einhell · einhell comment published 29.05.2017 3 dcf model detailed forecast period transitional...

Einhell

(CDAX, Retail)

CO M M E N T Published 29.05.2017 08:15 1

A n a l y s t

Thilo Kleibauer [email protected]

+49 40 309537-257

Value Indicators: EUR Share data: Description:

DCF: 66.15

FCF-Value Potential 18e: 70.76

Bloomberg: EIN3 GR

Reuters: EING_p

ISIN: DE0005654933

Supplier of power tools and garden equipment for private household use.

Market Snapshot: EUR m Shareholders: Risk Profile (WRe): 2017e

Buy

EUR 66.00 (EUR 57.00)

Price EUR 59.59

Upside 10.8 %

Market cap: 224.9

No. of shares (m): 3.8

EV: 208.4

Freefloat MC: 224.9

Ø Trad. Vol. (30d): 63.96 th

Freefloat 100.0 %

Thannhuber AG (Ordinary sh.) 91.0 %

Others (Ordinary shares) 9.0 %

Beta: 1.3

Price / Book: 1.3 x

Equity Ratio: 52 %

Power-X-Change system key driver for sales and margin growth

We have revised our earnings scenario after the release of Einhell’s Q1 report. Based on higher sales and earnings estimates for the

coming years, we derive a DCF-based PT of EUR 66 (previous: EUR 57). Remains a Buy.

The strong Q1 performance (sales +14.2% to EUR 137m, EBT +79% to EUR 9.4m, as already reported) was driven by dynamic sales growth

in all core regions (DACH +9.1% to EUR 56.3m, other Europe +15.5% to 46.4m, Australia +28.9% to EUR 26.8m). This underlines that the

group is gaining market share in key markets. Moreover, the gross margin was up significantly by 200bps in Q1 (from 31.8% to 33.8%). We

regard this as a good indicator of the attractiveness of Einhell’s product assortment and increased brand awareness.

Key driver for the sales and margin increase is Einhell’s Power-X-Change product range. With this innovative system, Einhell has

focused early on the fast growing area of cordless power tools. The key element of this concept is a master battery, which can be used for

different devices (drill hammer, circular saw, angle grinder, hedge trimmer, lawn mover etc.). More and more products will be added to this

system. As Einhell’s solution is comfortable for the user, customer retention figures should also benefit. With this product enhancement, the

management also expects further growth potential in the e-commerce channel and in business with specialised stores, while the share of sales

with discounters is expected to decline.

Further earnings margin potential beyond 2017: Based on the confirmed earnings guidance (EBT margin 4.0-4.5%), Einhell will return to its

long-standing EBT margin level (Ø EBT margin 2004/16: 4.2%) in the current year. However, current earnings are still affected by several

temporary effects, which should phase out in the coming year. First of all, Einhell’s 2017 outlook includes the expected deconsolidation loss

(WRe: EUR 1.5m) from the disposal of the subsidiary in Brazil (closing expected in H1). Secondly, the PPA amortisation from the Ozito

acquisition (EUR 1.8m in FY 2016) will terminate in mid-2018. And lastly, as a consequence of the strong Ozito performance, Einhell recorded

operating expenses in its P&L (EUR 2.0m in FY 2016, EUR 1.1m in Q1 2017) from the adjustments of the variable purchase price for Ozito.

The last tranche of this obligation is to be paid after H1 2017, so that Einhell can fully benefit from Ozito’s profits from H2 2017 onwards.

Therefore, we expect an EBT margin increase from 4.2% (2017e) to 5.0% in 2019.

Changes in Estimates: Comment on Changes: FY End: 31.12. in EUR m

2017e (old)

+ / - 2018e (old)

+ / - 2019e (old)

+ / -

Sales 512.0 1.2 % 532.5 2.9 % 554.0 4.3 %

EBIT 23.1 4.3 % 24.7 14.1 % 26.3 17.5 %

EBT 21.5 0.9 % 23.7 9.2 % 25.3 13.1 %

Net income 14.8 0.9 % 16.5 7.5 % 17.8 9.6 %

EPS 3.92 1.0 % 4.36 7.6 % 4.71 9.8 %

� We have increased our sales expectations in light of the strong Q1 turnover growth.

