Europe Today cheuvreu… · positive view on the story; we see 34% upside from current prices. In the small- and mid-cap segment, Matthijs Van Leijenhorst initiates coverage on D’Ieteren

Sector Country

17 February 2014

Europe Today Today Christopher Potts upgrades the Italian market from neutral to overweight, believing that 2013 marked the end of Italy’s chronic underperformance within the European context, and considering that 2014 is the “now-or-never” year for an Italian outperformance. Accordingly, Marco Baccaglio states that among the stocks in our Italian Selected List (Atlantia, ENEL Green Power, Finmeccanica, Gtech and Telecom Italia), Atlantia is the story that might benefit the most from the recovery of the Italian economy.

Catherine Rolland comments on last week’s roadshow with Edenred’s management, highlighting the quality of the group’s performance in Latam last year. She reiterates her positive view on the story; we see 34% upside from current prices. In the small- and mid-cap segment, Matthijs Van Leijenhorst initiates coverage on D’Ieteren with a Reduce rating and a target price of EUR33, and Natalia Bobo upgrades her rating on Almirall from Hold to Buy, raising hes target price from EUR12 to EUR16.

Today's top research news

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Almirall () A turn for the better

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Axway Software (Hold) Downgrade from Buy to Hold

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Cairo Communication (Buy) TP raised to EUR7.8 after better Q4 2013 results

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Gerresheimer (Hold) Feedback from conference call, TP up to EUR50

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IMA (Buy) Powerful FY 2013 backlog, estimates and TP up

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Interpump Group (Buy) TP up from EUR9.7 to EUR12.3

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Lagardère (Buy) Buys out France Télévisions’ minority in Gulli

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Télévision Française 1 (Buy) FY 2013 earnings (due on 19 February) preview

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Italy Highlights from our Italian Selected List

Rating and target price changes Company Rating Target Price

Cairo Communication New Buy EUR7.8

2/17/2014 Old Buy EUR7.3

Givaudan New Buy CHF1500

2/17/2014 Old Buy CHF1375

Husqvarna New Reduce SEK43.5

2/17/2014 Old Reduce SEK37.5

IMA New Buy EUR34

2/17/2014 Old Buy EUR28

Interpump Group New Buy EUR12.3

2/17/2014 Old Buy EUR9.7

Roadshow pipeline

03/02 Coloplast - Geneva SWITZERLAND

04/02 Coloplast - Zurich SWITZERLAND

05/02 Givaudan - Zurich SWITZERLAND

05/02 Coloplast - Milan ITALY

06/02 Klepierre SA - Paris FRANCE

07/02 Dassault Systèmes - Lunch - Paris FRANCE

08/02 Danske Bank A/S - London - CFO UK

10/02 Banca Generali SpA - London UK

10/02 Danske Bank A/S - London CEO UK

11/02 Givaudan - Edinburgh SWITZERLAND

Click here for full list of changes xx Click here to attend roadshow

Ratings info Booking online

https://research.keplercheuvreux.com/

https://research.keplercheuvreux.com/bookingOnline/index.aspx

Country Sector Frontp

Today’s research by country Belgium

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D’Ieteren (Reduce)

Waiting for the third pillar

Denmark

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GN Store Nord (Buy)

Momentum to continue

France

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Axway Software (Hold)

Downgrade from Buy to Hold

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Eutelsat (Buy) Highlights from interim results meeting

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Ingenico (Buy)

Solid FY results on 19 February after market

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Lagardère (Buy) Buys out France Télévisions’ minority in Gulli

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M6 Métropole télévision (Buy)

FY 2013 earnings (due on 18 February) preview

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Imerys (Buy) Counterbid on Amcol

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Télévision Française 1 (Buy)


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Veolia Environnement (Reduce) A CEO under pressure

Germany

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Gerresheimer (Hold)

Feedback from conference call, TP up to EUR50

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Volkswagen (Buy) Voting against unionisation

Italy

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Beni Stabili (Buy)

The trough appears to be over

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Cairo Communication (Buy) TP raised to EUR7.8 after better Q4 2013 results

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IMA (Buy)

Powerful FY 2013 backlog, estimates and TP up

X X


Netherlands

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UNIT4 (Accept Offer)

Results in line, slightly disappointing outlook

Spain

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Almirall

A turn for the better


Sweden

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Ericsson (Buy)

Global strategic agreement with Ciena

Switzerland

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Givaudan (Buy)

Roadshow, IFF results confirm our positive view


Today’s research by sector Autos & parts

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Volkswagen (Buy)

Voting against unionisation

Capital goods

X X

IMA (Buy)

Powerful FY 2013 backlog, estimates and TP up

X X


Chemicals

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Givaudan (Buy)

Roadshow, IFF results confirm our positive view

Construction & materials

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Imerys (Buy)

Counterbid on Amcol

General retail

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D’Ieteren (Reduce)

Waiting for the third pillar

IT hardware & telco eqpmt

X X

Ericsson (Buy)

Global strategic agreement with Ciena

X X

Ingenico (Buy) Solid FY results on 19 February after market

IT software & services

X X

Axway Software (Hold)

Downgrade from Buy to Hold

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UNIT4 (Accept Offer) Results in line, slightly disappointing outlook

Media

X X

Cairo Communication (Buy)

TP raised to EUR7.8 after better Q4 2013 results

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Eutelsat (Buy) Highlights from interim results meeting

X X

Lagardère (Buy)

Buys out France Télévisions’ minority in Gulli

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M6 Métropole télévision (Buy) FY 2013 earnings (due on 18 February) preview

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Télévision Française 1 (Buy)


Medtech & services

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GN Store Nord (Buy)

Momentum to continue

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Gerresheimer (Hold) Feedback from conference call, TP up to EUR50


Pharma & biotech

X X

Almirall

A turn for the better

Property

X X

Beni Stabili (Buy)

The trough appears to be over

Utilities

x x

Veolia Environnement (Reduce)

A CEO under pressure

Country Story

X X

Italy

Highlights from our Italian Selected List

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17 February 2014 Rating change Positive

Almirall

Spain | Pharma & biotech

Buy (Hold) Target price EUR 16.00

Current price EUR 11.82

Natalia Bobo [email protected] +34 914 36 5165

A turn for the better Reuters ALM.MC Bloomberg ALM SM Index DJ Stoxx 600

Market data

Market cap (EURm) 2,042

Free float 33%

No. of shares outstanding (m) 173

Avg. daily trading volume('000) 516

YTD abs performance -0.2%

52-week high (EUR) 12.99

52-week low (EUR) 8.69

FY to 31/12 (EUR) 2013E 2014E 2015E

Sales (m) 691.7 835.7 904.8

EBITDA adj (m) 79.9 143.8 235.6

EBIT adj (m) 10.0 70.2 160.6

Net profit adj (m) 23.5 73.5 142.5

Net fin. debt (m) 213.4 185.5 46.8

FCF (m) 6.8 30.3 167.5

EPS adj. and fully dil. 0.14 0.43 0.82

Consensus EPS 0.22 0.41 0.64

Net dividend 0.01 0.17 0.34

FY to 31/12 (EUR) 2013E 2014E 2015E

P/E (x) adj and ful. dil. 86.3 27.8 14.3

EV/EBITDA (x) 28.6 15.7 9.0

EV/EBIT (x) na 32.2 13.2

FCF yield 0.3% 1.5% 8.2%

Dividend yield 0.1% 1.5% 2.8%

Net debt/EBITDA (x) 3.2 1.6 0.4

Gearing 23.7% 19.1% 4.3%

ROIC 0.9% 6.2% 14.6%

EV/IC (x) 2.9 2.9 2.8

2013: a year of key product launches

Aqua deal: accretive and strategic

Net profit and free cash flow acceleration from 2014

Rating upgraded from Hold to Buy, TP up from EUR12 to EUR16

2013: a year of key product launches Almirall carried out 30 product launches in 2013 in different geographies and our assessment so far is that the main markets for the key products are already on track and ready for further upside. Aclidinium has succeeded in key countries like Spain (12% market share among LAMAs by November), Germany (7.8%), Italy (9.2%) and the US (3.4%). In fact, Aclidinium is already Almirall’s top product by sales (EUR81.2m estimated contribution for 2013, 12% of total). We expect that the combination with Formoterol will be launched in Europe in 2015 and by March we will have the FDA feedback on the US filing (on standby due to regulatory concerns over CMC issues). In our base case scenario, we assume the launch will be delayed by one year (from 2015 to 2016) and estimate a lower long-term market share for the combo in the US COPD market (6% versus 7.8%).

Aqua deal: accretive and strategic The recent acquisition of the US company, Aqua will give Almirall access to the world’s largest derma market, through a highly efficient company with EBITDA margins in excess of 35%. We expect significant EPS accretion in the first year (+23%) and potential cross-selling synergies in derma, which should account for 30% of Almirall’s revenues (versus 19% previously).

Net profit and free cash flow acceleration from 2014 We expect 2013 to be a trough year for Almirall’s net profit and FCF. From 2014, we expect the company to enjoy a higher sales contribution from new products, a reduced commercial effort, the consolidation of Aqua and lower personnel expenses as the recently announced restructuring will be visible in the P&L. We increase our EPS estimates by 31% for 2014E and 2015E.

Rating upgraded from Hold to Buy, TP up from EUR12 to EUR16 We lift our TP from EUR12 to EUR16 as we roll over our model to the end of 2014. We also assume a lower WACC (lower interest rates, higher leverage) and factor in the Aqua acquisition and restructuring in Europe. Aclidinium accounts for EUR7.0 per share of our TP. If the US combo were to fail (highly unlikely, in our view), our TP would fall to about EUR12.3. Rating upgraded from Hold to Buy. IMPORTANT. Please refer to keplercheuvreux.com/disclaimer or to the last

page of this report for “Important disclosures” and analyst(s) certifications keplercheuvreux.com

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17 February 2014 Rating change Positive

Axway Software

France | IT software & services

Hold (Buy) Target price EUR 27.00


Sébastien Sztabowicz [email protected] +33 1 5365 3510

Downgrade from Buy to Hold Reuters AXW.PA Bloomberg AXW FP Index FTSE Euro First 300

Market data

Market cap (EURm) 566

Free float 30%



YTD abs performance 28.8%



FY to 31/12 (EUR) 2013E 2014E 2015E

Sales (m) 247.5 270.2 297.8

EBITDA adj (m) 41.1 48.1 55.6

EBIT adj (m) 39.1 46.0 53.5

Net profit adj (m) 33.3 33.4 36.4

Net fin. debt (m) -16.9 -32.7 -51.3

FCF (m) 25.6 25.5 27.4




FY to 31/12 (EUR) 2013E 2014E 2015E


EV/EBITDA (x) 13.5 11.2 9.4

EV/EBIT (x) 14.2 11.7 9.7

FCF yield 4.5% 4.5% 4.8%


Net debt/EBITDA (x) -0.3 -0.5 -0.8

Gearing -6.5% -11.6% -16.8%

ROIC 13.0% 15.0% 17.0%

EV/IC (x) 2.7 2.6 2.4

Mid-single-digit organic growth in Q4

Slight margin improvement and solid FCF full-year

Positive outlook for 2014

Downgrade from Buy to Hold, TP up from EUR23 to EUR27

Mid-single-digit organic growth in Q4 Following strong revenue growth in Q3 (+14% LFL) and booming licenses (+38% LFL), we expect softer sales in Q4 (+5% LFL) and have limited visibility going into the results (especially as quarterly license sales remain volatile). That said, despite lower traction from new licenses, maintenance could grow faster (+12% LFL benefiting from the group’s strategy to support its key customers and increase the mix toward higher-end contracts) and services decline about 8% LFL (affected by low licenses sales at the start of 2013). Organic growth could finally climb about 7% over the full year (vs. -1.5% in 2012).

