AUSTRALIA AHE AU Price (at 03:28, 13 Feb 2015 GMT) Outperform A$3.82 Valuation - EV/EBITA A$ 3.85-4.34 12-month target A$ 4.34 12-month TSR % +19.6 Volatility Index Low/Medium GICS sector Retailing Market cap A$m 1,171 30-day avg turnover A$m 3.6 Number shares on issue m 306.5 Investment fundamentals Year end 30 Jun 2014A 2015E 2016E 2017E Revenue m 4,732.2 5,340.5 5,607.8 5,807.5 EBIT m 148.3 173.0 181.9 188.6 Reported profit m 72.9 95.5 101.1 105.5 Adjusted profit m 78.5 95.5 101.1 105.5 Gross cashflow m 112.2 139.0 147.4 154.2 CFPS 41.5 45.3 48.1 50.3 CFPS growth % 3.7 9.4 6.1 4.6 PGCFPS x 9.2 8.4 7.9 7.6 PGCFPS rel x 0.99 0.92 0.97 1.02 EPS adj 29.0 31.2 33.0 34.4 EPS adj growth % 3.9 7.4 5.8 4.4 PER adj x 13.2 12.3 11.6 11.1 PER rel x 0.74 0.70 0.80 0.90 Total DPS 21.0 22.0 23.0 24.0 Total div yield % 5.5 5.8 6.0 6.3 Franking % 100 100 100 100 ROA % 8.9 9.6 9.8 9.9 ROE % 13.9 14.4 14.6 14.6 EV/EBITDA x 11.0 9.2 8.7 8.4 Net debt/equity % 102.8 103.6 101.4 98.0 P/BV x 1.8 1.7 1.7 1.6 AHE AU vs Small Ordinaries, & rec history Note: Recommendation timeline - if not a continuous line, then there was no Macquarie coverage at the time or there was an embargo period. Source: FactSet, Macquarie Research, February 2015 (all figures in AUD unless noted) 13 February 2015 Macquarie Securities (Australia) Limited Solid Event Automotive Holdings (AHE) has reported a H1 NPAT of $45.0m (Macquarie $45.2m), up 17% on pcp of $38.4m. Impact Solid start. Revenue of $2.56bn (Macquarie $2.63bn) was up 11% on pcp of $2.3bn and EBITDA of $102.6m (Macquarie $103.5m) was up 18% on pcp of $86.6m. Automotive EBIT of $60.6m was slightly higher than our $59.4m expectation and up 10% on pcp. The first four months of the Bradstreet acquisition was the key driver. Logistics EBIT of $22.1m was slightly lower than our $24.8m expectation but up 18% on pcp. A strong refrigerated result was partially offset by lower other logistics results. Steady new vehicle sales to benefit FY15. The new car sales market has recorded a 1.5% fall so far in FY15. NSW is up 1.4%, Victoria down 0.5%, WA down 7.3% and Queensland down 3.1%. We expect a flat to marginally down new car market in FY15 with earnings to be supported by the Bradstreet acquisition. The Logistics division will benefit in FY15 from the Scott's acquisition and increased Rand capacity. We expect current capacity of 102,050 pallets to be expanded to 175,000 by the end of FY15. No formal outlook was given but we see a solid auto market, lower fuel prices, lower interest rates and acquisition increments contributing to strong H2 results. The impact of acquisitions is expected to benefit FY15 revenue by ~$600m. Gearing. Debt (excluding floor plan finance) was ~$238.2m. Since June 2014 AHE has settled the $73m Bradstreet acquisition. We believe Automotive has capacity of >$100m for acquisitions and expansions within its current facilities. While total net debt to EBITDA looks high at 3.4x in FY15, it is ~1.1x when adjusted for floor plan. Interest coverage is strong and grows substantially once adjusted for floor plan funding. Earnings and target price revision FY15 eps down 1.1% to 31.2cps. FY16 eps down 1.3% to 33.0cps Price target changed from $4.39 to $4.34. Price catalyst 12-month price target: A$4.34 based on a EV/EBITA methodology. Catalyst: Earnings delivery and acquisitions. Action and recommendation Outperform retained. We believe AHE is a well managed business with a proven business model. Please refer to page 8 for important disclosures and analyst certification, or on our website www.macquarie.com/research/disclosures.
