Industriehold. Cham Hold Hammer Retex: the ... - Investor Relations
Industriehold. Cham Hold Hammer Retex: the ... - Investor Relations
Industriehold. Cham Hold Hammer Retex: the ... - Investor Relations
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<strong>Industriehold</strong>. <strong>Cham</strong><br />
<strong>Hold</strong><br />
Switzerland<br />
Packaging/Paper 24-03-09<br />
Bloomberg:INDN SW Reuters:INDN.S SEDOL no:4459307 CHF 200.00 on 23-03-09<br />
Equity Research<br />
Switzerland<br />
Analysts<br />
Patrick Rafaisz<br />
patrick.rafaisz@vontobel.ch<br />
+41 (0)58 283 63 46<br />
Patrick Laager<br />
patrick.laager@vontobel.ch<br />
+41 (0)58 283 73 63<br />
<strong>Hammer</strong> <strong>Retex</strong>: <strong>the</strong> sale, spin-off, going private, and<br />
tender offer combo!<br />
Following <strong>Industriehold</strong>ing <strong>Cham</strong>'s (IC) weak set of FY08 results, <strong>the</strong> company last week<br />
announced <strong>the</strong> details regarding <strong>the</strong> spin-off of its real estate division <strong>Hammer</strong> <strong>Retex</strong><br />
(HR). The fairness opinion yielded a total value of CHF 138 mn, in line with VontE<br />
CHF 139 mn. However, as IC will sell a 45% stake in HR first in order to cross-subsidize<br />
its ailing paper business, shareholders will only be eligible for <strong>the</strong> remaining 55%,<br />
which will be distributed as a dividend in kind (pending AGM approval). We advise<br />
investors to accept <strong>the</strong> offer as <strong>the</strong> price is fair (15% premium over NAV). However, we<br />
still fail to identify any triggers for <strong>Cham</strong> Paper Group (CPG) and <strong>the</strong>refore advise<br />
against an investment in IC shares. On a stand alone basis (excl. HR), IC would trade at<br />
4.3x EV/EBITDA 09E and <strong>the</strong>refore offers little upside in <strong>the</strong> current difficult market<br />
environment. We reiterate our <strong>Hold</strong> rating with a PT of CHF 200.<br />
Changes to our estimates: As <strong>the</strong> distribution of <strong>the</strong> dividend in kind (<strong>Hammer</strong> <strong>Retex</strong><br />
shares) is still pending AGM approval (24 April), we have only included <strong>the</strong> sale of <strong>the</strong><br />
45% stake in HR in our estimates. Hence, reported EPS 09E will increase 38% (CHF 8 mn<br />
realized gain on <strong>the</strong> holding level), but we have lowered our adj. EPS 09E, 10E, and 11E<br />
by 43%, 33% and 14%, respectively, due to significantly higher minorities.<br />
Challenging times ahead: Without HR's reliable earnings contribution, CPG will face a<br />
very challenging FY09. Admittedly, lower pulp and paper chemical prices should soften<br />
some of <strong>the</strong> pressure on margins, but lower raw material prices also increases <strong>the</strong> appeal<br />
of competing products (e.g. plastics vs. paper in flexible packaging) and <strong>the</strong> industry has<br />
still not yet aligned capacities to demand.<br />
PERFORMANCE<br />
550<br />
550<br />
500<br />
500<br />
450<br />
450<br />
400<br />
400<br />
350<br />
350<br />
300<br />
300<br />
250<br />
250<br />
200<br />
200<br />
150<br />
150<br />
2006 2007<br />
INDUSTRIEHOLDING CHAM<br />
2008 2009<br />
HIGH 500.91 20/4/07,LOW 165.00 27/2/09,LAST 195.00 20/3/09 Source: DATASTREAM<br />
PER SHARE DATA<br />
Price target (CHF) 200.00<br />
Price INDN.S on 23-03-09 CHF 200.00<br />
No. of shares INDN.S in '000 693<br />
Market cap. INDN.S (CHF mns) 139<br />
O<strong>the</strong>r market cap. (CHF mns) 0<br />
Total market capitalization (CHF mns) 139<br />
Free Float % 75<br />
Buru <strong>Hold</strong>ing (voting 20%) 20<br />
Bestinver Gestion (voting 10%) 10<br />
Golden Peaks Capital (voting 8%) 8<br />
