AGFA - · 2018. 3. 11. · I. Company Description Activities Description: AGFA consists of 2 core activities: medical imaging (43%) and graphic printing (49%). In addition, there

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Summary :

Conclusion: The current management can present a good track record. The pension problem probably prevented an acquisition by a larger player and also made it difficult to get an accurate valuation. The improving expectations in terms of growth, profitability and capital needs provide a fair value of 5.4 Euro in a conservative scenario.

FOR QUALIFIED INVESTORS ONLY, Please see inside front cover for important disclosures

Share Price 3.89 EUR Number of shares 167.8 m

Fair Value 5.40 EUR Market Cap 653 mEUR

Upside 39% Enterprise Value 1626 mEUR

Symbol ENXTBR:AGFB Credit Rating NA

Isin Code BE0003755692

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Sales 2,755 3,023 3,091 2,865 2,620 2,659 2,537 2,443 2,421 2,425

Growth -9.1% 9.7% 2.2% -7.3% -8.6% 1.5% -5% -3.7% -0.9% 0.2%

EBITDA 324 201 201 244 177 222 208 194 192 212

Margin 11.8% 6.6% 6.5% 8.5% 6.8% 8.3% 8.2% 7.9% 7.9% 8.8%

EPS 0.80 -0.44 -0.11 0.24 0.30 0.42 0.42 0.22 0.44 0.55

P/E 7.5 -6.9 -8.8 6.1 6.0 5.0 9.3 17.7 8.8 7.1

EV/EBITDA 2.9 3.8 2.3 1.9 2.4 1.8 3.0 3.5 2.9 2.2

Dividend 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Dividend Yield 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

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Analyst Wim Lewi, CFA Valuescan.be [email protected]

AGFA Equity Report

08/03/2018

mailto:[email protected]

THIS DOCUMENT MAY NOT BE DISTRIBUTED TO PERSONS IN THE US, AUSTRALIA? CANADA OR JAPAN

1

I. Company Description

Activities

Description: AGFA consists of 2 core activities: medical imaging (43%) and graphic printing (49%). In

addition, there is a smaller department of "special products" (8%) that supplies materials for all kinds of

applications. The medical and graphic core activities were strongly affected by the digitization that has

continued since the year 2000. AGFA has invested substantially in the medical segment (Healthcare) to

keep up with this upheaval. Over the years, AGFA has extended its know-how through acquisitions to new

digital technologies that go beyond "taking images"

AGFA Healthcare, diversified by acquisitions Agfa Healthcare is a major player on the diagnostic imaging market, providing analog and digital

technology, as well as IT solutions to meet the needs of specialized clinicians in the field of radiology,

cardiology, mammography and orthopaedics. Activities cover the entire imaging cycle from equipment to

processing, diagnosing, sharing and maintenance.The business group is also a key provider on the

healthcare information solutions market, integrating the administrative, financial and clinical workflows of

individual hospitals and hospital groups. Together with medical and hospital IT specialists, Agfa makes

healthcare diagnoses more reliable and affordable. All this has resulted in a significant accomplishment:

more than 50% of all hospitals in the world now use Agfa technology.

Acquisition Timeline

1999 Acquisition of Sterling Diagnostic to gain a leading market position in medical imaging in the US. 2000 Acquisition of Quadrat (RIS - Belgium)

2001 Acquisition of Talk Technology, Inc. (Voice-enabled - US)

2002 Acquisition of Mitra (PACS - Canada)

2004 Acquisition of Symphonie On Line (Healthcare Information Solutions - France)

2005 Acquisition of GWI (Healthcare Information Solutions - Germany), Heartlab, Inc. (Cardio IT - US)

2007 Acquisition of HYDMedia (Healthcare Information Solutions - Germany)

2009 Acquisition of Insight Agents (Contrast Media - Germany)

2011 Acquisition of WPD (Healthcare Information Solutions – Brazil)

2016 Acquisition of TIP Group (Business Intelligence – Austria)

Investment in MphRx Inc (Start-up integrated care solutions – New York)

Graphics31%

HealthCare61%

Specialty Products

8%

Graphics49%

HealthCare

43%

Specialty Products

8%


2

Sales 2015 Sales 2017

(Source: Company website)

Agfa is present in almost every link of the medical imaging value chain.