Slight margins improvement and solid FCF full-year We expect EUR39m operating profit over the full year, up about 12% YOY and showing a slight 20bp margin improvement to 15.8%. The group should also deliver strong FCF (EUR31m) and end the year with a robust financial position (EUR17m net cash position by year-end vs. EUR7m net debt end-2012), leaving room for further acquisitions in coming quarters.

Positive outlook for 2014 Management should provide a positive outlook for 2014 with stronger organic growth and operating leverage. We believe organic growth should gradually accelerate to +9% this year (licenses up 11%/maintenance up 9%) thanks to the proliferation of eGovernment services worldwide, strong demand coming from the healthcare system in the US, the explosion of data coming from mobile and cloud applications and the ramp-up of cross-selling opportunities with Vordel (cloud/mobile API server). We expect solid 17% margins in 2014 (+120bp) thanks to higher operating leverage and positive contribution from synergies with Vordel.

Downgrade from Buy to Hold, TP up from EUR23 to EUR27 While the shares have more than doubled since early 2013, the valuation is now more demanding and the shares are more likely to consolidate around current levels in the coming months. We also continue to believe that the very strong Q3 performance was a one-off; hence the re-rating has gone too far. We downgrade our rating from Buy to Hold, raising our TP from EUR23 to EUR27, showing a P/E target of about 16x 2014E.

IMPORTANT. Please refer to keplercheuvreux.com/disclaimer or to the last


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17 February 2014 Target price change Positive

Beni Stabili

Italy | Property

Buy (Buy) Target price EUR 0.65


Samuel Henry-Diesbach [email protected] +33 1 5365 3663

The trough appears to be over Reuters BNSI.MI Bloomberg BNS IM Index DJ Stoxx 600

Market data


Free float 40%

No. of shares outstanding (m) 1,915

Avg. daily trading volume('000) 2,338




FY to 31/12 (EUR) 2013 2014E 2015E

Net rent 194.7 195.7 195.3

EBITDA 181.8 181.6 180.9

DPS 0.02 0.02 0.02

FFO (recurring) 74.0 75.2 77.9

FFO (incl. trading) 77.9 82.7 80.4

Net profit -11.6 9.5 -12.1

FFOps (recurring) 0.04 0.04 0.04

FFOps (incl. trading) 0.04 0.04 0.04

NAVps 0.80 0.83 0.88

NNAVps 0.8 0.8 0.9

FY to 31/12 (EUR) 2013 2014E 2015E

P/FFO 12.7 14.8 14.3

P/FFO (incl. trading) 12.1 13.4 13.8

P/NAV -1 -38.5% -30.2% -34.3%

P/NNAV -1 -37.7% -29.4% -33.6%


LTV 51.5% 49.1% 49.3%

Interest coverage -1.7 -1.8 -1.8

FFO/NNAV 3.5% 3.4% 3.3%

EBITDA/Asset value 4.1% 4.2% 4.3%

2013 figures in line with expectations

In line with our initial bet, context seems set to improve for 2014

Our forecasts remain broadly unchanged…

… but we lift our target price from EUR0.59 to EUR0.65 (rollover)

Unsurprising 2013 figures Unsurprisingly, Beni Stabili reported FFO down by close to 11% in 2013 (fully in line with our expectations at EUR74m vs. EUR73.7m in our model). This decrease is due to local tax and financial expenses for the new convertible bonds. The portfolio valuation is down by 1.5%, continuing the moderate but steady valuation decline Beni Stabili has seen every year over the past years, with the average yield up by +0.1pp to 6.2% in 2013. Beni Stabili also saw significant acceleration of its disposals in H2, mostly in Q4, and it now guides for EUR150-300m of disposals for 2014. As expected, DPS is flat at EUR0.022.

2014 prospects Beni Stabili expects to return to a FFO positive trend in 2014. The more supportive financial environment (banks, corporate bond markets etc.) should ease 2015 refinancing. As a result, the company expects a less dilutive impact than initially feared from this challenging issue. But on the balance sheet, we also believe this should be supported by investors’ appetite for Italian real estate, which is likely to lead to disposals in 2014 well above 2013 levels, and should raise management’s confidence in its 45% LTV target (50% at end-2013).

TP up from EUR0.59 to EUR0.65 (rollover) We have not significantly changed our forecasts at this stage, but we raise our target price from EUR0.59 to EUR0.65 (rolling over our target price from end-2013 to end-2014). We still believe valuation losses are possible in 2014 and we don’t expect organic growth to be significantly positive either, but the environment for Beni Stabili is already improving, and should even be better in 2014. Moody’s raised the credit rating outlook to stable from negative, citing the government’s financial strength and fewer risks from contingent liabilities. We keep our Buy rating.



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Cairo Communication

Italy | Media



Daniele Ridolfi [email protected] +39 02 8550 7219

TP raised to EUR7.8 after better Q4 2013 results Reuters CAI.MI Bloomberg CAI IM Index DJ Stoxx 600

Market data

Market cap (EURm) 561

Free float 27%






FY to 31/12 (EUR) 2013 2014E 2015E

Sales (m) 285.1 302.0 321.7

EBITDA adj (m) 24.7 39.0 57.1

EBIT adj (m) 19.1 28.2 46.4

Net profit adj (m) 18.4 19.3 32.9

Net fin. debt (m) -172.3 -170.9 -179.5

FCF (m) -24.0 19.7 29.7




FY to 31/12 (EUR) 2013 2014E 2015E


EV/EBITDA (x) 15.9 10.1 6.8

EV/EBIT (x) 20.5 14.0 8.3

FCF yield -4.3% 3.5% 5.3%



Gearing -152.7% -154.0% -146.3%

ROIC 138.8% 70.5% 107.9%

EV/IC (x) 15.2 15.1 12.9

Better Q4 2013 results at net profit level

Profitable La7 - dividend at EUR0.27

Positive outlook: advertising up 3% YOY in January

EPS fine-tuned - TP raised from EUR7.3 to EUR7.8, Buy

Cairo: Main data (EURm)

FY 2012 FY 2013 YOY Q4 2012 Q4 2013 YOY QOQ Q4 2013E

Net revenues

314 285 -9% 81 84 4% 39% 83

EBITDA 31 25 -20% 8 9 18% 70% 11 margin 9.9% 8.7% 9.3% 10.6% EBIT 28 19 -33% 7 6 -13% 52% 6 margin 9.0% 6.7% 8.7% 7.2% Net profit 19 74 297% 5 13 146% nm -6 NFP 61 173 182% 61 173 182% -7% 172

Source: Kepler Cheuvreux

Better Q4 2013 results at net profit level On Friday, Cairo reported Q4 results above our expectations with net profit at EUR13m (vs our estimates of minus EUR6m), thanks to the lower D&A, higher financial income and lower tax rate. The NFP at EUR173m was in line with our estimates, decreasing 7% QOQ due to working capital.

LA7 is profitable - dividend at EUR0.27 per share Q4 results underlined: 1) La 7 is a profitable asset, as EBITDA came to EUR3m (8% EBITDA margin) thanks to the very strong cost cutting and to the positive advertising trend (+6.5% YOY); 2) the publishing division suffered the slowdown of advertising on magazines with EBITDA at EUR3.2m (-30% YOY); 3) dividend proposal of EUR0.27 per share (3.8% yield), in line with 2012 and above our estimate of EUR0.20.

Positive outlook: advertising up 3% YOY in January Advertising collection on La7 and La7d in January 2014 increased by 3% YOY (EUR12.6m), confirming the positive trend of Q4.

EPS fine-tuned, TP raised from EUR7.3 to EUR7.8, Buy confirmed We increase our 2014-15 EPS estimates by 5% including lower D&A, higher financial income and a lower tax rate. We also raise our TP from EUR7.3 to EUR7.8. Even after a brilliant price performance (+173% in the last 12 months), we confirm our Buy rating, as the stock still trades at low multiples (14.5x P/E 2015E vs. 16.5 of peers), with an attractive and sustainable dividend yield (4%) and soundly positive NFP (EUR173m at end-2013).



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17 February 2014 Initiation of coverage Negative

D’Ieteren

Belgium | General retail

Reduce (None) Target price EUR 33.00


Matthijs Van Leijenhorst [email protected] +31 20 563 2379

Waiting for the third pillar Reuters IETB.BR Bloomberg IETB BR Index DJ Stoxx 600

Market data


Free float 41%






FY to 31/12 (EUR) 2013E 2014E 2015E

Sales (m) 5,420.3 5,543.7 5,629.4

EBITDA adj (m) 347.3 355.5 368.9

EBIT adj (m) 227.8 236.0 249.5

Net profit adj (m) 142.5 145.6 160.6

Net fin. debt (m) 559.9 447.8 327.5

FCF (m) 216.5 197.8 198.5




FY to 31/12 (EUR) 2013E 2014E 2015E


EV/EBITDA (x) 7.5 7.0 6.4

EV/EBIT (x) 11.4 10.6 9.5

FCF yield 10.9% 9.9% 10.0%



Gearing 32.0% 24.2% 16.6%

ROIC 8.7% 9.2% 9.7%

EV/IC (x) 1.4 1.3 1.2

Auto distribution — little room for growth

Belron’s growth comes at a cost

Strong balance sheet — eyeing acquisitions

Initiation of coverage: Reduce, TP EUR33

Auto distribution — little room for growth Belgium is a mature market with no underlying growth trend. We expect to see declining demand for vehicles (a -1% CAGR 2013-17E), simply because there are too many cars in Belgium (penetration is among the highest in Europe). As the operating result is vulnerable to a downturn as costs are mainly fixed, we see little room to improve margins.

Belron’s growth come at a cost We expect to see a divergent trend across regions. In mature markets like Europe and North America, sales are likely to remain stagnant, while rapid increases are foreseen in China and Brazil. Given current market trends, REBIT is not expected to return to its historical average of 8.6%, as it will take more marketing effort in Europe and the US to keep its top line growing, while emerging markets are still loss-making.

Strong balance sheet — eyeing acquisitions D’Ieteren has a strong balance sheet due to the disposal of certain assets and its strong FCF generation. FCF to equity yields around 9%, while its dividend yields around 2%, so it has enough headroom to return cash to shareholders. However, as the company is eyeing new acquisitions to offset limited growth potential and diversify risk, we see little potential for generous shareholder returns. We estimate that an acquisition could potentially add between 7% and 30% in earnings, but also increases the conglomerate discount.

Initiation of coverage: Reduce, TP EUR33 The company has two separate business lines both related to automotive, but with no synergies. We see some structural issues for both entities (no underlying trend for growth, limited margin upside). The average of our valuation methods points to a fair value of EUR33, below current market prices. Accordingly, we initiate coverage with a Reduce rating. Based on our estimates, D’Ieteren trades at 2014E EV/EBITDA and 2014E P/E multiples of 7.0x and 13.7x respectively. In our view, the only share price trigger for this stock would be a value-enhancing acquisition or an increase in dividend amid strong cash flow generation.