� For the gross margin, we now assume an increase to 32.5% in 2019. � While our EBT margin scenario for 2017 is unchanged, we expect

stronger margin potential in 2018 and 2019. � For our DCF valuation, we have increased the average mid- to long-term

EBIT margin from 4.2% to 4.6%.

Rel. Performance vs CDAX:

1 month: 31.7 %

6 months: 36.0 %

Year to date: 44.9 %

Trailing 12 months: 49.4 %

Company events:

23.06.17 AGM

FY End: 31.12. in EUR m

CAGR (16-19e) 2013 2014 2015 2016 2017e 2018e 2019e

Sales 5.9 % 416.3 416.4 443.8 487.2 518.0 548.0 578.0

Change Sales yoy 9.6 % 0.0 % 6.6 % 9.8 % 6.3 % 5.8 % 5.5 %

Gross profit margin 28.9 % 30.4 % 31.7 % 32.2 % 32.3 % 32.4 % 32.5 %

EBITDA 9.6 % 10.5 13.4 19.0 27.0 29.5 33.0 35.6

Margin 2.5 % 3.2 % 4.3 % 5.5 % 5.7 % 6.0 % 6.2 %

EBIT 14.7 % 6.6 8.4 13.9 20.5 24.1 28.2 31.0

Margin 1.6 % 2.0 % 3.1 % 4.2 % 4.7 % 5.1 % 5.4 %

EBT 19.0 % 4.0 5.1 11.8 17.0 21.7 25.9 28.7

Margin 1.0 % 1.2 % 2.7 % 3.5 % 4.2 % 4.7 % 5.0 %

Net income 27.8 % 2.1 1.6 7.4 9.3 14.9 17.7 19.5

EPS 27.7 % 0.55 0.42 1.95 2.48 3.96 4.69 5.17

DPS 17.6 % 0.40 0.40 0.60 0.80 1.00 1.15 1.30

Dividend Yield 1.3 % 1.3 % 1.9 % 2.2 % 1.7 % 1.9 % 2.2 %

FCFPS 8.97 1.16 -2.95 8.25 0.55 2.33 3.01

FCF / Market cap 28.9 % 3.8 % -9.4 % 23.1 % 0.9 % 3.9 % 5.0 %

EV / Sales 0.3 x 0.3 x 0.3 x 0.2 x 0.4 x 0.4 x 0.3 x

EV / EBITDA 10.6 x 8.3 x 6.8 x 4.3 x 7.1 x 6.2 x 5.5 x

EV / EBIT 16.8 x 13.2 x 9.3 x 5.7 x 8.6 x 7.2 x 6.4 x

P / E 56.3 x 72.7 x 16.0 x 14.4 x 15.0 x 12.7 x 11.5 x

FCF Yield Potential 4.1 % 5.7 % 8.1 % 12.6 % 8.4 % 9.4 % 10.4 %

Net Debt -5.6 -3.5 11.0 -18.3 -16.5 -20.9 -27.7

ROCE (NOPAT) 1.4 % 1.8 % 5.5 % 7.4 % 11.1 % 12.0 % 12.5 % Guidance: Sales of EUR 510-515m in 2017, EBT margin 4-4.5%

Einhell

CO M M E N T Publ ished 29 .05 .2017 2

Sales development in EUR m

Source: Warburg Research

Sales by regions 2016; in %


EBIT development in EUR m


Company Background

� Einhell is the leading provider of power tools and garden equipment for household use. The products are sold under the Einhell brand

and as retailers' own brands.

� Value is created in the product development, quality control, sales, and after-sales services. Production is outsourced to China.

� Einhell's main customers are large DIY chains (54% of sales), specialised trade (15%) and e-commerce platforms (12%). The share

of business with discounters is at 14%.

� The company was founded in 1964 by Josef Thannhuber. The Thannhuber family holds the majority of the non-listed ordinary shares.

