3W Power SA/AEG Power Solutions

Transcription

1 3 W P o w er S A/ A E G P o w er S ol ut io n s # $T ypcap$ x Page 1/5 Equity flash Company contact Electronics Luxembourg Neutral Target 0.30 EUR Price (08/06/2017) : 0.22 EUR Upside : 36 % Est.chg 2017e 2018e EPS Successful conclusion of protective shield proceedings for German subsidiary Publication date :55 Writing date : Mrz 14Jun 14Sep 14Dez 14Mrz 15Jun 15Sep 15Dez 15Mrz 16Jun 16Sep 16Dez 16Mrz 17Jun 17 Source : Oddo, Fininfo Capital 3W9K GY 3W9K.F Relative to IT Services (Rebased) Market Cap (EURm) 18 Enterprise value (EURm) Extrema 12 months Free Float (%) 80.2 Performance (%) 1m 3m 12m Absolute Perf. rel. Country Index Perf. rel. IT Services P&L 12/17e 12/18e 12/19e Sales (EURm) EBITDA (EURm) Current EBIT (EURm) Attr. net profit (EURm) Adjusted EPS (EUR) Dividend (EUR) P/E (x) ns P/B (x) ns ns ns Dividend Yield (%) FCF yield (%) ns EV/Sales (x) EV/EBITDA (x) EV/Current EBIT (x) ns ns ns Gearing (%) ns ns ns Net Debt/EBITDA(x) ns ns 7.0 Next Events Earnings Release Q2 Results Q3 Results Earnings Release 71 Refocusing on core industrial business and customer-centric structure After our recent discussion with management, we have partially adjusted our model to factor in i/ 3W s modified financial structure, and ii/ the restructuring of the German subsidiary. Already in vember, 3W s board filed for a protective shield and debtor-in-possession proceedings for its loss-making German subsidiary AEG Power Solutions GmbH. The protective shield proceedings not only enabled 3W to restructure pension liabilities and other fixed costs but also to streamline the German subsidiary into a more customer-centric and group-integrated structure. On 2 May 2017, following the approval of the restructuring plan by the local court, the protective shield proceedings were concluded and the business activities at 3W and the German subsidiary continued to operate fully consolidated again. 20.0m financing facility agreed, of which 15.0m secured To finance operating activities and restructuring costs going forward 3W entered into a super senior secured debt agreement of 20m, of which 15m was secured as of March 2017 (9.5% interest). The 15m financing facility consists of a 7.5m revolving credit facility and 7.5m additional financing for the German subsidiary. Furthermore, the bondholders of both series i.e. 45.3m, and 14.0m, agreed on a deferral of interest payments, amongst other things, to the maturity date, by increasing the interest to 9.5% for both series to improve yoy In line with company expectations, we continue to model group revenues of 160m for 2017eand 180m for 2018e, assuming i/ successful implementation of the planned costsavings programs, and ii/ full availability of new financing facilities of 20m. On the bottom line, we expect 3W s EBITDA margin to move into positive territory in 2017 and start to improve towards 3W s medium- to long-term target of 5-7% (2019e: 3.5%). Given the current financial and operational developments, the company expects more stable working capital utilization in 2017 translating into net available cash of m. If the above assumptions hold both in terms of the business plan (including the measures to prevent a liquidity shortage in May 2018) and financing (no default events), management believes that, based on its current liquidity forecasts, the company has sufficient liquidity available to operate the business without further interruption. Neutral recommendation and TP of 0.30/share reiterated In our view, both i/ the new financing facility, and ii/ deferral of interest payments, should give 3W the financial flexibility to operate more efficiently and to further streamline its core industrial businesses. We have partially adjusted our model to factor in i/ the new financial structure, and ii/ the restructuring of the German subsidiary. However, given still-low visibility on i/ the outcome of the restructuring program, and ii/ the future direction of oil and gas markets, we prefer to maintain our Neutral rating and TP of 0.30 per share. Henning Steinbrink (Analyst) +49 (69) henning.steinbrink@oddoseydler.com Abraham Cavoosi-Kaleno +49 (69) abraham.cavoosi-kaleno@oddoseydler.com Risque de conflits d'intérêts : Oddo & Cie et/ou une de ses filiales peuvent être en situation de conflit d intérêts avec certaines des émetteurs mentionnés dans cette publication. Vous pouvez consulter l ensemble des mentions des conflits d intérêts en dernière page de ce document. garanties. Les appréciations formulées reflètent notre opinion à la date de publication et sont donc susceptibles d être révisées ultérieurement.