Average daily trading volume (12 months) 854<br />
SHARE VALUATION<br />
CHF 2007 2008 2009E 2010E<br />
EPS 26.9 -27.2 23.3 16.7<br />
EPS growth % NM NM NM -29<br />
P/E 7.4 NM 8.6 12.0<br />
CEPS 26.9 -27.2 23.3 16.7<br />
P/CE 7.4 NM 8.6 12.0<br />
Dividend 0.00 0.54 0.00 0.00<br />
Dividend yield % 0.0 0.3 0.0 0.0<br />
Book value 435 391 411 426<br />
Price/Book 0.5 0.5 0.5 0.5<br />
EV/EBITDA 3.9 6.8 4.8 4.7<br />
HIGH 12-MONTH LOW<br />
421.73 152.00<br />
EXCESS PERFORMANCE<br />
SPIX 1 SMLCPSW 2<br />
3M -0.6% 2.5%<br />
6M -5.8% 3.1%<br />
12M -5.0% 2.4%<br />
1<br />
SPI ex Div.<br />
2<br />
Vontobel Small Caps Index<br />
BREAKDOWN<br />
Sales 2008<br />
by sector CHF mns Change Share<br />
- Paper Speciality 412.6 -8% 96%<br />
- Real Estate 19.2 -13% 4%<br />
by region<br />
- Europe 365.3 -7% 85%<br />
- America 24.6 -30% 6%<br />
- Asia 23.7 -12% 5%<br />
- RoW 18.2 2% 4%<br />
Total 431.7 -8% 100%<br />
KEY DATA<br />
CHF mns 2008 2009E 2010E<br />
Sales 432 325 327<br />
EBIT 13.5 18.9 20.9<br />
EBIT margin % 3.1 5.8 6.4<br />
Shareholders' net profit -19.4 16.2 11.6<br />
Return on equity % NM 5.7 3.9<br />
Total assets 519 584 580<br />
Equity 271 347 357<br />
Equity ratio % 52.3 59.5 61.6<br />
Interest-bearing debt 153 138 123<br />
Cash 18.6 109 105<br />
Operating cash flow -2.8 65.0 30.5<br />
Capex -36.7 -21.0 -20.0<br />
© 2009. The objectivity of this report may be compromised by existing or planned business relationships between <strong>the</strong> producer and <strong>the</strong> analysed company and potential<br />
conflicts of interest arising <strong>the</strong>reof. <strong>Investor</strong>s should <strong>the</strong>refore on no account use this report as <strong>the</strong> sole basis on which to make a decision. Please see <strong>the</strong> end of <strong>the</strong><br />
document for more details on potential conflicts of interest and disclaimer information.
<strong>Industriehold</strong>. <strong>Cham</strong><br />
<strong>Hold</strong><br />
Switzerland/Packaging/Paper 24-03-09<br />
Shareholders get 55%, CPG gets 45%<br />
The spin-off of <strong>Hammer</strong> <strong>Retex</strong> has finally come true (assuming AGM approval).<br />
The deal consists of 3 separate transactions:<br />
Cash inflow of CHF 62 mn is badly<br />
needed<br />
Shareholders will receive 1 unquoted<br />
HR share per IC share<br />
Offer price of CHF 109.45 is fair<br />
1) Sale of 45% stake<br />
In a first step, IC sold a 45% stake to Ludama <strong>Hold</strong>ing (consisting of Seewarte<br />
<strong>Hold</strong>ing AG and HR chairman Fritz Jörg). This provides IC with a cash inflow of<br />
CHF 62 mn and significantly streng<strong>the</strong>ns <strong>the</strong> company's balance sheet. The<br />
cash was badly needed as <strong>the</strong> Italian profit centre of CPG was already in breach<br />
of at least one of its covenants. The sale will result in a realized gain of CHF 8<br />
mn on <strong>the</strong> holding level. The company negotiated a favourable tax treatment<br />
and will <strong>the</strong>refore pay no more than CHF 0.5 mn in taxes on <strong>the</strong> gain.<br />
2) Distribution of a dividend in kind (HR shares)<br />
Pending AGM approval, IC shareholders will receive a dividend in kind in <strong>the</strong><br />
form of HR shares. Each IC share is eligible for 1 HR share. The HR shares will<br />
be unquoted and shareholders will hence not be able to trade <strong>the</strong>m on an<br />
exchange. Shareholders will receive <strong>the</strong> HR shares on 9 June 2009.<br />
3) Public tender offer<br />
Ludaman <strong>Hold</strong>ing will make a public tender offer for <strong>the</strong> 55% of HR shares<br />
which will be distributed to shareholders. The offer price will be CHF 109.45<br />