(Source: Company presentation)

Diagnostic imaging

Within Diagnostic Imaging Agfa currently focuses on the business unit of Digital Radiography (20% of

Healthcare turnover) which includes DR (Digital Radiography) and CR (Computed Radiography) solutions.

Both DR and CR are digital but in contrast to CR, which complements former analog systems with a

reusable and digitally readable cassette in place of a traditional film cassette, DR provides a fully digitized

approach. DR systems are thus much faster but also more expensive. Agfa provides competitive DR

solutions with excellence in dose reduction and the advantage to be fully integrated with the MUSICA


3

software. With respect to developing markets, CR systems remain important due to their simplicity.

Enterprise Imaging

The Enterprise Imaging business unit provides solutions for information and imaging content management.

AGFA currently focuses on its fully integrated Enterprise Imaging platform that provides an integrated

whole of Agfa’s core offerings in this segment. The Enterprise Imaging platform brings together different

departmental PACS (Picture Archiving and Communication System), information systems, VNA’s (Vendor

Neutral Archive), advanced 3D, voice recognition and viewer and mobile functionality. Agfa provides also a

specialized version for cardiology and radiology. On a stand-alone basis Agfa also provides various

healthcare information systems and has a good position in the emerging market of VNA’s which consolidate

all imaging data from multiple systems, departments and vendors. Agfa Healthcare signed a contract with

the Fédération des Hôpitaux Luxembourg (FHL) for a national VNA solution that will include all images from

all departments of all hopitals in Luxembourg. The solution will also be linked with the national Electronic

Health Record (HER), supporting Luxembourg’s strategy of integrated care by means of one single platform.

Other solutions include various business intelligence applications, an application for dose management, the

HYDMEDIA archiving tool and XERO Viewer, an application which enables access to imaging data from

different sources with mobile device support.

Hospital IT

Hospital IT groups the ORBIT enterprise-wide IT solutions which provide availability of patients’ histories,

including all images and clinical and administrative data. ORBIT is currently one of the leading Hospital and

Clinical Information Systems (HIS/CIS) in Europe. A new focus area for Agfa is integrated care, offering an

integrated overview of a patient for all the stakeholders. Agfa recently developed the Agfa Healthcare

Portal for image and results delivery that is able to integrate with the Agfa Enterprise Imaging system and

third-party systems. The tool enables hospitals to offer care providers, referring physicians and patients

access to the patient’s health information. Integrated care is expected to become increasingly important.

Stand-Alone Hospital IT

Agfa Healthcare started with the envisaged reshaping of the Group by organizing the healthcare IT activities

(Imaging IT and Hospital IT) into a stand-alone legal entity structure and organization within the Agfa-

Gevaert Group, starting with Latin America and the Middle-East. The move would enable the healthcare IT

business to increase its focus on its current markets. Agfa was approached by CompuGroup Medical SE for

a potential acquisition of all of the issued shares of Agfa, but they reached an understanding to not further

pursue the discussions about the contemplated public takeover bid. The decision to organize the healthcare

IT activities into a stand-alone entity might bring along a new potential acquisition.


4

Pressure to implement all the different technology systems of an healthcare institution in 1 system

Will facilities with PACS in place swap for one single-provider solution from a different vendor? Many

health care providers are consolidating to create integrated health care delivery systems with greater

market power. These providers may try to use their market power to negotiate price reductions for our

solutions, health care devices and services. As the health care industry consolidates, our client base could

be eroded, competition for clients could become more intense and the importance of landing new client

relationships becomes greater.