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17 February 2014 Company update Positive

Ericsson

Sweden | IT hardware & telco eqpmt

Buy (Buy) Target price SEK 102.00

Current price SEK 81.25


Global strategic agreement with Ciena Reuters ERICb.ST Bloomberg ERICB SS Index DJ Stoxx 600

Market data

Market cap (SEKm) 268,531

Free float 100%

No. of shares outstanding (m) 3,305



52-week high (SEK) 90.75

52-week low (SEK) 72.60

FY to 31/12 (SEK) 2013 2014E 2015E

Sales (m) 227,376 236,200 250,900

EBITDA adj (m) 32,435 34,549 42,741

EBIT adj (m) 22,298 23,920 31,450

Net profit adj (m) 15,816 16,874 22,495

Net fin. debt (m) -47,634 -56,122 -68,901

FCF (m) 12,349 18,403 23,686




FY to 31/12 (SEK) 2013 2014E 2015E


EV/EBITDA (x) 6.9 6.4 4.9

EV/EBIT (x) 10.0 9.3 6.7

FCF yield 4.7% 6.9% 8.8%



Gearing -33.6% -38.1% -43.8%

ROIC 21.3% 22.0% 28.7%

EV/IC (x) 3.0 2.9 2.7

Global strategic agreement with Ciena on IPoWDM

Large opportunities in the IPoWDM market mid-term

Promising agreement, but execution will be key

Attractive risk-reward at current levels

Global strategic agreement with Ciena on IPoWDM Last Friday, Ericsson announced a strategic global agreement with Ciena, a leading US optical transport equipment vendor, to develop joint transport solutions for IP-optical convergence and service provider software-defined networking. While Ericsson is increasingly pushing to reinforce its position in IP, the group has a very limited footprint in optical transport and the Ciena agreement could finally help strengthen its offering to address the SDN market opportunity. The global agreement includes: 1) joint development of IP optical solutions (leveraging on Ciena’s optical transport, building IPoWDM interfaces/boards for Ericsson SSR 8000 platform and developing multi-layer/multi-vendor open service provider SDN transport control); 2) a global resale agreement (reselling Ciena 6500 packet-optical platform and the 5400 family and providing a complete end-to-end solution).

Large opportunities in the IPoWDM market mid-term During the call last Friday, Jan Haglund, head of IP & broadband, strongly emphasized the benefits of the strategic partnership with Ciena, allowing to: 1) combine the strength of industry leaders; 2) develop integrated solutions with lowest TCO; 3) accelerate the benefit of service provider SDN and convergence for operators (fast time to market and a competitive best-in-class solution). While Ericsson confirmed extremely aggressive (and a bit too ambitious in our view) market share targets in IP routing mid-term (number one in IP edge/core, packet core, IP metro and backhaul), there is strong potential for the IP optical integration market mid-term (IPoWDM could represent 32% of the USD30bn IP/optical market by 2020 and grow at a rapid 60% CAGR over the period).

Promising agreement but execution will be key While the agreement looks promising, execution will be key as this kind of partnership has rarely delivered significant results in the past and market competition is high (notably with Alcatel-Lucent which has well integrated its 1830 PSS optical platform and its SR OS router platform).

Attractive risk-reward at current levels We keep Buy rating as the risk-reward remains attractive around SEK80.



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17 February 2014 Company update Neutral

Eutelsat

France | Media



David Cerdan [email protected] +33 1 70 81 57 43

Highlights from interim results meeting Reuters ETL.PA Bloomberg ETL FP Index DJ Stoxx 600

Market data


Free float 58%






FY to 30/06 (EUR) 2014E 2015E 2016E

Sales (m) 1,345.7 1,475.9 1,568.5

EBITDA adj (m) 1,030.8 1,133.5 1,207.7

EBIT adj (m) 624.8 701.8 709.4

Net profit adj (m) 304.6 364.3 375.2

Net fin. debt (m) 3,676.6 3,743.3 3,778.0

FCF (m) 32.2 171.6 215.4




FY to 30/06 (EUR) 2014E 2015E 2016E


EV/EBITDA (x) 8.5 7.8 7.3

EV/EBIT (x) 14.0 12.6 12.5

FCF yield 0.6% 3.4% 4.3%



Gearing 183.4% 179.9% 175.4%

ROIC 7.9% 8.0% 8.0%

EV/IC (x) 1.7 1.7 1.6

Interim results: business review

Interim results: other aspects

Guidance and KECH estimates

Still a Buy, TP EUR27

Interim results: business review 1) Video: sales were flat and growth could resume with new capacities: AT1 and AT2 (to be launched in March) combine 27 tps, of which 16 are already presold; 2) data is suffering in Africa from oversupply and further competition with terrestrial networks and Eutelsat expects the market to be better balanced; 3) multi-usage: the business with US DoD remains under pressure, but partly offset by new contracts. For the next negotiations, Eutelsat remains cautious. Other revenues in Q2 2013 include EUR5m related to 28.5E whose dispute with SES is now resolved. This means this line could continue to generate EUR5m of revenues per quarter.

Interim results: other aspects The income tax rate increased to 42.6%, but excluding the settlement of a fiscal audit, the rate is 40%. This is high, and the company does not see any potential to reduce it as French taxes on profits, dividends and deductibility of the financial charges are unlikely to improve.

Guidance and KECH estimates Eutelsat guides for: 1) for FY 2013-14E: at least 2.5% sales growth at constant perimeter (excluding FX, non-recurring items and Satmex), and an EBITDA margin of around 76.5% in FY 2013-14E with Satmex; 2) for the next two fiscal years, a 5%+ sales CAGR excluding Satmex. On our side, we increase our top-line estimates by c. 2%, but we have also integrated EUR20m of financial charges related to the renegotiation of Satmex’s debt as well as a higher income tax rate, leading us to cut our 2013-14 EPS estimates by 6%. Thus, we expect net profit to be down 22% in FY 2013-14E, then up 20% in FY 2014-15E, while the net debt/EBITDA ratio could reach a peak of 3.6x by end-June. A stable DPS would imply an 85% payout ratio, a touch above the guidance of 65-75%.

Still a Buy, TP EUR27 Overall, we make no significant changes to our 2013-16 estimates and our Buy case is still supported by the return to substantial organic growth from early next year, a solid 5% yield and attractive multiples (close to historical multiples, at a 15% discount vs. SES).



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17 February 2014 Target price change Neutral

Gerresheimer

Germany | Medtech & services

Hold (Hold) Target price EUR 50.00


Oliver Reinberg, CFA [email protected] +49 69 7569 6140

Feedback from conference call, TP up to EUR50 Reuters GXIG.DE Bloomberg GXI GR Index DJ Stoxx 600

Market data


Free float 100%






FY to 30/11 (EUR) 2013E 2014E 2015E

Sales (m) 1,265.9 1,310.1 1,382.0

EBITDA adj (m) 249.8 260.0 284.2

EBIT adj (m) 147.2 155.7 176.6

Net profit adj (m) 96.7 90.8 105.4

Net fin. debt (m) 435.3 401.7 342.6

FCF (m) 30.2 49.5 75.6




FY to 30/11 (EUR) 2013E 2014E 2015E


EV/EBITDA (x) 9.0 8.6 7.6

EV/EBIT (x) 15.3 14.3 12.3

FCF yield 1.7% 2.9% 4.5%



Gearing 77.3% 63.4% 47.7%

ROIC 8.4% 8.6% 9.5%

EV/IC (x) 1.8 1.7 1.7

Surprisingly positive reaction on Q4 results outlook for 2014

We cut EPS by 4% for 2014 and 2015, we are 5% below street

TP raised from EUR45 to EUR50 by rolling our valuation forward

We like the business but stock fairly priced

Surprisingly positive reaction on Q4 results and 2014 outlook A concern was the 2014 outlook, as we believed consensus had to be cut (see our espresso from January). While we feared a EUR5m lower EBITDA guidance, the market still had to cut EPS by about 10% (half happened, half still to go). The stock reacted positively however, which we can only explain as the result of the fact that at least the negative catalyst is behind us, and consensus started to adjust downwards ahead of the release of Q4 numbers and the 2014 outlook.

Feedback from conference call 1) The Mexico issue is fixed. 2) Ready to fill (RTF) syringes: scrap rate has improved, but cost of production is still too high. In FY 2013, they had an 11% EBITDA. Management guided for only little improvement in 2014. 3) RFT 4 will only start to contribute commercial sales in Q4, meaningful contribution In 2015. Ramp up costs will still apply in H1. A decision on the fifth RTF line is due towards year-end. 4) Q1 results will be softer: a) soft start in MG; b) some destocking which seems to be a very short-term issue; c) tough comps, as tooling sales strongly contributed in Q1 2013. 5) No big increase in normalised depreciation, as the largest part of capex goes into buildings (long write-down times). 6) Ongoing discussion of German energy politics: no impact currently expected. Exemptions for GXI likely to continue to apply. German subsidies currently worth EUR9m. 7) Gerresheimer’s market share in pen systems has increased to 18% (from 10% earlier), on the back of growth with only existing clients. 8) Normalised syringe margins should be above 20% EBITDA margins, but no timing provided. 9) Plastic Systems pipeline continues to be strong. More tooling sales in EUR terms expected than in 2013. Timing of product launches remains difficult to predict as this is in the hands of its clients.

TP up from EUR45 to EUR50, fairly priced We cut our EPS forecasts by 4% for 2014 and 2015 and are 5% below the street. We modelled the top end of its EBITDA guidance (EUR250-265m) minus a EUR5m impact from currencies. This EPS cut is however offset by rolling our valuation forward which yields our EUR50 TP, up from EUR45, at which Gerresheimer is trading at 15x 2015E P/E. We continue to like the business, but we consider the stock to be fairly priced. Hold.



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Givaudan

Switzerland | Chemicals

Buy (Buy) Target price CHF 1500.00

Current price CHF 1385.00

Patrick Jnglin, CFA [email protected] +41 43 333 6000

Roadshow, IFF results confirm our positive view Reuters GIVN.VX Bloomberg GIVN VX Index DJ Stoxx 600

Market data

Market cap (CHFm) 12,702

Free float 100%




52-week high (CHF) 1389.00

52-week low (CHF) 1094.00

FY to 31/12 (CHF) 2013 2014E 2015E

Sales (m) 4,369 4,455 4,692

EBITDA adj (m) 970 1,026 1,105

EBIT adj (m) 693 743 846

Net profit adj (m) 543 595 658

Net fin. debt (m) 816 646 504

FCF (m) 714 681 681



Net dividend 47.00 51.00 55.00

FY to 31/12 (CHF) 2013 2014E 2015E


EV/EBITDA (x) 12.7 13.1 12.0

EV/EBIT (x) 17.8 18.1 15.7

FCF yield 6.4% 5.4% 5.4%



Gearing 23.8% 16.6% 12.4%

ROIC 14.5% 15.6% 17.3%

EV/IC (x) 3.1 3.3 3.2

Risks from Emerging Markets should be limited

IFF’s FY 2013 results confirm attractive industry fundamentals

Givaudan’s FCF and dividend yields are still best-in-class

Buy, TP CHF1500

Roadshow confirms our Investment case Despite the more cautious outlook for Emerging Markets of some of its main customers in the FMCG sector, Givaudan’s EM operations continue to do well according to management, as the company is still benefitting from market share gains from local and regional players. The management at our roadshow in London reiterated its target to outperform underlying market growth by 1.5-2.5% a year. As it does not expect any margin pressure from possible raw material cost hikes in 2014, we expect its margin to increase further (by 80bps in 2014) due to its underlying operational leverage, the elimination of one-off costs and benefits from recent restructuring. Accordingly, we forecast the group’s FCF yield as a percentage of sales (based on the assumption of a stable NWC and capex as a percentage of sales vs. 2013) to increase by another 20bps in 2014 to c. 15.4%.

