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Einhell
(CDAX, Retail)
A n a l y s t
Thilo Kleibauer
+49 40 309537-257
CO M M E N T Published 24.08.2018 08:15 1
RESEARCH
Buy
EUR 118.00 (EUR 113.00)
Price EUR 96.60
Upside 22.2 %
Value Indicators: EUR Share data: Description:
DCF: 118.02
FCF-Value Potential 19e: 115.23
Bloomberg: EIN3 GR
Reuters: EING_p
ISIN: DE0005654933
Supplier of power tools and garden equipment for private household use.
Market Snapshot: EUR m Shareholders: Risk Profile (WRe): 2018e
Market cap: 364.6
No. of shares (m): 3.8
EV: 363.8
Freefloat MC: 364.6
Ø Trad. Vol. (30d): 8.06 th
Freefloat 100.0 %
Thannhuber AG (Ordinary sh.) 91.0 %
Others (Ordinary shares) 9.0 %
Beta: 1.3
Price / Book: 1.8 x
Equity Ratio: 54 %
Sales and margin growth to continue in H2
Stated Figures Q2/2018: Comment on Figures:
FY End: 31.12. in EUR m
Q2 18
Q2 18e
Q2 17 yoy
6M 18
6M 18e
6M 17 yoy
Sales 155.9 157.3 143.3 9 % 309.6 311.0 280.5 10 %
Gross profit 54.8 53.6 47.8 15 % 107.2 106.0 94.2 14 %
Margin 35.2 % 34.1 % 33.4 % 34.6 % 34.1 % 33.6 %
EBT 12.0 11.9 9.8 23 % 23.7 23.6 19.2 24 %
Margin 7.7 % 7.5 % 6.8 % 7.7 % 7.6 % 6.8 %
Net income 9.0 7.8 6.0 48 % 17.0 15.8 12.4 37 %
EPS 2.37 2.06 1.60 48 % 4.51 4.19 3.28 38 %
� Q2/H1 sales and EBT in line with expectations (company already announced the five-month sales growth and a H1 forecast at the AGM on June 22).
� Q2 sales increase mainly driven by dynamic growth in Western Europe (+21%) and DACH region (+11%).
� Top line affected by several FX rate changes (AUD, TRY, ARS). Currency-adjusted H1 sales growth was almost 15%.
� Strong gross margin improvement underpins that the product assortment is well received by customers.
� Net income / EPS benefitted from lower tax rate (down from 34% to 27% in H1).
Einhell reported Q2/H1 numbers. Overall, the dynamic sales and profit growth continued in Q2, driven by the further expansion of the Power-
X-Change product series with a master battery concept for cordless power tools. The positive gross margin trend (+100bps in H1) underlines
Einhell’s product quality and strong brand awareness. For H2 too, the confirmed 2018 outlook implies a sales increase of around 10% and
positive EBT margin development. With its Q2/H1 report the group pointed to a more challenging environment for some regions (e.g. currency
situation in Turkey, Argentina and Russia as well as the withdrawal of Bunnings from the UK). However, the potential impact of these factors on
group numbers will be limited in our view.
We have increased our estimates following the Q2/H1 report. The investment case is fully intact with the Power-X-Change series as a
major growth driver. Moreover, the management is focused on its mid-term strategy with preparation for US market entry and planned
investments in a new warehouse facility in Landau. In June, management announced a sales target of EUR 830m for 2022 (which is not fully
reflected in our DCF model with expected sales of EUR 772m in 2022). We are increasing the PT from EUR 113 to EUR 118 based on our
new estimates. We are confirming the Buy recommendation.
Changes in Estimates: Comment on Changes:
FY End: 31.12. in EUR m
2018e (old)
+ / - 2019e (old)
+ / - 2020e (old)
+ / -
Sales 600.0 2.0 % 640.0 1.4 % 682.0 0.9 %
EBIT 44.2 5.8 % 47.0 3.7 % 50.1 2.9 %
EBT 41.0 6.2 % 43.8 4.5 % 46.7 3.6 %
Net income 26.7 12.7 % 28.9 8.9 % 31.2 6.2 %
EPS 7.06 12.7 % 7.67 8.9 % 8.28 6.2 %
� Our new 2018 estimates are in line with Einhell’s guidance. We expect an EBT margin of 7.1% (previously: 6.8%)
� We have lowered our tax rate forecast to 30% for 2018 (previously 34%) and beyond. Therefore, we anticipate a stronger net income increase.
� For 2019/20 we expect stable operating earnings margins. For the mid- to long-term margin scenario in our DCF model we are calculating with lower profit margins.
