BDI BioEnergy Intern Neutral. Activity level in Q3 might not support FY estimates - PDF

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8/11/1 8/1/11 8/3/11 8/5/11 8/7/11 8/9/11 8/11/11 8/1/12 8/3/12 8/5/12 8/7/12 8/9/12 MATELAN Research Preview Note Price as of 9/11/12: November 212 Company / Sector Fair Value Recommendation BDI
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8/11/1 8/1/11 8/3/11 8/5/11 8/7/11 8/9/11 8/11/11 8/1/12 8/3/12 8/5/12 8/7/12 8/9/12 MATELAN Research Preview Note Price as of 9/11/12: November 212 Company / Sector Fair Value Recommendation BDI BioEnergy Intern. 2. Neutral HiTec Engineering (Renewable Energies) ( 2.) (unchanged) Activity level in Q3 might not support FY estimates Share price performance Share data Volume (l.s.) Close (r.s.) Reuters D7I.F Bloomberg D7I GY No. of shares (m) 3.8 Monthly volume Free float 19.1% Market cap. (m) 33. EV (m) n.m. Valuation EV/Sales n.m. n.m. EV/ EBITDA n.m. n.m. EV/EBIT n.m. n.m. PER Div. yield 2.9% 2.9% RoCE 1.8% 5.1% RoE 2.4% 4.2% Investment case While the second quarter showed some signs of improvement and following up on this performance would have left the company positive even in a transition year, we might now face a weak level of activity in Q3, which might not allow the company to cover current fix costs. Though this would trigger a revision in our full year earnings estimates, the company s strong cash position should still more than support the current market valuation. In any case, we stay Neutral on the stock until momentum picks up again. LOW ACTIVITY IN Q3 WEIGHS ON EARNINGS While the second quarter showed some positive signs we are somewhat cautious with regard to BDI s development in Q3. Work on the new BioDiesel orders appears to show some delays and there is little left to do in FVD and BioGas. This should lead to a situation in which BioDiesel might just break-even while FVD and BioGas should turn negative on EBIT level. As a consequence, net profit for the quarter as well as the nine month period should become negative. FY FORECAST MIGHT BE TOO HIGH With losses in BioGas most likely not phasing out as planned, it will be hard to achieve our FY forecasts or even reaching a positive result. The BioGas division s performance might even require that the goodwill in BDI s accounts needs to be written down, which is not yet part of our estimates, and which would trigger an even stronger earnings revision after the release of results. Though an earnings revision should have a negative effect on our valuation, we should still see some upside from the current share price based on the company s high cash position. For additional disclosures please refer to the appendix Analyst Forecasts Hartmut Moers Sales Tel.: EBITDA EBIT Adj. EPS Dr. Anne Gronski Dividend Tel.: Oper. CF Free CF Q3 12 Preview EUR Q3 12e Q3 11 Change 9M 12e FY 12e FY 11 Change Order book at end of period 29,9 22,2 34.7% 29,9 15, 15,1 -.7% BioDiesel plant manufacturing 2,6 7, % 9,381 12, 22, % Fine vacuum destillation 1, 1, % 4,934 8, 6, % BioGas plant manufacturing n.m. 4,962 9, 5,221 n.m. Sales 4,1 9, % 19,277 29, 34, % BioDiesel plant manufacturing 5 1, % 5 1,2 4, % Margin 1.9% 14.8%.5% 1.% 19.7% Fine vacuum destillation % % Margin n.m. 17.1% n.m. 9.4% 1.8% BioGas plant manufacturing -1,3-192 n.m. -1, ,593 n.m. Margin n.m. n.m. n.m. -1.1% -3.5% EBIT -1,55 1, % -1,55 1,4 3, % Margin -37.8% 12.5% -43.4% n.m. 3.6% 1.5% -65.7% Net profit a.m. -1,45 1, % ,345 4, % Source: BDI, Matelan Research - 2 - MATELAN Research Sales and EBIT-margin % 8% 6% 4% 2% % Adj. EPS and DPS Sales (l.s.) EBIT-margin (r.s.) Adj. EPS DPS Source: BDI, MatelanReserch, left scale in EURm Operating cash flow and free cash flow Source: BDI, MatelanReserch, EUR, DPS incl. capital reduction Capital expenditure and depreciation Opearting cash flow Free cash flow Capex Depreciation Source: BDI, MatelanReserch, EURm, excl. invest. in securities Equity and net debt Source: BDI, MatelanReserch, EUR, excl. unsched. depreciation RoCE and RoE 25% 2% 15% 1% 5% % Equity Net debt (neg. numbers = net cash) RoCE RoE Source: BDI, MatelanReserch, EURm Source: BDI, MatelanReserch - 3 - PROFIT & LOSS ACCOUNT EURm Sales Growth -2.