Positive read-through from IFF’s FY results Similarly to Givaudan, IFF also reported strong 2013 results at the end of last week (LFL sales growth of 7%, adjusted operating profit and EPS growth of 11% and 12% in 2013) and gave an upbeat outlook for 2014 (according to IFF, FY 2014 is expected to show “strong operating profit and EPS growth”). Comparing IFF’s FCF generation (FCF yield as a percentage of sales of 9.9% vs. Givaudan’s 15.2% FCF yield) and dividend policy (payout ratio of 35% vs. Givaudan’s payout ratio of 60%+), we believe Givaudan remains the most attractive play in the industry.

Dividend story remains fully intact We expect the company’s dividend to increase to CHF51 in 2014, which would imply a dividend yield of 3.8%. Givaudan’s dividend yield should however be more aligned with companies with a comparable risk/return profile in Switzerland (such as Nestlé, which yields c. 3.4% based on IBES estimates), in our view. Applying a similar dividend yield to Givaudan results in a fair value of CHF1500. At such a value, Givaudan would trade at an EV/EBITDA 2015E multiple of c. 12.5x or at the upper end of the FMCG sector, which we regard as fair given the company’s leading market position in the attractive F&F industry (the top four players have a combined market share of 70%+, high barriers to entry, favourable structural trends), a strong track record and a shareholder-friendly dividend policy.



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17 February 2014 Earnings review Positive

GN Store Nord

Denmark | Medtech & services

Buy (Buy) Target price DKK 150.00

Current price DKK 136.00

Maja Pataki [email protected] +41 43 333 6623

Momentum to continue Reuters GN.CO Bloomberg GN DC Index DJ Stoxx 600

Market data

Market cap (DKKm) 22,684

Free float 100%




52-week high (DKK) 136.00

52-week low (DKK) 89.80

FY to 31/12 (DKK) 2014E 2015E 2016E

Sales (m) 7,534.0 8,147.9 na

EBITDA adj (m) 1,593.8 1,766.3 na

EBIT adj (m) 1,405.4 1,562.6 na

Net profit adj (m) 1,007.0 1,121.7 na

Net fin. debt (m) 267.9 -344.3 na

FCF (m) 557.1 690.8 na

EPS adj. and fully dil. 6.14 6.96 na


Net dividend 0.65 0.72 na

FY to 31/12 (DKK) 2014E 2015E 2016E

P/E (x) adj and ful. dil. 22.1 19.5 na

EV/EBITDA (x) 13.9 12.2 na

EV/EBIT (x) 15.8 13.8 na

FCF yield 2.6% 3.2% na

Dividend yield 0.5% 0.5% na

Net debt/EBITDA (x) 0.2 -0.2 na

Gearing 4.2% -4.6% na

ROIC 24.1% 26.4% na

EV/IC (x) 5.4 5.2 na

Strong FY 2013 results

2014 guidance conservative

Further share buy-back of DKK500m

Buy, TP DKK150

Strong FY 2013 GN reported strong set of results both in terms of organic top-line growth as well as profitability. GN Resound reported organic growth of 10%, both for hearing aids as well as otometrics with an EBITA margin of 20.1%. Hearing aid growth corresponds largely with unit growth, implying further market share gains. Netcom reported organic growth of 18%, with 27% in mobile and 12% in CC&O, with an EBITA margin of 18.1%.

2014 guidance conservative, GN issued a somewhat conservative guidance with >6% organic growth and >DKK875m EBITA for Resound and >11% organic growth and >DKK515m for Netcom, both heavily skewed towards H2. We believe the guidance could prove conservative should the initial hype over the MfI continue and translate into revenues. We see AAA in Orlando in March as the next catalyst for the stock, as we should get better understanding of US reaction to the MfI.

Further share buy-back of DKK500m GN announced yet another share buy-back program of another DKK500m and announced a dividend of DKK0.84 per share.

Reiterate Buy, TP DKK150 We reiterate our Buy rating and our DKK150 target price and expect GN’s strong momentum to continue. Resound Linx (MfI) should continue to drive market share gains particularly in the independent markets, while we expect UC and the music headset business to drive Netcom revenues.



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IMA

Italy | Capital goods



Matteo Bonizzoni, CFA [email protected] +39 02 80 62 83 43

Powerful FY 2013 backlog, estimates and TP up Reuters IMAI.MI Bloomberg IMA IM Index DJ Stoxx 600

Market data


Free float 30%






FY to 31/12 (EUR) 2013E 2014E 2015E

Sales (m) 760.9 869.2 913.2

EBITDA adj (m) 112.0 128.7 137.4

EBIT adj (m) 93.0 107.9 114.9

Net profit adj (m) 50.4 61.8 66.9

Net fin. debt (m) 130.4 127.5 87.9

FCF (m) 32.6 65.5 77.6




FY to 31/12 (EUR) 2013E 2014E 2015E


EV/EBITDA (x) 11.7 10.2 9.3

EV/EBIT (x) 14.1 12.1 11.1

FCF yield 2.9% 5.7% 6.8%



Gearing 92.7% 77.4% 45.3%

ROIC 25.8% 28.9% 29.5%

EV/IC (x) 6.0 5.5 5.4

FY 2013 preliminary results aligned to our estimates

Powerful backlog: +22% YOY (+16% organically)…

...leads us to upgrade our FY 2014-15 EPS by 6% - still conservative

TP up to EUR34, stronger growth supports premium multiples

IMA – FY 2013 preliminary results and FY 2014-15 estimates revision

2013 Preliminary 2014 2015

Act Est A vs E New Old chg New Old chg Sales 760.9 765.6 -0.6% 869.2 856.7 1.5% 913.2 889.6 2.7% EBITDA 112.0 110.5 1.4% 128.7 122.2 5.3% 137.4 129.3 6.3% EBITDA margin 14.7% 14.4% 14.8% 14.3% 15.0% 14.5% Net profit adj 61.8 58.4 5.8% 66.9 63.0 6.1%

Source: IMA, Kepler Cheuvreux

FY 2013 preliminary results aligned to estimates Preliminary FY 2013 results were aligned to our estimates. Revenues: EUR761m, 1% below estimate and in line with guidance. EBITDA: EUR112m (margin: 14.7%), 1% above our estimate and 6% above guidance (EUR105m).

Powerful backlog: +22% YOY (+16% organically)… The key driver is the backlog: at EUR456m it was up by 22% YOY and +16% YOY organically. Given backlog conversion into revenues covering 6/9 months (according to different business lines), we believe 2014 might even post double-digit organic growth.

…leads us to upgrade our FY 2014-15 EPS by 6% - still conservative As such, we incorporate the bullish backlog revising our FY 2014 organic top line growth up from 6% to a still conservative 8.5%. This turns into a 6% 2014-15 EPS upgrade. Our 14.8% EBITDA margin estimate for 2014 might still prove conservative, given the 14.7% starting base (2013) and operating leverage on a growing top line. Our FY 2014 EBITDA estimate is now positioned 11% above consensus, which we expect to rise. The FY 2014 guidance will be provided on 14 March, with final FY 2013 results.

TP up to EUR34, stronger growth supports premium multiples We revise our FCF-based TP to EUR34 (from EUR28), as a result of higher estimates, lower WACC (from 7.5% to 7.1%, driven by a lower risk free rate), slightly higher mid/long-term assumptions (growth, margins). In our new estimates, the stock is trading 10.2/9.3x EV/EBITDA, 18.5/16.9x P/E 2014-15, slightly higher than the long-term average (9x, 17x respectively). However, very positive prospects for 2014 fully support the 5/10% premium on historical multiples, in our view. Buy confirmed.



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Imerys

France | Construction & materials



Josep Pujal [email protected] +33 1 53 65 35 26

Counterbid on Amcol Reuters IMTP.PA Bloomberg NK FP Index DJ Stoxx 600

Market data


Free float 40%






FY to 31/12 (EUR) 2013E 2014E 2015E

Sales (m) 3,739.5 3,976.5 4,192.9

EBITDA adj (m) 679.1 751.2 808.9

EBIT adj (m) 472.4 531.4 577.1

Net profit adj (m) 300.9 347.9 383.9

Net fin. debt (m) 894.6 796.0 669.6

FCF (m) 214.8 216.4 253.8




FY to 31/12 (EUR) 2013E 2014E 2015E


EV/EBITDA (x) 8.3 7.4 6.7

EV/EBIT (x) 11.9 10.4 9.4

FCF yield 4.5% 4.5% 5.3%



Gearing 37.4% 31.1% 24.3%

ROIC 9.3% 10.2% 10.8%

EV/IC (x) 1.5 1.5 1.4

Minerals Technologies offering USD42 per share

The board should prefer Imerys's proposal

We expect Imerys to remain disciplined

Buy, TP EUR70

Minerals Technologies offering USD42 per share Mineral Technologies has sent a letter to Amcol's board proposing USD42 in cash per share (Imerys USD41).

The board should prefer Imerys's proposal Mineral Technologies is relatively small (USD1.8bn market cap) compared to the target (USD1.6-1.7bn). Its net debt/EBITDA would jump to 3.7x, unless a capital increase took place. We thus think Imerys’s offer would be more attractive to Amcol's board and the largest shareholders (family 20%), who probably still care about the future of the company, which would be in a fragile situation in the new indebted group. Given this (and the quite small difference of price between the two offers), we also expect the board, which has given unanimous support to the Imerys bid, to oppose the MinTech offer.

We expect Imerys to remain disciplined We do not expect Imerys to pay a price that would not create value. As the CEO has repeated many times in the past, the group can internally improve its growth profile. In fact, it has been closing many small deals in both directions (three disposals or closures and many acquisitions in the last three years) for this purpose. Moreover, we see the presence of GBL as the largest shareholder as an additional guarantee to a focus on value creation.

Buy rating maintained We maintain our Buy rating. In the worst case (Imerys not launching its offer), our TP would be EUR66.



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Ingenico

France | IT hardware & telco eqpmt




Solid FY results on 19 February after market Reuters INGC.PA Bloomberg ING FP Index DJ Stoxx 600

Market data


Free float 90%






FY to 31/12 (EUR) 2013E 2014E 2015E

Sales (m) 1,387.0 1,470.0 1,624.0

EBITDA adj (m) 272.0 326.0 382.0

EBIT adj (m) 238.0 291.0 345.0

Net profit adj (m) 159.0 198.7 238.4

Net fin. debt (m) 306.1 179.7 27.1

FCF (m) 132.9 167.3 212.0




FY to 31/12 (EUR) 2013E 2014E 2015E


EV/EBITDA (x) 13.3 10.7 8.7

EV/EBIT (x) 15.2 12.0 9.7

FCF yield 4.0% 5.0% 6.3%



Gearing 38.6% 19.5% 2.5%

ROIC 18.5% 19.2% 22.9%

EV/IC (x) 3.4 3.3 3.2

Double-digit organic growth in Q4 2013

Resilient margins in H2 despite opex investments

Positive outlook for 2014

Solid results and positive outlook

Double-digit organic growth in Q4 Despite tough basis in Q4 (sales +13% LFL in Q4), we expect solid double-digit organic growth in Q4 (+10% LFL vs. +9% for the street) with payment terminals up 9% LFL and services up about 17% LFL. The group should benefit from steady demand in the US (+23% LFL thanks to market share gains in the merchant segment and healthy demand in the retail segment) and EEMEA (+32% LFL with large deliveries in Turkey and Russia), solid market conditions in both Asia-Pacific (+10% LFL with strong demand in China, Indonesia) and LatAm (+9% LFL with resilient volumes in Brazil and increasing penetration in Mexico and Columbia) while Europe could hold up well (+3% LFL despite macro headwinds). Over the full year, the group could deliver strong organic growth again (+15% LFL).