Competitive Quality

� Einhell successfully differentiates itself from its competitors by undercutting brand products such a Bosch or Black&Decker in price at

a comparable quality level.

� At the same time the company stands out from low-cost providers thanks to its strong focus on quality and after-sales services.

� Einhell shows a high level of cost flexibility and generated clearly positive earnings even in economically challenging years.

� With its broad range of offers, the clear positioning and the Power-X-Change category, Einhell is well on track for further market share

gains.

� The continuation of the international expansion (South Amercia, Australia, Turkey) offers additional growth potential.

EBT development in EUR m


Sales by segments 2016; in %


Net income development in EUR m


Einhell


DCF model

Detailed forecast period Transitional period Term. Value

Figures in EUR m 2017e 2018e 2019e 2020e 2021e 2022e 2023e 2024e 2025e 2026e 2027e 2028e 2029e

Sales 518.0 548.0 578.0 606.9 637.2 669.1 701.9 735.6 770.2 805.6 841.8 875.5 901.8

Sales change 6.3 % 5.8 % 5.5 % 5.0 % 5.0 % 5.0 % 4.9 % 4.8 % 4.7 % 4.6 % 4.5 % 4.0 % 3.0 % 1.5 %

EBIT 24.1 28.2 31.0 32.8 33.8 34.8 35.8 36.8 35.4 34.6 33.7 35.0 31.6

EBIT-margin 4.7 % 5.1 % 5.4 % 5.4 % 5.3 % 5.2 % 5.1 % 5.0 % 4.6 % 4.3 % 4.0 % 4.0 % 3.5 %

Tax rate (EBT) 30.0 % 30.0 % 30.0 % 30.0 % 30.0 % 30.0 % 30.0 % 30.0 % 30.0 % 30.0 % 30.0 % 30.0 % 30.0 %

NOPAT 16.9 19.7 21.7 22.9 23.6 24.4 25.1 25.7 24.8 24.2 23.6 24.5 22.1

Depreciation 5.4 4.8 4.6 6.1 6.4 6.7 7.0 7.4 7.7 8.1 8.4 8.8 9.0

in % of Sales 1.0 % 0.9 % 0.8 % 1.0 % 1.0 % 1.0 % 1.0 % 1.0 % 1.0 % 1.0 % 1.0 % 1.0 % 1.0 %

Changes in provisions 0.2 0.3 0.3 -0.4 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2

Change in Liquidity from

- Working Capital 10.7 9.0 8.0 7.8 8.0 8.4 8.7 8.9 9.2 9.4 9.6 8.9 7.0

- Capex 5.2 5.4 5.6 6.1 6.4 6.7 7.0 7.4 7.7 8.1 8.4 8.8 9.0

Capex in % of Sales 1.0 % 1.0 % 1.0 % 1.0 % 1.0 % 1.0 % 1.0 % 1.0 % 1.0 % 1.0 % 1.0 % 1.0 % 1.0 %

Other 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Free Cash Flow (WACC Model)

6.5 10.4 13.0 14.8 15.8 16.1 16.6 17.0 15.8 15.1 14.2 15.8 15.3 19

PV of FCF 6.3 9.4 10.8 11.4 11.3 10.7 10.2 9.8 8.4 7.4 6.5 6.7 6.0 118 share of PVs 11.36 % 37.95 % 50.69 %

Model parameter Valuation (m)

Derivation of WACC: Derivation of Beta: Present values 2029e 115

Terminal Value 118

Debt ratio 15.00 % Financial Strength 1.00 Financial liabilities 33

Cost of debt (after tax) 3.0 % Liquidity (share) 1.50 Pension liabilities 3

Market return 7.00 % Cyclicality 1.50 Hybrid capital 0

Risk free rate 1.50 % Transparency 1.00 Minority interest 2

Others 1.50 Market val. of investments 0

Liquidity 55 No. of shares (m) 3.8

WACC 7.80 % Beta 1.30 Equity Value 250 Value per share (EUR) 66.15

Sensitivity Value per Share (EUR)

