Bel - Financial Analysis

8/18/2019 Bel - Financial Analysis

1/13

Sector:

Food and Beverage

In 2013, the Group Bel achieved good results with sales growthby 5.3% and an operating incoe increased by 10.!% year"on"year to #23$ illion. It is iportant to underline that the secondhal o the year was less good in ter o results. &he ainreason is that raw aterial prices have risen sharply since theiddle o 2013.

'espite its growing strategy or 201$ the uncertain econoicconditions in soe ar(ets and the ongoing process o raw"aterial price increase is daaging on the year)s activity andproitability. In addition to that the ast developent o localcopetitors on the eerging ar(ets will strengthen thecopetition to capture new ar(et shares.In the irst hal o 201$, the consolidated sales are up 1,*% butthe operating incoe all to 3+,!% copared to last year. &heGroup)s sales eorts were not enough to oset the sharp

increase in raw aterial prices and the negative oreignechange ipact.

-ter two consecutive years characteried by /.25# dividendslevel, the Group Bell does not see able to ollow the saepolicy or 201$ and a decline in dividend and ar(et price isepected.

&he Bell stoc( is alost at its highest level o the year and isovervalued and epected to drop in price during the net

onths.

Overvalued stock expected to drop in

priceRecommendation

Share priceperformance

Shareprice (20/11/14)

Target price:

Potential:

308.99 €

293 €

-5.2 %

+14.01%314.00 €265.20 €

+137.70%314.00 €

115.00 €

Moderatesell

Recommendation: 22.!

"#ar$etrice:

ountr!:

France

Recommendation on &el 'ro(p e)(it*

Our recommendation on Bel equity is « Sell » for a share price performance at 293€

ur inancial valuation on the euity is based on the ollowing ultiples 7.7x B!"#$ %"& and'(77x )e*enue %"&

ompan*

1

Since 1st "anuar!2014 Variation: Highest: Lowest:

#$!earper%or&ance

Variation: Highest: Lowest:

'uit!per%or&ance$ T*


2/13

Bel +roup or +roupe Bel 4in rench6 is a ultinational cheese ar(eter centered in rance.

&he Bel Group, based in the +th district o 7aris, anuactures and distributes processed and hal"processed

cheeses, reuently pac(aged in individual portions. &he copany 89tablisseents :ules Bel; was ounded in

1+/5 in rgelet in the 'epartent o the :ura.

,"he -auhin /o01( , Bayel ,( ,iri1( ,-eerdammer1( ,Boursin1 are Belorocco. &oday, the Group

operates in 33 countries with 2* production sites on ive continents, and the copany sells its products in over

120 countries, relecting steady international growth over Bel)s long history.

&el 'ro(p o,er,ie 1/2

Sales readon * prod(ct Sales readon * location

Bel Group is established in 33 countries.

2

Sector:

Food and Beverage

ountr!:

France

>ultinational cheese ar(eter centered inrance

=aple 8&he ?aughing @ow;, 8Babybel;,8Airi;, 8?eerdaer;, 8Boursin;, etc.

● 5*% o sales generated by cheeseportions

● /+% o sales generated by 5 largestbrands


price

Recommendation: 22.!

"#ar$etrice:

Moderatesell


3/13

roageries Bel -, the listed rench dairy products anuacturer and distributor, agreed to acuire Boursin,he rench cheese anuacturer, ro Cnilever Group, the listed CA based consuer goods supplier, or aconsideration of 4) 5''m 64S# 79m8.

&he sale will enable Cnilever to ocus on segents outside the cheese category. -s a part o roageries Bel-, Boursin will be eposed to urther growth and brand developent opportunities. "he acquired entity hasenerated an annual turno*er of 4) 9m 64S# 37.5m8 in 2'': 0ith approximately ' employees.

Boursin epects sales o =CD 100 in 200* with hal o the revenue generated in rance and the rest ro theother =uropean countries, Eorth -erica, and -sia.

Revenue multiple: 4.2x

&el 'ro(p o,er,ie 2/2

&el 'ro(p shareholder str(ct(re

ase st(d* of &o(rsins ac)(isition in 2007

+

Sector:

Food and Beverage

ountr!:

France


price

Recommendation: 22.! "#ar$etrice:

Moderatesell


4/13

&el 'ro(p en,ironment anal*sis

S# anal*sis

STRENGTHS WEAKNESSES

Strong brand! image "ot o# ubidarie

$nternational preen%e Environemental iue due to pa%&ing

,reat place to -ork %or e&plo!ees Too man' R() expene

OPPO.TT'S T.'3TS

e- &arkets in 3sia and South

3&ericaStrong variation o% &ilk prices

e- products co&ing in the &arket

(snacks)

o&petitions o% private laels (5al$

*art6 arre%our)

heese has still a good i&age ealth issues

4

Sector:

Food and Beverage

ountr!:

France


price


Moderatesell


5/13

&el 'ro(p share price performance since 6an(ar* 2011 ,s. 40

>ar(et conditions reain challenging, with high raw aterial prices, signiicant oreignechange volatility and increased political instability in soe world regions.

&he Group)s sales eorts were not enough to avoid the +2 ># 4"3+%6 decline in operatingincoe or the irst hal o the year.

urther, the Group recognied non"recurring epense o soe #10 illion to coverinancial costs arising ro the decision to ove the copany)s headuarters in 2015.

