Embed Size (px)
Citation preview
X Value Investing Seminar
RETI TELEMATICHE ITALIANE
Roberto Russo Trani, July 12th, 2013
RETELIT
Assiteca SIM is a new italian (really) independent advisory and brokerage company
The company offers independent financial advisory services to investors applying the methodology of Value Investing, based on six fondamental rules:
1. No Products (funds or similar) but only stocks or bonds in our customer
portfolio’s
2. We believe that buying with a large margin of safety is the best way to mitigate
risk
3. Only after having concluded that the downside is well protected, we consider
the upside potential of investments we suggest to our customers
4. We do not equate risk with the inevitable short-term fluctuations in the market
quotes of stocks and/or bonds (Mr. Market approach)
5. We establish initial price targets and adhere to them strictly (intrinsic value)…
6. …but we modify our price targets as new information becomes available
2
Assiteca SIM – Who we are
Assiteca SIM was born in September 2012 from the acquisition of 100% of Cofin SIM, an italian investment brokerage company born in 1991.
The company shareholders are:
− 90,01% Altair S.r.l., whose shareolders are Alessandro Falciai (51%, Chairman of Assiteca SIM) and Roberto Russo (49%, CEO of Assiteca SIM);
− 9,99% Assiteca S.p.A., the major domestic insurance broker in Italy, born in 1982, totally independent from bank, insurance and industrial groups, with a work force of about 400 employees and freelancers and over 4.000 companies as customers.
Through the acquisition of local companies during the last 30 years, today Assiteca S.p.A. is present in 18 cities in the whole of Italy, in the major national production and entrepreneurial centres, and it has also 3 offices in Spain in Madrid, Barcelona and Seville.
Assiteca S.p.A. has an option to increase its shareholding in Assiteca SIM to 25% up
to 2015.
3
Assiteca SIM – History and shareholders
4
RETI TELEMATICHE ITALIANE
Our investment idea
Retelit is one of the leading Infrastructure Service Provider focused on ultra broadband fiber based data transmission and data center services. E-via, a wholly-owned subsidiary of Retelit, is the operating company.
5
Retelit company profile
7.500 km Fiber Network
8 Metropolitan Networks
18 Data Centers
Extending 7,500km along state, provincial and municipal highways, 8 metropolitan networks (MANs) in the largest Italian cities, and covering over 200 town centers, Retelit's proprietary network is integrated with 18 Data Centers to provide new generation ultrabroadband fiber based services.
1000+ Business Sites already connected and several thousands close to network, including business premises with one or more customers, Carriers’ Point of Presence (PoP), Radio Base Station and Data Center.
6
Retelit mission and vision
aaa
7
Milestone
Retelit’s main shareholder is the Libyan Post, Telecommunication and IT company
(LPTIC).
In September 2012 LPTIC drew up an agreement with other 11 shareholders (ex-
minorities) - in October they appointed a new Board of Directors to re-launch the
company.
8
Retelit shareholders
The Board is composed by nine Directors: the majority of them has international
skills and experience in TLC and fiber optical sectors
Mr Pinosa is the e-via Chairman and Mr Ashibani is the e-via Vice-chairman too. The other e-via Board Members are Mr Elghali, Mr Leideman and Mr Tosi.
9
The board of directors
Retelit is today positioned as an Infrastructure Service Provider focused on data transmission and housing wholesale services and infrastructures offered to international and domestic Telcos, Internet Services Providers and Information Communication Technology service providers.
The key points of Retelit business are:
− Revenue and customers mix is strongly Telco oriented;
− The increased number of Data Center service contracts achieved during the
past two years in the ICT market positions Retelit also as a Cloud Enabler: up-
selling to existing customers has now stronger growth prospective;
− Aggregated IP bandwidth delivered today (IP transit service – Internet
bandwidth 100% guaranteed) positions Retelit as a high quality Internet Service
Provider in the Italian market.