per share which amounts to a 15% premium over NAV. We had assumed a<br />
price of CHF 178 per share but did not factor in <strong>the</strong> additional shares sold to<br />
Ludama. Adjusted for <strong>the</strong> larger number of shares, we arrive at CHF 98 per<br />
share or CHF 112.6 incl. a 15% premium. We <strong>the</strong>refore deem <strong>the</strong> offer price to<br />
be fair. The offer period will be 6 April to 6 May 2009, with settlement<br />
expected on 10 June 2009.<br />
Given <strong>the</strong> current valuation of Swiss real estate companies, <strong>the</strong> 15% premium<br />
to NAV seems fair. Only Intershop and Warteck have P/NAV 09E ratios >1.0x.<br />
SWISS REAL ESATE VALUATION<br />
Swiss Real Estate Perf. Price/NAV<br />
NAV<br />
NAV growth Market cap<br />
Price YTD 08 09E 10E 08 09E 10E 08 09E 10E CHF mns<br />
Allreal 108 0.9% 0.98x 0.97x 0.96x 110.3 111.4 112.6 -0.1% 1.0% 1.1% 1,225<br />
BFW Liegenschaften 17.5 3.2% 0.56x 0.55x 0.56x 31.0 31.6 24.3 -3.3% 2.1% -23.3% 78<br />
Intershop <strong>Hold</strong>ing 275 -3.5% 1.11x 1.10x 1.07x 246.9 250.5 257.6 3.8% 1.5% 2.8% 578<br />
Mobimo 139 -1.8% 0.75x 0.75x 0.75x 185.1 185.2 185.3 1.8% 0.1% 0.0% 604<br />
PSP Swiss Property 46.0 -12.8% 0.74x 0.72x 0.71x 62.5 63.6 64.9 4.6% 1.8% 2.1% 1,951<br />
Swiss Prime Site 47.5 -6.6% 0.81x 0.81x 0.81x 58.7 58.6 58.3 2.0% -0.1% -0.4% 1,097<br />
Warteck Invest 1480 0.3% 1.08x 1.08x 1.08x 1,310 1,307 1,308 -0.1% -0.2% 0.1% 209<br />
Züblin 3.77 -17.7% 0.32x 0.31x 0.30x 11.7 12.3 12.4 2.0% 5.8% 0.8% 166<br />
Average -2.4% 0.78x 0.77x 0.76x 1.3% 1.5% -2.1% 771<br />
Max 16.0% 1.11x 1.10x 1.08x 4.6% 5.8% 2.8% 1,951<br />
Min -17.7% 0.32x 0.31x 0.30x -3.3% -0.2% -23.3% 78<br />
Median -1.8% 0.75x 0.75x 0.75x 1.9% 1.2% 0.4% 604<br />
Source: Vontobel Equity Research<br />
2 Vontobel Research
<strong>Industriehold</strong>. <strong>Cham</strong><br />
<strong>Hold</strong><br />
Switzerland/Packaging/Paper 24-03-09<br />
NEW OWNERSHIP STRUCTURE OF HAMMER RETEX<br />
Shareholders<br />
100%<br />
IC <strong>Cham</strong><br />
0-55%<br />
100%<br />
55%<br />
<strong>Cham</strong> Paper<br />
Group<br />
0%<br />
<strong>Hammer</strong> <strong>Retex</strong><br />
45%<br />
45-100%<br />
Ludama <strong>Hold</strong>ing<br />
Current share holdings<br />
Changes if spin-off approved<br />
Source: IC <strong>Cham</strong>, Vontobel Equity Research<br />
SCHEDULE OF THE SPIN-OFF<br />
Date<br />
Event<br />
6 April 2009 Start of <strong>the</strong> offer period<br />
6 April 2009 Start of trading of IC shares with tendered HR shares on 2 nd trading line<br />
24 April 2009 AGM<br />
6 May 2009 End of <strong>the</strong> offer period<br />
12 May 2009 Publication of final interim result<br />
13 May 2009 Start of <strong>the</strong> additional acceptance period<br />
27 May 2009 End of <strong>the</strong> additional acceptance period<br />
2 June 2009 Publication of <strong>the</strong> definitive final result<br />
3 June 2009 End trading of IC shares with tendered HR shares on 2 nd trading line<br />
9 June 2009 IC shares trade without HR shares<br />
9 June 2009 New name: <strong>Industriehold</strong>ing <strong>Cham</strong> changes to <strong>Cham</strong> Paper Group<br />
<strong>Hold</strong>ing<br />
10 June 2009 Settlement date<br />
Source: IC <strong>Cham</strong>, Vontobel Equity Research<br />
Only minor impact on income tax<br />
Withholding tax compensated by<br />
cash dividend<br />
Differing tax implications of<br />
accepting <strong>the</strong> offer<br />
Tax implications for investors<br />
For shareholders <strong>the</strong> spin-off has virtually no impact on income and capital gain<br />
taxes. Only <strong>the</strong> par value increase of CHF 1.0 per share which shareholders<br />
receive is subject to income tax at federal as well as on several cantonal levels<br />
