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Gaussin
Capital Goods / France
Document generated on the 21/05/2016
Sharp dilution still expected
KEY DATA
12/14A
12/15A
Adjusted P/E (x)
Call Option
Upside potential : 20.2%
Equity value depends on the positive outcome of the necessary debt
restructuring.
Target Price (6 months)
1.25
Share Price
€ 1.04
Market Capitalisation €M
54.0
Price Momentum
Extremes 12Months
Bloomberg ticker
GOOD
0.66
3.27
ALGAU FP
12/16E
12/17E
12/18E
-6.24
-4.66
ns
14.1
10.4
Dividend yield (%)
0.00
0.00
0.00
0.00
0.00
EV/EBITDA(R) (x)
-5.46
-4.94
25.1
11.2
7.03
Adjusted EPS (€)
-0.55
-0.54
0.00
0.07
0.10
Growth in EPS (%)
Dividend (€)
Sales (€M)
n/a
n/a
n/a
n/a
35.6
0.00
0.00
0.00
0.00
0.00
19.4
6.51
29.6
45.4
60.4
EBIT margin (%)
-36.6
-181
3.78
11.7
15.4
Attributable net profit (€M)
-7.56
-10.4
-0.01
3.83
5.20
ROE (after tax) (%)
-85.3
-94.4
-0.05
8.59
10.5
88.4
112
43.3
52.2
47.6
Gearing (%)
Last forecasts updated on the 17/05/2016
Benchmarks
Values (€)
Upside
Weight
1.43
38%
35%
DCF
NAV/SOTP per share
1.66
59%
20%
EV/Ebitda
Peers
1.02
-2%
20%
P/E
Peers
1.10
6%
10%
Dividend Yield
Peers
0.00
-100%
10%
P/Book
Peers
2.08
100%
5%
1.25
20%
100%
TARGET PRICE
Conflicts of interest
Corporate broking
NO
Trading in corporate shares
NO
Analyst ownership
NO
Advising of corporate (strategy, marketing, debt, etc)
NO
Research paid for by corporate
Analyst
YES
Provision of corporate access paid for by corporate
NO
Link between AlphaValue and a banking entity
NO
Brokerage activity at AlphaValue
NO
Client of AlphaValue Research
NO
Felix Brunotte
capitalgoods@alphavalue.eu
@
corporate.alphavalue.com
+33 (0) 1 70 61 10 50
sales@alphavalue.eu
Contract research, paid for by the above corporate entity. Equity research methods and procedures are as applied by AlphaValue. Target prices and opinions are thus exclusively determined by those
methods and procedures.
ALPHAVALUE CORPORATE SERVICES
Gaussin
(Call Option)
Engineering-Heavy Constr. / France
Contents
Recent Updates....................................................................................................................
3
Body of research..................................................................................................................
8
Target Price & Opinion....................................................................................................
9
Businesses & Trends......................................................................................................
10
Money Making.................................................................................................................
13
Debt.................................................................................................................................
15
Valuation.........................................................................................................................
16
DCF.................................................................................................................................
18
NAV/SOTP......................................................................................................................
19
Worth Knowing................................................................................................................
20
Financials........................................................................................................................
22
Pension Risks..................................................................................................................
28
Governance & Management...........................................................................................
30
Graphics..........................................................................................................................
32
Methodology.........................................................................................................................
35
May 21 2016
Copyright Alphavalue - 2016 – corporate.alphavalue.com
Page 2
ALPHAVALUE CORPORATE SERVICES
Gaussin
(Call Option)
Engineering-Heavy Constr. / France
Recent Updates
May 21 2016
Copyright Alphavalue - 2016 – corporate.alphavalue.com
Page 3
ALPHAVALUE CORPORATE SERVICES
Gaussin
(Call Option)
Engineering-Heavy Constr. / France
Updates
17/05/2016 Sharp dilution still expected
Change in EPS
2016 : € 0.00 vs -0.09
2017 : € 0.07 vs 0.07
ns
+7.10%
2015 EPS is lower than expected for a simple reason: we were previously forecasting Gaussin to raise capital
before the end of 2015. The capital increase finally occurred at the beginning of 2016, so that the number of
shares at the end of 2015 is less than expected which increases the loss per share. Note that the net loss is
better than expected.
Change in Target Price
€ 1.26 vs 1.35
-6.59%
Following the release of the 2015 annual results, we have updated our model. We have made only minor
changes to our forecast. Note that we still expect the number of shares to cross the 50m threshold in the next
few years, a sharp increase compared to the 2.5m shares in 2009. We also continue to forecast an EBITDA
margin in the vicinity of 20% by 2018 onwards and an EBITDA growth rate of 7% between 2018 and 2026.
Note also that should the company manage to raise capital at €2 per share, this would act positively on our
valuation as it would reduce the dilution.
04/05/2016 Waiting for an industrial partner to improve the perspectives
Earnings/sales releases
Fact
Key information:
• Revenue declined by 66% to €6.5m.
• Worsening of the bottom line: net income at €-10.3m vs €-7.6m in 2014.
• Net income and FCF better than expected.
• Order book improved from €48m at end 2014 to €122m.
• Equity at €12.2m at 31 December 2015 completed by a €7.5m capital increase at the beginning of 2016.
Analysis
The port division disappoints because of delays
The sharp decrease in revenue stems mainly from the port division (revenue decreased by 69%) where
important delays in the manufacturing of the Power Pack Full Elec, electric motorisation, resulted because of
technical difficulties met by the CEA (Commissariat à l’Energie Atomique). The company said that it has
already prepared the industrial assets for serial production. On its side, the MTO (Make-To-Order) division
registered a 34% decrease in revenue. As it currently represents less than 15% of overall revenue, it is less
important than the decrease in the Port division. However, the trend seems to be here to stay, with revenue
decreasing each year since 2012, when sales reached €3.6m: a 72% decrease since 2012 is registered in
the MTO division.
But regard the glass as half full
On the positive side, we note that the company is improving its operational efficiency as the cost of
production now represents 38.7% of the activity produced (revenue + inventoried products + capitalised
production), whereas the ratio was 32.5% in 2014. This is most likely the result of the learning curve and
improvement in the organisation, as the company said that it was implementing a programme to control costs
better and reduce them.
The second positive news is the fact that salary expenses rose by only 9% whereas the number of employees
increased by 30% at the end of 2015.
May 21 2016
Copyright Alphavalue - 2016 – corporate.alphavalue.com
Page 4
ALPHAVALUE CORPORATE SERVICES
Gaussin
(Call Option)
Engineering-Heavy Constr. / France
Updates
The third positive news is that net income attributable to the group is slightly better than expected at €-10.3m
versus €-12m expected.
The last very positive news is that FCF is really better than expected. It is in the vicinity of €-12m, whereas we
were expecting €-34m, because of the sharp increase in working capital, reflecting the business model
(leasing of products which should result in a sharp increase in accounts receivable), the delivery of the order
book (which should result in significant higher inventories) and the potential difficulties to get credits from its
suppliers and customers (because of the uncertainties in the company’s financial situation). As the company
met delays in the delivery of its orders, we believe that this pressure on working capital should be reported in
the next year when there will be a normalisation of the activity. We believe that management’s ability to control
working capital will be the key to limiting the negative FCF generation to a level that should not push the
company to execute too much of a capital increase.
Operational results deeply in negative territory
Concerning the operational results, once again it is deeply in negative territory, namely €-11.5m vs €-8.0m in
2014, because of the significant other expenses amounting to €-17.5m. Even if we believe that it is a
necessary step for a growing company, we continue to believe that this amount of expenses is excessive.
This item comprises the costs stemming from tendering of projects (Qingdao, Shangai, Singapore),
participating in national and international trade fairs (Amsterdam TOC, SITL Hanover CEMAG, Singapore
TOC Asia, PTT Port & Terminal Technology in Charleston…), the organisational structure (surveys, quality
specialists and so on) and the search for new investors. Keep in mind that the fees paid on sales and for
external providers (lawyers, Alternext and advisory groups) amounted to €3m, which is significant with regard
to the revenue reported for the period.
Risks
Note the following comments from the auditors:
- The deferred tax assets of €4.1m are not justified on the grounds that the company registered a loss in 2014
and 2015 and that the ability of the company to retrieve them in the short term is uncertain.
- The goodwill amounting to €1.3m should have been impaired by €0.9m.
- Hence, the equity of the company is overstated by at least €5m as of December 2015.
- The going concern basis of accounting could be inappropriate in the case that the company is unable to
find an industrial partner.
- There are some fiscal risks because of an ongoing tax control: the tax reassessment is worth €1.5m and the
tax penalty is worth €1.2m. However, Gaussin already provisioned €2.3m.
Perspectives
Concerning the perspectives, thanks to the strong order book we remain confident that the potential remains
significant if the company is able to find an industrial partner. Moreover, some upside potentials reside:
- Gaussin and its partner, the Chinese CIMC, have been short listed for the automation of the Singaporean
port for potentially 20 AGV (Automated Guided Vehicles) and 25 Power Pack Full Elec. Negotiation are still
ongoing.
- The tendering for the automatisation of the Shanghai port by Yangshan Container Terminal has been
attributed to ZPMC, but this latter is envisaging a subcontracting/participation with Gaussin.
- Gaussin is accelerating its search for an industrial partner. It aims at building an industrial, commercial or
financial partnership with an international group, preferably an Asian one, in order to tender for projects that
amount to five to ten times its current revenue. The building of this partnership should result in entering into
the new partner’s capital. As a reminder, during the extraordinary general assembly on 15 March 2016, the
shareholders agreed a maximum amount of €50m for this.
Impact
May 21 2016
Copyright Alphavalue - 2016 – corporate.alphavalue.com
Page 5
ALPHAVALUE CORPORATE SERVICES
Gaussin
(Call Option)
Engineering-Heavy Constr. / France
Updates
Following the release of the annual accounts, we will revise our model. We will most likely moderately
increase our target price on the back of better FCF generation than expected. However, we will not change
our long-term forecasts (revenue of €100m by 2025 with a c.20% EBITDA margin) until the company is able
to find an industrial partner.
23/03/2016 Gaussin raised €7.5m at €1 per share
Financing issue
Fact
Gaussin announced that it has raised €7.5m through a private placement and a reserved transaction. The
private placement was for 4m shares at €1 per share and was covered by the 10th resolution from the general
meeting on 30 October 2015. The reserved transaction was for 3.5m shares at €1 per share and was covered
by the 24th and 25th resolutions from the same general meeting. These transactions were a necessary
condition in order for Gaussin to receive €5.5m of debt-equivalent from BPI France, since there was a
resolutory condition to its attribution, namely a €6m capital increase. This financing received will be used to
finance the VASCO (translated from French: Vehicle Automated Supervised for Containers) project. The goal
of this project is to develop the first system of automatic guidance for terminal trailers without the need to
install infrastructural equipments.
