Recommendation: BUY(BUY) Risk: HIGH (HIGH) Price Target: EUR 20.60 (20.60) 07 April 2011 Solid FY10 & More to come Final FY10 results: On 31 March 2011 Vectron announced final FY10 results which confirmed the preliminary numbers released mid of March. Driven by domestic business, sales came in at EUR 22.0m (our estimates: EUR 22.0m), indicating a yoy increase of 7.4%. The weak spot continues to be the company s international business which experienced a yoy decline of around 4.9% (FY10: EUR 7.7m vs. FY09: EUR 8.1m) while its domestic business grew by more than 15%. The vast majority of sales were generated with POS systems contributing more than 75% to the overall company sales. Slightly improving margins: In the bottom line, Vectron generated net income of EUR 0.3m beating prior year s EUR 0.1m (our estimates: EUR 0.4m). Due to lower depreciation and amortization expenses EBIT margin improved slightly to 4.3% from 3.8% in FY09, achieving EUR 0.9m in FY10. Given positive operating CF of EUR 1.7m, Cash and cash equivalents surged almost by EUR 1.4m to EUR 7.7m at the end of FY10. Thus the management runs business with a net cash position of EUR 1.1m. Given the strong operating cash flow the management will propose a dividend of EUR 0.30/share for FY10 to the shareholders at the annual general meeting. Positive on upcoming FYs: We continue to take a positive view on Vectron as we believe following measures such as 1) the introduction of new stationary POS systems, 2) the international business expansion and 3) the introduction of bonvito (potentials highlighted in our last update published on 25 March 2011) will propel top line and margins in upcoming FYs. However due to initial investments in bonvito marketing campaign (announcement of Bitburger Group as first customer) we slightly reduce our operating margins for FY11E as portrayed in our change table on the RHS. However going forward into FY12E, we expect positive top line and margin contribution from bonvito and hence increase our estimates accordingly. Recommendation: With return to its past dividend policy (payout ratio of ~80% prior to FY09) and evolving growth in company s underlying business we think the stock should attract more investors, going forward. Thus we stick to our BUY recommendation and PT of EUR 20.60/share. Change Share price (dark) vs. TecDAX Sources: CBS Research AG, Bloomberg Internet: www. vectron.de WKN: A0KEXC Reuters: V3SG.DE Company profile: 2010 2011E 2012E new old new old new old Sales 22.0 - - 24.5 28.7 27.3 EBIT 0.9-1.9 2.5 4.0 3.8 EPS 0.20-0.61 0.88 1.69 1.50 Share data: Share price (EUR, last closing price): Shares outstanding (in thousands): Market capitalisation (EURm): Enterprise value (EURm): Ø daily trading volume (6 m., no. of shares): Performance data: High 52 weeks (EUR): Low 52 weeks (EUR): Absolute performance: (12 months) Relative performance (vs. TecDAX): 1 month 3 months 12 months Sector: Technology ISIN: DE000 A0KEXC7 Bloomberg: V3S GY Vectron Systems AG is a leading provider of intelligent POS systems for the networking of branch shops. With an installation basis of more than 100,000 POS systems, Vectron belongs to the top European manufacturers and is market leader in the German catering trade and bakery industry. 14.75 1,500 22.1 21.0 2,110 16.49 11.67-1.7% 9.9% 0.7% -9.9% Key data Y/E 31.12., EUR m 2008 2009 2010 2011E 2012E Total output 23.6 20.6 22.0 24.5 28.7 EBITDA 5.2 2.2 2.3 3.1 4.9 EBIT 3.8 0.8 0.9 1.9 4.0 Net result 2.6 0.1 0.3 0.9 2.5 EPS 1.71 0.07 0.20 0.61 1.69 DPS 1.40 0.00 0.30 0.36 1.25 Gross margin 63.2% 60.5% 60.0% 60.0% 60.3% EBIT margin 16.1% 3.8% 4.3% 7.8% 14.0% EV/EBITDA 4.0 9.4 9.1 6.8 4.3 EV/EBIT 5.5 26.7 22.3 11.0 5.2 P/E 8.6 225.5 73.8 24.2 8.7 Source: CBS Research AG, Vectron Systems AG Shareholders: Jens Reckendorf Thomas Stümmler Jochen Fischer Free float 32.9% 32.9% 6.0% 28.2% Financial calendar: 1Q110 results 29 April 2011 Author: Veysel Taze (Analyst) Close Brothers Seydler Research AG Phone: +49 (0)69-977 84 56 0 E-Mail: research@cbseydlerresearch.ag www.cbseydlerresearch.ag Please notice the information on the preparation of this document, the disclaimer, the advice regarding possible conflicts of interests, and the mandatory information required by 34b WpHG (Securities Trading Law) at the end of this document. This financial analysis in accordance with 34b WpHG is exclusively intended for distribution to individuals that buy or sell financial instruments at their own account or at the account of others in connection with their trading activities, occupation, or employment.