(for Swiss private investors).<br />
The increase in par value due to <strong>the</strong> issued HR shares is subject to 35%<br />
withholding tax. While Swiss residents can reclaim <strong>the</strong> withholding tax, for<br />
foreign investors this depends on <strong>the</strong> respective double tax treaties (if<br />
existent).<br />
IC will pay a cash dividend of CHF 0.538 per share directly to <strong>the</strong> tax<br />
authorities, which equals <strong>the</strong> withholding tax deductions from <strong>the</strong> dividend in<br />
kind as well as <strong>the</strong> cash dividend.<br />
Unlike for legal entities (like corporations), accepting <strong>the</strong> tender offer for <strong>the</strong><br />
HR shares will have no capital gains tax implications for private investors. For<br />
legal entities, capital gains taxes apply.<br />
3 Vontobel Research
1.<br />
3.<br />
2.<br />
4.<br />
<strong>Industriehold</strong>. <strong>Cham</strong><br />
<strong>Hold</strong><br />
Switzerland/Packaging/Paper 24-03-09<br />
Uncertain future for CPG<br />
IC now a focused niche player in<br />
coated specialty paper<br />
Pulp and paper chemicals prices have<br />
eased…<br />
The spin-off of HR will allow management to entirely focus on its core specialty<br />
paper business going forward. The divestment of <strong>the</strong> ailing Norwegian profit<br />
centre Hunsfos in late 2008 left CPG with its (still) profitable Swiss profit centre<br />
(<strong>Cham</strong>) and <strong>the</strong> struggling Italian profit centre (Carmignano and Condino). The<br />
company now acts as a niche player entirely focused on coated specialty<br />
papers.<br />
But market conditions remain extraordinarily difficult for FY09. Admittedly, on<br />
<strong>the</strong> one hand <strong>the</strong> easing of pulp and paper chemicals prices should soften <strong>the</strong><br />
pressure on margins and <strong>the</strong> end of <strong>the</strong> de-stocking, which has had a negative<br />
impact on <strong>the</strong> anyway lower demand over <strong>the</strong> past months, may finally draw<br />
nearer. On <strong>the</strong> o<strong>the</strong>r hand, however, energy prices are set to remain high and<br />
<strong>the</strong> company will feel <strong>the</strong> impact of <strong>the</strong> depreciated EUR.<br />
PULP AND PAPER CHEMICAL PRICE INDICES<br />
310<br />
260<br />
210<br />
160<br />
110<br />
60<br />
1993 1995 1997 1999 2001 2003 2005 2007 2009<br />
ISPI Pulp Price Index Pulp and Paper Chemicals Index<br />
Source: Bloomberg, Vontobel Equity Research<br />
EMU ELECTRICITY CPI INDEX<br />
140<br />
130<br />
120<br />
110<br />
100<br />
90<br />
80<br />
2002 2003 2004 2005 2006 2007 2008 2009<br />
Source: Bloomberg, Vontobel Equity Research<br />
… but so have costs of substitutes!<br />
Demand should never<strong>the</strong>less remain subdued for <strong>the</strong> foreseeable future and<br />
despite various plant closures across Europe, overcapacities continue to loom.<br />
Fur<strong>the</strong>rmore, <strong>the</strong> massive decline in oil prices will sharpen <strong>the</strong> competitive edge<br />
of plastics vs. paper in <strong>the</strong> flexible packaging market. Similarly, aluminium<br />
prices below USD 2,000/t favour cheaper but more material intensive<br />
production technologies for inner liners (16% of annual revenues) vs. <strong>the</strong> more<br />
efficient, but also more costly vacuum metalizing technology used by CPG. The<br />
increasing consolidation of converters should also increase pricing pressure<br />
from <strong>the</strong> customers.<br />
WTI CRUDE, USD/BBL<br />
170<br />
150<br />
130<br />
110<br />
90<br />
70<br />
50<br />
30<br />
2006 2007 2008 2009<br />
Source: Bloomberg, Vontobel Equity Research<br />
