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BeneluxAll caps

EQUITY MARKETS

March 2009

Benelux DigestCrossing the chasm

The issue now is the duration of the downturn, more than its depth.

Waiting for the absolute bottom is futile; it may already have passed

and may already be priced in ©

Based on our ‘investment clock’ theme, we overweight early cyclicals,

with a couple of defensives mixed in ©

Benelux top picks: ASML, Bekaert, D’Ieteren, EVS, Nutreco, Philips,

Randstad, Unit 4 Agresso and Vopak ©

Benelux All Caps TeamB

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Benelux Digest March 2009

Contents

Index of companies 1

Index of companies by sector 2

Summary 3

Early cyclicals steal the show 10

The investment clock...............................................................................................10

The time is right for early cyclicals ..........................................................................12

Economics and strategy 15

No economic recovery this year… ..........................................................................15

ING’s Benelux top picks 17

Past performance of ING’s top picks.......................................................................18

Current top picks .....................................................................................................21

ASML: BUY, TP €16.0 (25% upside) ......................................................................21

Bekaert: BUY, TP €60 (21% upside).......................................................................22

D’Ieteren: BUY, TP €150 (38% upside)...................................................................22

EVS: BUY, TP €31 (27% upside) ............................................................................23

Nutreco: BUY, TP €41 (52% upside).......................................................................23

Philips: BUY, TP €15.8 (36% upside)......................................................................24

Randstad: BUY, TP €15 (31% upside)....................................................................24

Unit 4 Agresso: BUY, TP €10 (22% upside)............................................................25

Vopak: BUY, TP €35 (19% upside) .........................................................................26

Companies 27

Rankings 124

Disclosures Appendix 129

Cover photograph courtesy of

istockphoto

Pricing date 20 March 2009 unless

stated otherwise

There are no recommendation or target

price changes in this report

Publication date 24 March 2009


Index of companies

Company Page Company Page_

Aalberts.................................................................... 28

AB InBev.................................................................. 29

Ackermans & van Haaren........................................ 30

AEGON.................................................................... 31

Agfa ......................................................................... 32

Ahold........................................................................ 33

Akzo Nobel .............................................................. 34

Alfacam.................................................................... 35

AMG......................................................................... 36

Arcadis..................................................................... 37

ArcelorMittal............................................................. 38

Arseus...................................................................... 39

ASML ....................................................................... 40

Atenor ...................................................................... 41

Ballast Nedam ......................................................... 42

BAM ......................................................................... 43

Barco ....................................................................... 44

Bekaert .................................................................... 45

Belgacom SA ........................................................... 46

Beter Bed................................................................. 47

BinckBank................................................................ 48

Boskalis ................................................................... 49

Brunel International.................................................. 50

CFE.......................................................................... 51

CMB......................................................................... 52

CNP (Nationale à Portefeuille)................................. 53

Colruyt ..................................................................... 54

Crucell...................................................................... 55

CSM......................................................................... 56

Delhaize................................................................... 57

Dexia........................................................................ 58

D’Ieteren .................................................................. 59

Draka ....................................................................... 60

DSM......................................................................... 61

Duvel Moortgat ........................................................ 62

Emakina................................................................... 63

Eriks......................................................................... 64

Euronav ................................................................... 65

EVS.......................................................................... 66

Exact Holding........................................................... 67

Exmar ...................................................................... 68

Fortis........................................................................ 69

Fugro ....................................................................... 70

Gamma.................................................................... 71

GBL.......................................................................... 72

GIMV........................................................................ 73

Grontmij ................................................................... 74

Heijmans.................................................................. 75

Heineken...................................................................76

IBA............................................................................77

Imtech.......................................................................78

IPTE..........................................................................79

Kas Bank ..................................................................80

KBC ..........................................................................81

Kinepolis ...................................................................82

KPN ..........................................................................83

Macintosh .................................................................84

Melexis......................................................................85

Metris ........................................................................86

Mobistar ....................................................................87

Nutreco .....................................................................88

Nyrstar ......................................................................89

Océ ...........................................................................90

Omega Pharma ........................................................91

OncoMethylome Sciences ........................................92

OPG..........................................................................93

Option .......................................................................94

Ordina.......................................................................95

Philips .......................................................................96

Pinguin......................................................................97

Randstad ..................................................................98

Reed Elsevier NV .....................................................99

Royal Dutch Shell A - Euro .....................................100

Royal Ten Cate.......................................................101

SBM Offshore .........................................................102

Sligro.......................................................................103

Smit International....................................................104

Solvay .....................................................................105

Super de Boer.........................................................106

Telenet Group.........................................................107

Tessenderlo ............................................................108

TiGenix ...................................................................109

TKH Group..............................................................110

TNT.........................................................................111

TomTom .................................................................112

Transics ..................................................................113

UCB ........................................................................114

Umicore ..................................................................115

Unilever NV.............................................................116

Unit 4 Agresso ........................................................117

USG People............................................................118

Vopak......................................................................119

VPK Packaging.......................................................120

Wavin......................................................................121

Wessanen...............................................................122

Wolters Kluwer........................................................123


Index of companies by sector

Banks

Binckbank 48

Dexia 58

Fortis 69

Kas Bank 80

KBC 81

Beverages

AB InBev 29

Duvel Moortgat 62

Heineken 76

Chemicals

Akzo Nobel 34

DSM 61

Solvay 105

Tessenderlo 108

Umicore 115

Construction & building materials

Arcadis 37

Ballast Nedam 41

BAM 43

Boskalis 49

CFE 51

Heijmans 75

Wavin 121

Distributors

Eriks 64

Diversified industrials

Gamma 71

Royal Ten Cate 101

Electronic & electrical equipment

Barco 44

Draka 60

EVS 66

Metris 86

Philips 96

TKH Group 109

TomTom 112

Engineering & machinery

Aalberts 28

Bekaert 45

Imtech 78

IPTE 79

Food & drug retailers

Ahold 33

Colruyt 54

Delhaize 57

Sligro 103

Super de Boer 106

Food producers & processors

CSM 56

Nutreco 88

Pinguin 97

Unilever NV 116

Wessanen 122

General retailers

Beter Bed 47

Macintosh 84

Health

Arseus 39

IBA 77

Omega Pharma 91

OPG 93

TiGenix 108

Insurance

AEGON 31

Investment companies

Ackermans & van Haaren 30

CNP (Nationale a Portefeuille) 53

GBL 72

GIMV 73

IT hardware

ASML 40

Melexis 85

Océ 90

Option 94

Leisure & hotels

Kinepolis 82

Media & entertainment

Agfa 32

Alfacam 35

Emakina 63

Reed Elsevier NV 99

Wolters Kluwer 123

Oil & gas

Royal Dutch Shell A – Euro 100

Packaging

VPK Packaging 120

Pharmaceuticals

Crucell 55

OncoMethylome Sciences 92

UCB 114

Real estate

Atenor 41

Software & computer services

Exact Holding 67

Ordina 95

Transics 113

Unit 4 Agresso 117

Steel & other metals

AMG 36

ArcelorMittal 38

Nyrstar 89

Support services

Brunel International 50

D’Ieteren 59

Fugro 70

Grontmij 74

Randstad 98

SBM Offshore 102

TNT 111

USG People 118

Telecommunication services

Belgacom SA 46

KPN 83

Mobistar 87

Telenet Group 107

Transport

CMB 52

Euronav 65

Exmar 68

Smit International 104

Vopak 119


Summary

We now expect the first stage of an upturn in 2Q-3Q09. The

outperformance of defensives is turning, gradually, in favour of early cyclicals.

Consumer cyclicals should outperform slightly later in the recovery phase. We believe

the issue now is the duration of the recession – and the concomitant stock market

recovery – more than the depth. In any case, waiting for the absolute bottom is likely a

futile exercise in market timing. The bottom may already have passed and it already

seems to be priced in. Exact timing is difficult to predict, but building up a position takes

time so we believe it is worth starting to take positions now in the earliest cyclicals.

Earnings momentum to remain negative. We forecast a 6% EPS decline in

2009F, with a recovery in 2010F (13.2% earnings growth). Our base case is that the

trough in earnings will occur some time during 1Q10 or 2Q10. In our January 2009

guide (Benelux top picks: The Benelux investment clock), we indicated that we believed

it was of paramount importance to avoid nasty surprises. We wanted to wait for

earnings downgrades and (at least some) visibility on how far demand could decline. In

essence, we felt it was too early to call the bottom and chose to remain largely in

defensive names in the near term. It now seems that, despite no improvement in

fundamentals, volumes have not deteriorated further on the worst of 4Q08.

Being defensive has paid off. In our January 2009 book, we included eight longs

and eight shorts. The average weighted performance of our long picks has been -4.4%,

while our shorts have performed slightly better, at -12.0%. On a long/short basis, our

picks would have returned 7.6%, better than all relevant indices. In addition, our Top

picks/Longs outperformed all relevant indices on a long-only basis.

The Benelux market is trading at 8.6x 2009F earnings, with small & mid

caps (SMC) at a 19% discount to large caps, down slightly since January when the

discount reached 32%. Benelux growth stocks are trading at a 2009F PER of around

7.9x, while defensives are on c.9.6x. Our Benelux coverage universe includes 99

stocks, with coverage split as follows: 71 SMCs (€31bn market cap) and 28 large caps

(€378bn); 57 Dutch (€317bn) and 42 Belgian stocks (€92bn); and 39 cyclicals (€76bn),

27 defensives (€292bn), 17 growth (€7bn), 12 financials (€29bn) and 4 biotechs (€5bn).

Fig 1 ING Benelux top picks

As at 20/03/09

Country

Rec

Market

cap Price

Target

price Upside

Net debt/

EBITDA (x)

PER (x)

(€m) (€) (€) (%) 2009F 2009F 2010F

ASML Netherlands Buy 5,514 12.77 16.00 25.3 6.9 N/A 19.4

Bekaert Belgium Buy 981 49.60 60.00 21.0 1.8 7.9 8.2

D’Ieteren Belgium Buy 601 108.60 150.00 38.1 2.7 4.4 4.6

EVS Belgium Buy 334 24.50 31.00 26.5 -1.0 11.9 8.0

Nutreco Netherlands Buy 926 27.00 40.95 51.7 1.2 8.1 7.0

Philips Netherlands Buy 10,748 11.65 15.80 35.7 -0.2 16.2 8.4

Randstad Netherlands Buy 1,937 11.43 15.00 31.2 2.7 6.9 6.7

Unit 4 Agresso Netherlands Buy 215 8.20 10.00 22.0 1.9 5.4 4.7

Vopak Netherlands Buy 1,833 29.45 35.00 18.8 2.3 8.2 8.9

Median 921 26.5 1.9 16.2 8.4

Benelux median 487 17.0 1.7 8.6 8.0

Source: ING estimates

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Fig 2 Benelux all caps valuation table

Mkt cap Price Target Upside PER (x) EV/EBITDA (x)

Company Rec (€m) (€) Price (€) (%) 2008F 2009F 2010F 2008F 2009F 2010F Sector

371 3.57 5.00 40.1 4.0 6.7 4.1 4.5 5.1 3.9 Engineering & machinery

AB InBev Buy 31,421 20.01 25.17 25.8 14.3 13.2 10.2 14.6 9.1 8.0 Beverages

1,237 36.93 33.00 -10.6 10.4 10.1 10.5 N/A N/A N/A Investment companies

AEGON Buy 4,452 2.94 5.50 87.3 N/A N/A N/A N/A N/A N/A Insurance

173 1.39 3.10 123.0 N/A 2.1 1.7 6.4 5.1 5.0 Media & entertainment

Ahold Buy 9,573 8.16 10.50 28.8 11.2 9.9 8.6 5.2 4.3 3.5 Food & drug retailers

7,201 31.08 28.00 -9.9 7.5 9.4 8.8 4.9 5.6 5.1 Chemicals

Alfacam Buy 45 5.50 8.00 45.5 19.4 36.5 6.8 6.0 6.0 3.7 Media & entertainment

144 3.85 4.30 11.7 2.6 6.4 9.6 1.4 2.9 2.8 Steel & other metals

Arcadis Buy 592 9.79 10.50 7.3 8.5 9.1 8.5 5.1 4.8 4.5 Construction & building materials

26,152 14.14 14.00 -1.0 1.6 15.1 6.2 2.3 5.6 4.0 Steel & other metals

Arseus Buy 168 5.57 7.40 32.9 8.9 7.9 6.9 6.9 6.4 5.6 Health

5,514 12.77 16.00 25.3 17.1 N/A 19.4 7.4 N/A 10.4 IT hardware

Atenor Hold 181 36.00 32.00 -11.1 4.4 15.5 12.0 5.0 12.3 9.9 Construction & building materials

129 13.20 14.00 6.1 5.5 10.5 8.5 2.7 3.6 3.3 Construction & building materials

BAM Hold 799 5.90 5.90 0.1 3.1 4.3 4.6 4.9 5.6 5.3 Construction & building materials

135 10.73 13.00 21.2 15.3 12.0 4.9 2.5 2.0 1.4 Electronic & electrical equipment

Bekaert Buy 981 49.60 60.00 21.0 4.3 7.9 8.2 3.1 4.1 3.9 Engineering & machinery

7,213 22.54 32.50 44.2 8.4 8.7 9.2 4.6 4.6 4.4 Telecommunication services

Beter Bed Hold 156 7.30 8.00 9.6 7.1 14.4 11.5 4.4 7.4 6.3 General retailers

487 6.34 6.10 -3.8 14.7 30.7 19.5 N/A N/A N/A Banks

Boskalis Sell 1,191 13.89 10.00 -28.0 4.8 7.0 9.5 2.4 3.5 3.8 Construction & building materials

173 7.59 7.50 -1.2 3.9 8.3 9.5 2.0 3.9 4.2 Support services

CFE Hold 230 17.60 23.00 30.7 3.3 3.4 4.5 2.0 2.2 2.5 Construction & building materials

542 15.64 15.00 -4.1 2.6 7.8 10.2 2.1 5.7 6.8 Transport

3,847 34.29 42.00 22.5 21.5 19.7 17.8 N/A N/A N/A Investment companies

5,391 170.56 150.00 -12.1 17.9 16.1 14.3 9.2 8.3 7.3 Food & drug retailers

Crucell Hold 993 15.13 15.00 -0.9 67.9 21.0 21.7 26.3 10.0 8.6 Pharmaceuticals

577 8.92 9.30 4.3 7.6 7.3 6.5 5.6 5.5 5.0 Food producers & processors

Delhaize Hold 4,793 47.65 48.00 0.7 10.0 9.4 8.7 5.5 4.7 4.3 Food & drug retailers

4,195 2.38 1.50 -37.0 N/A 4.4 3.6 N/A N/A N/A Banks

D'Ieteren Buy 601 108.60 150.00 38.1 3.6 4.4 4.6 3.1 4.1 4.2 Support services


DSM Hold 3,585 21.97 21.00 -4.4 6.4 15.7 11.6 3.9 5.5 4.8 Chemicals

177 33.06 34.00 2.8 15.5 14.0 11.8 6.1 5.5 4.7 Beverages

Emakina Hold 26 7.70 9.00 17.0 136.7 40.3 18.6 12.4 8.8 6.2 Media & entertainment

229 21.00 30.00 42.9 3.8 4.8 4.7 4.6 5.2 4.9 Distributors

Euronav Buy 683 10.00 15.00 50.0 1.7 5.4 8.5 2.3 3.9 4.8 Transport


Exact Holding Hold 360 15.60 14.60 -6.4 9.1 9.0 8.8 5.4 5.5 5.3 Software & computer services

312 6.88 10.00 45.3 N/A 16.0 9.5 9.1 10.3 9.2 Transport

Fortis Buy 3,772 1.50 2.00 33.3 1.2 1.1 0.9 N/A N/A N/A Banks

2,003 26.08 29.00 11.2 6.7 6.9 7.4 4.7 4.0 3.8 Support services

Gamma Sell 27 3.58 3.06 16.2 N/A 1.4 1.0 10.2 4.7 4.1 Diversified industrials

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Fig 2 Benelux all caps valuation table (cont’d)


Company Rec (€m) (€) price (€) (%) 2008F 2009F 2010F 2008F 2009F 2010F Sector

GBL Buy 7,848 50.38 69.00 37.0 9.2 10.5 9.7 N/A N/A N/A Investment companies

731 31.53 33.00 4.7 N/A N/A N/A N/A N/A N/A Investment companies

Grontmij Hold 270 15.20 16.00 5.3 5.9 6.3 6.9 5.6 4.8 4.5 Support services

101 4.23 8.00 89.1 4.4 2.6 2.3 4.8 3.7 3.2 Construction & building materials

Heineken Hold 9,871 20.15 23.56 17.0 9.7 9.6 8.0 8.6 6.9 6.1 Beverages

131 4.93 8.30 68.4 24.2 10.3 7.3 4.9 3.0 2.4 Health

Imtech Buy 800 10.34 17.00 64.4 6.5 5.6 6.0 5.6 4.6 4.6 Engineering & machinery

10 1.47 1.50 2.0 37.2 N/A 4.5 5.0 5.7 3.8 Engineering & machinery

Kas Bank Hold 126 8.00 8.00 0.0 N/A 11.3 11.1 N/A N/A N/A Banks

3,955 11.62 14.00 20.5 1.7 5.2 4.2 N/A N/A N/A Banks

Kinepolis Buy 109 15.91 22.00 38.3 7.2 7.2 6.6 4.5 4.3 4.0 Leisure & hotels


Macintosh Hold 155 7.18 8.00 11.4 5.0 9.0 6.3 4.6 5.2 4.2 General retailers

150 3.50 3.70 5.7 5.4 9.1 6.3 5.3 6.3 5.0 IT hardware

Metris Sell 12 1.00 0.70 -30.0 N/A N/A 80.5 27.1 13.2 6.5 Electronic & electrical equipment


Nutreco Buy 926 27.00 40.95 51.7 8.2 8.1 7.0 5.4 4.8 4.1 Food producers & processors

277 2.77 2.50 -9.7 4.4 N/A N/A 0.9 N/A N/A Steel & other metals

Océ Sell 193 2.28 1.60 -29.8 N/A N/A N/A 5.6 5.7 5.4 IT hardware

434 17.93 24.00 33.9 7.8 5.6 5.4 6.8 6.2 5.7 Health

OncoMethylome Sciences Buy 72 5.45 10.30 88.9 N/A N/A N/A N/A N/A N/A Pharmaceuticals

396 6.80 9.50 39.7 6.4 6.6 5.9 5.6 5.5 4.9 Health

Option Hold 35 0.85 1.00 17.6 N/A N/A N/A N/A 17.2 4.3 IT hardware

118 2.86 2.50 -12.6 7.7 8.2 7.6 6.5 5.6 5.2 Software & computer services

Philips Buy 10,748 11.65 15.80 35.7 14.2 16.2 8.4 4.5 4.8 3.0 Electronic & electrical equipment


Randstad Buy 1,937 11.43 15.00 31.3 3.4 6.9 6.7 4.4 6.7 6.0 Support services

5,437 8.23 10.70 30.0 4.9 4.6 3.4 6.5 5.0 4.5 Media & entertainment

Royal Dutch Shell A – Euro Hold 149,280 16.73 19.80 18.4 5.5 12.0 8.6 3.1 5.6 4.5 Oil & gas

311 12.70 16.03 26.2 5.8 6.0 5.8 5.0 4.6 4.3 Diversified industrials

SBM Offshore Hold 2,158 10.63 10.00 -5.9 9.3 7.8 7.2 6.7 5.8 5.2 Support services

730 16.71 15.00 -10.2 10.2 10.4 9.9 6.1 5.7 5.3 Food & drug retailers

Smit International Hold 699 39.25 35.00 -10.8 6.3 7.6 9.0 5.3 5.3 5.7 Transport

3,978 46.96 55.00 17.1 10.0 8.2 6.2 3.9 4.3 3.6 Chemicals

Super de Boer Buy 300 2.61 4.20 60.7 N/A 17.6 13.0 7.2 7.3 6.2 Food & drug retailers


Tessenderlo Buy 622 22.46 24.00 6.9 3.8 9.3 8.1 2.7 4.0 3.7 Chemicals

74 3.03 6.30 107.9 N/A N/A N/A N/A N/A N/A Health

TKH Group Hold 253 7.19 7.75 7.8 4.4 5.5 5.9 4.7 4.8 4.6 Electronic & electrical equipment

4,434 12.35 14.00 13.4 7.8 9.7 10.7 3.4 3.9 4.0 Support services

TomTom Hold 427 3.46 3.00 -13.3 3.0 7.0 5.5 4.7 5.0 4.3 Electronic & electrical equipment

30 3.67 4.10 11.7 13.6 N/A 13.6 4.4 9.1 4.9 Software & computer services

UCB Sell 3,766 20.90 19.50 -6.7 6.7 10.7 10.2 8.3 6.7 6.1 Pharmaceuticals

1,633 13.61 14.00 2.9 13.4 13.5 10.2 4.4 5.6 4.5 Chemicals

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Fig 2 Benelux all caps valuation table (cont’d)


Company Rec (€m) (€) Price (€) (%) 2008F 2009F 2010F 2008F 2009F 2010F Sector

Unilever NV Buy 38,312 13.61 18.50 35.9 9.5 10.4 9.6 6.7 6.9 6.3 Food producers & processors

215 8.20 10.00 22.0 5.5 5.4 4.7 5.5 5.0 4.2 Software & computer services

USG People Hold 375 5.89 6.00 1.9 7.6 9.7 7.3 3.9 6.7 5.5 Support services

68 1.39 3.50 151.8 4.2 4.0 3.5 2.0 1.8 1.9 Support services

Vopak Buy 1,836 29.45 35.00 18.8 8.7 8.2 9.0 6.3 5.6 5.8 Transport

149 17.00 25.00 47.1 6.9 6.2 5.7 3.8 3.3 3.0 Packaging

Wavin Buy 153 1.89 2.86 51.1 3.3 3.9 3.3 3.7 3.9 4.1 Construction & building materials


Wolters Kluwer Hold 3,323 11.53 13.20 14.5 8.1 8.4 7.5 7.1 6.9 6.1 Media & entertainment

4,234 23.1 10.8 9.9 9.0 5.7 5.6 4.9

487 17.0 7.3 8.6 8.0 5.0 5.5 4.6

Benelux LC median 5,092 21.5 9.1 9.8 8.7 5.4 5.6 5.2

253 12.7 6.4 7.9 7.3 4.9 5.2 4.5

375 13.7 7.3 8.2 7.3 5.0 5.5 4.4

1,191 16.1 6.4 9.0 8.2 4.9 5.2 4.4

Benelux late-cyclical median 622 16.4 7.8 9.3 8.4 5.2 5.5 4.7

344 13.5 4.9 7.8 7.1 4.4 4.8 4.5

Benelux defensive median 926 17.7 8.9 9.6 8.8 5.5 5.5 5.3

215 21.0 6.7 7.9 7.0 4.8 5.2 4.3

Benelux biotech median 534 53.5 37.3 15.8 16.0 17.3 8.4 7.4

3,772 20.5 9.2 10.1 9.7 2.0 1.8 1.9

577 14.5 6.4 8.0 7.4 5.1 5.2 4.6

384 20.5 9.6 9.8 8.5 4.9 5.6 4.5

tion or target prices changes in this report.

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Free EPS growth (%) Net debt/EBITDA (x) EBIT margin (%)

Company Country Style Rec float

(%)

2008F

(%)

2009F

(%)

2010F

(%)

2008F

(%)

2009F

(%)

2010F

(%)

2008F

(%)

2009F

(%)

2010F

(%)

Growth Buy 85.0 -23.1 -40.4 63.3 3.0 3.2 2.3 9.7 7.5 10.0

AB InBev Belgium Defensive Buy 45.0 2.3 8.7 29.0 7.8 4.4 3.7 27.3 26.4 27.9

Financial Hold 67.0 -25.0 3.3 -3.7 N/A N/A N/A N/A N/A N/A

AEGON Netherlands Financial Buy 89.0 N/A N/A N/A N/A N/A N/A N/A N/A N/A

Cyclical Buy 100.0 N/A N/A 20.3 2.6 2.0 2.0 4.6 7.0 7.4

Ahold Netherlands Defensive Buy 100.0 3.1 12.7 15.5 0.8 0.4 0.0 4.7 4.8 4.9

Defensive Hold 100.0 139.3 -20.1 7.4 1.1 1.1 0.9 9.2 8.0 9.0

Alfacam Belgium Growth Buy 27.3 -3.4 -46.8 439.4 3.4 3.1 1.8 19.0 14.0 28.8

Cyclical Hold 69.1 15.7 -59.3 -33.3 0.5 1.0 0.5 9.6 4.4 3.2

Arcadis Netherlands Cyclical Buy 75.0 13.4 -6.9 7.2 1.2 0.9 0.7 6.9 6.8 6.8

Cyclical Sell 57.0 61.9 -89.4 144.2 1.1 2.1 1.2 15.6 3.5 8.0

Arseus Netherlands Cyclical Buy 58.0 1.8 13.7 14.5 2.7 2.4 2.0 8.5 8.8 9.4

Cyclical Buy 100.0 -49.8 N/A N/A -0.7 6.9 -1.5 19.1 -17.5 11.8

Atenor Belgium Defensive Hold 42.5 N/A -71.6 28.8 N/A N/A N/A N/A N/A N/A

Cyclical Hold 95.0 -11.9 -48.2 24.0 0.7 1.0 0.9 2.9 1.8 2.2

BAM Netherlands Cyclical Hold 87.3 -24.8 -28.4 -7.3 3.5 3.8 3.5 2.6 3.0 2.9

Growth Hold 91.1 -83.4 27.2 142.9 0.5 0.2 0.1 1.2 2.5 5.4

Bekaert Belgium Growth Buy 60.9 53.7 -46.1 -3.2 1.4 1.8 1.6 11.0 7.5 7.5

Defensive Buy 37.8 -6.8 -3.5 -4.7 1.0 0.9 0.7 20.6 20.2 19.3

Beter Bed Netherlands Cyclical Hold 40.0 -18.8 -51.0 24.8 0.3 0.5 0.4 8.7 4.6 5.5

Financial Hold 35.7 -55.3 -52.1 57.2 N/A N/A N/A N/A N/A N/A

Boskalis Netherlands Cyclical Sell 63.0 21.9 -31.9 -26.3 -0.2 -0.3 -0.6 15.4 10.0 7.6

Cyclical Hold 34.3 23.2 -53.1 -13.2 -0.6 -1.3 -1.7 8.7 4.4 3.9

CFE Belgium Cyclical Hold 54.6 12.0 -4.4 -24.1 0.7 1.0 1.1 6.5 6.2 5.2

Cyclical Hold 43.4 -12.3 -67.4 -23.4 0.4 1.9 2.8 40.9 21.8 19.3

CNP Belgium Financial Hold 30.7 7.8 8.8 10.6 N/A N/A N/A N/A N/A N/A

Defensive Hold 52.6 7.2 11.8 11.9 -0.8 -0.8 -0.9 6.8 7.0 7.1

Crucell Netherlands Biotech Hold 100.0 N/A 223.3 -3.4 -5.5 -3.3 -4.6 1.3 14.7 16.5

Defensive Hold 100.0 -38.4 3.7 13.1 2.5 2.3 2.0 5.3 5.1 5.5

Delhaize Belgium Defensive Hold 100.0 20.3 7.0 8.0 1.9 1.5 1.2 4.8 4.8 4.8

Financial Sell 26.7 N/A N/A 20.0 N/A N/A N/A N/A N/A N/A

D'Ieteren Belgium Cyclical Buy 41.3 -2.9 -18.3 -3.8 2.1 2.7 2.8 6.1 5.9 6.0

Cyclical Hold 52.1 -24.4 -50.5 9.0 2.6 2.6 2.3 4.9 3.8 3.9

DSM Netherlands Cyclical Hold 100.0 47.1 -59.5 34.7 1.3 1.6 1.3 9.7 5.7 6.9

Defensive Hold 61.9 -2.8 10.0 19.2 -0.1 -0.3 -0.5 17.1 18.1 19.9

Emakina Belgium Growth Hold 33.9 -70.7 239.2 116.4 0.2 0.0 -0.2 5.4 6.5 8.0

Growth Buy 46.8 18.4 -19.8 2.5 2.4 2.6 2.3 7.6 6.0 6.1

Euronav Belgium Cyclical Buy 43.4 311.2 -68.5 -36.5 1.3 2.2 2.8 54.9 40.6 34.5

Growth Buy 81.8 14.5 -38.4 49.6 -0.6 -1.0 -0.8 61.8 50.1 57.0

Exact Holding Netherlands Defensive Hold 43.0 6.6 1.4 1.8 -0.8 -0.8 -0.9 18.9 19.2 18.9

Cyclical Buy 42.7 N/A N/A 68.1 7.0 8.1 7.4 13.9 12.9 15.3

Fortis Netherlands Financial Buy 87.0 -37.2 10.8 27.6 N/A N/A N/A N/A N/A N/A

Be

ne

lux D

ige

st

Ma

rch

20

09

Fig 3 ING Benelux all caps (cont’d)



(%)

2008F

(%)

2009F

(%)

2010F

(%)

2008F

(%)

2009F

(%)

2010F

(%)

2008F

(%)

2009F

(%)

2010F

(%)

Buy 84.3 24.1 -2.6 -7.1 1.0 0.7 0.4 17.1 17.8 16.7

Gamma Netherlands Cyclical Sell 44.0 N/A N/A 37.3 9.4 4.3 3.7 -0.2 5.4 6.6

Financial Buy 0.5 46.2 -12.3 8.7 N/A N/A N/A N/A N/A N/A

GIMV Belgium Financial Hold 0.7 N/A N/A N/A N/A N/A N/A N/A N/A N/A

Defensive Hold 53.6 22.1 -7.6 -8.7 1.4 0.7 0.1 5.4 5.5 5.0

Heijmans Netherlands Cyclical Sell 95.0 -59.3 67.2 16.3 3.5 2.7 2.2 1.1 1.5 1.7

Defensive Hold 50.0 -9.1 1.3 19.8 3.8 2.8 2.3 12.5 12.4 13.4

IBA Belgium Growth Buy 60.3 -62.1 134.6 41.0 -0.8 -0.6 -0.4 3.2 5.4 6.9

Cyclical Buy 100.0 24.3 15.3 -7.3 2.0 1.5 1.2 4.8 5.0 4.7

IPTE Belgium Cyclical Hold 34.0 -97.7 N/A N/A 3.9 4.4 2.9 1.6 1.4 2.5

Financial Hold 35.7 N/A N/A 2.6 N/A N/A N/A N/A N/A N/A

KBC Belgium Financial Buy 41.4 -27.1 -66.6 25.6 N/A N/A N/A N/A N/A N/A

Defensive Buy 65.5 22.4 -0.2 9.3 2.5 2.2 1.9 13.3 13.3 13.6

KPN Netherlands Defensive Buy 100.0 -8.0 17.3 16.5 2.2 2.2 2.2 18.3 19.5 20.4

Cyclical Hold 73.0 -33.8 -44.9 43.4 2.6 2.8 2.1 3.8 3.0 3.7

Melexis Belgium Growth Hold 46.6 -18.9 -40.8 44.8 1.6 1.6 1.3 15.9 13.3 16.3

Sell 67.0 N/A N/A N/A 23.8 11.7 5.8 -10.9 -4.5 5.9

Mobistar Belgium Defensive Hold 47.1 0.0 -6.6 -2.6 0.5 0.7 0.7 27.6 26.6 26.2

Defensive Buy 100.0 -5.9 1.5 15.7 1.7 1.2 0.8 3.5 3.7 4.0

Nyrstar Belgium Cyclical Hold 100.0 N/A N/A N/A -1.0 1.6 -0.5 N/A N/A N/A

Cyclical Sell 54.3 N/A N/A N/A 2.8 3.1 2.9 1.6 0.9 1.2

Omega Pharma Belgium Defensive Hold 60.0 29.1 39.0 4.3 3.5 3.3 2.8 12.2 14.2 14.3

Biotech Buy 36.1 N/A N/A N/A 3.0 2.2 1.1 -374.5 -178.5 -116.8

OPG Netherlands Defensive Buy 70.0 -46.1 -3.2 11.3 2.3 2.1 1.7 -3.8 3.3 3.5

Hold 81.8 N/A N/A N/A 346.8 0.2 1.1 -10.9 -9.3 -6.1

Ordina Netherlands Cyclical Hold 85.0 -67.6 -6.8 8.2 2.7 2.3 2.2 -11.1 2.3 2.9

Cyclical Buy 100.0 -78.5 -12.3 92.7 0.2 -0.2 -0.5 5.0 4.2 7.5

Pinguin Belgium Defensive Buy 17.7 99.4 34.5 31.1 2.1 1.7 1.3 5.1 N/A N/A

Cyclical Buy 67.0 -5.9 -50.2 2.8 2.0 2.7 2.1 0.3 2.0 2.1

Reed Elsevier NV Netherlands Cyclical Buy 94.1 -7.3 6.0 34.4 3.4 2.5 2.1 20.5 21.6 22.5

Defensive Hold 100.0 -1.8 -54.0 39.3 0.2 0.7 0.8 8.3 4.8 7.3

Royal Ten Cate Netherlands Growth Buy 56.0 7.9 -3.7 4.5 2.6 2.2 2.0 8.1 7.9 7.7

Hold 100.0 -16.2 19.1 8.9 2.8 2.4 2.2 9.0 11.8 11.9

Sligro Netherlands Defensive Hold 100.0 -5.0 -2.1 5.3 1.3 0.9 0.6 4.5 4.5 4.5

Defensive Hold 46.0 -7.4 -16.1 -15.5 1.7 1.6 1.8 16.1 13.5 11.4

Solvay Belgium Cyclical Hold 67.0 -48.4 22.3 32.6 1.1 1.1 0.8 10.2 9.0 11.1

Defensive Buy 43.0 N/A N/A 35.3 1.3 1.1 0.6 1.5 1.3 1.4

Telenet Group Belgium Defensive Buy 36.1 86.1 94.8 43.6 4.3 3.6 3.1 22.2 23.0 25.2

Cyclical Buy 73.6 N/A -59.1 14.5 0.9 0.9 0.7 8.6 4.3 4.4

TiGenix Belgium Biotech Buy 38.6 N/A N/A N/A 1.5 0.7 0.7 N/A N/A N/A

Cyclical Hold 54.0 17.9 -19.1 -6.3 2.0 1.7 1.4 7.6 6.7 6.3

TNT Netherlands Cyclical Hold 100.0 -23.1 -19.5 -9.5 0.2 0.3 0.3 8.7 8.0 7.5

Hold 43.0 -55.8 -57.8 27.7 3.3 3.5 2.8 -47.8 11.1 12.1

Be

ne

lux D

ige

st

Ma

rch

20

09

Fig 3 ING Benelux all caps (cont’d)



(%)

2008F

(%)

2009F

(%)

2010F

(%)

2008F

(%)

2009F

(%)

2010F

(%)

2008F

(%)

2009F

(%)

2010F

(%)

Transics Belgium Growth Hold 68.0 -58.3 N/A N/A 1.0 1.8 0.8 13.0 2.4 9.0

Biotech Sell 54.1 46.1 -37.6 4.5 3.2 0.8 0.5 17.5 15.8 16.5

Umicore Belgium Cyclical Hold 97.5 -79.7 -0.7 32.3 0.8 1.0 0.7 2.6 2.0 2.6

Defensive Buy 100.0 0.8 -8.5 8.0 1.1 1.0 0.7 14.6 14.3 14.7

Unit 4 Agresso Netherlands Growth Buy 71.5 12.8 2.0 14.3 2.4 1.9 1.4 8.2 8.4 9.5

Cyclical Hold 82.5 -66.3 -21.4 32.6 2.3 3.7 2.8 3.1 2.0 2.7

Van Der Moolen Netherlands Financial Hold 89.0 N/A 6.3 13.1 -2.9 -2.5 0.0 11.4 15.3 16.9

Defensive Buy 47.0 17.1 5.8 -8.5 2.5 2.3 2.3 30.7 31.6 28.6

VPK Packaging Belgium Cyclical Hold 13.5 -30.6 11.5 8.0 1.6 1.2 1.0 5.0 5.4 5.7

Cyclical Buy 93.4 -50.9 -16.2 16.6 2.8 2.9 3.1 5.9 6.6 6.5

Wessanen Netherlands Defensive Hold 89.0 -16.5 4.3 13.5 2.9 2.3 1.9 3.7 3.8 3.9

Cyclical Hold 93.5 -7.9 -4.2 11.5 2.6 2.4 2.0 19.5 18.2 19.3

63.0 -5.9 -5.5 13.1 1.7 1.7 1.3 8.2 6.5 7.4

Benelux LC median 77.0 -0.9 -4.2 15.0 1.1 1.3 0.9 11.3 8.4 10.2

60.9 -7.4 -6.8 12.2 2.0 1.8 1.4 6.0 5.9 6.3

Benelux early-cyclical median 65.5 -5.9 -4.7 15.7 1.7 1.8 1.1 7.2 5.4 6.4

67.0 -12.8 -16.1 11.9 1.7 1.8 1.6 6.9 7.0 7.5

Benelux late-cyclical median 73.6 0.4 4.8 9.8 1.6 1.5 1.2 8.1 5.9 6.6

71.1 -12.1 -19.5 13.0 1.8 2.0 1.7 6.5 5.0 6.0

Benelux defensive median 60.0 0.8 1.4 11.9 1.7 1.4 1.0 10.7 12.4 11.4

67.0 -16.2 -11.8 34.3 2.4 1.8 1.4 8.2 7.5 9.0

Benelux biotech median 46.4 46.1 92.9 0.5 2.2 0.7 0.6 1.3 14.7 16.5

35.7 -26.1 3.3 13.1 -2.9 -2.5 0.0 11.4 15.3 16.9

84.3 -7.3 -7.6 12.3 2.0 2.1 1.4 7.6 5.5 6.8

46.8 -2.8 -0.7 16.8 1.5 1.6 1.1 10.2 7.3 8.5


Early cyclicals steal the show

Following up on our January ‘Benelux investment clock’ theme, we now expect

a first stage of cyclical uplift in 2Q-3Q09 driven by restocking, which should last

a couple of months, followed only then by a real demand-driven recovery by

mid-2010. The outperformance of defensives is shifting, gradually, in favour of

early cyclicals. The latter segment in the Benelux is down 73% from its two-year

high (vs -52% for late cyclicals) and trading at a 2010F PER of just 7.3x (vs 9.3x

for late cyclicals), a 10% discount to our Benelux universe. At this stage, we

have a preference for Dutch stocks, which are more weighted towards cyclicals.