Terminal Growth Delta EBIT-margin

Beta WACC 0.75 % 1.00 % 1.25 % 1.50 % 1.75 % 2.00 % 2.25 % Beta WACC -1.5 pp -1.0 pp -0.5 pp +0.0 pp +0.5 pp +1.0 pp +1.5 pp

1.51 8.8 % 55.06 55.77 56.51 57.31 58.17 59.08 60.07 1.51 8.8 % 30.26 39.28 48.30 57.31 66.33 75.34 84.36

1.41 8.3 % 58.68 59.52 60.43 61.40 62.45 63.58 64.80 1.41 8.3 % 32.27 41.98 51.69 61.40 71.11 80.82 90.53

1.35 8.0 % 60.68 61.61 62.61 63.68 64.85 66.10 67.47 1.35 8.0 % 33.39 43.49 53.59 63.68 73.78 83.88 93.98

1.30 7.8 % 62.82 63.85 64.96 66.15 67.45 68.85 70.39 1.30 7.8 % 34.60 45.12 55.63 66.15 76.67 87.19 97.70

1.25 7.5 % 65.12 66.26 67.49 68.83 70.27 71.85 73.58 1.25 7.5 % 35.91 46.88 57.85 68.83 79.80 90.77 101.74

1.19 7.3 % 67.61 68.87 70.25 71.74 73.36 75.14 77.09 1.19 7.3 % 37.34 48.80 60.27 71.74 83.20 94.67 106.13

1.09 6.8 % 73.21 74.79 76.51 78.39 80.46 82.75 85.28 1.09 6.8 % 40.60 53.20 65.80 78.39 90.99 103.58 116.18

� No structural mid- to long-term EBIT margin change expected.

� Sales growth slightly below Einhell's long-standing target range of +5-10% p.a.

Einhell


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 2013 2014 2015 2016 2017e 2018e 2019e

Net Income before minorities 1.5 1.6 7.6 9.6 15.2 18.1 20.1

+ Depreciation + Amortisation 3.9 5.0 5.2 6.5 5.4 4.8 4.6

- Net Interest Income -2.6 -3.4 -2.1 -3.5 -2.4 -2.3 -2.3

- Maintenance Capex 3.4 3.6 4.5 5.0 5.5 6.0 6.5

+ Other 0.0 0.0 0.0 0.0 0.0 0.0 0.0

= Free Cash Flow Potential 4.6 6.4 10.4 14.6 17.5 19.2 20.5

Free Cash Flow Yield Potential 4.1 % 5.7 % 8.1 % 12.6 % 8.4 % 9.4 % 10.4 %

WACC 7.80 % 7.80 % 7.80 % 7.80 % 7.80 % 7.80 % 7.80 %

= Enterprise Value (EV) 111.3 111.7 129.1 116.7 208.4 204.0 197.2 = Fair Enterprise Value 59.0 81.8 133.5 187.8 224.4 246.1 262.3

- Net Debt (Cash) -21.5 -21.5 -21.5 -21.5 -19.9 -24.6 -31.7

- Pension Liabilities 3.2 3.2 3.2 3.2 3.4 3.7 4.0

- Other 0.0 0.0 0.0 0.0 0.0 0.0 0.0

- Market value of minorities 0.0 0.0 0.0 0.0 0.0 0.0 0.0

+ Market value of investments 0.0 0.0 0.0 0.0 0.0 0.0 0.0

= Fair Market Capitalisation 77.3 100.1 151.8 206.1 240.9 267.1 290.0

No. of shares (total) (m) 3.8 3.8 3.8 3.8 3.8 3.8 3.8

= Fair value per share (EUR) 20.48 26.52 40.23 54.61 63.82 70.76 76.83

premium (-) / discount (+) in % 7.1 % 18.8 % 28.9 %

Sensitivity Fair value per Share (EUR)