Solid in FY14 Automotive Holdings (AHE) has reported a H1 NPAT of $45.0m (Macquarie $45.2m), up 17% on pcp of $38.4m. We have detailed the result in the table below. Fig 1 Result summary Profit and Loss 1H14a 2H14a FY14a 1H15a 2H15e FY15e Change Revenue $2,313.7m $2,418.5m $4,732.2m $2,564.5m $2,776.0m $5,340.5m 10.8% EBITDA $86.6m $92.0m $178.6m $102.6m $110.6m $213.1m 18.4% Depreciation $14.0m $16.4m $30.4m $19.9m $20.2m $40.1m 42.2% Amortisation $0.0m $0.0m $0.0m $0.0m $0.0m $0.0m n/a EBIT $72.6m $75.7m $148.3m $82.7m $90.4m $173.0m 13.9% Net Interest $13.8m $16.9m $30.7m $17.5m $16.2m $33.7m 26.6% Pre-Tax Profit $58.8m $58.7m $117.5m $65.2m $74.1m $139.3m 10.9% Tax Expense $17.9m $17.8m $35.7m $18.2m $22.2m $40.4m 2.0% Net Profit $40.9m $41.0m $81.9m $46.9m $51.9m $98.9m 14.8% Outside eq int $2.6m $0.8m $3.4m $1.9m $1.4m $3.4m -24.8% Net ISI's $0.0m ($5.6m) ($5.6m) $0.0m $0.0m $0.0m n/a Rep Earnings $38.4m $34.6m $72.9m $45.0m $50.5m $95.5m 17.4% Adj Earnings $38.4m $40.2m $78.5m $45.0m $50.5m $95.5m 17.4% Gross Cflow $52.4m $56.5m $108.9m $64.9m $70.7m $135.6m 24.0% EPS (Adj/dil) 14.7c 14.3c 29.0c 14.7c 16.5c 31.2c -0.2% EPS growth 1.1% 7.1% 3.9% -0.2% 15.3% 7.5% EBITDA/Sales 3.7% 3.8% 3.8% 4.0% 4.0% 4.0% EBIT/Sales 3.1% 3.1% 3.1% 3.2% 3.3% 3.2% Source: Company data, Macquarie Research, February 2015 Revenue of $2.56bn (Macquarie $2.63bn) was up 11% on pcp of $2.3bn and EBITDA of $102.6m (Macquarie $103.5m) was up 18% on pcp of $86.6m. EPS growth was lower and impacted by the capital raising in March for the Scott s and Bradstreet acquisitions. Fig 2 Divisional results Automotive 1H14(a) 2H14(a) FY14(a) 1H15(a) 2H15(e) FY15(e) Sales Revenue 1,914.2 1,966.9 3,881.2 2,049.6 2,245.4 4,295.0 Growth % 8.0% 11.2% 9.6% 7.1% -4.9% 1.0% EBIT 55.2 61.7 116.9 60.6 69.9 130.5 Margin % 2.9% 3.1% 3.0% 3.0% 3.1% 3.0% Logistics 1H14(a) 2H14(a) FY14(a) 1H15(a) 2H15(e) FY15(e) Sales Revenue 399.3 451.4 850.7 514.6 530.5 1,045.1 Growth % 1.3% 32.1% 15.6% 28.9% 17.5% 22.9% EBIT 18.7 13.4 32.1 22.1 21.4 43.5 Margin % 4.7% 3.0% 3.8% 4.3% 4.0% 4.2% Source: Company data, Macquarie Research, February 2015 Automotive EBIT of $60.6m was slightly higher than our $59.4m expectation and up 10% on pcp. The first four months of the Bradstreet acquisition was the key driver contributing revenue of $134.0m and pre-tax profit of $4.6m. Acquisitions are discussed more fully below. The Automotive result is strong considering the WA new car market is down 7.3% so far in FY15. We believe Automotive outperformed this statistic due to its retail (as opposed to fleet and business) focus and a strong performance in the second hand market. Logistics EBIT of $22.1m was slightly lower than our $24.8m expectation but up 18% on pcp. A strong refrigerated result (up 74% or $7.9m to $18.4m) was partially offset by lower other logistics results (down 52% or $4.6m to $4.2m). The Scott s and JAT acquisition was the key driver of refrigerated results. We expect capacity expansions to drive earnings in FY16 and beyond. All main parts of the other logistics business, KTM, AMCAP and GTB/VSE reported lower earnings. KTM was impacted by currency, AMCAP by the Mitsubishi contract and GTB/VSE by challenging truck and bus markets. 13 February 2015 2