FY End: 31.12. in EUR m
CAGR (17-20e) 2014 2015 2016 2017 2018e 2019e 2020e
Sales 7.5 % 416.4 443.8 487.2 553.4 612.0 649.0 688.0
Change Sales yoy 0.0 % 6.6 % 9.8 % 13.6 % 10.6 % 6.0 % 6.0 %
Gross profit margin 30.4 % 31.7 % 32.2 % 34.6 % 34.6 % 34.6 % 34.6 %
EBITDA 9.3 % 13.4 19.0 27.0 43.8 52.0 54.0 57.1
Margin 3.2 % 4.3 % 5.5 % 7.9 % 8.5 % 8.3 % 8.3 %
EBIT 10.2 % 8.4 13.9 20.5 38.5 46.8 48.8 51.5
Margin 2.0 % 3.1 % 4.2 % 7.0 % 7.6 % 7.5 % 7.5 %
EBT 10.6 % 5.1 11.8 17.0 35.7 43.6 45.8 48.3
Margin 1.2 % 2.7 % 3.5 % 6.5 % 7.1 % 7.0 % 7.0 %
Net income 16.0 % 1.6 7.4 9.3 21.2 30.0 31.5 33.2
EPS 16.0 % 0.42 1.95 2.48 5.63 7.96 8.35 8.79
DPS 22.4 % 0.40 0.60 0.80 1.20 1.80 2.00 2.20
Dividend Yield 1.3 % 1.9 % 2.2 % 1.9 % 1.9 % 2.1 % 2.3 %
FCFPS 1.16 -2.95 8.25 -5.65 4.45 5.68 6.00
FCF / Market cap 3.8 % -9.4 % 23.1 % -9.1 % 4.6 % 5.9 % 6.2 %
EV / Sales 0.3 x 0.3 x 0.2 x 0.4 x 0.6 x 0.5 x 0.5 x
EV / EBITDA 8.3 x 6.8 x 4.3 x 5.6 x 7.0 x 6.5 x 5.9 x
EV / EBIT 13.2 x 9.3 x 5.7 x 6.4 x 7.8 x 7.2 x 6.5 x
P / E 72.7 x 16.0 x 14.4 x 11.1 x 12.1 x 11.6 x 11.0 x
FCF Potential Yield 5.7 % 8.1 % 12.6 % 9.6 % 8.9 % 9.4 % 10.1 %
Net Debt -3.5 11.0 -18.3 11.1 -0.8 -15.3 -30.2
ROCE (NOPAT) 1.8 % 5.5 % 7.4 % 13.7 % 16.4 % 16.1 % 16.3 % Guidance: 2018: Sales increase to EUR 610-615m, EBT margin between 6.9-7.4%
Rel. Performance vs CDAX:
1 month: 2.2 %
6 months: 3.9 %
Year to date: 20.0 %
Trailing 12 months: 33.3 %
Company events:
Einhell
CO M M E N T Publ ished 24 .08 .2018 2
RESEARCH
Sales development in EUR m
Source: Warburg Research
Sales by regions 2017; in %
Source: Warburg Research
Gross margin development in %
Source: Warburg Research
Company Background
� Einhell is the leading provider of power tools and garden equipment for household use. The products are sold under the Einhell brand
and as retailers' own brands.
� Value is created in the product development, quality control, sales, and after-sales services. Production is outsourced to China.
� Einhell's main customers are large DIY chains (54% of sales), specialised trade (15%) and e-commerce platforms (14%). The share
of business with discounters is at 14%.
� The company was founded in 1964 by Josef Thannhuber. The Thannhuber family holds the majority of the non-listed ordinary shares.
Competitive Quality
� Einhell successfully differentiates itself from its competitors by undercutting brand products such a Bosch or Black&Decker in price at
a comparable quality level.
� At the same time the company stands out from low-cost providers thanks to its strong focus on quality and after-sales services.
� Einhell shows a high level of cost flexibility and generated clearly positive earnings even in economically challenging years.
� With its broad range of offers, the clear positioning and the Power-X-Change category, Einhell is well on track for further market share
gains.
� The continuation of the international expansion (North/South America, Australia, Turkey) offers additional growth potential.