HIGH GRADE ALUMINIUM, USD/T<br />
3,500<br />
3,000<br />
2,500<br />
2,000<br />
1,500<br />
1,000<br />
2001 2002 2003 2004 2005 2006 2007 2008 2009<br />
Source: Bloomberg, Vontobel Equity Research<br />
EBIT margin target unlikely to be met<br />
anytime soon<br />
All in all, IC is well positioned in a few attractive niches in <strong>the</strong> specialty papers<br />
market. But even though CPG is moving in <strong>the</strong> right direction, we believe it will<br />
4 Vontobel Research
<strong>Industriehold</strong>. <strong>Cham</strong><br />
<strong>Hold</strong><br />
Switzerland/Packaging/Paper 24-03-09<br />
take time before <strong>the</strong> company will be able to achieve its EBIT margin target of<br />
5-12% (over <strong>the</strong> cycle). While <strong>the</strong> cash inflow from <strong>the</strong> sale of <strong>the</strong> 45% stake<br />
in HR has streng<strong>the</strong>ned <strong>the</strong> company's balance sheet, <strong>the</strong> Italian profit centre is<br />
already in breach of covenants. As a consequence, CHF 23 mn of long term<br />
debt had to be reclassified as short term debt, even though management is<br />
confident that <strong>the</strong> bank syndicate in Italy will not force <strong>the</strong> immediate<br />
repayment of <strong>the</strong> debt.<br />
We include <strong>the</strong> sale of <strong>the</strong> 45% stake<br />
in HR in our estimates<br />
Changes to our estimates<br />
As <strong>the</strong> distribution of <strong>the</strong> dividend in kind (<strong>Hammer</strong> <strong>Retex</strong> shares) is still<br />
pending AGM approval (24 April), we have only included <strong>the</strong> sale of <strong>the</strong> 45%<br />
stake in HR in our estimates. Hence, reported EPS 09E increased 38%<br />
(CHF 8 mn realized gain on <strong>the</strong> holding level), but have we lowered our adj.<br />
EPS 09E, 10E, and 11E by 43%, 33% and 14% respectively due to significantly<br />
higher minorities.<br />
CHANGES TO OUR ESTIMATES<br />
In CHF mn<br />
New Vontobel Estimates Old Vontobel Estimates<br />
% Change<br />
2009E 2010E 2011E 2009E 2010E 2011E 2009E 2010E 2011E<br />
Revenues 320.1 322.4 324.0 320.1 322.4 324.0 +0% +0% +0%<br />
EBITDA 40.4 42.0 38.1 40.4 42.0 38.1 +0% +0% +0%<br />
EBIT 18.9 20.9 17.2 18.9 20.9 17.2 +0% +0% +0%<br />
EPS Reported 23.3 16.7 15.4 16.9 22.4 17.8 +38% -26% -14%<br />
EPS Adjusted 6.7 11.6 15.4 11.8 17.4 17.8 -43% -33% -14%<br />
Source: Vontobel Equity Research<br />
Conclusion & Valuation<br />
We advise accepting <strong>the</strong> offer<br />
The spin-off of <strong>Hammer</strong> <strong>Retex</strong> will finally come true. The cross-subsidy to <strong>the</strong><br />
paper business by <strong>the</strong> sale of a 45% stake is somewhat unfortunate for<br />
investors, but <strong>the</strong> terms of <strong>the</strong> takeover offer for <strong>the</strong> remaining 55% stake in<br />
HR are fair. We <strong>the</strong>refore advise investors to accept <strong>the</strong> offer and tender <strong>the</strong><br />
HR shares which <strong>the</strong>y will receive as a dividend in kind.<br />
<strong>Hold</strong>, PT: CHF 200<br />
Once <strong>the</strong> HR shares have been distributed to shareholders, IC shares will fall<br />
approx. by <strong>the</strong> offer price or CHF 109.45 per share. Excluding HR, <strong>the</strong> paper<br />
business is currently valued at 4.3x EV/EBITDA 09E (assuming net debt of<br />
CHF 60 mn and EBITDA of CHF 30 mn). Hence, we believe <strong>the</strong> current share<br />
price offers no upside and advise against an investment as we fail to identify<br />
any catalysts for <strong>the</strong> shares once investors have cashed in on <strong>the</strong>ir HR shares.<br />