Resilient margins in H2 despite opex investments We expect resilient margins in H2 despite opex investments to seize new growth opportunities (in the mobile and online payments as well as in traditional card processing business outside Germany). Gross margin could climb to 44.9% in H2 (+180bp YOY) with solid improvements in both terminals (thanks to higher volumes and optimized purchasing costs) and services (with positive contribution from Ogone) while clean operating margin should hold up well in H2 (18.5%, -10bp YOY) despite higher opex (+18% YOY partly due to investments to capture new growth opportunities and the consolidation of Ogone).

Positive outlook for 2014 Management is expected to deliver a positive outlook for 2014 as demand in the terminals business looks pretty good entering 2014 (solid volumes in emerging markets and market share opportunities in the merchant segment in the US) while services business could accelerate this year (strong momentum in online payment and synergies with Ogone ramp-up). Management could cautiously guide for organic growth of over 8% this year (as in 2012 and 2013) with stronger margins. We expect 10.5% organic growth this year with 19.8% clean operating margin.

Solid results and positive outlook We keep our Buy rating as we expect solid results, and the 2014 is positive, while valuation remains attractive.



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Interpump Group

Italy | Capital goods



Enrico Coco [email protected] +39 02 8550 7227

TP up from EUR9.7 to EUR12.3 Reuters IP.MI Bloomberg IP IM Index DJ Stoxx 600

Market data


Free float 74%






FY to 31/12 (EUR) 2013E 2014E 2015E

Sales (m) 556.5 674.5 739.3

EBITDA adj (m) 105.2 131.5 150.8

EBIT adj (m) 79.3 105.3 124.1

Net profit adj (m) 44.2 61.5 74.2

Net fin. debt (m) 88.7 98.7 50.2

FCF (m) 39.0 42.1 64.4




FY to 31/12 (EUR) 2013E 2014E 2015E


EV/EBITDA (x) 11.4 9.5 8.0

EV/EBIT (x) 15.2 11.9 9.7

FCF yield 3.6% 3.9% 6.0%



Gearing 20.8% 20.8% 9.4%

ROIC 21.9% 28.0% 31.1%

EV/IC (x) 4.5 4.4 4.1

Q4 in line, sales ex acquisitions and forex up 6% YOY vs. 2% in Q3

2014 sales guidance: 5% organic growth, 2% below consensus

Estimates fine-tuned: EBITDA -4% in 2014, -1% in 2015

TP up to EUR12.3 - rich multiples, but M&A supportive

Q4 in line, sales ex acquisitions and forex up 6% YOY vs. 2% in Q3 Q4 results came in below our estimates and were broadly in line with consensus. Revenues were up 5.9% YOY at constant perimeter and forex (+9.9% in hydraulics, +2.2% in water jetting), vs. +2% in Q3 and a negative trend in H1, with the improving performance also reflecting the easier YOY comparison (2012 was strong in H1 and weak in H2). The EBITDA margin was 18.4% vs. 17.6% in Q4 2012. The margin adjusted for non-recurrent costs and at constant perimeter was 19.5%, in line with our estimates. Net debt at EUR89m at end-2013 was better than expected (EUR94m). In 2013, FCF was slightly below 2012 (EUR34m vs. EUR39m), after EUR14m higher capex (EUR30m vs. EUR16m) and EUR13m lower working capital drag (EUR1m vs. EUR14m).

FY 2014 sales guidance: 5% organic growth, 2% below consensus During the conference call, management said to expect FY 2014 sales at EUR660m (+20% YOY) plus/minus EUR10m, EBITDA at EUR126m (+20% YOY, flat margins reflect lower initial profitability of acquired assets) plus/minus EUR4m, and net debt at EUR100m plus/minus EUR10m. Sales guidance implies 5% organic growth, as 2014 will benefit from a c. EUR80m contribution from an additional four months of Hydrocontrol and 12 months consolidation of IMN.

Estimates fine-tuned: EBITDA -4% in FY 2014, -1% in 2015 We cut 2014 sales by 2% (1% in 2015), and EBITDA by 4% (2% in FY 2015). Management said the start of 2014 confirmed the improving trend of Q4, and based on the Q4 run-rate (+10% organic growth ex forex for hydraulics and +2% for water jetting), we think guidance is a bit cautious and stick to our assumption of +7% organic growth in sales in 2014.

TP up to EUR12.3 - rich multiples, but M&A supportive The shares trade at a premium to historical levels (2014-15E EV/EBIT of 12-11x vs. one-year forward of 10x). However, we think the M&A strategy will pay off (cyclical recovery in European construction and distribution synergies), and in 3-4 years the company could reach EUR1bn sales with 70% of growth coming from acquisitions financed through organic cash flows.



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Lagardère

France | Media



Andrea Beneventi [email protected] +33 1 70 81 57 52

Buys out France Télévisions’ minority in Gulli Reuters LAGA.PA Bloomberg MMB FP Index DJ Stoxx 600

Market data

Market cap (EURm) 4 075

Free float 90%



YTD abs performance 6,9%

52-week high (EUR) 28,90

52-week low (EUR) 17,79

FY to 31/12 (EUR) 2013E 2014E 2015E

Sales (m) 7 305,8 7 570,2 7 678,5

EBITDA adj (m) 582,2 647,4 688,1

EBIT adj (m) 370,2 402,9 437,9

Net profit adj (m) 199,2 258,9 301,1

Net fin. debt (m) 711,3 -267,4 -262,4

FCF (m) 113,6 151,7 195,0

EPS adj. and fully dil. 1,55 1,99 2,31

Consensus EPS 1,59 1,79 1,96

Net dividend 10,30 1,30 1,30

FY to 31/12 (EUR) 2013E 2014E 2015E

P/E (x) adj and ful. dil. 18,7 14,5 12,5

EV/EBITDA (x) 8,5 6,2 5,8

EV/EBIT (x) 13,4 9,9 9,1

FCF yield 2,5% 3,5% 4,8%

Dividend yield 35,6% 4,5% 4,5%

Net debt/EBITDA (x) 1,2 -0,4 -0,4

Gearing 39,2% -14,3% -13,3%

ROIC 31,6% 33,9% 36,4%

EV/IC (x) 6,0 4,8 4,7

Appealing valuation, EUR44m per audience point

We see the deal as preliminary to a sale

TF1, M6, Canal+ potential buyers

Up to EUR0.6 per share in additional upside

Appealing valuation, c.EUR44m per audience point Last Friday, the board of the French public broadcaster France Télévisions decided to sell its 34% stake in the children’s channel Gulli to Lagardère, for c. EUR25m, while retaining 66%. The transaction values the channel (debt-free) at EUR75m. Gulli, created in 2005, has an all-day audience of 1.7% based on Médiametrie data from more than four years ago (arguably understating the real audience of Gulli), and a unique positioning in the children’s market, a segment where several pay-TV channels are available but no other significant thematic free-to-air channel exist. The deal values Gulli at EUR44m per point of audience.

We see the deal as preliminary to a sale The deal is most likely to be an intermediate step for Lagardère, preparing the sale of Gulli to a larger free-to-air broadcaster. The channel, which we believe is slightly lossmaking for Lagardère, could be profitable as part of a larger scale business. We noticed that Lagardère sold its cartoon production arm, Genao Productions, to its management on 9 October 2013, indicating scarce strategic interest in this field.

TF1, M6, Canal+ potential buyers The free-to-air landscape in France is favourable to sellers in our view, as the CEOs of main broadcasters point to the need for consolidation, and cash-rich incumbents on the market including TF1, M6 and Canal+. None of them is seriously positioned in the children’s segment, making Gulli a strategic asset to own.

Up to EUR0.6 per share in additional upside Recent transaction multiples in French free-to-air point to a valuation range of EUR40-125m per point of audience, with TMC-NT1 sale to TF1 in 2010 at the low end of the range and Direct8-DirectStar sold by Bolloré to Vivendi at the high end. Gulli is conservatively valued at zero in our Lagardère SOP, leaving room for up to EUR0.6 per share in additional upside to Lagardère’s FV at EUR125m per audience point. More details on Gulli’s positioning in our report Fifty Shades of Cash and on Lagardère’s valuation in the report Fifty Shades of Earnings. IMPORTANT. Please refer to keplercheuvreux.com/disclaimer or to the last


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https://research.keplercheuvreux.com/Research/Categories/Documents/index.aspx?id=223559


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M6 Métropole télévision

France | Media



Conor O'Shea, CFA [email protected] +33 1 5365 3609

FY 2013 earnings (due on 18 February) preview Reuters MMTP.PA Bloomberg MMT FP Index DJ Stoxx 600

Market data


Free float 51%






FY to 31/12 (EUR) 2013E 2014E 2015E

Sales (m) 1,372.4 1,387.0 1,401.7

EBITDA adj (m) 283.7 284.0 289.8

EBIT adj (m) 214.1 213.3 218.1

Net profit adj (m) 128.6 129.3 132.4

Net fin. debt (m) -233.2 -262.8 -302.0

FCF (m) 136.5 136.1 139.4




FY to 31/12 (EUR) 2013E 2014E 2015E


EV/EBITDA (x) 6.6 6.5 6.2

EV/EBIT (x) 8.7 8.6 8.3

FCF yield 6.5% 6.5% 6.6%



Gearing -39.5% -42.9% -46.8%

ROIC 50.8% 52.9% 91.1%

EV/IC (x) 7.7 7.6 7.6

FY 2013 earnings on Tuesday after close

Softer end of year for French TV market

M6 market share gains should have cycled out in November

Margins unlikely to move upwards until 2015 earliest

FY 2013 earnings on Tuesday after close M6 is set to release FY 2013 earnings after close tomorrow (18 February).

M6: Q4 revenues /H2 margin preview

EURm Q4 2013 Q4 2012 % YOY

Interactions 3.8 6.1 (37.3%) Digital (non-ad) & other 6.7 7.0 (5.0%) Audiovisual rights 24.9 31.3 (20.4%) Retail 71.1 72.7 (2.2%) FCGB 17.6 15.9 10.7% M6 web 22.1 26.1 (15.3%) Total diversification 146.1 159.1 (8.1%) Advertising Digital and other media 52.9 49.0 7.9% M6 channel 181.9 184.8 (1.6%) Total ad revenues 232.8 233.8 0.4% Total group revenues 381.0 392.9 (3.0%) EBITA (H2) 60.2 93.2 (35.4%) Margin 15.8% 23.7%

Source: Kepler Cheuvreux

Softer year-end ad market, but trades at 40% discount to peers As the ad market was a bit softer into year-end, and as M6’s spare capacity advantage (which was driving market share gains) cycled out in November, we forecast a drop in ad revenues in Q4 after +2.5% in Q3. January ad revenues are up 9.8% YOY in gross terms (before discounts) for the national TV broadcasters, according to Kantar, but as seasonally discounts are high, it is hard to draw firm conclusions yet. We forecast 1.7% ad revenue growth for M6 in 2014, which could be challenging, given slight viewing share slippage in 2013, and if the ad market is flat. In any case, such a level of growth is not enough to allow M6 to grow its margins (3% growth needed). Conversely, M6 is aiming for flat programming costs in 2014. Its net cash position means there is an outside chance of seeing another special dividend (after 2012’s EUR1 per share) and it remains the cheapest broadcaster in European FTA (40% discount on EV/EBITA).