EBT development in EUR m
Source: Warburg Research
Sales by segments 2016; in %
Source: Warburg Research
Net income development in EUR m
Source: Warburg Research
Einhell
CO M M E N T Publ ished 24 .08 .2018 3
RESEARCH
DCF model
Detailed forecast period Transitional period Term. Value
Figures in EUR m 2018e 2019e 2020e 2021e 2022e 2023e 2024e 2025e 2026e 2027e 2028e 2029e 2030e
Sales 612.0 649.0 688.0 729.3 771.6 814.8 858.8 903.4 948.6 991.3 1,031.0 1,061.9 1,088.4
Sales change 10.6 % 6.0 % 6.0 % 6.0 % 5.8 % 5.6 % 5.4 % 5.2 % 5.0 % 4.5 % 4.0 % 3.0 % 2.5 % 1.5 %
EBIT 46.8 48.8 51.5 51.0 52.5 53.8 55.0 56.0 56.9 54.5 56.7 53.1 54.4
EBIT-margin 7.6 % 7.5 % 7.5 % 7.0 % 6.8 % 6.6 % 6.4 % 6.2 % 6.0 % 5.5 % 5.5 % 5.0 % 5.0 %
Tax rate (EBT) 30.0 % 30.0 % 30.0 % 30.0 % 30.0 % 30.0 % 30.0 % 30.0 % 30.0 % 30.0 % 30.0 % 30.0 % 30.0 %
NOPAT 32.7 34.1 36.1 35.7 36.7 37.6 38.5 39.2 39.8 38.2 39.7 37.2 38.1
Depreciation 5.2 5.2 5.6 7.3 9.3 9.8 10.3 10.8 11.4 11.9 12.4 12.7 13.1
in % of Sales 0.8 % 0.8 % 0.8 % 1.0 % 1.2 % 1.2 % 1.2 % 1.2 % 1.2 % 1.2 % 1.2 % 1.2 % 1.2 %
Changes in provisions 0.3 0.2 0.2 0.6 0.3 0.3 0.3 0.3 0.3 0.3 0.2 0.2 0.2
Change in Liquidity from
- Working Capital 13.0 7.0 8.0 2.8 4.3 3.7 7.4 11.6 11.7 11.1 10.3 8.0 6.9
- Capex 7.5 10.0 10.0 10.2 10.0 9.8 10.3 10.8 11.4 11.9 12.4 12.7 13.1
Capex in % of Sales 1.2 % 1.5 % 1.5 % 1.4 % 1.3 % 1.2 % 1.2 % 1.2 % 1.2 % 1.2 % 1.2 % 1.2 % 1.2 %
Other 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Free Cash Flow (WACC Model)
17.7 22.5 23.9 30.5 31.9 34.2 31.4 27.9 28.4 27.3 29.6 29.3 31.4 35
PV of FCF 17.7 20.9 20.6 24.4 23.6 23.5 20.0 16.5 15.6 13.9 14.0 12.8 12.7 223 share of PVs 12.90 % 38.58 % 48.53 %
Model parameter Valuation (m)
Derivation of WACC: Derivation of Beta: Present values 2030e 236
Terminal Value 223
Debt ratio 15.00 % Financial Strength 1.00 Financial liabilities 22
Cost of debt (after tax) 3.0 % Liquidity (share) 1.50 Pension liabilities 3
Market return 7.00 % Cyclicality 1.50 Hybrid capital 0
Risk free rate 1.50 % Transparency 1.00 Minority interest 2
Others 1.50 Market val. of investments 0
Liquidity 14 No. of shares (m) 3.8
WACC 7.80 % Beta 1.30 Equity Value 445 Value per share (EUR) 118.02
Sensitivity Value per Share (EUR)
Terminal Growth Delta EBIT-margin
Beta WACC 0.75 % 1.00 % 1.25 % 1.50 % 1.75 % 2.00 % 2.25 % Beta WACC -1.5 pp -1.0 pp -0.5 pp +0.0 pp +0.5 pp +1.0 pp +1.5 pp
1.51 8.8 % 97.37 98.70 100.11 101.62 103.23 104.97 106.83 1.51 8.8 % 67.77 79.05 90.33 101.62 112.90 124.18 135.47
1.41 8.3 % 104.08 105.67 107.38 109.21 111.18 113.31 115.62 1.41 8.3 % 72.82 84.95 97.08 109.21 121.34 133.47 145.60
1.35 8.0 % 107.78 109.53 111.42 113.45 115.64 118.01 120.58 1.35 8.0 % 75.64 88.24 100.84 113.45 126.05 138.65 151.25
1.30 7.8 % 111.75 113.69 115.77 118.02 120.46 123.11 125.99 1.30 7.8 % 78.68 91.80 104.91 118.02 131.14 144.25 157.36
1.25 7.5 % 116.01 118.16 120.47 122.98 125.70 128.67 131.92 1.25 7.5 % 81.98 95.65 109.31 122.98 136.65 150.31 163.98
1.19 7.3 % 120.61 122.99 125.57 128.37 131.42 134.76 138.43 1.19 7.3 % 85.56 99.83 114.10 128.37 142.64 156.90 171.17
1.09 6.8 % 130.96 133.92 137.15 140.68 144.57 148.85 153.61 1.09 6.8 % 93.75 109.39 125.04 140.68 156.33 171.97 187.62
� Mid- to long-term EBIT margin below current level (average EBIT margin 2006/17: 5.1%)
� Sales growth assumption in line with Einhell's long-standing target range of +5-10% p.a.