10
Retelit current positioning
a
11
Retelit current market
a
12
Some of the main customers
The majority of revenues comes from international customers
a
13
Market growth elements
Source: Cisco VNI Global Mobile Data Traffic Forecast 2012-2017
• Digital Identity
• Digital PA
• No Digital Divide
• E-Health
• Open Data
• Digital Education
• Electronic Payments
• Digital Justice
a
14
The evolution of bandwidth services
1. Grow without changing Company’s DNA
2. Strengthen positioning in Telcos wholesale market
3. Consolidate positioning in ICT and new media market
4. Address selected corporations and public administrations
5. Focus on high quality broadband services, developing Internet value added
services and Virtual Private Networks
6. Improve Premium Data Center services portfolio
7. Extend network reach leveraging fiber backhauling projects for mobile
operators
8. Consider telecom infrastructure acquisitions to increase network coverage
9. Expand backbone cross-border and open new European Points of Presence
10. Develop International projects, some in partnership with LPTIC
15
Business plan strategic guidelines
a
16
Retelit value proposition
a
17
Retelit planned market extension
Stock Price: 0,47 € Revenues 2012: 37,2 mln €
Mkt cap: 77 mln € Ebitda 2012: 9,66 mln €
Shrs Out/Float: 164,3 mln/99 mln Net Cash 03/2013: 10,2 mln €
18
Stock performance since 2006
a
19
Historical income statement and balance sheet
INCOME STATEMENT(000) €
Communication services 30.807 28.937 26.873
IRUs and network maintenance 3.932 3.547 3.725
Fiber Sales 1.791 720 1.101
Wimax 0 1.051 428
Other 766 965 1.283
Total Revenues 37.296 35.219 33.410
(Raw mat. and serv. Cost) (17.519) (14.709) (14.248)
(Salary cost) (5.093) (4.846) (4.534)
(Other operational costs) (5.018) (4.959) (5.278)
EBITDA 9.666 10.707 9.350
(Depreciation and amortization) (12.575) (13.351) (15.557)
(Other reserves) (2.191) (1.422) (155)
EBIT (5.100) (4.066) (6.362)
(Financial expenses) (194) (263) (155)
Financial income 1.741 889 39
Gain (loss) on dismissions - - -
EBT (3.553) (3.440) (6.478)
(Tax) - - -
Minority int. - - -
Net Income (3.553) (3.440) (6.478)
Profit (loss) entered under Shareholder's
Equity(109) (2)
Total result for the year (3.662) (3.442) (6.478)
2012 2011 2010BALANCE SHEET
(000) €
Tangible assets 104.970 108.417 118.077
Inangible assets 24.824 27.143 50.523
Other non current assets 30.285 30.423 7.501
Total Long Term Assets 160.079 165.983 176.101
Trade receivables 17.454 16.373 13.970
(Trade payables) (22.134) (20.811) (20.121)
Other current assets 118 157 96
(Other current liabilities) (2.191) (2.221) (1.778)
Total Current Assets (6.753) (6.502) (7.833)
(Severance Indemnity) (911) (730) (803)
(Other current liabilities) (24.982) (24.225) (24.927)
Total non corrent liabilities (25.893) (24.955) (25.730)
NET Invested Capital 127.433 134.526 142.538
financed by:
Equity 144.033 144.026 144.019
Reserves (4.813) (1.347) 5.054
Net Income (3.552) (3.442) (6.478)
Shareholders Equity 135.668 139.235 142.595
Minority interest - - -
Current Financial Debt 1.624 1.819 1.813
Long term Fiancial Debt 2.138 3.743 5.563
(Other current fiancial assets) (848) , -
Cash and equivalent (11.148) (10.273) (7.433)
Net Financial Position (8.234) (4.711) (57)
2012 2011 2010
a
20
Revenues and EBITDA
a
21
Net Financial Position
− 42M€ expected cash generation, of which 27,5M€ from the disposal of
the WiMAX Business Unit
− 75M€ 2013-2017 CAPEX, of which 49,2M€ for building connections
− 76,1M€ tax asset as at December 31st, 2012, of which 39,7M€ due to tax
on losses and 36,4M€ related to temporary differences in taxable income
a
22
WIMAX put option
− Retelit is currently renting the WIMAX Business Unit to Linkem
− Retelit can sell the BU by exercising the PUT option till June 30th, 2014
− The agreed price of the asset for the PUT option is determined in 33M€
− The price must be deducted of the annual charges payments done by
Linkem during the duration of contract
− Retelit Business Plan 2013-2017 includes the selling of the BU
− Expected cash inflow for the selling is 27,5M€
a
23