Steady new vehicle sales to benefit FY15 The new car sales market has recorded a 1.5% fall so far in FY15. NSW is up 1.4%, Victoria down 0.5%, WA down 7.3% and Queensland down 3.1%. Fig 3 Annualised sales by state 20.00% 15.00% 10.00% 5.00% 0.00% -5.00% -10.00% -15.00% -20.00% Dec-95 Dec-97 Dec-99 Dec-01 Dec-03 Dec-05 Dec-07 Dec-09 Dec-11 Dec-13 NSW Qld WA Source: FCAI, February 2015 This data only tells part of the story for AHE. In CY14 the private new car market (AHE s primary exposure) grew 0.5% while the business market fell 6.6%, the Government market grew 3.4% and the rental market grew 2.3%. AHE operates 167 automotive franchises spread across 95 dealership locations. We expect a flat to marginally down new car market in FY15 with earnings to be supported by the Bradstreet acquisition. The Logistics division will benefit in FY15 from the Scott's acquisition and increased Rand capacity. We expect current capacity of 102,050 pallets to be expanded to 175,000 by the end of FY15. Fig 4 Logistics growth also reflects pallet capacity Source: AHE, February 2015 13 February 2015 3
No formal outlook was given but we see a solid Auto market, lower fuel prices, lower interest rates and acquisition increments contributing to strong H2 results. The impact of acquisitions is expected to benefit FY15 revenue by ~$600m. Gearing Debt (excluding floor plan finance) was ~$238.2m. Since June 2014 AHE has settled the $73m Bradstreet acquisition which is the main reason for the increase in net debt levels since June. The table below highlights our analysis of profit and loss and balance sheet coverage ratios including and excluding the effect of floor plan funding. Fig 5 Interest and debt coverage is higher than reported once the impact of floor plan funding is accounted for FY10(a) FY11(a) FY12(a) FY13(a) FY14(a) 1H15(a) Interest Paid Floorplan 18,059 23,682 25,219 24,545 24,453 11,353 Other 5,717 9,068 10,958 10,680 8,879 7,546 Total 23,776 32,750 36,177 35,225 33,332 18,899. Interest received 4,096 5,564 5,462 5,832 2,595 1,406 Net interest 19,680 27,186 30,715 29,393 30,737 17,493 Net interest less floorplan 1,621 3,504 5,496 4,848 6,284 6,140 EBIT 99,144 102,309 127,039 136,950 148,264 82,666 EBIT less floorplan 81,085 78,627 101,820 112,405 123,811 71,313 EBIT interest cover 5.0x 3.8x 4.1x 4.7x 4.8x 4.7x EBIT interest cover (excluding floorplan) 50.0x 22.4x 18.5x 23.2x 19.7x 11.6x Interest paid excluding floorplan cover 14.2x 8.7x 9.3x 10.5x 13.9x 9.5x EBITDA 115,988 121,777 153,505 165,325 178,614 102,567 EBITDA less floorplan 97,929 98,095 128,286 140,780 154,161 91,214 Net Debt 380,330 371,130 572,610 671,357 683,037 788,452 Floorplan 374,941 382,134 501,946 578,700 565,600 550,200 Net Debt ex floorplan 5,389-11,004 70,664 92,657 117,437 238,252 ND/EBITDA 0.1x -0.1x 0.6x 0.7x 0.8x n/a Source: AHE, Macquarie Research, February 2015 While total net debt to EBITDA looks high at 3.4x in FY15, it is ~1.1x when adjusted for floor plan. Interest coverage is strong and grows substantially once adjusted for floor plan funding. Macquarie understands this is the way banks look at coverage for Automotive. As a consequence, we believe Automotive has capacity of >$100m for acquisitions and expansions within its current facilities. AHE agreed to acquire Scott s Refrigerated Freightways (SRF) for an EV of $116m and Bradstreet Motor Group for $68m in March 2014. Both businesses being acquired have higher operating margins than the existing AHE operations. In the case of SRF this is due to the increased flexibility of road transport compared to rail. SRF will give AHE a truly national cold storage business and was acquired on 4.6x FY14 EBITDA and 6.2x FY14 EBIT based on AHE estimates. Bradstreet is being acquired on 4.8x pre-tax profit, which is in line with multiples AHE has paid for larger acquisitions in the past. Bradstreet has 13 dealerships located around Newcastle. 13 February 2015 4
We have detailed Automotive s acquisition history since listing below. Fig 6 Acquisitions increasing again ($m) Date Event Price Sales Opening Balance FY05 340.6 8-Sep-06 Auckland Auto Collection 2.3 200.0 1-Dec-06 Mcgrath Lander 67.0 650.0 1-Mar-07 PAA 15.1 1-Mar-07 Lansvale Holden 21-Mar-07 Zupps 117.4 670.0 10-Sep-10 Graham Werner Toyota 12.0 80.0 12-May-11 Coventry Automotive 37.0 130.0 12-May-11 Harris Transport 32.0 80.0 31-Oct-11 Diesel Motors Trucks 6.0 30-Jan-12 Jeff Wignall Group 14.0 20-Jun-12 Coffey Ford 2.0 5-Jul-12 Toll Refrigerated 6.5 75.0 5-Jul-12 Gold Coast Auto sale -4.5-100.0 23-Aug-12 Mercedes Asia Pacific 8.0 110.0 12-Oct-12 Newcastle Iveco 3.4 32.0 15-Feb-13 Bayside and Peninsula 7.0 75.0 26-Apr-13 McMillan and South Mourang Toyota 20.0 100.0 6-Jun-13 Jason Mazda 13.0 50.0 31-Jul-13 Davie Motors Holden 6.0 80.0 25-Mar-14 Bradstreet 68.0 449.0 25-Mar-14 SRF and JAT 116.0 237.0 Total 548.2 2,918.0 Source: Company data, Macquarie Research, February 2015 Valuation $3.85-$4.34, target $4.34 We have detailed our valuation in the table below. Fig 7 EV/EBITA valuation adjusted for floor plan FY15 Multiple- Low Multiple - High Value - Low Value - High EBITA 173.0 Less floorplan cost 23.0 EBITA excluding floorplan 150.0 9.0 10.0 1350.2 1500.2 Total 150.0 1350.2 1500.2 Less Net Debt 720.6 720.6 Add floorplan 550.0 550.0 Plus option Cash 0.0 0.0 Value 1179.6 1329.6 Diluted Shares on Issue 306.5 306.5 Value per share $3.85 $4.34 Source: Macquarie Research, February 2015 In our valuation we have adjusted EBITA for our estimate of FY15e floor plan funding costs and applied a multiple of 9-10x adjusted EBITA. We have also removed our estimate of total floor plan from net debt so as to match the numerator and denominator in our valuation. Our price target has been set at the upper end of our FY15e valuation. 13 February 2015 5
Limited (AHE:$3.82) 13-Feb-15 Interim results 1H14(a) 2H14(a) 1H15(a) 2H15(e) Profit & Loss 2014A 2015E 2016E 2017E Revenue 2313.7 2418.5 2564.5 2776.0 Revenue $m 4732.2 5340.5 5607.8 5807.5 EBITDA $m 86.6 92.0 102.6 110.6 EBITDA $m 178.6 213.1 225.0 234.0 Depreciation $m 14.0 16.4 19.9 20.2 Depreciation $m 30.4 40.1 43.0 45.3 Amortisation of goodwill $m 0.0 0.0 0.0 0.0 Amortisation of goodwill $m 0.0 0.0 0.0 0.0 EBIT $m 72.6 75.7 82.7 90.4 EBIT $m 148.3 173.0 181.9 188.6 Net Interest expense $m 13.8 16.9 17.5 16.2 Net interest expense $m 30.7 33.7 34.9 35.4 Pre-Tax Profit $m 58.8 58.7 65.2 74.1 Pre-Tax Profit $m 117.5 139.3 147.1 153.3 Tax Expense $m 17.9 17.8 18.2 22.2 Tax Expense $m 35.7 40.4 42.6 44.4 Net Profit $m 40.9 41.0 46.9 51.9 Net Profit $m 81.9 98.9 104.4 108.8 Outside equity interests $m 2.6 