The investment clock In January 2009, we published our views and analysis on the Benelux investment

clock, highlighting the historical stock performance of our Benelux universe during the

four legs of an economic cycle: (1) recovery; (2) mature cycle; (3) late cycle; and

(4) downturn. In terms of timing, we seem to have entered a sixth consecutive quarter

of downturn (entered in 1Q08, according to our econometric model), which makes this

downturn longer than the average 3.5 quarters seen in downturns since 1985.

Although we believe it is futile to attempt to predict when the bottom will be reached,

we expect to be more than halfway through the (economic) downturn and on the eve of

a (market) recovery, as shown in Figure 4.

Fig 4 ING’s Benelux investment clock

Recovery

Mat

ure

cycl

e

Late cycle

Dow

ntur

n

Mark

et

Economy

Source: ING

_

Our historical analysis consists of looking at quarter-on-quarter stock returns from

1985 to 2008, excluding stocks listed after 2002 (16 in our universe), and computing

average quarterly returns for each leg of the cycle, ranking the stocks accordingly. The

analysis allows us to identify early, mid and late cyclicals in our Benelux universe. The

results are provided in Figures 5-7. We have highlighted our top picks in bold.

Halfway through the

downturn, on the eve of

a market recovery

Identifying early, mid

and late cyclicals


Fig 5 Early cyclicals in the Benelux (ranked, top picks in bold)

Price vs Price vs Mkt cap Net debt/EBITDA (x) PER (x) EV/EBITDA (x)

Rec 2Y high (%) 2Y low (%) (€m) 2009F 2010F 2009F 2010F 2009F 2010F

Beter Bed Hold -73.7 5.2 156 0.5 0.4 14.4 11.5 7.4 6.3

Nutreco Buy -47.9 24.5 926 1.2 0.8 8.1 7.0 4.8 4.1

Omega Pharma Hold -73.7 3.4 434 3.3 2.8 5.6 5.4 6.2 5.7

Ballast Nedam Hold -67.7 40.9 129 1.0 0.9 10.5 8.5 3.6 3.3

IPTE Hold -87.1 8.9 10 4.4 2.9 N/A 4.5 5.7 3.8

Kinepolis Buy -72.2 9.3 109 2.2 1.9 7.2 6.6 4.3 4.0

D’Ieteren Buy -68.4 50.4 601 2.7 2.8 4.4 4.6 4.1 4.2

Exact Holding Hold -49.7 20.1 360 -0.8 -0.9 9.0 8.8 5.5 5.3

Fugro Buy -57.9 36.7 2,003 0.7 0.4 6.9 7.4 4.0 3.8

USG People Hold -84.1 6.9 375 3.7 2.8 9.7 7.3 6.7 5.5

Crucell Hold -24.0 94.7 993 -3.3 -4.6 21.0 21.7 10.0 8.6

Ordina Hold -84.3 57.1 118 2.3 2.2 8.2 7.6 5.6 5.2

AEGON Buy -81.7 58.9 4,452 N/A N/A N/A N/A N/A N/A

Unit 4 Agresso Buy -64.4 17.1 215 1.9 1.4 5.4 4.7 5.0 4.2

Randstad Buy -81.7 18.7 1,937 2.7 2.1 6.9 6.7 6.7 6.0

Dexia Sell -90.4 107.9 4,195 N/A N/A 4.4 3.6 N/A N/A

Melexis Hold -76.0 5.1 150 1.6 1.3 9.1 6.3 6.3 5.0

EVS Buy -69.7 15.7 334 -1.0 -0.8 11.9 8.0 6.4 4.4

Fortis Buy -94.9 163.6 3,772 N/A N/A 1.1 0.9 N/A N/A

ASML Buy -48.9 19.5 5,514 6.9 -1.5 N/A 19.4 N/A 10.4

Brunel International Hold -71.8 8.3 173 -1.3 -1.7 8.3 9.5 3.9 4.2

IBA Buy -80.1 5.8 131 -0.6 -0.4 10.3 7.3 3.0 2.4

AB InBev Buy -52.2 94.0 31,421 4.4 3.7 13.2 10.2 9.1 8.0

Heijmans Sell -91.0 24.4 101 2.7 2.2 2.6 2.3 3.7 3.2

Grontmij Hold -62.6 14.7 270 0.7 0.1 6.3 6.9 4.8 4.5

GIMV Hold -42.4 14.6 731 N/A N/A N/A N/A N/A N/A

Binckbank Hold -49.3 42.2 487 N/A N/A 30.7 19.5 N/A N/A

Median -71.8 19.5 375 1.8 1.1 8.2 7.3 5.5 4.4


_

Fig 6 Mid cyclicals in the Benelux (ranked, top picks in bold)



Draka Hold -87.7 18.1 206 2.6 2.3 5.0 4.6 3.2 2.9

Agfa Buy -92.9 2.2 173 2.0 2.0 2.1 1.7 5.1 5.0

Macintosh Hold -79.5 14.0 155 2.8 2.1 9.0 6.3 5.2 4.2

OPG Buy -76.1 11.9 396 2.1 1.7 6.6 5.9 5.5 4.9

Aalberts Buy -83.6 5.9 371 3.2 2.3 6.7 4.1 5.1 3.9

KPN Buy -27.0 20.9 16,835 2.2 2.2 10.8 9.3 5.5 5.3

TNT Hold -64.4 14.0 4,434 0.3 0.3 9.7 10.7 3.9 4.0

ArcelorMittal Sell -78.6 11.7 26,152 2.1 1.2 15.1 6.2 5.6 4.0

Akzo Nobel Hold -52.2 36.0 7,201 1.1 0.9 9.4 8.8 5.6 5.1

Heineken Hold -58.3 2.4 9,871 2.8 2.3 9.6 8.0 6.9 6.1

Wessanen Hold -77.9 14.3 189 2.3 1.9 5.2 4.6 4.4 3.9

KBC Buy -89.1 111.2 3,955 N/A N/A 5.2 4.2 N/A N/A

Ackermans & van Haaren Hold -52.0 17.5 1,237 N/A N/A 10.1 10.5 N/A N/A

Gamma Sell -94.9 32.1 27 4.3 3.7 1.4 1.0 4.7 4.1

CFE Hold -76.8 4.3 230 1.0 1.1 3.4 4.5 2.2 2.5

Philips Buy -64.7 2.8 10,748 -0.2 -0.5 16.1 8.4 4.7 3.0

UCB Sell -55.9 19.2 3,766 0.8 0.5 10.7 10.2 6.7 6.1

Smit International Hold -49.2 26.0 699 1.6 1.8 7.6 9.0 5.3 5.7

Solvay Hold -60.8 11.8 3,978 1.1 0.8 8.2 6.2 4.3 3.6

Umicore Hold -63.3 32.5 1,633 1.0 0.7 13.5 10.2 5.6 4.5

Boskalis Sell -67.7 3.1 1,191 -0.3 -0.6 7.0 9.5 3.5 3.8

BAM Hold -73.9 26.2 799 3.8 3.5 4.3 4.6 5.6 5.3

Arcadis Buy -57.3 60.5 592 0.9 0.7 9.1 8.5 4.8 4.5

Atenor Hold -33.9 4.3 181 N/A N/A 15.5 12.0 12.3 9.9

GBL Buy -47.0 4.4 7,848 N/A N/A 10.5 9.7 N/A N/A

Bekaert Buy -58.8 31.0 981 1.8 1.6 7.9 8.2 4.1 3.9

Colruyt Hold -10.9 25.8 5,391 -0.8 -0.9 16.1 14.3 8.3 7.3

Median -64.4 14.3 1,191 1.8 1.6 9.0 8.2 5.2 4.4

Source: ING estimates _


Fig 7 Late cyclicals in the Benelux (ranked, top picks in bold)



CMB Hold -76.5 24.9 542 1.9 2.8 7.8 10.2 5.7 6.8

Wolters Kluwer Hold -51.3 0.6 3,323 2.4 2.0 8.4 7.5 6.9 6.1

Barco Hold -85.4 9.5 135 0.2 0.1 12.0 4.9 2.0 1.4

DSM Hold -46.8 39.4 3,585 1.6 1.3 15.7 11.6 5.5 4.8

Delhaize Hold -36.9 35.0 4,793 1.5 1.2 9.4 8.7 4.7 4.3

CNP Hold -37.6 13.5 3,847 N/A N/A 19.7 17.8 N/A N/A

TKH Group Hold -69.3 13.2 253 1.7 1.4 5.5 5.9 4.8 4.6

Imtech Buy -55.2 9.9 800 1.5 1.2 5.6 6.0 4.6 4.6

Eriks Buy -69.2 3.4 229 2.6 2.3 4.8 4.7 5.2 4.9

Tessenderlo Buy -51.7 11.6 622 0.9 0.7 9.3 8.1 4.0 3.7

Mobistar Hold -24.6 2.5 2,765 0.7 0.7 10.8 11.1 5.5 5.6

Océ Sell -87.7 20.0 193 3.1 2.9 N/A N/A 5.7 5.4

Duvel Moortgat Hold -33.3 5.0 177 -0.3 -0.5 14.0 11.8 5.5 4.7

Super de Boer Buy -46.3 34.6 300 1.1 0.6 17.6 13.0 7.3 6.2

Royal Dutch Shell Hold -46.6 8.8 149,280 0.7 0.8 12.0 8.6 5.6 4.5

Kas Bank Hold -72.7 15.1 126 N/A N/A 11.3 11.1 N/A N/A

Reed Elsevier NV Buy -44.9 6.6 5,437 2.5 2.1 4.6 3.4 5.0 4.5

SBM Offshore Hold -65.7 21.2 2,158 2.4 2.2 7.8 7.2 5.8 5.2

Royal Ten Cate Buy -61.3 19.5 311 2.2 2.0 6.0 5.8 4.6 4.3

Unilever NV Buy -46.6 0.1 38,312 1.0 0.7 10.4 9.6 6.9 6.3

Sligro Hold -54.4 21.1 730 0.9 0.6 10.4 9.9 5.7 5.3

Vopak Buy -38.7 39.2 1,836 2.3 2.3 8.2 9.0 5.6 5.8

Ahold Buy -27.2 22.2 9,573 0.4 0.0 9.9 8.6 4.3 3.5

CSM Hold -69.3 11.9 577 2.3 2.0 7.3 6.5 5.5 5.0

VPK Packaging Hold -64.2 5.3 149 1.2 1.0 6.2 5.7 3.3 3.0

Pinguin Buy -43.6 17.1 108 1.7 1.3 9.6 7.3 4.0 3.4

Median -51.7 13.5 622 1.5 1.2 9.3 8.4 5.5 4.7


_

Fig 8 Unclassified companies (limited history)



Alfacam Buy -57.3 49.2 45 3.1 1.8 36.5 6.8 6.0 3.7

AMG Hold -92.0 38.9 144 1.0 0.5 6.4 9.6 2.9 2.8

Arseus Buy -25.6 37.4 168 2.4 2.0 7.9 6.9 6.4 5.6

Belgacom SA Buy -41.7 8.9 7,213 0.9 0.7 8.7 9.2 4.6 4.4

Emakina Hold -51.6 16.8 26 0.0 -0.2 40.3 18.6 8.8 6.2

Euronav Buy -72.0 23.4 683 2.2 2.8 5.4 8.5 3.9 4.8

Exmar Buy -73.1 17.9 312 8.1 7.4 16.0 9.5 10.3 9.2

Metris Sell -94.0 25.4 12 11.7 5.8 N/A 80.5 13.2 6.5

Nyrstar Hold -86.1 78.1 277 1.6 -0.5 N/A N/A N/A N/A

OncoMethylome Sciences Buy -55.4 18.1 72 2.2 1.1 N/A N/A N/A N/A

Option Hold -94.3 7.4 35 0.2 1.1 N/A N/A 17.2 4.3

Telenet Group Buy -39.0 46.3 1,462 3.6 3.1 19.3 13.4 6.2 5.6

TiGenix Buy -40.9 86.8 74 0.7 0.7 N/A N/A N/A N/A

TomTom Hold -95.2 39.6 427 3.5 2.8 7.0 5.5 5.0 4.3

Transics Hold -74.0 35.7 30 1.8 0.8 N/A 13.6 9.1 4.9

Wavin Buy -89.9 12.3 153 2.9 3.1 3.9 3.3 3.9 4.1

Median -72.6 30.5 148 2.2 1.4 8.3 9.3 6.2 4.8


_

The time is right for early cyclicals We have looked at the price, valuation and earnings momentum of early-cyclical

stocks in the Benelux relative to our universe. Our analysis suggests that the time is

right to move into early cyclicals versus late cyclicals, with a preference for Dutch

stocks, which are more weighted towards cyclicals.

Early cyclicals

suggested by all

indicators, including…


Fig 9 Price relative to Benelux universe

Fig 10 Recent price performance (%)

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0

1.1

1.2

11/96 11/98 11/00 11/02 11/04 11/06 11/08

Early cyclicals Late cyclicals

-71.8-64.4

-51.7

19.514.3 13.5

-80

-60

-40

-20

0

20

40

Early cyclicals Mid cyclicals Late cyclicals

Price vs 2Y high Price vs 2Y low

Source: ING Source: ING

_

Figure 9 indicates that while the price relative performance of late cyclicals has

reached an all-time high, that of early cyclicals seems to have bottomed at an all-time

low. More short-term indicators such as the performance relative to two-year highs and

lows also show how hard early cyclicals have been hit, although they have already

started to recover from their lows.

Fig 11 12m fwd PER rel to Benelux universe (x)

Fig 12 2010F PER (x)

0.5

0.6

0.7

0.8

0.9

1.0

1.1

1.2

1.3

11/96 11/98 11/00 11/02 11/04 11/06 11/08

Early cyclicals Late cyclicals

7.3

8.2

8.4

6.6

6.8

7.0

7.2

7.4

7.6

7.8

8.0

8.2

8.4

8.6

Early cyclicals Mid cyclicals Late cyclicals

Source: Factset, ING Source: ING

_

Valuation momentum, as shown above, also runs in favour of early cyclicals relative to

mid and late cyclicals. Early cyclicals are currently trading at a 10% discount to the

market and well below (the more defensive) mid and late cyclicals.

Earnings momentum for our universe of Benelux early cyclicals also shows an

interesting trend; however, it is unclear whether a bottom has yet been reached.

… price relatives…

… valuation and…

… earnings momentum


Fig 13 Early vs mid cyclicals 12m fwd EPS

Fig 14 Early vs mid cyclicals EPS

0

25

50

75

100

125

150

175

200

225

250

1/97 1/99 1/01 1/03 1/05 1/07 1/09

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1/06 7/06 1/07 7/07 1/08 7/08 1/09

2008 2009 2010

Source: Factset Source: Factset

_


Economics and strategy

No economic recovery this year… The Eurozone is likely to stay in recession until the end of this year, and growth looks

set to remain weak in 2010. The risk of undershooting the inflation target means the

ECB is likely to ease monetary policy further.

Meanwhile, 4Q08 GDP turned out to be even worse than expected, declining a non-

annualised 1.5% from the third quarter. Moreover, inventory accumulation yielded the

strongest positive contribution to growth. With final demand now faltering, inventory

reduction threatens to be a major drag on growth in the first half of 2009. Capacity

utilisation in the manufacturing industry deteriorated to a mere 75%, the lowest figure

since the survey started in 1990. In this regard, we expect companies to cut capital

expenditure further. With the construction sector also in the doldrums, there is little

growth impetus to expect in the first half of the year.

The question puzzling most forecasters is how much worse things can get before they

improve. Unfortunately, this remains a guessing game. Further deterioration in the

health of financial institutions could provoke a credit crunch, with feedback loops on

both asset prices and activity. Add to this the implosion of world trade and one has the

recipe for a depression. Conversely, an improvement in sentiment, which is notoriously

hard to forecast, could prove the spark needed to start the recovery. There are some

historical comparisons one can refer to. According to the IMF, the average recession

following financial stress triggered by a banking crisis lasts seven to eight quarters.

This compares with an average duration of three quarters for recessions without

financial stress. Given a first negative growth quarter in 2Q08, this would mean that the

recession could continue throughout the year and possibly into 1Q10.

However, for the time being, we are not pencilling in this worst-case scenario. As a

matter of fact, a few indicators are already signalling some stabilisation. Forward-

looking components in the ZEW and Ifo surveys increased again in February. On top

of this, consumption is being supported by rising purchasing power. That said, the rise

in the unemployment rate to 8.2% in January, with worse to come, may temper any

appetite to consume. We therefore believe it is too soon to forecast a return to positive

growth in the course of 2009. We now expect Eurozone GDP to shrink by 3.2% in

2009, followed by a 0.2% expansion next year, but risks remain on the downside. This

scenario implies a peak-to-trough output loss of 4.2%.

Few people are willing to bet that the market has bottomed out or are confident that the

gains will hold. Such pessimism is perhaps understandable, given what has gone

before. Over the past 18 months, there have been half a dozen bear market rallies, or

‘dead cat’ bounces. These have lasted for about a month, during which time stock

markets have on average gained 14%.

If economic activity is bottoming out, it should show up in leading indicators and

commodity prices. It is stating the obvious, but for a bear market rally to take hold, it

has to be based on a plausible recovery story. But what if the consensus is wrong, as it

has been in the recent past? What if this is the real thing and the market has

bottomed?

Little growth expected

in the first half of 2009

A few indicators are

signalling some

stabilisation


Some bits of economic data are starting to improve, such as new home sale

inventories in the US, which are 40% below their peak, and housing affordability.

… But that is already in the price

The consensus is still too optimistic about earnings in 2009 and 2010. We believe that

recovery will come later and from a lower base. Our base case suggests that the low

for earnings will occur some time during 1Q10 or 2Q10.

In seeking to determine how much further equities can and should fall, we think

gauging the earnings cycle remains the investor’s best ally.

On our forecasts, Belgian stocks are trading at 11.4x 2009F and 8.5x 2010F PER,

implying that we are more cautious than the market as that stands at 6.7x 2009F and

6.0x 2010F PER (JCF). Likewise, in the Netherlands our PERs of 8.7x in 2009F and

7.8x in 2010F (versus JCF consensus of 8.4x and 6.6x, respectively) imply that we

estimate that earnings will recover less quickly in 2010. In terms of the level, we see

the trough coming in the second quarter of 2010.

The traditional rule of thumb is that equity markets hit a low some three quarters in

advance of the earnings trough. If this rule holds, the most likely time for the start of

sustainable rally will be some time in 2Q09-3Q09.

Fig 15 ING global GDP forecasts

2009F 2010F

1Q 2Q 3Q 4Q FY 1Q 2Q 3Q 4Q FY

US

GDP (% QoQ, ann) -5.9 -3.8 -1.2 -0.7 -3.4 1.1 1.7 1.5 1.6 0.4

Eurozone

GDP (% QoQ, ann) -5.1 -2.1 -1.3 -0.4 -3.2 0.4 0.9 1.2 1.6 0.2

Japan

GDP (% QoQ, ann) -9.2 0.5 0.9 0.6 -5.1 5.7 0.9 2.2 1.5 2.2

China

GDP (% QoQ, ann) 7.0 7.0 7.5 8.0 7.5 8.0 8.3 8.0 7.9 8.0

UK

GDP (% QoQ, ann) -3.6 -47.0 -4.6 -3.6 -4.1 -2.3 -0.9 0.3 1.1 -0.4

EUR/US$ (eop) 1.3 1.2 1.2 1.2 1.2 1.2 1.2 1.2

EUR/GBP (eop) 0.9 0.9 0.9 0.9 0.9 0.9 0.8 0.8

Source: ING

_

Sustainable rally some

time in 2Q09-3Q09


ING’s Benelux top picks

We have selected our nine favourite stocks within our universe, based on our

investment clock theme and bottom-up input from our analyst team. The selection is

summarised in Figure 16.

In our January 2009 guide, we indicated that we believed it was of paramount

importance to avoid nasty surprises. We wanted to wait for earnings downgrades and

(at least some) visibility on how far demand could decline. In essence, we felt it was

too early to call the bottom and chose to remain largely in defensive names over the

near term. It now seems that, despite no improvement in fundamentals, volumes have

not deteriorated further on the worst of 4Q08. What is more, we have heard that

institutions are being told by risk managers that portfolios have to reflect a broader

spread of risk away from defensives, that they have unprecedented amounts of cash

(10%+), and that they simply cannot buy more non-cyclicals. There is also evidence

that hedge funds are again seeing inflows. Now that leverage has been lowered, there

is cash to invest and they want to buy the market for recovery.

We believe the issue now is the duration of the recession – and the concomitant stock

market recovery – more than the depth. In any case, waiting for the absolute bottom is

likely a futile exercise in market timing. The absolute bottom may already have passed

and it already seems to be priced in.

In short, we have chosen to go overweight in early cyclicals, as highlighted in our

January 2009 report, Benelux top picks: The Benelux investment clock, with a couple

of defensives mixed in. Sectors/shares that have empirically behaved as such are

technology, staffing and consumer related.

Our top picks (longs) selection (2009F PER 7.9x, EV/EBITDA 4.8x) trades at an 8-9%

discount to the Benelux median (2009F PER 8.6x, EV/EBITDA 5.5x). Our new portfolio

of top picks for 2009 consists of the companies shown in Figure 16.

Fig 16 ING Benelux top picks

Mkt cap Upside EPS growth (%) PER (x) EV/EBITDA (x) Net debt/EBITDA (x)

(€m) (%) 2009F 2010F 2009F 2010F 2009F 2010F 2009F

ASML 5,694 25.3 N/A N/A N/A 20.0 N/A 10.8 N/A

Bekaert 979 21 -46 -3 7.9 8.2 4.1 3.9 1.8

D’Ieteren 596 38 -18 -4 4.4 4.6 4.1 4.2 2.7

EVS 334 27 -38 49 11.9 8.0 6.4 4.4 -1.0

Nutreco 904 52 2 16 7.9 6.8 4.7 4.0 1.2

Philips 10,698 36 -12 92 16.1 8.4 4.7 3.0 -0.2

Randstad 1,927 31 -50 3 6.9 6.7 6.7 6.0 2.7

Unit 4 Agresso 214 22 2 14 5.3 4.7 5.0 4.2 1.9

Vopak 1,833 19 6 -9 8.2 8.9 5.6 5.7 2.3

Median 979 27 -15 9 7.9 8.0 4.8 4.2 1.8

Benelux median 487 17 -5 13 8.6 8.0 5.5 4.6 1.7


_

Given our thoughts on where we are in the investment cycle and the horizon we have

taken (until the end of 2009), we have chosen not to include a list of shorts given the

extreme volatility in the market and the (in our view) bottoming-out of the market. Since

we started issuing our list of shorts in September 2008, our short recommendations

Appetite for defensives

seems to have

decreased

Overweight early

cyclicals


have actually performed quite well (as shorts), so this is not a case of ‘once bitten

twice shy’. Evidently, looking at the nature of our top picks, one could infer that we

believe more defensive names will not have a similar performance over the next nine

months.

Past performance of ING’s top picks In our last Benelux all-cap book published in January 2009, we included eight longs

and eight shorts. The average weighted performance of our long picks has been

-4.4%, while our shorts have performed slightly better, at -12.0%. On a long/short

basis, our picks would have returned 7.6%, better than all relevant indices. In addition,

our Top picks/Longs outperformed all relevant indices on a long-only basis.

During the extensive marketing that followed the publication, we perceived reticence

on the part of investors to invest in the names we suggested, citing that these stocks

were already over-owned, that they had already performed better than the market and

so had more downside than stocks that had performed badly, and that if markets did

improve these would be the first left behind.

Fig 3 Top picks vs AEX

Fig 4 Top picks vs BEL20

-0.2

-0.15

-0.1

-0.05

0

0.05

0.1

1/09 1/09 2/09 2/09 2/09 2/09 3/09 3/09 3/09

ING Top Picks AEX

-0.2

-0.15

-0.1

-0.05

0

0.05

0.1

1/09 1/09 2/09 2/09 2/09 2/09 3/09 3/09 3/09

ING Top Picks BEL 20

Source: Datastream Source: Datastream

_

Fig 5 Top picks vs underperformers

-0.25

-0.2

-0.15

-0.1

-0.05

0

0.05

0.1

1/09 1/09 2/09 2/09 2/09 2/09 3/09 3/09 3/09

ING Top Picks ING Underperformers

Source: Datastream, ING

_

Top picks/Longs

outperformed all

relevant indices


Our longs selection of stocks was indeed defensive in character, with the exception of

Agfa, which turned out to be the only major underperformer in the portfolio. All the

longs-selection companies were able to surprise positively at their full-year results. The

best performer was Nutreco, where the positive factors affecting its business model

and the investment seem not to have been fully understood yet. In the event, our

rationale for upgrading Agfa – namely, the positive effect of declining aluminium and

silver prices – proved to be correct, although the bulk of the positive effect will only be

felt in the quarters ahead. The other companies performed better than the Benelux

benchmarks, with some landing in positive performance territory and others slightly

down.

Fig 6 Share price performance – long picks (19/01/09-20/03/09)

Opening

price

Last

price Performance

Inclusion in

portfolio Performance

(€) (€) (unweighted, %) (weighted, %)

Agfa 1.99 1.39 -30.4 In 19/01 -30.4

AB InBev 18.94 20.01 5.6 In 28/01 5.6

Ahold 9.03 8.16 -9.6 In 19/01 -9.6

KPN 10.51 9.82 -6.6 In 19/01 -6.6

Nutreco 24.16 27.00 11.8 In 19/01 11.8

Reed Elsevier 9.19 8.23 -10.4 In 19/01 -10.4

Telenet 12.79 13.28 3.8 In 19/01 3.8

Vopak 29.39 29.45 0.2 In 19/01 0.2

Total performance (%) -4.4


_

With markets having continued their fall into 2009, our shorts selection performed

particularly well in the immediate wake of the publication. The focus was on cyclicals

(chemicals, staffing and natural resources). The call that provoked the most discussion

was undoubtedly ArcelorMittal, where our analyst’s predictions proved on the mark and

where concerns about a rights issue still linger. Our best short call was Gamma, which

delivered very poor 2008 results and the future of which is still very much in limbo. At

one point, the stock was down 65%! We made one mistake by adding Dexia to the list

(or not removing it on time), proving to us that sound judgement on financials is still

very tricky while in the midst of upheaval and governmental intervention in the sector.

Fig 7 Share price performance – underperformers (19/01/09-20/03/09)

Opening

price

Last

price Performance

Inclusion in

portfolio Performance

(€) (€) (unweighted, %) (weighted, %)

Akzo Nobel 28.78 27.92 -3.0 In 19/01; out 25/02 -3.0

ArcelorMittal 17.05 14.14 -17.1 In 19/01 -17.1

Barco 15.08 14.37 -4.7 In 19/01; out 05/02

Dexia 1.68 2.38 41.7 In 02/0335.0

Boskalis 14.8 13.88 -6.2 In 19/01 -6.2

Gamma 7.14 3.58 -49.9 In 19/01 -49.9

Solvay 54.27 46.96 -13.5 In 19/01 -13.5

UCB 24.17 20.9 -13.5 In 19/01 -13.5

USG 8.37 6.03 -28.0 In 19/01; out 05/03 -28.0

Total performance (%) -12.0


_


Fig 8 Performance indices (19/01/09-20/03/09)

Index level, 19/01/09 Index level, 20/03/09 Performance (%)

AEX 245.22 212.71 -13.3

AMX 311.11 287.56 -7.6

BEL20 1,839.94 1,708.66 -7.1

Source: Bloomberg

_

Interestingly, if we had chosen to mechanistically buy the cheapest 15 stocks and short

the 15 most expensive ones, performance would have been dismal for long-only

portfolios, while shorting would have outperformed both our short selection and the

market. This proves that stock selection matters.

Fig 9 Long/shorting the cheapest/dearest PER stocks at 19 January 2009

Cheapest PER Performance (%) Expensive PER Performance (%)

Gamma -49.9 Royal Dutch -11.4

Agfa -30.4 AB InBev 11.0

Dexia -6.7 KPN -6.6

KBC -9.1 Mobistar -16.7

TomTom -22.9 Unilever NV -24.3

D’Ieteren 32.2 Barco -28.8

Heijmans -29.5 Duvel Moortgat -4.2

Océ -6.6 Van Lanschot -13.2

Draka -20.1 UCB -13.5

Eriks -12.5 Befimmo -10.1

AMG -41.7 Colruyt -2.6

BAM -10.7 Telenet Group 3.8

Kendrion -12.5 Exmar -25.5

CFE -27.4 ArcelorMittal -17.1

Royal Ten Cate -12.4 Option -53.6

Average performance -17.3 -14.2

Source: Company data, ING estimates


Current top picks

ASML: BUY, TP €16.0 (25% upside) As an early cyclical, ASML’s trading landscape looks barren. The GDP amplifier is still

in effect in the semi equipment industry where order intake nosedived in 4Q08 and is

unlikely to be any better in 1H09. The big positive is that both I/B/E/S estimates and

valuation levels have adjusted to the poor market conditions. We rate the stock a BUY

ahead of a possible order recovery in 4Q09F. If our timing is wrong, bear in mind that

ASML: (1) is a master cost cutter; and (2) carries a briefcase of cash.

We forecast a 2009F EPS of -€0.42 and a 2010F EPS of €0.66. The lowest 2009F

EPS I/B/E/S estimate aims for -€1.08 and the highest for €0.15. For 2010F, the range

is -€0.33 and €1.40. Does it really matter? We think not. Visibility is poor, that’s for

sure, and it is highly likely that ASML will post a net loss in 2009F. Looking beyond

2009 is, in our view, a waste of time, as looking even two quarters ahead represents a

major challenge in the chip equipment sector. At least estimates now reflect the harsh

market conditions, which is a major positive, in our view.

It is hard to find newsflow-driven triggers, apart from well known stories such as:

• Taiwanese support actions for the beleaguered DRAM industry.

• Upgrade spending. In the never-ending drive to lower production costs, chip

manufacturers need ASML tools. Capex spending is currently very bad, and we

have no visibility on client behaviour going forward, but if anything happens, ASML

will be there to benefit right from the start.

• We do not expect the 1Q09 results (due 15 April) to bring relief on order intake. In

our view, the likelihood of a strong bounce in the share price has increased as

orders could start to recover in 3Q09 or 4Q09. As a rule of thumb, semi equipment

stocks bounce two quarters ahead of a reversion in order intake.

Going back in history, the PER multiple shot up above 200x in 2001 when estimates

started to reflect the 2002-03 downturn. Taking another view, the 2009F P/BV and

EV/sales multiples reflect a level that, in our view, suggests an attractive risk/reward

balance for the stock. Our target price is based on target 2010F P/BV of 3.5x, a 12%

premium to the historical low and a 40% discount to the average level.


Bekaert: BUY, TP €60 (21% upside) A global market leader. Bekaert is a market leader in drawn wire products and

applications, generating annual combined sales of €4bn. Its key end markets are:

(1) automotive (31% of sales), as a global market leader in steel cord for reinforcing

radial tyres (one in four tyres runs on Bekaert steel cord); (2) construction (23% of

sales), to reinforce over 5m m³ pa of concrete with Dramix steel fibres; (3) utilities

(16% of sales), in the production and distribution of energy and water; and

(4) telecoms as a supplier of cable reinforcement.

A resilient cyclical. Bekaert reported flat 4Q08 organic sales and a 2H08 REBIT

margin of 9.7%, comfortably above its long-term guidance range of 7-9%, in spite of

very difficult trading conditions in its key end markets, as: (1) 75% of its automotive

exposure is replacement; (2) Dramix concrete reinforcement is mainly used in less

cyclical infrastructure projects; and (3) Bekaert has taken maximum advantage of

growth sectors such as utilities.

A solid profile. Bekaert is on a sound financial footing, with net debt/EBITDA at 1.6x.

The 6% dividend yield is not at risk (payout still below 50%), in spite of record capex in

the past few years for expansion in emerging markets. Bekaert therefore has attractive

long-term geographical coverage (c.60% of sales in emerging markets, 40% in mature

markets) and should be perfectly positioned for when demand picks up. It has a

growing portfolio of product innovations via significant R&D expenses (3% of sales).

A trough valuation. We expect 2009F EPS to decline 46%, followed by a 3% decline

in 2010F (EPS of €6.0, 17% below consensus). Bekaert trades at a 2010F PER of

8.2x, which is a trough multiple for the company. Going forward, we expect investors to

value Bekaert towards mid-cycle multiples in anticipation of a global recovery. Our

target price reflects a 2010F PER of 10.0x (vs a historical range of 8-16x).

D’Ieteren: BUY, TP €150 (38% upside) A leader in every segment. D’Ieteren owns a 77.4% stake in Belron (57% of pre-tax

profit), the world’s leader in car glass repair and replacement. It also operates a

Belgian car retail activity (39% of group pre-tax profit) that holds a leading position in

the market with exclusive import rights for the VW brand, and owns a 59.6% stake in

LSE-listed Avis Europe (12% of pre-tax profit), a leading European car rental company.

D’Ieteren is an early cyclical, with turnaround and value appeal. Belron proved its

resilience in 2H08 (going forward, we expect 6% organic sales growth with 8% REBIT

margins), and Avis Europe is bucking the trend through early (and successful) cost

cutting. The Car Retail business’s pains (we still expect negative momentum in

monthly car sales) are priced in as we value the activity using trough earnings (a 58%

fall in pre-tax current profit in 2009F and a 29% fall in 2010F) and trough multiples.

We expect further upside potential through a rerating of the activities from current

trough levels, followed by earnings momentum. At mid-cycle multiples (Belron at 13x

PER, Car Retail at 6x EV/EBITDA), D’Ieteren would be worth €220 (€252 including

Avis book value of €197m vs a market value of €22m in our SOTP).

Trough valuations. We value the stock based on a SOTP model, which values:

(1) Avis Europe at its LSE market value (€4 per D’Ieteren share vs a book value of €36

per share); (2) the Car Retail activity at a 2009F EV/EBITDA of 4.5x (€17 per share), in

line with Benelux cyclicals; and (3) Belron at a 2009F PER of 10x (€128 per share), in

line with defensive stocks.


EVS: BUY, TP €31 (27% upside) EVS develops hardware (broadcast servers) and software that enable the digital

recording of video on hard disks. The company is far and away the market leader in

the niche outside broadcasting (OB) market (with over an 85% market share), while

the operations started in 2002 in the ten-times-larger studio market already represent

c.30% of sales.

Revenues should only go up from current levels, with order intake set to increase in

2Q09 on broadcasters’ needs to prepare for next year’s sports championships and in

2H09 due to the ramp-up to the 2010 events (the Winter Olympics, the World Cup, the

Commonwealth and Asian Games). Sales triggers are numerous, with major non-EU

economies organising the events, while the studio opportunity is the strongest in

Europe.

We see now as an excellent entry point given: (1) good timing as EVS’s shares

typically anticipate large events 8-13 months in advance, while we are now 10 months

away from the Vancouver Olympics; and (2) solid downside protection from a 9%

dividend yield.

EVS trades in line with peers (2009F PER of 11.9x and 2010F PER of 8.0x), but

deserves a premium, as its best-in-class balance sheet (€45m net cash) and

profitability (EBIT margin of c.50%) make it much more resilient. While some peers are

under severe operational and financial pressure, EVS’s market share expansion

should be boosted in 2009F by the strengthened US$/€ (+14% YoY, while peers are

predominantly US-based). We calculate our target price by applying a historical trough

PER of 10x to 2010F EPS.

Nutreco: BUY, TP €41 (52% upside) Nutreco is the global market leader in salmon feed with a 35% market share. It is

number-two in premix for animal nutrition with a 12% market share. These two product

groups generate around 70% of EBITA. The other 30% is generated by the group’s

local animal nutrition leadership position in Canada, compound feed position in

Benelux/Spain and leading poultry processing position in Spain.

In the current difficult economic environment, Nutreco’s characteristics of profit

resilience and management prudence are a major benefit. Although meat and animal

nutrition markets are not completely immune to the recession, the recovery in

Nutreco’s poultry processing business and Canadian pig nutrition as well as further

benefits from procurement could compensate for volume declines in fish feed, the

return to trend profit in compound feed and the absence of windfall profits in premix.

The underlying strength comes from megatrends such as food safety & traceability and

sustainability. After 15 years of investment in these key future elements of distinction, it

is harvest time for Nutreco. Increased customer focus on these issues after the

Chinese contamination affairs and the establishment of Aquaculture Stewardship

Council certification should be advantages for Nutreco.

The current valuation at a 2009F PER of 8x and an EV/EBITDA of 5x and the free

cash flow yield of 15-17% for 2009-11F support our €41 target price, which is based on

a weighted average of three scenarios: trough multiples, DCF and M&A.


Philips: BUY, TP €15.8 (36% upside) Despite no improvement yet in its (three) end markets, with the company guiding for a

weakening 1Q09, the adjustment of fixed costs (over €400m on an annual basis,

skewed towards 2H09) and steps taken in the Connected Displays business should

contain most of the margin damage this year. The shares trade at a discount to peers,

and post the sale of its stake in LG Display, Philips is in a net cash position, so there is

no question that it will survive. We believe the majority of the portfolio will bottom out in

the coming quarters.

Consumer Lifestyle. The latest signs from the retail channels are that stocks are

down but stabilising, but retailers continue to manage at low inventory levels. In

Connected Displays, there is some evidence of slowing TV price erosion and the

company still strives for between break-even and a mid-single-digit margin. Although

there is some evidence of downtrading in Consumer Lifestyle, this unit should prove

the most resilient as Philips has products across all price points.

Lighting. This division is likely to be hit the hardest, with the highest percentage of

fixed costs (nearly 50%) and exposure to some of the worst-hit end-markets. Some

positive impact of stimulus packages can be expected but only towards the end of

2009. To put this into perspective, we estimate the total percentage of Philips’ sales

directly exposed to these markets at just 13%.