Management insisted on the fact that this capital increase does not prejudge the industrial partnership that the
group is currently negotiating with a Chinese group and an Indonesian group.
Analysis
Following the capital increase, the number of shares is 29.4m. We stick to our view that the number of shares
will continue to increase sharply in 2016 to c.50m shares. Hence, we don’t see the need to adjust our model
before the publication of the 2015 annual results or a significant event such as the entering into the capital of
a new reference shareholder, namely the Chinese CIMC Vehicles Group or the Indonesian TTL-PT Terminal
Teluk Lamong, or both. As a reminder, during the general meeting held on 15 March 2016, the company
adopted several resolutions to allow CIMC and TTL to each subscribe to 15m shares at €2 per share. If such
a scenario were to be realised, it would act positively on our valuation since the dilution effect would be more
limited than in our central scenario of additional capital increases at €1.
25/01/2016 Poor performance in 2015 but attractive prospects for the future
Earnings/sales releases
Fact
Gaussin published its sales figures for 2015: €6.6m, of which €5.7m stems from the ATT division. The decline
in revenue was 66% versus FY2014.
In contrast, the order book at year end 2015 was €122m, namely a 153% increase.
Analysis
The sharp decrease in revenue underlines the poor financial performance for FY2015 but was largely
anticipated by the market. Inversely, the sharp increase in the order book underlines the bright prospects for
the company over the long-term.
The good news:
- The Port Singapore Authority (PSA) shortlisted Gaussin and its partner, the Chinese company CIMC, to
May 21 2016
Copyright Alphavalue - 2016 – corporate.alphavalue.com
Page 6
ALPHAVALUE CORPORATE SERVICES
Gaussin
(Call Option)
Engineering-Heavy Constr. / France
Updates
assist with the automation of the port of Singapore by supplying the AGV (automated guided vehicles) and
Power Pack Full Elec products. It seems that this first potential order (20 vehicles and 25 Power Packs) is a
way to test the quality of the AGV products before a more significant order.
- Similarly, the Yangshan Container Terminal (YCT) company also shortlisted Gaussin in September 2015 for
50 automated vehicles. The tender has not yet been awarded and Gaussin is awaiting the final decision. As
for PSA, we believe that the potential order from YCT could be the beginning of more orders in the future,
should the products prove convincing.
- Gaussin is seeking backing from a large industrial group with the help of the Corporate Finance department
of BNP Paribas. Such backing is much needed and awaited by market participants as it could be the trigger
point of a successful growth story.
Impact
As a consequence of these poor sales figures we have slightly downgraded 2015 and 2016 EPS. We remain,
however, convinced that betting on Gaussin could be a successful investment over the long-term and that the
current valuation is fair should our scenario of revenue growth to €100m by 2025 be achieved. Lack of
visibility give us pause in the short term and we would recommend awaiting news of the backing of a large
industrial group since we see this as the trigger for a regime shift.
25/01/2016 Poor performance for FY2015 but bright prospects for the future
Change in EPS
2015 : € -0.45 vs -0.38
2016 : € -0.09 vs -0.01
ns
ns
Following publication of the FY2015 revenue figures we decided to take a slightly more negative view on our
EPS forecasts.
Change in NAV
€ 1.72 vs 1.92
-10.5%
Following publication of the FY2015 revenue figures we have updated the reference multiples in our NAV,
explaining the decrease in the NAV valuation.
Change in DCF
€ 1.50 vs 1.51
-0.63%
The change of our DCF valuation is limited as we had already taken into account a conservative scenario with
very significant dilution.
May 21 2016
Copyright Alphavalue - 2016 – corporate.alphavalue.com
Page 7
ALPHAVALUE CORPORATE SERVICES
Gaussin
(Call Option)
Engineering-Heavy Constr. / France
Body of research
May 21 2016
Copyright Alphavalue - 2016 – corporate.alphavalue.com
Page 8
ALPHAVALUE CORPORATE SERVICES
Gaussin
(Call Option)
Engineering-Heavy Constr. / France
Target Price & Opinion
Stock Price and Target Price
Earnings Per Share & Opinion
May 21 2016
Copyright Alphavalue - 2016 – corporate.alphavalue.com
Page 9
ALPHAVALUE CORPORATE SERVICES
Gaussin
(Call Option)
Engineering-Heavy Constr. / France
Businesses & Trends
Businesses & Trends
Gaussin is a family-owned company dating back more than a century. Backed by a client list including prestigious
companies like Maersk and DP World (to mention only the port operators), Gaussin Manugistique enjoys international
renown and a strong foothold in the port sector. Founded in 1880 by Eugène Gaussin, the company is currently headed by
Christophe Gaussin. As of 1986, at the height of the containerisation boom, Gaussin Manugistique decided to refocus its
business on terminal tractor trailers. As of 1994, on the impetus of Christophe Gaussin, the company began to develop a
motorised range. With its “made-to-order” (construction of specialist vehicles to order) offering for large customers, Gaussin
Manugistique benefits from the long tail in the heavy engineering sector.
As of 2006, the company invested massively in the creation of a port container handling/logistics system, resulting in the first
prototype of the Automotive Terminal Trailer (ATT) in 2008/09. The constitution of a demonstration vehicle fleet was only
finished in 2011/12 after validation of the prototype in 2010, the first ATT order taking place in September 2012. This long
cycle and the disputes encountered along the way weakened the company and, between 2010 and 2012, Gaussin
Manugistique racked up total losses of €28.3m due to heavy R&D spending/depreciation/provisions and weak sales volumes
(concentration on the development of the ATT range) leading to successive capital increases. The return to profit in 2013
and the take-off in the order book (€29.7m at end 2012) seemed to signal a turning point for Gaussin Manugistique.
Furthermore, on 9 May 2013, DP World signed a letter of intent for 225 ATTs: the port operator has already purchased 777
Terminal Trailers from Gassin. Note that terminal trailers are the equipment most often found at a port terminal. Gaussin
Manugistique’s aim is to offer a new paradigm in the horizontal transportation/unloading of containers: efficiency and cost
reduction are the new watch words of port operators and the ATT range meets these needs. For a long period, Gaussin
Manugistique could have been classified as a a semi-cyclical, short-run business due to the high proportion of made-toorder activity in its overall sales. With the strategic shift and the development of the ATT range, Gaussin Manugistique may
now be deemed to have re-positioned itself as a growth company and a mid-volume manufacturer in a semi-cyclical sector.
Given its significant export share Gaussin does, however, remain sensitive to global growth, growth in commercial trading
and economic cycles.
Gaussin Manugistique offers two product ranges: MTO/ATM (Made-To-Order, Automotive Trailer Mover) and the ATT/AIV
(Automotive Terminal Trailer/Automotive Intelligent Vehicle) range. MTO consists of manufacturing trailers and specialised
vehicles for the transport, energy, transformation industry and environmental sectors to order. The ATM is a
handling/logistics system for the semi-trailers of heavy goods vehicles which has a reduced size (can be housed in the
space of the semi-trailer) and which offers greater manoeuverability relative to a tractor/truck. Additionally, the electric motor
enables logistics companies to generate operating cost savings. This product won the innovation award at the SITL trade
show (transport and logistics). For its part, the ATT is a port vehicle specifically dedicated to the transportation/unloading of
containers: by offering an availability ratio of 99% (compared with 90% for traditional terminal trailers) thanks to the Power
Pack (a removable pack containing the motor and the energy component), a reduction in operating costs estimated at 50%
by Gaussin Manugistique client PTP and a number of movements per hour higher than the competition, this product is highly
attractive to the major port operators. Lastly, the AIV is a port vehicle similar to the ATT but auto-guided and currently in the
launch phase. Gaussin Manugistique also offers various services like audit, training and maintenance. The company is
looking to flesh out its services offering by continuing to develop leasing, finance leasing and automation in the near future.
Through its Event subsidiary, Gaussin Manugistique has a portfolio of more than 25 patents on the ATT range, filed in the
company’s main markets. The patents giving the company a competitive advantage are as follows: ALL-IN-ONE (patent
covering the architecture of the port vehicle) & POWER-PACK (patent covering the concept of concentrating the energy
components in a removable pack). In partnership with the French Atomic Energy Commission (CEA), Batterie Mobile (49%
owned by Gaussin Manugistique and 51% by Milestone Factory) has developed electric, hybrid and hydrogen-fuelled
motorisation systems for Power Packs together with the algorithm enabling the independent navigation for the AIV (Google
car-type autonomous port vehicle). For its part, Gaussin Manugistique has developed diesel and natural gas-fuelled power
systems. Gaussin Manugistique’s main risks are those linked to the product portfolio, risks linked to the manufacturing of
ATTs, risks linked to the supply chain and suppliers, technological risks, risks linked to the competitive environment and risks
linked to intellectual property and replication.
May 21 2016
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Page 10
ALPHAVALUE CORPORATE SERVICES
Gaussin
(Call Option)
Engineering-Heavy Constr. / France
Businesses & Trends
In its Drewry Report 2011, Drewry Shipping estimated that global container traffic is likely to double in 10 years and exceed
the billion TEU mark in 2020. The growth in the container fleets was respectively 5%, 8% and 7% in 2012, 2011 and 2010,
according to the Container Census from Drewry. Furthermore, according to the Xerfi “Container Shipping Lines” survey of
March 2011, 90% of the merchandise transported in the world should be carried by containers. Currently, some 5% annual
growth in this sector mainly originates from the intensification of trading flows. The growth in commercial trading by
container should logically accelerate the purchasing of container handling/transport/unloading tools by port operators.
Additionally, the automation of port operations should stimulate the interest of port operators (due to productivity gains) and
thus offer attractive growth opportunities for the sector.
Given that this is a growing niche market, the competition is relatively moderate, the port vehicles/tractors sector effectively
being highly concentrated. Gaussin Manugistique’s competitors are the traditional terminal trailer manufacturers whose
investment costs are lower but where the operating costs are higher. Since there are currently no terminal trailers with the
ATT architecture (combined tractor and trailer), these are indirect competitors. The main manufacturers of traditional
terminal trailers are the brands Kalmar by Cargotech (Finland), the leader of the terminal tractor trailer market, Capacity
Texas (USA), Terberg (Netherlands), Mafi Transport Systems (Germany). CHNTC (China) with its Sinotruck brand is the
main terminal tractor trailer manufacturer in Asia. This does not prevent Gaussin Manugistique from taking its share of this
market given its technological differentiation.