10.80 % 16.14 20.50 30.40 40.79 47.31 52.65 57.52

9.80 % 17.29 22.10 33.01 44.45 51.69 57.45 62.65

8.80 % 18.71 24.06 36.21 48.96 57.07 63.35 68.93

WACC 7.80 % 20.48 26.52 40.23 54.61 63.82 70.76 76.83

6.80 % 22.78 29.71 45.43 61.93 72.57 80.36 87.05

5.80 % 25.87 33.99 52.43 71.77 84.33 93.26 100.80

4.80 % 30.25 40.06 62.34 85.71 100.99 111.53 120.27

� Net debt improvement expected in line with positive earnings trend

Einhell


Valuation

2013 2014 2015 2016 2017e 2018e 2019e

Price / Book 0.8 x 0.7 x 0.8 x 0.8 x 1.3 x 1.2 x 1.1 x

Book value per share ex intangibles 34.00 35.50 35.51 37.74 40.76 44.48 48.61

EV / Sales 0.3 x 0.3 x 0.3 x 0.2 x 0.4 x 0.4 x 0.3 x

EV / EBITDA 10.6 x 8.3 x 6.8 x 4.3 x 7.1 x 6.2 x 5.5 x

EV / EBIT 16.8 x 13.2 x 9.3 x 5.7 x 8.6 x 7.2 x 6.4 x

EV / EBIT adj.* 16.8 x 9.8 x 8.2 x 5.2 x 8.1 x 7.0 x 6.4 x

P / FCF 3.5 x 26.2 x n.a. 4.3 x 108.8 x 25.6 x 19.8 x

P / E 56.3 x 72.7 x 16.0 x 14.4 x 15.0 x 12.7 x 11.5 x

P / E adj.* 56.3 x 72.7 x 16.0 x 14.4 x 15.0 x 12.7 x 11.5 x

Dividend Yield 1.3 % 1.3 % 1.9 % 2.2 % 1.7 % 1.9 % 2.2 %

Free Cash Flow Yield Potential 4.1 % 5.7 % 8.1 % 12.6 % 8.4 % 9.4 % 10.4 %

*Adjustments made for: -

Einhell


Consolidated profit & loss In EUR m 2013 2014 2015 2016 2017e 2018e 2019e

Sales 416.3 416.4 443.8 487.2 518.0 548.0 578.0

Change Sales yoy 9.6 % 0.0 % 6.6 % 9.8 % 6.3 % 5.8 % 5.5 %

Increase / decrease in inventory 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Own work capitalised 0.0 0.0 0.1 0.0 0.0 0.0 0.0