0.8 1.9 1.4 Outside equity interests $m 3.4 3.4 3.4 3.4 Net Abn/Extra $m 0.0-5.6 0.0 0.0 Net Abnormals/Extra. $m -5.6 0.0 0.0 0.0 Reported Earnings $m 38.4 34.6 45.0 50.5 Reported Earnings $m 72.9 95.5 101.1 105.5 Adjusted Earnings $m 38.4 40.2 45.0 50.5 Adjusted Earnings $m 78.5 95.5 101.1 105.5 Gross Cashflow $m 54.1 57.8 64.8 78.9 Gross Cashflow $m 111.9 143.7 149.7 156.0 EPS (Adj/dil) c 14.7 14.3 14.7 16.5 EPS (adj/diluted) c 29.0 31.2 33.0 34.4 EPS growth % 1.1 7.1-0.2 15.3 EPS growth % 0.0 7.5% 5.8% 4.4% CFPS c 9.8 27.3 21.7 32.4 PE (adj) x 13.2 12.3 11.6 11.1 CFPS Growth % 2.7 4.8 121.6 18.6 CFPS c 37.7 54.0 36.6 41.7 EBITDA/Sales % 3.7 3.8 4.0 4.0 CFPS Growth % 6.1 43.2-32.2 13.9 EBIT/Sales % 3.1 3.1 3.2 3.3 PGCFPS x 10.1 7.1 10.4 9.2 Earnings Split % 48.8 51.2 47.1 52.9 DPS c 21.0 22.0 23.0 24.0 Revenue Growth % 6.8 14.6 10.8 14.8 Yield % 5.5 5.8 6.0 6.3 EBIT Growth % 3.3 13.4 13.9 19.4 Franking % 100.0 100.0 100.0 100.0 Profit and Loss ratios 2014A 2015E 2016E 2017E Cashflow Analysis 2014A 2015E 2016E 2017E Revenue Growth % 10.6 12.9 5.0 3.6 EBIT Growth % 8.3 16.7 5.2 3.7 Pre-tax Profit $m 117.5 139.3 147.1 153.3 EBITDA/Sales % 3.8 4.0 4.0 4.0 Depreciation & Amortisation $m 30.4 40.1 43.0 45.3 EBIT/Sales % 3.1 3.2 3.2 3.2 Tax Paid $m -35.9-35.7-40.4-42.6 Effective tax rate % 30.3 29.0 29.0 29.0 Gross cashflow $m 111.9 143.7 149.7 156.0 Payout ratio % 72.4 70.6 69.8 69.8 Changes in working capital $m 12.2 26.6-35.1-26.2 EV/EBITA x 11.6 10.9 10.5 10.2 Other $m -22.0-4.7-2.3-1.8 EV/EBITDA x 9.6 8.9 8.5 8.2 Operating Cashflow $m 102.2 165.6 112.3 127.9 EV/Sales x 0.4 0.4 0.3 0.3 Acquisitions $m -83.2-68.0 0.0 0.0 Capex - Plant & Equip. $m -111.4-68.0-61.4-63.6 Balance sheet ratios Asset Sales $m 9.2 0.3 0.0 0.0 ROE % 13.9 14.4 14.6 14.6 Other $m 0.9 0.0 0.0 0.0 ROA % 8.9 9.6 9.8 9.9 Investing cashflow $m -184.5-135.7-61.4-63.6 ROFE % 11.9 12.7 12.8 12.8 Dividend (ordinary) $m -56.5-67.4-70.5-73.6 Net Debt $m 683.0 720.6 740.1 749.3 Equity raised $m 141.3 0.0 0.0 0.0 Net Debt/Equity % 102.8 103.6 101.4 98.0 Other $m 0.0 0.0 0.0 0.0 Interest Cover x 4.8 5.1 5.2 5.3 Financing cashflow $m 84.8-67.4-70.5-73.6 Price/NTA x 3.6 3.3 3.0 2.8 NTA per share $ 1.07 1.16 1.26 1.36 Net Change in cash/debt $m 2.5-37.5-19.6-9.2 EFPOWA m 270.9 306.5 306.5 306.5 Historical performance 2011A 2012A 2013A 2014A Balance Sheet 2014A 2015E 2016E 2017E Cash $m 99.5 92.0 82.4 73.2 Revenue $m 3331.2 3914.7 4277.6 4732.2 Receivables $m 293.0 277.3 291.2 301.5 EBITDA $m 121.8 153.5 165.3 178.6 Inventories $m 671.9 651.5 684.1 708.5 Depreciation/Amortisation $m 19.5 26.5 28.4 30.4 Investments $m 7.5 75.5 75.5 75.5 EBIT $m 102.3 127.0 137.0 148.3 Property, plant & equipment $m 303.9 331.5 349.9 368.1 Net interest expense $m 27.2 30.7 29.4 30.7 Intangibles $m 323.6 323.6 323.6 323.6 Pre-Tax Profit $m 75.1 96.3 107.6 117.5 Other Assets $m 69.5 69.5 69.5 69.5 Tax Expense $m 22.1 29.2 31.7 35.7 Total Assets $m 1768.9 1820.8 1876.1 1919.9 Net Profit $m 53.0 67.1 75.9 81.9 Payables $m 237.2 227.7 239.1 247.6 Net Abn/Extra $m -19.9-13.5-6.0-5.6 Short Term Debt $m 590.4 590.4 590.4 590.4 Long Term Debt $m 192.1 222.1 232.1 232.1 EPS (adj/dil) c 22.2 24.7 27.9 29.0 Other Liabilities $m 84.8 84.8 84.8 84.8 EPS growth % -0.1 0.1 0.1 0.0 Total Liabilities $m 1104.5 1125.0 