% -45.% 17.7% -13.1% -16.4% 2.7% 2.% 19.% 18.% Change invent. / intern. prod. assets Total Output Growth n.m. n.m. 17.6% n.m. n.m. 2.7% 2.% 19.% 18.% Cost of goods sold Gross profit Gross-margin 28.8% 46.2% 52.9% 47.5% 53.6% 56.% 56.% 56.% 56.% 56.% Personnel expenses Other operating income Other operating expenses EBITDA EBITDA-margin 6.4% 11.8% 16.7% 13.2% 17.2% 7.9% 1.6% 11.1% 11.9% 11.5% Amortisation and Depreciation EBIT EBIT-margin 6.1% 7.8% 5.1% 7.9% 9.8% 3.6% 7.1% 8.5% 9.9% 9.9% Financial costs Participation result Income from securities Financial result Extraordinary result EBT Income taxes Earnings transferred to limited partners Net profit Growth -16.3% -45.3% 33.3% 15.6% -65.6% 77.2% 37.3% 33.8% 16.7% thereof minorities thereof net profit attrib. to shareholders Average no. of shares (m) EPS (EUR) Growth -16.2% -45.3% 46.2% 11.9% -67.6% 77.2% 37.3% 33.8% 16.7% Adj. EPS (EUR) Growth -16.2% -45.3% 46.2% 11.9% -67.6% 77.2% 37.3% 33.8% 16.7% DPS (EUR) Payout Ratio.% 61.4% 389.3% 271.4% 22.9% 7.6% 39.9% 29.% 25.% 25.% BALANCE SHEET EURm Intangible assets thereof goodwill Tangible assets Financial assets Other fixed assets Fixed assets Inventories Accounts receivable Cash and marketable securities Other current assets Current assets TOTAL ASSETS Subscribed capital Reserves Profit for the year Minorities Shareholder's equity Equity ratio 61.7% 63.3% 7.1% 55.9% 63.8% 67.% 65.7% 64.6% 63.8% 63.% Short term financial liabilities Long term financial liabilities Financial liabilities Gearing.%.%.%.%.%.%.%.%.%.% Pension and similar provisions Other provisions and deferrals Provisions Accounts payable Advances received Trade liabilities Other liabilities TOTAL LIABILITIES CASH FLOW STATEMENT EURm EBIT Depreciation and amortization Change in other provisons Change in net working capital Change in other assets & liabilities Financial result Extraordinary result Discontinued operations Taxes Cash flow from operating activities Investments in tangible and intangible assets Investments in financial assets Net investments in other fix assets Cash flow from investing activities Change in financial liabilities Change in shareholder's equity Change in pensions and similar prov Dividend payments Other / Consolidation / Currency Cash flow from financing activities Cash at the beginning of period Change in cash Cash at the end of period DIVISIONAL BREAKDOWN EURm BioDiesel plant manufacturing Fine-vacuum distillation n.a BioGas plant manufacturing Sales BioDiesel plant manufacturing Fine-vacuum distillation n.a BioGas plant manufacturing EBIT BioDiesel plant manufacturing 6.1% 12.3% 4.7% 11.3% 19.7% 1.% 5.% 8.% 1.% 1.% Fine-vacuum distillation n.a % 8.7% 5.2% 1.8% 9.4% 1.% 1.% 1.% 1.% BioGas plant manufacturing n.a. n.a. n.a % -3.5% -1.1% 7.% 8.% 1.% 1.% EBIT-margin 6.1% 8.2% 5.2% 8.% 1.5% 3.6% 7.1% 8.6% 1.% 1.% - 5 - GROWTH Sales -12.2% -2.% -45.% 17.7% -13.1% -16.4% 2.7% 2.% 19.% 18.% EBITDA -65.% 52.4% -24.4% -6.7% 19.3% -64.% 62.9% 26.% 27.5% 13.7% EBIT -66.6% 7.5% -64.8% 8.6% 13.4% -71.3% 139.4% 44.6% 38.9% 18.% Net profit -52.2% -16.3% -45.3% 33.3% 15.6% -65.6% 77.2% 37.3% 33.8% 16.7% MARGINS Gross 28.8% 46.2% 52.9% 47.5% 53.6% 56.% 56.% 56.% 56.% 56.% EBITDA 6.4% 11.8% 16.7% 13.2% 17.2% 7.9% 1.6% 11.1% 11.9% 11.5% EBIT 6.1% 7.8% 5.1% 7.9% 9.8% 3.6% 7.1% 8.5% 9.9% 9.9% Net 7.2% 7.2% 7.4% 8.4% 1.6% 4.6% 6.8% 7.7% 8.7% 8.6% PROFITABILITY RoE 8.7% 6.7% 3.% 6.5% 7.5% 2.4% 4.2% 5.5% 6.9% 7.% RoA 3.% 3.% 1.3% 2.% 3.8%.7% 2.% 2.7% 3.6% 4.