Einhell
CO M M E N T Publ ished 24 .08 .2018 4
RESEARCH
Free Cash Flow Value Potential Warburg Research's valuation tool "FCF Value Potential" reflects the ability of the company to generate sustainable free cash flows. It is based on the "FCF potential" - a FCF "ex growth" figure - which assumes unchanged working capital and pure maintenance capex. A value indication is derived via the perpetuity of a given year’s “FCF potential” with consideration of the weighted costs of capital. The fluctuating value indications over time add a timing element to the DCF model (our preferred valuation tool). in EUR m 2014 2015 2016 2017 2018e 2019e 2020e
Net Income before minorities 1.6 7.6 9.6 21.6 30.5 32.0 33.8
+ Depreciation + Amortisation 5.0 5.2 6.5 5.2 5.2 5.2 5.6
- Net Interest Income -3.4 -2.1 -3.5 -2.8 -3.2 -3.0 -3.2
- Maintenance Capex 3.6 4.5 5.0 6.0 6.4 7.5 9.0
+ Other 0.0 0.0 0.0 0.0 0.0 0.0 0.0
= Free Cash Flow Potential 6.4 10.4 14.6 23.6 32.5 32.7 33.6
FCF Potential Yield (on market EV) 5.7 % 8.1 % 12.6 % 9.6 % 8.9 % 9.4 % 10.1 %
WACC 7.80 % 7.80 % 7.80 % 7.80 % 7.80 % 7.80 % 7.80 %
= Enterprise Value (EV) 111.7 129.1 116.7 246.2 363.8 349.3 334.5 = Fair Enterprise Value 81.8 133.5 187.8 302.5 416.6 419.7 431.4
- Net Debt (Cash) 8.0 8.0 8.0 8.0 -4.2 -18.9 -34.0
- Pension Liabilities 3.1 3.1 3.1 3.1 3.4 3.6 3.8
- Other 0.0 0.0 0.0 0.0 0.0 0.0 0.0
- Market value of minorities 0.0 0.0 0.0 0.0 0.0 0.0 0.0
+ Market value of investments 0.0 0.0 0.0 0.0 0.0 0.0 0.0
= Fair Market Capitalisation 70.6 122.4 176.6 291.4 417.4 434.9 461.6
Aktienanzahl (Mio.) 3.8 3.8 3.8 3.8 3.8 3.8 3.8
= Fair value per share (EUR) 18.71 32.42 46.80 77.19 110.58 115.23 122.29
premium (-) / discount (+) in % 14.5 % 19.3 % 26.6 %
Sensitivity Fair value per Share (EUR)
10.80 % 12.69 22.59 32.98 54.93 79.92 84.34 90.53
9.80 % 14.29 25.20 36.65 60.83 88.06 92.53 98.96
8.80 % 16.25 28.40 41.15 68.08 98.04 102.59 109.30
WACC 7.80 % 18.71 32.42 46.80 77.19 110.58 115.23 122.29
6.80 % 21.90 37.62 54.12 88.98 126.82 131.58 139.10
5.80 % 26.18 44.62 63.96 104.83 148.65 153.58 161.71
4.80 % 32.26 54.53 77.90 127.30 179.58 184.74 193.74
� Increase in net cash position in the coming years expected.