We <strong>the</strong>refore maintain our <strong>Hold</strong> rating with a PT of CHF 200 per share.<br />
INTERNATIONAL PEER GROUP<br />
20/03/2009 P/E 09 P/E 10<br />
Ev/EBITDA<br />
09<br />
Ev/EBITDA<br />
10<br />
Ev/EBITDA<br />
09<br />
Ev/EBITDA<br />
10<br />
Stora Enso Oyj 23.4 x 15.7 x 5.7 x 5.3 x 0.4 x 0.4 x<br />
UPM Kymmene Oyj 18.1 x 9.5 x 5.7 x 5.1 x 0.4 x 0.4 x<br />
M Real n.m. n.m. 12.4 x 8.1 x 0.1 x 0.1 x<br />
International Paper 44.4 x 12.2 x 5.6 x 4.9 x 0.6 x 0.6 x<br />
Sappi n.m. 8.9 x 6.7 x 4.9 x 0.4 x 0.4 x<br />
Holmen Ab 13.6 x 13.6 x 6.9 x 6.9 x 0.8 x 0.8 x<br />
Ahlstrom Oyj 33.5 x 15.5 x 6.5 x 5.8 x 0.5 x 0.5 x<br />
Paper Industry Average 26.6 x 12.6 x 7.1 x 5.9 x 0.5 x 0.5 x<br />
Source: Vontobel Equity Research<br />
5 Vontobel Research
<strong>Industriehold</strong>. <strong>Cham</strong><br />
<strong>Hold</strong><br />
Switzerland/Packaging/Paper 24-03-09<br />
CONSOLIDATED FINANCIAL DATA (CHF MNS)<br />
2004 2005 2006 2007 2008 2009E 2010E 2011E<br />
SALES 441 426 455 471 432 325 327 324<br />
- change (%) -58 -3 7 3 -8 -25 1 -1<br />
EBITDA 62 48 42 56 40 40 42 38<br />
- as % of sales 14.1 11.2 9.2 12.0 9.3 12.4 12.8 11.8<br />
INTANGIBLES AMORTIZATION -1.9 -2.2 -2.8 -2.2 -1.8 -1.1 -0.7 -0.7<br />
DEPRECIATION -31.4 -26.4 -25.8 -26.7 -25.0 -20.3 -20.4 -20.2<br />
- as % of sales 7.1 6.2 5.7 5.7 5.8 6.2 6.2 6.2<br />
- as % of avg.cap.exp./5-y -83 -79 -92 -102 -89 -74 -75 -73<br />
OPERATING PROFIT 28.9 19.1 13.3 27.5 13.5 18.9 20.9 17.2<br />
- change (%) -44 -34 -31 107 -51 41 10 -18<br />
- as % of sales 6.6 4.5 2.9 5.8 3.1 5.8 6.4 5.3<br />
FINANCIAL RESULT -7.6 2.9 -2.3 -6.3 -12.5 -6.5 -4.5 -3.8<br />
NON-RECURRING ITEMS -0.2 0.0 -26.8 0.0 -19.9 8.0 0.0 0.0<br />
PRETAX PROFIT 21.1 22.0 -15.8 21.2 -18.9 20.4 16.4 13.4<br />
- change (%) -41 4 -172 -234 -189 -208 -20 -18<br />
- as % of sales 4.8 5.2 -3.5 4.5 -4.4 6.3 5.0 4.1<br />
TAXES -9.2 -4.4 4.5 -1.4 -0.5 -1.0 -1.4 -1.1<br />
- tax rate (%) 44 20 28 7 -2 5 8 8<br />
GROUP NET PROFIT 11.9 17.5 -11.4 19.7 -19.4 19.4 15.0 12.3<br />
- change (%) -37 48 -165 -274 -198 -200 -22 -18<br />
- as % of sales 2.7 4.1 -2.5 4.2 -4.5 6.0 4.6 3.8<br />
MINORITY INTERESTS 0.0 0.0 0.0 0.0 0.0 -3.2 -3.5 -1.6<br />
SHAREHOLDERS' NET PROFIT 11.9 17.5 -11.4 19.7 -19.4 16.2 11.6 10.7<br />
- change (%) -7 48 -165 -274 -198 -183 -29 -8<br />
- as % of sales 2.7 4.1 -2.5 4.2 -4.5 5.0 3.5 3.3<br />
- as % of equity 4.1 5.4 -3.8 6.2 -7.1 5.7 3.9 3.5<br />
CASH FLOW FROM OPERATING ACTIVITIES 24.0 31.0 28.6 31.5 -2.8 65.0 30.5 32.8<br />
- change (%) -59 29 -8 10 -109 -2382 -53 7<br />
- as % of sales 5.4 7.3 6.3 6.7 -0.7 20.0 9.3 10.1<br />
CAPITAL EXPENDITURE -24.3 -20.9 -35.5 -23.9 -36.7 -21.0 -20.0 -37.0<br />
- 5-year average -37.6 -33.3 -27.9 -26.3 -28.2 -27.6 -27.4 -27.7<br />
DATA PER REGISTERED (CHF, ADJ)<br />
EARNINGS 15.6 24.0 -15.5 26.9 -27.2 23.3 16.7 15.4<br />
- change (%) -1 53 -165 274 -201 186 -29 -8<br />
CASH EARNINGS 13.0 10.8 17.4 18.5 -3.7 6.7 11.6 15.4<br />
- change (%) 14 -17 61 7 -120 -280 73 33<br />
DIVIDEND 5.0 5.0 0.0 0.0 0.5 0.0 0.0 0.0<br />
- payout ratio (%) 32 21 0 0 -2 0 0 0<br />
CASH FLOW FROM OPERATING ACTIVITIES 32 42 39 43 -4 94 44 47<br />
BOOK VALUE 403 442 410 435 391 411 426 444<br />
TOTAL ASSETS 562 595 583 593 519 584 580 577<br />
CASH 25.0 50.2 58.0 57.4 18.6 109.2 104.7 85.5<br />
INTEREST-BEARING DEBT 144 143 136 138 153 138 123 108<br />
NET DEBT 119 93 78 81 134 28 18 22<br />
- as % of group equity 41 29 26 25 49 8 5 6<br />
EQUITY SHAREHOLDER 293 325 301 319 271 285 295 308<br />
GROUP EQUITY 293 325 301 319 271 347 357 370<br />
- as % of total assets 52 55 52 54 52 59 62 64<br />
NO. OF REGISTERED (MNS) 0.760 0.731 0.734 0.733 0.713 0.693 0.693 0.693<br />
Source: Vontobel Equity Research<br />
6 Vontobel Research
5.<br />
Disclaimer & Disclosures<br />
Vontobel Research<br />