Profit and loss account HGB EUR 1,000 2008 2009 2010 2011E 2012E Sales 23,597 20,515 22,028 24,451 28,730 YoY grow th -7.2% -13.1% 7.4% 11.0% 17.5% Inventory changes 19 44 5 0 0 Other own work capitalized 0 0 0 0 0 Total output 23,616 20,559 22,033 24,451 28,730 Cost of materials -8,702-8,129-8,811-9,780-11,406 as % of total output -36.8% -39.5% -40.0% -40.0% -39.7% Gross profit 14,914 12,430 13,222 14,671 17,324 as % of total output 63.2% 60.5% 60.0% 60.0% 60.3% Personnel expenses -4,558-4,919-5,193-5,379-5,869 as % of total output -19.3% -23.9% -23.6% -22.0% -20.4% Other operating income 208 175 216 171 144 as % of total output 0.9% 0.8% 1.0% 0.7% 0.5% Other operating expenses -5,366-5,449-5,933-6,382-6,723 as % of total output -22.7% -26.5% -26.9% -26.1% -23.4% EBITDA 5,198 2,237 2,312 3,081 4,875 as % of total output 22.0% 10.9% 10.5% 12.6% 17.0% Depreciation and amortization -1,385-1,451-1,369-1,172-850 as % of total output -5.9% -7.1% -6.2% -4.8% -3.0% EBIT 3,813 785 943 1,909 4,026 as % of total output 16.1% 3.8% 4.3% 7.8% 14.0% Net financial result 189 40 66 69 55 EBT 4,002 825 1,009 1,978 4,081 as % of total output 16.9% 4.0% 4.6% 8.1% 14.2% Income taxes -1,164-264 -176-593 -1,224 as % of EBT -29.1% -32.0% -17.5% -30.0% -30.0% Other taxes (reclassified as operational) -4.0-15.1-5.9 0.0 0.0 Net income 2,834 546 827 1,385 2,857 as % of total output 12.0% 2.7% 3.8% 5.7% 9.9% Profit transfer agreement -130-129 -163-143 0 Jouissance right compensations -146-318 -364-327 -327 Net income attributable to shareholders 2,559 98 300 915 2,530 as % of total output 10.8% 0.5% 1.4% 3.7% 8.8% Weighted average shares outstanding (in thousands) 1,500 1,500 1,500 1,500 1,500 Basic earnings per share (EUR) 1.71 0.07 0.20 0.61 1.69 Dividend per share 1.40 0.00 0.30 0.36 1.25 Source: Vectron Systems, CBS Research AG www.cbseydlerresearch.ag Close Brothers Seydler Research AG 2
Balance sheet HGB EUR 1,000 2008 2009 2010 2011E 2012E Assets Noncurrent assets 4,957 3,807 2,762 2,323 2,393 as % of total assets 26.9% 24.4% 17.3% 13.9% 13.5% Intangible assets 4,168 3,080 2,107 1,499 1,416 Property, plant and equipment 768 707 635 805 958 Financial assets 21 20 19 19 19 Current assets 13,463 11,788 13,172 14,450 15,282 as % of total assets 73.1% 75.6% 82.7% 86.1% 86.5% Inventories 2,382 2,198 2,314 2,567 3,017 Trade accounts receivable 3,217 2,946 2,773 3,349 3,936 Other current receivables and assets 104 77 211 122 172 Other assets 121 278 210 278 278 Cash and cash equivalents 7,639 6,289 7,664 8,133 7,879 Total assets 18,420 15,595 15,934 16,774 17,675 Shareholders equity and liabilities Shareholders equity 12,244 10,242 10,542 11,007 12,996 as % of total equity and liabilities 66.5% 65.7% 66.2% 65.6% 73.5% Capital stock 1,500 1,500 1,500 1,500 1,500 Capital reserve 4,500 4,500 4,500 4,500 4,500 Retained earnings 40 40 40 40 40 Unappropriated surplus 3,168 1,166.242 1,466 1,931 3,920 Jouissance right capital 3,036 3,036 3,036 3,036 3,036 Noncurrent liabilities 5,370 4,338 4,270 4,627 3,359 as % of total equity and liabilities 29.2% 27.8% 26.8% 27.6% 19.0% Provisions 1,870 838 770 1,127 1,359 Undisclosed Partnership 1,500 1,500 1,500 1,500 0 Jouissance right capital II 2,000 2,000 2,000 2,000 2,000 Liabilities 806 1,015 1,123 1,140 1,320 as % of total equity and liabilities 4.4% 6.5% 7.0% 6.8% 7.5% Trade accounts payable 518 504 810 589 687 Other liabilities 288 510 313 550 632 Total equity and liabilities 18,420 15,595 15,934 16,774 17,675 Source: Vectron Systems, CBS Research AG www.cbseydlerresearch.ag Close Brothers Seydler Research AG 3