Einhell
CO M M E N T Publ ished 24 .08 .2018 5
RESEARCH
Valuation
2014 2015 2016 2017 2018e 2019e 2020e
Price / Book 0.7 x 0.8 x 0.8 x 1.3 x 1.8 x 1.6 x 1.4 x
Book value per share ex intangibles 35.50 35.51 37.74 42.83 49.20 55.54 62.15
EV / Sales 0.3 x 0.3 x 0.2 x 0.4 x 0.6 x 0.5 x 0.5 x
EV / EBITDA 8.3 x 6.8 x 4.3 x 5.6 x 7.0 x 6.5 x 5.9 x
EV / EBIT 13.2 x 9.3 x 5.7 x 6.4 x 7.8 x 7.2 x 6.5 x
EV / EBIT adj.* 9.8 x 8.2 x 5.2 x 6.1 x 7.6 x 7.2 x 6.5 x
P / FCF 26.2 x n.a. 4.3 x n.a. 21.7 x 17.0 x 16.1 x
P / E 72.7 x 16.0 x 14.4 x 11.1 x 12.1 x 11.6 x 11.0 x
P / E adj.* 72.7 x 16.0 x 14.4 x 11.1 x 12.1 x 11.6 x 11.0 x
Dividend Yield 1.3 % 1.9 % 2.2 % 1.9 % 1.9 % 2.1 % 2.3 %
FCF Potential Yield (on market EV) 5.7 % 8.1 % 12.6 % 9.6 % 8.9 % 9.4 % 10.1 %
*Adjustments made for: -
Einhell
CO M M E N T Publ ished 24 .08 .2018 6
RESEARCH
Consolidated profit & loss In EUR m 2014 2015 2016 2017 2018e 2019e 2020e
Sales 416.4 443.8 487.2 553.4 612.0 649.0 688.0
Change Sales yoy 0.0 % 6.6 % 9.8 % 13.6 % 10.6 % 6.0 % 6.0 % Increase / decrease in inventory 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Own work capitalised 0.0 0.1 0.0 0.0 0.0 0.0 0.0
Total Sales 416.4 443.9 487.2 553.4 612.0 649.0 688.0
Material expenses 290.0 303.1 330.1 361.9 400.2 424.4 450.0
Gross profit 126.4 140.8 157.1 191.4 211.8 224.6 238.0
Gross profit margin 30.4 % 31.7 % 32.2 % 34.6 % 34.6 % 34.6 % 34.6 % Personnel expenses 55.4 61.3 63.2 72.4 79.3 83.6 88.5
Other operating income 7.1 5.8 6.2 7.8 9.0 8.0 8.0
Other operating expenses 64.7 66.3 73.1 83.1 89.5 95.0 100.4
Unfrequent items 0.0 0.0 0.0 0.0 0.0 0.0 0.0
EBITDA 13.4 19.0 27.0 43.8 52.0 54.0 57.1
Margin 3.2 % 4.3 % 5.5 % 7.9 % 8.5 % 8.3 % 8.3 %
Depreciation of fixed assets 2.8 2.8 3.9 3.1 3.4 4.0 4.4
EBITA 10.7 16.2 23.1 40.6 48.6 50.0 52.7
Amortisation of intangible assets 2.2 2.3 2.6 2.1 1.8 1.2 1.2
Goodwill amortisation 0.0 0.0 0.0 0.0 0.0 0.0 0.0
EBIT 8.4 13.9 20.5 38.5 46.8 48.8 51.5
Margin 2.0 % 3.1 % 4.2 % 7.0 % 7.6 % 7.5 % 7.5 %
EBIT adj. 11.4 15.8 22.3 40.3 47.6 48.8 51.5
Interest income 0.2 0.2 0.1 0.2 0.0 0.0 0.0
Interest expenses 1.5 2.1 2.1 2.2 2.2 2.0 2.0
Other financial income (loss) -2.1 -0.2 -1.5 -0.8 -1.0 -1.0 -1.2
EBT 5.1 11.8 17.0 35.7 43.6 45.8 48.3
Margin 1.2 % 2.7 % 3.5 % 6.5 % 7.1 % 7.0 % 7.0 % Total taxes 3.4 4.1 7.3 14.2 13.1 13.7 14.5
Net income from continuing operations 1.6 7.6 9.6 21.6 30.5 32.0 33.8
Income from discontinued operations (net of tax) 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Net income before minorities 1.6 7.6 9.6 21.6 30.5 32.0 33.8
Minority interest 0.0 0.3 0.3 0.3 0.5 0.5 0.7
Net income 1.6 7.4 9.3 21.2 30.0 31.5 33.2
Margin 0.4 % 1.7 % 1.9 % 3.8 % 4.9 % 4.9 % 4.8 %
Number of shares, average 3.8 3.8 3.8 3.8 3.8 3.8 3.8
EPS 0.42 1.95 2.48 5.63 7.96 8.35 8.79
EPS adj. 0.42 1.95 2.48 5.63 7.96 8.35 8.79
*Adjustments made for:
Guidance: 2018: Sales increase to EUR 610-615m, EBT margin between 6.9-7.4%
Financial Ratios 2014 2015 2016 2017 2018e 2019e 2020e
Total Operating Costs / Sales 96.8 % 97.1 % 95.7 % 93.5 % 93.0 % 92.9 % 92.9 %