Kalmar has produced more than 57,000 terminal trailers over a period of more than 50 years. The 32,000 most recent
terminal trailers were manufactured over the last fifteen years: annual sales are estimated at around 2,000 terminal trailers.
According to Kalmar, automation and services offer the most attractive growth opportunities. Port automation is slowly
developing with fewer than 40 terminals in more than a thousand now automatised to a significant degree. Gottwald, of Terex
Port Solutions, was the first to implement auto-guided port vehicles in the early 1990s. More than 650 Gottwald AGVs
(Automated Guided Vehicle) have thus been sold in the past twenty years, a product which competes directly with the
Gaussin Manugistique AIV. To a lesser extent, VDL Containersystemen is also a direct competitor for the auto-guided range
although the relative advantages of the Gaussin Manugistique AIV model should enable it to gain a significant market share
in this still-embryonic technology. Moreover, in a context where Corporate Social Responsibility is taking on an increasingly
important dimension, the 200 to 300 annual fatal accidents in port terminals could be significantly reduced thanks to the
adoption of auto-guided port vehicles.
The ATT substitutes are ship-to-shore cranes, gantry cranes, container storage racks and fork-lift trucks. In addition to
effecting vertical container movements, the latter may effectively also undertake horizontal operations. Their principal
disadvantages are their high unit cost (with the exception of fork-lifts) and their limited range. The main manufacturers of
ship-to-shore cranes are Cargotech, Terex Port Solutions and Konecranes. Terex also manufactures fork-lift trucks aimed at
port operators.
According to Gaussin Manugistique, the number of terminal trailers in service is estimated to be 32,500. Taking a lifespan of
five years, the renewal market may thus be estimated at 6,000 units a year. For its part, the PEMA (6th annual mobile
equipment survey) puts the sale of terminal trailers at 2,000 in 2012 excluding North America for the six main manufacturers.
Taking into account North America and the other competitors (like the Asian Sinotruk which did not respond to the survey), a
market situated at between 2,500 and 3,000 annual units remains conservative. Market leader Kalmar sells 2,000 terminal
trailers on average per year. Estimating its share of the market at between 25% and 50%, the annual market is likely to be
around 4,000 to 8,000 terminal trailers. With an average price of around €115k for traditional terminal trailer manufacturers,
the market is liable to amount to between €290m and €900m. Taking the average price of an ATT with a Power-Pack (€300k)
into account, the market would amount to between €750m and €2,400m. This difference remains conservative since the ATT
range has the potential to become a partial substitute for heavy equipment like ship-to-shore cranes and other port vehicles
like Reachstackers. Thus, a potential market of 5,000 ATTs per year would seem to be a reasonable estimate. With around
200 ATTs sold annually by the end of 2016, Gaussin Manugistique would have a market share of around 4% (in terms of the
number of terminal trailers sold), which constitutes our central scenario. Furthermore, the marketing of the AIV range (and
the services linked to the deployment of the auto-guidance system), Dockings Stations, made-to-order vehicles, ATMs
Terminal Trailers and new options could also drive revenues higher.
May 21 2016
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Page 11
ALPHAVALUE CORPORATE SERVICES
Gaussin
(Call Option)
Engineering-Heavy Constr. / France
Businesses & Trends
Divisional Breakdown Of Revenues
Sector
12/15A
12/16E
12/17E
12/18E
Change 16E/15
€M
Terminal port
equipements (A...
Engineering-Heavy
Constr.
Engineering-Heavy
MTO
Constr.
Services / Licensing / Engineering-Heavy
Others
Constr.
of % total
Change
17E/16E
€M
of % total
5.51
24.0
39.0
54.0
18
80%
15
95%
1.00
4.60
5.40
5.40
4
16%
1
5%
0.00
1.00
1.00
1.00
1
4%
0
0%
Other
0.00
0.00
0.00
0.00
0
0%
0
0%
Total sales
6.51
29.6
45.4
60.4
23
100%
16
100%
Key Exposures
Sales By Geography
Revenues
Costs
Equity
Dollar
90.0%
5.0%
0.0%
France
10.0%
Emerging currencies
15.0%
0.0%
0.0%
Other
90.0%
0.0%
0.0%
0.0%
Long-term global warming
We address exposures (eg. how much of the turnover is exposed to the $ ) rather than sensitivities (say, how much a 5% move in the $ affects the bottom line). This is to make
comparisons easier and provides useful tools when extracting relevant data.
Actually, the subject is rather complex on the ground. The default position is one of an investor managing in €. An investor in £ will obviously not react to a £ based stock trading partly in €
as would a € based investor. In addition, certain circumstances can prove difficult to unravel such as for eg. a € based investor confronted to a Swiss company reporting in $ but with a
quote in CHF... Sales exposure is probably straightforward but one has to be careful with deep cyclicals. Costs exposure is a bit less easy to determine (we do not allow for hedges as
they can only be postponing the day of reckoning). How much of the equity is exposed to a given subject is rarely straightforward but can be quite telling
In addition, subjects are frequently intertwined. A $ exposure may encompass all revenues in $ pegged currencies and an emerging currency exposure is likely to include $ pegged
currencies as well.
Exposure to global warming issues is frequently indirect and may require to stretch a bit imagination.
May 21 2016
Copyright Alphavalue - 2016 – corporate.alphavalue.com
Page 12
ALPHAVALUE CORPORATE SERVICES
Gaussin
(Call Option)
Engineering-Heavy Constr. / France
Money Making
Money Making
Gaussin Manugistique is currently enjoying strong growth in its order book: from €3.2m in 2011 to €8.9m in 2012 and
€29.7m in 2013. The ATT range represented more than 80% of revenues in 2013 versus only some 15% in 2012: the sale of
ATTs has effectively been multiplied by ten due to the virtual absence of ATT sales in 2012. The company is also
simultaneously developing its exports with the breakdown in revenues by geography moving from 76% of sales generated in
France in 2012 to 5% in France in 2014 (forecast).
Gaussin Manugistique has opted for differentiation rather than a price war. By betting on this sensible choice, Gaussin
Manugistique has been able to create a “blue ocean” in a niche market thanks to significant investment in R&D. The ATT/AIV
range has been protected by the filing of numerous patents.
This company has opted for a tried and tested loyalty strategy which has won its spurs and is comparable to that of the
“printer cartridge” strategy, as applied to capital goods. Whereas the chassis has an estimated lifespan of between 20 and
30 years, the Power-Pack (removable module comprising the motor and the energy source) has a shorter lifespan of
between three and five years. Over the full duration of the chassis use, the client must purchase between five and seven
Power-Packs of which Gaussin Manugistique has exclusive ownership. The company will thus have a semi-recurrent
revenue source which will come on stream gradually as its lead product, namely the ATT, and its new product, the AIV, are
accepted by the market. The price of a Power-Pack is positioned at between 50% of the price of the chassis for the Diesel
model and 100% of the chassis price for the Full-Electric model. If the Full-Electric Pack proves a hit with port operators, the
Gaussin Manugistique business model could thus evolve to focus on the manufacturing and improvement of the Full-Electric
Power-Packs in partnership with Batterie Mobile, the latter being 49% owned by Gaussin Manugistique and 51% by
Milestone Factory.
Gaussin Manugistique has also moved up-market. By creating a unique product range catering to the specific needs of port
operators and protecting it by the filing of numerous patents, Gaussin Manugistique has given itself room to increase the sale
prices of its products depending on their success. Furthermore, by continuously improving its product technology and by
offering new options, Gaussin Manugistique regularly proposes new products/options with more value added and at higher
prices. The deployment of this strategy enables the company to discriminate its clients by prices.
Similarly, this company has opted for a cost optimisation strategy. By moving from a made-to-order manufacturing model to
a mid-volume series based model, Gaussin Manugistique has been able to reduce the manufacturing costs for its ATT range
significantly thanks to both economies of scale and the apprenticeship curve. Additionally, the sub-contracting and
procurement of standardised components enables manufacturing costs to be contained. In addition to the steady decline in
manufacturing costs, Gaussin Manugistique is also counting on flexibility to limit its fixed costs and rapidly adapt to market
conditions: sourcing of standardised components from suppliers, ability to rapidly redeploy on other suppliers, use of
temporary staff for the final assembly, etc. The bulk of an ATT’s manufacturing costs are thus variable costs.
Gaussin Manugistique is counting on both internal and external growth to drive its revenues. The internal growth is mainly
based on the development of the ATT/AIV range together with the related services (leasing, finance leases, training,
maintenance, etc.). However, Gaussin Manugistique does not object to external growth as witnessed in its two abortive
partnership attempts with Dubaï Investments Industries and EPD. Despite these setbacks, the licensing/partnership model
remains a way for Gaussin Manugistique rapidly to respond to success of the ATT/AIV range with port operators. The
choice of strategic orientation towards the automobile concession model would also be a way for Gaussin Manugistique to
increase its revenues while reducing the risk for its shareholders.
With the reinforcement of its liquidity and solvency following the raising of equity and debt financing during the first half of
2014 (€23.7m at 31 March 2014), Gaussin Manugistique should be able to renegotiate its supplier payment conditions under
better terms (currently at the time the order is placed) and obtain more favourable client advances. This should accentuate
the transition to a model based on low, or potentially negative, working capital at a time of strong growth in orders. Gaussin
Manugistique’s activity could ultimately prove to be significantly cash generative.
May 21 2016
Copyright Alphavalue - 2016 – corporate.alphavalue.com
Page 13
ALPHAVALUE CORPORATE SERVICES
Gaussin
(Call Option)
Engineering-Heavy Constr. / France
Money Making
In addition to direct sales with large accounts, Gaussin Manugistique is currently developing its distribution network in two
forms: distribution agreements without a vehicle order commitment and distribution agreements with a vehicle order
commitment. The first distributor order was placed in June 2013. Sixteen letters of intent have been signed with a view to the
implementation of exclusive distribution contracts with a minimum number of ATTs per year. In June 2014, two of these
letters of intent were transformed into contracts by FSH (Hamburg, Germany) and Akan-sel (Turkey). This distribution
strategy nonetheless highlights the willingness of Gaussin Manugistique to move towards a dealer-based model.
Divisional EBIT
Change
17E/16E
Change 16E/15
12/15A
12/16E
12/17E
12/18E
Services / Licensing / Others
0.00
0.60
0.60
0.60
1
5%
0
0%
MTO
Terminal port equipements
(ATT/AIV/Powerpacks/Docking S...