Uncertainty about the repealing of the Obamcare system in the US

As the debate on repealing and replacing the so-called Obamacare system continues to intensify, American

hospitals are uncertain about the funding of the health care system in the future. Companies who are

active in the health care business feel the impact of the measures taken by President Trump. Especially

companies whose income are dependent of the subsidies that are part of the Obamacare law are

discouraged to make large investments.

Standardization and consolidation of hospital information systems

The evolution in the domain of healthcare is increasingly calling for IT proficiency to face the many

challenges, including the need for improved registration, standardisation, integration and exchange of data

and information, the fostering of patient centricity and the push towards a better quality and efficacy of

cure and care. To date, the business requirements of the hospital are not always aligned with the current

state of IT accomplishments. Many hospital information system providers are developing new eHealth data

applications to consolidate information. In Belgium, mobile health (mHealth) is also gaining attention with

the use of mobile applications.

Other market trends

- Increasing adoption of health information technology (HIT)

- Software as a Service (SaaS) instead of complex network infrastructure

- Mobile applications, Cloud-based PACS

- Development of products to integrate VNAs with electronic health records (EHRs)


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AGFA Graphics, analog suffers, inkjet rises slowly in the mix Not only newspapers, books, magazines, billboards and packaging are printed, but also bank notes, wallpapers, textiles, labels, cans and CD's. Before the actual printing can start, a number of prepress activities need to be performed. In the prepress stage, photos are scanned, text and images are combined in a layout, pages are correctly positioned, colors are quality-controlled and digitally proofed. After a proof has been prepared and checked, the data are exposed, with the intermediary film (computer-to-film: CTF) or directly onto a printing plate (computer-to-plate: CTP).

Sales 2015 Sales 2017

(Source: Company presentation)

As the worldwide market leader in pre-press solutions, Agfa answers all the pre-press needs of the graphic industry. Agfa provides commercial, newspaper and packaging printers with the most extensive integrated solutions for both computer-to-film and computer-to-plate systems, including equipment, consumables (graphic films and printing plates) and software. Agfa also supplies digital proofing systems, large format printing and the professional software that controls the entire prepress process. In addition, Agfa offers digital inkjet printing presses for industrial applications. The acquisition of Gandi Innovations allowed Agfa Graphics to extend its industrial inkjet portfolio. Furthermore, the business group consolidated its positions in the Asian and North-American markets through the establishment of the Agfa Graphics Asia joint-venture and the acquisition of the Harold M. Pitman Company. In the field of prepress, Agfa Graphics strengthened its position with the acquisition of software developer and reseller Bodoni Systems.

AGFA Speciality products Specialty Products supplies a wide variety of film-based products and high-tech solutions to large business-to-business customers outside the graphic and healthcare markets. Its main products are motion picture film, microfilm, film for non-destructive testing as well as film for the production of printed circuit boards (PCB's). Agfa Specialty Products is active in growth areas with products based on its core competences: materials for smart cards, conductive polymers and related products, synthetic paper and membranes for gas separation.


6

II. Business Model

A. Growth Expectations

Short term news and recent results

Most of the Agfa-Gevaert Group’s growth engines – including Inkjet, HealthCare Information Solutions and

several future-oriented activities of the Agfa Specialty Products business group – performed well in 2017.

The Group’s top line decrease was attributable to adverse currency effects and to the decline in the

traditional businesses, including Agfa HealthCare’s hardcopy business, which felt the effects of the

reorganization of its distribution channels in China. Excluding currency effects, the Group’s revenue decline

was limited to 2.9%. The top line trend clearly improved versus the previous year (-3.5%), showing a

significant improvement in the fourth quarter.

Graphics quarterly segment growth

Inkjet is still the fastest growing segment, but remained relatively slow in a YoY comparison after strong

growth cycles in 2010 and 2015.

0

500

1,000

1,500

2,000

2,500

3,000

3,500Sales

-40%

-20%

0%

20%

40%

60%

80%

Inkjet Analog Digital


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Healthcare quarterly segment growth

Hardcopy and radiology have been extremely volatile, but recovererd towards 4Q17. Hospital IT continued

to grow strongly over FY17. This segment is strategically important for future margin improvement.