Our valuation: company challenges
− Entering corporate business requires changes in commercial
organisation, processes, technology and operations
− Public Sector business in Italy is affected by slow decision making process
and complex burocracy
− Competition in the wholesale market is very hard, with continuous price
erosion
− Potential changes in regulatory scenario
− Several potential acquisitions are currently under investigation, however
they require extra time for further analysis and due diligence
− Cloud Services may be included in company portfolio after an accurate
selection of possible partners
a
24
Our valuation: year to date main events
− Business Plan strategic actions have been promptly launched upon approval on March 1st, 2013
− First quarter results were in line with budget, with financial position positive and foreseen better than 2012
− New important customers have been gained in both Carriers and ICT market
− Positioning towards Public Sector ongoing by means of commercial presentations, workshops, offering to public tenders
− First European Point Of Presence in Frankfurt live today
− Carrier Ethernet backbone platform deployment in progress, operational in September
− 100Gbps low latency DWDM (Dense Wavelength Division Multiplexing) backbone live in 2013
− Hiring process on-going
a
25
Our valuation: numbers
Retelit Business Plan 2017 targets:
Revenues: € 73,9 mln
Ebitda: € 26,0 mln
Net Cash: € 49,4 mln
Today multiples:
EV/Sales: 1,94x Mkt cap/BV: 0,56x
EV/EBITDA: 8,77x Mkt cap/TBV: 0,68x
We could foresee three different scenarios:
1. Best case scenario: Business Plan targets will be reached at 100%
2. Base case scenario: Business Plan targets will be reached at 75%
3. Worst case scenario: Business Plan targets will be reached at 50%
a
26
Retelit business plan: best case scenario
Retelit 100% B.P. targets 2017
Sales mln €
exp. Growth 17,5%
Ebitda mln €
exp. Growth 24,5%
Capex mln €
% on revenues: 20%
Net Cash mln € 49
15
74
26,0
Stock valuation 2017
EV (Ebitda 8x) 208
Net Cash 49
Mkt Cap. 257
x Retelit share 1,57
Net present value x share 1,26
Retelit current price 0,47
Upside vs. Current price 167,6%
a
27
Retelit business plan: base case scenario
Retelit 75% B.P. targets 2017
Sales mln €
exp. Growth 17,5%
Ebitda mln €
exp. Growth 24,5%
Capex mln €
% on revenues: 20%
Net Cash mln € 34
12
55
19,5
Stock valuation 2017
EV (Ebitda 8x) 156
Net Cash 34
Mkt Cap. 190
x Retelit share 1,19
Net present value x share 0,96
Retelit current price 0,47
Upside vs. Current price 104,8%
a
28
Retelit business plan: worst case scenario
Retelit 50% B.P. targets 2017
Sales mln €
exp. Growth 17,5%
Ebitda mln €
exp. Growth 24,5%
Capex mln €
% on revenues: 20%
Net Cash mln € 25
10
37
13,0
Stock valuation 2017
EV (Ebitda 8x) 104
Net Cash 25
Mkt Cap. 129
x Retelit share 0,81
Net present value x share 0,65
Retelit current price 0,47
Upside vs. Current price 39,0%
a
29
Conclusion: company strenghts
− Leading Italian infrastructure service provider
− No debt (the problem of TLC companies)
− Proprietary ultra broadband fiber infrastructure with high barriers to enter
(the original cost of Retelit infrastructure was 500 mln €)
− Growing demand of services based on broadband fiber
− Newly appointed, highly committed and experienced management team
− 2013-2017 Business Plan focused on growth and profitability
− Strong cash generation supports planned capex plan
− M&A opportunities to accelerate company growth
− Diversified shareholder base with a free float above 50%
a
Assiteca SIM – X Value Investing Seminar
Thank you, and see you next year!
Assiteca SIM contacts:
Tel. +39 02 3675 4600
www.assitecasim.it
30
a
Disclaimer
THIS DOCUMENT MAY NOT BE REPRODUCED OR REDISTRIBUTED, IN WHOLE OR IN PART, TO ANY OTHER PERSON. THE INFORMATION CONTAINED HEREIN MAY INCLUDE FORWARD-LOOKING STATEMENTS THAT ARE NOT HISTORICAL FACTS, INCLUDING STATEMENTS ABOUT THE COMPANY’S BELIEFS AND EXPECTATIONS. THESE STATEMENTS ARE BASED ON CURRENT PLANS, ESTIMATES, PROJECTIONS AND PROJECTS, AND CANNOT BE INTERPRETED AS A PROMISE OR GUARANTEE OF WHATSOEVER NATURE.