Operating Leverage 1497.4 x 9.8 x 4.9 x 6.5 x 2.0 x 0.7 x 1.0 x
EBITDA / Interest expenses 9.2 x 9.0 x 12.8 x 19.8 x 23.6 x 27.0 x 28.6 x
Tax rate (EBT) 67.7 % 35.1 % 43.2 % 39.6 % 30.0 % 30.0 % 30.0 %
Dividend Payout Ratio 92.2 % 29.6 % 31.3 % 21.0 % 22.3 % 23.6 % 24.5 %
Sales per Employee 315,427 336,175 357,193 374,392 397,403 405,625 424,691
Sales, EBITDA in EUR m
Source: Warburg Research
Operating Performance in %
Source: Warburg Research
Performance per Share
Source: Warburg Research
Einhell
CO M M E N T Publ ished 24 .08 .2018 7
RESEARCH
Consolidated balance sheet In EUR m 2014 2015 2016 2017 2018e 2019e 2020e
Assets
Goodwill and other intangible assets 24.0 22.2 19.8 17.9 19.3 20.1 20.8
thereof other intangible assets 10.6 9.1 7.0 5.5 7.0 7.8 8.5
thereof Goodwill 13.4 13.1 12.8 12.3 12.3 12.3 12.3
Property, plant and equipment 18.6 19.6 19.9 22.1 24.2 28.2 31.8
Financial assets 0.4 0.4 0.4 0.7 0.7 0.7 0.7
Other long-term assets 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Fixed assets 43.0 42.2 40.0 40.7 44.2 49.0 53.3
Inventories 110.4 139.1 127.7 180.1 191.0 200.0 208.0
Accounts receivable 62.5 62.7 67.9 82.3 89.0 92.0 97.0
Liquid assets 36.3 24.3 54.7 14.4 24.2 38.9 54.0
Other short-term assets 41.4 32.5 32.9 35.2 38.0 37.5 37.0
Current assets 250.5 258.6 283.2 312.1 342.2 368.4 396.0
Total Assets 293.5 300.8 323.3 352.8 386.5 417.4 449.3
Liabilities and shareholders' equity
Subscribed capital 9.7 9.7 9.7 9.7 9.7 9.7 9.7
Capital reserve 26.7 26.7 26.7 26.7 26.7 26.7 26.7
Retained earnings 122.6 128.5 132.9 151.9 138.7 161.9 185.9
Other equity components -0.9 -8.5 -7.0 -8.7 30.0 31.5 33.2
Shareholders' equity 158.0 156.3 162.2 179.5 205.0 229.8 255.4
Minority interest 1.6 1.7 1.9 2.0 2.0 2.0 2.0
Total equity 159.6 157.9 164.1 181.6 207.0 231.8 257.4
Provisions 13.9 16.2 21.9 31.9 33.5 34.7 35.9
thereof provisions for pensions and similar obligations 2.6 2.8 3.2 3.1 3.4 3.6 3.8
Financial liabilities (total) 30.2 32.5 33.2 22.4 20.0 20.0 20.0
thereof short-term financial liabilities 0.2 2.5 3.2 22.4 20.0 20.0 20.0
Accounts payable 55.3 62.5 70.3 85.4 90.0 95.0 100.0
Other liabilities 34.6 31.6 33.8 31.4 36.0 36.0 36.0
Liabilities 133.9 142.8 159.2 171.2 179.5 185.7 191.9
Total liabilities and shareholders' equity 293.5 300.8 323.3 352.8 386.5 417.4 449.3
Financial Ratios 2014 2015 2016 2017 2018e 2019e 2020e
Efficiency of Capital Employment
Operating Assets Turnover 3.1 x 2.8 x 3.4 x 2.8 x 2.9 x 2.9 x 2.9 x
Capital Employed Turnover 2.7 x 2.6 x 3.3 x 2.9 x 3.0 x 3.0 x 3.0 x
ROA 3.7 % 17.4 % 23.3 % 52.3 % 67.9 % 64.3 % 62.2 %
Return on Capital
ROCE (NOPAT) 1.8 % 5.5 % 7.4 % 13.7 % 16.4 % 16.1 % 16.3 %
ROE 1.0 % 4.7 % 5.9 % 12.4 % 15.6 % 14.5 % 13.7 %
Adj. ROE 1.0 % 4.7 % 5.9 % 12.4 % 15.6 % 14.5 % 13.7 %
Balance sheet quality
Net Debt -3.5 11.0 -18.3 11.1 -0.8 -15.3 -30.2
Net Financial Debt -6.0 8.2 -21.5 8.0 -4.2 -18.9 -34.0
Net Gearing -2.2 % 6.9 % -11.2 % 6.1 % -0.4 % -6.6 % -11.7 %
Net Fin. Debt / EBITDA n.a. 43.1 % n.a. 18.3 % n.a. n.a. n.a.
