 BANKHAUS LAMPE // 10 Contacts HEAD OF CAPITAL MARKETS & ADVISORY Ute Gerbaulet + 49 (0) ute.gerbaulet@bankhaus-lampe.de HEAD OF EQUITY Ralf Menzel + 49 (0) ralf.menzel@bankhaus-lampe.de VIA INTERNATIONAL KBR FINANCE LLC CHAPERONE OF BANKHAUS LAMPE KG IN THE US EQUITY SALES CONTINENTAL EUROPE Ulrich Klingmüller + 49 (0) ulrich.klingmueller@bankhaus-lampe.de EQUITY SALES IN GB Yusuf Bilgic + 44 (0) yb@lampe-capital.com EQUITY SALES IN US Florian Hartmann fhartmann@kbr-group.com EQUITY SALES TRADING CONTINENTAL EUROPE Nils Carstens + 49 (0) nils.carstens@bankhaus-lampe.de EQUITY SALES TRADING IN GB Chris Ford + 44 (0) cf@lampe-capital.com EQUITY SALES TRADING IN US Kim Last kl@ikbrfinance.com Bankhaus Lampe Research Jägerhofstraße 10 D Düsseldorf research@bankhaus-lampe.de + 49 (0) (0)