Total Sales 416.3 416.4 443.9 487.2 518.0 548.0 578.0

Material expenses 296.0 290.0 303.1 330.1 350.7 370.4 390.2

Gross profit 120.3 126.4 140.8 157.1 167.3 177.6 187.9

Gross profit margin 28.9 % 30.4 % 31.7 % 32.2 % 32.3 % 32.4 % 32.5 %

Personnel expenses 54.3 55.4 61.3 63.2 65.9 69.6 73.3

Other operating income 11.5 7.1 5.8 6.2 6.8 6.8 7.0

Other operating expenses 66.9 64.7 66.3 73.1 78.7 81.8 86.0

Unfrequent items 0.0 0.0 0.0 0.0 0.0 0.0 0.0

EBITDA 10.5 13.4 19.0 27.0 29.5 33.0 35.6

Margin 2.5 % 3.2 % 4.3 % 5.5 % 5.7 % 6.0 % 6.2 %

Depreciation of fixed assets 2.6 2.8 2.8 3.9 3.1 3.2 3.4

EBITA 7.9 10.7 16.2 23.1 26.4 29.8 32.2

Amortisation of intangible assets 1.3 2.2 2.3 2.6 2.3 1.6 1.2

Goodwill amortisation 0.0 0.0 0.0 0.0 0.0 0.0 0.0

EBIT 6.6 8.4 13.9 20.5 24.1 28.2 31.0

Margin 1.6 % 2.0 % 3.1 % 4.2 % 4.7 % 5.1 % 5.4 %

EBIT adj. 6.6 11.4 15.8 22.3 25.8 29.0 31.0

Interest income 0.3 0.2 0.2 0.1 0.1 0.0 0.0

Interest expenses 1.7 1.5 2.1 2.1 2.0 1.8 1.8

Other financial income (loss) -1.2 -2.1 -0.2 -1.5 -0.5 -0.5 -0.5

EBT 4.0 5.1 11.8 17.0 21.7 25.9 28.7

Margin 1.0 % 1.2 % 2.7 % 3.5 % 4.2 % 4.7 % 5.0 %

Total taxes 2.5 3.4 4.1 7.3 6.5 7.8 8.6

Net income from continuing operations 1.5 1.6 7.6 9.6 15.2 18.1 20.1

Income from discontinued operations (net of tax) 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Net income before minorities 1.5 1.6 7.6 9.6 15.2 18.1 20.1

Minority interest -0.6 0.0 0.3 0.3 0.3 0.4 0.6

Net income 2.1 1.6 7.4 9.3 14.9 17.7 19.5

Margin 0.5 % 0.4 % 1.7 % 1.9 % 2.9 % 3.2 % 3.4 %

Number of shares, average 3.8 3.8 3.8 3.8 3.8 3.8 3.8

EPS 0.55 0.42 1.95 2.48 3.96 4.69 5.17

EPS adj. 0.55 0.42 1.95 2.48 3.96 4.69 5.17

*Adjustments made for:

Guidance: Sales of EUR 510-515m in 2017, EBT margin 4-4.5%

Financial Ratios 2013 2014 2015 2016 2017e 2018e 2019e

Total Operating Costs / Sales 97.5 % 96.8 % 97.1 % 95.7 % 95.6 % 95.2 % 95.1 %

Operating Leverage -4.7 x 1497.4 x 9.8 x 4.9 x 2.8 x 2.9 x 1.8 x

EBITDA / Interest expenses 6.1 x 9.2 x 9.0 x 12.8 x 14.8 x 18.3 x 19.8 x

Tax rate (EBT) 62.7 % 67.7 % 35.1 % 43.2 % 30.0 % 30.0 % 30.0 %

Dividend Payout Ratio 100.6 % 92.2 % 29.6 % 31.3 % 24.8 % 24.0 % 24.5 %

Sales per Employee 303,859 315,427 336,175 357,193 378,102 394,245 409,929

Sales, EBITDA in EUR m


Operating Performance in %


Performance per Share


Einhell


Consolidated balance sheet In EUR m 2013 2014 2015 2016 2017e 2018e 2019e

Assets

Goodwill and other intangible assets 27.5 24.0 22.2 19.8 20.0 20.0 20.0

thereof other intangible assets 12.2 10.6 9.1 7.0 7.0 7.0 7.0

thereof Goodwill 15.2 13.4 13.1 12.8 13.0 13.0 13.0

Property, plant and equipment 18.3 18.6 19.6 19.9 21.0 22.2 23.4

Financial assets 0.4 0.4 0.4 0.4 0.4 0.4 0.4

Other long-term assets 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Fixed assets 46.1 43.0 42.2 40.0 41.4 42.6 43.8

Inventories 106.0 110.4 139.1 127.7 136.0 144.0 152.0

Accounts receivable 64.4 62.5 62.7 67.9 74.0 78.0 82.0

Liquid assets 59.0 36.3 24.3 54.7 50.9 55.6 62.7

Other short-term assets 34.5 41.4 32.5 32.9 37.0 38.0 38.0

Current assets 263.9 250.5 258.6 283.2 297.9 315.6 334.7

Total Assets 310.0 293.5 300.8 323.3 339.3 358.2 378.5

Liabilities and shareholders' equity

Subscribed capital 9.7 9.7 9.7 9.7 9.7 9.7 9.7

Capital reserve 26.7 26.7 26.7 26.7 26.7 26.7 26.7

Retained earnings 123.9 122.6 128.5 132.9 122.5 133.8 147.6

Other equity components -4.4 -0.9 -8.5 -7.0 14.9 17.7 19.5

Shareholders' equity 155.8 158.0 156.3 162.2 173.8 187.9 203.5

Minority interest 2.5 1.6 1.7 1.9 2.0 2.0 2.0

Total equity 158.3 159.6 157.9 164.1 175.8 189.9 205.5

Provisions 12.4 13.9 16.2 21.9 19.3 19.6 19.9

thereof provisions for pensions and similar obligations 1.9 2.6 2.8 3.2 3.4 3.7 4.0