Healthcare. The picture here remains weak, with ongoing evidence of financing

constraints in North American imaging. Philips has started introducing new products (at

lower price points). One might almost forget that the weakness is mainly felt in

Imaging, which constitutes 35% of divisional revenues, with the other products having

a rather better outlook.

Our assumptions (lower in Connected Displays, a book gain on the sale of the LG

stake) lead to EPS forecasts for 2009F and 2010F of €0.40 and €1.21, respectively.

Based on our SOTP analysis, we set a target price of €15.8.

Randstad: BUY, TP €15 (31% upside) We rate Randstad a BUY. The current risk/reward balance looks attractive as our cycle

analysis illustrates that a turn in sentiment could kick in early in 2Q09. Meanwhile,

downside risk seems limited at current valuation levels as the shares appear already to

have digested further earnings downgrades, while our sensitivity analysis suggests

that balance sheet concerns are overdone. While we would acknowledge that our call

may be a little early given current uncertainty on the outlook for the labour market, we

believe the risk/reward balance is now attractive enough to position for a rally. We also

know that once you can see it, it is too late.

Cycle analysis points to a potential turn in sentiment early in 2Q09. If we model in a

50% peak-to-trough decline in US volumes, which compares with the 20% decline

seen in the 2001-03 recession, we would see the deepest decline in YoY volume

declines in around September. Based on the previous cycle correlation, this would

imply that Randstad, as an early-cycle staffing company, should recover four months

ahead of the trough; ie, at the beginning of 2Q09.

The stock is attractively valued, trading at a 2009F PER of 6.9x, on our 6% sub-

consensus EPS forecast. Our trough EPS estimate for 2009F is 5% above the market

trough EPS estimate for 2010F. All in all, we believe the 2009F PER multiple already

incorporates further earnings downgrades and concerns on the balance sheet. In our


view, downside to earnings forecasts is fading out, although risk is still on the

downside. Within the sector, Randstad trades at discounts of c.35% on 2009-10F PER

and 4-11% on 2009-10F EV/EBITDA. If we compare Randstad with its closest peer,

Adecco (based on Bloomberg consensus), we see that the former trades at a discount

of 12-23% on 2009-10F EV/EBITDA, which we believe is overdone and does not fairly

reflect its risk/reward characteristics.

Downside risk. It seems that the market is willing to value the downside at 0.2x

EV/sales, which is the previous trough multiple. We disagree with this reasoning as:

(1) this multiple was not reached on the lowest sales forecast; and (2) the trough

margin this downturn will likely be higher despite a much deeper sales decline due to

cost synergies from Vedior and better cost management. On the other side, we could

argue that the balance sheet is more geared than during the last downturn. However,

we are strongly convinced that a rights issue is not needed, based on our sensitivity

analysis. As a proxy for the downside risk, we arrive at a value of €8.92 based on an

EV/sales of 0.2x on our trough sales estimate for 2010F.

Unit 4 Agresso: BUY, TP €10 (22% upside) Unit 4 Agresso is an international provider of business management software. The

company develops, sells, implements and supports Enterprise Resource Planning

(ERP) solutions. These encompass Finance, Procurement, Projects, Payroll and HR.

Key characteristics of Unit 4’s products are flexibility and post-implementation agility.

The company is active in Benelux (31% of 2008 revenues), the UK (22%), Sweden

(14%), Spain (11%), Norway (8%), Germany (5%) and North America (5%).

Guidance seems safe. We rate Unit 4 Agresso a BUY as we believe that, despite

challenging market conditions, the guidance for a similar EBITDA level in 2009 to that

seen in 2008 is within reach given that: (1) 42% of Unit 4’s revenues are recurring;

(2) the gross margin is likely to improve further due to lower third-party hiring (it

improved 190bp in 2008); (3) CODA will be consolidated for two extra months; and

(4) synergies will kick in from the CODA acquisition (€2-3m). We would not argue that

the 2009 results are in the bag, but Unit 4 certainly has some headroom in achieving

its €70m target (excluding restructuring costs). Moreover, the effect of the restructuring

in Spain should materialise during the year and management seems prepared to take

further restructuring measures if needed.

Balance sheet risks seem reduced now that the company has passed on issuing a

dividend. Following the CODA acquisition (mainly financed by debt), Unit 4 reported a

net debt/EBITDA of 2.28x at the end of 2008, well within the covenant range’s upper

limit of 2.75x. We are confident that it will remain within a safe range covenant terms

and forecast a 2009F net debt/EBITDA of 2.1-2.2x. We believe EBITDA would need to

fall by more than 5% in order for the covenants to be broken. Considering the dividend

decision together with the adjusted covenant conditions, we believe balance sheet risk

has abated for now.

Attractive valuation. However, the shares still price in significant earnings and

balance sheet risks, trading at a 2009F PER of c.5x (well below the small-cap peer

group), which we believe is overdone. Note that 42% of Unit 4’s business is recurring

(maintenance) and c.40% of sales are generated in the public sector.


Vopak: BUY, TP €35 (19% upside) Vopak is the world’s number-one independent storage firm, with total capacity as

of 1 January 2009 of 27.1m m3. It has a broad geographical base, with 80 terminals in

32 countries. Its main areas of operation are Europe and the Far East. Vopak has a

large position in the storage of oil products and chemicals. Its strategy is to offer the

best services to its clients and the highest operational efficiency, which should

contribute to further growth for the company, supported by high demand for storage

logistics given a structural shortage.

Changes in the storage function, shortages, Vopak swapping its typical contango

clients for oil and chemicals multinationals, the large capacity expansion in 2004-11

and long-term contracts should allow Vopak to weather the economic storm better than

many expect. Clearly, Vopak is not immune to the downturn, especially given how

long-lasting it is proving, but the company is now better prepared than ever before.

Vopak is guiding for a solid outlook, with 2009 EBITDA of at least €450m (up 5%

YoY). This guidance demonstrates the predictability of the company’s 2009 earnings

and is in line with its long-term target of €475-550m for 2009-10. We estimate that

Vopak will breach the bottom of this range in 2009-10F at around €480m for both years

as chemicals storage will be hit by the downturn, but that expansion of capacity –

especially of add-on capacity at much higher rates – should more than compensate for

this.

We expect resilience in earnings in the coming years – whatever happens in the oil

and chemicals industries – as clients will still need storage. Moreover, we believe that

if Vopak shows the resilience we expect in this downturn, it should grow quickly once

the recession is over and probably assume a considerably higher multiple given its

performance during the recession. At a 2009F EV/EBITDA of 5.6x, we believe the

stock is cheap. Given its attractive risk/reward profile, Vopak is one of our favourite

Benelux small and mid-cap stocks. Our €35 target price implies 12-month upside of

19%.


Companies


Aalberts Buy

Netherlands Price (20/03/09) €3.57 Market cap €374.0mEngineering & machinery Target price (12 mth) €5.00 Reuters AALB.AS

Jan Hein de Vroe, CFA Amsterdam (31 20) 563 8770 [email protected]

Share price performance

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12-month forecast returns (%)

Share price 40.1Dividend 4.512m f'cst total return 44.6

Share data

No. of shares (m) 103.9Daily turnover (shares) 529,232Free float (%) 85.0Enterprise value (€m) 1,039.2Market cap (€m) 374.0


Investment case End markets appear to give no reason to be(come)

too upbeat on the company’s prospects. The

earnings power of the assets is far higher than 2009

figures indicate, however. Aalberts will breach

some covenants this year, entailing higher interest

charges and getting a waiver, but the likelihood of it

getting into more trouble (ie, being forced into a

rights issue) is very low. In addition, we think the

debt load is manageable (last year’s buyback of

€10m preference shares, €277m of acquisitions and

capex €40m higher than depreciation) – so a lot of

cash can be conserved this year. With lower raw

material prices we believe there is also room to

reduce inventory. Aalberts’ share price has been hit

on the back of this and concerns that the company

might need to shore up its balance sheet. We

believe 2009 will prove to be a tough year but do

not see capital measures being needed. In our view,

unless we go into a multi-year decline, the share

price has bottomed out. BUY.

Company profile

Overview Aalberts has two core activities: industrial services and

flow control. Industrial services generates 30% of

turnover and 30% of EBIT, versus 70% and 70%,

respectively, for flow control. Looking at geographical

spread, Germany is its main market (17% of sales),

followed by the UK (16%), Benelux (14%), the US

(12%) and France (12%).

The company has an excellent track record in

achieving earnings growth and making decent

acquisitions. Since 1985, it has achieved strong EPS

growth (almost 20% pa on average).

Flow control (70.6% 2008 sales) Flow control focuses on the development, production

and sale of products and systems for connecting,

distributing and regulating liquids and gases. These

are supplied worldwide to the wholesale trade, OEMs,

gas producers, utility corporations, laboratories and the

beer and soft drink industries.

Industrial services (29.4% 2008 sales)

Industrial services focuses on the development,

production, processing and sale of complex parts for

high-grade industrial end-products based on customer

specifications. The parts and services are supplied to a

large number of market segments, such as the

precision engineering, medical, automotive, electro-

metallic, aircraft, defence, aluminium, telecoms and

semiconductor industries.

In most of the markets in which it operates, Aalberts

holds a top three position. Its long-term strategy is

based on EPS growth, continuous turnover growth,

balanced distribution of turnover, leading positions in

niche markets and healthy balance sheet ratios. The

company has a well diversified portfolio, spread across

various products, markets and regions. It claims that

no industry represents more than 15% of sales and no

single client more than 2-3% of sales.

Financials

Yr to Dec (€m) 2006 2007 2008 2009F 2010F 2011F

Income statement Turnover 1,445.0 1,702.5 1,750.8 1,596.2 1,612.2 1,641.0EBITDA 222.1 254.2 251.6 201.7 242.1 256.6EBITA 168.1 193.3 181.5 132.3 172.7 186.8Operating exceptionals 0.0 0.0 0.0 0.0 0.0 0.0Net financial charges (26.0) (30.2) (56.2) (45.0) (36.5) (31.1)Pre-tax profit 134.7 153.8 113.1 75.1 124.0 143.6Taxes (33.6) (33.8) (19.3) (18.8) (31.0) (35.9)Net profit 100.0 118.7 92.7 55.6 91.8 106.3Adj net attributable profit 102.9 118.7 92.7 55.6 91.8 107.3

Balance sheet Working capital 243.7 254.6 287.1 254.9 261.9 290.8Goodwill 270.4 308.8 445.6 445.6 445.6 445.6Tangible fixed assets 378.0 444.9 516.3 491.9 474.5 481.5Other intangible assets 69.7 101.4 149.1 136.9 124.7 112.5L/T investments 0.0 0.0 0.0 0.0 0.0 0.0Net debt 532.9 524.9 765.2 654.5 547.9 479.1L/T non-int-bearing liabs 53.7 62.9 71.2 71.2 71.2 71.2Minority interests (equity) 3.9 7.8 10.0 10.7 11.9 13.3Shareholders' equity 383.6 530.4 577.0 618.2 700.9 792.0

Cash flow Op cash flow (pre-tax) 134.1 257.7 245.7 242.4 234.2 226.2Cash taxes (33.6) (33.8) (19.3) (18.8) (31.0) (35.9)Op cash flow (after-tax) 100.4 223.9 226.4 223.7 203.2 190.3Net financial charges (CF) (26.9) (22.7) 14.1 (33.8) (27.4) (23.3)Net capex (110.4) (127.8) (147.1) (45.0) (52.0) (76.7)Free cash flow (36.8) 73.5 93.3 144.9 123.8 91.3

Ratios (%) EBITDA margin 15.4 14.9 14.4 12.6 15.0 15.6EBITA margin 11.6 11.4 10.4 8.3 10.7 11.4Net margin 7.0 7.0 5.4 3.5 5.8 6.6ROE 30.2 26.0 16.7 9.3 13.9 14.4Net debt/equity 137.5 97.5 130.3 104.1 76.9 59.5

Growth (%) Turnover 35.7 17.8 2.8 -8.8 1.0 1.8EBITDA 32.9 14.5 -1.0 -19.8 20.0 6.0Adj EPS 26.78 11.42 -23.11 -40.39 63.34 15.51

Per share data (€) Adj EPS 1.05 1.17 0.90 0.53 0.87 1.01Dividend 0.27 0.31 0.28 0.16 0.25 0.28NAV 3.91 5.20 5.59 5.92 6.63 7.41

Valuation EV/turnover (x) 0.6 0.5 0.7 0.7 0.6 0.5EV/EBITDA (x) 4.0 3.5 4.6 5.2 3.9 3.4EV/EBIT (x) 5.5 4.9 6.8 8.7 5.8 5.0Adj PER (x) 3.4 3.1 4.0 6.7 4.1 3.6Price/NAV (x) 0.9 0.7 0.6 0.6 0.5 0.5Dividend yield (%) 7.5 8.7 7.8 4.5 6.9 7.7


AB InBev Buy

Belgium Price (20/03/09) €20.01 Market cap €31,420.6mBeverages Target price (12 mth) €25.17 Reuters INTB.BR

Gerard Rijk Amsterdam (31 20) 563 8755 [email protected]


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Share data

No. of shares (m) 1,570.2Daily turnover (shares) 5,544,520Free float (%) 45.0Enterprise value (€m) 75,386Market cap (€m) 31,421


Investment case We rate AB InBev a BUY due to stronger-than-

expected cost savings and its rising free cash flow

generation, leading to a quicker-than-anticipated

deleveraging of the company. In fact, through its

25% global beer market share, AB InBev is

currently changing the rules of the game with

suppliers and probably with customers at a later

date. AB InBev generates 80% of its EBITA from the

Americas where beer markets are relatively

resilient. If we pro forma include all synergies of

AB InBev in 2009F, its valuation would be in line

with the beer group but still 25-30% behind the food

sector.

Company profile

History

AB InBev was established in November 2008 following

InBev's acquisition of Anheuser-Busch. InBev was

created through the merger of Interbrew and AmBev in

August 2004. AB InBev is the leading global brewer in

volume, value and net profit terms. It has a portfolio of

local and global brands of which Stella, Budweiser,

Bud Light, Brahma, Skol and Beck’s are the most

important. AB InBev has leading positions in North and

Latin America, China and South Korea, and Western

and Eastern Europe, It also owns a 50%+ stake in

Grupo Modelo, the Mexican market leader. Slightly

more than 50% of the shares are still controlled by

family shareholders. Geographical division of EBITA is

currently around 45% North America, 40% Latin

America, 7% Western Europe, 4% Eastern Europe and

4% Asia.

Americas

In North America, AB InBev is market leader with

leading positions in the US (50%) and Canada. AB

InBev's presence in Latin America is through its 80%+

voting share in AmBev and its 50%+ economic

interest. It has leading positions in several important

Latin American countries. Of these, the almost 70%

market share in Brazil and the leading position in

Argentina are the most crucial.

Asia-Pacific AB InBev has become market leader in China following

the Anheuser acquisition. In South Korea is takes

second position. In the Pacific region, Lion Nathan

provides AB InBev with a position in Australia.

Western Europe AB InBev has strong positions in Belgium/Luxembourg

(55-60% market share), the UK (20%), the Netherlands

(15%) and Germany (10-15%). Weaker positions or

shareholdings exist in France, Spain and Italy.

Eastern Europe AB InBev is one of the leading brewers in Eastern

Europe. It is No.2 in Russia and No.1 in the Ukraine. In

several other countries it has leading positions (Czech

Republic, Hungary, Romania, Bulgaria, Balkan

countries).

Financials

Yr to Dec (€m) 2005 2006 2007 2008F 2009F 2010F

Income statement Turnover 11,656 13,309 14,430 14,732 24,589 25,843EBITDA 3,339.0 4,240.0 4,995.0 5,154.7 8,244.3 8,961.7EBITA 2,439.0 3,224.0 3,920.0 4,028.7 6,498.9 7,217.6Operating exceptionals 0.0 0.0 0.0 0.0 0.0 1.0Net financial charges (451.0) (472.0) (598.0) (644.0) (2,659.0) (2,428.9)Pre-tax profit 1,793.0 2,659.0 3,697.0 3,048.7 4,247.6 5,239.2Taxes (391.0) (531.0) (649.0) (554.1) (1,075.2) (1,340.9)Net profit 904.0 1,413.0 2,199.0 1,639.5 2,389.0 3,082.7Adj net attributable profit 1,055.7 1,488.2 1,890.7 1,916.0 2,389.0 3,081.7

Balance sheet Working capital 928.0 867.0 259.0 243.9 (686.3) (786.6)Goodwill 11,108 12,305 13,834 43,934 43,934 43,934Tangible fixed assets 5,997.0 6,301.0 6,629.0 12,199 12,518 12,518Other intangible assets 540.0 1,265.0 1,250.0 1,250.0 1,250.0 1,250.0L/T investments 703.0 754.0 784.0 3,284.0 3,284.0 3,285.0Net debt 5,085.0 5,814.0 5,379.0 40,311 36,539 33,119L/T non-int-bearing liabs 2,056.0 2,091.0 1,791.0 3,191.0 3,191.0 3,192.0Minority interests (equity) 7,597.2 7,597.2 7,426.2 7,426.2 7,426.2 7,426.2Shareholders' equity 4,537.8 5,989.8 8,159.8 9,983.1 13,144 16,462

Cash flow Op cash flow (pre-tax) 3,278.0 4,105.0 4,902.0 5,174.7 9,744.3 8,962.7Cash taxes (391.0) (531.0) (649.0) (554.1) (1,075.2) (1,340.9)Op cash flow (after-tax) 2,887.0 3,574.0 4,253.0 4,620.5 8,669.2 7,621.9Net financial charges (CF) (451.0) (472.0) (598.0) (644.0) (2,659.0) (2,428.9)Net capex (1,077.0) (1,204.0) (1,445.0) (1,445.0) (1,745.5) (1,432.5)Free cash flow 1,359.0 1,898.0 2,210.0 2,531.5 4,264.7 3,761.5


Growth (%) Turnover 13.8 14.2 8.4 2.1 66.9 5.1EBITDA 21.9 27.0 17.8 3.2 59.9 8.7Adj EPS 7.25 39.11 26.45 2.32 8.69 29.00




Ackermans & van Haaren Hold

Belgium Price (20/03/09) €36.93 Market cap €1,237.0mInvestment companies Target price (12 mth) €33.00 Reuters ACKB.BR

Arnaud W. Goossens Brussels (32 2) 547 7534 [email protected]


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Share price -10.6Dividend 3.812m f’cst total return -6.9

Share data

No. of shares (m) 33.5Daily turnover (shares) 81,807Free float (%) 67.0Enterprise value (€m) 525.1Market cap (€m) 1,237.0


Investment case 2009 should remain tough, with impairments

looming given the market conditions. Trough

multiples, quality assets and a cash pile weighing

11% of NAV should cushion the impact on the

downside, while upside could be held back timing-

wise by the late-cyclical exposure of the portfolio.

We would not rule out a transaction involving a

distressed corporate to which AvH could apply its

strategic turnaround skills. In terms of valuation,

we apply trough multiples to most activities,

suggesting strong upside potential in a market

recovery phase. This is particularly the case for

DEME, although this business is profiled more as a

late cyclical, and the Private Equity portfolio.

Upside in the value of the Banking assets (78.8%

stake in Finaxis, which owns two banks with

extremely safe assets) will be driven more by

earnings momentum than multiple expansion.

Company profile

Overview Ackermans & van Haaren is an investment company

with controlling stakes mainly in non-listed companies

(86% of NAV). Its roots are in dredging in Antwerp,

which explains its 50% stake in DEME, a leading

dredging company. The group’s investment philosophy

is based on long-term majority holdings in strategic

stakes with a high growth profile. However, its

involvement is limited to the selection of management

and specification of companies’ long-term strategy. It

does not intervene in day-to-day management.

Contracting (24% of NAV) The contracting division includes the 50% stake in

DEME, a leading dredging company behind Boskalis,

co-owned by CFE (50%), which also specialises in the

treatment of polluted soil and sludge, and a 45% stake

in Rent-A-Port. The division also holds 100% of the

contracting company, Van Laere, which specialises in

infrastructure construction work in Benelux, and 75%

of NMP, which builds and operates 800km of gas and

chemical pipelines in Belgium.

Financial services (29% of NAV) Finaxis is the banking division, 78.8% owned by AvH

since February 2004 (60% previously). Finaxis

consists of Antwerp-based Bank Delen, a private bank

focused on asset management (€11bn), and Bank van

Breda, a high-end retail bank.

Real estate (13% of NAV) AvH owns a stake in a listed Sicafi, Leasinvest Real

Estate, and 100% of Extensa, a land (200ha) and real

estate development company. AvH’s stake in

Leasinvest Real Estate was diluted to 29% following

Axa’s capital injection (in kind).

Private equity (25% of NAV)

This is the group’s capital development portfolio,

through the 74%-owned Sofinim. The portfolio consists

of 16 unlisted stakes invested in Belgium in various

sectors, three listed stakes and GIB, the JV with CNP,

which is invested in, among other businesses, Groupe

Flo and Trasys. Sofinim’s most recent investment is a

50% stake in Distriplus alongside CNP and a 6% stake

in Iris (listed). Distriplus owns three Belgian non-food

speciality retailers.

Financials

Yr to Dec (€m) 2006 2007 2008F 2009F 2010F 2011F

Income statement

Contracting 31.3 53.8 72.8 56.4 43.8 44.0

Financial services 41.6 44.3 38.3 35.5 43.0 49.0

Real Estate & services 28.5 27.1 7.5 17.1 17.5 17.9

Private equity 176.9 76.1 28.1 23.3 23.4 25.6

Total subsidiaries 278.3 201.3 146.7 132.3 127.6 136.5

Current results 123.3 183.2 136.3 132.3 127.6 136.5

Net profit 307.6 241.4 114.4 137.3 137.6 146.5

NAV breakdown Stake (%) Value (€m) (%) Method

Contracting 297.3 24.1

DEME 50.0 264.5 21.4 3.5x EBITDA

Van Laere 100.0 10.8 0.9 4.5x PER

SNTC 75.0 18.0 1.5 4.0x P/CF

Sagar Cements 14.3 4.0 0.3 Market price

Financial Services 363.2 29.5

Finaxis 78.8 357.2 29.0 0.9x P/B

BDM/ASCO 50.0 6.0 0.5 Latest

Real Estate 158.0 12.8

Extensa 100.0 52.5 4.3 7.0x PER

Leasinvest Real Estate 29.2 58.4 4.7 Market price

Cobelguard 40.0 9.6 0.8 8.0x EBIT

Fin. Duval 30.0 37.5 3.0 Acq. price

Private equity 74.0 310.2 25.2

Trasys 50.0 11.9 1.0 3.5x EBITDA

Distriplus 50.0 40.0 3.2 Adj. acq price

Total listed 46.3 3.8

Others non-listed 162.8 13.2 4.5x EBITDA

Cash 49.2 4.0 AvH

Equity investments 68.4 5.5

Net cash/(debt) 36.2 2.9

Total NAV 1,233.2 100.0

NAV per share (€) 36.8

Forecasts and ratios (€m) 2006 2007 2008 2009F 2010F 2011F

Net current profit 123.3 183.2 136.3 132.3 127.6 136.5

Net profit 307.6 241.4 114.4 137.3 137.6 146.5

Net EPS (€) 9.18 7.21 3.42 4.10 4.11 4.37

Adj EPS growth (%) 9.5 -21.5 -52.6 20.0 0.2 6.5

Dividend (€) 1.15 1.39 1.39 1.50 1.60 1.80

Adj PER (x) 4.0 5.1 10.8 9.0 9.0 8.4

P/BV (x) 1.0 0.9 0.8 0.8 0.7 0.7

ROE (%) 24.8 16.2 7.5 8.9 8.4 8.5

Dividend yield (%) 3.1 3.8 3.8 4.1 4.3 4.9


AEGON Buy

Netherlands Price (20/03/09) €2.94 Market cap €4,452.5mInsurance Target price (12 mth) €5.50 Reuters AEGN.AS

Albert Ploegh Amsterdam (31 20) 563 8748 [email protected]


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E300 Life Assurance (rebased)



Share data

No. of shares (m) 1,516.0Daily turnover (shares) 14,606,600Free float (%) 89.0Enterprise value (€m) 4,452.5Market cap (€m) 4,452.5


Investment case We see two overriding themes to close the

valuation gap with peers in 2009-10: (1) AEGON’s

share price is strongly correlated to credit spreads.

Credit markets seem to price in ALL negatives.

AEGON, in our view, is one of the best plays in the

sector to benefit from credit spread tightening. (2)

AEGON’s diversified product portfolio and sources

of earnings that are less dependent on equity

market returns should help the company show

better earnings resilience compared with peers.

The AEGON share is currently trading at only 0.5x

adjusted P/EV 2009F, even assuming full

conversion of government securities, making it one

of the cheapest stocks in the sector. On P/TE

(tangible equity), a harsh measure for life

companies, AEGON is trading at 1.3x, a c.20%

discount vs peers.

Company profile

History AEGON was formed in 1983 from the merger between

AGO and Ennia. The group, headquartered in the

Netherlands, is one of the world's largest life insurers,

offering a broad range of life products in three main

markets, namely the Americas, UK and Netherlands.

AEGON expanded in 1999 following the US$9.9bn

acquisition of the US insurer Transamerica.

Americas The Americas is AEGON's biggest operation,

accounting for c.60% of group underlying pre-tax profit

for 2008. The group is a top-three life insurer in the US

with c.6% market share. AEGON distributes a broad

range of life and savings products through agents,

broker dealers, wirehouses, marketing companies,

intermediaries, worksite marketing and financial

institutions.

Netherlands AEGON is the fifth largest insurer in Holland with a

c.12.5% domestic market share in life. The

Netherlands operation, which targets middle- and

upper class individuals, and the corporate market,

distributes its products through agents, direct

marketing, internet and retail networks.

United Kingdom AEGON has already reached its market share target of

10% in life by 2010. The UK operation, which largely

comprises Scottish Equitable and GRE Life (acquired

in 1999), sells life, pensions and asset management

products through IFA networks.

CEE AEGON aims for a top five position in its key markets

and 10% market share in mandatory pensions. In

Poland and Hungary AEGON already has solid top 5

market positions. AEGON aims for similar positions in

Slovakia Czech Republic, Romania and Turkey.

Other countries

AEGON also operates in selected high-growth

potential life markets, including Spain, India, Taiwan

and China.

Financials

Yr to Dec (€m) 2006 2007 2008 2009F 2010F 2011F

Underlying earnings before tax 2,427 2,639 1,573 1,966 2,555 2,863

Over/(under) performance of fair value items 266 (272) (1,619) 0 0 0

Operating earnings before tax 2,693 2,367 (46) 1,966 2,555 2,863

Gains/(losses) on investments 569 747 35 177 365 454

Impairment charges (31) (76) (1,038) (1,051) (932) (492)

Other income/(charges) 86 40 (12) 0 0 0

Income before tax 3,971 3,078 (1,061) 1,091 1,989 2,825

Income tax (802) (526) (21) (285) (537) (779)

Minority interest 0 0 0 0 0 0

Net income 3,169 2,552 (1,082) 807 1,452 2,046

Per share data

Full conversion

EPS reported 0.53 1.47 (0.82) 0.22 0.50 0.77

EPS operating 0.39 0.99 (0.14) 0.52 0.71 0.81

NAV per share 11.8 10.1 2.7 2.6 2.8 3.2

NAV (US comparison) 9.4 9.0 4.9 4.9 5.0 5.5

Tangible equity 10.3 8.4 2.3 2.2 2.5 3.1

EEV per share 13.2 13.4 8.8 9.3 9.9 10.5

Adjusted EEV per share 9.8 8.9 5.8 6.4 6.8 7.2

ROE underlying (%) N/A 12.6 (2.9) 10.6 14.3 15.4

ROE operating (%) N/A N/A 6.6 10.6 14.3 15.4

EV operating margin (%) 11.2 8.8 10.1 10.0 10.1 10.3

Dividend per share 0.31 0.60 0.30 0.27 0.27 0.27

Valuation (full conversion)

PER reported 5.5 2.0 (3.6) 13.2 5.8 3.8

PER operating 7.5 3.0 (21.4) 5.7 4.2 3.6

P/NAV 0.2 0.3 1.1 1.1 1.1 0.9

P/NAV (US) 0.3 0.3 0.6 0.6 0.6 0.5

P/EEV (adjusted) 0.3 0.3 0.5 0.5 0.4 0.4



Agfa Buy

Belgium Price (20/03/09) €1.39 Market cap €169.7mMedia & entertainment Target price (12 mth) €3.10 Reuters AGFB.BR



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Share price 123.0Dividend 0.012m f’cst total return 123.0

Share data



Investment case We confirm our non-consensus views: (1) default

risks are behind us; (2) the cost structure is firmly

under control; and (3) the positive impact of lower

raw material prices should be felt from 1Q09. The

market seems to be assuming bankruptcy, while we

believe balance sheet risks are behind us thanks to

early cost control and lower raw material prices

(€86m cost benefit), boosting profitability (and

offsetting the recession impact) and CF, and

bringing down debt. Our forecasts also reflect the

recession, with a top-line decline of 14% (ex-FX) in

1H09 and an underlying EBIT (ex-raw materials)

decline of 45%. We value: (1) Graphics at 7x 10F

EV/EBIT; (2) Healthcare at 7.8x 10F EV/EBIT, which

reflects a blend between Analogue (7x) and Digital

(9x); and (3) Specialty Products at 6x 10F EV/EBIT.

Company profile Agfa was set up in 1867 as a dye maker and in 1964

merged with Gevaert, a manufacturer of photographic

film and paper. In 1981, Bayer took full control. After

diversifying into pre-press and radiography, Agfa

became a global player in the imaging industry,

competing with Kodak and Fuji. Bayer sold 70% of its

stake at the IPO in 1999 and the remaining 30% in

2002. KBC sold its 27% stake in 2006, increasing the

free float to 100%. Agfa generates 50% of its revenue

in Europe, 25% in the Americas and 20% in Asia.

Agfa Graphics (2008: 50% sales, 47% REBIT) Agfa Graphics supplies a wide range of photographic

and electronic pre-press solutions for the graphics

industry. Agfa is a world leader for pre-press systems;

a large share of the world’s printed media is produced

using Agfa products, including printing film, plate and

paper, film and plate imaging equipment, processing

and proofing equipment, professional scanners and

pre-press software. Since 2004, Agfa has been

involved in the nascent industrial inkjet market, which

accounts for €183m of sales, 12% of divisional sales.

Agfa Healthcare (40%, 42%) Healthcare suffers from declining sales of analogue

products (49% of sales), which include classic

radiology systems (18% of healthcare sales – mid-

single-digit EBIT margin) and hardcopy (31% of sales),

mostly films, sales of which are in decline. Computed

radiography on standalone workstations accounts for

18% of healthcare sales but is barely profitable

because of loss-making hardware sales. The growth

area for healthcare is the market for digital solutions or

healthcare IT (33% of healthcare sales), which

comprises PACS/RIS systems, departmental solutions

(mostly radiology and cardiology but expansion

towards other departments) and hospital-wide IT

solutions (Orbis).

Agfa Materials (10%, 11%)

Materials offers film-based consumables in the

business-to-business market. It supplies products to

the motion picture market (sound recording film and

colour print film) and the non-destructive testing market

(microfilm and films) as well as solutions for aerial

photography, for thermal printing, for the production of

printed circuit boards, security identification cards and

passports and for use in electroluminescent lamps,

touch screens and displays.

Financials

Yr to Dec (€m) 2006 2007 2008 2009F 2010F 2011F

Income statement Turnover 3,401.0 3,283.0 3,032.0 2,826.3 2,755.5 2,780.5EBITDA 408.0 340.0 254.0 302.8 306.3 322.0EBITA 256.0 197.0 138.0 198.3 204.3 221.9Operating exceptionals (191.0) (72.0) (158.0) (25.0) (15.0) (15.0)Net financial charges (32.0) (35.0) (38.0) (52.6) (49.5) (46.8)Pre-tax profit 33.0 90.0 (58.0) 120.6 139.8 160.1Taxes 15.0 (19.0) (26.0) (36.4) (38.7) (43.8)Net profit 15.0 42.0 (167.0) 53.2 70.1 85.3Adj net attributable profit 47.0 70.0 (85.0) 83.2 100.1 115.3

Balance sheet Working capital 1,051.0 1,117.0 1,032.0 955.3 969.1 962.7Goodwill 558.0 553.0 434.0 434.0 434.0 434.0Tangible fixed assets 455.0 407.0 369.0 343.6 324.3 307.6Other intangible assets 298.0 263.0 213.0 213.0 213.0 213.0L/T investments 99.0 20.0 13.0 13.0 13.0 13.0Net debt 704.0 721.0 673.0 601.6 610.1 585.6L/T non-int-bearing liabs 824.0 748.0 684.0 578.0 493.0 408.0Minority interests (equity) 3.0 3.0 4.0 2.3 2.5 2.7Shareholders’ equity 930.0 888.0 700.0 777.0 847.8 933.9

Cash flow Op cash flow (pre-tax) 344.0 274.0 339.0 379.6 292.4 328.4Cash taxes 15.0 (19.0) (26.0) (36.4) (38.7) (43.8)Op cash flow (after-tax) 359.0 255.0 313.0 343.2 253.7 284.7Net financial charges (CF) (32.0) (35.0) (38.0) (52.6) (49.5) (46.8)Net capex (114.0) (80.0) (27.0) (79.1) (82.7) (83.4)Free cash flow 213.0 140.0 248.0 211.4 121.6 154.4

Ratios (%) EBITDA margin 12.0 10.4 8.4 10.7 11.1 11.6EBITA margin 7.5 6.0 4.6 7.0 7.4 8.0Net margin 0.5 1.3 -5.5 1.9 2.6 3.1ROE 4.8 7.7 -10.7 11.3 12.3 12.9Net debt/equity 75.5 80.9 95.6 77.2 71.7 62.5

Growth (%) Turnover 2.8 -3.5 -7.6 -6.8 -2.5 0.9EBITDA 7.4 -16.7 -25.3 19.2 1.1 5.1Adj EPS 48.93 20.29 15.21

Per share data (€) Adj EPS 0.38 0.56 (0.68) 0.67 0.80 0.92Dividend 0.50 0.00 0.00 0.00 0.00 0.00NAV 7.45 7.12 5.61 6.23 6.79 7.48

Valuation EV/turnover (x) 0.4 0.5 0.5 0.5 0.6 0.5EV/EBITDA (x) 3.7 4.7 6.4 5.1 5.0 4.7EV/EBIT (x) 5.9 8.1 11.8 7.7 7.5 6.8Adj PER (x) 3.6 2.4 - 2.0 1.7 1.5Price/NAV (x) 0.2 0.2 0.2 0.2 0.2 0.2Dividend yield (%) 36.8 0.0 0.0 0.0 0.0 0.0


Ahold Buy

Netherlands Price (20/03/09) €8.2 Market cap €9,573.4mFood & drug retailers Target price (12 mth) €10.5 Reuters AHLN.AS

John David Roeg Amsterdam (31 20) 563 8759 [email protected]


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Share data



Investment case We have a BUY rating with a DCF/11x trough 2009F

PER-based target price of €10.5. With its dynamic

growth profile and undemanding valuation (c.25%

discount to European peers on 2009F EV/EBITA)

Ahold is among our top picks in the sector. We

believe Ahold offers better visibility than most of its

peers. It offers: (1) further margin expansion

potential, especially in the US, in spite of a tough

environment; (2) solid growth in the Netherlands

thanks to store upgrades and add-ons; (3) no

meaningful emerging market exposure; (4) no

meaningful non-food exposure; (5) a strong

balance sheet; and (6) the benefit from a stronger

US dollar.

Company profile

History Ahold dates back more than 100 years to when Albert

Heijn started selling groceries in Zaandam, the

Netherlands. From its Dutch base the group entered

the US market in 1977. The company has undergone

restructuring since February 2003 under new

management. The sale of a 49% stake in JMR

(Portugal) is expected to materialise in 2009.

US food retail Ahold has dominant market shares in parts of New

England, Pennsylvania and the Washington DC area.

Stop & Shop/Giant Landover generate annual sales of

US$6.5bn and Giant Carlisle US$4.7bn.

Europe In Europe, Ahold is active in the Netherlands and the

Czech Republic/Slovakia. In the Netherlands, Albert

Heijn is market leader, with a 31.5% market share.

Together with sales of Dutch specialty stores, Etos

(drug stores) and Gall & Gall (wines and liquor), Ahold

generates €8bn in turnover in the Netherlands. In the

Czech Republic/Slovakia, Ahold is one of the leading

food retailers with annual sales of €1.6bn. In addition,

Ahold owns 60% of ICA, the market leader in Sweden

and the Baltics.