1. Analyst Declaration This Vontobel Report has been produced by <strong>the</strong> organizational unit responsible for investment research<br />
(Research unit, sell-side analysis) of Bank Vontobel AG, Gotthardstrasse 43, CH-8022 Zurich, tel. +41 (0)58<br />
283 71 11 http://www.vontobel.com/. Bank Vontobel AG is subject to supervision by <strong>the</strong> Swiss Financial<br />
Market Supervising Authority (FINMA), Schwanengasse 12, Bern, http://www.finma.ch. The authors listed<br />
on page 1 confirm that this report gives a complete and precise reflection of <strong>the</strong>ir opinion of <strong>the</strong> analysed<br />
company and that <strong>the</strong>y have nei<strong>the</strong>r directly nor indirectly received compensation for <strong>the</strong>ir assessment or<br />
opinion. The compensation of <strong>the</strong> authors of this report is not directly related to <strong>the</strong> investment banking<br />
volume generated between Vontobel Group and <strong>the</strong> analysed company.<br />
The author(s) of this document owns securities in <strong>the</strong> analysed companies None<br />
The document was not submitted to <strong>the</strong> analysed companies before publication or distribution<br />
2. Disclosure of conflicts of interest As an internationally active company, Vontobel Group is subject to a number of provisions in drawing up<br />
and distributing its investment research documents. The maker and distributors of this financial analysis point<br />
out <strong>the</strong> following potential conflicts of interests: The author and its associated companies<br />
• Will or are attempting to generate investment banking business with <strong>the</strong> analysed company within <strong>the</strong><br />
next three months,<br />
• conduct transactions with securities of <strong>the</strong> analysed company from time to time,<br />
• have participated in capital market transactions/<strong>the</strong> issue of securities of <strong>the</strong> analysed companies in <strong>the</strong><br />
last 12 months: None,<br />
• have been active as Market Maker in equities of <strong>the</strong> analysed companies in <strong>the</strong> last 12 months: None,<br />
• have provided o<strong>the</strong>r publicly known Investment Banking services for companies mentioned in this<br />
report in <strong>the</strong> last 12 months: None<br />
• have received compensation for products and services outside Investment Banking from analysed<br />
companies: None,<br />
• hold more than 5 % of <strong>the</strong> voting rights of <strong>the</strong> analysed companies: None,<br />
• and <strong>the</strong> analysed companies have executives who are members of <strong>the</strong> board of Bank Vontobel AG or<br />
affiliated companies: None<br />
• have executives who are members of <strong>the</strong> board of <strong>the</strong> analysed companies None<br />
• have no significant financial interest in <strong>the</strong> analysed companies and<br />
• have reached no agreement with <strong>the</strong> analysed companies regarding this financial analysis.<br />
3. Research rating history The Ratings and / or Rating Outlook of <strong>the</strong> analysed companies were last changed as follows:<br />
<strong>Industriehold</strong>. <strong>Cham</strong> was last changed from Reduce to <strong>Hold</strong> on 19-12-2008<br />
4. Global rating distribution Share of VT IB clients<br />
VT Research universe VT Research universe in rating category<br />
No. As % As %<br />
Buy 48 29% 27%<br />
<strong>Hold</strong> 103 61% 25%<br />
Reduce 17 10% 35%<br />
The table above is revised at <strong>the</strong> beginning of each quarter, i.e. it currently reflects <strong>the</strong> status as at 31<br />
December 2008.<br />
5. Methodology / Rating system Bank Vontobel’s financial analysts apply a variety of valuation methodologies (e.g. DCF and EVA modelling,<br />