1146.4 1154.9 Ordinary DPS c 17.0 18.0 20.0 21.0 Shareholders Funds $m 650.1 678.1 708.7 740.6 EBITDA/Sales % 3.7 3.9 3.9 3.8 Minority Interests $m 14.3 17.7 21.0 24.4 EBIT/Sales % 3.1 3.2 3.2 3.1 Total Shareholders Equity $m 664.4 695.8 729.7 765.0 ROE % 12.4 14.2 15.6 13.9 ROFE % 13.0 13.8 12.6 11.9 Total Funds employed $m 1,768.9 1,820.8 1,876.1 1,919.9 EFPOWA m 230.6 259.7 260.7 270.9 2014A 2015E 2016E 2017E Divisional Information 2014A 2015E 2016E 2017E Fixed charges cover Automotive Revenue 3,881.48 4,295.30 4,510.42 4,655.18 EBITDA 178.6 213.1 225.0 234.0 Growth 0.1 1.0% 3.0% 3.0% EBIT 148.3 173.0 181.9 188.6 Op lease payments 64.7 73.0 76.7 79.4 EBIT 116.1 129.6 136.3 140.7 Net Interest 30.7 33.7 34.9 35.4 Margin 3.0% 3.0% 3.0% 3.0% Fixed charges cover: Logistics EBITDA 2.5 2.7 2.7 2.7 Revenue 850.7 1045.1 1097.4 1152.3 EBIT 2.2 2.3 2.3 2.3 Growth 0.2-5.0% 5.0% 5.0% ND/EBITDA 3.8 3.4 3.3 3.2 EBIT 32.1 43.5 45.6 47.9 Margin 3.8% 3.0% 3.0% 3.0% Source: Company data, Macquarie Research, February 2015 13 February 2015 6
Fundamentals Macquarie Wealth Management Macquarie Quant View The quant model currently holds a neutral view on. The strongest style exposure is Growth, indicating this stock has good historic and/or forecast growth. Growth metrics focus on both top and bottom line items. The weakest style exposure is Profitability, indicating this stock is not efficiently converting its investments to earnings as proxied by ratios such as ROE, ROA 157/293 Global Alpha Model Sector Rank % of BUY recommendations 64% (7/11) Number of Price Target downgrades 0 Number of Price Target upgrades 1 Attractive Quant Rank within Country Rank within Sector Displays where the company s ranked based on the fundamental consensus Price Target and Macquarie s Quantitative Alpha model. The rankings are displayed relative to the sector and country. Macquarie Alpha Model ranking A list of comparable companies and their Macquarie Alpha model score (higher is better). Factors driving the Alpha Model For the comparable firms this chart shows the key underlying styles and their contribution to the current overall Alpha score. Corporate Travel Manageme 2.2 Corporate Travel Manageme Invocare Ardent Leisure Group Village Roadshow Seven West Media Myer 0.6 0.5 0.1-0.1-0.3-0.5 Invocare Ardent Leisure Group Village Roadshow Seven West Media Myer -3.0-2.0-1.0 0.0 1.0 2.0 3.0-100% -80% -60% -40% -20% 0% 20% 40% 60% 80% 100% Valuations Growth Profitability Earnings Momentum Price Momentum Quality Macquarie Earnings Sentiment Indicator The Macquarie Sentiment Indicator is an enhanced earnings revisions signal that favours analysts who have more timely and higher conviction revisions. Current score shown below. Drivers of Stock Return Breakdown of 1 year total return (local currency) into returns from dividends, changes in forward earnings estimates and the resulting change in earnings multiple. Corporate Travel Manageme Invocare Ardent Leisure Group Village Roadshow Seven West Media Myer 1.1-0.9 0.1-1.3-0.5-0.7-0.9 Corporate Travel Manageme Invocare Ardent Leisure Group Village Roadshow Seven West Media Myer -3.0-2.0-1.0 0.0 1.0 2.0 3.0-100% -50% 0% 50% 100% Dividend Return Multiple Return Earnings Outlook 1Yr Total Return What drove this Company in the last 