Financials

Yr to Dec (€m) 2006 2007 2008 2009F 2010F 2011F

Income statement Turnover 27,826 28,152 25,722 29,708 31,501 33,478EBITDA 1,963.0 1,885.9 1,875.0 2,161.5 2,321.9 2,491.2EBITA 1,209.0 1,155.9 1,214.3 1,418.1 1,551.9 1,693.6Operating exceptionals 0.0 0.0 0.0 0.0 0.0 0.0Net financial charges (459.0) (302.0) (234.0) (284.0) (228.0) (195.0)Pre-tax profit 735.6 964.0 1,093.0 1,248.7 1,445.3 1,627.3Taxes (39.0) (167.0) (225.0) (283.5) (331.0) (374.7)Net profit 898.6 2,931.0 1,074.0 990.1 1,139.3 1,277.7Adj net attributable profit 698.5 830.4 856.2 965.1 1,114.3 1,252.7

Balance sheet Working capital (658.0) (1,233.0) (1,305.0) (1,365.2) (1,429.4) (1,497.6)Goodwill 2,184.0 252.0 251.0 251.0 251.0 251.0Tangible fixed assets 6,925.0 5,390.0 5,532.0 5,453.5 5,375.3 5,297.1Other intangible assets 470.0 351.0 347.0 347.0 347.0 347.0L/T investments 2,677.0 2,330.0 2,345.0 2,345.0 2,345.0 2,345.0Net debt 4,636.0 2,266.0 1,498.0 965.2 (61.4) (1,208.5)L/T non-int-bearing liabs 1,692.0 937.0 996.0 996.0 996.0 996.0Minority interests (equity) 71.0 77.0 0.0 0.0 0.0 0.0Shareholders' equity 5,199.0 3,810.0 4,676.0 5,070.0 5,954.4 6,955.0

Cash flow Op cash flow (pre-tax) 1,253.6 1,744.0 1,876.7 2,221.8 2,386.0 2,559.5Cash taxes 114.0 50.0 (147.0) (226.8) (264.8) (299.7)Op cash flow (after-tax) 1,367.6 1,794.0 1,729.7 1,994.9 2,121.2 2,259.7Net financial charges (CF) (453.0) (317.0) (239.0) (284.0) (228.0) (195.0)Net capex (922.0) 4,587.0 (651.0) (664.9) (691.8) (719.4)Free cash flow (7.4) 6,064.0 839.7 1,046.0 1,201.4 1,345.3

Ratios (%) EBITDA margin 7.1 6.7 7.3 7.3 7.4 7.4EBITA margin 4.3 4.1 4.7 4.8 4.9 5.1Net margin 3.3 10.5 4.2 3.3 3.6 3.8ROE 13.8 17.4 20.3 19.8 20.2 19.4Net debt/equity 88.0 58.3 32.0 19.0 -1.0 -17.4

Growth (%) Turnover -37.5 1.2 -8.6 15.5 6.0 6.3EBITDA -12.5 -3.9 -0.6 15.3 7.4 7.3Adj EPS -7.24 57.53 3.11 12.72 15.46 12.42




Akzo Nobel Hold

Netherlands Price (20/03/09) €31.08 Market cap €6,820.1mChemicals Target price (12 mth) €28.00 Reuters AKZO.AS



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Share price -9.9Dividend 5.812m f'cst total return -4.1

Share data

No. of shares (m) 231.7Daily turnover (shares) 2,499,620Free float (%) 100.0Enterprise value (€m) 8,604.0Market cap (€m) 6,820.1


Investment case Akzo Nobel’s 4Q08 was its weakest quarter in 2008,

showing that the product offering is not immune

from the economic slump. We expect ICI synergies

and two restructuring programmes to partially

offset the decline in forecast income but believe

underlying momentum remains negative. Full

integration of the ICI and Akzo Nobel decorative

units could surprise on the upside. One might

argue there is a modicum of a premium in Akzo

Nobel’s valuation. We believe this is due to the

company’s low gearing (1.1x net debt/EBITDA) and

high level of variable costs in comparison with the

rest of the industry, enabling it to keep its margins

falling too far when demand sours. With sector

momentum and end markets (and Akzo Nobel

consensus downgrades) expected to remain

negative, we maintain our HOLD.

Company profile

Profile Akzo Nobel has transformed itself from a chemicals/

pharma hybrid to a focused coatings and chemicals

company through the sale of its pharma interests

(Organon BioSciences), followed by the acquisition of

ICI and subsequent disposals. Akzo is the global

leader in coatings with a particularly strong position in

decorative paints.

Decorative paints (34% 2008 sales) The combination of ICI’s positioning in UK/Ireland, the

Americas and, importantly, Asia, with Akzo Nobel’s

strength in EMEA has given solid global exposure. The

combined exposure to growth in emerging markets,

supported by very strong market positions in

developed markets confers considerable strategic

strength, in our view.

Performance coatings (29% 2008 sales) The company is active in industrial coatings (including

specialty and aerospace coatings, industrial finishes

and powder coatings), marine & protective coatings

and car refinishes. The acquisition of ICI brought the

can coating business to the portfolio.

Specialty chemicals (37% 2008 sales) Akzo has consistently taken a portfolio approach to its

chemicals’ interests, reflecting the largely M&A-driven

route through which it has been created. Following an

extensive disposal programme in recent years, and the

acquisition of ICI, the current portfolio is as follows

(percentage of divisional sales in parentheses): pulp &

paper chemicals (22%), base chemicals (19%),

functional chemicals (19%), surfactants (12%), and

polymer chemicals (11%), chemicals Pakistan (11%)

and specialty polymers (9%).

Akzo Nobel’s chemicals portfolio has an impressive

history of surprisingly good margin stability, given the

basic nature of much of the product offer. In addition, it

is interesting to note the chemicals portfolio has

relatively little exposure to the oil price.

Financials

Yr to Dec (€m) 2006 2007 2008 2009F 2010F 2011F

Income statement Turnover 13,737 10,217 15,415 14,563 14,128 14,280EBITDA 1,850.0 1,271.0 1,878.0 1,609.5 1,703.8 1,895.6EBITA 1,298.0 818.0 1,416.0 1,164.8 1,272.7 1,461.2Operating exceptionals 0.0 0.0 0.0 0.0 0.0 0.0Net financial charges (111.0) (120.0) (183.0) (200.0) (200.0) (200.0)Pre-tax profit 1,440.0 9,527.0 (761.0) 689.8 847.7 1,086.2Taxes (258.0) (166.0) (260.0) (182.8) (224.6) (287.8)Net profit 1,153.0 9,330.0 (1,086.0) 463.9 570.1 735.3Adj net attributable profit 989.0 9,401.0 956.0 763.9 820.1 935.3

Balance sheet Working capital 2,496.0 1,065.0 1,252.0 1,152.9 1,104.4 1,121.3Goodwill 285.0 463.0 3,576.0 3,576.0 3,576.0 3,576.0Tangible fixed assets 3,346.0 2,203.0 3,357.0 3,353.8 3,394.4 3,432.4Other intangible assets 203.0 206.0 3,596.0 3,596.0 3,596.0 3,596.0L/T investments 1,706.0 1,402.0 1,848.0 1,697.1 1,603.7 1,499.6Net debt 1,090.0 (8,039.0) 2,084.0 1,783.9 1,529.6 1,162.2L/T non-int-bearing liabs 2,877.0 2,249.0 3,632.0 3,632.0 3,632.0 3,632.0Minority interests (equity) 119.0 97.0 450.0 450.0 450.0 450.0Shareholders' equity 4,144.0 11,032 7,463.0 7,509.8 7,662.9 7,981.1

Cash flow Op cash flow (pre-tax) 1,678.0 1,088.0 1,905.0 1,704.6 1,752.4 1,878.7Cash taxes (258.0) (166.0) (260.0) (182.8) (224.6) (287.8)Op cash flow (after-tax) 1,420.0 922.0 1,645.0 1,521.8 1,527.7 1,590.8Net financial charges (CF) (111.0) (120.0) (183.0) (200.0) (200.0) (200.0)Net capex (529.0) (359.0) (514.1) (475.0) (505.4) (506.4)Free cash flow 780.0 443.0 947.9 846.8 822.4 884.5

Ratios (%) EBITDA margin 13.5 12.4 12.2 11.1 12.1 13.3EBITA margin 9.4 8.0 9.2 8.0 9.0 10.2Net margin 8.6 91.6 -6.6 3.5 4.4 5.6ROE 30.5 123.0 -11.7 6.2 7.5 9.4Net debt/equity 25.6 -72.2 26.3 22.4 18.9 13.8

Growth (%) Turnover 5.7 -25.6 50.9 -5.5 -3.0 1.1EBITDA 7.5 -31.3 47.8 -14.3 5.9 11.3Adj EPS 57.06 877.81 -87.76 -20.09 7.36 14.05




Alfacam Buy

Belgium Price (20/03/09) €5.50 Market cap €44.5mMedia & entertainment Target price (12 mth) €8.00 Reuters ALFGR.BR

Olivier Van Doosselaere Brussels (32 2) 547 7523 [email protected]


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Share data

No. of shares (m) 8.1Daily turnover (shares) 2,170.0Free float (%) 27.3Enterprise value (€m) 91.6Market cap (€m) 44.5


Investment case Alfacam is exposed to the cyclical patterns of major

(sports) events, which occur in even years.

Therefore, we expect a challenging 2009, with a

c.20% drop in rental revenues from OB vans,

although the new business units should show

strong resilience. In particular, the content division

– where 20 people were hired in 2008 (of a total 150

company staff) – could be a source of positive

newsflow if the new generic TV channel, which is

currently still in development phase, is launched in

2H09 (not yet in our numbers). Over the next 12

months, we expect a share price outperformance

due to an anticipation of the 2010 recovery. We

have a BUY recommendation.

Company profile Alfacam is a Belgian TV facilities provider. Its core

business lies in the building, renting and operation of

outside broadcasting (OB) vans for which it has, by far,

the largest HD-equipped fleet in Europe (24 units). The

company recently entered three new complementary

markets where it has a challenger or pioneer position:

(1) the long-range terrestrial transmission of HD

content for live productions; (2) HDTV broadcasting;

and (3) the rental of the largest TV production studio in

Belgium. The company’s revenues are strongly

exposed to major sporting events.

Outside broadcasting (80% of 2008 sales) The outside broadcasting segment includes two

Source of revenues: (1) the rental/operation of OB

vans and TV production equipment; and (2) the sale of

existing or new OB vans to third parties. It is Alfacam’s

core business, positioned as a technological leader

thanks to having the largest HD-equipped fleet in

Europe.

Wireless (4% of 2008 sales) Management spotted an attractive business

opportunity in the terrestrial long-range transmission of

digital HD content. It used to be covered by national

public broadcasters, but they will probably not be able

to follow the required innovation pace. In our view,

Alfacam can capitalise on its strong HD facilities

reputation and client base to be successful in this

market.

Real estate (7% of 2008 sales) Alfacam owns the Eurocam Media Centre which is a

state-of-the-art TV production facility located near

Antwerp, Belgium. The company intends to capitalise

on its investment in real estate to generate rental

income and create synergies with its other activities.

Content (9% of 2008 sales)

Alfacam sells its HDTV channels on a full buyout basis

to pay-TV boutique or national public broadcasters

looking for an inexpensive entry into HDTV. Alfacam’s

long-term ambition is to create a pan-European HDTV

broadcaster, adopting a multi-regional ‘Eurosport-like’

strategy. We believe it will offer the desired low-risk

approach but it does not provide visibility on future

revenues.

Geographic breakdown of sales (2007) Europe: 69%, RoW: 31%.

Financials

Yr to Dec (€m) 2006 2007 2008 2009F 2010F 2011F

Income statement Turnover 23.9 26.1 36.4 33.8 42.7 40.2EBITDA 13.0 12.7 17.3 15.2 23.0 16.6EBITA 6.2 5.6 6.9 4.7 12.3 5.1Operating exceptionals 0.0 0.0 0.0 0.0 0.0 0.0Net financial charges (2.8) (2.4) (3.9) (3.0) (2.8) (2.5)Pre-tax profit 3.4 3.2 3.0 1.7 9.5 2.6Taxes (0.6) (1.0) (0.7) (0.5) (3.0) (0.8)Net profit 2.8 2.2 2.3 1.2 6.6 1.8Adj net attributable profit 2.8 2.2 2.3 1.2 6.6 1.8

Balance sheet Working capital (2.7) 0.3 0.3 0.5 0.0 0.0Goodwill 0.3 0.3 0.3 0.3 0.3 0.3Tangible fixed assets 44.0 71.5 91.4 81.2 81.0 92.2Other intangible assets 0.1 0.2 0.4 0.4 0.4 0.4L/T investments 4.0 4.5 5.4 5.4 5.4 5.4Net debt 29.6 41.0 58.8 47.1 40.4 49.5L/T non-int-bearing liabs 8.3 6.5 8.5 8.5 8.5 8.5Minority interests (equity) 0.0 0.0 0.0 0.0 1.0 2.0Shareholders' equity 8.7 29.9 33.0 34.3 40.8 42.6

Cash flow Op cash flow (pre-tax) 11.9 10.0 15.4 15.4 23.0 16.9Cash taxes (0.6) (1.0) (0.7) (0.5) (3.0) (0.8)Op cash flow (after-tax) 11.3 9.1 14.6 14.9 20.1 16.1Net financial charges (CF) (2.8) (2.2) (3.9) (3.0) (2.8) (2.5)Net capex 2.7 (31.0) (30.9) 4.5 (5.0) (20.7)Free cash flow 11.2 (24.1) (20.1) 16.4 12.2 (7.1)


Growth (%) Turnover 9.7 9.4 39.5 -7.3 26.6 -6.0EBITDA 136.0 -2.3 36.4 -12.1 51.5 -27.9Adj EPS -16.40 -3.44 -46.85 439.36 -72.98


Valuation (x) EV/turnover 3.1 3.3 2.8 2.7 2.0 2.3EV/EBITDA 5.7 6.8 6.0 6.0 3.7 5.7EV/EBIT 11.9 15.3 14.9 19.4 6.9 18.5Adj PER 15.7 18.8 19.4 36.5 6.8 25.1Price/NAV 5.1 1.5 1.3 1.3 1.1 1.0Dividend yield (%) 0.0 0.0 0.0 0.0 0.0 18.2


AMG Hold

Netherlands Price (20/03/09) €3.85 Market cap €144.1mSteel & other metals Target price (12 mth) €4.30 Reuters AMG.AS

Filip De Pauw Brussels (32 2) 547 6097 [email protected]


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Share data

No. of shares (m) 27.6Daily turnover (shares) 705,919Free float (%) 69.1Enterprise value (US$m) 259.5Market cap (US$m) 144.1


Investment case We rate AMG a HOLD as we lack visibility on the

long-term viability of Timminco’s UMGSi business

model after the company announced that it is

halting expansion plans to ramp up a 14,400mt

capacity, thus dashing hopes of cutting the

production cost to below US$30/kg, which is the

production cost of best-in-class poly-silicon

producers. Given the higher efficiency of poly, the

long-term viability of UMGSi seems uncertain.

Furthermore, specialty metal prices and demand

continued to decline in 1Q09, which does not bode

well for Advanced Materials. The strong order

backlog at Engineering Systems should mitigate

some effects of an economic downturn. We expect

EPS to decline from US$2.0 in 2008 to US$0.54 in

2010F. We now value the company at a 2010F PER

of 8.0x, in line with engineering peers.

Company profile AMG, incorporated in the Netherlands, is a global

specialty materials company, offering engineered

metallurgical products and advanced vacuum furnace

systems to a wide variety of end-markets. Mostly, AMG

uses its proprietary know-how to produce its metals

and materials. The company is active in 12 countries

on five continents. In addition, AMG designs,

engineers and produces advanced vacuum furnace

systems for growing industries globally. AMG’s

metallurgical expertise has enabled it to obtain leading

market shares for many of its products and systems.

Many of AMG’s products and systems are important

for the production of key components for the

aerospace, energy (solar), construction and

transportation industries.

AMG is organised into two business units, Advanced

Materials and Engineering Systems, and owns a

majority interest in two publicly listed companies,

Timminco (50.4% and Graphit Kropfmuehl (79%).

Advanced Materials (39% of 2008 EBITDA) Advanced Materials develops and produces niche

specialty metals and complex metals products. AMG is

one of a small number of significant producers globally

of niche specialty metals, such as ferrovanadium,

ferronickel molybdenum, aluminium master alloys,

chromium metal and magnesium alloys, used by steel,

aluminium and super-alloy producers for aerospace,

energy, construction and transportation applications.

Engineering Systems (43% of 2008 EBITDA) Engineering Systems designs, engineers and

produces advanced vacuum furnace systems and

operates vacuum heat treatment facilities. AMG sells

vacuum furnace systems to customers in the

aerospace, energy (solar), transportation, super-alloy

and specialty steel industries.

Timminco (14% of 2008 EBITDA) Timminco is a leader in the production of SGS for the

solar photovoltaic energy industry. The company also

produces silicon metal and magnesium products for

use in a broad range of industrial applications.

GK (4% of 2008 EBITDA) GK is a leading producer of high-grade natural graphite

(36% of sales) and the only German producer of silicon

metal (64% of sales).

Financials

Yr to Dec (US$m) 2007 2008 2009F 2010F 2011F

Income statement

Turnover 1,155.6 1,517.9 1,173.3 1,130.4 1,200.5EBITDA 119.4 185.3 89.1 73.7 94.4EBITA 86.3 145.3 51.1 35.7 56.4Operating exceptionals 0.0 0.0 0.0 0.0 0.0Net financial charges (52.1) (20.1) (16.0) (12.0) (12.0)Pre-tax profit 28.8 44.5 35.1 23.7 44.4Taxes (20.7) (41.9) (13.3) (9.0) (16.9)Net profit 11.7 14.5 22.4 14.9 26.4Adj net attributable profit 46.9 55.0 22.4 14.9 26.4

Balance sheet

Working capital 144.7 150.3 155.0 138.0 146.6Goodwill 50.3 47.1 47.1 47.1 47.1Tangible fixed assets 155.8 313.5 331.7 312.5 289.5Other intangible assets 0.0 0.0 0.0 0.0 0.0L/T investments 76.6 74.5 74.5 74.5 74.5Net debt (47.1) 88.5 88.9 37.8 (3.0)L/T non-int-bearing liabs 164.7 185.1 185.1 185.1 185.1Minority interests (equity) 64.1 57.1 57.1 57.1 57.1Shareholders’ equity 245.7 254.7 277.1 292.0 318.4

Cash flow

Op cash flow (pre-tax) 66.7 232.7 84.4 90.7 85.8Cash taxes (20.7) (41.9) (13.3) (9.0) (16.9)Op cash flow (after-tax) 46.0 190.8 71.1 81.7 69.0Net financial charges (CF) (52.1) (20.1) (16.0) (12.0) (12.0)Net capex (66.7) (237.4) (56.2) (18.8) (15.0)Free cash flow (72.8) (66.8) (1.1) 50.9 42.0

Ratios (%)

EBITDA margin 10.3 12.2 7.6 6.5 7.9EBITA margin 7.5 9.6 4.4 3.2 4.7Net margin 0.7 0.2 1.9 1.3 2.3ROE 4.8 5.8 8.4 5.3 8.6Net debt/equity -15.2 28.4 26.6 10.8 -0.8

Growth (%)

Turnover 31.4 -22.7 -3.7 6.2EBITDA 55.2 -51.9 -17.2 28.0Adj EPS 15.70 -59.30 -33.30 76.69

Per share data (US$)

Adj EPS 1.72 1.99 0.81 0.54 0.96Dividend 0.00 0.00 0.00 0.00 0.00NAV 9.03 9.23 10.04 10.58 11.54

Valuation

EV/turnover (x) 0.1 0.2 0.2 0.2 0.1EV/EBITDA (x) 1.3 1.4 2.9 2.8 1.8EV/EBIT (x) 1.8 1.8 5.1 5.8 3.0Adj PER (x) 3.0 2.6 6.4 9.6 5.5Price/NAV (x) 0.6 0.6 0.5 0.5 0.5Dividend yield (%) 0.0 0.0 0.0 0.0 0.0


Arcadis Buy

Netherlands Price (20/03/09) €9.79 Market cap €589.3mConstruction & building materials Target price (12 mth) €10.50 Reuters ARDS.AS

Quirijn Mulder Amsterdam (31 20) 563 8757 [email protected]


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Share data

No. of shares (m) 60.5Daily turnover (shares) 66,978Free float (%) 75.0Enterprise value (€m) 748.8Market cap (€m) 589.3


Investment case Arcadis is well prepared for the current downturn,

supported in its infra division by the stimulus

packages, but also focused on its market positions

and cost levels. Strategically, Arcadis is in

excellent condition and should benefit from any

opportunities in M&A. Pivotal is its worldwide

leading position in environmental services as, due

to societal pressure, the credit crisis will not keep

the subject off the agenda of governments or

corporates. While in 2009F we expect EPS 8% lower

from operations, we foresee a recovery in 2010F.

Valuation is attractive at a 2009F EV/EBITDA of

4.7x, 15% cheaper than its international peer group.

We rate Arcadis a BUY with a 2009F EV/EBITDA

target multiple of 5.2x.

Company profile Arcadis is an engineering consultancy operating in

over 100 countries, with strongholds in the Netherlands

(23% of 2008 revenues, 19% of EBITA), Other Europe

(22%, 22%), the US (45%, 43%) and the Rest of the

World (10%, 18%). It has three segments: engineering

consultancy in infrastructure, environmental sciences

and buildings (facility and project management).

Infrastructure (2008: 37% revenues, 39% EBITA) Infrastructure activities relate to roads, railways,

waterways, energy and telecoms. Revenues from

these activities are generated mainly in the

Netherlands and the US, but other European regions,

such as Belgium and France, are becoming

increasingly important.

Environmental services (37%, 39%)

Operations concern the maintenance or improvement

of air, soil and water quality. The division is

international but the US is the most important region.

Growing internationalisation is due to demand from

multinational clients. A fixed remediation programme,

GRiP, has developed as a strong brand name with a

growing portfolio in the US. The acquisition of BBL

(October 2005) and LFR (February 2008) have taken

Arcadis into the major league.

Buildings (26%, 20%) Arcadis designs office buildings, distribution centres

and stadiums. Operations are throughout Europe; the

US is becoming less important, especially since the

divestment of its engineering division for the

automotive industry. Arcadis added facility

management to its portfolio with important customers

such as Philips and DSM. However, project and

programme management is becoming more important

with the acquisitions of PRC (2003), AYH (May 2005)

and RTKL (July 2007).

Financials

Yr to Dec (€m) 2006 2007 2008 2009F 2010F 2011F

Income statement Turnover 1,235.5 1,497.5 1,739.9 1,845.5 1,873.8 1,925.7EBITDA 96.5 127.6 155.1 158.3 159.3 165.1EBITA 78.8 107.2 131.8 133.3 133.3 140.1Operating exceptionals 0.0 0.0 0.0 0.0 0.0Net financial charges (3.5) (8.6) (23.6) (20.0) (25.0) (16.5)Pre-tax profit 66.5 92.9 108.6 105.5 109.8 127.6Taxes (20.1) (28.0) (32.9) (36.3) (35.8) (42.1)Net profit 44.9 62.3 70.0 65.2 69.9 81.1Adj net attributable profit 53.2 62.3 70.0 65.2 69.9 81.1

Balance sheet Working capital 31.6 39.9 79.5 86.9 90.7 92.0Goodwill 154.2 227.5 278.5 270.5 265.5 263.5Tangible fixed assets 55.0 63.9 57.2 58.2 58.2 59.2Other intangible assets 0.0 0.0 0.0 0.0 0.0L/T investments 25.5 41.5 41.5 41.5 41.5 41.5Net debt 19.4 109.0 183.8 147.3 110.8 66.0L/T non-int-bearing liabs 46.2 64.5 53.0 53.0 53.0 53.0Minority interests (equity) 11.8 11.5 12.3 12.3 12.3 12.3Shareholders' equity 188.9 187.7 207.6 244.5 279.7 324.8

Cash flow Op cash flow (pre-tax) 82.0 134.6 116.9 150.9 155.5 163.8Cash taxes (20.1) (28.0) (32.9) (36.3) (35.8) (42.1)Op cash flow (after-tax) 61.9 106.6 84.0 114.7 119.7 121.7Net financial charges (CF) (0.7) (2.6) 2.0 (1.0) (2.5) (3.8)Net capex (19.3) (33.3) (26.6) (26.0) (26.0) (26.0)Free cash flow 41.9 70.7 59.4 87.7 91.2 91.9


Growth (%) Turnover 23.6 21.2 16.2 6.1 1.5 2.8EBITDA 32.8 32.2 21.6 2.0 0.7 3.6Adj EPS 35.28 16.45 13.40 -6.91 7.21 15.95




ArcelorMittal Sell

Netherlands Price (20/03/09) €14.14 Market cap €26,151.9mSteel & other metals Target price (12 mth) €14.00 Reuters ISPA.AS

Nick Hatch London (44 20) 7767 6690 [email protected]


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Share price -1.0Dividend 7.812m f'cst total return 6.8

Share data

No. of shares (m) 1,364.1Daily turnover (shares) 13,842,300Free float (%) 51.1Enterprise value (US$m) 48,677Market cap (US$m) 26,152


Investment case A weakening economic outlook and deteriorating

steel industry fundamentals could put further

pressure on steel industry shares, including

ArcelorMittal. We estimate that the US and Chinese

stimulus packages will have limited effect in 2009.

Company profile Arcelor was formed via the merger of Aceralia (Spain),

Arbed (Luxembourg) and Usinor (France) in February

2002. In 2005, Arcelor generated revenues of €32.6bn,

and produced 46.7mt of crude steel. The shares stand

to gain from the group's position as leader in the steel

sector worldwide and a free float of over 75%.

Flat Carbon America This business unit was the third largest in 2008 in

terms of EBITDA, with a contribution of US$5,834m, or

23% of the total. In turn, this unit consists of two parts,

North America and South America. The key operations

for FCA are in the US, Canada and Brazil. Shipments

in 2008 were 25.8mt, 19.9mt in North America and a

further 5.9mt in South America.

Flat Carbon Europe This business consists of operations throughout

Europe. In Western Europe the key businesses are in

Belgium, Germany, France and Spain, while the

Eastern European assets are primarily in Poland and

Romania. In 2008 FCE shipped 33.5mt, making it the

largest component of the group by volume, and the

second largest in terms of EBITDA. In 2008, this was

US$6.4bn or 26% of the total.

Long Carbon

In 2008, the group produced 27.1mt in this division,

and was the largest EBITDA contributor, at US$6.7bn

or 27% of the total. The key business units are in

Europe and South America, with production also in

North America and other regions.

Asia, Africa and CIS (AACIS) The AACIS division includes ArcelorMittal’s business

operations in Asia, Africa and the Commonwealth of

Independent States. The division consists of the major

production units of ArcelorMittal Temirtau in

Kazakhstan, ArcelorMittal Kryviy Rih in Ukraine and

ArcelorMittal South Africa. The division accounted for

9% of sales and 16% of EBITDA for 2008.

Stainless steel ArcelorMittal’s stainless steel segment consists of

three divisions in Europe and South America:

ArcelorMittal Inox Brasil; ArcelorMittal Stainless

Europe; and ArcelorMittal Stainless and Nickel Alloys,

located in Imphys, France. The division accounted for

6% of sales and 4% of EBITDA for 2008.

Steel Solutions & Services (AM3S)

AM3S is ArcelorMittal’s trading, service centre and

distribution division, and therefore can be seen as the

downstream component of the company’s business

model. Of AM3S’s product needs, 85% are sourced

from ArcelorMittal’s steel production network. The

business contributed 4% (US$1.1bn) of the group’s

2008 EBITDA.

Financials

Yr to Dec (US$m) 2007 2008F 2009F 2010F 2011F

Income statement

Turnover 105,216 124,936 76,191 75,320 79,980EBITDA 19,400 24,478 8,720.2 11,258 15,139EBITA 14,830 19,435 2,662.0 6,058.1 9,580.2Operating exceptionals 0.0 0.0 0.0 0.0 0.0Net financial charges (927.0) (2,352.0) (1,419.6) (1,016.6) (739.6)Pre-tax profit 14,888 11,537 2,080.5 5,945.4 9,800.4Taxes (3,038.0) (1,098.0) (208.1) (1,070.2) (1,764.1)Net profit 10,368 9,399.0 1,736.9 4,241.4 6,991.6Adj net attributable profit 10,368 16,598 1,736.9 4,241.4 6,991.6

Balance sheet

Working capital 12,810 14,476 9,561.8 9,529.0 14,125Goodwill 15,031 16,119 16,119 16,119 16,119Tangible fixed assets 61,994 60,755 57,697 55,997 53,938Other intangible assets 0.0 0.0 0.0 0.0 0.0L/T investments 11,272 11,800 12,638 13,542 14,502Net debt 22,767 26,489 18,358 13,641 10,077L/T non-int-bearing liabs 17,796 17,431 17,652 17,989 18,279Minority interests (equity) 4,850.0 4,032.0 4,167.6 4,801.4 5,846.1Shareholders' equity 56,685 55,198 55,912 59,130 65,099

Cash flow

Op cash flow (pre-tax) 20,589 20,542 14,093 11,306 10,545Cash taxes (2,563.0) 0.0 (135.2) (768.4) (1,521.2)Op cash flow (after-tax) 18,026 20,542 13,958 10,538 9,024.1Net financial charges (CF) (1,494.0) 0.0 (1,792.6) (1,297.6) (937.6)Net capex (12,696) (12,428) (3,000.0) (3,500.0) (3,500.0)Free cash flow 3,836.0 8,114.0 9,165.7 5,740.2 4,586.5

Ratios (%)

EBITDA margin 18.4 19.6 11.4 14.9 18.9EBITA margin 14.1 15.6 3.5 8.0 12.0Net margin 11.3 8.4 2.5 6.5 10.0ROE 18.3 16.8 3.1 7.4 11.3Net debt/equity 37.0 44.7 30.6 21.3 14.2

Growth (%)

Turnover 18.7 -39.0 -1.1 6.2EBITDA 26.2 -64.4 29.1 34.5Adj EPS 61.94 -89.39 144.20 64.84

Per share data (US$)


Valuation



Arseus Buy

Belgium Price (20/03/09) €5.57 Market cap €168.2mHealth Target price (12 mth) €7.40 Reuters RCUS.BR

Sjoerd Ummels Brussels (32 2) 547 8941 [email protected]


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Investment case Active in principally defensive segments of the

professional healthcare market, Arseus is a well

managed company with solvent, recession-proof

customers. The company enjoys sound medium-

term growth prospects in the fragmented European

pharmaceutical compounding and dental market

segments. Arseus has manageable debt levels, low

refinancing risk and no covenant issues. Moreover,

it has no meaningful emerging-market (CEE)

exposure and limited non-euro currency exposure.

In view of the above, we value Arseus at a 2009F

PER of 10.5x, roughly in line with the current

valuation of both the peer group and the Benelux

SMC defensive sub-segment. This implies a €7.4 TP

and a BUY recommendation.

Company profile

Description Arseus is organised into four principal businesses:

Fagron Group (c.39% of 2008 sales) Fagron provides products and services for

pharmaceutical compounding to pharmacies and

pharmaceutical wholesalers. It offers instruments and

equipment for compounding, as well as raw materials

and half-finished goods. The company also provides

third-party compounding services to pharmaceutical

wholesalers. In addition, Fagron supplies specialty

pharmaceutical raw materials to the pharmaceutical,

nutraceutical, veterinary and cosmetic industries. It has

an increasingly pan-European presence through

acquisitions and greenfields.

Arseus Dental (c.41% of 2008 sales)

Arseus Dental markets equipment and consumables to

dentists and dental labs, and specialist supplies to

technical dental laboratories. It is active in Benelux,

France, Germany, Spain and Italy.

Arseus Medical (c.13% of 2008 sales)

Arseus Medical is a supplier of medical equipment and

consumables in Belgium and the Netherlands, with a

primary focus on five distinctive consumer profiles:

hospitals; nursing and elderly care homes;

ophthalmologists; home care; and general/specialist

practitioners.

Corilus (c.7% of 2008 sales) Corilus is a provider of integrated IT solutions for

healthcare professionals and institutions in Belgium

(90% of sales), the Netherlands and France.

Financials

Yr to Dec (€m) 2006 2007 2008 2009F 2010F 2011F


Balance sheet Working capital 54.6 59.0 61.9 58.2 62.8 68.0Goodwill 136.4 142.1 173.8 173.8 173.8 173.8Tangible fixed assets 16.4 21.2 34.5 38.2 40.6 42.5Other intangible assets 9.3 13.5 27.3 28.6 30.2 31.7L/T investments 0.0 0.0 0.0 0.0 0.0 0.0Net debt 103.2 50.6 104.4 99.4 94.7 89.1L/T non-int-bearing liabs 6.1 6.7 10.4 12.6 15.5 18.7Minority interests (equity) 0.0 0.0 (2.0) 0.0 0.0 0.0Shareholders’ equity 100.8 178.2 185.5 197.9 211.8 226.8

Cash flow Op cash flow (pre-tax) 25.4 28.2 33.1 38.5 40.3 44.1Cash taxes (2.5) (3.2) (3.1) (4.4) (5.2) (6.0)Op cash flow (after-tax) 22.9 25.0 30.0 34.1 35.1 38.1Net financial charges (CF) (5.5) (7.0) (8.1) (7.0) (7.9) (8.6)Net capex 0.0 0.0 (18.4) (13.0) (11.9) (11.8)Free cash flow 17.4 18.0 3.5 14.1 15.2 17.7


Growth (%) Turnover 9.9 16.5 5.0 7.0 8.0EBITDA 39.0 11.4 7.1 11.9 9.4Adj EPS 26.30 1.83 13.67 14.50 10.63




ASML Buy

Netherlands Price (20/03/09) €12.77 Market cap €5,514.3mIT hardware Target price (12 mth) €16.00 Reuters ASML.AS

Tijs Hollestelle Amsterdam (31 20) 563 8789 [email protected]


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Investment case As an early cyclical, ASML’s trading landscape

appears barren. The GDP amplifier is still in effect

in the semi-equipment market, where order intake

nosedived in 4Q08 and is unlikely to be any better

in 1H09. The big positive is that both IBES

estimates and valuation have adjusted to the poor

market conditions. We recommend buying ahead of

a possible order recovery in 4Q09F. If our timing is

wrong, bear in mind that ASML is a master cost

cutter and carries a briefcase of cash (€1.07 per

share). Consensus estimates show a huge range

from -€1.08 to €0.15 this year and €1.40 to -€0.33 in

2010F. Does this really matter? We think not. The

most important thing is that these numbers now

fully reflect the downturn, which is a major positive.

Visibility is zero, but that is not a reason to remain

on the sidelines. The PER jumped to 60x in early

2009 from 24x at the end of last year, reflecting the

harsh trading conditions. The likelihood of a strong

bounce in the share price has increased as orders

could start to recover in 3Q or 4Q09F. As a rule of

thumb, semi-equipment stocks bounce two

quarters ahead of a reversion in order intake. We

recommend buying ahead of the pending order

recovery, as waiting for clear evidence risks

missing a lot of the outperformance.

We believe that ASML is fundamentally a very

strong company. Our target price is based on a

2010F P/BV of 3.5x, a small 12% premium to the

historically low levels and a 40% discount to the

average level.

Company profile ASML is a provider of semiconductor equipment for

use in the manufacture of integrated circuits. The

company focuses on the lithography market, in which

circuits are etched onto wafers. Its clients include

manufacturers such as Intel, TSMC and

STMicroelectronics.

Lithography

The company’s products comprise steppers and

scanners. These products etch very small lines onto

wafers by using light beams. Due to the high R&D

costs involved, competition in the lithography market is

essentially limited to three players: ASML, Canon and

Nikon. ASML’s market share varies from 30% to 40%

depending on the capex of its customers. ASML

ultimately targets a market share of c.50%. Its products

are technically very advanced and fetch prices of up to

US$20m per unit.

Financials

Yr to Dec (€m) 2006 2007 2008 2009F 2010F 2011F

Income statement Turnover 3,597.1 3,808.7 2,952.9 1,414.0 2,779.7 4,416.6EBITDA 957.7 974.9 683.2 (118.1) 464.3 1,199.2EBITA 870.7 848.5 562.8 (248.1) 329.3 1,064.2Operating exceptionals 0.0 (23.1) (276.0) 0.0 0.0 0.0Net financial charges (0.9) 33.5 22.7 22.0 26.0 26.0Pre-tax profit 869.8 858.8 309.5 (226.1) 355.3 1,090.2Taxes (245.1) (171.0) 12.7 45.2 (71.1) (218.0)Net profit 624.7 687.8 322.2 (180.9) 284.2 872.2Adj net attributable profit 624.7 687.8 322.2 (180.9) 284.2 872.2

Balance sheet Working capital 596.2 726.4 839.7 238.5 583.1 1,036.6Goodwill 0.0 0.0 0.0 0.0 0.0 0.0Tangible fixed assets 270.9 380.9 540.6 520.6 505.6 510.6Other intangible assets 53.7 226.5 277.4 273.2 269.0 264.8L/T investments 0.0 0.0 0.0 0.0 0.0 0.0Net debt (1,267.0) (669.6) (462.1) (815.0) (673.7) (981.8)L/T non-int-bearing liabs 31.4 112.3 104.0 49.8 97.9 155.6Minority interests (equity) 0.0 0.0 0.0 0.0 0.0 0.0Shareholders' equity 2,156.5 1,891.0 1,988.8 1,798.6 1,935.5 2,641.3

Cash flow Op cash flow (pre-tax) 572.8 (89.5) 213.8 483.0 119.8 745.7Cash taxes (217.5) (171.0) 12.7 45.2 (71.1) (218.0)Op cash flow (after-tax) 355.4 (260.5) 226.5 528.2 48.7 527.7Net financial charges (CF) (48.7) 33.5 22.7 22.0 26.0 26.0Net capex (65.4) (174.1) (259.8) (110.0) (120.0) (140.0)Free cash flow 241.3 (401.2) (10.6) 440.2 (45.3) 413.7

Ratios (%) EBITDA margin 26.6 25.6 23.1 -8.4 16.7 27.2EBITA margin 24.2 22.3 19.1 -17.5 11.8 24.1Net margin 17.4 18.1 10.9 -12.8 10.2 19.7ROE 32.3 34.0 16.6 -9.6 15.2 38.1Net debt/equity -58.8 -35.4 -23.2 -45.3 -34.8 -37.2

Growth (%) Turnover 42.2 5.9 -22.5 -52.1 96.6 58.9EBITDA 77.5 1.8 -29.9 -117.3 N/M 158.3Adj EPS 103.50 13.61 -49.80 N/M N/M 206.84

Per share data (€) Adj EPS 1.31 1.49 0.75 (0.42) 0.66 2.02Dividend 0.00 0.25 0.20 0.22 0.24 1.27NAV 4.52 4.34 4.61 4.16 4.48 6.11

Valuation (x) EV/turnover 1.3 1.3 1.7 3.3 1.7 1.0EV/EBITDA 5.0 5.0 7.4 N/M 10.4 3.8EV/EBIT 5.5 5.8 9.0 N/M 14.7 4.3Adj PER 9.7 8.6 17.1 N/M 19.4 6.3Price/NAV 2.8 2.9 2.8 3.1 2.8 2.1Dividend yield (%) 0.0 2.0 1.6 1.7 1.9 9.9


Atenor Hold

Belgium Price (20/03/09) €36.00 Market cap €181.4mConstruction & building materials Target price (12 mth) €32.00 Reuters ATEO.BR



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Investment case Atenor has an attractive long-term project portfolio,

with eight projects (c.355,000m²) whose long-term

potential has not been shaken by the current

economic circumstances, due to strict investment

criteria: (1) AAA location; (2) phasability; and

(3) reduced entry price. Management suggests that

the portfolio provides visibility until 2015 and

maintains guidance of average capital gains of

€500/m² (track record >€600/m²). The read-through

is that Atenor should report an average annual

capital gain of €25m, which translates into an EPS

of €4.0 (assuming overhead costs of €5m per year).