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17 February 2014 Earning preview Neutral

Télévision Française 1

France | Media



Conor O'Shea, CFA [email protected] +33 1 5365 3609

FY 2013 earnings (due on 19 February) preview Reuters TFFP.PA Bloomberg TFI FP Index DJ Stoxx 600

Market data


Free float 56%






FY to 31/12 (EUR) 2013E 2014E 2015E

Sales (m) 2,517.7 2,146.6 2,169.5

EBITDA adj (m) 338.1 266.0 323.5

EBIT adj (m) 220.9 163.1 221.3

Net profit adj (m) 137.8 135.1 156.3

Net fin. debt (m) -304.1 -634.4 -1,185.9

FCF (m) 183.8 158.5 191.5




FY to 31/12 (EUR) 2013E 2014E 2015E


EV/EBITDA (x) 8.5 11.3 6.1

EV/EBIT (x) 12.9 18.4 8.9

FCF yield 5.7% 5.2% 6.3%



Gearing -16.6% -34.1% -62.3%

ROIC 9.5% 8.0% 15.9%

EV/IC (x) 1.8 2.5 2.9

FY 2013 results out on Wednesday

Aligning ourselves closer to consensus for Q4

Ad forecasts for 2014 unchanged

Special dividend needed to send a positive signal

FY 2013 results out on Wednesday TF1 is due to report full-year results at market opening on 19 February.

TF1: Q4 forecasts

EURm Q4 2013 Q4 2012 % change

Revenues TV channels & content 546.3 555.6 (1.7%) o/w FTA advertising 412.7 423.3 (2.5%) Consumer products 65.0 73.0 (11.0%) Pay-TV 140.0 137.3 2.0% Holding & other 1.8 1.8 0.0% Total 753.1 767.7 (1.9%) EBITA TV channels & content 82.0 77.4 5.9% Consumer products 5.0 4.5 11.1% Pay-TV 21.0 17.6 19.3% Holding & other 7.0 4.4 59.1% Total 115.0 103.9 10.7%

Source: KeplerCheuvreux

Aligning ourselves closer to consensus for Q4 After the weaker year-end for the French ad market, by now well flagged, we make less aggressive assumptions on tactical cost savings going into year-end, which means a 4%cut to full-year EPS. Gross ad revenue growth in Q4 was +3%, which drives our net forecast decline of -2.5% for Q4 For 2014, we continue to model 1.9% advertising growth, full completion of the EUR85m cost savings plan as well as an anticipated resale value of part of the EUR130m World Cup rights to pay-TV providers. Canal + or BeIN Sports. January is up 9.8% gross for the national TV, but as seasonally discounts are high, it is hard to draw firm conclusions.

Special dividend needed to send a positive signal We believe it will be disappointing if part of the proceeds from the partial sale of Eurosport, which can be added to an existing cash balance and put option to sell the remaining 49% (by mid-2015) making EUR1bn+ in net cash, are not returned to shareholders through a special dividend.



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16 February 2014 Earnings review Neutral

UNIT4

Netherlands | IT software & services

Accept Offer (Accept Offer) Target price EUR 38.75


Peter Olofsen [email protected] +31 20 563 2367

Results in line, slightly disappointing outlook Reuters UNI4.AS Bloomberg UNIT4 NA Index DJ Stoxx 600

Market data


Free float 64%






FY to 31/12 (EUR) 2013E 2014E 2015E

Sales (m) 491.3 520.5 553.6

EBITDA adj (m) 96.2 113.0 125.2

EBIT adj (m) 41.4 58.5 70.2

Net profit adj (m) 48.8 61.8 70.5

Net fin. debt (m) 106.3 57.7 0.3

FCF (m) 29.7 61.0 73.1




FY to 31/12 (EUR) 2013E 2014E 2015E


EV/EBITDA (x) 13.0 10.7 9.2

EV/EBIT (x) 30.3 20.6 16.4

FCF yield 2.6% 5.3% 6.4%



Gearing 40.3% 19.8% 0.1%

ROIC 12.6% 16.7% 20.1%

EV/IC (x) 4.9 4.7 4.5

2013 sales and EBITDA in line

Guiding for single-digit EBITDA growth in 2014

Tender offer runs until 28 February

Accept the offer

2013 sales and EBITDA in line Sales and EBITDA (excluding costs related to the public-to-private project) of EUR490.5m (+4%) and EUR97.6m (+13%) were both in line with our numbers. Sales at FinancialForce.com grew 85% to EUR17m, with an annualized run-rate at year-end of EUR30.6m. Due to the increased headcount (+60% to 250 FTE) and higher marketing spending, the EBITDA loss at FinancialForce.com increased from EUR9.1m to EUR11.7m, about in line with our forecast for a EUR12m loss. No dividend is proposed, which is no surprise in light of the takeover bid by Advent International.

Guiding for single-digit growth in 2014 2014 guidance calls for single-digit growth in sales and EBITDA. We were looking for 6% sales growth, but modelling an EBITDA growth rate in the mid teens because of lower losses at FinancialForce.com. We suspect the difference can be explained by a step-up in investments, as we expect UNIT4 to pursue a more aggressive expansion strategy once the tender offer by Advent proves successful, with the company willing to sacrifice some short-term EBITDA to drive long-term value for its new owner.

Offer period runs until 28 February Following the publication of the offer memorandum on 20 December, an extraordinary general meeting of shareholders will be convened next Wednesday. The offer period will expire on 28 February at 17.40 CET. Advent has set a minimum acceptance level of 85%, although this can be lowered to 75%, without the need for approval by UNIT4.

Accept the offer Increased growth investments, something we expect if Advent’s bid succeeds, could drive significant upside to valuation in the long term. However, investors that do not tender their shares might be left with an illiquid stock and limited near-term upside because of investments weighing on earnings. Taking into account the possibilities to squeeze out minority shareholders (through post-closing merger and liquidation or post-closing asset transaction and liquidation procedures), we recommend to tender shares.



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17 February 2014 Company update Negative

Veolia Environnement

France | Utilities

Reduce (Reduce) Target price EUR 10.00


Xavier Caroen [email protected] +33 1 5365 3676

A CEO under pressure Reuters VIE.PA Bloomberg VIE FP Index DJ Stoxx 600

Market data


Free float 96%






FY to 31/12 (EUR) 2013E 2014E 2015E

Sales (m) 22,588 23,153 23,628

EBITDA adj (m) 1,804 2,021 2,220

EBIT adj (m) 644 696 933

Net profit adj (m) 113 175 240

Net fin. debt (m) 9,046 9,529 9,959

FCF (m) -339 -245 -190




FY to 31/12 (EUR) 2013E 2014E 2015E


EV/EBITDA (x) 8.3 7.7 7.2

EV/EBIT (x) 23.2 22.3 17.1

FCF yield -5.3% -3.9% -3.0%



Gearing 92.9% 102.5% 110.5%

ROIC 4.2% 4.5% 6.0%

EV/IC (x) 1.5 1.5 1.6

Dassault family is lobbying to replace Antoine Frerot…

…with the restructuring plan seen as unambitious

Position of French government will be determinant

Reduce rating confirmed

Dassault family is lobbying to replace Antoine Frerot According to media report (Les Echos) the Dassault family, the second-largest shareholder in Veolia, is seeking to oust the group’s CEO, while replacing him with David Azema, the head of French state holding company APE. Such move would allow the family to support the socialist French government on top of the implementation of further costs, which the family currently sees as insufficient to straighten up the group’s profitability. The Dassault family owns 5.99% of Veolia Environnement's shares, which have lost 49% of their value since being acquired (via the unlisted Group Industriel Marcel) in 2008 (acquisition being made at EUR19 per share, and share currently trades at EUR12).

…with restructuring plan seen as not ambitious

Veolia, which already raised its fixed costs reduction targets twice, now targets EUR750m in cumulated net impact by 2015 (o/w 80% is in EBITDA and 20% on net income from associates in P&L) to straighten up the group’s profitability, which is impacted by massive pricing deterioration in its French water business. This plan is seen as insufficient and too timid by the Dassault family, which wants to drive up the group’s profitability and also increase the group’s share price. Frerot’s position as CEO has already been at risk, with Henri Proglio (CEO of EDF) attempting to replace him with conservative politician Jean-Louis Borloo in 2012.

Position from French government will be determinant The French state, which is the top shareholder in Veolia with an 8.85% stake through the CDC, may play an important role in this case, as it will be able to support Frerot’s position at Veolia or not. Yet, according to Reuters, an official at French Prime Minister Jean-Marc Ayrault's office said Matignon will not interfere in management appointments at private companies.

Reduce rating confirmed We view this situation as negative for the group, which is entering the most difficult part of its transition phase: restructuring and modifying Veolia’s costs structure. A change in management will not make the implementation of these costs cut easier. Reduce and TP of EUR10 confirmed.



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Volkswagen

Germany | Autos & parts



Michael Raab, CFA [email protected] +49 69 7569 6157

Voting against unionisation Reuters VOWG_p.DE Bloomberg VOW3 GY Index DJ Stoxx 600

Market data


Free float 100%






FY to 31/12 (EUR) 2013E 2014E 2015E

Sales (m) 201,952 210,811 217,083

EBITDA adj (m) 25,293 28,122 30,225

EBIT adj (m) 14,165 17,392 20,760

Net profit adj (m) 10,395 11,765 13,598

Net fin. debt (m) 98,577 97,606 95,962

FCF (m) 3,736 3,075 4,213




FY to 31/12 (EUR) 2013E 2014E 2015E


EV/EBITDA (x) 8.9 8.0 7.4

EV/EBIT (x) 15.9 13.0 10.8

FCF yield 3.9% 3.2% 4.4%



Gearing 108.7% 96.7% 85.3%

ROIC 4.8% 5.7% 6.3%

EV/IC (x) 1.1 1.0 0.9

Employees decide not to let unions in

A landmark decision, protecting a business model

May favourably influence plans for 7-seater SUV

Good news for VW

VW workers in Chattanooga vote against unionisation According to today's edition of Handelsblatt, with 712 out of a total of 1,338 votes, the workforce of VW's Chattanooga factory in the US expressed their will not to allow union representation in the factory.

Vote has character of a landmark decision In our view, this represents a major setback in the UAW's efforts to get a foothold in the so far traditionally non-unionised American South. We believe VW's Chattanooga factory was a prime target of the UAW. Winning the vote to be allowed in, would have created a strong argument for the UAW to try and also get a foothold in other factories in the South of the US, creating an avalanche effect for the region's business model. In our view, allowing the unions into the factory would have raised the probability of increased costs, reduced competitiveness, and as such impaired the business model in the that part of the US, which has been benefitting from cheaper labour costs than in the northern part of the US due to non-unionisation.

Good news for VW We believe that the vote against unionisation may be the final impulse for VW management to decide to build the planned all-new 7-seater SUV in the US (instead of Mexico). Since this specific model is supposed to compete in the mass market, it is in our view reliant on a competitive cost structure which is now being supported by the decision. Effectively, we believe the decision may even speed up the process related to bringing the 7-seater SUV to industrial fruition. Overall, this is good news for VW.



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17 February 2014 Positive

Italy

Marco Baccaglio, CFA [email protected] +39 02 80 62 83 20

Highlights from our Italian Selected List

Stock-picking gradually shifts towards domestic themes

We like restructuring stories and asset-based domestic stocks

Our Selected List currently includes Atlantia, Finmeccanica…

…and Gtech, ENEL Green Power and Telecom Italia

Atlantia (Buy, TP EUR19.5) The recovery of traffic on the Italian network and the positive tariff development in 2014 back our positive view. The impact of discounted tariffs for commuters should be negligible, while the risk stemming from Alitalia could be removed after interest from Etihad.

Finmeccanica (Buy, TP EUR7.5) Our Buy case rests on restructuring and disposals. Our current EUR7.5 TP excludes the impact of the Ansaldo Breda disposal, which could add EUR2.5 per share. A process similar to that used for Ansaldo Energia (sale to the CDP) could make it politically acceptable.