Financial liabilities (total) 51.4 30.2 32.5 33.2 31.0 31.0 31.0

thereof short-term financial liabilities 21.4 0.2 2.5 3.2 1.0 1.0 1.0

Accounts payable 52.6 55.3 62.5 70.3 74.0 77.0 81.0

Other liabilities 35.4 34.6 31.6 33.8 39.1 40.7 41.0

Liabilities 151.8 133.9 142.8 159.2 163.4 168.3 172.9

Total liabilities and shareholders' equity 310.0 293.5 300.8 323.3 339.3 358.2 378.4


Efficiency of Capital Employment

Operating Assets Turnover 3.1 x 3.1 x 2.8 x 3.4 x 3.3 x 3.3 x 3.3 x

Capital Employed Turnover 2.7 x 2.7 x 2.6 x 3.3 x 3.3 x 3.2 x 3.3 x

ROA 4.5 % 3.7 % 17.4 % 23.3 % 36.1 % 41.6 % 44.6 %

Return on Capital

ROCE (NOPAT) 1.4 % 1.8 % 5.5 % 7.4 % 11.1 % 12.0 % 12.5 %

ROE 1.3 % 1.0 % 4.7 % 5.9 % 8.9 % 9.8 % 10.0 %

Adj. ROE 1.3 % 1.0 % 4.7 % 5.9 % 8.9 % 9.8 % 10.0 %

Balance sheet quality

Net Debt -5.6 -3.5 11.0 -18.3 -16.5 -20.9 -27.7

Net Financial Debt -7.6 -6.0 8.2 -21.5 -19.9 -24.6 -31.7

Net Gearing -3.6 % -2.2 % 6.9 % -11.2 % -9.4 % -11.0 % -13.5 %

Net Fin. Debt / EBITDA n.a. n.a. 43.1 % n.a. n.a. n.a. n.a.

Book Value / Share 41.3 41.9 41.4 43.0 46.1 49.8 53.9

Book value per share ex intangibles 34.0 35.5 35.5 37.7 40.8 44.5 48.6

ROCE Development


Net debt in EUR m


Book Value per Share in EUR


Einhell


Consolidated cash flow statement In EUR m 2013 2014 2015 2016 2017e 2018e 2019e

Net income 4.0 5.1 11.8 17.0 21.7 25.9 28.7

Depreciation of fixed assets 2.6 2.8 2.8 3.9 3.1 3.2 3.4

Amortisation of goodwill 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Amortisation of intangible assets 1.3 2.2 2.3 2.6 2.3 1.6 1.2

Increase/decrease in long-term provisions 1.1 1.5 2.3 5.7 -2.6 0.3 0.3

Other non-cash income and expenses -2.5 -3.4 -4.1 -7.3 -6.5 -7.8 -8.6

Cash Flow before NWC change 6.5 8.1 15.1 21.9 18.0 23.2 25.0

Increase / decrease in inventory 19.7 -4.4 -28.7 11.4 -8.3 -8.0 -8.0

Increase / decrease in accounts receivable 1.8 1.9 -0.2 -5.2 -6.1 -4.0 -4.0

Increase / decrease in accounts payable 20.0 2.7 7.3 7.8 3.7 3.0 4.0

Increase / decrease in other working capital positions 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Increase / decrease in working capital (total) 41.5 0.2 -21.7 14.0 -10.7 -9.0 -8.0

Net cash provided by operating activities [1] 48.0 8.3 -6.5 35.9 7.3 14.2 17.0

Investments in intangible assets -12.2 -0.5 -0.8 -0.5 -1.0 -1.0 -1.0

Investments in property, plant and equipment -2.0 -3.4 -3.8 -4.2 -4.2 -4.4 -4.6

Payments for acquisitions -0.9 0.3 0.0 0.0 0.0 0.0 0.0

Financial investments 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Income from asset disposals 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Net cash provided by investing activities [2] -15.1 -3.6 -4.6 -4.7 -5.2 -5.4 -5.6