Long term growth drivers

Growth Conclusion

AGFA is well positioned as an independent hospital IT supplier. It offers a platform that can

manage files from various imaging devices from GE, Philips or Siemens. AGFA must continue to

invest in order to keep up with the "cloud" evolution. This technology allows hospitals to save

costs in a tight budget environment. In the graphical activities the growth has been negative.

Digital development ensures a continuous decrease in turnover and competitive pressure is

reflected in pricing. Turnover decline is partly compensated by the digital inkjet segment. AGFA

can return to small sales growth by 2019.

Sales by Segment overview

-40%

-30%

-20%

-10%

0%

10%

20%

30%

Radiolog HIS/CIS Imaging IT (PACS) CR Hardcopy

AGFA Y2010 Y2011 Y2012 Y2013 Y2014 Y2015 Y2016 Y2017 Y2018 Y2019

Graphics 1,341 1,596 1,652 1,491 1,355 1,358 1,267 1,195 1,147 1,124

HealthCare 1,178 1,177 1,212 1,160 1,069 1,112 1,090 1,052 1,068 1,089

Specialty Products 236 250 227 214 196 189 180 196 206 212

Totals 2,755 3,023 3,091 2,865 2,620 2,659 2,537 2,443 2,421 2,425

Growth%

Graphics 19.0% 3.5% -9.7% -9.1% 0.2% -6.7% -5.7% -4.0% -2.0%

HealthCare -0.1% 3.0% -4.3% -7.8% 4.0% -2.0% -3.5% 1.5% 2.0%

Specialty Products 5.9% -9.2% -5.7% -8.4% -3.6% -4.8% 8.9% 5.0% 3.0%

Totals 9.7% 2.2% -7.3% -8.6% 1.5% -4.6% -3.7% -0.9% 0.2%


8

B. Profitability

Short term news and recent results

T

Long term Profitability drivers

T

Profitability conclusion

The valuation is more dependent on profit margin recovery. This is primarily a function of price setting and

competitive pressure in the market. The impact of raw material prices has decreased in recent years due to

the switch to digital applications. AGFA can still increase its healthcare margin through better product mix

and internal cost savings. AGFA has lagged behind the average margin within the sector. The Graphics

division suffers from sales declines, but benefits from mix improvement (inkjet). We do not expect AGFA to

achieve an EBITDA margin of 10% anaytime soon. An EBIT margin between 6 and 6.5% is realistic over the

next couple of years.

Profit by segment

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

EBIT%

EBIT 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Graphics 120 -7 26 61 70 65 80 53 49 52

HealthCare 110 40 76 77 79 107 120 106 94 102

Specialty Products 5 -2 -3 10 7 13 13 15 17 17

Corporate 5 5 -3 15 -20 -14 -47 -36 -28 -20

Totals 240 36 96 163 136 171 166 138 132 151

Margin%

Graphics 8.9% -0.4% 1.6% 4.1% 5.2% 4.8% 6.3% 4.4% 4.3% 4.6%

HealthCare 9.3% 3.4% 6.3% 6.7% 7.4% 9.7% 11.0% 10.1% 8.8% 9.4%

Specialty Products 2.1% -0.8% -1.3% 4.8% 3.4% 6.6% 7.2% 7.5% 8.2% 8.2%

Totals 8.7% 1.2% 3.1% 5.7% 5.2% 6.4% 6.5% 5.6% 5.5% 6.2%


9

C. Capital Needs

(Source: Company data, Valuescan.be estimates)

Capex Returns to higher level after under-investment. Capex/Sales of 2.5%. Working Capital Has been rationalised and moves in line with sales. Debt, strong reduction from cash flow and no dividend, total FY15 debt = 941m including pension debt

Capital Needs conclusion

AGFA is a healthy company with low financial debt. The high debt due to the acquisitions from the past have been reduced from the cash flows. The company has indicated to return to acquisitions to stimulate growth. AGFA therefore does noy pay a dividend. AGFA bears a historical pension debt. These liabilities weigh on the balance sheet because the low interest rates make the company liable for accounting losses to its equity. However, these are accounting effects that disappear as soon as interest rates normalize. Over 2017, the pension debt decreased by around 50m EUR.