% RoCE 75.9% 21.3% 9.1% 13.3% 12.6% 1.8% 5.1% 7.3% 9.9% 1.4% CAPITAL STRUCTURE Equity ratio 61.7% 63.3% 7.1% 55.9% 63.8% 67.% 65.7% 64.6% 63.8% 63.% Asset turnover Net working capital / sales 24.9% -1.4% -4.8% 22.6% 36.6% 7.7% 7.4% 7.2% 7.% 69.8% Receivables days outstanding Payables days outstanding VALUATION Share price x No of shares = Market Cap Net debt (- Net cash) LT provisions Minorities Participations = Enterprise Value EV / Sales.9 n.m. n.m. n.m..1 n.m. n.m. n.m. n.m. n.m. EV / EBITDA 13.7 n.m. n.m. n.m..5 n.m. n.m. n.m. n.m. n.m. EV / EBIT 14.5 n.m. n.m. n.m. 1. n.m. n.m. n.m. n.m. n.m. PE Dividend yield.% 5.7% 21.4% 16.% 1.7% 2.9% 2.9% 2.9% 3.3% 3.9% Price / Book Based on average share price up to, Net Debt, LT provisions, Minorities and Participations are year-end numbers ADDITIONAL DISCLOSURES This report has been prepared by MATELAN Research GmbH, Koblenzer Str. 79, Bonn. MATELAN s policy prohibits all research analysts to invest in any stock that is covered by MATELAN. (1) Analyst certification The analyst(s) responsible for the content of this research report hereby certifies that (1) all views expressed in this report accurately reflect his/her personal views about any and all of the subject securities or issuers and (2) no part of his/her compensation was, is or will be directly or indirectly related to the specific recommendation(s) or view(s) of this report. MATELAN may have sent extracts of this research report to the subject company for the purpose of verifying factual accuracy. The information provided by the latter was taken into consideration in the report. However, this entailed no change of the assessment. (2) Disclosures about potential conflicts of interest MATELAN Research GmbH will receive compensation from BDI for services provided in. (3) Rating definitions Security firms use a variety of rating terms and systems. Investors should carefully read the definitions of the rating system used in each research report. In addition, since the research report contains more complete information concerning analyst s views, investors should carefully read the entire research report and not infer its contents from the ratings alone. In any case, ratings (or research) should not be used or relied upon as investment advice. An investor s decision to buy or sell a stock should depend on individual circumstances (such as the investor s existing holdings) and other considerations. MATELAN Research GmbH uses an absolute rating system, which varies considerably from relative rating systems (such as Overweight, Equal Weight or Underweight ). Stock ratings are defined as follows: Strong Buy: In the next 6 to 12 months, the analyst expects a potential absolute change in value of over 2% with high forecast certainty. Buy: In the next 6 to 12 months, the analyst expects a potential absolute change in value of more than 1%. Neutral: In the next 6 to 12 months, the analyst expects a potential absolute change in value of over % up to a maximum of 1%. Reduce: In the next 6 to 12 months, the analyst expects a potential absolute negative change in value of up to -1%. Sell: In the next 6 to 12 months, the analyst expects a potential absolute negative change in value of over -1 % with high forecast certainty. The change in stock price results from the difference between the current share price and the analyst s performance expectations, which are generally based on a fair value calculation performed on the basis of a discounted cash flow model and a key comparison analysis. (4) Additional information for clients in Germany and other countries This research report has been produced in Germany. It was approved and distributed by MATELAN Research GmbH, which is authorized by the BundesanstaltfürFinanzdienstleistungsaufsicht (BaFin). Laws and regulations in 