Other/cancellations
0.20
0.92
1.08
1.08
1
6%
0
4%
-12.0
-0.40
3.65
7.60
12
90%
4
96%
Total
-11.8
1.12
5.33
9.28
13
100%
4
100%
€M
of % total
€M
of % total
Divisional EBIT margin
12/15A
Services / Licensing / Others
12/16E
12/17E
12/18E
60.0%
60.0%
60.0%
MTO
20.0%
20.0%
20.0%
20.0%
Terminal port equipements (ATT/AIV/Powerpack...
-217%
-1.68%
9.36%
14.1%
Total
-181%
3.78%
11.7%
15.4%
May 21 2016
Copyright Alphavalue - 2016 – corporate.alphavalue.com
Page 14
ALPHAVALUE CORPORATE SERVICES
Gaussin
(Call Option)
Engineering-Heavy Constr. / France
Debt
Debt
Gaussin Manugistique has had numerous capital increases since 2006: more than €47.5m of equity has been raised to
finance the development of the ATT. These fund-raisings were admittedly dilutive for the shareholders but they have enabled
the development of a comprehensive range of port vehicles. The last equity fundraising of €9.1m in February 2014 enabled
Gaussin Manugistique to reinforce both its liquidity and its solvency.
Of the 700,000 warrants (BSA) issued in March 2011 to the benefit of the company GEM, 250,000 were exercised in 2011
and the balance during 2014. Similarly, 3,217,399 of the 4,035,097 BSARs issued in November 2013 remain to be
exercised. Were all the outstanding BSARs to be exercised, the gross proceeds of the capital increase would be €7.56m,
i.e. a potential dilution of around 21%.
Gaussin Manugistique raised €13m of debt in April 2014 with bullet redemption in 2021. The interest rate is 8% through to
2020 then 9% in the last year. Debt is guaranteed by the pledging of the Event shares and the patents on the ATT range.
The company now enjoys a solid balance sheet and a strong liquidity situation. The net financial position should become
positive as of 2016.
Every year, Gaussin Manugistique receives an R&D tax credit. The amount of the R&D tax credit stood at between €0.35m
and €0.6m in 2010, 2011 and 2013, peaking at €3.9m in 2012.
Funding - Liquidity
12/15A
12/16E
12/17E
12/18E
EBITDA
€M
-14.5
3.12
7.33
11.3
Funds from operations (FFO)
€M
-9.08
1.99
5.83
7.20
Ordinary shareholders' equity
€M
12.2
42.5
46.7
52.2
Gross debt
€M
16.1
27.0
32.0
32.0
o/w Less than 1 year - Gross debt
€M
1.29
1.00
1.00
1.00
o/w 1 to 5 year - Gross debt
€M
1.21
1.00
1.00
1.00
o/w Beyond 5 years - Gross debt
€M
13.6
25.0
30.0
30.0
+ Gross Cash
€M
1.56
4.71
5.54
8.74
= Net debt / (cash)
€M
14.6
22.3
26.5
23.3
Bank borrowings
€M
16.1
22.0
29.0
32.0
Financial leases liabilities
€M
0.00
0.00
0.00
0.00
Mortgages
€M
0.00
0.00
0.00
0.00
Other financing
€M
0.01
5.00
3.00
0.00
Gearing (at book value)
%
112
43.3
52.2
47.6
Adj. Net debt/EBITDA(R)
x
-1.01
7.15
3.61
2.06
Adjusted Gross Debt/EBITDA(R)
x
-1.24
9.27
4.63
3.02
Adj. gross debt/(Adj. gross debt+Equity)
%
59.6
40.5
42.1
39.5
Ebit cover
x
-24.3
0.95
3.55
4.89
FFO/Gross Debt
%
-50.5
6.87
17.2
21.1
FFO/Net debt
%
-62.3
8.91
22.0
30.9
FCF/Adj. gross debt (%)
%
-68.1
-130
-12.3
9.39
(Gross cash+ "cash" FCF+undrawn)/ST debt
x
-8.30
-33.0
1.38
11.9
"Cash" FCF/ST debt
x
-9.90
-37.7
-4.17
3.20
May 21 2016
Copyright Alphavalue - 2016 – corporate.alphavalue.com
Page 15
ALPHAVALUE CORPORATE SERVICES
Gaussin
(Call Option)
Engineering-Heavy Constr. / France
Valuation
Valuation
CAUTIONARY STATEMENT
Valuing Gaussin Manugistique is an exceptionally tough exercise. In fact, the company currently burns a lot of cash and one
or several significant capital increases are expected. We thus need to warn investors that our valuation is highly speculative
because a small change in our hypothesis could change significantly the company’s valuation. This explains why we choose
to classify Gaussin as a “call option” under the flag “funding issues”.
Following the press release on 2014 and 2015 full-year results, we have decided to take into account a significant dilution
during the next two years. The following assumptions have been used: one or several capital increases for an amount of
c.€30m at €1 per share in 2016. The number of shares thus increases from 22m at the end of 2015 to 52m at the end of
2016. Note that the number of shares in 2009 was c.2.5m.
DCF VALUATION
For the DCF, the central scenario is a strong growth in sales. Sales are expected to reach €30m in 2016E, €45m in 2017E
and €60m in 2018E. This sales growth is driven by the growth in the ATT range. Overall, we forecast FCFF to move from
negative territory to positive territory: we expect FCF will increase from c.€-37m in 2016E (mainly because of sharp
increase in WCR) to c.€10m in 2026E which in our opinion may be justified by an expansion of the EBITDA margin between
2015 and 2026E from -220% to 18.7%. We believe that the company has no other choice than to clearly expand its EBITDA
margin if it wants to stay in business over the long term and fund its growth.
The assumptions for the 2018-2026 period are as follows: sales, EBITDA and tax growth of 7% as well as working capital
requirement and capex growth of 2% per year. The Drewry forecasts put the growth in the number of containers transported
at an annual 5% through to 2020. Similarly, the OECD estimates the real growth of global GDP to be an annual 2.9%
between 2011 and 2060 while the ECB’s inflation target is an annual average of 2%, i.e. nominal GDP growth of around 5%.
The change in WCR deserves a comment. The scenario of a sharp increase of working capital requirement has been taken
into account, because of a change in the business model. Indeed, the company has decided to lease its products, which will
sharply increase WCR, whereas our previous opinion, based on Christophe Gaussin’s statements during an interview with
him, was that the WCR would soon become negative. This huge investment in WCR will be mostly funded through the
expected capital increases: the WCR would thus grow by c.€35m in 2016E before increasing by €2m per year between
2018 and 2026. In fact, we decided to apply a simple rule for 2017E onwards: each euro of incremental revenue to be
generated, needs an investment of c.€0.30 to €0.50 in working capital. This seems to be conservative enough in our opinion.
More comments are deserved on the capex side. The scenario of an expansion in the manufacturing site over the next two
years has been taken into account. Investment expenditure is estimated at €5m in 2016E and 2017E to finance the
company’s expansion. Then, we expect capex to converge towards depreciation expense, namely €2m. Capex as a
proportion of sales would thus move from 75% in 2015 to 17% in 2016E, 11% in 2017E and to c.3% from 2018E onwards.
The long-term growth used to calculate the terminal value is the ECB’s inflation target, namely 2%.
The discounted terminal value represents 66% of the valuation by DCF. This means that our valuation is more speculative
than usually since it depends more on the terminal value than on the next 10 years free cash flow. This can be explained by
the fact that we expect FCFF to be strongly in negative territory in 2016E (because of the high capex and sharp increase in
WCR).
SOTP VALUATION
For the sum of the parts, Gaussin Manugistique has been divided into four parts. The port division (ATT/AIV) has been
valued using an EV/order book multiple of 0.7x and a reference multiple of €117m (namely 2015 order book). The EV/sales
multiples for the MTO division (given the lack of growth for this division has been estimated at 1x and a reference multiple of
May 21 2016
Copyright Alphavalue - 2016 – corporate.alphavalue.com
Page 16
ALPHAVALUE CORPORATE SERVICES
Gaussin
(Call Option)
Engineering-Heavy Constr. / France
Valuation
€3m has been used. The services/licences division has been valued using an EV/sales multiple of 5x on a reference multiple
of €1m. The valuation of the Gaussin Manugistique and Event subsidiary patent portfolio has been estimated at €13m, due to
its pledging as a guarantee on the debt.
PEERS VALUATION
Gaussin Manugistique has no real comparable. It is effectively a growth company in a niche market with a market
capitalisation of below €30m. However, Wärtsilä (Finland, heavy engineering/maritime sector, the manufacturer of electric
generators and boat engines), Metso (Finland, mining sector, manufacturer of automation solutions), GEA Group (Germany,
mechanical engineering sector) and Hamburger Hafen & Logistik (Germany, transport/logistics sector) have been chosen as
peers due to their degree of similarity with the Gaussin Manugistique business model. A 50% premium has been applied to
the P/E, EV/EBITDA, P/B multiples and the yield due to Gaussin Manugistique’s growth profile (strong growth in the order
book). Although its growth potential could justify a premium higher than 50%, this has not been envisaged due to Gaussin
Manugistique’s riskier profile (SME, concentration on one product range, etc.). The multiples are applied to forecasts 18
months out. This explains why the peers’ valuation is such a drag on overall valuation: 18m earnings are expected to be only
slightly positive, Gaussin is not expected to pay a dividend over the next few years and the EBITDA will be rather low in
comparison to our expectation for 2018E onwards. We consider the NAV and DCF to give a better picture of our valuation
for these reasons.