2009-10 should be challenging. Due to the

economic downturn, we expect delays in further

project sales. In 2009, Atenor is certain to report a

€12m capital gain on the completion and delivery of

the President building and will strive to sign

additional leases, aiming to book another €7-8m on

the revision of the transfer price (INGF €4m). This

translates into 2009F net income of €11.7m (EPS of

€2.33). We expect partial sales for South City, Media

Gardens and Premium in 2010F, resulting in net

income of €15.1m (EPS of €3.00).

On valuation: 2007-08 results were above average,

whereas 2009-10F will probably be below. Hence,

we lack short-term triggers. The strong balance

sheet (high 7.2% dividend yield), attractive long-

term portfolio and stable majority shareholders

should underpin the shares. We have a target price

of €32, based on a mid-cycle EPS of €4.0 and a

target PER multiple of 8.0x (the long-term mid-cycle

trading multiple of peers, Kaufman & Broad and

Nexity). HOLD.

Company profile In 2007, Atenor emerged as a pure-property

development company, the area of business in which it

has built a strong track record in recent years. Atenor’s

strategy consists of investing, via SPVs, in prime

locations, on which large projects (offices, residences

and retail) are then built. Usually, before completion of

a building (which takes three to five years), the shares

of the SPV are sold with a capital gain (exempt from

taxation under Belgian law) and the proceeds

reinvested in new projects.

Atenor’s project pipeline offers good earnings visibility.

Currently, it has eight projects (355,000m²) under

management, on which we expect it to realise €500/m²

in capital gains. This seems plausible, as Atenor has a

track record of realising capital gains of more than

€600/m².

For strategic reasons, Atenor decided to move out of

private equity, after its private equity stakes reported

disappointing results in recent years. The company

sold its last stakes in 2007.

Financials

Yr to Dec (€m) 2006 2007 2008 2009F 2010F 2011F

Income statement Turnover 78.7 71.7 40.0 16.0 18.9 32.3EBITDA 12.5 31.5 41.7 13.0 15.8 29.1EBITA 9.2 31.0 39.7 12.0 14.8 28.1Operating exceptionals 0.0 0.0 0.0 0.0 0.0 0.0Net financial charges (2.9) 1.6 (0.4) (0.4) 0.2 0.4Pre-tax profit 6.3 32.6 39.3 11.6 14.9 28.4Taxes 7.3 2.2 1.8 0.0 0.0 0.0Net profit 13.6 35.4 41.2 11.7 15.1 28.5Adj net attributable profit 14.4 33.8 41.2 11.7 15.1 28.5

Balance sheet Working capital 93.1 16.8 123.2 73.2 73.2 73.2Goodwill 0.0 0.3 3.5 3.5 3.5 3.5Tangible fixed assets 2.4 0.9 22.0 21.0 20.0 19.0Other intangible assets 0.0 0.0 0.0 0.0 0.0 0.0L/T investments 24.5 54.9 20.9 20.9 20.9 20.9Net debt 36.7 (42.7) 28.2 (21.4) (24.4) (40.8)L/T non-int-bearing liabs 7.5 12.2 15.9 15.9 15.9 15.9Minority interests (equity) 0.2 0.1 (0.4) (0.4) (0.4) (0.4)Shareholders’ equity 75.7 103.0 125.9 124.5 126.5 141.9

Cash flow Op cash flow (pre-tax) (18.5) 109.5 (64.7) 63.0 15.8 29.1Cash taxes 7.3 2.2 1.8 0.0 0.0 0.0Op cash flow (after-tax) (11.2) 111.7 (62.9) 63.0 15.8 29.1Net financial charges (CF) (2.9) 1.6 (0.4) (0.4) 0.2 0.4Net capex 0.0 0.0 (7.9) 0.0 0.0 0.0Free cash flow (14.1) 113.2 (71.1) 62.6 16.0 29.4

Ratios (%) EBITDA margin 15.8 44.0 104.1 81.3 83.5 89.9EBITA margin 11.7 43.3 99.2 75.0 78.2 86.8Net margin 16.3 50.9 102.7 72.3 79.0 87.9ROE 19.0 37.8 36.0 9.4 12.0 21.3Net debt/equity 48.4 -41.5 22.5 -17.3 -19.4 -28.9

Growth (%) Turnover -8.9 -44.2 -60.0 18.3 70.8EBITDA 152.8 32.1 -68.8 21.6 83.9Adj EPS 135.25 22.10 -71.58 28.81 89.13




Ballast Nedam Hold

Netherlands Price (20/03/09) €13.20 Market cap €129.4mConstruction & building materials Target price (12 mth) €14.00 Reuters BALNc.AS



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Investment case Although Ballast Nedam has guided for a 40% YoY

drop in group EBIT in 2009, it is one of the few

construction companies to have provided at least

some guidance on operating performance. The

company, which derives c.95% of sales from the

Dutch construction market (and is active in all sub-

segments) faces tough market conditions in 2009-

10. Its infra business is relatively resilient but its

housing and commercial real estate property

development business is exposed to the current

economic crisis.

Ballast’s financial position is very healthy (2008 net

debt/EBITDA of 0.6x), the 2008 dividend

represented a yield of >10% and working capital

and capex are manageable. Furthermore, there is

no re-financing risk in the short or medium term.

The stock trades at a 2009F PER of 10.5x. This

looks rich, but adjusted for the discounted value of

the tax assets the multiple drops to 7.3x. In our

view, Ballast will certainly survive this downturn,

but it is too early to advise buying the shares,

hence our HOLD recommendation.

Company profile

Overview

Ballast Nedam is the smallest Dutch-listed construction

stock, boasting a No.5 market position in the

Netherlands. The company has undergone major

restructuring, both financially as well as operationally,

and has shifted its focus from traditional construction

activities to participation in the entire construction

process at the earliest possible stage.

Strategy

The policy is focused on the further consolidation of

existing development activities (in the Dutch PFI utility

market) and close involvement in large-scale

infrastructure projects. Additionally, the company has

divested most of its international business, which was

characterised by hit-and-run projects around the globe

incorporating high political and payment risks.

Business units

In 2007, Ballast Nedam generated turnover of €1.27bn,

and more than 90% of this was earned in the

Netherlands. The group employed an average of

around 3,838 people during the year. Ballast Nedam's

activities are grouped into two clusters of companies:

(1) civil engineering (national and international)

development, representing 53% of total turnover and

35% of group EBIT; and (2) the development and

construction of homes and other buildings,

representing 47% of total sales and 65% of group

EBIT.

Financials

Yr to Dec (€m) 2006 2007 2008 2009F 2010F 2011F

Income statement Turnover 1,310.0 1,270.0 1,426.0 1,332.8 1,283.6 1,233.0EBITDA 62.0 62.0 67.0 49.3 53.1 68.7EBITA 41.0 41.0 42.0 24.0 27.6 42.7Operating exceptionals 0.0 0.0 0.0 0.0 0.0 0.0Net financial charges (4.0) (4.0) (11.0) (8.0) (7.5) (7.0)Pre-tax profit 38.0 38.0 31.0 17.0 21.1 36.7Taxes 6.0 (11.0) (7.0) (4.6) (5.8) (10.4)Net profit 44.0 27.3 24.0 12.3 15.2 26.3Adj net attributable profit 44.0 27.3 24.0 12.3 15.2 26.3

Balance sheet Working capital (73.0) 32.0 (30.0) (26.9) (26.4) (26.0)Goodwill 0.0 0.0 0.0 0.0 0.0 0.0Tangible fixed assets 151.0 158.0 176.0 180.7 186.2 192.2Other intangible assets 21.0 22.0 25.0 24.0 23.0 22.0L/T investments 81.0 62.0 73.0 73.0 73.0 73.0Net debt (14.0) 72.0 48.0 49.0 46.7 52.2L/T non-int-bearing liabs 36.0 30.0 28.0 28.0 28.0 28.0Minority interests (equity) 0.0 0.0 0.0 0.0 0.0 0.0Shareholders' equity 158.0 172.0 168.0 174.1 181.8 181.8

Cash flow Op cash flow (pre-tax) 9.0 (34.0) 127.0 47.1 53.7 69.3Cash taxes 0.0 0.0 0.0 0.0 12.2 (8.9)Op cash flow (after-tax) 9.0 (34.0) 127.0 47.1 65.9 60.4Net financial charges (CF) (4.0) (4.0) (11.0) (8.0) (7.5) (7.0)Net capex (40.0) (29.0) (44.0) (30.0) (31.0) (32.0)Free cash flow (35.0) (67.0) 72.0 9.1 27.4 21.4

Ratios (%) EBITDA margin 4.7 4.9 4.7 3.7 4.1 5.6EBITA margin 3.1 3.2 2.9 1.8 2.2 3.5Net margin 3.4 2.1 1.7 0.9 1.2 2.1ROE 31.2 16.5 14.1 7.2 8.6 14.5Net debt/equity -8.9 41.9 28.6 28.1 25.7 28.7

Growth (%) Turnover 8.6 -3.1 12.3 -6.5 -3.7 -3.9EBITDA 12.7 0.0 8.1 -26.5 7.8 29.4Adj EPS 116.84 -38.22 -11.88 -48.18 24.01 72.76




BAM Hold

Netherlands Price (20/03/09) €5.89 Market cap €799.0mConstruction & building materials Target price (12 mth) €5.90 Reuters BAMN.AS



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No. of shares (m) 135.5Daily turnover (shares) 4,026,740Free float (%) 87.3Enterprise value (€m) 1,976.6Market cap (€m) 799.0


Investment case BAM’s diversified activity portfolio, its market

leading positions in many countries plus its well

established risk management systems, are key

features for a prime contractor facing a downturn.

Having said this, the property division – which

generates margins above the group average – is

facing a very difficult time as both the Dutch

housing market and the international commercial

real estate markets have ground to a halt. We

expect a focus on limiting risks and little earnings

surprise in the coming quarters. Our SOTP and

DCF valuation methods clearly indicate a much

higher value for the company than the current

share price suggests. However, at this stage in the

cycle, upgrading based on this could seriously

understate the downside risk to the stock. BAM

trades at a 2009F PER of 4.3x; we have seen 2.1x in

previous recessions.

Company profile

Overview BAM is the largest Dutch contractor and achieved

2007 net profit of €349m and turnover of €8.95bn, of

which c.42% was in the Netherlands, 32% in the UK

and Ireland, 9% in Germany, 7% in Belgium, 5% in the

US and 5% in the rest of the world. 2007 net profit was

severely impacted by a large book gain of €72m after

tax on the divestment of BAM’s US branch, Flatiron.

Sales-wise, BAM is also a top-ten player in Europe and

has experience in the PFI market, due largely to its

strong UK branch.

Business units BAM unites operating companies active in

construction, (40% of sales) property (14%), civil

engineering (41%), mechanical and electrical

contracting (2%) and consultancy, and engineering

(2%) and PFI concessions (1%). BAM also has an

interest (21.5%) in a leading non-listed dredging

company (Van Oord) with international operations. The

operating companies initiate, develop, build and

maintain projects concerned with living, working,

transport and recreation.

Strategy BAM's strategic orientation is undergoing a shift from

production to performance. Privatisation and

partnering, coupled with the demand for better

products at lower lifetime costs, mean that BAM has to

operate across the entire value chain. The complexity

of larger projects is increasing, but in addition the

clients for all projects are rightly demanding that the

services provided should go further than implementing

prepared designs. BAM's financial targets boil down to

group sales of €10bn and a profit before tax and

amortisation margin of 4%.

Financials

Yr to Dec (€m) 2006 2007 2008 2009F 2010F 2011F

Income statement Turnover 8,646.1 8,954.0 8,835.0 8,504.6 8,547.0 8,732.2EBITDA 362.5 442.0 428.7 353.1 349.1 397.1EBITA 263.6 339.7 333.2 256.1 251.1 297.1Operating exceptionals 0.0 0.0 0.0 0.0 0.0 0.0Net financial charges 0.0 (34.0) (31.0) (42.0) (43.0) (45.0)Pre-tax profit 276.0 428.1 252.2 246.3 233.0 278.1Taxes (90.8) (77.1) (86.5) (57.8) (56.2) (68.1)Net profit 184.5 349.0 161.8 187.5 173.8 207.1Adj net attributable profit 185.5 348.0 261.8 187.5 173.8 207.1

Balance sheet Working capital 164.3 552.8 555.1 547.2 555.6 578.4Goodwill 0.0 0.0 0.0 0.0 0.0 0.0Tangible fixed assets 442.1 434.7 430.2 455.9 491.6 531.3Other intangible assets 726.2 905.4 802.3 799.6 795.9 791.2L/T investments 823.5 777.7 781.6 781.6 781.6 781.6Net debt 1,135.6 1,425.8 1,478.9 1,341.5 1,230.7 1,142.0L/T non-int-bearing liabs 323.7 240.5 237.2 237.2 237.2 237.2Minority interests (equity) 4.2 10.8 5.7 5.7 5.7 5.7Shareholders' equity 692.6 993.5 847.4 999.9 1,152.1 1,299.6

Cash flow Op cash flow (pre-tax) 92.0 186.6 298.3 348.6 342.4 381.9Cash taxes (90.8) (77.1) (86.5) (57.8) (56.2) (68.1)Op cash flow (after-tax) 1.2 109.5 211.8 290.8 286.2 313.8Net financial charges (CF) 0.0 (34.0) (31.0) (42.0) (43.0) (45.0)Net capex (135.5) (157.0) (132.9) (120.0) (130.0) (135.0)Free cash flow (134.3) (81.5) 47.9 128.8 113.2 133.8


Growth (%) Turnover 16.4 3.6 -1.3 -3.7 0.5 2.2EBITDA 6.0 21.9 -3.0 -17.6 -1.1 13.7Adj EPS -7.21 87.52 -24.77 -28.36 -7.31 19.14




Barco Hold

Belgium Price (20/03/09) €10.73 Market cap €135.2mElectronic & electrical equipment Target price (12 mth) €13.00 Reuters BAR.BR



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Investment case New management is set to deploy a strategy that

could reposition the company on a profitable

growth trajectory. This could boost Barco’s value,

but we believe it is too early to price this in. With a

€17m loss at M&E (the most cyclical activity) in

4Q08 alone without any one-offs to account for, and

with little optimism from management that demand

will return in the current economic environment,

this division could be a major drain on profits in

early 2009. Longer term, management aims for

double-digit growth and 10% EBIT margins. To

reach this, it will roll out a new operating model:

entering new markets and new geographies, while

moving into higher-volume, mid-range markets and

introducing a wider business proposition (more

software, integrated systems and services).

Company profile Barco began manufacturing radio broadcast receivers

in 1934 before expanding into TV sets. During the

1970s, the company switched to high-end niche

industrial applications on a worldwide basis. Barco is

now a world leader in professional visualisation and

display solutions for B2B, ranking first or second in

every niche in which it is active. Geographical split of

sales: EMEA 48%, Americas 34% and Asia 18%.

In March 2007, Barco unveiled its new structure with a

reshuffle of existing activities into three core divisions

focused on visualisation technology: (1) Medical

Imaging (MI); (2) Media & Entertainment (M&E); and

(3) Security & Monitoring (S&M).

Barco estimates that its total addressable market is

worth €2.8bn, expected to grow to €3.9bn by 2010 (an

8.5% CAGR), with a market share of 20%. Barco

expects the strongest growth in M&E (9-14% to 2010),

followed by MI (7-10%) and S&M (5-7%).

Medical imaging (18% of 2008 sales)

This division contains softcopy image display, which

consists mainly of high-resolution screens for PACS,

modality OEM solutions and advanced visualisation,

which is mainly 3D image processing software. Growth

drivers include a shift to softcopy medical imaging and

increasing use of emerging technologies/software for

medical diagnostics.

Security & monitoring (34% of 2008 sales)

This division includes traffic & surveillance, defence

and process & network monitoring. Products are

mainly network-centric display walls and screens, with

demand driven by the rising need for security and

monitoring.

Media & entertainment (33% of 2008 sales) This segment consists of digital cinema, events and

media. Growth drivers include: (1) digital cinema

penetration (currently only 3%); (2) rising media/events

budgets; and (3) the transition to digital display in

outdoor advertising.

Others (17% of 2008 sales) Three smaller activities: simulation, corporate AV and

avionics. We believe these are potential disposal

candidates if they lack scale/breakthrough within two to

three years, as they generate slower-than-expected

growth (3-8%) and below-average profitability.

Financials

Yr to Dec (€m) 2005 2006 2007 2008F 2009F 2010F

Income statement Turnover 712.0 750.8 747.2 725.3 715.3 735.5EBITDA 118.7 117.4 112.4 67.9 78.1 99.4EBITA 52.0 60.7 57.5 8.9 18.1 39.4Operating exceptionals 0.0 0.0 0.0 0.0 0.0 0.0Net financial charges (1.2) (1.1) (2.2) (3.7) (4.1) (3.1)Pre-tax profit 50.8 59.6 63.8 8.8 14.0 36.3Taxes (10.3) (11.8) (10.5) 0.0 (2.8) (9.1)Net profit 38.6 33.3 53.3 18.3 11.2 27.2Adj net attributable profit 40.5 47.8 53.3 8.8 11.2 27.2

Balance sheet Working capital 194.2 240.6 260.4 237.4 231.3 227.7Goodwill 61.0 48.5 48.2 57.3 57.3 57.3Tangible fixed assets 102.5 88.1 116.0 85.4 57.7 57.4Other intangible assets 67.4 76.1 80.9 71.4 76.9 83.4L/T investments 20.4 19.7 27.3 39.5 39.5 39.5Net debt (17.3) 17.0 56.8 36.0 19.5 7.4L/T non-int-bearing liabs 43.6 43.1 54.4 51.7 28.8 28.8Minority interests (equity) 1.2 0.0 0.0 0.0 0.7 0.7Shareholders’ equity 418.1 412.9 421.6 403.2 413.7 428.4

Cash flow Op cash flow (pre-tax) 84.1 71.1 92.6 90.9 84.2 103.0Cash taxes (10.3) (11.8) (10.5) 0.0 (2.8) (9.1)Op cash flow (after-tax) 73.8 59.3 82.1 90.9 81.4 93.9Net financial charges (CF) (1.2) (1.1) (2.2) (3.7) (4.1) (3.1)Net capex (59.4) (64.1) (67.5) (20.7) (60.8) (66.2)Free cash flow 13.2 (5.9) 12.3 66.5 16.6 24.6


Growth (%) Turnover 6.0 5.5 -0.5 -2.9 -1.4 2.8EBITDA -5.6 -1.1 -4.3 -39.6 15.0 27.3Adj EPS -29.91 18.00 11.45 -83.45 27.19 142.85




Bekaert Buy

Belgium Price (20/03/09) €49.60 Market cap €981.3mEngineering & machinery Target price (12 mth) €60.00 Reuters BEKB.BR



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Investment case The economic turmoil will make 2009-10

challenging for Bekaert. Nevertheless, we believe

our 2009-10F EPS estimates mark the trough for the

company. Meanwhile, Bekaert is on a sound

financial footing, with net debt/EBITDA at 1.6x.

Hence, the 6% dividend yield is not at risk (payout

still below 50%). Furthermore, the company has

attractive long-term geographical coverage, with

roughly 60% of sales in emerging markets and 40%

in mature markets (ie, when demand picks up,

Bekaert should be in the right place). Bekaert also

has a strong product mix (worldwide market leader

in resilient niche markets such as steel cord for

radial tyres (75% replacement) and Dramix concrete

reinforcement (mainly used for large infrastructure

projects), which is constantly being improved via

significant R&D expenses (3% of sales). We set a

target price for Bekaert of €60, targeting a mid-

cycle multiple of 10.0x PER on a trough 2010F EPS.

BUY.

Company profile

Overview Bekaert is an international group, headquartered in

Belgium. Core competencies are advanced metal

transformation, advanced materials and coatings. This

unique combination is the company’s key strength.

Bekaert’s basic raw material is wire rod steel wire

about the thickness of a finger, which it converts by

mechanical deformation and heat treatment into wires

that can be as fine as one-50th of the thickness of a

human hair. These wires are then turned into cable

and cord, woven or knitted into cloth, or processed into

ultra-fine filters and fibres, for a wide range of industrial

applications in virtually all sectors of the economy but

mainly in the automotive (31% of sales), infrastructure

(23%) and utilities (16%) sectors.

Key numbers Bekaert recorded 2008 combined sales (ie, sales of

consolidated companies +100% of sales of joint

ventures and associates after intercompany

elimination) of €4.0bn and a net result of €174.1m. The

company employs c.23,000 people and is organised

into three business segments: advanced wire products

(98.5% of REBIT); advanced materials; and advanced

coatings.

Geographical breakdown of combined sales

(2008) Latin America 38%, Europe 27%, Asia 19%, US 15%,

ROW 1%.

Financials

Yr to Dec (€m) 2007 2008 2009F 2010F 2011F

Income statement

Turnover 2,174.0 2,663.0 2,451.6 2,402.6 2,498.7EBITDA 306.0 461.2 333.9 330.2 362.4EBITA 186.3 294.2 183.9 180.2 212.4Operating exceptionals 0.0 0.0 0.0 0.0 0.0Net financial charges (41.0) (49.2) (49.0) (48.9) (47.1)Pre-tax profit 180.7 217.3 153.0 148.8 187.2Taxes (19.1) (25.5) (30.3) (30.9) (41.3)Net profit 152.9 174.1 108.0 104.0 128.7Adj net attributable profit 151.0 228.2 123.0 119.0 143.7

Balance sheet

Working capital 511.6 645.7 604.7 581.0 603.5Goodwill 70.1 59.1 59.1 59.1 59.1Tangible fixed assets 917.6 1,070.7 1,120.7 1,120.7 1,120.7Other intangible assets 51.9 52.3 52.3 52.3 52.3L/T investments 295.9 226.6 226.6 226.6 226.6Net debt 497.5 656.5 610.9 539.3 491.2L/T non-int-bearing liabs 203.0 225.6 225.6 225.6 225.6Minority interests (equity) 48.4 41.8 41.8 41.8 41.8Shareholders’ equity 1,098.2 1,130.6 1,185.2 1,233.0 1,302.6

Cash flow

Op cash flow (pre-tax) 248.4 327.2 374.8 353.9 339.9Cash taxes (19.1) (25.5) (30.3) (30.9) (41.3)Op cash flow (after-tax) 229.3 301.6 344.5 323.1 298.6Net financial charges (CF) (41.0) (49.2) (49.0) (48.9) (47.1)Net capex (210.3) (295.2) (200.0) (150.0) (150.0)Free cash flow (22.0) (42.8) 95.5 124.2 101.5

Ratios (%)


Growth (%)

Turnover 22.5 -7.9 -2.0 4.0EBITDA 50.7 -27.6 -1.1 9.8Adj EPS 53.68 -46.10 -3.24 20.75

Per share data (€)


Valuation



Belgacom SA Buy

Belgium Price (20/03/09) €22.54 Market cap €7,213.1mTelecommunication services Target price (12 mth) €32.50 Reuters BCOM.BR

Bertrand Kuentzler Brussels (32 2) 547 8210 [email protected]


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Investment case Belgacom is one of the most defensive plays in the

European telecoms sector, operating in a stable

market while showing an underleveraged balance

sheet. We expect the 9.7% dividend yield to support

the stock over the next few months and believe the

company should be able to offer stable cash

returns in the coming years. Belgacom is still

suffering from unfavourable regulation on mobile

termination rates, which may ease in the next few

months. The competitive dynamics of the Belgian

telecoms market are benign (two wireline players,

three mobile players) and offer good visibility in

times of high uncertainty.

Company profile Belgacom is the Belgian incumbent telecom operator,

providing a broad range of services to both residential

and business customers in the domestic market and

abroad. Its 17,400 workforce contributed to generate

€6bn in revenue in 2008.

In 2006, Belgacom announced that it would restructure

internally to respond better to customer requirements

and reflect its fully integrated profile by pursuing a

strategy of convergence. This led to five divisions: two

customer-oriented entities (consumer and enterprise);

a network and IT entity; one entity for support services;

and an ICS division. The group has recently completed

this transformation and modified its reporting format

accordingly. Belgacom operates in Belgium through

the Belgacom, Proximus, Telindus and Skynet brands,

and its activities are currently divided into five

divisions:

Consumer business unit (CBU) The Consumer business unit branch accounted for

36% of Belgacom’s revenues (55% of segment results)

in 2008. CBU markets voice products and services,

internet and television, on both fixed and mobile

networks, for residential clients.

Enterprise business unit (EBU) Belgacom’s EBU division accounted for 43% of

revenues (64% of segment results) in 2008. EBU

meets the ICT needs of professional clients, be they

independent workers, smaller firms or major

companies.

Service delivery engine (SDE)

SDE accounted for 7% of revenues (-3% of segment

results) in 2008. SDE centralises all network and IT

services costs.

Staff & support (S&S) Staff & support accounted for 1% of revenues (-18% of

segment results) in 2008. S&S includes all support

functions and services including real estate.

International carrier services (ICS) The ICS division accounted for 13% of revenues (3%

of segment results) in 2008. Belgacom owns 72% of

ICS, while Swisscom owns the remainder.

Financials

Yr to Dec (€m) 2007 2008F 2009F 2010F 2011F

Income statement

Turnover 6,065.0 5,920.2 5,954.5 5,978.1 6,025.7EBITDA 2,032.0 1,979.6 1,955.2 1,955.3 1,939.8EBITA 1,258.6 1,220.8 1,201.8 1,155.0 1,167.6Operating exceptionals 0.0 0.0 0.0 0.0 0.0Net financial charges 1.0 (89.9) (97.3) (92.2) (82.7)Pre-tax profit 1,259.6 1,130.9 1,104.6 1,062.9 1,084.9Taxes (300.0) (270.6) (277.5) (275.0) (289.1)Net profit 959.6 860.4 827.1 787.8 795.7Adj net attributable profit 959.6 860.4 827.1 787.8 795.7

Balance sheet

Working capital (273.0) (146.5) (160.3) (172.3) (189.4)Goodwill 1,777.0 2,087.5 2,087.5 2,087.5 2,087.5Tangible fixed assets 2,471.0 2,460.7 2,417.6 2,332.5 2,251.0Other intangible assets 482.0 558.4 571.7 481.1 518.5L/T investments 343.0 319.0 279.0 239.0 199.0Net debt 1,178.4 1,898.4 1,729.0 1,413.7 1,190.9L/T non-int-bearing liabs 1,095.0 1,006.8 926.8 846.8 774.9Minority interests (equity) 6.0 5.0 5.0 5.0 5.0Shareholders’ equity 2,519.0 2,367.2 2,533.1 2,694.5 2,888.2

Cash flow

Op cash flow (pre-tax) 1,894.0 1,764.9 1,889.0 1,887.2 1,884.9Cash taxes (300.0) (270.6) (277.5) (275.0) (289.1)Op cash flow (after-tax) 1,594.0 1,494.3 1,611.5 1,612.2 1,595.8Net financial charges (CF) 1.0 (89.9) (97.3) (92.2) (82.7)Net capex (370.4) (1,115.3) (732.5) (624.5) (728.2)Free cash flow 1,224.6 289.2 781.8 895.5 784.8

Ratios (%)


Growth (%)

Turnover -2.4 0.6 0.4 0.8EBITDA -2.6 -1.2 0.0 -0.8Adj EPS -6.77 -3.51 -4.75 1.00



Valuation



Beter Bed Hold

Netherlands Price (20/03/09) €7.30 Market cap €156.0mGeneral retailers Target price (12 mth) €8.00 Reuters BETR.AS

Raoul Huysmans Amsterdam (31 20) 563 8760 [email protected]


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Investment case The recession will continue to strain discretionary

consumer spending, therefore fundamentals for

Beter Bed are weak and don’t appear to be turning

the corner any time soon. However, we believe

Beter Bed is much better prepared to navigate the

current crisis thanks to its market leadership

position, sound financial position and benign

outlook for operating costs. Beter Bed is well

managed, focused on operational performance and

will not rest on its laurels during these trying times.

We believe Beter Bed to be attractively positioned

once the economy eventually starts to recover. On

our target price of €8.0 the limited upside indicates

a HOLD.

Company profile Beter Bed is active in the European bedroom furniture

market with market-leading positions in Germany and

the Netherlands.

Business activities The company’s retail operation comprises 1,036 stores

across a number of chains: Beter Bed (active in the

Netherlands with 84 stores); Matratzen Concord (in the

Netherlands, Germany, Austria and Switzerland with

827 stores); and Beddenreus (in the Netherlands with

33 stores). In addition, the company has 50 stores in

Spain. Beter Bed is also active in the wholesale market

for branded products in the bedroom sector in the

Netherlands and Germany. Its strategy is based on

growth through international expansion, like-for-like

growth, branding and acquisitions.

Objectives

Beter Bed’s objectives are to improve net profit under

current adverse market conditions and position the

company to benefit from a market recovery. Its policy

is based on: (1) increasing sales through promotions

and new products; (2) improving gross margins; (3)

reducing costs per store; and (4) maintaining profitable

expansion. In terms of profitability, the target is an

EBIT margin of 12.5% within the next few years, but

the company states that given current market

conditions this is not a realistic objective; hence it is

likely to be deferred to a long-term target.

Financials

Yr to Dec (€m) 2006 2007 2008 2009F 2010F 2011F


Balance sheet Working capital 7.5 20.8 19.3 20.6 21.6 21.6Goodwill 0.0 0.0 0.0 0.0 0.0 0.0Tangible fixed assets 28.2 33.5 35.8 37.6 39.4 41.2Other intangible assets 0.0 0.0 0.0 0.0 0.0 0.0L/T investments 0.0 0.0 0.5 0.5 0.5 0.5Net debt (8.1) 9.2 12.9 10.6 10.6 8.4L/T non-int-bearing liabs 1.1 0.0 0.0 0.0 0.0 0.0Minority interests (equity) 0.0 0.0 0.0 0.0 0.0 0.0Shareholders' equity 42.7 45.1 42.7 48.1 50.8 54.9

Cash flow Op cash flow (pre-tax) 39.3 31.1 40.0 21.4 25.3 35.5Cash taxes (10.1) (9.3) (8.2) (3.8) (5.0) (7.2)Op cash flow (after-tax) 29.2 21.8 31.8 17.6 20.3 28.3Net financial charges (CF) (0.6) (0.5) (0.9) (0.8) (0.6) (0.6)Net capex (7.7) (10.8) (10.5) (9.0) (9.0) (9.0)Free cash flow 20.9 10.5 20.4 7.8 10.7 18.7






BinckBank Hold

Netherlands Price (20/03/09) €6.34 Market cap €487.4mBanks Target price (12 mth) €6.10 Reuters BINCK.AS



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Share price (3.8)Dividend 4.712m f'cst total return 0.9

Share data



Investment case Binck reported solid 4Q08 results, beating our

expectations. We continue to believe that Binck

remains well positioned for long-term earnings

growth, but near-term sentiment is likely to be

dominated by negative newsflow. Limited upside

from these levels, hence a HOLD rating.

BinckBank is a pioneer in the Dutch online

brokerage market with an impressive track record

with respect to client growth and market share

development. Following the Alex acquisition in late

2007 Binck is the undisputed market leader with an

unparalleled scale advantage. The combined

business activities are all about operating leverage,

which online brokerage is. Furthermore, the

increased scale results in substantial cost savings

and with the Optiver initiative (best execution

platform live 2H09), Sprinters cooperation with ING

and the continued development of its professional

services should boost profits going forward. In a

consolidating sector we view Binck with its solid

balance sheet and strong cost-conscious

management a winner in the longer term.

On our estimates Binck trades at a 2009F adj PER

of 9.9x, in line with the sector. Our DCF derived

target price is €6.1; the limited upside dictates a

HOLD rating.

Company profile BinckBank primarily operates as an internet broker for

retail investors in the Netherlands, Belgium and

France. In 2008, the company realised €149m in

revenues, the bulk of which was generated in the

Netherlands. In late 2007, BinckBank acquired the

market leader in online brokerage in the Netherlands,

Alex, for a cash consideration of €390m, adding

100,000 brokerage accounts to its operations.

BinckBank is currently the market leader in the

Netherlands with a c.27% market share (based on total

retail investors), driven by compelling products,

supported by a state-of-the-art website and competitive

commission rates. BinckBank’s operations are split into

two business units.

Retail (2008: 89% of sales, 84% of PBT)

Within the retail business unit, BinckBank operates as

an internet broker for private investors, via a website

through which clients can invest in all the major stock

exchanges. At the end of 2008, retail comprised

284,709 accounts (2007: 206,933), of which 259,358

(2007: 193,376) were in the Netherlands, 22,269 were

in the Belgian market (2007: 13,557) and 3,082 were in

the French market.

Professional services (2008: 11% of sales, 16%

of PBT) This unit provides banking and securities order

execution services for professional clients (ie,

independent asset managers and stockbrokers). The

division now also focuses on the complete outsourcing

of securities-related processes of small banks. At the

end of 2008, professional services had 8,527 clients

(2007: 7,390).

Financials

Yr to 2006 2007 2008 2009F 2010F 2011F

Income statement (€m) Net interest income 10.8 17.9 40.6 36.1 38.8 40.8Net fees and commissions 35.8 46.0 101.2 82.7 94.4 105.0Trading profit 0.0 0.0 0.0 0.0 0.0 0.0Insurance profit 0.0 0.0 0.0 0.0 0.0 0.0Other operating income 9.1 5.8 7.4 7.5 7.5 7.5Total income 55.6 69.7 149.2 126.3 140.6 153.4% of average total assets 9.9 4.1 5.6 4.8 4.9 4.9Total operating costs (26.7) (33.3) (107.5) (103.3) (106.6) (112.1)% of average total assets 4.8 2.0 4.0 3.9 3.7 3.6% of total income 47.9 47.8 72.1 81.9 75.8 73.1Net operating income 29.0 36.4 41.7 22.9 34.0 41.2Provisions 0.0 0.0 (0.2) (1.1) (0.5) (0.5)Operating profit 29.0 36.4 41.5 21.8 33.5 40.7Associates 0.0 0.1 0.5 (0.5) 0.0 0.5Capital gains, etc 0.0 0.0 0.0 0.0 0.0 0.0Pre-tax profit 29.0 36.5 42.0 21.3 33.5 41.2Tax (5.1) (4.8) (8.9) (5.4) (8.5) (10.5)% tax rate 17.7 13.1 21.3 25.5 25.5 25.5Minorities 0.0 0.0 0.0 0.0 0.0 0.0Extraordinary & other items 0.0 0.0 0.1 0.0 0.0 0.0Earnings 23.9 31.7 33.1 15.9 25.0 30.7Amortisation of goodwill 0.0 0.0 31.0 31.0 31.0 31.0Net inc after amort of gw 23.9 31.7 64.1 46.9 55.9 61.7

Balance sheet (€m) Total assets 620.3 2,756.4 2,578.4 2,736.2 2,987.5 3,261.7Customer loans 212.4 497.8 227.7 279.6 319.2 359.0% of total assets 34.2 18.1 8.8 10.2 10.7 11.0Other int-earning assets 211.1 1,399.5 1,668.8 1,782.3 1,903.7 2,033.6Customer deposits 383.4 1,772.8 1,747.7 1,922.6 2,194.6 2,468.4% of total assets 61.8 64.3 67.8 70.3 73.5 75.7Other int-bearing liabilities 165.1 516.4 352.9 352.9 352.9 352.9Shareholders' funds 71.3 466.8 477.6 460.6 439.8 440.2

Per share data (€) EPS reported 0.79 1.04 0.43 0.21 0.32 0.40Adj EPS 0.79 1.04 0.83 0.61 0.73 0.80Adj EPS including SB 0.79 1.04 0.84 0.64 0.80 0.88DPS 0.4 0.5 0.4 0.3 0.4 0.4BVPS 2.3 14.2 6.2 6.0 5.7 5.7Adj PER 8.0 6.1 7.6 9.9 8.6 7.9

Solvency and profitability ratios (%) Tier 1 BIS ratio 24.6 8.0 17.2 19.0 17.0 27.2Total BIS ratio 24.6 8.0 17.2 19.0 17.0 27.2RWA 255 651 450 495 569 580Adj ROE 33.5 6.8 13.4 10.5 13.0 14.7ROE 33.5 6.8 6.9 3.4 5.7 7.0


Boskalis Sell

Netherlands Price (20/03/09) €13.89 Market cap €1,191.3mConstruction & building materials Target price (12 mth) €10.00 Reuters BOSN.AS



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Investment case Coming out of a super cycle, dredging experienced

an unprecedented boom in demand driven by

multiple growth drivers. Boskalis now faces a

tough period. As the credit crisis has hit the

dredging market since late 2008, the industry faces

more challenging market conditions than in the

past three years. Some of Boskalis’ competitors

that are heavily exposed to the Middle East (ME) are

being confronted by significant project halts and

delays. Although Boskalis’ exposure to the ME is

limited (35% of sales), the fact that peers’ vessels

are being freed up in the ME could have a negative

impact on pricing going forward. The industry’s

order book remains at very high levels but, as

tender activity diminishes, we expect demand to be

insufficient to keep margins at the exceptional high

levels seen in 2007-08. There is also the constant

threat that existing projects could be stopped,

which will weigh on industry sentiment. On top of

this, we expect all dredging firms to remain

committed to their long-term fleet expansion

programmes, as this is a vital part of their

strategies. We estimate a trough EBIT margin (ex-

Smit income) in 2010F of 7.6%, well above the 5%

margin reported in the last downturn (2004), setting

us c.32% below IBES. Based on the potential

downside in our estimates, we regard valuation

levels as demanding. Trading at a 2010F

EV/EBITDA of 5.5x and PER of 9.1x, we rate the

stock a SELL.