-40

-20

0

20

40

60

80

1003. Capex

-400

-200

0

200

400

600

800 5. Net Financial debt

0

100

200

300

400

500

600

700

800

9004. Working capital

0.0

0.2

0.4

0.6

0.8

1.0

1.2 6. Dividend


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P&L and Balance Sheet tables with Cash Flow ratio’s

(Source: Company data, Valuescan.be estimates)

Price 3.89 EUR NOSH 168 MktCap 653 EV 1,626 Isin I_BE0003755692

Target 5.40 Debt 941 Minorities 32 CredRat 0.00 Code ENXTBR:AGFB

December 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Sales 3,283 3,032 2,755 3,023 3,091 2,865 2,620 2,659 2,537 2,443 2,421 2,425

Salesgrowth 0.0% -7.6% -9.1% 9.7% 2.2% -7.3% -8.6% 1.5% -4.6% -3.7% -0.9% 0.2%

Gross Profit 963 886 998 842 869 834 807 842 857 814 811 825

Gross Margin 29.3% 29.2% 36.2% 27.9% 28.1% 29.1% 30.8% 31.7% 33.8% 33.3% 33.5% 34.0%

R&D 174 149 153 162 163 146 146 144 141 144 147 147

R&D% 5.3% 4.9% 5.6% 5.4% 5.3% 5.1% 5.6% 5.4% 5.6% 5.9% 6.1% 6.1%

SG&A 812 567 605 644 610 525 525 527 543 505 520 527

SG&A% 24.7% 18.7% 22.0% 21.3% 19.7% 18.3% 20.0% 19.8% 21.4% 20.7% 21.5% 21.7%

EBITDA 191 219 324 201 201 244 177 222 208 194 192 212

Margin 5.8% 7.2% 11.8% 6.6% 6.5% 8.5% 6.8% 8.3% 8.2% 7.9% 7.9% 8.8%

Depreciation 105 91 84 79 66 64 54 61 50 56 60 61

Amortisation 0 0 0 0 0 0 0 0 0 0 0 0

Other operating income 0 0 0 0 0 0 0 0 -7 -27 -12 1

EBIT -23 170 240 36 96 163 136 171 166 138 132 151

Margin -0.7% 5.6% 8.7% 1.2% 3.1% 5.7% 5.2% 6.4% 6.5% 5.6% 5.5% 6.2%

Financials -83 -114 -100 -84 -85 -71 -59 -84 -51 -40 -36 -32

Pretax -106 56 140 -48 11 92 77 87 115 98 96 119

Tax Rate -57% -88% -26% -48% -182% -47% -23% -18% -30% -54% -23% -23%

Tax 60 -49 -36 23 -20 -43 -18 -16 -35 -53 -22 -27

Adjustments 0 0

Net adj. -167 6 105 -73 -19 41 50 71 70 37 74 92

EPS adj. -1.34 0.05 0.80 -0.44 -0.11 0.24 0.30 0.42 0.42 0.22 0.44 0.55

# Shares 125 125 131 168 168 168 168 168 168 168 168 168

Dividend

Valuations

EV/Sales 0.4 0.2 0.3 0.3 0.1 0.2 0.2 0.2 0.2 0.3 0.2 0.2

EV/EBITDA 6.6 2.9 2.9 3.8 2.3 1.9 2.4 1.8 3.0 3.5 2.9 2.2

PE -3.7 37.4 7.5 -6.9 -8.8 6.1 6.0 5.0 9.3 17.7 8.8 7.1

EBIT Growth -117% 41% -85% 167% 70% -17% 26% -3% -17% -4% 15%

NET Growth -498% 1650% -170% 22% 42% -1% -47% 100% 24%

EPS Growth -498% 1573% -154% 22% 42% -1% -47% 100% 24%

Balance Sheet 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Tangibles 407 369 326 313 301 277 242 234 207 198 190 178 177