2 Page 2/5 Q1-17 sales suffered from business disruption under protective shield 3W posted its Q results on an unaudited pro-forma basis, including AEG PS GmbH as fully consolidated. On this basis, 3W generated orders of 46.3m (down 10.2% yoy; Q1 2016: 51.5m) and revenue of 33.5m (down 9.7% yoy; Q1 2016: 37.1m). Despite challenging market conditions, 3W posted a 20% higher order intake compared to Q Q EBITDA was - 6.1million vs 0.4m in Q rmalized EBITDA, i.e. EBITDA adjusted for one-time transactions, was - 2.7m, up 25.0% yoy vs - 3.6m in Q The group s cash position improved to 16.8m at 31 March 2017 from 14.9m at 31 December In our view, the results for Q1 and Q were/continue to be impacted by the group s decision to enter into protective shield proceedings in 3W s largest subsidiary in Germany. However, management believes the long-term benefits outweigh the negative short-term impact on business. There is still a certain resiliency in the oil & gas markets, but 3W observes a shift to gas infrastructure. There is also much greater activity amongst EPC companies based in the Middle East/Far East including China vs traditional western participants. Here 3W benefits from its diversification both in terms of product offering and geographic reach, which contributes to a certain stability. As of 1 July 2017, Mr. Paul van der Harten will assume CFO responsibilities at 3W. Based on his long-term experience in the oil & gas industry, we believe 3W will benefit from Mr. van der Harten s skills. He was responsible for several senior finance positions at Shell and spent the last five years with OMV in part as CFO for the group s exploration and production division. 3W Power Q results (pro forma) Q Q % qoq Q % yoy Order backlog % % Order entry % % Revenues % % Book to bill ratio % % EBITDA n.m. 0.4 n.m. as % of total revenues -18.2% -1.3% n.m. 1.1% n.m. rmalized EBITDA n.m n.m. as % of total revenues -8.1% 3.0% n.m. -9.7% n.m. Cash and cash equivalent % % Source: Company data, Oddo Seydler

3 Page 3/5 3W9K.F 3W9K GY Neutral Price 0.22EUR Electronics Luxembourg Upside 36.36% TP 0.30EUR PER SHARE DATA (EUR) 12/12 12/13 12/14 12/15 12/16 12/17e 12/18e 12/19e Adjusted EPS Reported EPS Growth in EPS(%) ns ns ns ns ns ns ns 21.3% Net dividend per share FCF to equity per share Book value per share Number of shares market cap Number of diluted shares VALUATION 12/12 12/13 12/14 12/15 12/16 12/17e 12/18e 12/19e 12m highest price m lowest price (*) Reference price Capitalization Restated Net debt Minorities (fair value) Financial fixed assets (fair value) Provisions Enterprise Value P/E (x) ns ns 1.8 ns ns ns P/CF (x) 9.1 ns ns ns ns Net Yield (%) 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% FCF yield (%) ns 37.0% 7.4% ns ns ns 17.5% 19.2% P/B incl. GW (x) ns ns ns ns P/B excl. GW (x) ns ns ns ns EV/Sales (x) EV/EBITDA (x) 25.9 ns ns ns ns EV/EBIT (x) ns ns ns ns ns ns ns ns (*) historical average price PROFIT AND LOSS (EURm) 12/12 12/13 12/14 12/15 12/16 12/17e 12/18e 12/19e Sales EBITDA Depreciations Current EBIT Published EBIT Net financial income Corporate Tax Net income of equity-accounted companies Profit/loss of discontinued activities (after tax) Minority interests Attributable net profit Adjusted attributable net profit BALANCE SHEET (EURm) 12/12 12/13 12/14 12/15 12/16 12/17e 12/18e 12/19e Goodwill Other intangible assets Tangible fixed assets WCR Financial assets Ordinary shareholders equity Minority interests Shareholders equity current provisions Net debt CASH FLOW STATEMENT (EURm) 12/12 12/13 12/14 12/15 12/16 12/17e 12/18e 12/19e EBITDA Change in WCR Interests & taxes Others Operating Cash flow CAPEX Free cash-flow Acquisitions / disposals Dividends Net capital increase Others Change in net debt GROWTH MARGINS PRODUCTIVITY 12/12 12/13 12/14 12/15 12/16 12/17e 12/18e 12/19e Sales growth -4.8% -32.0% -21.9% -12.7% -11.1% 1.4% 12.5% 7.0% Lfl sales growth 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Current EBIT growth ns ns ns ns ns ns ns ns Growth in EPS(%) ns ns ns ns ns ns ns 21.3% Net margin -2.8% -17.4% 4.7% -9.8% -9.8% -0.3% 2.1% 2.4% EBITDA margin 2.9% -9.0% -6.0% -5.6% -0.5% 0.7% 3.2% 3.5% Current EBIT margin -51.2% -22.5% -17.0% -20.9% -7.5% -5.0% -1.8% -1.2% CAPEX / Sales -3.3% -2.9% 13.8% -0.5% 3.6% -1.9% -1.8% -1.8% WCR / Sales 28.7% 14.5% 16.1% 19.2% -4.8% 7.9% 7.8% 7.8% Tax Rate 15.2% 0.2% ns 7.2% 14.0% 14.0% 20.0% 20.0% rmative tax rate ns Asset Turnover ROCE post-tax (normative tax rate) - - ns ROCE post-tax hors GW (normative tax rate) - - ns ROE -5.7% -79.2% 31.2% -67.0% 84.4% 0.8% -7.2% -8.3% DEBT RATIOS 12/12 12/13 12/14 12/15 12/16 12/17e 12/18e 12/19e Gearing 67% ns 24% ns ns ns ns ns Net Debt / Market Cap Net debt / EBITDA 5.84 ns ns ns ns ns ns 6.97 EBITDA / net financial charges Source: Oddo, Fininfo