Change in financial liabilities 19.2 -21.2 2.3 0.6 -2.2 0.0 0.0

Dividends paid -3.0 -2.6 -2.6 -3.0 -3.3 -3.6 -3.9

Purchase of own shares 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Capital measures 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Other 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Net cash provided by financing activities [3] 16.3 -23.9 -0.3 -2.3 -5.5 -3.6 -3.9

Change in liquid funds [1]+[2]+[3] 49.2 -19.2 -11.5 28.8 -3.4 5.1 7.5

Effects of exchange-rate changes on cash 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Cash and cash equivalent at end of period 54.8 39.8 24.8 53.1 51.3 56.0 63.1


Cash Flow

FCF 33.8 4.4 -11.1 31.1 2.1 8.8 11.4

Free Cash Flow / Sales 8.1 % 1.1 % -2.5 % 6.4 % 0.4 % 1.6 % 2.0 %

Free Cash Flow Potential 4.6 6.4 10.4 14.6 17.5 19.2 20.5

Free Cash Flow / Net Profit 1622.4 % 274.6 % -151.3 % 333.3 % 13.8 % 49.7 % 58.2 %

Interest Received / Avg. Cash 0.8 % 0.5 % 0.6 % 0.3 % 0.2 % 0.0 % 0.0 %

Interest Paid / Avg. Debt 4.1 % 3.6 % 6.7 % 6.4 % 6.2 % 5.8 % 5.8 %

Management of Funds

Investment ratio 3.4 % 0.9 % 1.0 % 1.0 % 1.0 % 1.0 % 1.0 %

Maint. Capex / Sales 0.8 % 0.9 % 1.0 % 1.0 % 1.1 % 1.1 % 1.1 %

Capex / Dep 365.1 % 78.5 % 88.8 % 73.4 % 96.3 % 112.5 % 121.7 %

Avg. Working Capital / Sales 33.3 % 28.3 % 28.9 % 27.1 % 25.2 % 25.6 % 25.8 %

Trade Debtors / Trade Creditors 122.5 % 113.0 % 100.3 % 96.5 % 100.0 % 101.3 % 101.2 %

Inventory Turnover 2.8 x 2.6 x 2.2 x 2.6 x 2.6 x 2.6 x 2.6 x

Receivables collection period (days) 56 55 52 51 52 52 52

Payables payment period (days) 65 70 75 78 77 76 76

Cash conversion cycle (Days) 86 90 116 83 85 86 87

CAPEX and Cash Flow in EUR m


Free Cash Flow Generation


Working Capital


Einhell


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SOURCES

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Einhell


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Company Disclosure Link to the historical price targets and rating changes (last 12 months)

Einhell 3, 5, 6 http://www.mmwarburg.com/disclaimer/disclaimer_en/DE0005654933.htm

http://www.mmwarburg.com/disclaimer/disclaimer_en/DE0005654933.htm

Einhell


INVESTMENT RECOMMENDATION

Investment recommendation: expected direction of the share price development of the financial instrument up to the given price target in the opinion of

the analyst who covers this financial instrument.

-B- Buy: The price of the analysed financial instrument is expected to rise over the next 12 months.

-H- Hold: The price of the analysed financial instrument is expected to remain mostly flat over the next 12

months.

-S- Sell: The price of the analysed financial instrument is expected to fall over the next 12 months.

“-“ Rating suspended: The available information currently does not permit an evaluation of the company.

WARBURG RESEARCH GMBH – ANALYSED RESEARCH UNIVERSE BY RATING

Rating Number of stocks % of Universe

Buy 108 54

Hold 79 40

Sell 11 6

Rating suspended 1 1

Total 199 100

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 29 69

Hold 10 24

Sell 2 5

Rating suspended 1 2

Total 42 100

PRICE AND RATING HISTORY EINHELL AS OF 29.05.2017

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.

Einhell


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