Intangibles 795 628 633 667 670 653 618 615 615 621 589 589 589

Other Fixed 355 301 268 259 235 216 195 173 173 233 190 190 190

Financial Assets 16 13 9 14 15 10 11 17 17 14 16 16 16

Non-Curr.A. 1,573 1,311 1,236 1,253 1,221 1,156 1,066 1,039 1,012 1,066 985 973 972

Inventory 578 575 483 583 639 635 542 512 512 483 487 483 483

Receivables 1,154 1,022 921 940 952 865 788 745 711 619 633 605 601

Cash 152 180 153 241 100 127 126 196 128 129 68 418 515

Other Current 102 72 59 69 37 47 46 56 56 55 60 60 60

Curr.Ass. 1,986 1,849 1,616 1,833 1,728 1,674 1,502 1,509 1,407 1,286 1,248 1,566 1,660

Total Assets 3,559 3,160 2,852 3,086 2,949 2,830 2,568 2,548 2,419 2,352 2,233 2,540 2,632

Equity 891 704 724 1,063 995 169 368 146 217 252 307 381 473

LT Debt 740 809 553 379 352 410 319 125 137 74 47 125 125

Other NC Liabil. 813 747 710 674 636 1,385 1,078 1,318 1,318 1,308 1,194 1,194 1,194

Non-Curr.Liabil. 2,444 2,260 1,987 2,116 1,983 1,964 1,765 1,589 1,672 1,634 1,548 1,700 1,792

ST Debt 134 14 11 21 16 8 24 197 44 37 39 197 197

Payables 426 352 337 491 498 507 458 440 381 392 382 379 379

Other Curr.Liabil. 555 534 517 458 452 351 321 322 322 289 264 264 264

Current Liabilit. 1,115 900 865 970 966 866 803 959 747 718 685 840 840

Total Liabil. 3,559 3,160 2,852 3,086 2,949 2,830 2,568 2,548 2,419 2,352 2,233 2,540 2,632

Net Debt 722 643 411 159 268 291 217 126 53 -18 18 -96 -193

Working capital 853 783 609 643 678 689 597 551 576 476 534 505 502

Inv/Sales% 17.6% 17.5% 15.9% 21.2% 21.1% 20.5% 18.9% 19.5% 19.3% 19.0% 19.9% 19.9% 19.9%

Rec/Sales% 35.2% 31.1% 30.4% 34.1% 31.5% 28.0% 27.5% 28.4% 26.7% 24.4% 25.9% 25.0% 24.8%

Pay/Sales% 13.0% 10.7% 11.1% 17.8% 16.5% 16.4% 16.0% 16.8% 14.3% 15.5% 15.6% 15.6% 15.6%

Capex/Sales% 0.2% 0.5% 0.1% 2.8% 2.3% 0.6% 0.7% 1.0% 1.3% 1.2% 1.6% 2.0% 2.5%


11

III. Valuation

DCF valuation range:

(Source: business plan estimates from previous chapters by Valuescan.be, these can differ from the actual results)