Company profile

Overview Royal Boskalis Westminster is an international

dredging company active in more than 50 countries

across five continents. Its core activities include the

construction and maintenance of harbours and

waterways, the creation of land in water, and coastal

defence and riverbank protection. It also operates in

numerous home markets in a range of related

activities.

Boskalis generated sales of €2.1bn in 2008 and

reported net profit of €249m. In the past couple of

years Boskalis has benefited from several long-term

growth drivers such as increasing: (1) sea trade; (2)

world population; (3) tourism; and (4) the boom in

global energy markets. Together these developments

supported an unprecedented strong demand for

harbour extensions, the deepening of waterways, land

reclamation, beach replenishment and coastal defence

projects. Though the credit crisis has slowed

investments worldwide, the first signs of weakness in

dredging emerged in late 2008. In particular, the

construction boom in the Middle East started to show

cracks and many building projects – among them

some of the largest dredging contracts in the world –

were delayed or halted. In 2008 Boskalis derived 35%

of sales from the ME, 12% Netherlands, 8% Americas,

15% Australia & Asia, 10% Africa and 20% from the

rest of Europe.

Financials

Yr to Dec (€m) 2006 2007 2008 2009F 2010F 2011F

Income statement Turnover 1,366.1 1,877.0 2,195.3 1,921.5 1,846.0 1,929.1EBITDA 236.8 348.1 454.6 313.5 269.0 305.8EBITA 150.3 245.5 339.1 191.5 141.0 176.8Operating exceptionals 0.0 0.0 5.6 0.0 0.0 0.0Net financial charges (0.7) (2.6) 0.5 (1.0) (2.5) (3.3)Pre-tax profit 152.4 250.4 311.0 214.2 158.2 195.7Taxes (35.3) (43.3) (60.9) (44.4) (33.2) (41.3)Net profit 116.6 204.4 249.1 169.7 125.0 154.4Adj net attributable profit 116.6 204.4 249.1 169.7 125.0 154.4

Balance sheet Working capital (168.1) (289.7) (323.0) (311.3) (296.3) (299.0)Goodwill 0.0 3.5 19.4 19.4 19.4 19.4Tangible fixed assets 721.9 857.4 979.4 1,116.7 1,243.9 1,394.2Other intangible assets 0.0 0.0 0.0 0.0 0.0 0.0L/T investments 22.9 17.6 233.5 233.5 233.5 233.5Net debt (103.3) (215.6) (108.4) (94.3) (164.5) (219.4)L/T non-int-bearing liabs 55.4 27.6 150.0 150.0 150.0 150.0Minority interests (equity) 6.0 8.7 7.6 7.6 7.6 7.6Shareholders' equity 618.6 768.1 860.1 945.0 1,007.5 1,084.7

Cash flow Op cash flow (pre-tax) 207.8 441.9 610.3 301.8 254.0 308.5Cash taxes (35.3) (43.3) (60.9) (44.4) (33.2) (41.3)Op cash flow (after-tax) 172.5 398.5 549.4 257.4 220.7 267.2Net financial charges (CF) (0.7) (2.6) 0.5 (1.0) (2.5) (3.3)Net capex (127.0) (222.4) (255.4) (240.8) (215.8) (240.8)Free cash flow 44.9 173.5 294.6 15.6 2.5 23.2

Ratios (%) EBITDA margin 17.3 18.5 20.7 16.3 14.6 15.9EBITA margin 11.0 13.1 15.4 10.0 7.6 9.2Net margin 8.6 11.0 11.4 8.8 6.8 8.0ROE 20.1 29.5 30.6 18.8 12.8 14.8Net debt/equity -16.5 -27.8 -12.5 -9.9 -16.2 -20.1

Growth (%) Turnover 17.4 37.4 17.0 -12.5 -3.9 4.5EBITDA 45.8 47.0 30.6 -31.0 -14.2 13.7Adj EPS 85.05 75.24 21.88 -31.87 -26.34 23.54




Brunel International Hold

Netherlands Price (20/03/09) €7.59 Market cap €172.6mSupport services Target price (12 mth) €7.50 Reuters BRUN.AS

Marc Zwartsenburg, CEFA Amsterdam (31 20) 563 8721 [email protected]


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Investment case We have a HOLD rating and €7.5 target price, based

on a cash-adjusted target PER of 7.0x. Longer-term,

Brunel seems an attractive investment, but despite

recent strong performance we believe short-term

visibility is very low and we believe the upside and

downside risks are balanced for now. On the

downside we see risks in Germany, fall-out of

projects in Energy and margin risk when demand

falls due to Brunel’s strategy to hold on to its

salesforce in anticipation of a market recovery. On

the upside we might be too prudent on margins in

Energy and too harsh on margin decline in

Germany, while we could be underestimating the

speed of downsizing and cost-cutting needed to

protect margins. Longer-term and, in the case of a

market turn, Brunel seems a clear winner, as it is

strongly positioned to take market share, in our

view. However, at present, we consider the risks to

be too great.

Company profile

History

Brunel was founded in 1975. The company is a 100%

specialist staffing company, specialising in

engineering, ICT, finance, legal, insurance and

banking. Brunel is active in the Netherlands, Germany,

Belgium, Canada and worldwide in the energy sector.

The free float is currently 39%, while founder, Mr Jan

Brand, owns 61%.

Brunel Netherlands

The Netherlands represents 22% of revenues with

c.50% from engineering, 20% from ICT, c.20% from

legal and finance and 10% from, among others,

insurance and banking.

Brunel Germany

In Germany, Brunel has 33 branches and generates

19% of sales, and is completely focused on the

engineering segment.

Brunel energy This division represents 55% of revenues and provides

temporary workers on a project base to companies

active in the exploration of oil and gas (the oil majors

like Exxon Mobile). Brunel is the No.1 player worldwide

and has a presence in, among others, Asia, Canada,

Western Africa, Australia, Europe, Moscow, and

Kazakhstan.

Other activities Other activities comprises of Canada, where Brunel

focuses on various specialities, of which the

automotive sector is the most important.

Financials

Yr to Dec (€m) 2006 2007 2008 2009F 2010F 2011F

Income statement Turnover 499.1 579.9 714.2 683.2 649.1 694.4EBITDA 38.3 54.4 65.3 33.4 29.1 46.8EBITA 35.3 51.2 62.1 29.8 25.5 43.2Operating exceptionals 0.0 0.0 0.0 0.0 0.0 0.0Net financial charges 0.1 0.0 0.3 0.5 0.7 0.8Pre-tax profit 35.3 51.3 62.4 30.3 26.2 44.0Taxes (11.1) (14.4) (16.9) (8.8) (7.6) (12.8)Net profit 26.3 36.1 44.8 21.0 18.2 30.6Adj net attributable profit 26.3 36.1 44.8 21.0 18.2 30.6

Balance sheet Working capital 75.9 80.6 106.3 106.7 98.7 106.7Goodwill 4.2 4.0 4.0 4.0 4.0 4.0Tangible fixed assets 7.7 8.5 7.6 9.0 10.4 11.8Other intangible assets 0.0 0.0 2.1 0.0 0.0 0.0L/T investments 2.5 3.9 5.1 5.1 5.1 5.1Net debt (25.1) (39.7) (40.3) (43.0) (49.5) (52.5)L/T non-int-bearing liabs 2.5 2.2 2.5 2.5 2.5 2.5Minority interests (equity) 0.4 0.6 1.1 0.0 0.0 0.0Shareholders' equity 113.6 135.4 163.8 165.4 165.3 177.7

Cash flow Op cash flow (pre-tax) 19.2 49.9 36.1 33.0 37.1 38.8Cash taxes (11.1) (14.4) (16.6) (8.6) (7.4) (12.5)Op cash flow (after-tax) 8.1 35.5 19.5 24.3 29.7 26.3Net financial charges (CF) 0.1 0.0 0.3 0.5 0.7 0.8Net capex (4.5) (4.3) (4.0) (5.0) (5.0) (5.0)Free cash flow 3.6 31.2 15.8 19.8 25.4 22.1






CFE Hold

Belgium Price (20/03/09) €17.60 Market cap €230.4mConstruction & building materials Target price (12 mth) €23.00 Reuters CFEB.BR



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Investment case CFE’s activities break down into two very different

businesses: (1) dredging, via its 50% stake in

DEME, experienced a super cycle in the past three

years, but now faces a market in which some of its

key competitors are being hit by project halts in the

Middle East. Capacity is rapidly becoming more

widely available, which we expect will put pressure

on pricing; (2) construction activities, which has

been hit by the credit crisis on the development

side, has a defensive character as CFE has

managed to win many large concession-related

civil engineering contracts in the Benelux (under

the wing of construction giant Vinci). We expect

many of these contracts to start in 2009. This

should offset lower demand in the housing and

commercial business. Given the difference in

profitability between the two activities, dredging is

dominant in CFE’s valuation. CFE has a sound

financial position, but we expect the valuation to

reflect the economic downturn. Our target price

suggests target 2009-10F EV/EBITDA of 3.5x for

dredging and 2.0x for construction activities. We

rate CFE a HOLD.

Company profile

Overview

CFE is focused on the construction industry in the

Benelux and CEE. CFE also owns a 50% stake in

DEME, a leading dredging company headquartered in

Belgium. DEME is jointly controlled by Ackermans &

van Haaren, a Belgian listed investment company. The

stake is proportionally accounted in CFE's P&L.

Construction (57% of sales, 26% of EBIT) Although turnover of the construction business

amounted to €974m in 2008, representing 57% of the

group, its relatively low margins mean that it accounted

for just 26% of group EBIT. In the construction activity,

we include CFE's traditional construction businesses

(82% of divisional sales) in Benelux and CEE,

technical services (14%), and property development

(4%). Concession, though still in its infancy, represents

1% of sales. In terms of geographical split of sales for

traditional construction, the lion’s share is derived from

Belgium 64%, Luxembourg 13%, the Netherlands 8%

and Central & Eastern Europe 15%.

Dredging (43% of sales, 74% of EBIT) Exposure to the dredging business is through the 50%

stake in DEME, which manages a balanced product

portfolio consisting of dredging (73% of sales),

environmental business (14%), oil & gas (4%), and

marine infrastructure (9%). Geographical split of sales:

Western EU 34%, Middle East 22%, Africa 19%,

Americas 7%, Asia & Oceania 7%, India & Pakistan

8% and other 3%.

Financials

Yr to Dec (€m) 2006 2007 2008 2009F 2010F 2011F



Cash flow Op cash flow (pre-tax) 150.3 199.1 140.3 210.4 172.6 184.3Cash taxes (15.7) (21.5) (23.9) (21.7) (17.2) (20.4)Op cash flow (after-tax) 134.6 177.6 116.4 188.7 155.4 163.9Net financial charges (CF) (8.6) (15.2) (17.0) (18.8) (19.2) (18.3)Net capex (130.1) (117.6) (149.3) (102.5) (102.5) (102.5)Free cash flow (4.1) 44.8 (49.9) 67.3 33.6 43.1


Growth (%) Turnover 19.3 26.1 17.8 1.5 -3.0 3.1EBITDA 26.2 38.5 12.0 8.6 -11.4 6.9Adj EPS 57.97 37.77 11.98 -4.42 -24.10 17.48




CMB Hold

Belgium Price (20/03/09) €15.64 Market cap €541.9mTransport Target price (12 mth) €15.00 Reuters CMB.BR



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Investment case CMB’s weak 2008/4Q08 figures revealed some

difficult to understand steps taken in the past,

putting extra pressure on results. These include the

purchase of 20m shares in Fortescue, a client

mining company, and we estimate 0.7m shares in

Fortis. The change of the contract with Fortescue

provides potential upside in Fortescue shares but

an estimated US$100m EBIT contribution is lost.

The coverage of its income also disappointed.

While spot rates have recovered from lows, they

are still at loss-making rates, all contributing to

CMB being more uncertain than normal owing to

the extreme market conditions. Our CMB target

price is now €15, reflecting the lower adjusted NAV.

Although the operations are well managed, the

economic news is too weak to ignore and

unsupportive of CMB’s earnings and dividend.

Company profile

History/profile Until mid-2003, CMB was an independent shipping firm

listed on Euronext, with tanker, dry bulk and LPG/LNG

transport activities. In June 2003, Exmar, representing

the LPG/LNG activities, was spun off from CMB. In

December 2004, Euronav, representing the oil tanker

interests, was also spun off. CMB is now a pure bulk

shipping firm, generating revenues of €526m and net

profit of €243m.

Bocimar (2007: 86% of revenues, 93% of EBIT) Bocimar is relatively large in the market for dry bulk,

operating a large fleet of different types of bulk

carriers: Capesize (13 owned, four under construction

and seven chartered in), Panamax (two, three and

three) and Handymax (three, three and zero) under the

Bocimar flag. Bocimar is active in buying and selling

assets (ships).

Other activities (14%, 7%) Other CMB activities are grouped under CMB Holding.

The largest activity is Hessenatie Logistics, which

owns and operates warehouses in Boom, Kampenhout

and Kortrijk, all in Belgium. CMB Holding also has

financial investments in ship broking firm Clarkson’s

(with an 18.5% interest) and Pacific Basin, an operator

of Handysize vessels, and a 27% stake in AEMG ship

management. Other activities include a 50% stake in

Reslea, a real estate firm with property in Antwerp and

other cities.

Through ACL Aviation, ACL Leasing and ACL Air – all

51/49% joint ventures with Petercam – CMB is active

in the aviation business.

Financials

Yr to Dec (€m) 2006 2007 2008F 2009F 2010F 2011F

Income statement Turnover 478.1 526.3 642.7 464.0 454.8 445.7EBITDA 192.1 304.9 304.1 143.7 133.6 123.7EBITA 159.7 268.8 262.6 101.0 87.9 74.7Operating exceptionals 0.0 0.0 0.0 0.0 0.0 0.0Net financial charges (22.2) (26.2) (58.4) (30.7) (33.8) (37.2)Pre-tax profit 137.5 242.6 204.2 70.2 54.1 37.6Taxes (8.0) 0.7 9.3 (1.0) (1.0) (1.0)Net profit 129.5 243.3 213.5 69.2 53.1 36.6Adj net attributable profit 129.5 243.3 213.5 69.2 53.1 36.6

Balance sheet Working capital (16.4) 147.9 (31.9) (32.1) (23.2) (15.3)Goodwill 0.2 0.2 0.2 0.2 0.2 0.2Tangible fixed assets 639.3 618.4 778.6 960.8 1,065.1 1,166.1Other intangible assets 0.0 0.0 0.0 0.0 0.0 0.0L/T investments 50.6 60.9 60.9 60.9 60.9 60.9Net debt 269.8 259.8 106.8 271.6 373.2 480.3L/T non-int-bearing liabs 32.9 24.4 24.4 24.4 24.4 24.4Minority interests (equity) 0.0 0.0 0.0 0.0 0.0 0.0Shareholders' equity 397.6 543.3 676.6 693.9 705.4 707.3

Cash flow Op cash flow (pre-tax) 171.9 447.4 266.8 106.2 105.0 103.0Cash taxes (0.9) (1.1) 10.3 0.0 0.0 0.0Op cash flow (after-tax) 171.0 446.3 277.1 106.2 105.0 103.0Net financial charges (CF) (22.2) (26.2) (58.4) (30.7) (33.8) (37.2)Net capex (162.6) 20.6 (34.5) (225.0) (150.0) (150.0)Free cash flow (13.8) 440.6 184.2 (149.5) (78.8) (84.2)


Growth (%) Turnover -5.9 10.1 22.1 -27.8 -2.0 -2.0EBITDA -11.1 58.7 -0.3 -52.7 -7.0 -7.4Adj EPS -15.98 87.86 -12.25 -67.36 -23.36 -31.13




CNP (Nationale à Portefeuille) Hold

Belgium Price (20/03/09) €34.29 Market cap €3,847.3mInvestment companies Target price (12 mth) €42.00 Reuters NAT.BR



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Share data

No. of shares (m) 112.2Daily turnover (shares) 304,932Free float (%) 0.3Enterprise value (€m) 11,802Market cap (€m) 3,847.3


Investment case In the past ten years, the total return on CNP has

significantly outperformed the market, both in

terms of share price as well as NAV enhancement.

We largely attribute the latter to the solid

performance of CNP’s oil-related shareholdings,

TOTAL (36% of NAV) and Transcor (10% of NAV),

which benefited from significant increases in oil

prices. In light of the current low oil prices and

economic recession, we favour stronger sector

diversification (hence our HOLD), although we do

highlight that TOTAL is our preferred oil stock

(most defensive financial and operating structure).

The NAV discount stands at 18%, slightly below the

20% long-term average.

Company profile

Overview

Founded in 1906, CNP is one of the top elements of

Albert Frère’s holding cascade. Through a transitive

and majority shareholding in Erbe (with BNP Paribas),

CNP is under majority control of the Frère-Bourgeois

parent holding company, whose capital is owned by

the Frère family. CNP makes a distinction between

direct shareholdings (private and public) and indirect

shareholdings, which it holds through intermittence of

its stake in the Pargesa-GBL holding structure.

Investment focus

With a prudent risk management philosophy, CNP

plays an active role in the strategy of the companies in

which it holds stakes through board representation

CNP’s investment portfolio is heavily weighted towards

the oil sector (Total and Transcor), which is likely to

remain a fundamental trademark of the company. CNP

also actively seeks attractive investments on an

opportunistic matter in a variety of other sectors, while

restricting its investments in Europe in order to

maintain a high degree of availability to its portfolio

companies (1-day trip philosophy).

Financials

Net asset value Mcap listed Stake value

Company % stake shares (€m) (€m) % NAV

Listed assets 2,948.2 62.5

TOTAL 1.9 89,986.4 1,691.3 35.9

Iberdrola 0.7 27,262.6 182.6 3.9

Lafarge 2.6 6,460.6 165.2 3.5

GDF Suez 0.6 57,341.8 368.0 7.8

Suez Environnement 0.9 5,166.3 44.7 0.9

Pernod Ricard 1.0 8,907.1 87.5 1.9

Imerys 10.3 1,746.7 179.3 3.8

Arkema 1.3 745.0 9.7 0.2

M6 7.1 1,539.7 109.3 2.3

Affichage Holding 25.3 190.8 48.3 1.0

Iris 6.1 71.9 4.4 0.1

Eiffage 1.4 3,105.0 43.5 0.9

Groupe Flo 23.4 61.3 14.4 0.3

Unlisted 998.5 21.2

Transcor Astra 80.0 460.4 9.8

Distripar 100.0 61.4 1.3

Belgian Ice Cream 100.0 24.6 0.5

Entremont 63.5 56.0 1.2

Cheval Blanc 40.0 48.1 1.0

Lyparis (Go Voyages) 31.0 35.0 0.7

Trasys 46.0 8.8 0.2

Tikehau 50.0 28.9 0.6

Banca Leonardo 19.6 172.0 3.6

Other assets 103.4 2.2

Company shares 4.5 3,847.3 173.1 3.7

Net debt 594.0 12.6

Net asset value 4,713.8

NAV per share (€) 42.0

Share price discount to NAV (%) 18.4

Forecasts 2008 2009F* 2010F* 2011F*

Operating result 181.3 186.5 199.3 205.6

Net profit (group share) 65.9 186.5 199.3 205.6

Adj. EPS 0.59 1.66 1.78 1.83

Dividend 0.78 0.84 0.89 0.96

Adj. PER (x) 58.4 20.6 19.3 18.7

Yield (%) 2.3 2.4 2.6 2.8

Payout (%) 132.9 50.3 50.3 52.2

*No assumptions made on future investments/divestments or capital gains/losses



Colruyt Hold

Belgium Price (20/03/09) €170.6 Market cap €5,391.0mFood & drug retailers Target price (12 mth) €150.0 Reuters COLR.BR



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Share data

No. of shares (m) 31.6Daily turnover (shares) 93,503Free float (%) 52.6Enterprise value (€m) 4,891.9Market cap (€m) 5,391.0


Investment case Following Colruyt’s last interim results, one might

wonder whether the lower-than-expected growth

figures mark the end of a high growth fairytale. We

do not believe it does. Colruyt should continue to

feel wage inflation pressure in 2H08 (year ending

March 2009), but in the years ahead this should

ease while sales growth should remain impressive.

In the short term, we would classify Colruyt as a

“sleeping beauty”. We believe that the company

will seize any potential weakness in its share price

as an opportunity to carry out further share

buybacks, thus limiting further downside. In 1H08,

the group spent c.€30m on buybacks. At the end of

September 2008, its net cash position amounted to

€350m.

Company profile

Description Colruyt is a state-of-the-art Belgian food retailer with a

unique full-range discount concept. Stores have a ‘no-

frills’ layout, enabling customers to shop quickly and at

the lowest prices, but offer the complete product mix

usually available in supermarkets. Colruyt has

achieved impressive sales growth and profitability over

the past decade, with one of Europe's highest

operating margins and return on capital employed.

Retail activities

Colruyt is the No.2/3 food retailer in Belgium, with a

market share of 21% in 2007 for its flagship Colruyt

banner. This banner consists of 207 stores. Colruyt

also operates 54 OKay, smaller supermarket stores, 5

Bio-Planet and 34 non-food Dreamland stores in

Belgium. Through the acquisition of Ripotot in the mid-

1990s, Colruyt also operates 45 supermarkets in

France.

Wholesale Colruyt has wholesale activities in Belgium and

France, eg, through the Spar network in Belgium and

various regional companies that service foodservice

clients in France.

Financials

Yr to Mar (€m) 2006 2007 2008 2009F 2010F 2011F

Income statement Turnover 4,775.5 5,208.6 5,673.8 6,324.5 6,756.3 7,265.0EBITDA 411.9 465.7 504.0 545.7 592.6 645.5EBITA 332.2 371.4 401.7 431.5 472.6 518.6Operating exceptionals 0.0 0.0 0.0 0.0 0.0 0.0Net financial charges 8.3 12.2 15.3 11.0 14.1 17.2Pre-tax profit 340.5 383.6 417.0 442.5 486.7 535.9Taxes (110.2) (121.0) (128.7) (137.2) (150.9) (166.1)Net profit 230.2 262.5 288.3 305.4 335.9 369.7Adj net attributable profit 230.2 262.5 288.3 305.4 335.9 369.7

Balance sheet Working capital (282.6) (310.3) (328.9) (386.5) (424.0) (464.3)Goodwill 48.8 46.7 64.3 64.1 64.1 64.1Tangible fixed assets 702.0 802.0 936.9 1,037.7 1,143.5 1,143.5Other intangible assets 3.7 6.5 7.0 7.8 7.8 7.8L/T investments 30.7 29.3 65.1 65.9 65.9 65.9Net debt (346.8) (437.1) (331.2) (438.3) (499.1) (577.7)L/T non-int-bearing liabs 78.1 92.0 104.4 105.9 105.9 105.9Minority interests (equity) 0.7 0.8 0.7 0.8 0.7 0.8Shareholders' equity 770.6 918.5 970.5 1,120.6 1,249.7 1,287.9



Growth (%) Turnover 9.3 9.1 8.9 11.5 6.8 7.5EBITDA 12.4 13.1 8.2 8.3 8.6 8.9Adj EPS 12.93 15.79 11.75 7.18 11.76 11.89




Crucell Hold

Netherlands Price (20/03/09) €15.13 Market cap €993.5mPharmaceuticals Target price (12 mth) €15.00 Reuters CRCL.AS

Mark Clark London (44 20) 7767 6358 [email protected]


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Investment case Crucell’s shares continue to trade on hopes of a bid

from sanofi-aventis, which we find unlikely due to

antitrust issues and the fact the company already

has rights to key Crucell pipeline projects. On the

other hand, we see a major chance that

Pfizer/Wyeth could come back to the table within

the next year, therefore our target price reflects a

blend of fundamental and speculative

considerations.

Company profile

Background In February 2006, Dutch-based Crucell acquired a

Swiss vaccine manufacturer, Berna Biotech, for

€364m. In so doing, it was transformed from a platform

technology company, based around its PER.C6 cell-

culture system, into a global vaccines company.

Crucell ranks sixth in the €12.5bn vaccines market,

albeit with a <2% market share. Its revenues split

geographically: Europe 71%; N America 16%; Asia

9%; RoW 3%. Crucell made a maiden pre-tax profit of

€6m in 2008.

Quinvaxem key for now Crucell’s short to medium-term prospects rely heavily

on its paediatric vaccine, Quinvaxem. Rapid adoption

of this vaccine in developing nations led to >50% group

revenue growth in 2007 and 33% growth in 2008. We

forecast Quinvaxem’s sales to peak in 2009 at

c.€167m, due to a bunching of supplies in the final

year of the 2007-09 contract period and to increased

competition thereafter from Indian-based suppliers.

There is doubt regarding the long-term prospects for

Crucell, as its R&D-stage vaccines are mostly early-

stage. Only one key vaccine is in Phase II – an

influenza vaccine (FluCell) – plus one antibody-based

product (for TB). We are more conservative than

Crucell regarding the prospects for the flu vaccine

(peak sales €300m vs Crucell’s US$1.5bn) due to

market over-capacity, competition from other cell-

based vaccines, and cautious comments from its

partner, sanofi pasteur.

Valuation We value Crucell at €11.5/share on fundamentals,

using a risk-adjusted NPV-based SOTP.

Financials

Yr to Dec (€m) 2006 2007 2008 2009F 2010F 2011F

Income statement Turnover 103.9 177.6 226.1 310.5 277.6 294.3EBITDA (42.5) (25.0) 31.3 74.6 75.0 81.3EBITA (56.8) (39.5) 14.7 57.4 57.4 63.2Operating exceptionals (33.5) (0.2) 4.9 0.0 0.0 0.0Net financial charges 1.7 1.4 (2.7) 3.0 4.0 5.0Pre-tax profit (98.1) (49.0) 6.3 49.8 50.8 57.6Taxes 10.6 3.0 8.3 (2.5) (5.1) (8.6)Net profit (87.6) (45.9) 14.6 47.3 45.7 48.9Adj net attributable profit (87.6) (45.9) 14.6 47.3 45.7 48.9

Balance sheet Working capital 88.5 49.9 59.4 23.2 (23.1) (84.3)Goodwill 47.4 44.4 46.1 46.1 46.1 46.1Tangible fixed assets 138.0 145.5 151.2 169.1 176.4 173.3Other intangible assets 113.1 94.0 79.0 67.3 55.7 44.0L/T investments 37.6 37.7 37.7 37.7 37.7 37.7Net debt (157.8) (163.2) (170.9) (248.3) (344.7) (469.6)L/T non-int-bearing liabs 38.7 44.8 29.3 29.3 29.3 29.3Minority interests (equity) 0.0 0.0 0.0 0.0 0.0 0.0Shareholders' equity 497.3 437.2 453.5 500.8 546.5 595.4

Cash flow Op cash flow (pre-tax) (50.1) 27.3 (0.9) 110.9 131.7 153.9Cash taxes 0.1 (1.5) (0.6) 8.3 (2.5) (5.1)Op cash flow (after-tax) (50.0) 25.7 (1.5) 119.2 129.2 148.8Net financial charges (CF) (4.0) (3.5) 1.3 (5.5) (6.5) (7.5)Net capex (20.1) (27.0) (15.8) (35.0) (25.0) (15.0)Free cash flow (74.1) (4.8) (16.1) 78.7 97.7 126.3

Ratios (%) EBITDA margin -40.9 -14.1 13.8 24.0 27.0 27.6EBITA margin -54.7 -22.2 6.5 18.5 20.7 21.5Net margin -84.3 -25.9 6.5 15.3 16.5 16.6ROE -27.6 -9.8 3.3 9.9 8.7 8.6Net debt/equity -31.7 -37.3 -37.7 -49.6 -63.1 -78.9

Growth (%) Turnover 70.9 27.3 37.3 -10.6 6.0EBITDA 138.1 0.6 8.4Adj EPS -292.56 54.01 223.35 -3.43 7.00

Per share data (€) Adj EPS (1.53) (0.71) 0.22 0.72 0.70 0.74Dividend 0.00 0.00 0.00 0.00 0.00 0.00NAV 8.71 6.66 6.91 7.62 8.32 9.07

Valuation EV/turnover (x) 8.0 4.7 3.6 2.4 2.3 1.8EV/EBITDA (x) (19.6) (33.2) 26.3 10.0 8.6 6.4EV/EBIT (x) (13.0) (16.2) 273.0 16.3 14.2 10.2Adj PER (x) 67.9 21.0 21.7 20.3Price/NAV (x) 1.7 2.3 2.2 2.0 1.8 1.7Dividend yield (%) 0.0 0.0 0.0 0.0 0.0 0.0


CSM Hold

Netherlands Price (20/03/09) €8.9 Market cap €576.9mFood producers & processors Target price (12 mth) €9.3 Reuters CSMNc.AS

Marco Gulpers, CFA Amsterdam (31 20) 563 8758 [email protected]


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Investment case We believe CSM’s worries are not over yet.

Although its current valuation discounts a lot of

bad news, we lack the visibility for a short-term

recovery; hence, we expect the shares to be range-

bound near term. CSM trades at a 2009F PER of

7.3x.

CSM needs to manage the mismatch between

declining input costs and declining sales prices.

Recent evidence from General Mills (GIS) does not

bode well for the bakery division in the US as

prices dropped sharply between December and

February for GIS. The 4Q08, the YoY drop in EBIT

was c.30%. In 1Q09, we expect the drop in EBIT to

be at least 20% on tough comparables.

Recent weakening of the US dollar might lower

EPS. We use a €1.30 spot rate in our estimates,

which at current rates might impact EPS by a

further c.2.5%.

Finally, although PURAC only accounts for c.15%

of sales, it will receive a disproportionate amount of

attention, especially because a recovery appears

delayed by at least another quarter. In addition,

1Q09 faces a tough comparable YoY.

Company profile

History CSM was founded in 1919 and has gradually grown

from being a local sugar producer into an international

company in the area of food ingredients and bakery

supplies. It currently consists of three divisions: bakery

supplies Europe, bakery supplies North America and

biochemicals.

Bakery supplies Europe

Bakery supplies Europe comprises c.20 companies

and is operational in 16 European countries. The

division specialises in the development, production and

sale of bakery ingredients and products for

professional bakers and bakers of par-baked products

in Europe. With a market share of 12%, bakery

supplies Europe is considered the European market

leader.

Bakery supplies North America This division operates in the US and Canada and

consists of nine operating companies. It holds second

place in the US market for bakery ingredients and

products. The division markets its own products but

also distributes products from third parties. The sale of

its own products and the distribution of third-party

products contribute about equally to the division’s total

turnover.

Biochemicals Biochemicals operates under the name PURAC and is

the world market leader in lactic acid (biochemically

produced via fermentation) and lactic acid derivatives.

Production takes place at four sites in the Netherlands,

Spain, Brazil and the US. Lactic acid and its

derivatives are used in many different ways in the

manufacture of, for example, pharmaceuticals, food

and cosmetics.

Financials

Yr to Dec (€m) 2006 2007 2008 2009F 2010F 2011F

Income statement Turnover 2,421.4 2,485.6 2,599.3 2,784.3 2,874.2 2,967.9EBITDA 224.1 214.5 209.2 214.2 228.3 241.1EBITA 155.1 148.2 143.6 150.0 164.5 177.4Operating exceptionals 0.0 0.0 0.0 0.0 0.0 0.0Net financial charges (47.6) (19.6) (28.1) (28.5) (28.2) (24.4)Pre-tax profit 74.3 34.3 88.9 104.7 126.6 143.2Taxes (10.5) 15.9 11.6 (31.8) (38.0) (42.7)Net profit 104.7 150.2 100.5 72.9 88.6 100.4Adj net attributable profit 97.0 121.5 73.6 80.1 90.7 102.5

Balance sheet Working capital 375.0 176.6 261.9 267.6 261.9 270.4Goodwill 702.3 771.6 773.7 766.9 760.1 753.3Tangible fixed assets 585.6 519.8 513.4 510.5 509.9 511.5Other intangible assets 84.9 127.3 91.4 91.4 91.4 91.4L/T investments 0.0 0.0 0.0 0.0 0.0 0.0Net debt 592.4 455.9 528.1 500.1 456.3 422.0L/T non-int-bearing liabs 310.6 182.0 171.8 171.8 171.8 171.8Minority interests (equity) 0.0 0.0 0.0 0.0 0.0 0.0Shareholders' equity 844.8 957.4 941.6 964.5 995.2 1,032.8

Cash flow Op cash flow (pre-tax) 169.5 203.8 113.7 208.5 234.1 232.6Cash taxes (15.6) 15.9 11.6 (31.8) (38.0) (42.7)Op cash flow (after-tax) 153.9 219.7 125.3 176.7 196.0 189.8Net financial charges (CF) (45.9) (26.4) (28.1) (28.5) (28.2) (24.4)Net capex (116.5) (116.9) (61.6) (61.3) (63.2) (65.3)Free cash flow (8.5) 76.4 35.6 87.0 104.6 100.1


Growth (%) Turnover 1.2 2.7 4.6 7.1 3.2 3.3EBITDA 4.9 -4.3 -2.5 2.4 6.6 5.6Adj EPS 65.60 39.71 -38.35 3.74 13.15 13.02




Delhaize Hold

Belgium Price (20/03/09) €47.7 Market cap €4,792.8mFood & drug retailers Target price (12 mth) €48.0 Reuters DELB.BR



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Investment case We rate Delhaize a HOLD given the lack of upside

from the current share price to our €48 target price.

The share has had a solid performance in recent

months, partly driven by the strengthening of the

US dollar and a resilient sales and margin

performance in a tough US market environment.

Looking ahead, we acknowledge the group’s sound

fundamentals, but still see more risks on the

downside than on the upside in terms of sales

growth and margin development on both sides of

the Atlantic. With few short-term catalysts, we

believe a Hold rating is justified.

Company profile

Description Delhaize Group is a Belgium-based food retailer

mainly active in the supermarket format. Its strategy is

to develop strong leadership in local markets with

different banners, but utilising group synergies.

Delhaize America Delhaize America is the No.2 food retailer on the US

East Coast with c.1,600 stores at end-2008. It operates

under six different banners: Food Lion, Bloom, Bottom

Dollar and Harveys in the Mid-Atlantic region,

Hannaford in New England and Sweetbay in Florida.

Delhaize America is one of the most profitable food

retailers in the US in terms of EBITDA margin thanks

to excellent marketing strategies coupled with a low

cost culture. In 2008, Delhaize America contributed

69% to group sales and 79% to group EBIT.

Delhaize Belgium Delhaize ranks No.2/3 in Belgium with 775 stores and

c.25.1% market share. Competitors include Carrefour

(No.1) and Colruyt (No.2/3). In 2008, Belgium

contributed 23% and 19% to group sales and EBIT,

respectively.

Rest of Europe and Asia

Delhaize has 200 stores in Greece (AlfaBeta, No.2

behind Carrefour), 40 stores in Romania and 63 stores

in Indonesia (a JV). Greece contributed sales of

€1.3bn in 2008, or 7% of group turnover. Operations in

Romania and Indonesia are still small. Delhaize has

pulled out of the Czech Rep, Singapore and Thailand.

Financials

Yr to Dec (€m) 2006 2007 2008 2009F 2010F 2011F

Income statement Turnover 19,225 18,957 19,024 21,220 22,121 23,252EBITDA 1,442.3 1,412.9 1,378.0 1,520.6 1,590.1 1,705.3EBITA 946.3 937.2 904.1 1,023.6 1,070.9 1,158.2Operating exceptionals 0.0 0.0 0.0 0.0 0.0 0.0Net financial charges (275.7) (332.7) (201.9) (215.9) (197.9) (158.9)Pre-tax profit 670.6 604.5 702.2 807.7 873.0 999.3Taxes (245.0) (203.7) (216.8) (286.7) (309.9) (354.8)Net profit 351.9 410.1 467.1 506.3 546.8 626.3Adj net attributable profit 417.2 386.4 473.2 506.3 546.8 626.3

Balance sheet Working capital (12.9) (83.2) 19.3 28.5 11.1 (7.8)Goodwill 2,697.6 2,445.7 2,607.0 2,607.0 2,607.0 2,607.0Tangible fixed assets 3,400.0 3,383.1 3,831.2 3,950.5 4,069.0 4,245.9Other intangible assets 604.6 552.1 597.4 597.4 597.4 597.4L/T investments 170.6 244.0 260.9 260.9 260.9 260.9Net debt 2,784.9 2,448.1 2,611.3 2,229.4 1,839.6 1,438.5L/T non-int-bearing liabs 513.6 417.6 509.4 509.4 509.4 509.4Minority interests (equity) 36.2 48.7 51.6 60.4 70.2 81.1Shareholders' equity 3,525.2 3,627.3 4,143.5 4,645.1 5,126.3 5,674.4

Cash flow Op cash flow (pre-tax) 1,469.0 1,432.2 1,279.0 1,574.1 1,619.5 1,735.0Cash taxes (265.2) (223.0) (130.4) (286.7) (309.9) (354.8)Op cash flow (after-tax) 1,203.8 1,209.2 1,148.6 1,287.4 1,309.6 1,380.2Net financial charges (CF) (293.5) (275.9) (185.3) (195.9) (177.9) (137.9)Net capex (699.9) (729.3) (714.0) (616.4) (637.7) (724.0)Free cash flow 210.4 204.0 249.3 475.2 494.0 518.3


Growth (%) Turnover 4.8 -1.4 0.4 11.5 4.2 5.1EBITDA 4.9 -2.0 -2.5 10.4 4.6 7.2Adj EPS 10.16 -9.96 20.33 7.00 7.99 14.56




Dexia Sell

Belgium Price (20/03/09) €2.38 Market cap €4,194.7mBanks Target price (12 mth) €1.50 Reuters DEXI.BR



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Investment case We see no easy cure for Dexia’s structural

problems and lack of visibility keeps us cautious.

Measures taken so far have not resulted in any

meaningful improvement to liquidity. Management

is working hard to address the structural problems,

namely, long-term public finance commitments and

bond and credit spread portfolios that are short-

term and wholesale funded. De-risking and

downsizing in the current environment is no easy

task and if Dexia fails to return to a business model

with acceptable leverage and funding needs

(without government guarantees), drastic measures

such as a break-up or nationalisation cannot be

ruled out, in our view. We set our target price in line

with our forecast tangible equity per share of €1.5

for 2009F (2008: €0.9).