Valuation Summary
Benchmarks
Values (€)
Upside
Weight
DCF
1.43
38%
35%
NAV/SOTP per share
1.66
59%
20%
EV/Ebitda
Peers
1.02
-2%
20%
P/E
Peers
1.10
6%
10%
Dividend Yield
Peers
0.00
-100%
10%
P/Book
Peers
2.08
100%
5%
1.25
20%
Target Price
Comparison based valuation
Computed on 18 month forecasts
P/E (x)
Ev/Ebitda (x)
P/Book (x)
Yield(%)
Peers ratios
18.8
10.5
2.56
3.41
Gaussin's ratios
26.7
16.0
1.22
0.00
50.0%
50.0%
50.0%
50.0%
Default comparison based valuation (€)
1.10
1.02
2.08
0.00
Gea Group
33.9
15.6
2.71
2.29
Wärtsilä
13.9
8.98
2.88
3.73
Metso
14.9
8.65
1.97
5.37
Hamburger Hafen & Logistik
16.2
8.40
1.96
4.02
Premium
May 21 2016
Copyright Alphavalue - 2016 – corporate.alphavalue.com
Page 17
ALPHAVALUE CORPORATE SERVICES
Gaussin
(Call Option)
Engineering-Heavy Constr. / France
DCF
DCF Valuation Per Share
WACC
%
8.82
Avg net debt (cash) at book value
€M
24.4
PV of cashflow FY1-FY11
€M
34.6
Provisions
€M
1.92
FY11CF
€M
10.5
Unrecognised actuarial losses (gains)
€M
0.00
Normalised long-term growth"g"
%
2.00
Financial assets at market price
€M
0.00
Terminal value
€M
154
Minorities interests (fair value)
€M
0.00
PV terminal value
€M
66.0
Equity value
€M
74.4
PV terminal value in % of total value
%
65.6
Number of shares
Mio
51.9
Total PV
€M
101
Implied equity value per share
€
1.43
Assessing The Cost Of Capital
Synthetic default risk free rate
%
3.50
Company debt spread
bp
450
Target equity risk premium
%
5.00
Marginal Company cost of debt
%
8.00
Tax advantage of debt finance
(normalised)
%
30.0
Company beta (leveraged)
x
1.28
Average debt maturity
Year
Company gearing at market value
%
41.3
Sector asset beta
x
1.04
Company market gearing
%
29.2
Debt beta
x
0.90
Required return on geared equity
%
9.91
Market capitalisation
€M
54.0
Cost of debt
%
5.60
Net debt (cash) at book value
€M
22.3
Cost of ungeared equity
%
8.68
Net debt (cash) at market value
€M
18.2
WACC
%
8.82
5
DCF Calculation
12/15A 12/16E 12/17E 12/18E Growth 12/19E 12/26E
Sales
€M
6.51
29.6
45.4
60.4
7.00%
64.6
104
EBITDA
€M
-14.5
3.12
7.33
11.3
7.00%
12.1
19.4
EBITDA Margin
%
-222
10.5
16.1
18.7
18.7
18.7
Change in WCR
€M
1.14
-34.7
-5.00
-2.00
2.00%
-2.04
-2.34
Total operating cash flows (pre tax)
€M
-7.18
-31.6
2.33
9.28
10.0
17.0
Corporate tax
€M
0.37
0.05
0.00
-2.18
7.00%
-2.34
-3.75
Net tax shield
€M
-0.19
-0.35
-0.45
-0.57
2.00%
-0.58
-0.67
Capital expenditure
€M
-4.82
-5.00
-5.00
-2.00
2.00%
-2.04
-2.34
Capex/Sales
%
-74.0
-16.9
-11.0
-3.31
-3.16
-2.26
Pre financing costs FCF (for DCF purposes)
Various add backs (incl. R&D, etc.) for DCF
purposes
€M
-11.8
-36.9
-3.12
4.53
5.07
10.3
Free cash flow adjusted
€M
-11.8
-36.9
-3.12
4.53
5.07
10.3
Discounted free cash flows
€M
-11.8
-36.9
-2.87
3.82
3.94
4.41
Invested capital
€
24.4
62.4
70.6
72.9
74.4
85.4
May 21 2016
€M
Copyright Alphavalue - 2016 – corporate.alphavalue.com
Page 18
ALPHAVALUE CORPORATE SERVICES
Gaussin
(Call Option)
Engineering-Heavy Constr. / France
NAV/SOTP (edit)
NAV/SOTP Calculation
% owned
Valuation
technique
Port terminal equipm...
100%
Patents portfolio
100%
Services / Licensing /...
100%
Volume
based
valuation
AlphaValue
valuation
EV/Sales
MTO
100%
EV/Sales
Multiple
used
0.7
Valuation at
100%
(€M)
In
currency
per share
(€)
Stake
valuation
(€M)
% of gross
assets
82.3
82.3
1.58
76.6%
13.0
13.0
0.25
12.1%
5
5.00
5.00
0.10
4.66%
1
3.00
3.00
0.06
2.79%
(1)
0.08
3.82%
107
2.07
100%
Net cash/(debt) by year end
-22.3
-0.43
-20.8%
Commitments to pay
Other
4.10
Total gross assets
-2.36
-0.05
-2.20%
Commitments received
3.31
0.06
3.08%
NAV/SOTP
86.0
1.66
80.1%
Number of shares net of treasury shares - year end (Mio)
51.9
NAV/SOTP per share (€)
1.66
Current discount to NAV/SOTP (%)
37.2
May 21 2016
Copyright Alphavalue - 2016 – corporate.alphavalue.com
1. Deferred tax assets
Page 19
ALPHAVALUE CORPORATE SERVICES
Gaussin
(Call Option)
Engineering-Heavy Constr. / France
Worth Knowing
Worth Knowing
Following the completion of the ATT/AIV range development phase, Gaussin Manugistique has entered the commercialisation
phase for these two products. The consolidation of the management/marketing team should enable Gaussin Manugistique to
accelerate the commercialisation process.
To be able to meet the strong demand from port operators, Gaussin Manugistique plans to invest in expanding its factory.
The raising of equity and other financing amounting to €23.7m during the 2014 first half should enable the company to
finance its expansion over the short/medium term without requiring any further capital increases.
The purchase of warrants (BSAR) by Christophe Gaussin (Chairman and Chief Executive Officer) to the tune of 916,991
units (around 800,000 had already been exercised at mid-June 2014) and Volker Berl (Board director) to the tune of
260,648 units in late November 2013 (enabling them to significantly increase their shareholdings) are good indicators of the
confidence of the management/Board of Directors in the success of the ATT range. In the event that all the warrants are
exercised, the diluted shareholdings of Christophe Gaussin and Volker Berl would stand approximately at a respective 8.5%
and 3.5%. Furthermore, the purchase of 155,700 shares by Volker Berl during the fund raisings of late 2013 and early 2014
is also a strong signal.
The heavy provisions passed in 2012 enabled the balance sheet to be cleaned up (resolution of disputes with Dubaï
Investments Industries and EPD). The raising of EUR 10.7 million of equity and an additional EUR 13 million of financing
enabled a reinforcement in the company’s solvency, liquidity and investment capability.
Following the dispute with EPD, Gaussin Manugistique repatriated the final assembly of the ATT/AIV range and the PowerPacks to Héricourt in France, enabling the company to be more responsive. Production capacity is estimated by the
management at between 250 ATTs a year, based on the current organisation and 700 ATTs per year, in 3×8 (without
significant additional investment).
Due to the interest of port operators in port vehicles like the ATT/AIV, the promising potential of the ATT range, the approach
of the end of the R&D cycle and the beginning of the commercialisation phase, Gaussin Manugistique could attract the
interest of a company understanding the potential of this innovative range, meaning that the possibility of a bid cannot be
ruled out.
The growth that Gaussin Manugistique needs to deliver to justify its valuation is very high. Having tripled in 2013, on our
estimates sales should more than double in 2014, then enjoy growth of around 70% and 40% respectively in 2015 and 2016
(sales growth would then fall to 5%/year through to 2024, and 2%/year subsequently). It is thus important to highlight the
existence of execution risks, namely the difficulty of managing too high a level of growth: difficulties in securing the supply
chain (difficulties encountered by some suppliers in meeting their deadlines), operational difficulties linked to the expansion
of the assembly factory and the logistics chain, difficulties for the management linked to the significant increase in the
payroll, difficulties linked to the management of cash flows (control over Working Capital Requirement), etc.
To limit these difficulties, the negotiation of partnerships with major industrial groups with strong operations and benefiting
from substantial financial resources could allow Gaussin Manugistique to reduce the risks linked to the strong growth in the
order book.
The €13m financing facility has ruled out any short-medium term liquidity issues. However, a potential worst case scenario
could be the company not managing to realise sufficient growth to ultimately reimburse the debt (insufficient cash flow
generation from operations and/or refinancing difficulties given a deterioration in the balance sheet/outlook). Given the
pledging of the patent portfolio, the control of Gaussin Manugistique could then change hands.
Conversely, were the management able to generate sufficient cash flow from operations, Gaussin Manugistique could
reimburse the credit early, i.e. as of 2018.
May 21 2016
Copyright Alphavalue - 2016 – corporate.alphavalue.com
Page 20
ALPHAVALUE CORPORATE SERVICES
Gaussin
(Call Option)
Engineering-Heavy Constr. / France
Worth Knowing
Shareholders
% owned
Of which
% voting rights
Of which
% free to float
Christophe Gaussin
8.90%
8.90%
0.00%
Volker Berl
2.52%
2.52%
0.00%
Name
Apparent free float
May 21 2016
88.6%
Copyright Alphavalue - 2016 – corporate.alphavalue.com
Page 21
ALPHAVALUE CORPORATE SERVICES
Gaussin
(Call Option)
Engineering-Heavy Constr. / France
Financials
Valuation Key Data
12/15A
12/16E
12/17E
12/18E
Adjusted P/E
x
-4.66
ns
14.1
10.4
Reported P/E
x
-5.31
-4,030
14.1
10.4
EV/EBITDA(R)
x
-4.94
25.1
11.2
7.03
P/Book
x
4.51
1.27
1.16
1.03
Dividend yield
%
0.00
0.00
0.00
0.00
Free cash flow yield
%
-22.2
-69.8
-7.72
5.92
Average stock price
€
2.51
1.04
1.04
1.04
Consolidated P&L
12/15A
12/16E
12/17E
12/18E
€M
6.51
29.6
45.4
60.4
Sales growth
%
-66.5
355
53.4
33.0
Sales per employee
€th
108
370
454
503
Order book (mio currency)
m
122
150
175
200
Purchases and external costs (incl. IT)
€M
R&D costs as % of sales
%
0.00
0.00
0.00
0.00
Staff costs
€M
-4.86
-6.00
-7.00
-8.00
Operating lease payments
€M
Cost of sales/COGS (indicative)
€M
-16.1
-19.2
-29.5
-39.3
EBITDA
€M
-14.5
3.12
7.33
11.3
EBITDA(R)
€M
-14.5
3.12
7.33
11.3
EBITDA(R) margin
%
-222
10.5
16.1
18.7
EBITDA(R) per employee
€th
-241
39.0
73.3
94.0
Depreciation
€M
-0.93
-2.00
-2.00
-2.00
Depreciations/Sales
%
14.3
6.76
4.41
3.31
Amortisation
€M
Additions to provisions
€M
Reduction of provisions
€M
0.56
Underlying operating profit
€M
-15.2
1.12
5.33
9.28
Underlying operating margin
%
-234
3.78
11.7
15.4
Other income/expense (cash)
€M
3.65
Other inc./ exp. (non cash; incl. assets revaluation)
€M
Earnings from joint venture(s)
€M
Impairment charges/goodwill amortisation
€M
-0.20
Operating profit (EBIT)
€M
-11.8
1.12
5.33
9.28
Interest expenses
€M
-1.13
-1.28
-1.60
-2.00
Sales
of which effectively paid cash interest expenses
-0.39
€M
-1.13
-1.28
-1.60
-2.00
Financial income
€M
0.00
0.10
0.10
0.10
Other financial income (expense)
€M
0.50
Net financial expenses
€M
-0.63
-1.18
-1.50
-1.90
of which related to pensions
€M
0.00
0.00
0.00
0.00
Pre-tax profit before exceptional items
€M
-12.4
-0.06
3.83
7.38
Exceptional items and other (before taxes)
€M
1.76
of which cash (cost) from exceptionals
€M
0.00
0.05
-1.12
-2.18
Current tax
€M
Impact of tax loss carry forward
€M
Deferred tax
€M
0.37 (1)
0.00 (1)
1.12
0.00
Corporate tax
€M
0.37
0.05
0.00
-2.18
Tax rate
%
3.00
78.4
0.00
29.6
Net margin
%
-185
-0.05
8.44
8.60
Equity associates
€M
-0.05
Actual dividends received from equity holdings
Minority interests
Actual dividends paid out to minorities
€M
€M
-0.06
€M
Income from discontinued operations
€M
Attributable net profit
€M
-10.4
-0.01
3.83
5.20
Impairment charges/goodwill amortisation
€M
0.20
0.00
0.00
0.00
May 21 2016
1. Research Tax Credit
Copyright Alphavalue - 2016 – corporate.alphavalue.com
Page 22
ALPHAVALUE CORPORATE SERVICES
Gaussin
(Call Option)
Engineering-Heavy Constr. / France
Financials
Other adjustments
€M
Adjusted attributable net profit
€M
Interest expense savings
€M
Fully diluted adjusted attr. net profit
NOPAT
-10.2
-0.01
3.83
5.20
€M
-10.2
-0.01
3.83
5.20
€M
-10.7
0.78
3.73
6.50
12/15A
12/16E
12/17E
12/18E
-14.5
3.12
7.33
11.3
Cashflow Statement
EBITDA
€M
Change in WCR
€M
1.14
-34.7
-5.00
-2.00
of which (increases)/decr. in receivables
€M
-0.26
-24.8
-10.0
-10.0
of which (increases)/decr. in inventories
€M
-2.20
0.55
-5.00
-2.00
of which increases/(decr.) in payables
€M
-1.23
-0.30
5.00
5.00
of which increases/(decr.) in other curr. liab.