The DCF

ROIC analysis

Saved 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

Salesgrowth -4.6% -3.7% -0.9% 0.2% 1.0% 1.5% 1.5% 2.0% 2.0% 2.0% 2.0%

Sales 2537 2443 2421 2425 2450 2486 2524 2574 2626 2678 2732

Oper.Margin 6.5% 5.6% 5.5% 6.2% 6.3% 6.5% 6.5% 6.5% 6.5% 6.5% 6.3%

Oper.Income 166 138 132 151 154 162 164 167 171 174 172

Depreciation 50 56 60 61 62 63 63 65 66 67 69

WC changes -58 29 4 -5 -8 -8 -10 -11 -11 -11

Taxes -35 -53 -22 -27 -28 -29 -30 -30 -31 -32 -31

Capex -30 -40 -48 -60 -60 -61 -62 -63 -65 -66 -67

Free Cash Flow 151 43 150 129 123 126 128 128 130 133 131

Working Capital 476 534 505 502 507 514 522 533 543 554 565

Net Debt 941 898 748 619 497 371 243 115 -15 -148 -279

Tax Rate -21% -38% -17% -18% -18% -18% -18% -18% -18% -18% -18%

WC/Sales 19% 22% 21% 21% 21% 21% 21% 21% 21% 21% 21%

Capex/Sales -1% -2% -2% -2% -2% -2% -2% -2% -2% -2% -2%

Deprec./Capex 167% 140% 124% 102% 102% 102% 102% 102% 102% 102% 102%

Free Cash Flow 43 150 129 123 126 128 128 130 133 131

Discount Factor 1.000 0.926 0.857 0.794 0.735 0.681 0.630 0.583 0.540 0.500

Discounted Flows 43 139 110 97 93 87 81 76 72 66

Horizon Value 755

Terminal Value 1,115 Sensitivity Base Case

- Net debt - Minor. 973 Rg/WACC 8.5% 8.0% 7.5% WACC 8.0%

Equity Value 897 1.5% 4.2 4.9 5.8 LT Growth 2.0%

Nr Shares 168 2.0% 4.6 5.4 6.4

HV/TV Ratio 84% 2.5% 5.1 6.1 7.2 Target Price : 5.4Fin. Assets 16

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22

ROIC vs WACC

ROIC (Beginning IC) WACC

-14%

-12%

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

0

500

1000

1500

2000

2500

3000

03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22

Invested Capital Growth

Beginning Invested Capital Invested Capital Growth

0.0x

0.2x

0.4x

0.6x

0.8x

1.0x

1.2x

1.4x

1.6x

1.8x

2.0x

-90%

-80%

-70%

-60%

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22

NOPAT Mrg vs Avg IC Turns

NOPAT Margin IC Turns (Beginning IC)

(4,000)

(3,000)

(2,000)

(1,000)

0

1,000

2,000

3,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Historic Equity vs. IC + EVA

Beginning Invested Capital EVA Enterprice Value


12

Contents and methodology

I. Company Description Brief company history to situate the roots and recent material events.

Description of the activities in the reported segments that are used for the business model.

The necessary background for investors to understand what the company does.

II. Sector Overview Description of the market environments in which the company operates.

Expectations of market growth potential and market share trends.

The necessary sector background for investors to understand the business model.

III. Business Model

Value = Growth x Profitability / Capital needs

A. Growth Expectations The growth expectations are modelled by reported segment on a 10y history and 3y forward.

The long term drivers by segment are evaluated, company expectations vs. sector dynamics.

Recent results are discussed and a growth conclusion is discussed with the segment table.

B. Profitability The profit margins are modelled by reported segment on a 10y history and 3y forward.

Competitive situation and operating costs are discussed per segment, peer comparison.

Profitability conclusion in a segment EBIT table, including corporate or exceptional costs.

C. Capital Needs Equity reports often spent too little attention to the capital needs to realise growth and profitability.

Hence, Capex, Working Capital, Debt and Dividends are discussed.

The Capex is modelled towards the maintenance level at the end of the 3Y forecasting horizon.

IV. Valuation We use a DCF to translate the future free cash flows into a fair value estimate.

The WACC is set at 8% for all companies as our expected return for the Equity investor.

ValueScan.be measures value with the same yardstick, independent of noise or hype.

For companies with higher risk profiles, a higher WACC is possible and will be justified.

A ROIC analysis backtests the valuation with an EVA analysis. The historic Equity value is compared to

the historic EVA calculation. This indicates whether the market has been over- or undervaluing the

company in the past.

http://www.valuescan.be/Salesgrowth

http://www.valuescan.be/ProfitMargin

http://www.valuescan.be/CapitalNeeds


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AGFA - · 2018. 3. 11. · I. Company Description Activities Description: AGFA consists of 2 core activities: medical imaging (43%) and graphic printing (49%). In addition, there

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