Company profile

History

Formed following the October 1996 merger of Crédit

Local de France and Crédit Communal de Belgique,

Dexia is the world leader in local public authority

financing. Major acquisitions since its inception include

Financial Security Assurance (FSA) in 2000 and

Artesia in 2001.

Public/project finance and credit enhancement The group's largest business line, contributing 50% to

2008 pre-crisis-impact net profit. Dexia is in the

process of closing the FSA sale. Total long-term loans

are €270bn and production was €55bn in 2008. About

80% of income is this division is interest related.

Retail financial services

The acquisition of Artesia Banking Corporation placed

Dexia among the three leading banks in Belgium,

offering customers (private sector, professionals, self-

employed and SMEs) a comprehensive product range.

In banking, Dexia has a market share of close to 20%,

while in life insurance it ranks third. The business line

contributed 20% to 2008 pre-crisis-impact net profit.

Total customer deposits are €69bn.

Asset management and investor services On 31 December 2008, Dexia had €79bn of assets

under management. Total assets under administration

are US$1,896bn.

Treasury and financial markets

The TFM division will substantially reduce risk-taking.

The proprietary trading exits are exited and VaR limits

halved on other trading. The main profit drivers of this

business are fixed income and cash & liquidity

management. TFM provides short- and long-term

funding for the group and offers customers of the other

business lines (eg, local authorities, retail clients and

institutional investors) a large range of capital markets

products (eg, fixed income, derivatives forex). It

represented c.25% of pre-crisis profit in 2008.

Financials

Yr to Dec 2006 2007 2008 2009F 2010F 2011F

Income statement (€m) Net interest income 4,545.5 4,673.0 6,244.0 5,778.5 5,830.3 5,819.2Net fees and commissions 1,500.7 1,502.0 1,431.0 1,322.5 1,334.4 1,331.8Trading profit 743.1 557.0 (614.0) 476.6 480.8 479.9Insurance profit 230.9 6.0 64.0 29.8 30.1 30.0Other operating income 194.8 158.0 (3,569.0) (1,650.2) (1,664.9) (1,661.8)Total income 7,215.0 6,896.0 3,556.0 5,957.2 6,010.6 5,999.1% of average total assets 1.3 1.2 0.6 0.9 0.9 0.9Total operating costs (3,613.0) (3,834.0) (4,119.0) (3,606.7) (3,498.3) (3,458.2)% of average total assets 0.7 0.7 0.7 0.6 0.5 0.5% of total income 50.1 55.6 115.8 60.5 58.2 57.6Net operating income 3,602.0 3,062.0 (563.0) 2,350.5 2,512.4 2,541.0Provisions (147.0) (163.4) (3,292.0) (920.3) (813.0) (496.9)Operating profit 3,455.0 2,898.6 (3,855.0) 1,430.2 1,699.4 2,044.1Associates 0.0 0.0 0.0 0.0 0.0 0.0Capital gains, etc 0.0 (6.6) (22.0) 0.0 0.0 0.0Pre-tax profit 3,455.0 2,892.1 (3,877.0) 1,430.2 1,699.4 2,044.1Tax (574.0) (256.9) 629.0 (325.5) (392.1) (483.0)% tax rate 16.6 8.9 16.2 22.8 23.1 23.6Minorities (77.0) (102.7) (76.5) (104.9) (107.5) (115.0)Extraordinary & other items 0.0 0.0 0.0 0.0 0.0 0.0Earnings 2,804.0 2,532.5 (3,324.5) 999.8 1,199.9 1,446.1Amortisation of goodwill 0.0 0.0 0.0 0.0 0.0 0.0Net inc after amort of gw 2,804.0 2,532.5 (3,324.5) 999.8 1,199.9 1,446.1

Balance sheet (€m) Total assets 566,743 604,565 651,006 656,249 662,823 671,477Customer loans 226,502 242,619 368,845 387,287 406,652 426,984% of total assets 40.0 40.1 56.7 59.0 61.4 63.6Other int-earning assets 330,404 351,361 265,218 252,019 239,228 227,550Customer deposits 109,484 126,680 114,728 117,023 122,874 129,017% of total assets 19.3 21.0 17.6 17.8 18.5 19.2Other int-bearing liabilities 424,405 447,225 512,619 455,959 444,905 454,324Shareholders' funds 16,299 14,525 3,916.4 4,916.2 6,116.0 7,562.1

Per share data (€) EPS reported 2.50 2.15 (2.54) 0.55 0.65 0.79EPS pre-crisis impact 2.50 2.15 1.94 0.74 0.79 0.82DPS 0.8 0.9 0.0 0.0 0.0 0.0BVPS 13.2 11.5 2.1 2.7 3.3 4.1TE 11.1 9.8 0.9 1.5 2.1 2.9

Solvency and profitability ratios (%) Tier 1 BIS ratio 9.8 9.1 10.8 11.5 11.7 11.9Tier 2 BIS ratio 3.1 2.7 1.4 1.3 1.3 1.2Total BIS ratio 12.9 11.9 12.2 12.9 12.9 13.1ROE 17.2 17.4 -84.9 20.3 19.6 19.1

Credit quality (€m) Gross NPLs 1,359.0 1,218.0 3,535.0 3,872.9 4,066.5 4,269.8Accumulated provisions 942.0 818.0 2,083.0 2,323.7 2,439.9 2,561.9Coverage ratio (%) 69.3 67.2 58.9 60.0 60.0 60.0Net NPLs 417.0 400.0 1,452.0 1,549.1 1,626.6 1,707.9


D’Ieteren Buy

Belgium Price (20/03/09) €108.60 Market cap €596.2mSupport services Target price (12 mth) €150.00 Reuters IETB.BR



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No. of shares (m) 5.5Daily turnover (shares) 4,091.0Free float (%) 41.3Enterprise value (€m) 3,239.2Market cap (€m) 596.2


Investment case D’Ieteren is as an early cyclical, with turnaround

and value appeal. Belron has proven its resilience

in 2H08 and Avis Europe is bucking the trend

through restructuring. Car Distribution’s pain (we

still expect negative momentum in monthly car

sales) is priced in as we value the activity using

trough earnings and trough multiples. At a 2009F

EV/EBITDA of 4.1x and a 2009F P/BV of 0.6x, the

stock is still at trough multiples. Our €150 SOTP-

based target price values: (1) Avis Europe at its

LSE market value (€4 per D’Ieteren share); (2) the

Car Distribution activity at a 2009F EV/EBITDA of

4.5x, in line with Benelux cyclicals; and (3) Belron

at a 2009F PER of 10x (or €128 per share vs a book

value of the stake of €116 per D’Ieteren share), in

line with Benelux defensive stocks.

Company profile

Description

Founded in Belgium in 1805, D’Ieteren is a family

company focused on services to motorists. The group

manages three automotive-related businesses with

strong brand names: exclusive car distribution in

Belgium of several well known brands; international

short-term car rental (Avis Europe); and automotive

glass replacement (Carglass/Autoglass).

Car distribution (31% of 2008 current pre-tax)

D’Ieteren is the exclusive importer and distributor of

VW, Audi, Seat, Skoda, Bentley, Porsche and

Lamborghini cars in Belgium. It holds a 19.8% share in

a market of 536,000 new vehicles in 2008. D’Ieteren

supplies about 300 independent dealers and operates

17 own dealerships and four Porsche Centres. It also

develops peripheral services for motorists such as

financing, leasing and used-car retailing as well as

operating Yamaha distribution in Belgium.

Avis Europe (12%) D’Ieteren owns a 59.6% stake in Avis Europe, listed on

the LSE. Avis is a leader in the European car rental

market and owns the Budget brand in Europe. Its

customer profile is broken down as follows: Individuals

(56% of 2007 revenues); Corporate (34%); and

Insurance/leasing (10%). Its main geographical

markets are France (22% of 2008 sales), Spain (15%),

Italy (17%), Germany (17%) and the UK (15%).

Belron/Carglass (57%)

In line with its strategy to diversify in automotive-

related services with growth potential, D’Ieteren added

a third pillar at the end of 1999 with the acquisition of a

majority stake in Belron/PGSI for €250m. Belron is a

worldwide specialist in automotive glass repair and

replacement with a large international network and well

known brand names (Carglass and Autoglass). The

stake was increased to 77.4% in 2007. D’Ieteren aims

to consolidate this fragmented market and thus

recently acquired Safelight (2007), the US market

leader, and Diamond Glass (2008), another US player.

Europe represented 58% of group sales in 2008.

Financials

Yr to Dec (€m) 2006 2007 2008 2009F 2010F 2011F

Income statement Turnover 5,335.0 5,967.1 6,146.8 5,850.9 5,732.9 6,038.6EBITDA 760.9 839.9 1,076.1 791.9 788.3 847.0EBITA 307.7 361.7 375.1 342.7 341.7 384.4Operating exceptionals 0.0 0.0 0.0 0.0 0.0 0.0Net financial charges (102.4) (117.3) (129.5) (140.0) (136.0) (132.0)Pre-tax profit 206.0 245.7 246.7 203.8 206.8 253.5Taxes (27.7) (41.0) (46.7) (42.2) (50.5) (61.9)Net profit 106.4 132.5 39.3 135.8 130.6 160.5Adj net attributable profit 142.8 171.1 166.1 135.8 130.6 160.5

Balance sheet Working capital 905.6 951.6 1,165.0 1,058.0 1,068.1 1,125.0Goodwill 644.4 786.6 852.0 852.0 852.0 852.0Tangible fixed assets 1,118.2 1,148.4 1,167.0 1,228.9 1,228.9 1,228.9Other intangible assets 936.3 1,055.3 804.2 804.2 804.2 804.2L/T investments 188.3 171.2 188.9 188.9 188.9 188.9Net debt 1,942.6 2,096.3 2,268.7 2,149.4 2,178.0 2,220.2L/T non-int-bearing liabs 603.1 562.8 522.1 451.2 293.0 134.0Minority interests (equity) 455.3 483.1 446.8 493.5 538.6 594.6Shareholders’ equity 791.8 970.9 939.5 1,037.8 1,132.5 1,250.2

Cash flow Op cash flow (pre-tax) 710.2 755.3 735.9 898.9 778.2 790.0Cash taxes (27.7) (41.0) (46.7) (42.2) (50.5) (61.9)Op cash flow (after-tax) 682.5 714.3 689.2 856.7 727.7 728.1Net financial charges (CF) (102.4) (117.3) (129.5) (140.0) (136.0) (132.0)Net capex (555.0) (1,068.5) (618.7) (581.9) (604.7) (621.5)Free cash flow 25.1 (471.5) (59.0) 134.8 (13.0) (25.4)


Growth (%) Turnover 12.1 11.8 3.0 -4.8 -2.0 5.3EBITDA 10.5 10.4 28.1 -26.4 -0.5 7.4Adj EPS 46.31 19.82 -2.92 -18.25 -3.80 22.90




Draka Hold

Netherlands Price (20/03/09) €5.08 Market cap €206.5mElectronic & electrical equipment Target price (12 mth) €6.00 Reuters DRAK.AS



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Investment case As Draka is enterning a cyclical downturn, the

focus for the coming quarters lies in its defensive

exposure versus cyclical exposure. For instance,

capex budgets from the telecom and energy

sectors are relatively stable while its exposure to

automotive and construction faces a sharp drop in

demand. Draka’s business model is used to

constant cost-alignment efforts hence we believe

the company has an advantage here as it is able to

rapidly implement cost reductions, matching

capacity to market demand. We believe Draka will

survive this downturn, although its relatively large

debt burden will continue to pressure valuation

multiples. Trading at a PER 2009F of 5.0x this

embodies an 11% sector discount, which we

attribute to the balance sheet. HOLD.

Company profile Draka is one of the top ten players in the global cable

market and No.3 in Europe. It has a strong position in

communications cable and holds substantial market

shares in standard and special purpose cables.

Energy & infra (38% of sales, 46% of EBIT) Energy & infrastructure comprises the group’s low-

voltage power, instrumentation and signalling cable

activities. The division develops, produces and sells

the full range of cable products for domestic,

infrastructure and industrial applications. Solutions are

both standard installation and power cable as well as

customer-specific. The portfolio includes MV utility

cables.

Industry & specialty (35% of sales, 40% of EBIT)

Industry & specialty is a diverse group specialising in

the development, manufacture and innovation of

solutions for a worldwide customer base. Its five

divisions – automotive & aviation, cableteq USA,

elevator products, industrial, and wire & cable

assemblies – operate across the globe with wide-

reaching products, services and applications. Its

products are used in airplanes, cruise liners, defence

ships, oil platforms, wind turbines, mines, construction

equipment and elevators, among others.

Communications (27% of sales, 14% of EBIT)

Communications is a global leader in optical-fibre-

technology cabling solutions (telecommunications and

data communications) for a large number of market

segments. Market-focused cable solutions include

innovative applications and project management

services and expertise for broadband and mobile

network infrastructures.

Targets

An average operating margin over the economic cycle

of around 5%, healthy interest coverage

(EBITDA/interest of >4.5x); working capital at 16-18%

of revenues (2008: 14.1%).

Financials

Yr to Dec (€m) 2006 2007 2008 2009F 2010F 2011F

Income statement Turnover 2,529.4 2,816.2 2,706.8 2,499.5 2,460.7 2,542.4EBITDA 112.4 198.2 189.6 150.7 152.1 165.6EBITA 62.8 150.0 138.3 99.7 101.1 113.6Operating exceptionals (32.9) 0.0 (46.7) (5.0) 0.0 0.0Net financial charges (33.9) (45.6) (37.5) (51.0) (50.3) (49.5)Pre-tax profit (0.9) 115.6 61.3 48.4 54.6 68.5Taxes (8.6) (16.7) 14.2 (5.5) (6.0) (9.3)Net profit (11.1) 97.9 60.0 41.6 47.2 57.9Adj net attributable profit (7.4) 96.8 74.0 41.4 46.9 57.5


Cash flow Op cash flow (pre-tax) 346.1 164.6 246.8 182.4 158.4 152.3Cash taxes 0.0 0.0 0.0 0.0 0.0 0.0Op cash flow (after-tax) 346.1 164.6 246.8 182.4 158.4 152.3Net financial charges (CF) 0.0 0.0 0.0 0.0 0.0 0.0Net capex (37.0) (61.9) (47.3) (30.0) (45.0) (56.0)Free cash flow 309.1 102.7 199.5 152.4 113.4 96.3

Ratios (%) EBITDA margin 4.4 7.0 7.0 6.0 6.2 6.5EBITA margin 2.5 5.3 5.1 4.0 4.1 4.5Net margin -0.4 3.5 2.3 1.7 2.0 2.3ROE -3.2 23.1 17.2 8.9 9.4 10.8Net debt/equity 112.3 133.8 107.0 78.6 65.1 56.3

Growth (%) Turnover 34.6 11.3 -3.9 -7.7 -1.6 3.3EBITDA 34.6 76.3 -4.3 -20.5 0.9 8.9Adj EPS N/M N/M -24.43 -50.47 9.02 18.04

Per share data (€) Adj EPS (0.21) 2.72 2.06 1.02 1.11 1.31Dividend 0.37 0.68 0.00 0.00 0.26 0.33NAV 12.00 11.66 12.24 11.86 12.13 12.55

Valuation (x) EV/turnover 0.2 0.2 0.2 0.2 0.2 0.2EV/EBITDA 4.9 3.2 2.9 3.2 2.9 2.6EV/EBIT 9.5 4.3 4.2 5.1 4.6 3.9Adj PER N/M 1.9 2.5 5.0 4.6 3.9Price/NAV 0.4 0.4 0.4 0.4 0.4 0.4Dividend yield (%) 7.3 13.4 0.0 0.0 5.2 6.4


DSM Hold

Netherlands Price (20/03/09) €21.97 Market cap €3,483.5mChemicals Target price (12 mth) €21.00 Reuters DSMN.AS



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Investment case With a large exposure to construction and

automotive in the materials and base chemicals

divisions (>40% of the non-life sciences business),

we see little upside until these end markets turn the

corner. Fertilizer prices coming off the record highs

of 2008 do not help. This weakness is reflected in

estimates but we believe life sciences provides

investors with a safety buoy. Nutrition and pharma

represented some 50% of EBIT in 2008 and we

expect this to grow to nearly 65% in 2009F. The

outlook appears dismal in both performance

materials and polymer intermediates. In this

cluster, automotive & construction represent

c.>40% of sales. Base chemicals is the wild card.

There has been persistent speculation of interest in

the agrobusiness (€578m sales in 2008). In our

view, any deal above €400m for the unit would be a

major positive catalyst for the share price. A mixed

bag, on balance, but with little downside left, in our

view.

Company profile

Overview Following the Accelerating Vision 2010 review, DSM

moved to five clusters (from four) in 1Q08. Innovation

is a core plank in the group’s development strategy,

and it expects to show incremental annual sales (net of

attrition) of €1bn from new products by 2010.

Nutrition (29.1% of 2008 sales)

This cluster consists of DSM’s nutritional products

business (vitamins, carotenoids) and DSM’s food

specialities interests. The company is worldwide

market leader in both vitamins and carotenoids.

Pharma (9.3% 2008 sales) This cluster comprises the pharma products and anti-

infectives groups. The company is a global leader in

the supply of products to the pharma industry, and

estimates that 40% of top-selling medicines include

DSM ingredients. The anti-infectives business has

been under pressure in recent years, primarily

because of increasingly intense competition, and

volatile prices in penicillin and derivatives.

Performance materials (24.7% 2008 sales)

This cluster now comprises three business groups:

DSM resins, DSM engineering plastics, and DSM

Dyneema. Innovative PM products, of which Dyneema

is a good example, are expected be an important

element of the growth strategy.

Polymer intermediates (12.9% 2008 sales) This is essentially the retained portion of the old

Industrial Chemicals cluster, the rest of which was

moved to the Base Chemicals & Materials cluster, as a

prelude to divestment. The main businesses in PI are

caprolactam and acrylonitrile.

Base chemicals & materials (18.6% 2008 sales) This cluster is essentially a holding area for those

businesses which are to be divested in the short term.

It includes some former Industrial Chemicals units:

DSM Melamine; DSM Agro (fertilisers); DSM Energy

and DSM Elastomers.

Financials

Yr to Dec (€m) 2006 2007 2008 2009F 2010F 2011F

Income statement Turnover 8,352.0 8,757.0 9,297.0 8,391.3 8,593.7 8,848.3EBITDA 1,281.0 1,247.0 1,357.0 922.4 1,035.1 1,214.6EBITA 841.0 823.0 903.0 480.2 591.7 759.0Operating exceptionals 0.0 (176.0) (45.0) (45.0) (45.0) (45.0)Net financial charges (81.0) (75.0) (102.0) (110.0) (110.0) (110.0)Pre-tax profit 739.0 570.0 753.0 323.2 435.7 604.0Taxes (181.0) (136.0) (182.0) (90.5) (122.0) (169.1)Net profit 553.0 429.0 577.0 237.7 318.7 439.9Adj net attributable profit 565.0 419.0 567.0 227.7 308.7 429.9

Balance sheet Working capital 1,856.0 1,496.0 1,684.0 1,469.0 1,489.8 1,546.3Goodwill 725.0 724.0 724.0 724.0 724.0 724.0Tangible fixed assets 3,655.0 3,440.0 3,641.0 3,615.0 3,622.8 3,683.4Other intangible assets 283.0 313.0 476.0 476.0 476.0 476.0L/T investments 126.0 146.0 195.0 165.7 (31.9) (246.0)Net debt 921.0 1,338.0 1,781.0 1,510.7 1,341.7 1,244.7L/T non-int-bearing liabs (131.0) (602.0) 244.0 244.0 244.0 244.0Minority interests (equity) 71.0 73.0 62.0 62.0 62.0 62.0Shareholders' equity 5,784.0 5,310.0 4,633.0 4,633.0 4,633.0 4,633.0

Cash flow Op cash flow (pre-tax) 1,002.0 1,033.0 1,177.0 1,157.4 1,141.9 1,135.2Cash taxes 71.0 141.0 0.0 0.0 0.0 0.0Op cash flow (after-tax) 1,073.0 1,174.0 1,177.0 1,157.4 1,141.9 1,135.2Net financial charges (CF) (81.0) (75.0) (102.0) (110.0) (110.0) (110.0)Net capex (452.0) (389.0) (564.0) (450.0) (504.0) (522.0)Free cash flow 540.0 710.0 511.0 597.4 527.9 503.2


Growth (%) Turnover 6.9 4.8 6.2 -9.7 2.4 3.0EBITDA -2.5 -2.7 8.8 -32.0 12.2 17.3Adj EPS 0.27 -21.23 47.11 -59.47 34.74 38.42




Duvel Moortgat Hold

Belgium Price (20/03/09) €33.06 Market cap €176.6mBeverages Target price (12 mth) €34.00 Reuters DUVE.BR



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No. of shares (m) 5.3Daily turnover (shares) 761.0Free float (%) 23.9Enterprise value (€m) 167.2Market cap (€m) 176.6


Investment case Duvel has historically proven to be a very resilient

company in downturns, significantly outperforming

other brewers in terms of sales, on account of the

premium profile of its brand portfolio. In recent

months, management stated that it was not feeling

the effects of the recession and we expect

continuous, albeit more modest, growth in 2009,

driven by Duvel’s excellent export opportunities.

Higher raw material prices weigh on 2008F margins

and we forecast further impact in 2009F given the

longer term-time horizon of some 2008 contracts.

While Duvel’s defensive profile is further supported

by its net cash position, we believe it is reflected in

demanding valuation multiples. We have a HOLD

recommendation.

Company profile

Background Duvel Moortgat is a family-controlled producer of

speciality beers. Sound management and a focus on

high-quality speciality beers have enabled it to

generate margins at the high end of the industry –

above 20% EBIT margins.

About two-thirds of revenues come from Belgium, its

domestic market, where Duvel enjoys an 80% share of

the high-fermentation blonde beers. Duvel Moortgat’s

main export markets are the Netherlands, France, the

UK and the US. Export markets represent only 40% of

revenues, and Duvel’s growth potential outside the

Benelux is substantial. However, margins in export

markets are inferior to domestic levels due to a lack of

critical mass.

Duvel Moortgat’s marketing spend hovers around 15%

of revenues, well below the beer industry average of

25%. This low spend highlights the potential of the

Duvel brand, which generates high organic revenue

growth and margins relative to the industry, with a low

marketing budget. The out-of-home channel

represents around two-thirds of Duvel Moortgat’s

volumes in Belgium. In the food channel (food &

beverage retailers), Duvel Moortgat is present in all

Belgian tier one supermarkets.

Duvel brand (63% of 2007 sales)

The company produces its flagship brew, the Duvel

beer, in its brewery in Puurs, Belgium. Duvel is a high-

fermentation blonde beer with an alcohol content of

8.5°.

Czech specialty beers (6% of 2007 sales)

Duvel Moortgat acquired 50% of Czech brewer

Bernard in 2001. It produces premium lagers. While

Bernard represents 18% of Duvel Moortgat’s volumes,

it generates only 7% of its revenues.

Other specialty beers (31% of 2007 sales)

These brands include, among others: (1) Bel Pils:

luxury lager. (2) Maredsous: two blonde beers and one

dark abbey beer (under licence from Fromagerie et

Brasserie de Maredsous), alcohol content 6°, 8° and

10° and (3) Vedett: luxury lager, targeted at the youth

market.

Geographical breakdown of sales (2007): Belgium: 60%; US: 10% and RoW: 30%

Financials

Yr to Dec (€m) 2005 2006 2007 2008F 2009F 2010F

Income statement Turnover 66.3 75.8 87.5 97.4 101.8 111.1EBITDA 21.9 24.4 26.2 28.4 30.5 34.5EBITA 14.5 16.3 17.5 17.0 18.8 22.5Operating exceptionals 0.0 0.0 0.0 0.0 0.0 0.0Net financial charges 0.2 0.0 (0.3) 0.4 0.0 0.0Pre-tax profit 14.3 15.9 16.8 17.0 18.4 22.1Taxes (5.0) (5.6) (5.4) (5.9) (6.2) (7.4)Net profit 9.3 10.4 11.4 11.1 12.2 14.7Adj net attributable profit 9.7 10.8 11.8 11.5 12.6 15.1


Cash flow Op cash flow (pre-tax) 17.4 22.0 26.9 25.4 29.3 32.8Cash taxes (5.0) (5.6) (5.4) (5.9) (6.2) (7.4)Op cash flow (after-tax) 12.4 16.4 21.5 19.4 23.1 25.4Net financial charges (CF) 0.2 0.0 (0.3) 0.4 0.0 0.0Net capex (10.4) (10.0) (18.0) (15.0) (13.2) (14.4)Free cash flow 2.2 6.4 3.2 4.8 9.9 10.9


Growth (%) Turnover 8.2 14.4 15.3 11.3 4.5 9.2EBITDA 4.2 11.5 7.3 8.5 7.5 12.8Adj EPS -1.03 10.88 9.31 -2.82 10.04 19.22




Emakina Hold

Belgium Price (20/03/09) €7.70 Market cap €26.4mMedia & entertainment Target price (12 mth) €9.00 Reuters ALEMK.BR



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No. of shares (m) 3.4Daily turnover (shares) 30Free float (%) 33.9Enterprise value (€m) 26.9Market cap (€m) 26.4


Investment case Emakina should continue to benefit from the trend

of advertising shifting to new media, even in a

downturn, as advertising spending becomes more

focused. In this context, the gap between the

amount of online advertising expenditure and the

internet’s media timeshare is large, but narrowing.

2007 acquisition costs have weighed on margins,

but going forward, we expect significant operating

leverage as well as sales synergies between the

acquired divisions. While the company has

impressive growth potential, we believe this is

priced in at today’s demanding valuation multiples.

We have a HOLD recommendation with a DCF-

based target price of €9.00.

Company profile Emakina is the second-largest Belgian web agency. A

web agency is similar to a traditional advertising

agency except that the only media it uses to promote

its clients is the internet. The company’s added value

is to offer a combination of e-commerce and e-

marketing services, as it can build both the websites

and the web-based advertising campaigns of its

clients.

Emakina enjoys strong recognition across the industry

in Belgium for both its technical and creative expertise.

In addition and thanks to impressive client loyalty,

Emakina’s business model provides the company with

good visibility on its 12-month forward revenue.

Geographic breakdown of sales (2008F) Belgium: 90%; Europe: 10%

Financials

Yr to Dec (€m) 2005 2006 2007 2008F 2009F 2010F

Income statement Turnover 5.0 8.4 17.4 29.1 35.7 42.8EBITDA 0.6 1.1 1.6 2.2 3.1 4.2EBITA 0.5 0.9 1.2 1.6 2.3 3.4Operating exceptionals 0.0 0.0 0.0 0.0 0.0 0.0Net financial charges (0.2) (0.1) (0.5) (1.0) (1.1) (1.1)Pre-tax profit 0.2 0.8 0.7 0.6 1.3 2.4Taxes (0.2) (0.4) 0.1 (0.2) (0.4) (0.8)Net profit 0.0 0.3 0.7 0.2 0.7 1.4Adj net attributable profit 0.1 0.3 0.7 0.2 0.7 1.4

Balance sheet Working capital 0.7 1.8 3.2 4.2 5.6 6.9Goodwill 0.7 0.6 5.8 5.4 4.9 4.4Tangible fixed assets 0.1 0.2 0.7 1.1 1.6 2.2Other intangible assets 0.1 0.8 1.3 1.3 1.3 1.3L/T investments 0.0 0.0 0.1 0.1 0.1 0.1Net debt 0.5 (5.6) 0.7 0.5 0.1 (1.0)L/T non-int-bearing liabs 0.0 0.0 (0.7) 1.9 3.0 5.2Minority interests (equity) 0.0 0.0 0.3 0.3 0.3 0.0Shareholders' equity 1.1 8.9 9.0 9.3 10.0 11.4

Cash flow Op cash flow (pre-tax) 0.1 0.0 (0.6) 1.2 1.7 2.8Cash taxes (0.2) (0.4) 0.1 (0.2) (0.4) (0.8)Op cash flow (after-tax) (0.1) (0.4) (0.5) 1.0 1.3 2.0Net financial charges (CF) 0.0 0.0 0.0 0.0 0.0 0.0Net capex (0.1) (0.1) (5.8) (0.5) (0.6) (0.7)Free cash flow (0.2) (0.5) (6.3) 0.5 0.7 1.3

Ratios (%) EBITDA margin 11.4 13.0 9.1 7.5 8.5 9.8EBITA margin 9.1 10.2 6.9 5.4 6.5 8.0Net margin -0.2 4.1 4.7 1.4 2.4 3.7ROE -0.8 6.8 7.4 2.1 6.8 13.3Net debt/equity 39.9 -63.0 7.1 4.9 0.8 -8.6

Growth (%) Turnover 24.3 68.4 105.6 67.7 22.6 20.0EBITDA 14.3 91.8 44.0 38.9 39.3 37.2Adj EPS -46.95 160.76 82.00 -70.71 239.16 116.40




Eriks Buy

Netherlands Price (20/03/09) €21.00 Market cap €228.6mDistributors Target price (12 mth) €30.00 Reuters ERKNc.AS



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Investment case Eriks is fundamentally a very sound company. It

has a strong operational track record, a clear

expansion strategy and a management team which

acts upon this strategy. As a distributor to the

wider Western EU industry, the stock naturally

suffers in very weak economic conditions.

Although the business model is not invulnerable to

the economic cycle, history suggests that Eriks is

much less cyclical than one might presume. Eriks

made two relative large acquisitions in the past two

years, Wyko and Econosto, hence its 2008 net

debt/EBITDA ratio of 2.2x (covenant allows <3.5x in

1Q09 and <3.0x afterwards). As many factories were

closed at the end of 2008 and early 2009,

management needs slightly more time to monitor

structural demand in its end-markets before making

a decision on the 2008 dividend. We believe Eriks’

management should be able to guide the business

through this downturn and emerge even stronger

out of it. Note that integration benefits are hidden in

both the Wyko and Econosto organisation. The

stock trades at a 2009F PER of 4.8x, which from a

medium- to long-term perspective is attractive,

BUY.

Company profile

Overview Eriks is a Dutch holding company of a group of

technical distribution companies. In 2008 sales of

€1.1bn and net profit of €52.5m were achieved, with an

average workforce of 5,479. Eriks procures, stores,

processes, sells and distributes a wide range of high-

quality mechanical engineering components and

provides a highly developed range of related technical

and logistics services. Its operations are based on a

broad and deep knowledge of market developments

and product features and has a corresponding modern

infrastructure. Eriks has become a leading, innovative

supplier to defined segments of industry, fulfilling the

twin roles of specialist and total supplier. Eriks supplies

over 90,000 industrial clients, markets over 600,000

products, purchases worldwide from over 1,000

qualified suppliers, and sends c.3m shipments

annually.

Business units

Based on 2008 numbers, Eriks derives c.29% of total

sales from the Netherlands, 30% from the UK, 15%

from Belgium, 15% from Germany, 4% from the Middle

East, 3% from the US, 1% from South-East Asia and

3% from other areas like Spain, France and Poland.

Goals Assuming normal growth in economic activity, Eriks’

financial targets are: (1) Average sales growth of 10-

15%, 5-7% organic (4.7% in 2008) and the remainder

via acquisitions (14.5% in 2008); (2) ROIC of at least

15%; (3) Net debt/EBITDA ratio of <3.0x (2008: 2.2x);

(4) Average rise in EPS of 5-10%.

Financials

Yr to Dec (€m) 2006 2007 2008 2009F 2010F 2011F

Income statement Turnover 543.3 949.1 1,131.5 1,129.7 1,139.4 1,185.0EBITDA 50.4 86.2 103.1 87.6 89.1 92.2EBITA 44.0 76.3 92.1 75.6 76.9 92.2Operating exceptionals 0.5 0.0 (0.8) 0.0 0.0 0.0Net financial charges (3.0) (10.0) (12.9) (13.0) (12.0) (11.0)Pre-tax profit 40.8 61.1 71.8 54.6 57.0 73.4Taxes (12.9) (16.9) (19.1) (14.7) (15.4) (19.8)Net profit 27.8 43.7 52.5 39.8 41.6 53.6Adj net attributable profit 28.5 48.9 59.1 47.8 49.5 61.4


Cash flow Op cash flow (pre-tax) (16.0) 66.1 22.0 87.6 86.7 81.2Cash taxes 1.2 (16.9) (19.1) (14.7) (15.4) (19.8)Op cash flow (after-tax) (14.8) 49.2 2.9 72.8 71.4 61.4Net financial charges (CF) 0.8 (10.0) (12.9) (13.0) (12.0) (11.0)Net capex (0.5) (11.6) (18.0) (13.0) (16.0) (19.0)Free cash flow (14.5) 27.6 (28.0) 46.8 43.4 31.4


Growth (%) Turnover 21.1 74.7 19.2 -0.2 0.9 4.0EBITDA 26.2 71.1 19.6 -15.0 1.7 3.5Adj EPS 25.81 30.21 18.45 -19.78 2.50 22.87




Euronav Buy

Belgium Price (20/03/09) €10.00 Market cap €664.2mTransport Target price (12 mth) €15.00 Reuters EUAV.BR



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No. of shares (m) 50.4Daily turnover (shares) 145,911Free float (%) 43.4Enterprise value (US$m) 1,510.1Market cap (US$m) 664.2


Investment case 2008 ended in line with expectations, but 1Q09

showed a favourable start. Macroeconomic figures

continue to be very weak, but our 2009-10F EPS

estimates are not under pressure on the back of

higher-than-expected rates and especially more

stability in Euronav’s results due to attractive long-

term contracts. Euronav operates three VLCCs for

TOTAL at cost + 50% profit-sharing, while it also

has a fleet of 18 Suezmaxes on 3-5yr contracts and

two very large joint venture VLCC starting services

for Maersk in 2H09. We have a BUY rating and a

target price of €15, 50% of Euronav’s adjusted NAV.

We believe the share price has been punished too

much due to expected GDP effects, while Euronav

shows more resilience. From a supply point of

view, the market is interesting, with the end of

single hulls near.

Company profile

History Euronav was split from CMB at the end of 2004. Since

then, Euronav has expanded rapidly through two large

deals in 2005 for a total of more than US$1bn (around

its own market cap). In 2006, the company optimised

the fleet through a couple of transactions in order to

get a better balance between owning and chartering.

Revenues in 2008 were US$934m and net profit was

US$400m.

Euronav is a world-leading oil tanker company,

operating in FY09 14 VLCCs, 18 Suezmaxes and two

FSOs from mid-2009/beginning 2010 in a joint venture

with OSG. Euronav has orders outstanding for another

two VLCCs and Suezmax-sized vessels. Part of the

fleet is time-chartered for shorter and longer periods.

FSOs, formerly ultra-large VLCCs, have been

contracted for eight years to Maersk after converting to

FSOs. As well as transporting crude and oil products,

Euronav buys and sells ships from time to time. Being

a modern fleet with an average of seven years, all

vessels are double-hulls and comply with the highest

maritime standards. Euronav is a member of the TI

pool, sharing cargoes and being more efficient than

average.

Financials

Yr to Dec (US$m) 2006 2007 2008F 2009F 2010F 2011F


Balance sheet Working capital 23.8 31.2 10.4 0.4 10.4 20.4Goodwill 8.7 0.7 0.7 0.7 0.7 0.7Tangible fixed assets 2,155.8 2,091.2 2,096.4 2,219.4 2,334.8 2,459.8Other intangible assets 0.0 0.0 0.0 0.0 0.0 0.0L/T investments 0.7 0.5 0.5 0.5 0.5 0.5Net debt 1,095.6 977.2 826.8 863.9 959.5 1,045.2L/T non-int-bearing liabs 2.6 2.1 2.1 2.1 2.1 2.1Minority interests (equity) 0.0 0.0 0.0 0.0 0.0 0.0Shareholders' equity 1,022.5 984.5 1,233.6 1,309.5 1,339.3 1,388.6

Cash flow Op cash flow (pre-tax) 445.2 364.1 656.4 382.8 343.5 353.7Cash taxes (1.4) (1.5) (1.3) (1.3) (1.3) (1.3)Op cash flow (after-tax) 443.8 362.7 655.1 381.5 342.2 352.4Net financial charges (CF) (69.2) (87.8) (110.8) (113.9) (103.1) (93.4)Net capex (231.1) (32.0) (150.0) (275.0) (275.0) (275.0)Free cash flow 143.5 242.8 394.4 (7.4) (35.9) (16.0)


Growth (%) Turnover 18.1 -14.8 61.1 -36.2 -10.0 -1.3EBITDA 16.0 -20.4 91.0 -40.1 -12.5 0.1Adj EPS 4.12 -53.48 311.23 -68.45 -36.48 24.30

Per share data (US$) Adj EPS 4.15 1.93 7.94 2.51 1.59 1.98Dividend 1.68 0.80 2.00 1.00 1.00 1.00NAV 19.47 18.82 24.48 25.98 26.57 27.55



EVS Buy

Belgium Price (20/03/09) €24.50 Market cap €333.9mElectronic & electrical equipment Target price (12 mth) €31.00 Reuters EVSB.BR



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Investment case While the order book improvement in February

versus last November suggests that the largest

overcapacity shock from the Beijing Olympics is

behind us, order intake should go up from current

levels as broadcasters prepare for next season’s

sports championships during 2Q09 and the 2010

events having a ramp-up effect in 2H09F. We expect

market share gains in 2009, as EVS launches new

products, while competitors are under heavy

financial and operational pressure. In addition, we

identify solid downside protection with a valuation

floor provided by the limited risk of cuts to the 9%

dividend yield, thanks to a sound balance sheet,

heavy cash generation and management

commitment to shareholder remuneration. BUY.

Company profile

Background Founded in 1994, EVS develops equipment for the

broadcasting industry that enables the digital recording

of video on hard disks. It designs, manufactures and

markets digital equipment and automation software for

radio and television broadcasters. These high-value-

added products, manufactured in small batches,

address niche markets where EVS holds strong market

shares.

TV systems' roots lie in the sports TV business. The

Live Slow Motion (LSM) system revolutionised sports

broadcasting in the early 1990s with its simultaneous

record and replay capability. The technology was

further developed in multi-channels, multi-operators

and networked (XT technology). Used at major

sporting events such as the Fifa World Cup and the

Olympics, it has evolved into a global industry

standard.