Book Value / Share 41.9 41.4 43.0 47.6 54.3 60.9 67.7
Book value per share ex intangibles 35.5 35.5 37.7 42.8 49.2 55.5 62.2
ROCE Development
Source: Warburg Research
Net debt in EUR m
Source: Warburg Research
Book Value per Share in EUR
Source: Warburg Research
Einhell
CO M M E N T Publ ished 24 .08 .2018 8
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Consolidated cash flow statement In EUR m 2014 2015 2016 2017 2018e 2019e 2020e
Net income 5.1 11.8 17.0 35.7 43.6 45.8 48.3
Depreciation of fixed assets 2.8 2.8 3.9 3.1 3.4 4.0 4.4
Amortisation of goodwill 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Amortisation of intangible assets 2.2 2.3 2.6 2.1 1.8 1.2 1.2
Increase/decrease in long-term provisions 1.5 2.3 5.7 10.0 1.6 1.2 1.2
Other non-cash income and expenses -3.4 -4.1 -7.3 -14.2 -13.1 -13.7 -14.5
Cash Flow before NWC change 8.1 15.1 21.9 36.8 37.3 38.4 40.6
Increase / decrease in inventory -4.4 -28.7 11.4 -52.4 -10.9 -9.0 -8.0
Increase / decrease in accounts receivable 1.9 -0.2 -5.2 -14.4 -6.7 -3.0 -5.0
Increase / decrease in accounts payable 2.7 7.3 7.8 15.1 4.6 5.0 5.0
Increase / decrease in other working capital positions 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Increase / decrease in working capital (total) 0.2 -21.7 14.0 -51.7 -13.0 -7.0 -8.0
Net cash provided by operating activities [1] 8.3 -6.5 35.9 -15.0 24.3 31.4 32.6
Investments in intangible assets -0.5 -0.8 -0.5 -0.7 -2.0 -2.0 -2.0
Investments in property, plant and equipment -3.4 -3.8 -4.2 -5.6 -5.5 -8.0 -8.0
Payments for acquisitions 0.3 0.0 0.0 0.3 0.0 0.0 0.0
Financial investments 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Income from asset disposals 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Net cash provided by investing activities [2] -3.6 -4.6 -4.7 -6.0 -7.5 -10.0 -10.0
Change in financial liabilities -21.2 2.3 0.6 -10.7 -2.4 0.0 0.0
Dividends paid -2.6 -2.6 -2.3 -3.0 -4.5 -6.8 -7.5
Purchase of own shares 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Capital measures 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Other 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Net cash provided by financing activities [3] -23.9 -0.3 -1.6 -13.8 -7.0 -6.8 -7.5
Change in liquid funds [1]+[2]+[3] -19.2 -11.5 29.5 -34.8 9.8 14.6 15.1
Effects of exchange-rate changes on cash 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Cash and cash equivalent at end of period 39.8 24.8 53.8 19.9 24.2 38.9 54.0
Financial Ratios 2014 2015 2016 2017 2018e 2019e 2020e
Cash Flow
FCF 4.4 -11.1 31.1 -21.3 16.8 21.4 22.6
Free Cash Flow / Sales 1.1 % -2.5 % 6.4 % -3.9 % 2.7 % 3.3 % 3.3 %
Free Cash Flow Potential 6.4 10.4 14.6 23.6 32.5 32.7 33.6
Free Cash Flow / Net Profit 274.6 % -151.3 % 333.3 % -100.4 % 55.9 % 68.0 % 68.2 %
Interest Received / Avg. Cash 0.5 % 0.6 % 0.3 % 0.6 % 0.0 % 0.0 % 0.0 %
Interest Paid / Avg. Debt 3.6 % 6.7 % 6.4 % 7.9 % 10.4 % 10.0 % 10.0 %
Management of Funds
Investment ratio 0.9 % 1.0 % 1.0 % 1.1 % 1.2 % 1.5 % 1.5 %
Maint. Capex / Sales 0.9 % 1.0 % 1.0 % 1.1 % 1.0 % 1.2 % 1.3 %
Capex / Dep 78.5 % 88.8 % 73.4 % 120.8 % 144.2 % 192.3 % 178.6 %
Avg. Working Capital / Sales 28.3 % 28.9 % 27.1 % 27.3 % 30.0 % 29.8 % 29.2 %
Trade Debtors / Trade Creditors 113.0 % 100.3 % 96.5 % 96.3 % 98.9 % 96.8 % 97.0 %
Inventory Turnover 2.6 x 2.2 x 2.6 x 2.0 x 2.1 x 2.1 x 2.2 x
Receivables collection period (days) 55 52 51 54 53 52 51
Payables payment period (days) 70 75 78 86 82 82 81
Cash conversion cycle (Days) 90 116 83 123 117 115 111
CAPEX and Cash Flow in EUR m
Source: Warburg Research
Free Cash Flow Generation
Source: Warburg Research
Working Capital
Source: Warburg Research
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This research report (“investment recommendation”) was prepared by the Warburg Research GmbH, a fully owned subsidiary of the M.M.Warburg &
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information and does not purport to be complete. The investment recommendation is based on publicly available information and data ("information")
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The valuation underlying the investment recommendation for the company analysed here is based on generally accepted and widely used methods of
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Independent of the applied valuation methods, there is the risk that the price target will not be met, for instance because of unforeseen changes in
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SOURCES
All data and consensus estimates have been obtained from FactSet except where stated otherwise.