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. This document may not be distributed in the UK, in the United States, Canada, Australia or Japan or to any U.S. person DISCLAIMER This research publication has been prepared by MATELAN analysts based on publicly available data that is believed to be accurate and complete. While reasonable care has been taken to ensure that the information contained herein is not untrue or misleading at the time of publication, MATELAN provides no representation or warranty in relation to its accuracy, completeness or reliability. Possible errors or incompleteness of the information do not constitute grounds for liability, either with regard to indirect or to direct or consequential damages. In particular, MATELAN is not liable for the statements, plans or other details contained in the information concerning the examined companies, strategies, economic situations, market and competitive situations, regulatory environment, etc. Neither MATELAN nor its employees are liable for the accuracy and completeness of the statements, estimates and conclusions derived from the information contained in this report. To the extent this research report is being transmitted in connection with an existing contractual relationship, e.g. financial advisory or similar services, the liability of MATELAN shall be restricted to gross negligence and wilful misconduct. In any case, the liability of MATELAN is limited to typical, foreseeable damages and liability for any indirect damages is excluded. This report does not constitute an offer to sell, or a solicitation of an offer to purchase, any security. MATELAN may perform services to other companies mentioned in this report. Directors or employees of MATELAN may serve on the board of directors of companies mentioned in this report. Any opinions contained herein are subject to change without notice. The analysis contained herein is based on numerous assumptions. Different assumptions could result in materially different results. MATELAN does not accept any liability for any loss or damage out of the use of all or any part of this report. Additional information will be made available upon request. Past performance is not necessarily indicative of future results. Investors should make their own investment decisions without relying on this publication. Only investors with sufficient knowledge and experience in financial matters to evaluate the merits and risks should consider an investment in any issuers or market discussed herein and other persons should not take any action on the basis of this publication. Any investments referred to herein may involve significant risk, are not necessarily available in all jurisdictions, may be illiquid and not be suitable for all investors. The price of securities may decrease or increase and as a result investors may lose the amount originally invested. Changes in exchange rates may also cause the value of investments to decrease or increase. Any documents or information we provide is solely for informational purposes and directed only to persons we reasonably believe to be investment professionals. All such communications and any activity to which they relate are available only to such investment professionals; any activity arising from such communications will only be carried out with investment professionals. Persons who do not have professional experience in matters relating to investments shout not rely upon such communications ADDITIONAL INFORMATION All rights are reserved. Copyrights and database rights protection exists in this publication. It may not be reproduced or redistributed without prior express permission of MATELAN. CONTACT DATA For further information please contact: Matelan Research GmbH Koblenzer Straße Bonn Analyst: Hartmut Moers Tel:
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