4 Page 4/5 Valuation method Our target prices are established on a 12-month timeframe and we use three valuation methods to determine them. First, the discounting of available cash flows using the discounting parameters set by the Group and indicated on Oddo Securities' website. Second, the sum-of-the-parts method based on the most pertinent financial aggregate depending on the sector of activity. Third, we also use the peer comparison method which facilitates an evaluation of the company relative to similar businesses, either because they operate in identical sectors (and are therefore in competition with one another) or because they benefit from comparable financial dynamics. A mixture of these valuation methods may be used in specific instances to more accurately reflect the specific characteristics of each company covered, thereby fine-tuning its evaluation. Sensitivity of the result of the analysis/ risk classification: The opinions expressed in the financial analysis are opinions as per a particular date, i.e. the date indicated in the financial analysis. The recommendation (cf. explanation of the recommendation systematic) can change owing to unforeseeable events which may, for instance, have repercussions on both the company and on the whole industry. Our stock market recommendations Our stock market recommendations reflect the RELATIVE performance expected for each stock on a 12-month timeframe. Buy: performance expected to exceed that of the benchmark index, sectoral (large caps) or other (small and mid caps). Neutral: performance expected to be comparable to that of the benchmark index, sectoral (large caps) or other (small and mid caps). Reduce: performance expected to fall short of that of the benchmark index, sectoral (large caps) or other (small and mid caps). The prices of the financial instruments used and mentioned in this document are the closing prices. All publications by Oddo Securities or Oddo Seydler concerning the companies covered and mentioned in this document are available on the research site: Web lien Recommendation and target price changes history over the last 12 months for the company analysed in this report Date Reco Price Target (EUR) Price (EUR) Analyst Neutral Henning Steinbrink Recommendation split Buy Neutral Reduce Our whole coverage (422) 47% 44% 9% Liquidity providers coverage (153) 48% 48% 5% Research service coverage (66) 52% 45% 3% Investment banking services (45) 64% 31% 4% Risk of conflict of interest: Investment banking and/or Distribution 1-Has Oddo Group, or Oddo & Cie, or Oddo Seydler managed or co-managed in the past 12 months a public offering of securities for the subject companys/ies? 2-Has Oddo Group, or Oddo & Cie, or Oddo Sydler received compensation for investment banking services from the subject company/ies in the past 12 months or expects to receive or intends to seek compensation for investment banking services from the subject company/ies in the last 12 months? Research contract between Oddo group & the issuer 3-Oddo & Cie and the issuer have agreed that Oddo & Cie will produce and disseminate investment recommendations on the said issuer as a service to the issuer Liquidity provider agreement and market-making 4-At the date of the distribution of this report, does Oddo Group, or Oddo & Cie, or Oddo Seydler act as a market maker or has Oddo Group, or Oddo & Cie, or Oddo Seydler siggned a liquidity provider agreement with the subject company/ies? Significant equity stake 5-Does Oddo Group, or Oddo & Cie, or Oddo Seydler own 5% or more of any class of common equity securities of the subject company/ies? 6-Does the subject company beneficially own % or more of any class of common equity of oddo & Cie or its affiliates? Disclosure to Company 7-Has a copy of this report ; with the target price and/or rating removed, been presented to the subject company/ies prior to its distribution, for the sole purpose of verifying the accuracy of factual statements? 8- Have the conclusions of this report been amended following disclosure to the company/ies and prior its distribution? Additional material conflicts 9- Is Oddo Group, or Oddo & Cie, or Oddo Seydelr aware of any additional material conflict of interest? Personal conflicts of interest Have those responsible for the drafting of the present document acquired securities from the issuer concerned by the present financial analysis? Have those responsible for the drafting of the present document received remuneration directly linked to investment firm service transactions or any other kind of transaction they carry out or any trading commissions they, or any legal person who is part of the same group, receive? Statement of conflict of interests of all companies mentioned in this document may be consulted on Oddo & Cie s: lien web

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