5 years Which factor score has had the greatest correlation with the company s returns over the last 5 years. EV/EBITDA FY1 Volatility 250 Day 250d Volatility SAL Growth 5yr Historic EPS Growth 5yr Historic Merton Score EBITDA Revisions 3 Month BPS Growth FY1-26% Negatives Positives -20% -22% -22% 22% 21% 21% 21% -30% -20% -10% 0% 10% 20% 30% How it looks on the Alpha model A more granular view of the underlying style scores that drive the alpha (higher is better) and the percentile rank relative to the sector and country. Alpha Model Score Valuation Growth Profitability Earnings Momentum Price Momentum Quality Capital & Funding Liquidity Risk Technicals & Trading Normalized Score 0.10 0.06 0.15-0.34-0.03-0.06-0.05-0.44-1.26-0.15 0.40 Percentile relative to sector(/293) Percentile relative to country(/242) 0 50 100 0 50 100 0 0 1 1 For more details on the Macquarie Alpha model or for more customised analysis and screens, please contact the Macquarie Global Quantitative/Custom Products Group (cpg@macquarie.com) 13 February 2015 7
Important disclosures: Recommendation definitions Macquarie - Australia/New Zealand Outperform return >3% in excess of benchmark return Neutral return within 3% of benchmark return Underperform return >3% below benchmark return Benchmark return is determined by long term nominal GDP growth plus 12 month forward market dividend yield Macquarie Asia/Europe Outperform expected return >+10% Neutral expected return from -10% to +10% Underperform expected return <-10% Macquarie First South - South Africa Outperform expected return >+10% Neutral expected return from -10% to +10% Underperform expected return <-10% Macquarie - Canada Outperform return >5% in excess of benchmark return Neutral return within 5% of benchmark return Underperform return >5% below benchmark return Macquarie - USA Outperform (Buy) return >5% in excess of Russell 3000 index return Neutral (Hold) return within 5% of Russell 3000 index return Underperform (Sell) return >5% below Russell 3000 index return Volatility index definition* This is calculated from the volatility of historical price movements. Very high highest risk Stock should be expected to move up or down 60 100% in a year investors should be aware this stock is highly speculative. High stock should be expected to move up or down at least 40 60% in a year investors should be aware this stock could be speculative. Medium stock should be expected to move up or down at least 30 40% in a year. Low medium stock should be expected to move up or down at least 25 30% in a year. Low stock should be expected to move up or down at least 15 25% in a year. * Applicable to Asia/Australian/NZ/Canada stocks only Recommendations 12 months Note: Quant recommendations may differ from Fundamental Analyst recommendations Financial definitions All "Adjusted" data items have had the following adjustments made: Added back: goodwill amortisation, provision for catastrophe reserves, IFRS derivatives & hedging, IFRS impairments & IFRS interest expense Excluded: non recurring items, asset revals, property revals, appraisal value uplift, preference dividends & minority interests EPS = adjusted net profit / efpowa* ROA = adjusted ebit / average total assets ROA Banks/Insurance = adjusted net profit /average total