€M
4.82
-10.1
5.00
5.00
Actual dividends received from equity holdings
€M
0.00
0.00
0.00
0.00
Paid taxes
€M
0.00
0.05
0.00
-2.18
Exceptional items
€M
0.00
Other operating cash flows
€M
6.52
Total operating cash flows
€M
-6.81
-31.5
2.33
7.10
Capital expenditure
€M
-4.82
-5.00
-5.00
-2.00
Capex as a % of depreciation & amort.
%
517
250
250
100
Net investments in shares
€M
0.00
Other investment flows
€M
-2.04
Total investment flows
€M
-6.85
-5.00
-5.00
-2.00
Net interest expense
€M
-0.63
-1.18
-1.50
-1.90
€M
-1.13
-1.18
-1.50
-1.90
of which cash interest expense
Dividends (parent company)
€M
Dividends to minorities interests
€M
0.00
0.00
0.00
0.00
New shareholders' equity
€M
12.8
30.0
0.00
0.00
€M
0.81
5.00
0.00
3.50
-1.90
of which (acquisition) release of treasury shares
(Increase)/decrease in net debt position
€M
0.59
10.9
Other financial flows
€M
0.15 (1)
(1)
Total financial flows
€M
12.4
39.7
Change in scope of consolidation, exchange rates & other
€M
0.00
Change in cash position
€M
-1.29
3.15
0.83
3.20
Change in net debt position
€M
-1.88
-7.71
-4.17
3.20
Free cash flow (pre div.)
€M
-12.3
-37.7
-4.17
3.20
Operating cash flow (clean)
€M
-6.81
-31.5
2.33
7.10
Reinvestment rate (capex/tangible fixed assets)
%
34.9
26.6
21.0
7.75
May 21 2016
Copyright Alphavalue - 2016 – corporate.alphavalue.com
1. Research Tax Credit
Page 23
ALPHAVALUE CORPORATE SERVICES
Gaussin
(Call Option)
Engineering-Heavy Constr. / France
Financials
Balance Sheet
12/15A
12/16E
12/17E
12/18E
Goodwill
€M
3.22
3.31
3.41
3.51
Contracts & Rights (incl. concession) intangible assets
€M
1.53
1.58
1.63
1.67
Total intangible
€M
4.75
4.89
5.04
5.19
Tangible fixed assets
€M
11.1
14.1
17.1
17.1
Financial fixed assets (part of group strategy)
€M
3.31
3.41
3.51
3.62
Other financial assets (investment purpose mainly)
€M
0.56
0.58
0.60
0.61
WCR
€M
5.30
40.0
45.0
47.0
of which trade & receivables (+)
€M
25.2
50.0
60.0
70.0
of which inventories (+)
€M
5.55
5.00
10.0
12.0
of which payables (+)
€M
5.30
5.00
10.0
15.0
of which other current liabilities (+)
€M
20.1
10.0
15.0
20.0
€M
4.08
4.21
4.33
4.46
€M
4.08
4.21
4.33
4.46
Total assets (net of short term liabilities)
€M
29.1
67.2
75.6
78.0
Ordinary shareholders' equity (group share)
€M
12.2
42.5
46.7
52.2
Minority interests
€M
0.43
0.45
0.46
0.47
Provisions for pensions
€M
0.00
0.00
0.00
Other provisions for risks and liabilities
€M
1.86
1.92
1.97
2.03
Deferred tax liabilities
€M
Other liabilities
€M
Net debt / (cash)
€M
14.6
22.3
26.5
23.3
Total liabilities and shareholders' equity
€M
29.1
67.2
75.6
78.0
Average net debt / (cash)
€M
13.6
18.4
24.4
24.9
Other current assets
of which tax assets (+)
EV Calculations
12/15A
12/16E
12/17E
12/18E
EV/EBITDA(R)
x
-4.94
25.1
11.2
7.03
EV/EBIT (underlying profit)
x
-4.70
70.0
15.5
8.54
EV/Sales
x
11.0
2.64
1.82
1.31
EV/Invested capital
x
2.93
1.25
1.17
1.09
€M
55.1
54.0
54.0
54.0
+ Provisions (including pensions)
Market cap
€M
1.86
1.92
1.97
2.03
+ Unrecognised actuarial losses/(gains)
€M
0.00
0.00
0.00
0.00
+ Net debt at year end
€M
14.6
22.3
26.5
23.3
+ Leases debt equivalent
€M
0.00
0.00
0.00
0.00
- Financial fixed assets (fair value) & Others
€M
+ Minority interests (fair value)
€M
= Enterprise Value
€M
71.5
78.2
82.4
79.3
May 21 2016
Copyright Alphavalue - 2016 – corporate.alphavalue.com
Page 24
ALPHAVALUE CORPORATE SERVICES
Gaussin
(Call Option)
Engineering-Heavy Constr. / France
Financials
Per Share Data
Adjusted EPS (bfr gwill amort. & dil.)
Growth in EPS
€
%
12/15A
12/16E
12/17E
12/18E
-0.54
0.00
0.07
0.10
n/a
n/a
n/a
35.6
Reported EPS
€
-0.47
0.00
0.07
0.10
Net dividend per share
€
0.00
0.00
0.00
0.00
Free cash flow per share
€
-0.65
-1.02
-0.08
0.06
Operating cash flow per share
€
-0.36
-0.85
0.04
0.14
Book value per share
€
0.56
0.82
0.90
1.01
Number of ordinary shares
Mio
21.9
51.9
51.9
51.9
Number of equivalent ordinary shares (year end)
Mio
21.9
51.9
51.9
51.9
Number of shares market cap.