Gtech (Buy, TP EUR26.5) Gtech’s earnings could be supported by consolidation in the Italian market and new opportunities abroad, combined with cost cutting. Our analysis highlights several opportunities with high IRR. Good visibility and the appealing equity FCF yield support our positive stance.

ENEL Green Power (Buy, TP EUR2.3) We think the winning strategy for renewable energy companies is to diversify in terms of their technologies, regions and pipelines in order to be ready to switch from one technology or region to another if problems arise. In our opinion, the utility that has best managed the challenges of the current difficult macro environment is ENEL Green Power.

Telecom Italia (Buy, TP EUR1.0) Telecom Italia’s governance is becoming more independent and this has increased the price tag for TIM Brasil, on the back of the significant synergies that could be generated by consolidation in the Brazilian mobile market. We recently raised our target price to EUR1.0 (+15% upside): we think the upcoming board renewal in April supports short-term momentum.

IMPORTANT. Please refer to keplercheuvreux.com\disclaimer or to the last

page of this report for “Important disclosures” and analyst(s) certifications. keplercheuvreux.com

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Research ratings and important disclosures

Key:

Kepler Capital Markets SA (KCM) holds or owns or controls 100% of the issued shares of Crédit Agricole Cheuvreux SA(CA Cheuvreux), collectively hereafter KEPLER CHEUVREUX .

1. KEPLER CHEUVREUX holds or owns or controls 5% or more of the issued share capital of this company; 2. The company holds or owns or controls 5% or more of the issued share capital of Kepler Capital Markets SA; 3. KEPLER CHEUVREUX is or may be regularly carrying out proprietary trading in equity securities of this company; 4. KEPLER CHEUVREUX has been lead manager or co-lead manager in a public offering of the issuer’s financial instruments during the last twelve months; 5. KEPLER CHEUVREUX is a market maker in the issuer’s financial instruments; 6. KEPLER CHEUVREUX is a liquidity provider in relation to price stabilisation activities for the issuer to provide liquidity in such instruments; 7. KEPLER CHEUVREUX acts as a corporate broker or a sponsor or a sponsor specialist (in accordance with the local regulations) to this company; 8. KEPLER CHEUVREUX and the issuer have agreed that KEPLER CHEUVREUX will produce and disseminate investment research on the said issuer as a service to the issuer; 9. KEPLER CHEUVREUX has received compensation from this company for the provision of investment banking or financial advisory services within the previous twelve months; 10. KEPLER CHEUVREUX may expect to receive or intend to seek compensation for investment banking services from this company in the next three months; 11. The author of, or an individual who assisted in the preparation of, this report (or a member of his/her household), or a person who although not involved in the preparation of the report had or could reasonably be expected to have access to the substance of the report prior to its dis semination has a direct ownership position in securities issued by this company; 12. An employee of KEPLER CHEUVREUX serves on the board of directors of this c ompany; 13. As at the end of the month immediately preceding the date of publication of the research report Kepler Capital Markets, Inc. beneficially owned 1% or more of a class of common equity securities of the subject company; 14. KEPLER CHEUVREUX and UniCredit Bank AG have entered into a Co-operation Agreement to form a strategic alliance in connection with certain services including services connected to investment banking transactions. UniCredit Bank AG provides investment banking services to this issuer in return for which UniCredit Bank AG received consideration or a promise of consideration. Separately, through the Co-operation Agreement with UniCredit Bank AG for services provided by KEPLER CHEUVREUX in connection with such activities, KEPLER CHEUVREUX also received consideration or a promise of a consideration in accordance with the general terms of the Co-operation Agreement; 15. KEPLER CHEUVREUX and Crédit Agricole Corporate & Investment Bank (“CACIB”) have entered into a Co-operation Agreement to form a strategic alliance in connection with certain services including services connected to investment banking transactions. CACIB provides investment banking services to this issuer in return for which CACIB received consideration or a promise of consideration. Separately, through the Co-operation Agreement with CACIB for services provided by KEPLER CHEUVREUX in connection with such activities, KEPLER CHEUVREUX also received consideration or a promise of a consideration in accordance with the general terms of the Co-operation Agreement; 16. UniCredit Bank AG holds or owns or controls 5% or more of the issued share capital of KEPLER CAPITAL MARKETS SA. UniCredit Bank AG provides investment banking services to this issuer in return for which UniCredit Bank AG received consideration or a promise of consideration; 17. CACIB holds or owns or controls 15% of more of the issued share capital of KEPLER CAPITAL MARKETS SA. CACIB provides investment banking services to this issuer in return for which CACIB received consideration or a promise of consideration; 18. An employee of UniCredit Bank AG serves on the board of directors of KEPLER CAPITAL MARKETS SA; 19. Two employees of CACIB serves on the board of directors of KEPLER CAPITAL MARKETS SA. CACIB provides investment banking services to this issuer in return for which CACIB received consideration or a p romise of consideration; 20. The services provided by KEPLER CHEUVREUX are provided by Kepler Equities S.A.S., a wholly-owned subsidiary of KEPLER CAPITAL MARKETS SA.

Rating ratio Kepler Cheuvreux Q4 2013 Rating breakdown A B Buy 45.5% 0.0% Hold 29.0% 0.0% Reduce 21.0% 0.0% Not Rated/Under Review/Accept Offer 5.5% 0.0% Total 100.0% 0.0% Source: Kepler Cheuvreux A: % of all research recommendations B: % of issuers to which Investment Banking Services are supplied

From 9 May 2006, KEPLER CHEUVREUX’s rating system consists of three ratings: Buy, Hold and Reduce. For a Buy rating, the minimum expected upside is 10% in absolute terms over 12 months. For a Hold rating the expected upside is below 10% in absolute terms. A Reduce rating is applied when there is expected downside on the stock. Target prices are set on all stocks under coverage, based on a 12-months view. Equity ratings and valuations are issued in absolute terms, not relative to any given benchmark.

Analyst disclosures The functional job title of the person(s) responsible for the recommendations contained in this report is Equity Research Analyst unless otherwise stated on the cover.

Regulation AC - Analyst Certification: Each Equity Research Analyst(s) listed on the front-page of this report, principally responsible for the preparation and content of all or any identified portion of this research report hereby certifies that, with respect to each issuer or security or any identified portion of the report with respect to an issuer or security that the equity research analyst covers in this research report, all of the views expressed in this research report accurately reflect their personal views about those issuer(s) or securities. Each Equity Research Analyst(s) also certifies that no part of their compensation was, is, or will be, directly or indirectly, related to the specific recommendation(s) or view(s) expressed by that equity research analyst in this research report.

Each Equity Research Analyst certifies that he is acting independently and impartially from KEPLER CHEUVREUX shareholders, directors and is not affected by any current or potential conflict of interest that may arise from any KEPLER CHEUVREUX activities.

Analyst Compensation: The research analyst(s) primarily responsible for the preparation of the content of the research report attest that no part of the analyst’(s’) compensation was, is or will be, directly or indirectly, related to the specific recommendations expressed by the research analyst’s(s’) in the research report. The research analyst’s(s’) compensation is, however, determined by the overall economic performance of KEPLER CHEUVREUX.

Registration of non-US Analysts: Unless otherwise noted, the non-US analysts listed on the front of this report are employees of KEPLER CHEUVREUX, which is a non-US affiliate and parent company of Kepler Capital Markets, Inc. a SEC registered and FINRA member broker-dealer. Equity Research Analysts employed by KEPLER CHEUVREUX, are not registered/qualified as research analysts under FINRA/NYSE rules, may not be associated persons of Kepler Capital Markets, Inc. and may not be subject to NASD Rule 2711 and NYSE Rule 472 restrictions on communications with covered companies, public appearances, and trading securities held by a research analyst account.

Please refer to www.keplercheuvreux.com for further information relating to research and conflict of interest management.

Regulators

Location Regulator Abbreviation

Kepler Capital Markets S.A - France Autorité des Marchés Financiers AMF

Kepler Capital Markets, Sucursal en España Comisión Nacional del Mercado de Valores CNMV

Kepler Capital Markets, Frankfurt branch Bundesanstalt für Finanzdienstleistungsaufsicht BaFin

Kepler Capital Markets, Milan branch Commissione Nazionale per le Società e la Borsa CONSOB

Kepler Capital Markets, Amsterdam branch Autoriteit Financiële Markten AFM

Kepler Capital Markets, Zurich branch Swiss Financial Market Supervisory Authority FINMA

Kepler Capital Markets, Inc. Financial Industry Regulatory Authority FINRA

Kepler Capital Markets, London branch Financial Conduct Authority FCA

Kepler Capital Markets, Vienna branch Austrian Financial Services Authority FMA

Crédit Agricole Cheuvreux, SA - France Autorité des Marchés Financiers AMF

Crédit Agricole Cheuvreux España S.V Comisión Nacional del Mercado de Valores CNMV

Crédit Agricole Cheuvreux Niederlassung Deutschland Bundesanstalt für Finanzdienstleistungsaufsicht BaFin

Crédit Agricole Cheuvreux S.A., branch di Milano Commissione Nazionale per le Società e la Borsa CONSOB

Crédit Agricole Cheuvreux Amsterdam Autoriteit Financiële Markten AFM

Crédit Agricole Cheuvreux Zurich Branch Swiss Financial Market Supervisory Authority FINMA

Crédit Agricole Cheuvreux North America, Inc. Financial Industry Regulatory Authority FINRA

Crédit Agricole Cheuvreux International Limited Financial Conduct Authority FCA

Crédit Agricole Cheuvreux Nordic AB Finansinspektionen FI

Kepler Capital Markets S.A and Crédit Agricole Cheuvreux SA, are authorised and regulated by both Autorité de Contrôle Prudentiel and Autorité des Marchés Financiers.

For further information relating to research recommendations and conflict of interest management please refer to www.keplercheuvreux.com..

Legal and disclosure information

Other disclosures

This product is not for retail clients or private individuals.

The information contained in this publication was obtained from various publicly available sources believed to be reliable, but has not been independently verified by KEPLER CHEUVREUX. KEPLER CHEUVREUX does not warrant the completeness or accuracy of such information and does not accept any liability with respect to the accuracy or completeness of such information, except to the extent required by applicable law.

This publication is a brief summary and does not purport to contain all available information on the subjects covered. Further information may be available on request. This report may not be reproduced for further publication unless the source is quoted.

This publication is for information purposes only and shall not be construed as an offer or solicitation for the subscription or purchase or sale of any securities, or as an invitation, inducement or intermediation for the sale, subscription or purchase of any securities, or for engaging in any other transaction. This publication is not for private individuals.

Any opinions, projections, forecasts or estimates in this report are those of the author only, who has acted with a high degree of expertise. They reflect only the current views of the author at the date of this report and are subject to change without notice. KEPLER CHEUVREUX has no obligation to update, modify or amend this publication or to otherwise notify a reader or recipient of this publication in the event that any matter, opinion, projection, forecast or estimate contained herein, changes or subsequently becomes inaccurate, or if research on the subject company is withdrawn. The analysis, opinions, projections, forecasts and estimates expressed in this report were in no way affected or influenced by the issuer. The author of this publication benefits financially from the overall success of KEPLER CHEUVREUX.

The investments referred to in this publication may not be suitable for all recipients. Recipients are urged to base their investment decisions upon their own appropriate investigations that they deem necessary. Any loss or other consequence arising from the use of the material contained in this publication shall be the sole and exclusive responsibility of the investor and KEPLER CHEUVREUX accepts no liability for any such loss or consequence. In the event of any doubt about any investment, recipients should contact their own investment, legal and/or tax advisers to seek advice regarding the appropriateness of investing. Some of the investments mentioned in this publication may not be readily liquid investments. Consequently it may be difficult to sell or realise such investments. The past is not necessarily a guide to future performance of an investment. The value of investments and the income derived from them may fall as well as rise and investors may not get back the amount invested. Some investments discussed in this publication may have a high level of volatility. High volatility investments may experience sudden and large falls in their value which may cause losses. International investing includes risks related to political and economic uncertainties of foreign countries, as well as currency risk.