assets ROE = adjusted net profit / average shareholders funds Gross cashflow = adjusted net profit + depreciation *equivalent fully paid ordinary weighted average number of shares All Reported numbers for Australian/NZ listed stocks are modelled under IFRS (International Financial Reporting Standards). Recommendation proportions For quarter ending 31 December 2014 AU/NZ Asia RSA USA CA EUR Outperform 51.80% 58.06% 45.07% 44.42% 60.54% 46.81% (for US coverage by MCUSA, 5.29% of stocks followed are investment banking clients) Neutral 31.80% 27.37% 30.99% 50.10% 35.37% 33.51% (for US coverage by MCUSA, 3.08% of stocks followed are investment banking clients) Underperform 16.39% 14.57% 23.94% 5.48% 4.08% 19.68% (for US coverage by MCUSA, 0.44% of stocks followed are investment banking clients) AHE AU vs Small Ordinaries, & rec history (all figures in AUD currency unless noted) Note: Recommendation timeline if not a continuous line, then there was no Macquarie coverage at the time or there was an embargo period. Source: FactSet, Macquarie Research, February 2015 12-month target price methodology AHE AU: A$4.34 based on a EV/EBITA methodology Company-specific disclosures: AHE AU: Macquarie Group Limited together with its affiliates beneficially owns 1% or more of the equity securities of Automotive Group Holdings Ltd. Important disclosure information regarding the subject companies covered in this report is available at www.macquarie.com/disclosures. Date Stock Code (BBG code) Recommendation Target Price 14-Nov-2014 AHE AU Outperform A$4.39 15-Aug-2014 AHE AU Outperform A$4.24 25-Mar-2014 AHE AU Outperform A$4.45 14-Feb-2014 AHE AU Outperform A$4.29 19-Aug-2013 AHE AU Outperform A$4.25 02-Jul-2013 AHE AU Outperform A$3.73 18-Feb-2013 AHE AU Neutral A$4.27 24-Aug-2012 AHE AU Neutral A$2.74 05-Jul-2012 AHE AU Neutral A$2.58 20-Feb-2012 AHE AU Neutral A$2.17 Target price risk disclosures: AHE AU: Any inability to compete successfully in their markets may harm the business. This could be a result of many factors which may include geographic mix and introduction of improved products or service offerings by competitors. The results of operations may be materially affected by global economic conditions generally, including conditions in financial markets. The company is exposed to market risks, such as changes in interest rates, foreign exchange rates and input prices. From time to time, the company will enter into transactions, including transactions in derivative instruments, to manage certain of these exposures. Analyst certification: The views expressed in this research reflect the personal views of the analyst(s) about the subject securities or issuers and no part of the compensation of the analyst(s) was, is, or will be directly or indirectly related to the inclusion of specific recommendations or views in this research. The analyst principally responsible for the preparation of this research receives compensation based on overall revenues of Macquarie Group Ltd (ABN 94 122 169 279, AFSL No. 318062) ( MGL ) and its related entities (the Macquarie Group ) and has taken reasonable care to achieve and maintain independence and objectivity in making any recommendations. 13 February 2015 8
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