CEWE (SDAX, Technology) C OMMENT Published 10.11.2016 08:15 1 Analyst Thilo Kleibauer [email protected]+49 40 309537 - 257 Value Indicators: EUR Share data: Description: DCF: 83.23 FCF-Value Potential 2017e: 76.24 Bloomberg: CWC GR Reuters: CWCG ISIN: DE0005403901 Europe's leading industrial photofinisher and provider of personalised photo products Market Snapshot: EUR m Shareholders: Risk Profile (WRe): 2016e Buy EUR 83.00 Price EUR 79.85 Upside 3.9 % Market cap: 570 No. of shares (m): 7 EV: 556 Freefloat MC: 398 Freefloat 69.8 % Comm. heirs Senator Neumüller 27.4 % CeWe Stiftung & Co. KGaA 2.8 % Beta: 1.0 Price / Book: 2.9 x Equity Ratio: 51 % First Glance: Q3 numbers and higher EBIT guidance in line with expectations Cewe released Q3 numbers in line with our expectations: Sales Q3 2016 Q3 2015 y/y Q3 WRe 9M 2016 9M 2015 y/y FY 2016e FY 2015 y/y Photofinishing 95.4 91.5 4.3% 94.9 262.0 239.6 9.3% 440.0 414.9 6.0% Online Printing 19.7 18.7 5.3% 19.9 60.8 55.0 10.6% 87.5 77.8 12.5% Retail 12.9 15.1 -14.2% 13.7 40.2 43.5 -7.6% 58.0 60.8 -4.6% Other 0.6 0.2 0.5 1.5 0.2 1.5 0.6 142.7% Group sales 128.6 125.5 2.5% 129.0 364.6 338.4 7.7% 587.0 554.2 5.9% EBIT Q3 2016 Q3 2015 Q3 WRe 9M 2016 9M 2015 y/y FY 2016e FY 2015 y/y Photofinishing 5.6 3.7 4.5 6.1 0.8 45.0 40.4 Online Printing -0.3 -0.4 -0.1 0.5 -2.5 2.3 -0.9 Retail 0.0 -0.1 0.0 -0.4 -1.4 0.6 -0.4 Other -0.8 -0.6 -0.8 -2.2 -1.3 -3.2 -2.2 Group EBIT 4.5 2.7 3.6 4.1 -4.4 44.7 36.8 21.5% As expected, Q3 numbers in Photofinishing were affected by the long-term shift in seasonality with declining Q3 volumes (number of Photobooks sold in Q3: -1.9% to 1.36m, after 9M: +4.6% to 3.83m). The delivery of initial stocks and equipment to new and existing business partners in Q3 had a positive sales and EBIT impact in the Photofinishing segment. Key driver in this business remains the strong focus on added-value products, which lead to an increase in the revenue per photo of 10% (to 18.05 Eurocents) in Q3. Together with its Q3 report the group has uplifted its FY 2016 earnings guidance: New EBIT target range EUR 40-46m (prev. EUR 38-44m), new EPS target range EUR 4.00-4.57 (prev. EUR 3.81-4.38). Conclusion: Overall, Q3 numbers underline the good business performance in Photofinishing and Online Printing. As the management already announced in August that the outlook will be reviewed after 9 months, the higher earnings guidance comes not unexpected. Owing to the seasonality of the business, Cewe has a high dependency on Q4 earnings. Our current estimates are well in line with the new guidance and imply a 3% sales growth with flat EBIT for Q4. Rel. Performance vs SDAX: 1 month: -6.6 % 6 months: 43.2 % Year to date: 47.5 % Trailing 12 months: 43.0 % Company events: 16.11.16 RS EDI FY End: 31.12. in EUR m CAGR (15-18e) 2012 2013 2014 2015 2016e 2017e 2018e Sales 4.1 % 507 536 524 554 587 604 625 Change Sales yoy 8.1 % 5.7 % -2.3 % 5.8 % 5.9 % 2.9 % 3.5 % Gross profit margin 63.6 % 64.8 % 69.2 % 71.0 % 71.0 % 71.0 % 71.2 % EBITDA 6.2 % 66 67 66 75 84 86 90 Margin 13.0 % 12.5 % 12.6 % 13.6 % 14.4 % 14.2 % 14.4 % EBIT 11.5 % 29 29 33 37 45 47 51 Margin 5.7 % 5.4 % 6.2 % 6.6 % 7.6 % 7.7 % 8.2 % Net income 15.0 % 19 22 21 23 32 32 35 EPS 14.9 % 2.88 3.39 3.07 3.24 4.46 4.53 4.92 EPS adj. 14.9 % 2.88 3.51 3.00 3.24 4.46 4.53 4.92 DPS 5.9 % 1.45 1.50 1.55 1.60 1.70 1.80 1.90 Dividend Yield 4.6 % 4.2 % 3.0 % 3.0 % 2.1 % 2.3 % 2.4 % FCFPS 2.69 1.98 5.14 1.38 4.66 2.93 3.48 FCF / Market cap 8.6 % 5.5 % 10.0 % 2.6 % 5.8 % 3.7 % 4.4 % EV / Sales 0.5 x 0.5 x 0.7 x 0.7 x 1.0 x 0.9 x 0.9 x EV / EBITDA 3.6 x 4.1 x 5.4 x 5.2 x 6.6 x 6.4 x 6.0 x EV / EBIT 8.3 x 9.5 x 11.0 x 10.6 x 12.4 x 11.8 x 10.6 x P / E 10.9 x 10.6 x 16.7 x 16.6 x 17.9 x 17.6 x 16.2 x P / E adj. 10.9 x 10.2 x 17.1 x 16.6 x 17.9 x 17.6 x 16.2 x FCF Yield Potential 12.2 % 8.7 % 5.2 % 5.4 % 6.5 % 6.6 % 7.3 % Net Debt 36 41 2 8 -13 -21 -33 ROCE (NOPAT) 13.9 % 13.6 % 12.3 % 12.4 % 16.8 % 17.4 % 18.7 % Guidance: 2016: sales EUR 555-575m; EBIT EUR 38-44m; EPS EUR 3.81-4.38
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CEWE - EQS Group AG · 2016-11-10 · CEWE COMMENT Published 10.11.2016 2 Sales development in EUR m Source: Warburg Research Number of CEWE PHOTOBOOKS 2015; in million units Source:
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� EBIT margin potential in online printing. Mid-term margin decline assumed due to highly competitive market
CEWE
CO M M E N T Publ ished 10 .11 .2016 4
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 2012 2013 2014 2015 2016e 2017e 2018e
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CEWE
CO M M E N T Published 10.11.2016 10
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WARBURG RESEARCH GMBH – ANALYSED RESEARCH UNIVERSE BY RATING
Rating Number of stocks % of Universe
Buy 125 64
Hold 63 32
Sell 5 3
Rating suspended 1 1
Total 194 100
WARBURG RESEARCH GMBH – ANALYSED RESEARCH UNIVERSE BY RATING N
N 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 21 72
Hold 7 24
Sell 0 0
Rating suspended 1 3
Total 29 100
PRICE AND RATING HISTORY CEWE AS OF 10.11.2016
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.
CEWE
CO M M E N T Published 10.11.2016 12
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