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Additional information for clients in the United States
1. This research report (the “Report”) is a product of Warburg Research GmbH, Germany, a fully owned subsidiary of M.M.Warburg & CO (AG & Co.)
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2. The Report is provided in the United States for distribution solely to "major U.S. institutional investors" under Rule 15a-6 of the U.S. Securities
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Reference in accordance with section 85 of the German Securities Trading Act (WpHG) and Art. 20 MAR regarding possible conflicts of interest with companies analysed:
-1- Warburg Research, or an affiliated company, or an employee of one of these companies responsible for the compilation of the research, hold
a share of more than 5% of the equity capital of the analysed company.
-2-
Warburg Research, or an affiliated company, within the last twelve months participated in the management of a consortium for an issue in
the course of a public offering of such financial instruments, which are, or the issuer of which is, the subject of the investment
recommendation.
-3- Companies affiliated with Warburg Research manage financial instruments, which are, or the issuers of which are, subject of the
investment recommendation, in a market based on the provision of buy or sell contracts.
-4-
MMWB, Warburg Research, or an affiliated company, reached an agreement with the issuer to provide investment banking and/or
investment services and the relevant agreement was in force in the last 12 months or there arose for this period, based on the relevant
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confidential business information.
-5- The company compiling the analysis or an affiliated company had reached an agreement on the compilation of the investment
recommendation with the analysed company.
-6- Companies affiliated with Warburg Research regularly trade financial instruments of the analysed company or derivatives of these.
-6a- Warburg Research, or an affiliated company, holds a net long position of more than 0.5% of the total issued share capital of the analysed
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-6b- Warburg Research, or an affiliated company, holds a net short position of more than 0.5% of the total issued share capital of the analysed
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-6c- The issuer holds shares of more than 5% of the total issued capital of Warburg Research or an affiliated company.
-7- The company preparing the analysis as well as its affiliated companies and employees have other important interests in relation to the
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Company Disclosure Link to the historical price targets and rating changes (last 12 months)
Einhell 3, 5, 6 http://www.mmwarburg.com/disclaimer/disclaimer_en/DE0005654933.htm
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INVESTMENT RECOMMENDATION
Investment recommendation: expected direction of the share price development of the financial instrument up to the given price target in the opinion of
the analyst who covers this financial instrument.
-B- Buy: The price of the analysed financial instrument is expected to rise over the next 12 months.
-H- Hold: The price of the analysed financial instrument is expected to remain mostly flat over the next 12
months.
-S- Sell: The price of the analysed financial instrument is expected to fall over the next 12 months.
“-“ Rating suspended: The available information currently does not permit an evaluation of the company.
WARBURG RESEARCH GMBH – ANALYSED RESEARCH UNIVERSE BY RATING
Rating Number of stocks % of Universe
Buy 113 55
Hold 89 43
Sell 4 2
Rating suspended 0 0
Total 206 100
WARBURG RESEARCH GMBH – ANALYSED RESEARCH UNIVERSE BY RATING L
L taking into account only those companies which were provided with major investment services in the last twelve months.
Rating Number of stocks % of Universe
Buy 32 68
Hold 15 32
Sell 0 0
Rating suspended 0 0
Total 47 100
PRICE AND RATING HISTORY EINHELL AS OF 24.08.2018
Markings in the chart show rating changes by Warburg Research
GmbH in the last 12 months. Every marking details the date and
closing price on the day of the rating change.
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