'sum-of-<strong>the</strong>-parts', break-up and event-related analysis, peer group and market multiple comparisons) to<br />
<strong>the</strong>ir own financial projections for <strong>the</strong> companies <strong>the</strong>y cover. Overall, our investment recommendations take<br />
into consideration an assessment of <strong>the</strong> company in its entirety and of <strong>the</strong> sector to which it belongs<br />
("bottom-up approach"). Price target calculation is based on a number of factors, observations and<br />
assumptions, including but not limited to: key business performance indicators and ratios, public and private<br />
valuation multiples, comparison with one or more peer groups of comparable companies, overall equity<br />
market valuations, and with <strong>the</strong> company's own history and track record.<br />
The stock recommendations published by Vontobel’s research team are defined as follows:<br />
Rating<br />
Large Cap<br />
Buy<br />
<strong>Hold</strong><br />
Reduce<br />
Mid & small cap<br />
Buy<br />
<strong>Hold</strong><br />
Reduce<br />
Definition<br />
SLI Index (inc. tolerance) / non-Swiss stocks of similar market capitalisation<br />
Price target (when set) implies 10% or more upside on a 12-month horizon<br />
Price target (when set) implies 0-10% upside on a 12-month horizon<br />
Price target (when set) implies downside on a 12-month horizon<br />
O<strong>the</strong>r Swiss stocks / non-Swiss stocks of similar market capitalisation<br />
Price target (when set) implies 15% or more upside on a 12-month horizon<br />
Price target (when set) implies 0-15% upside on a 12-month horizon<br />
Price target (when set) downside on a 12-month horizon<br />
Analysts are required to review <strong>the</strong>ir recommendations under <strong>the</strong> following conditions:<br />
Buy: When upside to price target falls below 5% (all caps).<br />
<strong>Hold</strong>: When upside to price target reaches or exceeds 15% for large caps or 20% for mid & small cap;<br />
when downside to price target reaches or exceeds 5% (all caps).<br />
Reduce: When upside to price target reaches or exceeds 5% (all caps).<br />
We reserve <strong>the</strong> right to waive repeated changes of recommendation during periods of unusually high equity<br />
market or specific stock price volatility
Disclaimer & Disclosures<br />
Vontobel Research<br />
Share prices used in this financial report are closing prices on <strong>the</strong> date given. Deviations from this rule are<br />
disclosed. The underlying figures of a company valuation, i.e. <strong>the</strong> profit and loss statement, capital flow and<br />
balance sheet are estimates based on date and thus bear certain risks.<br />
They can change at any time without notice when o<strong>the</strong>r models, assumptions, interpretations and/or<br />
estimates are applied.<br />
The use of <strong>the</strong> valuation methods do not rule out <strong>the</strong> risk that <strong>the</strong> stock fails to achieve <strong>the</strong> "fair value" within<br />
<strong>the</strong> projected period. Numerous factors influence share price performance. Unforeseen changes can arise<br />
from <strong>the</strong> emergence of competitive pressure, from a change in demand for <strong>the</strong> products of an issuer,<br />
technological development, from macroeconomic activity, exchange rate fluctuation or from a shift in society’s<br />
moral concept. Changes in taxation law or supervisory regulations can often have a grave, unforeseen impact.<br />
This discourse on valuation methods and risk factors does not claim completeness.<br />
For more information on our methodology and rating system see www.vontobel.ch.<br />
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