&he Bell stoc( is overvalued and not anyore in line with the current results. &he shareprice is epected to drop in the coing onths

8e* facts in 2014

#

Sector:

Food and Beverage

ountr!:

France


price


Moderatesell


6/13

'ro(p &el rele,ant similar companies

8e* indicators 9escriptionompanies

Bright Dairy & Food Co., Ltd is engaged in thedevelopment, production, and sale of milk and dairyproducts in China. The company offers pasteurized milk,fresh milk, yoghurt, ultrahigh heat pasteurized milk, milkpo!der, "utter and cheese, and fruit #uices. $t is also

involved in the rearing and fostering of milk co!s and"ulls% logistic distri"ution% and the development,production, and sale of health and nutrition products. Thecompany is headuartered in 'hanghai, China.

Bongrain '( produces and distri"utes cheese and otherdairy specialties, and dairy ingredients in France, othercountries in )urope, and internationally. $t providesvarious cheese products, such as soft, fresh, pressed,and processed cheeses for use in cheese"oard, cuisine,salads, spreads, sand!iches, snacks, aperitifs, etc. Thecompany is also involved in the production of other dairyproducts, including creams, technical "utters, desserts,

!hey, po!der, and fats, as !ell as milk"ased nutrientsand functional ingredients.

*armalat 'p(, together !ith its su"sidiaries, producesand distri"utes milk, dairy products, and fruit "everages.The company operates in three segments+ ilk, Dairy*roducts, and Fruit Beverages. The ilk segment offers-T, pasteurized, condensed, po!dered, and flavoredmilk products, as !ell as cream and "/chamel. The Dairy*roducts segment provides yogurt, fermented milk,desserts, cheese, and "utter. The Fruit Beveragessegment offers fruit #uices, nectars, and tea.

)mmi (0 is engaged in the development, production,and marketing a range of dairy and fresh products!orld!ide. The company primarily focuses on freshproducts, such as lifestyle, convenience, and healthproducts. $ts dairy products comprise milk, cream,"utter, yoghurt, milk drinks, curd, and desserts. Thecompany is also involved in production, ageing, and

trade of cheese, including hard, semihard, and softcheese% fondue and raclette% fresh cheese andmozzarella% and processed cheese.

7

Sector:

Food and Beverage

ountr!:

France


price


Moderatesell


7/13

'ro(p &el nancial ,al(ation

8aluation area

'uit! 8alue

en *9

1;3


8/13

0,!2

0,5+

0,32

0,$+

0,!$

0,//

0,51

0,$1


price


=al(ation > 9isco(nted ash ?lo Method 1/5

&eta 9etermination

;rom competitor comparison

Bel Group copetitor 4Beta6

Average :

*el Group releveraged *eta :

Bright 'airy, =i, BongrainF and, 7aralat

+,-

'ro(p &el historical nancial str(ct(re

73(5 &€

+,/

"everaged 0nleveraged

;

Sector:

Food and Beverage

ountr!:

France

Moderatesell


9/13


e used @-7> odel with the ollowing paraeters e x 6)m?)f8

Dis( ree Date 4D6 =pected ar(et rentability 4D6 Beta 4B6

@ost o inancing by debts or Bel Group

Source : investors presentation

!mpact of the capital and dets

toc( echange capitaliation

Eet 'ebt

@opany value 4incl. Minority Interest 6

e

@(7A

d

5(A

2,3!! ># 4i.e. !3%6

1*3 ># 4i.e. *%6

2,5*3 >#

/$&

#et cost

ost of capital determination

"herefore a C$// of 7(A

1,50% 4-& 10 ans6

c. 12%

0,/+

<

Sector:

Food and Beverage

ountr!:

France


price


Moderatesell


10/13

&?R Historical E@ analysis


=> h!pothesis

Sales increase

@&A#9

An,estments

mortiBation

Con$ term$roth

D

roissance des,entes

roissance Elon$ terme

(restimations

onsiderations

roissance des ,entes

An,estissements

mortissements

Growth decrease 4high copetitionro eerging country6

roissance E lon$ terme =pected ondial growth

'ierence between =BI&'- and=BI& argin according historicalproil

1,5% growth.

$% o revenue.

1,0%.

$% o revenue.

@orrelation with historicalsaortiations and investents

1

Sector:

Food and Beverage

ountr!:

France


price


7rice increase o raw aterials4argin decline6

10.0% =BI&'-argin

$% o revenue.

Moderatesell


11/13


=> valuation results

1

Sector:

Food and Beverage

ountr!:

France


price


Moderatesell


12/13


=> valuation sensiilit!

1ompan' aluation Seniblit':

E3uit' alue Senibilit':

Target ri%e Senibilit' :

WA11

WA11

WA11

4 G R

4 G R

4 G R

1

Sector:

Food and Beverage

ountr!:

France


price


Moderatesell


13/13

=al(ation > Stoc eFchan$e comparale method

"hus a +roup Bel equity e*aluation of approximately €293

G

H

H

G

G

H

G

G

Sector:

Food and Beverage

ountr!:

France


price


Moderatesell

Bel - Financial Analysis

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