To the extent permitted by applicable law, no liability whatsoever is accepted for any direct or consequential loss, damages, costs or prejudices whatsoever arising from the use of this publication or its contents.

KEPLER CHEUVREUX (and its affiliates) have implemented written procedures designed to identify and manage potential conflicts of interest that arise in connection with its research business, which are available upon request. The KEPLER CHEUVREUX research analysts and other staff involved in issuing and disseminating research reports operate independently of KEPLER CHEUVREUX Investment Banking business. Information barriers and procedures are in place between the research analysts and staff involved in securities trading for the account of KEPLER CHEUVREUX or clients to ensure that price sensitive information is handled according to applicable laws and regulations.

Country and region disclosures

United Kingdom: This document is for persons who are Eligible Counterparties or Professional Clients only and is exempt from the general restriction in section 21 of the Financial Services and Markets Act 2000 on the communication of invitations or inducements to engage in investment activity on the grounds that it is being distributed in the United Kingdom only to persons of a kind described in Articles 19(5) (Investment professionals) and 49(2) (High net worth companies, unincorporated associations, etc.) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended). It is not intended to be distributed or passed on, directly or indirectly, to any other class of persons. Any investment to which this document relates is available only to such persons, and other classes of person should not rely on this document.

United States: This communication is only intended for, and will only be distributed to, persons residing in any jurisdictions where such distribution or availability would not be contrary to local law or regulation. This communication must not be acted upon or relied on by persons in any jurisdiction other than in accordance with local law or regulation and where such person is an investment professional with the requisite sophistication to understand an investment in such securities of the type communicated and assume the risks associated therewith.

This communication is confidential and is intended solely for the addressee. It is not to be forwarded to any other person or copied without the permission of the sender. This communication is provided for information only. It is not a personal recommendation or an offer to sell or a solicitation to buy the securities mentioned. Investors should obtain independent professional advice before making an investment.

Notice to U.S. Investors: This material is not for distribution in the United States, except to “major US institutional investors” as defined in SEC Rule 15a-6 ("Rule 15a-6"). Kepler Cheuvreux refers to Kepler Capital Markets, Société anonyme (S.A.) (“Kepler Capital Markets SA”) and its affiliates, including CA Cheuvreux, Société Anonyme (S.A.). Kepler Capital Markets SA has entered into a 15a-6 Agreement with Kepler Capital Markets, Inc. ("KCM, Inc.”) which enables this report to be furnished to certain U.S. recipients in reliance on Rule 15a-6 through KCM, Inc.

Each U.S. recipient of this report represents and agrees, by virtue of its acceptance thereof, that it is a "major U.S. institutional investor" (as such term is defined in Rule 15a-6) and that it understands the risks involved in executing transactions in such securities. Any U.S. recipient of this report that wishes to discuss or receive additional information regarding any security or issuer mentioned herein, or engage in any transaction to purchase or sell or solicit or offer the purchase or sale of such securities, should contact a registered representative of KCM, Inc.

KCM, Inc. is a broker-dealer registered with the Securities and Exchange Commission (“SEC”) under the U.S. Securities Exchange Act of 1934, as amended, Member of the Financial Industry Regulatory Authority (“FINRA”) and Member of the Securities Investor Protection Corporation (“SIPC”). Pursuant to SEC Rule 15a-6, you must contact a Registered Representative of KCM, Inc. if you are seeking to execute a transaction in the securities discussed in this report. You can reach KCM, Inc. at 600 Lexington Avenue, New York, NY 10022, Compliance Department (212) 710-7625; Operations Department (212) 710-7606; Trading Desk (212) 710-7602. Further information is also available at www.keplercapitalmarkets.com. You may obtain information about SIPC, including the SIPC brochure, by contacting SIPC directly at 202-371-8300; website: http://www.sipc.org/

KCM, Inc. is a wholly owned subsidiary of Kepler Capital Markets SA. Kepler Capital Markets SA, registered on the Paris Register of Companies with the number 413 064 841 (1997 B 10253), whose registered office is located at 112 avenue Kléber, 75016 Paris, is authorised and regulated by both Autorité de Contrôle Prudentiel (ACP) and Autorité des Marchés Financiers (AMF).

Nothing herein excludes or restricts any duty or liability to a customer that KCM, Inc. may have under applicable law. Investment products provided by or through KCM, Inc. are not insured by the Federal Deposit Insurance Corporation and are not deposits or other obligations of any insured depository institution, may lose value and are not guaranteed by the entity that published the research as disclosed on the front page and are not guaranteed by KCM, Inc.

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Investing in non-U.S. Securities may entail certain risks. The securities referred to in this report and non-U.S. issuers may not be registered under the U.S. Securities Act of 1933, as amended, and the issuer of such securities may not be subject to U.S. reporting and/or other requirements. Rule 144A securities may be offered or sold only to persons in the U.S. who are Qualified Institutional Buyers within the meaning of Rule 144A under the Securities Act. The information available about non-U.S. companies may be limited, and non-U.S. companies are generally not subject to the same uniform auditing and reporting standards as U.S. companies. Securities of some non-U.S. companies may not be as liquid as securities of comparable U.S. companies. Securities discussed herein may be rated below investment grade and should therefore only be considered for inclusion in accounts qualified for speculative investment.

Analysts employed by Kepler Capital Markets SA, a non-U.S. broker-dealer, are not required to take the FINRA analyst exam. The information contained in this report is intended solely for certain "major U.S. institutional investors" and may not be used or relied upon by any other person for any purpose. Such information is provided for informational purposes only and does not constitute a solicitation to buy or an offer to sell any securities under the Securities Act of 1933, as amended, or under any other U.S. federal or state securities laws, rules or regulations. The investment opportunities discussed in this report may be unsuitable for certain investors depending on their specific investment objectives, risk tolerance and financial position.

In jurisdictions where KCM, Inc. is not registered or licensed to trade in securities, or other financial products, transactions may be executed only in accordance with applicable law and legislation, which may vary from jurisdiction to jurisdiction and which may require that a transaction be made in accordance with applicable exemptions from registration or licensing requirements.

The information in this publication is based on sources believed to be reliable, but KCM, Inc. does not make any representation with respect to its completeness or accuracy. All opinions expressed herein reflect the author's judgment at the original time of publication, without regard to the date on which you may receive such information, and are subject to change without notice.

KCM, Inc. and/or its affiliates may have issued other reports that are inconsistent with, and reach different conclusions from, the information presented in this report. These publications reflect the different assumptions, views and analytical methods of the analysts who prepared them. Past performance should not be taken as an indication or guarantee of future performance, and no representation or warranty, express or implied, is provided in relation to future performance.

KCM, Inc. and any company affiliated with it may, with respect to any securities discussed herein: (a) take a long or short position and buy or sell such securities; (b) act as investment and/or commercial bankers for issuers of such securities; (c) act as market makers for such securities; (d) serve on the board of any issuer of such securities; and (e) act as paid consultant or advisor to any issuer. The information contained herein may include forward-looking statements within the meaning of U.S. federal securities laws that are subject to risks and uncertainties. Factors that could cause a company's actual results and financial condition to differ from expectations include, without limitation: political uncertainty, changes in general economic conditions that adversely affect the level of demand for the company's products or services, changes in foreign exchange markets, changes in international and domestic financial markets and in the competitive environment, and other factors relating to the foregoing. All forward-looking statements contained in this report are qualified in their entirety by this cautionary statement.

France: This publication is issued and distributed in accordance with Articles L.544-1 and seq and R. 621-30-1 of the Code Monétaire et Financier and with Articles 313-25 to 313-27 and 315-1 and seq of the General Regulation of the Autorité des Marchés Financiers (AMF).

Germany: This report must not be distributed to persons who are retail clients in the meaning of Sec. 31a para. 3 of the German Securities Trading Act (Wertpapierhandelsgesetz – “WpHG”). This report may be amended, supplemented or updated in such manner and as frequently as the author deems.

Italy: This document is issued by Kepler Capital Markets, Milan branch and Crédit Agricole Cheuvreux S.A., branch di Milano, authorised in France by the Autorité des Marchés Financiers (AMF) and the Autorité de Contrôle Prudentiel (ACP) and registered in Italy by the Commissione Nazionale per le Società e la Borsa (CONSOB) and is distributed by Kepler Capital Markets S.A and Crédit Agricole Cheuvreux, Société Anonyme (S.A.), authorised in France by the AMF and the ACP and registered in Italy by CONSOB. This document is for Eligible Counterparties or Professional Clients only as defined by the CONSOB Regulation 16190/2007 (art. 26 and art. 58).Other classes of persons should not rely on this document. Reports on issuers of financial instruments listed by Article 180, paragraph 1, letter a) of the Italian Consolidated Act on Financial Services (Legislative Decree No. 58 of 24/2/1998, as amended from time to time) must comply with the requirements envisaged by articles 69 to 69-novies of CONSOB Regulation 11971/1999. According to these provisions Kepler Capital Markets S.A and Crédit Agricole Cheuvreux, Société Anonyme (S.A.)warns on the significant interests of Kepler Capital Markets S.A and Crédit Agricole Cheuvreux, Société Anonyme (S.A.)indicated in Annex 1 hereof, confirms that there are not significant financial interests of Kepler Capital Markets S.A and Crédit Agricole Cheuvreux, Société Anonyme (S.A.)in relation to the securities object of this report as well as other circumstance or relationship with the issuer of the securities object of this report (including but not limited to conflict of interest, significant shareholdings held in or by the issuer and other significant interests held by Kepler Capital Markets S.A and Crédit Agricole Cheuvreux, Société Anonyme (S.A.)or other entities controlling or subject to control by Kepler Capital Markets S.A and Crédit Agricole Cheuvreux, Société Anonyme (S.A.)in relation to the issuer) which may affect the impartiality of this document]. Equities discussed herein are covered on a continuous basis with regular reports at results release. Reports are released on the date shown on cover and distributed via print and email. Kepler Capital Markets, Milan branch and Crédit Agricole Cheuvreux S.A., branch di Milano analysts are not affiliated with any professional groups or organisations. All estimates are by Kepler Capital Markets S.A and Crédit Agricole Cheuvreux, Société Anonyme (S.A.) unless otherwise stated.

Spain: This document is only intended for persons who are Eligible Counterparties or Professional Clients within the meaning of Article 78bis and Article 78ter of the Spanish Securities Market Act. It is not intended to be distributed or passed on, directly or indirectly, to any other class of persons. This report has been issued by Kepler Capital Markets, Sucursal en España and Crédit Agricole Cheuvreux España S.V, registered in Spain by the Comisión Nacional del Mercado de Valores (CNMV) in the foreign investments firms registry and it has been distributed in Spain by it or by Kepler Capital Markets S.A and Crédit Agricole Cheuvreux, Société Anonyme (S.A.) authorised and regulated by both Autorité de Contrôle Prudentiel and Autorité des Marchés Financiers. There is no obligation to register neither file any report and any supplemental documentation or information with the CNMV. Neither verification nor authorisation or compliance revision by the CNMV regarding this document and related documentation or information needs to be fulfilled in accordance with the Spanish Securities Market Law (Ley del Mercado de Valores).

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Other countries: Laws and regulations of other countries may also restrict the distribution of this report. Persons in possession of this document should inform themselves about possible legal restrictions and observe them accordingly.

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