Cash flow statement HGB EUR 1,000 2008 2009 2010 2011E 2012E Profit/loss on ordinary activities 2,559 98 300 915 2,530 Tax expenses/income 1,164 264 176 593 1,224 Cash taxes paid/received -2,659-1,352-347 -533-1,020 Depreciation and amortization 1,385 1,453 1,370 1,172 850 Other non cash items -36.752-10.8 24.8 0 0 Change in accruals -274 109-92 236 28 Extraordinary items -49 0 0 0 0 Gains/Losses from disposal of assets 0 0 0 0 0 "Cash flow" 2,089 561 1,431 2,383 3,611 Increase/decrease in inventories, trade receivables, and other assets Increase/decrease in trade accounts payable and other liabilities -68 497-73 -747-1,086-136 -5 340 17 180 Cash flow from operating activities 1,885 1,053 1,699 1,653 2,705 Net cash outflows from the purchase and retirement of PP&E and intangible assets Net cash outflows from the purchase and sale of consolidated companies -682-303 -324-734 -919 0 0 0 0 0 Cash flow from investing activities -682-303 -324-734 -919 Cash inflow from capital stock increases Dividends paid Proceeds from undisclosed partnership Proceeds from jouissance rigt capital Net borrowings/retirements of financial debt 0 0 0 0 0-2,400-2,100 0-450 -540 0 0 0 0-1,500 2,000 0 0 0 0-21 0 0 0 0 Cash flow from financing activities -421-2,100 0-450 -2,040 Total change in cash and cash equivalents 782-1,350 1,375 470-254 Cash and cash equivalents at the start of the period 6,857 7,639 6,289 7,664 8,133 Cash and cash equivalents at the end of the period 7,639 6,289 7,664 8,133 7,879 Source: Vectron Systems, CBS Research AG www.cbseydlerresearch.ag Close Brothers Seydler Research AG 4
Research Schillerstrasse 27-29 60313 Frankfurt am Main Phone: +49 (0)69 977 8456-0 Roger Peeters +49 (0)69-977 8456-12 Member of the Board Roger.Peeters@cbseydlerresearch.ag Martin Decot +49 (0)69-977 8456-13 Kristina Kardum +49 (0)69-977 8456-21 Martin.Decot@cbseydlerresearch.ag Kristina.Kardum@cbseydlerresearch.ag Rabeya Khan +49 (0)69-977 8456-10 Igor Kim +49 (0)69-977 8456-15 Rabeya.Khan@cbseydlerresearch.ag Igor.Kim@cbseydlerresearch.ag Ralf Marinoni +49 (0)69-977 8456-17 Manuel Martin +49 (0)69-977 8456-16 Ralf.Marinoni@cbseydlerresearch.ag Manuel.Martin@cbseydlerresearch.ag Enid Omerovic +49 (0)69-977 8456-19 Marcus Silbe +49 (0)69-977 8456-14 Enid.Omerovic@cbseydlerresearch.ag Marcus.Silbe@cbseydlerresearch.ag Veysel Taze +49 (0)69-977 8456-18 Veysel.Taze@cbseydlerresearch.ag Institutional Sales Schillerstrasse 27 29 25 Dowgate Hill 60313 Frankfurt am Main London EC4R 2GA Phone: +49 (0)69 9 20 54-400 Raimar Bock +49 (0)69-9 20 54-115 Head of Sales Raimar.Bock@cbseydler.com Henriette Domhardt +49 (0)69-9 20 54-137 Rüdiger Eich +49 (0)69-9 20 54-119 (Germany) Henriette.Domhardt@cbseydler.com (Germany, Switzerland) Ruediger.Eich@cbseydler.com Uwe Gerhardt +49 (0)69-9 20 54-168 Klaus Korzilius +49 (0)69-9 20 54-114 (Germany, Switzerland) Uwe.Gerhardt@cbseydler.com (Austria, Benelux, Germany) Klaus.Korzilius@cbseydler.com Stefan Krewinkel +49 (0)69-9 20 54-118 Markus Laifle +49 (0)69-9 20 54-120 (Execution, UK) Stefan.Krewinkel@cbseydler.com (Execution) Markus.Laifle@cbseydler.com Bruno de Lencquesaing +49 (0)69-9 20 54-116 Janine Theobald +49 (0)69-9 20 54-106 (Benelux, France) Bruno.deLencquesaing@cbseydler.com (Austria, Benelux, Germany) Janine.Theobald@cbseydler.com www.cbseydlerresearch.ag Close Brothers Seydler Research AG 5