Mio
21.9
51.9
51.9
51.9
Treasury stock (year end)
Mio
0.02
0.02
0.02
0.02
Number of shares net of treasury stock (year end)
Mio
21.9
51.9
51.9
51.9
Number of common shares (average)
Mio
18.9
36.9
51.9
51.9
Conversion of debt instruments into equity
Mio
Settlement of cashable stock options
Mio
Probable settlement of non mature stock options
Mio
Other commitments to issue new shares
Mio
Increase in shares outstanding (average)
Mio
0.00
0.00
0.00
0.00
Number of diluted shares (average)
Mio
18.9
36.9
51.9
51.9
Goodwill per share (diluted)
€
0.01
0.00
0.00
0.00
EPS after goodwill amortisation (diluted)
€
-0.55
0.00
0.07
0.10
EPS before goodwill amortisation (non-diluted)
€
-0.55
0.00
0.07
0.10
Actual payment
€
Payout ratio
%
0.00
0.00
0.00
0.00
Capital payout ratio (div +share buy back/net income)
%
7.94
0.00
0.00
Funding - Liquidity
12/15A
12/16E
12/17E
12/18E
EBITDA
€M
-14.5
3.12
7.33
11.3
Funds from operations (FFO)
€M
-9.08
1.99
5.83
7.20
Ordinary shareholders' equity
€M
12.2
42.5
46.7
52.2
Gross debt
€M
16.1
27.0
32.0
32.0
o/w Less than 1 year - Gross debt
€M
1.29
1.00
1.00
1.00
o/w 1 to 5 year - Gross debt
€M
1.21
1.00
1.00
1.00
o/w Beyond 5 years - Gross debt
€M
13.6
25.0
30.0
30.0
+ Gross Cash
€M
1.56
4.71
5.54
8.74
= Net debt / (cash)
€M
14.6
22.3
26.5
23.3
Bank borrowings
€M
16.1
22.0
29.0
32.0
Financial leases liabilities
€M
0.00
0.00
0.00
0.00
Mortgages
€M
0.00
0.00
0.00
0.00
Other financing
€M
0.01
5.00
3.00
0.00
Gearing (at book value)
%
112
43.3
52.2
47.6
Adj. Net debt/EBITDA(R)
x
-1.01
7.15
3.61
2.06
Adjusted Gross Debt/EBITDA(R)
x
-1.24
9.27
4.63
3.02
Adj. gross debt/(Adj. gross debt+Equity)
%
59.6
40.5
42.1
39.5
Ebit cover
x
-24.3
0.95
3.55
4.89
FFO/Gross Debt
%
-50.5
6.87
17.2
21.1
FFO/Net debt
%
-62.3
8.91
22.0
30.9
FCF/Adj. gross debt (%)
%
-68.1
-130
-12.3
9.39
(Gross cash+ "cash" FCF+undrawn)/ST debt
x
-8.30
-33.0
1.38
11.9
"Cash" FCF/ST debt
x
-9.90
-37.7
-4.17
3.20
May 21 2016
Copyright Alphavalue - 2016 – corporate.alphavalue.com
Page 25
ALPHAVALUE CORPORATE SERVICES
Gaussin
(Call Option)
Engineering-Heavy Constr. / France
Financials
ROE Analysis (Dupont's Breakdown)
12/15A
12/16E
12/17E
12/18E
Tax burden (Net income/pretax pre excp income)
x
0.84
0.22
1.00
0.70
EBIT margin (EBIT/sales)
%
-181
3.78
11.7
15.4
Assets rotation (Sales/Avg assets)
%
24.3
61.5
63.6
78.7
Financial leverage (Avg assets /Avg equity)
x
2.44
1.76
1.60
1.55
ROE
%
-94.4
-0.05
8.59
10.5
ROA
%
-55.7
1.90
7.94
13.4
Shareholder's Equity Review (Group Share)
12/15A
12/16E
12/17E
12/18E
€M
9.76
12.2
42.5
46.7
+ Net profit of year
€M
-10.4
-0.01
3.83
5.20
- Dividends (parent cy)
€M
0.00
0.00
0.00
0.00
+ Additions to equity
€M
12.8
30.0
0.00
0.00
€M
0.81
0.00
0.00
0.00
- Unrecognised actuarial gains/(losses)
€M
0.00
0.00
0.00
0.00
+ Comprehensive income recognition
€M
0.38
0.32
0.33
= Year end shareholders' equity
€M
12.2
42.5
46.7
52.2
12/15A
12/16E
12/17E
12/18E
Y-1 shareholders' equity
o/w reduction (addition) to treasury shares
Staffing Analytics
Sales per staff
€th
108
370
454
503
Staff costs per employee
€th
-81.1
-75.0
-70.0
-66.7
Change in staff costs
%
9.23
23.4
16.7
14.3
Change in unit cost of staff
%
-16.3
-7.46
-6.67
-4.76
Staff costs/(EBITDA+Staff costs)
%
-50.6
65.8
48.8
41.5
Average workforce
unit
60.0
80.0
100
120
Europe
unit
60.0
80.0
100
120
North America
unit
0.00
0.00
0.00
0.00
South Americas
unit
0.00
0.00
0.00
0.00
Asia
unit
0.00
0.00
0.00
0.00
Other key countries
unit
0.00
0.00
0.00
0.00
Total staff costs
€M
-4.86
-6.00
-7.00
-8.00
Wages and salaries
€M
-4.86
-6.00
-7.00
-8.00
€M
-1.35
-1.80
-2.10
-2.40
0.00
0.00
0.00
of which social security contributions
Equity linked payments
€M
Pension related costs
€M
Divisional Breakdown Of Revenues
12/15A
12/16E
12/17E
12/18E
Terminal port equipements (ATT/AIV/Powerpacks/Docking Statio... €M
5.51
24.0
39.0
54.0
MTO
€M
1.00
4.60
5.40
5.40
Services / Licensing / Others
€M
0.00
1.00
1.00
1.00
Other
€M
0.00
0.00
0.00
0.00
Total sales
€M
6.51
29.6
45.4
60.4
12/15A
12/16E
12/17E
12/18E
Divisional Breakdown Of Earnings
EBIT Analysis
Services / Licensing / Others
€M
0.00
0.60
0.60
0.60
MTO
€M
0.20
0.92
1.08
1.08
Terminal port equipements (ATT/AIV/Powerpacks/Docking Statio... €M
-12.0
-0.40
3.65
7.60
Other/cancellations
€M
Total
€M
-11.8
1.12
5.33
9.28
EBIT margin
%
-181
3.78
11.7
15.4
May 21 2016
Copyright Alphavalue - 2016 – corporate.alphavalue.com
Page 26
ALPHAVALUE CORPORATE SERVICES
Gaussin
(Call Option)
Engineering-Heavy Constr. / France
Financials
Revenue Breakdown By Country
12/15A
12/16E
EMEA
%
0.00
0.00
Asia
%
0.00
0.00
Americas
%
0.00
0.00
Europe
%
0.00
0.00
France
%
36.0
10.0
Other
%
64.0
90.0
Capital Employed
12/17E
12/18E
12/15A
12/16E
12/17E
12/18E
ROCE (NOPAT+lease exp.*(1-tax))/(net) cap employed adjusted
%
-43.8
1.25
5.28
8.91
Goodwill
€M
3.22
3.31
3.41
3.51
€M
0.82
0.85
0.87
0.90
€M
1.53
1.58
1.63
1.67
€M
1.13
1.16
1.20
1.23
Financial hedges (LT derivatives)
€M
0.00
0.00
0.00
0.00
Capitalised R&D
€M
0.00
0.00
0.00
0.00
PV of non-capitalised lease obligations
€M
0.00
0.00
0.00
0.00
Other fixed assets
€M
11.1
14.1
17.1
17.1
€M
2.72
4.72
6.72
8.72
Capital employed before depreciation
€M
29.1
69.1
79.4
83.7
WCR
€M
5.30
40.0
45.0
47.0
Other assets
€M
3.31
3.41
3.51
3.62
Unrecognised actuarial losses/(gains)
€M
0.00
0.00
0.00
0.00
Capital employed after deprec. (Invested capital)
€M
24.4
62.4
70.6
72.9
Accumulated goodwill amortisation
All intangible assets
Accumulated intangible amortisation
Accumulated depreciation
Divisional Breakdown Of Capital
12/15A
12/16E
12/17E
12/18E
Services / Licensing / Others
€M
1.00
1.00
1.00
1.00
MTO
€M
2.00
2.00
2.00
2.00
Terminal port equipements (ATT/AIV/Powerpacks/Docking Statio... €M
21.4
59.4
67.6
69.9
Other
€M
0.00
0.00
0.00
0.00
Total capital employed
€M
24.4
62.4
70.6
72.9
May 21 2016
Copyright Alphavalue - 2016 – corporate.alphavalue.com
Page 27
ALPHAVALUE CORPORATE SERVICES
Gaussin
(Call Option)
Engineering-Heavy Constr. / France
Pension Risks
Pension matters
Gaussin Manugistique uses a significant number of temporary and interim staff. This has the advantage of being able to
respond to any short-term increases in the order intake while enabling the company to retain a degree of flexibility. As the
business develops, some of these contracts will probably be transformed into permanent employment contracts: the duration
of a temporary employment contract may not exceed 18 months (renewals included). Furthermore, the company has a
payroll growth strategy: the group’s headcount thus increased from 58 employees, of whom 29 were temporary or interim
staff, in June 2013 to around 110 employees, of whom 60 temps and interim staff, in June 2014.
Gaussin Manugistique has a dynamic management strategy aimed at encouraging innovation: employees are effectively
incentivised financially to file patents for new ideas and protect the brands/models. Additionally, the Chairman and CEO
looks to create a virtuous circle by granting shares to all employees annually to encourage their efforts, secure their loyalty
and align their interests with those of the other shareholders. This method of staff compensation can only have a positive
impact on motivation levels.
Summary Of Pension Risks
12/15A
12/16E
12/17E
12/18E
Pension ratio
%
0.00
0.00
0.00
0.00
Ordinary shareholders' equity
€M
12.2
42.5
46.7
52.2
Total benefits provisions
€M
0.00
0.00
0.00
0.00
of which funded pensions
€M
0.00
0.00
0.00
0.00
of which unfunded pensions
€M
0.00
0.00
0.00
0.00
of which benefits / health care
€M
0.00
0.00
0.00
Unrecognised actuarial (gains)/losses
€M
0.00
0.00
0.00
0.00
Company discount rate
%
4.00
4.00
4.00
4.00
Normalised recomputed discount rate
%
Company future salary increase
%
3.00
3.00
Normalised recomputed future salary increase
%
Company expected rate of return on plan assets
%
5.00
5.00
Normalised recomputed expd rate of return on plan assets
%
0.50
Funded : Impact of actuarial assumptions
€M
0.00
Unfunded : Impact of actuarial assumptions
€M
0.00
Geographic Breakdown Of Pension Liabilities
3.50
3.00
3.00
3.00
5.00
5.00
12/15A
12/16E
12/17E
12/18E
%
100
100
100
100
%
100
100
100
100
US exposure
%
UK exposure
%
Euro exposure
%
Nordic countries
%
Switzerland
%
Other
Total
Balance Sheet Implications
12/15A
12/16E
12/17E
12/18E
Funded status surplus / (deficit)
€M
0.00
0.00
0.00
0.00
Unfunded status surplus / (deficit)
€M
0.00
0.00
0.00
0.00
Total surplus / (deficit)
€M
0.00
0.00
0.00
0.00
Total unrecognised actuarial (gains)/losses
€M
0.00
0.00
0.00
0.00
Provision (B/S) on funded pension
€M
0.00
0.00
0.00
0.00
Provision (B/S) on unfunded pension
€M
0.00
0.00
0.00
0.00
Other benefits (health care) provision
€M
0.00
0.00
0.00
Total benefit provisions
€M
0.00
0.00
0.00
May 21 2016
0.00
Copyright Alphavalue - 2016 – corporate.alphavalue.com
Page 28
ALPHAVALUE CORPORATE SERVICES
Gaussin
(Call Option)
Engineering-Heavy Constr. / France
Pension Risks
P&L Implications
12/15A
12/16E
12/17E
12/18E
Funded obligations periodic costs
€M
0.00
0.00
0.00
0.00
Unfunded obligations periodic costs
€M
0.00
0.00
0.00
0.00
Total periodic costs
€M
0.00
0.00
0.00
0.00
of which incl. in labour costs
€M
0.00
0.00
0.00
0.00
of which incl. in interest expenses
€M
0.00
0.00
0.00
0.00
12/15A
12/16E
12/17E
12/18E
0.00
0.00
0.00
0.00
Funded Obligations
Balance beginning of period
€M
Current service cost
€M
0.00
0.00
0.00
Interest expense
€M
0.00
0.00
0.00
Employees' contributions
€M
Impact of change in actuarial assumptions
€M
0.00
0.00
0.00
of which impact of change in discount rate
€M
0.00
of which impact of change in salary increase
€M
0.00
Changes to scope of consolidation
€M
Currency translation effects
€M
Pension payments
€M
Other
€M
Year end obligation
€M
Plan Assets
0.00
0.00
0.00
0.00
12/15A
12/16E
12/17E
12/18E
Value at beginning
€M
0.00
0.00
0.00
Company expected return on plan assets
€M
0.00
0.00
0.00
Actuarial gain /(loss)
€M
0.00
0.00
0.00
Employer's contribution
€M
0.00
0.00
0.00
0.00
Employees' contributions
€M
0.00
0.00
0.00
0.00
Changes to scope of consolidation
€M
Currency translation effects
€M
Pension payments
€M
0.00
0.00
0.00
0.00