Disclaimer and statement according to 34b German Securities Trading Act ( Wertpapierhandelsgesetz ) in combination with the provisions on financial analysis ( Finanzanalyseverordnung FinAnV) This report has been prepared independently of the company analysed by Close Brothers Seydler Research AG and/ or its cooperation partners and the analyst(s) mentioned on the front page (hereafter all are jointly and/or individually called the author ). None of Close Brothers Seydler Research AG, Close Brothers Seydler Bank AG or its cooperation partners, the Company or its shareholders has independently verified any of the information given in this document. Section 34b of the German Securities Trading Act in combination with the FinAnV requires an enterprise preparing a security analysis to point out possible conflicts of interest with respect to the company that is the subject of the analysis. Close Brothers Seydler Research AG is a majority owned subsidiary of Close Brothers Seydler Bank AG (hereafter CBS ). However, Close Brothers Seydler Research AG (hereafter CBSR ) provides its research work independent from CBS. CBS is offering a wide range of Services not only including investment banking services and liquidity providing services (designated sponsoring). CBS or CBSR may possess relations to the covered companies as follows (additional information and disclosures will be made available upon request): a. CBS holds more than 5% interest in the capital stock of the company that is subject of the analysis. b. CBS was a participant in the management of a (co)consortium in a selling agent function for the issuance of financial instruments, which themselves or their issuer is the subject of this financial analysis within the last twelve months. c. CBS has provided investment banking and/or consulting services during the last 12 months for the company analysed for which compensation has been or will be paid for. d. CBS acts as designated sponsor for the company's securities on the basis of an existing designated sponsorship contract. The services include the provision of bid and ask offers. Due to the designated sponsoring service agreement CBS may regularly possess shares of the company and receives a compensation and/ or provision for its services. e. The designated sponsor service agreement includes a contractually agreed provision for research services. f. CBSR and the analysed company have a contractual agreement about the preparation of research reports. CBSR receives a compensation in return. g. CBS has a significant financial interest in relation to the company that is subject of this analysis. In this report, the following conflicts of interests are given at the time, when the report has been published: d,f CBS and/or its employees or clients may take positions in, and may make purchases and/ or sales as principal or agent in the securities or related financial instruments discussed in this analysis. CBS may provide investment banking, consulting, and/ or other services to and/ or serve as directors of the companies referred to in this analysis. No part of the authors compensation was, is or will be directly or indirectly related to the recommendations or views expressed. Recommendation System: Close Brothers Seydler Research AG uses a 3-level absolute share rating system. The ratings pertain to a time horizon of up to 6 months: BUY: The expected performance of the share price is above +10%. HOLD: The expected performance of the share price is between 0% and +10%. SELL: The expected performance of the share price is below 0%. Recommendation history over the last 12 months for the company analysed in this report: Date Recommendation Price at change date Price Target 07 April 2011 BUY (update) EUR 14.75 EUR 20.60 25 March 2011 BUY (update) EUR 14.62 EUR 20.60 21 October 2010 BUY (Update) EUR 14.40 EUR 20.60 02 August 2010 BUY (Update) EUR 12.50 EUR 20.60 14 April 2010 BUY (Update) EUR 14.53 EUR 20.60 09 March 2010 BUY (Update) EUR 11.45 EUR 20.71 Risk-scaling System: www.cbseydlerresearch.ag Close Brothers Seydler Research AG 6
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