Other
€M
Value end of period
€M
0.00
0.00
0.00
0.00
Actual and normalised future return on plan assets
€M
0.00
0.00
0.00
0.00
12/15A
12/16E
12/17E
12/18E
0.00
Unfunded Obligations
Balance beginning of period
€M
0.00
0.00
0.00
Current service cost
€M
0.00
0.00
0.00
Interest expense
€M
0.00
0.00
0.00
Employees' contributions
€M
Impact of change in actuarial assumptions
€M
0.00
0.00
0.00
of which Impact of change in discount rate
€M
0.00
of which Impact of change in salary increase
€M
0.00
0.00
0.00
Changes to scope of consolidation
€M
Currency translation effects
€M
Pension payments
€M
Other
€M
Year end obligation
€M
May 21 2016
0.00
0.00
Copyright Alphavalue - 2016 – corporate.alphavalue.com
Page 29
ALPHAVALUE CORPORATE SERVICES
Gaussin
(Call Option)
Engineering-Heavy Constr. / France
Governance & Management
Governance parameters
Existing committees
Yes
/ No
Weighting
15%
One share, one vote
Audit / Governance Committee
Compensation committee
Chairman vs. Executive split
5%
Financial Statements Committee
Chairman not ex executive
5%
Litigation Committee
Independent directors equals or above 50% of total directors
Full disclosure on mgt pay (performance related bonuses, pensions and non
financial benefits)
Disclosure of performance anchor for bonus trigger
20%
Nomination Committee
Safety committee
20%
SRI / Environment
15%
Compensation committee reporting to board of directors
5%
Straightforward, clean by-laws
15%
Governance score
15
100%
Management
Name
Function
Birth date
Date in
Christophe GAUSSIN
M
CEO
1994
Michel KUSSELING
M
CFO
2015
Stéphane HECKY
M
Executive Officer
2015
Philippe SANDBERG
M
Executive Officer
2015
Michel LYRSTRAND
M
Executive Officer
2015
Jean Luc DEJEAN
M
Deputy CEO
2015
Date out
Compensation, in k€ (year)
Cash
Equity linked
(2014)
(2014)
Board of Directors
Christophe GAUSSIN
M
Member
Completion
Birth
of current
date
mandate
2018
Volcker BERL
M
Member
2017
Damien PERSONENI
M
Member
Name
May 21 2016
Indep. Function
Fees / indemnity,
in k€ (year)
Value of holding,
in k€ (year)
1995
(2014)
(2014)
2006
(2014)
(2014)
2008
(2014)
(2014)
Date in
Date out
Copyright Alphavalue - 2016 – corporate.alphavalue.com
Page 30
ALPHAVALUE CORPORATE SERVICES
Gaussin
(Call Option)
Engineering-Heavy Constr. / France
Governance & Management
Human Resources
Accidents at work
25% Of H.R. Score
Human resources development
35% Of H.R. Score
Pay
20% Of H.R. Score
Job satisfaction
10% Of H.R. Score
Internal communication
10% Of H.R. Score
HR Breakdown
Yes
Accidents at work
/ No
25%
Set targets for work safety on all group sites?
40%
Are accidents at work declining?
60%
Human resources development
35%
Rating
25/100
10/100
15/100
28/100
Are competences required to meet medium term targets identified?
10%
4/100
Is there a medium term (2 to 5 years) recruitment plan?
10%
4/100
Is there a training strategy tuned to the company objectives?
10%
0/100
Are employees trained for tomorrow's objectives?
10%
4/100
Can all employees have access to training?
10%
4/100
Has the corporate avoided large restructuring lay-offs over the last year to date?
10%
4/100
Have key competences stayed?
10%
4/100
Are managers given managerial objectives?
10%
4/100
If yes, are managerial results a deciding factor when assessing compensation level?
10%
4/100
Is mobility encouraged between operating units of the group?
10%
Pay
20%
0/100
14/100
Is there a compensation committee?
30%
0/100
Is employees' performance combining group performance AND individual performance?
70%
14/100
Job satisfaction
10%
10/100
Is there a measure of job satisfaction?
33%
3/100
Can anyone participate ?
34%
3/100
Are there action plans to prop up employees' morale?
33%
Internal communication
10%
Are strategy and objectives made available to every employee?
3/100
10/100
100%
Human Ressources score:
10/100
87/100
HR Score
H.R. Score : 8.7/10
May 21 2016
Capital Goods
Gaussin
Copyright Alphavalue - 2016 – corporate.alphavalue.com
Page 31
ALPHAVALUE CORPORATE SERVICES
Gaussin
(Call Option)
Engineering-Heavy Constr. / France
Graphics
Momentum
: Strong momentum corresponding to a continuous and overall positive moving average trend confirmed by volumes
: Relatively good momentum corresponding to a positively-oriented moving average, but offset by an overbought pattern or lack of confirmation
from volumes
: Relatively unfavorable momentum with a neutral or negative moving average trend, but offset by an oversold pattern or lack of confirmation from
volumes
: Strongly negative momentum corresponding to a continuous and overall negative moving average trend confirmed by volumes
Momentum analysis consists in evaluating the stock market trend of a given financial instrument, based on the analysis of its trading flows.
The main indicators used in our momentum tool are simple moving averages over three time frames: short term (20 trading days), medium term (50 days)
and long term (150 days). The positioning of these moving averages relative to each other gives us the direction of the flows over these time frames.
For example, if the short and medium-term moving averages are above the long-term moving average, this suggests an uptrend which will need to be
confirmed. Attention is also paid to the latest stock price relative to the three moving averages (advance indicator) as well as to the trend in these three
moving averages - downtrend, neutral, uptrend - which is more of a lagging indicator.
The trend indications derived from the flows through moving averages and stock prices must be confirmed against trading volumes in order to confirm the
signal. This is provided by a calculation based on the average increase in volumes over ten weeks together with a buy/sell volume ratio.
May 21 2016
Copyright Alphavalue - 2016 – corporate.alphavalue.com
Page 32
ALPHAVALUE CORPORATE SERVICES
Gaussin
(Call Option)
Engineering-Heavy Constr. / France
Graphics
Moving Average MACD & Volume
May 21 2016
Copyright Alphavalue - 2016 – corporate.alphavalue.com
Page 33
ALPHAVALUE CORPORATE SERVICES
Gaussin
(Call Option)
Engineering-Heavy Constr. / France
Graphics
€/$ sensitivity
Sector Capital Goods
May 21 2016
Copyright Alphavalue - 2016 – corporate.alphavalue.com
Page 34
ALPHAVALUE CORPORATE SERVICES
Gaussin
(Call Option)
Engineering-Heavy Constr. / France
Methodology
May 21 2016
Copyright Alphavalue - 2016 – corporate.alphavalue.com
Page 35
ALPHAVALUE CORPORATE SERVICES
Gaussin
(Call Option)
Engineering-Heavy Constr. / France
Methodology
Fundamental Opinion
It is implicit that recommendations are made in good faith but should not be regarded as the sole source of advice.
Recommendations are geared to a “value” approach.
Valuations are computed from the point of view of a secondary market minority holder looking at a medium term (say 6 months) performance.
Valuation tools are built around the concepts of transparency, all underlying figures are accessible, and consistency, same methodology whichever the
stock, allowing for differences in nature between financial and non financial stocks. A stock with a target price below its current price should not and will not
be regarded as an Add or a Buy.
Recommendations are based on target prices with no allowance for dividend returns. The thresholds for the four recommendation levels may change from
time to time depending on market conditions. Thresholds are defined as follows, ASSUMING long risk free rates remain in the 2-5% region.
Buy
Low Volatility
Normal Volatility
High Volatility
(10-30)
(15-35)
(above 35)
More than 15% upsideMore than 20% upsideMore than 30% upside
Add
From 5% to 15%
From 5% to 20%
From 10% to 30%
Reduce
From -10% to 5%
From -10% to 5%
From -10% to 10%
Sell
Below -10%
Below -10%
Below -10%
Recommendation
There is deliberately no “neutral” recommendation. The principle is that there is no point investing in equities if the return is not at least the risk free rate (and
the dividend yield which again is not allowed for).
Although recommendations are automated (a function of the target price whenever a new equity research report is released), the management of AlphaValue
intends to maintain global consistency within its universe coverage and may, from time to time, decide to change global parameters which may affect the
level of recommendation definitions and /or the distribution of recommendations within the four levels above. For instance, lowering the risk premium in a
gloomy context may increase the proportion of positive recommendations.
Valuation
Valuation processes have been organized around transparency and consistency as primary objectives.
Stocks belong to different categories that recognise their main operating features : Banks, Insurers and Non Financials.
Within those three universes, the valuation techniques are the same and in relation to the financial data available.
The weighting given to individual valuation techniques is managed centrally and may be changed from time to time. As a rule, all stocks of a similar profile
are valued using equivalent weighting of the various valuation techniques. This is for obvious consistency reasons.
Within the very large universe of Non Financials, there are in effect 4 sub-categories of weightings to cater for subsets: 1) 'Mainstream' stocks; 2) 'Holding
companies' where the stress is on NAV measures; 3) 'Growth' companies where the stress is on peer based valuations; 4) 'Loss making sectors' where
peers review is essentially pointing nowhere. The bulk of the valuation is then built on DCF and NAV, in effect pushing back the time horizon.
Valuation Issue
Normal
Growth
industrials industrials
Holding Loss
company runners
Bank
Insurers
DCF
35%
35%
10%
40%
0%
0%
NAV
20%
20%
55%
40%
25%
15%
PE
10%
10%
10%
5%
10%
20%
EV/EBITDA
20%
20%
0%
5%
0%
0%
Yield
10%
10%
20%
5%
15%
15%
P/Book
5%
5%
5%
5%
15%
10%
Banks' instrinsic method
0%
0%
0%
0%
25%
0%
Embedded Value
0%
0%
0%
0%
0%
40%
Mkt Cap/Gross Operating Profit
0%
0%
0%
0%
10%
0%
Typical sectors
Bio Techs
May 21 2016
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Page 36
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