Outside Broadcasting (62% of 2008 sales) EVS holds a market share of over 85% in servers for

mobile production in trucks, a niche where the

company generates 60%+ of its revenues.

Studio (38% of 2008 sales)

The opportunity in the studio market is potentially ten

times larger than in OB; EVS is a challenger, with an

estimated market share of 5%. EVS plans to capture

market share by leveraging its OB know-how and

attacking market positions dominated by Avid,

Omneon, Apple and Thomson, not only in the server

segment, but also in applications (editing) and in a

later phase in the play-out (compression server).

Digital cinema XDC (47% affiliate) XDC, 47% owned by EVS (diluted from 60% in July

2006), has a family of high-performance servers aimed

at the digital cinema business. Specific configurations

are available for each step of the process: post-

production, transmission and projection. XDC has

limited its market coverage to Europe. Its plan is based

on the lease of digital cinema equipment.

Geographic breakdown of sales (2008) EMEA: 53%; Americas: 25%; Asia-Pacific: 22%

Financials

Yr to Dec (€m) 2006 2007 2008 2009F 2010F 2011F

Income statement Turnover 85.2 94.7 110.7 83.6 106.5 111.5EBITDA 58.7 64.5 71.8 45.4 64.4 69.0EBITA 56.9 61.9 68.4 41.9 60.7 65.2Operating exceptionals 0.0 0.0 0.0 0.0 0.0 0.0Net financial charges 0.0 0.3 0.8 1.2 1.6 2.0Pre-tax profit 56.9 59.3 66.8 41.1 60.8 66.2Taxes (18.5) (19.8) (21.6) (13.2) (19.1) (20.6)Net profit 38.4 39.5 45.2 27.9 41.7 45.6Adj net attributable profit 38.4 39.5 45.2 27.9 41.7 45.6

Balance sheet Working capital 16.7 12.7 7.4 8.7 12.3 12.8Goodwill 0.0 0.0 0.0 0.0 0.0 0.0Tangible fixed assets 6.5 9.6 11.6 10.7 10.3 9.8Other intangible assets 0.7 0.8 0.7 0.5 0.5 0.5L/T investments 6.2 7.7 6.8 6.8 6.8 6.8Net debt (20.4) (32.7) (42.9) (44.1) (50.5) (62.6)L/T non-int-bearing liabs 0.6 1.7 2.3 (1.8) (0.3) 1.7Minority interests (equity) 0.0 0.0 0.0 0.0 0.0 0.0Shareholders' equity 49.9 62.1 68.0 73.5 81.5 91.8







Exact Holding Hold

Netherlands Price (20/03/09) €15.60 Market cap €360.3mSoftware & computer services Target price (12 mth) €14.60 Reuters EXAH.AS



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Investment case We have a HOLD rating based on Exact’s defensive

characteristics, ie, its relatively stable cash

generation and attractive dividend yield, combined

with a valuation in line with its peers, which seems

fair. However, visibility on organic growth in licence

revenue remains low and the slowdown has not

bottomed yet. In addition, Exact has given no

indication of how trading conditions have been in

recent months. Its internal forecast assumes

similar-to-lower revenues YoY in 2009 and a close

to double-digit decline in licence revenue. This,

combined with cost reductions feeding through

from previous restructuring measures, should

make EBITDA roughly stable in 2009, which stands

out in our Benelux universe. On the downside, if

Exact lowers its current payout ratio of 100% to (for

example) 50%, the proposition becomes a lot less

attractive, in our view, as the total return would

then drop to roughly the 5% dividend yield plus

negligible EPS growth, which approximates to a

savings account but with business risk thrown in.

Company profile

Overview Exact is a Dutch-based, international mid-market ERP

software vendor, which currently has subsidiaries in

more than 40 countries and serves customers in over

125. The company has a stable and profitable installed

base in the Netherlands among SMEs, which it serves

through an indirect channel. Around 50% of sales are

generated by highly recurrent maintenance revenues.

Products Its main products include its major ERP product, Exact

Globe, and E-Synergy, its internet-focused ERP

product, which is in general aimed at larger

organisations. In 1H06, Exact introduced an ASP

version of its product targeted at smaller SMEs in the

Netherlands.

Sales breakdown Through the acquisitions of Macola (2001) and Kewill

(2002), Exact entered the vast US mid-market, which

now represents 23% of sales, and it aims to become

one of the top three vendors for manufacturing

companies. Other regions: NL (41% of sales), EMEA

(26%) and AsiaPac (3%) and Longview (7%), which

Exact acquired in 2007. Longview is a leading provider

of corporate performance management (CPM)

software and is Exact's largest ever acquisition.

Sales split by product type: Licences (29% of sales),

Maintenance (50%), and Services (21%).

Financials

Yr to Dec (€m) 2006 2007 2008 2009F 2010F 2011F

Income statement Turnover 242.1 252.1 261.0 250.3 258.6 268.1EBITDA 52.6 57.0 58.2 57.3 58.5 59.9EBITA 47.8 52.0 53.2 52.1 53.0 54.1Operating exceptionals 0.0 (1.9) 0.0 0.0 0.0 (1.0)Net financial charges 2.2 2.6 0.8 0.5 0.5 0.5Pre-tax profit 48.2 50.5 49.6 48.6 49.5 51.2Taxes (13.7) (13.3) (13.3) (12.1) (12.4) (13.1)Net profit 34.2 36.3 35.9 36.0 36.7 37.8Adj net attributable profit 36.0 38.6 40.3 40.0 40.7 39.2

Balance sheet Working capital (21.9) (26.8) (26.6) (24.1) (24.9) (25.8)Goodwill 60.0 90.2 90.2 90.2 90.2 90.2Tangible fixed assets 16.9 17.9 14.9 14.9 14.9 14.9Other intangible assets 13.0 32.5 25.6 21.6 17.6 14.2L/T investments 5.5 6.1 5.0 5.0 5.0 5.0Net debt (124.0) (67.6) (44.1) (44.8) (50.0) (54.7)L/T non-int-bearing liabs 10.5 17.1 8.9 9.9 10.9 11.9Minority interests (equity) 2.0 2.7 1.5 1.8 2.2 2.6Shareholders' equity 182.8 162.9 137.9 137.9 137.9 137.9



Growth (%) Turnover 7.8 4.1 3.5 -4.1 3.3 3.6EBITDA 13.1 8.5 2.1 -1.6 2.1 2.3Adj EPS 9.64 7.18 6.56 1.39 1.76 -3.88




Exmar Buy

Belgium Price (20/03/09) €6.88 Market cap €311.9mTransport Target price (12 mth) €10.00 Reuters EXMR.BR



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No. of shares (m) 33.4Daily turnover (shares) 2,053.0Free float (%) 42.7Enterprise value (US$m) 1,501.7Market cap (US$m) 311.9


Investment case Exmar’s 2008 earnings were below our estimates

due to the volatile VLGC business. The company

did not guide for 2009, but the outlook is not

encouraging for LPG, suffering from the sharp

economic downturn hitting LPG/ammonia

transports. However, LNG is doing well on the back

of 25-yr contracts and the addition of ships

supports EBIT from LNG. The most interesting of

these is whether Exmar is able to realise its first

sale of its Opti-Ex platform which is being built now

and due to be completed mid-2009. There are four

potential clients for this platform, which is worth

US$300m. We find Exmar an attractive growth

story, valued at a 65% discount to its adjusted NAV

of €20. Our €10 target price is based on a 50%

discount to adjusted NAV.

Company profile Exmar is a shipping company that transports gas. It

has only a short history as an independent company,

having been spun off from CMB in June 2003. It

operates through three main divisions: LPG, LNG and

Offshore. Transport accounts for the lion’s share of

revenues and EBIT, but Services (non-transport

activities) contributes 8% and -4%, respectively. Plans

to list Offshore have been postponed.

LPG transport (2007: 56% revenues, 43% of

EBIT) This is Exmar's largest division, carrying LPG,

ammonia and other chemical gases. Exmar has a

strong position in the mid-segment transport of

LPG/ammonia, but is also building up a position in the

largest segment. In general, it is the cash cow for the

growth of the LNG and Offshore division.

LNG transport (17% of revenues, 53% of EBIT)

The LNG transportation division transports liquid

natural gas in general under long-term contracts for

customers. Exmar distinguishes itself from other

transport firms through the so-called LNGRV vessel,

which has a regasification unit on board to convert

liquid gas back into natural gas. Exmar aims to grow

rapidly in the LNGRV business, doubling the number of

its ships to 18 by 2016.

Offshore (11% of revenues, 8% of EBIT) Exmar undertakes a couple of activities in its Offshore

division. Most importantly, it has developed Opti-Ex, a

semi-sub offering a cheap solution for marginal

deepwater fields. It also operates an FPSO together

with CMB. Lastly, Exmar undertakes marine services

for the offshore industry.

Financials

Yr to Dec (US$m) 2006 2007 2008F 2009F 2010F 2011F

Income statement Turnover 525.1 502.7 571.8 563.7 606.3 629.0EBITDA 160.4 115.0 145.8 146.2 174.0 184.8EBITA 110.8 60.7 79.2 72.8 92.6 94.5Operating exceptionals 0.0 0.0 0.0 0.0 1.0 1.0Net financial charges (33.6) (59.3) (142.4) (52.2) (59.7) (60.4)Pre-tax profit 77.2 1.4 (63.2) 20.6 33.9 35.1Taxes (0.9) (0.9) (0.9) (0.9) (0.9) (0.9)Net profit 76.1 0.4 (64.2) 19.5 32.8 34.0Adj net attributable profit 76.1 0.4 (64.2) 19.5 32.8 34.0

Balance sheet Working capital (28.1) (38.2) (32.1) (32.1) (32.1) (32.1)Goodwill 1.4 1.1 1.1 1.1 1.1 1.1Tangible fixed assets 1,082.5 1,292.0 1,385.4 1,561.9 1,680.5 1,740.2Other intangible assets 0.0 0.0 0.0 0.0 0.0 0.0L/T investments 23.0 35.6 35.6 35.6 35.6 35.6Net debt 669.4 883.4 1,019.5 1,189.8 1,288.8 1,327.8L/T non-int-bearing liabs 20.0 38.0 38.0 38.0 38.0 38.0Minority interests (equity) 0.0 0.0 0.0 0.0 0.0 0.0Shareholders' equity 392.4 340.8 263.2 269.3 288.8 309.4

Cash flow Op cash flow (pre-tax) 136.8 160.9 111.0 146.2 174.0 184.8Cash taxes 0.0 0.0 0.0 0.0 0.0 0.0Op cash flow (after-tax) 136.8 160.9 111.0 146.2 174.0 184.8Net financial charges (CF) (33.6) (59.3) (142.4) (52.2) (59.7) (60.4)Net capex (280.2) (301.1) (225.0) (250.0) (200.0) (150.0)Free cash flow (177.1) (199.5) (256.4) (156.0) (85.7) (25.6)


Growth (%) Turnover 2.6 -4.3 13.8 -1.4 7.6 3.7EBITDA 1.5 -28.3 26.8 0.3 19.0 6.2Adj EPS -22.27 -99.47 68.12 3.65

Per share data (US$) Adj EPS 2.34 0.01 (1.92) 0.58 0.98 1.02Dividend 0.70 0.40 0.40 0.40 0.40 0.40NAV 12.05 9.74 7.87 8.06 8.64 9.26

Valuation EV/turnover (x) 1.9 2.4 2.3 2.7 2.6 2.6EV/EBITDA (x) 6.1 10.5 9.1 10.3 9.2 8.9EV/EBIT (x) 8.8 19.9 16.8 20.6 17.3 17.4Adj PER (x) 4.0 751.7 16.0 9.5 9.2Price/NAV (x) 0.8 1.0 1.2 1.2 1.1 1.0Dividend yield (%) 7.5 4.3 4.3 4.3 4.3 4.3


Fortis Buy

Netherlands Price (20/03/09) €1.50 Market cap €3,771.6mBanks Target price (12 mth) €2.00 Reuters FOR.BR



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Investment case A new agreement between the Belgian government,

BNP Paribas and Fortis Holding is up for voting on

8-9 April. In our view, it is good enough to be

approved by shareholders. We estimate an

adjusted 2008F NAV at €2.5 and tangible equity at

€2.2 per share. The cash part represents €1.3 per

share. There is still a possibility of a negative vote

in the upcoming EGMs (April); however, the

likelihood of a no vote is much lower than at the

last EGM in February: (1) financial markets have

deteriorated further; (2) a standalone scenario for

Fortis Bank has become more unrealistic; (3) an

improved cash and NAV position have sweetened

the deal; and (4) all shareholders are allowed to

vote during the EGMs, which was not the case at

the EGM on 11 February (although lawyer M.

Modrikamen may legally challenge this).

Small but important changes to the deal terms: the

NAV increases by €510m to €7.0bn and net cash by

€1,065m to €3.4bn compared with the deal terms

from 31 January. The pro-forma NAV is €2.8 per

share and net cash €1.3 per share. There are three

key deal sweeteners: Fortis Holding will sell 25% of

Fortis Insurance Belgium’s shares (FIB) to Fortis

Bank for a total cash consideration of €1,375m

(100% unchanged valuation of €5.5bn); Fortis’

funding obligation in the SPV is reduced to €760m

(+€240m net cash, no equity impact), which is 45%

of the total equity in the SPV (old deal 29.9%).

Conditions for the CASHES are unchanged, no

€2.35bn upfront payment, Relative Performance

Note remains in place. Anti-dilution clause related

to the call option on the BNPP shares (exercise

price €68, call option valued at €0.6bn).

Company profile

Overview Fortis resulted from the 1990 merger of AMEV (Dutch

insurer), VSB (Dutch bank) and AG (Belgium insurer).

Since then, it has acquired bank insurer ASLK and

Generale Bank in Belgium. The biggest acquisition

was that of part of ABN Amro. With the credit crisis

unfolding Fortis ran into major troubles to fund this

acquisition, which eventually resulted in the collapse of

the group. As a result the Dutch operations of Fortis

have been nationalized and a deal is up for voting

about basically the nationalisation of the Belgium bank

operations and subsequent sale to BPP Paribas. The

activities that are left in Fortis Holding are the Belgian

Insurance (75%) and the International Insurance

(100%) activities.

Insurance Belgium and International Fortis is the market leader in the Belgium insurance

market (market share of c.27%). It sells life and non-

life insurance, pensions and employee benefit products

through independent intermediaries. Its international

activities are insurance in Spain, motor insurance in

the UK and bancassurance deals in Asia.

New agreement

Base Bear Bull

Adjusted pro-forma situation 7.0 7.0 7.0

Pro-forma NAV per share 2.8 2.8 2.8

of which cash per share 1.3 1.3 1.3

Adjustments to pro-forma situation (€bn)

Net loss 4Q (forecast) (0.3) (0.5) (0.2)

SPV (0.8) (0.8) 0.0

RPN (CASHES) (0.3) (0.3) (0.3)

Call option BNPP 0.0 0.0 0.6

Real estate at fair value 0.9 0.0 0.9

MCS (settlement Dutch state) 0.0 0.0 1.0

Revised NAV 6.5 5.4 8.9

Goodwill & intangibles 0.9 0.9 0.9

Tangible equity 5.5 4.5 8.0

Ordinary shares 2,392 2,392 2,392

CASHES 0 0 0

Total shares outstanding 2,392 2,392 2,392

MCS 105 105 105

Options 42 42 42

Fully diluted no of shares (m) 2,539 2,539 2,539

NAV per share 2.5 2.1 3.5

Tangible equity per share 2.2 1.8 3.1

of which cash per share 1.3 1.0 1.7

% of TE 62 54 55

Normalised earnings Low High

FIB life 250 350

FIB non-life 100 125

FIB 350 475

FII 90 90

Holding company costs (40) (40)

Yield on cash, fresh etc 47 47

Cashes (13) (13)

Net profit (100%) 434 559

Minorities (88) (119)

Net attributable profit 346 440

ROE (incl cash) on revised NAV (%) 5 7

ROE (excl cash) on revised NAV (%) 11 14



Fugro Buy

Netherlands Price (20/03/09) €26.08 Market cap €2,003.1mSupport services Target price (12 mth) €29.00 Reuters FUGRc.AS



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Investment case 2008 was strong on the back of 23% organic

growth. Management expects to show modest

revenue growth in 1H09 with small pressure on net

margins, as the company finds limited impact from

the downturn thanks to essential services and big

clients who represent 85% of revenues. Led by

offshore survey, its largest and most profitable

business unit, a 10% YoY increase in orderbook

was impressive. If markets weaken, Fugro will fully

use its cost structure flexibility by reducing fleet

size and personnel. Long-term, Fugro foresees the

continuation of demand for its services. Capex

remains at high levels to reflect client demand. Our

target price is €29, based on zero discount to large

European oil service companies at 4.4x 2009F

EV/EBITDA.

Company profile

History

Engineering company Fugro was founded in 1962.

Shortly thereafter, it began opening branches abroad.

Since its listing, Fugro has made more than 100

acquisitions, the most important being TGS

Geosolutions, its main competitor in offshore surveys.

Activities Fugro collects, processes and interprets data and

provides advice related to the oil & gas, construction

and mining industries. It now comprises three main

activities: geotechnical services, survey and

geoscience. Fugro operates in 50 countries, with a

bias towards the US and Europe. It aims to make an

8.0-8.5% net profit margin in the medium term (2006:

9.8%), which equates to an EBITA margin of 12-13%.

Moreover, management aims to keep a healthy

balance sheet, with solvency of 30-35%, EBIT/interest

>5x, and average annual EPS and CFPS growth of

10%.

Geotechnical (24% of 2008 revenues, 20% of

EBIT) This division investigates and advises on the physical

characteristics of soils and rocks, both on- and

offshore. Fugro has dominant positions in certain

geographical offshore markets. Onshore faces more

local competition.

Survey (44%, 48%) This division involves mapping the topography and

geological composition of the earth's surface, off- and

onshore, but offshore dominates with leading market

positions. Fugro also carries out satellite positioning.

The division is closely related to the oil & gas industry.

Geoscience (32%, 32%)

This division's operations involve the gathering and

interpretation of data and the reduction of the cost of

oil field exploitation. It has three subdivisions: seismic

activities; reservoir modelling (field characterisation)

and airborne survey. Airborne survey collects

geophysical data for the mining and oil & gas

industries.

Financials

Yr to Dec (€m) 2006 2007 2008 2009F 2010F 2011F


Balance sheet Working capital 123.1 97.3 163.8 60.4 34.8 26.4Goodwill 347.3 381.6 428.2 428.2 428.2 428.2Tangible fixed assets 412.2 599.3 859.1 1,040.6 1,043.4 1,016.7Other intangible assets 21.5 26.0 24.0 23.0 23.0 24.0L/T investments 28.9 25.8 30.5 30.5 30.5 30.5Net debt 370.8 462.9 503.2 403.9 225.0 17.7L/T non-int-bearing liabs 39.6 30.8 53.5 53.5 53.5 53.5Minority interests (equity) 3.4 7.0 7.5 11.5 15.6 20.1Shareholders' equity 505.9 613.0 928.4 1,100.6 1,252.6 1,421.3

Cash flow Op cash flow (pre-tax) 276.4 394.8 565.6 586.8 618.4 651.3Cash taxes (43.4) (71.3) (94.8) (93.9) (87.6) (93.3)Op cash flow (after-tax) 233.0 323.6 470.8 492.9 530.8 558.0Net financial charges (CF) (26.4) (31.0) (1.9) (36.7) (31.6) (29.8)Net capex (224.9) (332.5) (380.0) (350.0) (200.0) (200.0)Free cash flow (18.3) (39.9) 88.9 106.2 299.1 328.2


Growth (%) Turnover 23.6 25.7 19.5 9.8 -1.6 5.8EBITDA 35.2 50.3 21.8 15.2 -0.6 8.4Adj EPS 36.43 52.46 24.14 -2.61 -7.08 5.91




Gamma Sell

Netherlands Price (20/03/09) €3.58 Market cap €26.4mDiversified industrials Target price (12 mth) €3.00 Reuters GAMN.AS



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Investment case Gamma Holding finds itself in a delicate position.

The company has a very weak balance sheet, with

significant debt, and is currently cornered by its

banks. In addition, Gamma continues to suffer from

unfavourable market conditions and needs to find

€45m of risk bearing capital before the end of July

2009 or bear the consequences of additional

penalties. With a lack of visibility in results and the

weak financial position, we would advise investors

to remain on the side lines until a solution has been

found to Gamma’s predicament.

Company profile Gamma Holding develops, manufactures and sells

textile-based products throughout the world. The group

consists of two sectors, Industrial Solutions and

Lifestyle Fabrics. The company is active in around 42

countries and employs approximately 7,200 people. In

2003, it refocused its strategy, divesting a number of

its activities such as curtain fabrics, wall decoration

and car fabrics. Most sales are generated in Europe

(45%), the US (20%) and Africa (20%). Gamma

Holding has its headquarters in Helmond in the

Netherlands.

Industrial Solutions (2008: 60% of sales, 38% of EBIT)

Industrial Solutions consists of three companies:

Belting, Filtration, and Coating and Composites.

Belting manufactures process and conveyor belts and

is the No.2 player worldwide. Filtration produces and

distributes screen and filter products. Coating &

Composites manufactures coated fabrics and

composites such as roofing, tents and printable media

fabric.

Lifestyle Fabrics (2008: 40% sales, 62% of EBIT)

Lifestyle Fabrics consists of two business units:

Sleepcare and Exotic Fabrics. Sleepcare is engaged in

the production of mattress ticking and is the No.1

player in Europe and No.4 in the US. Exotic Fabrics

produces colourful dyed and printed fabrics for the

West African market.

Financials

Yr to Dec (€m) 2006 2007 2008 2009F 2010F 2011F

Income statement Turnover 774.4 712.6 743.9 656.5 673.0 694.9EBITDA 94.4 90.1 72.2 46.1 55.6 74.9EBITA 63.1 60.9 39.8 17.0 25.9 44.3Operating exceptionals (11.2) (4.0) (54.7) (11.0) 0.0 0.0Net financial charges (12.9) (11.1) (17.1) (20.8) (13.9) (11.3)Pre-tax profit 37.1 44.2 (35.7) (18.7) 8.0 29.1Taxes (12.6) (14.1) 0.7 5.6 (2.4) (8.7)Net profit 23.9 31.8 (34.0) (11.1) 7.6 22.3Adj net attributable profit 21.0 28.4 (43.1) (15.9) 5.6 20.3


Cash flow Op cash flow (pre-tax) 75.1 88.1 52.8 37.3 60.0 80.8Cash taxes (12.6) (14.1) 0.7 5.6 (2.4) (8.7)Op cash flow (after-tax) 62.5 74.0 53.5 42.9 57.6 72.1Net financial charges (CF) (12.9) (11.1) (17.1) (20.8) (13.9) (11.3)Net capex (23.4) (28.4) (19.2) (15.8) (15.6) (15.6)Free cash flow 26.2 34.5 17.2 6.3 28.1 45.2

Ratios (%) EBITDA margin 12.2 12.6 9.7 7.0 8.3 10.8EBITA margin 8.1 8.5 5.4 2.6 3.9 6.4Net margin 3.2 4.5 -4.5 -1.7 1.1 3.2ROE 12.6 15.1 -20.9 -8.3 3.1 10.2Net debt/equity 110.1 103.4 201.7 139.0 122.5 82.8

Growth (%) Turnover -8.0 4.4 -11.7 2.5 3.3EBITDA -4.6 -19.9 -36.1 20.6 34.7Adj EPS 34.98 63.17 264.71

Per share data (€) EPS incl extraordinary items 3.24 4.31 (4.61) (1.51) 1.03 3.02Dividend 2.00 2.00 0.00 0.00 0.00 1.51NAV 25.80 27.32 19.21 23.80 24.83 29.36

Valuation EV/turnover (x) 0.3 0.3 0.4 0.4 0.4 0.3EV/EBITDA (x) 2.5 2.6 4.3 5.9 4.5 2.8EV/EBIT (x) 3.8 3.9 8.7 20.7 11.4 5.1Adj PER (x) 1.3 0.9 4.7 1.3Price/NAV (x) 0.1 0.1 0.2 0.2 0.1 0.1Dividend yield (%) 55.9 55.9 0.0 0.0 0.0 42.2


GBL Buy

Belgium Price (20/03/09) €50.38 Market cap €7,848.3mInvestment companies Target price (12 mth) €69.00 Reuters GBLB.BR



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Investment case GBL is a highly defensive stock, with a 33%

portfolio exposure to utilities (stable and

predictable cash flows) and 33% to TOTAL, which

is our favourite oil stock given its sound capital and

operating structure. Pernod (7%) is also one of our

favourite picks in its sector. Furthermore, GBL

currently holds a €376m net cash position (giving it

a strong advantage relative to leveraged peers), yet

this is to be significantly reduced with Lafarge’s

capital increase (GBL pro rata stake of €317m). GBL

has a track record of market outperformance, which

we expect to continue in the near term on account

of NAV enhancement by the underlying portfolio

companies. The discount of 24% stands close to

the average historical level of 25%. We have a BUY

recommendation.

Company profile

Overview

GBL represents the lowest level of the Albert Frère

holding structure. It is 50/50 controlled by the Frère

and Desmarais families through the non-listed

investment company Parjointco, which holds 54% of

the Swiss-listed holding company Pargesa.

Investment focus GBL has limited management reSource but is

determined to exercise its role as a professional

shareholder and play an active role in the strategy of

the companies in which it holds stakes through board

representation. It has therefore voluntarily capped the

number of stakes in which it invests. The company

avoids excess leverage and targets listed, highly liquid

European multinationals in traditional sectors such as

utilities, oils, energy, beverages, media and

construction.

Financials

Net asset value (€m)

Company % stake share price(€) Value (€m) % of portfolio

GDF Suez 5.3 26.1 3,063 28.5

Total SA 4.0 37.9 3,564 33.2

Lafarge SA 21.1 33.1 1,366 12.7

Pernod Ricard SA 8.1 40.5 722 6.7

Imerys SA 30.4 27.8 533 5.0

Suez Environnement SA 7.1 10.6 369 3.4

Iberdrola SA 0.6 5.5 157 1.5

Arkema 3.9 12.2 29 0.3

Other investments 175 1.6

Portfolio 9,978

Net cash/trading 376 3.5

Treasury shares 3.5 50.4 277 2.6

Adjustment 120 1.1

Total NAV 10,751

NAV per share 66.63

Share price 50.38

NAV discount (%) 24.4

2008 2009F* 2010F* 2011F*

Operating result 748.9 722.4 787.5 885.3

Net profit (group share) (687.5) 722.4 787.5 885.3

Adj. EPS (€) (4.41) 4.64 5.06 5.68

EPS growth (%) -188.3 -205.1 9.0 12.4

Dividend (€) 2.30 2.53 2.78 3.06

Dividend growth (%) 10.0 10.0 10.0 10.0

Adj. PER (x) N/M 10.9 10.0 8.9

Yield (%) 4.6 5.0 5.5 6.1

Payout (%) -52.1 54.5 55.0 53.8

*No assumptions made on future investments / divestments or unrealised gains/losses



GIMV Hold

Belgium Price (20/03/09) €31.53 Market cap €730.7mInvestment companies Target price (12 mth) €33.00 Reuters GIMV.BR



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Investment case Given the lack of divestment opportunities

expected in 2009 due to GIMV’s very young

portfolio (as a result of large divestments in

previous years), low asset prices and a closed IPO

window, we expect limited capital gains in the short

term. With an NAV discount currently standing at

27% versus a 25% long-term average, valuation

upside seems limited in our view (hence our HOLD

recommendation). However, we believe GIMV

should outperform a bear market as its sound cash

position of c.€21 per share should present a

valuation cushion in case of further market

deterioration. In addition, GIMV’s cash should lead

to attractive investment newsflow in the coming

months.

Company profile

Overview GIMV is the largest Belgian investment company, with

a focus on private equity (49% of NAV, including

loans), yet it is also invested in listed stocks (6% of

NAV), some of which the company directed to the IPO.

Lucrative divestments have enabled the company to

build up a solid cash position (45% of NAV). The

Flemish authorities hold a 27.06% stake in the

company, while the remaining shares are free float.

Investment focus

GIMV focuses on: (1) small- to medium-sized buyouts

and growth finance in traditional sectors (Corporate

Investments: c.40% of NAV) in Belgium, Germany, the

Netherlands and France; and (2) venture capital in

Western European ICT (c.8% of NAV) and

international Biotech (Life Sciences: c.11% of NAV).

The company has also recently targeted small

infrastructure projects and Clean Technology

investments (c.1% of NAV). Although originally created

in 1980 to support economic growth in Flanders, GIMV

is increasingly expanding the internationalisation of its

investment portfolio.

Financials

Net asset value (€m)

Company # of shares

(m)

share price

(€)

Value

(€m)

% of

portfolio

Alfacam Group NV 0.26 5.5 1.4 0.3

Avalon Pharmaceuticals Inc. 0.89 0.4 0.3 0.1

Barco 1.25 10.7 13.4 2.4

Evotec AG 0.36 0.8 0.3 0.1

Galapagos Genomics 0.09 6.0 0.5 0.1

Innate Pharma 1.93 1.4 2.7 0.5

Liveperson Inc 0.64 1.5 1.0 0.2

Memory Pharmaceuticals Corp. 1.05 0.4 0.5 0.1

Metris N.V. 0.56 1.0 0.6 0.1

Metris warrants 0.43 1.6 0.7 0.1

Santhera Pharmaceuticals AG 0.16 34.4 5.4 1.0

Telenet Group 1.42 13.3 18.8 3.4

ThromboGenics NV 0.04 8.9 0.4 0.1

TorreyPines Therapeutics Inc 1.74 0.1 0.2 0.0

Ablynx 3.70 4.2 15.6 2.8

Antisoma 11.52 0.3 3.2 0.6

Total value listed stakes 64.8 11.7

Unlisted stakes 284.1 51.4

Funds 113.8 20.6

Loans 89.9 16.3

= Total portfolio value 552.6

+ Net treasury and other 445.4

= Equity value (NAV) 998.0

Number of shares (m) 23.2

Equity value per share (€) 43.1

Share price discount (%) 26.8

Yr to Mar (€m) 2007/08 2008/09F* 2009/10F* 2010/11F*

Operating result (9.4) (8.0) (5.8) (3.3)

Net profit (group share) 154.9 (275.5) (21.5) (16.7)

Adj. EPS (€) 6.68 (11.89) (0.93) (0.72)

EPS growth (%) -37.9 -277.9 N/A N/A

Dividend 4.36 2.36 2.41 2.46

Dividend growth (%) 2.3 -45.9 2.0 2.0

Adj. PER (x) 4.7 N/A N/A N/A

Yield (%) 13.8 7.5 7.6 7.8

Payout (%) 65.2 N/A N/A N/A

*No assumptions made on future investments / divestments



Grontmij Hold

Netherlands Price (20/03/09) €15.20 Market cap €265.1mSupport services Target price (12 mth) €16.00 Reuters GRONc.AS



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Investment case Whereas 2008 figures were fine, management

foresees a challenging 2009, matching 2008, and

this in spite of an order book that spans over a year

and is 70% dependent on (semi)-government

contracts. We believe this has happened despite

the background of a tough economic environment,

and the return of fierce competition. We have little

doubt that the current management is capable of

weathering the storm, but while 2009 will be

satisfactory in our view also, 2010 could be

different. Given the medium-term uncertainty and at

a 2009F EV/EBITDA of 4.7x, only a notch cheaper

than Arcadis, we believe the share price reflects the

right value. HOLD; target price €16 based on 5x

2009F EV/EBITDA.

Company profile

History Grontmij's core business lies in consultancy and

engineering activities which provide services in all

elements of the project chain to the public and private

sector in urban regions. In 2008, Grontmij reported

annual turnover of €846m and an operating income

including income from joint ventures of €65m (margin

7.7%). Grontmij is organised into six countries

(revenues/EBITA: Netherlands 39%/40%, Belgium

7%/8%, UK 13%/14%, Germany/Poland 7%/12%,

Denmark 13%/15%% and Sweden 13/11% of sales).

The consultancy, engineering and contracting services

involve building, transportation, environment, water,

energy and industry projects. Owing to the temporary

and limited financial involvement in projects, Grontmij

can provide appropriate leverage to use the additional

cash flow for the expansion of its consultancy and

engineering operations. The best example was the

takeover of Carl Bro in 2006, which nearly doubled

Grontmij's exposure in western Europe. The company

employs roughly 8,000 people.

Consultancy & Engineering

Consultancy & Engineering is the backbone of

Grontmij's consultancy services on infrastructure and

construction works for national, regional and local

governments and private companies. With Carl Bro’s

energy, general building and water become more

important at Grontmij. Environment water and energy

contribute 41% to revenues, the building industry 31%

and transportation 28%. Grontmij’s exposure to

government and semi-government contracts is 70% of

total revenues.

Financials

Yr to Dec (€m) 2006 2007 2008 2009F 2010F 2011F

Income statement Turnover 533.9 768.0 844.5 866.6 872.8 930.1EBITDA 31.7 50.7 63.8 65.6 61.7 66.0EBITA 22.5 38.6 52.5 53.6 49.7 53.5Operating exceptionals 0.0 0.0 0.0 0.0 0.0Net financial charges (3.8) (6.0) (7.5) (3.1) (2.5) (1.7)Pre-tax profit 24.4 40.9 50.7 52.1 47.3 51.9Taxes (4.5) (9.3) (12.0) (16.2) (15.1) (16.6)Net profit 22.2 32.8 39.2 36.4 32.6 35.7Adj net attributable profit 22.7 37.8 46.1 42.6 38.9 42.0

Balance sheet Working capital 51.7 31.2 25.5 16.8 11.6 17.6Goodwill 107.5 108.4 130.5 124.2 118.0 111.7Tangible fixed assets 45.0 43.3 40.5 42.0 44.0 47.5Other intangible assets 63.2 60.3 71.6 65.4 59.1 52.9L/T investments 29.4 37.5 49.6 49.6 49.6 49.6Net debt 70.6 68.6 86.9 43.1 5.8 (24.0)L/T non-int-bearing liabs 87.5 55.0 55.9 55.9 55.9 55.9Minority interests (equity) 0.6 0.6 1.3 1.3 1.3 1.3Shareholders' equity 138.1 156.6 173.6 189.5 201.7 217.1

Cash flow Op cash flow (pre-tax) 2.5 113.8 95.0 82.1 73.3 66.3Cash taxes (4.5) (9.3) (12.0) (16.2) (15.1) (16.6)Op cash flow (after-tax) (2.0) 104.6 83.1 66.0 58.2 49.7Net financial charges (CF) (3.8) (6.0) (7.5) (3.1) (2.5) (1.7)Net capex (7.7) (10.0) (13.0) (13.5) (14.0) (16.0)Free cash flow (13.5) 88.6 62.6 49.4 41.7 32.0

Ratios (%) EBITDA margin 5.9 6.6 7.6 7.6 7.1 7.1EBITA margin 4.2 5.0 6.2 6.2 5.7 5.7Net margin 4.1 4.3 4.6 4.1 3.7 3.8ROE 17.1 21.5 23.7 20.0 16.7 17.1Net debt/equity 50.9 43.6 49.7 22.6 2.9 (11.0)

Growth (%) Turnover 22.7 43.9 10.0 2.6 0.7 6.6EBITDA 17.2 59.8 25.8 2.8 -6.0 6.9Adj EPS 96.44 56.68 22.08 -7.64 -8.74 8.02




Heijmans Sell

Netherlands Price (20/03/09) €4.23 Market cap €101.3mConstruction & building materials Target price (12 mth) €8.00 Reuters HEIJ.AS



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Investment case Heijmans struggles with internal problems, which

first emerged at the end of 2006. The company has

issued many profit warnings in the past two and a

half years and refrained from providing guidance

on FY08 net profit (FY08 results are delayed until 29

April). Heijmans initially took large loss provisions

in its Dutch Building unit (due to badly priced

contracts from 2005), but in 1H08 its large Dutch

Infra unit and Belgium operations also reported

losses. New management has been busy

restructuring the organisation, but so far we have

only received qualitative statements on the

progress of these actions. As Heijmans carries a

relatively large debt pile, the visibility on a potential

bank covenant breach is also very limited. In the

meantime, the economic crisis has brought the

Dutch housing market to a standstill, which is hitting

the property division hard. This was the main reason

behind Heijmans operating result. We are in the dark

concerning its operational performance or what cost

savings the current restructuring programmes might

deliver. We rate Heijmans a SELL, with such

uncertainty reducing the relevance of our €8 target

price.

Company profile

History Heijmans is the third largest Dutch contractor and also

operates in Belgium, Germany and the UK. Sales in

2007 were €3.73bn and net profit was €56m, heavily

hit by substantial loss provisions for badly priced

contracts signed in 2005. Currently the company’s new

management team is executing a major restructuring,

which includes operational as well as cultural changes

within the organisation.

Dutch business (73% of sales)

Property develops and builds homes (>90%) and non-

residential premises and represented 25% of sales but

over 50% of normalised EBIT. Infra (22% of sales) is

broken into road building (majority), asphalt production,

traffic systems, concrete and raw material businesses.

The Construction unit (20% of sales) builds, renovates

and maintains homes and non-residential buildings,

such as offices, schools, hospitals, etc. Technical

Services concerns design, implementation and

maintenance of complete electrical and mechanical

engineering installations in the non-residential market,

accounting for 6% of sales.

International (27% of sales) Heijmans Belgium (8% of sales) is active in all market

segments (property, housing and non-residential

building, roads and pipeline construction). Heijmans

Germany (10% of sales) consists of a substantial road

builder, but also includes an international railway

activity. Heijmans UK (9% of sales) is active in social

housing, healthcare and educational businesses.

Financials

Yr to Jan (€m) 2006 2007 2008 2009F 2010F 2011F

Income statement Turnover 2,835.3 2,942.1 3,731.9 3,800.6 3,918.2 4,000.0EBITDA 153.3 160.7 201.0 79.0 98.3 108.1EBITA 124.2 131.7 165.7 42.0 59.9 68.2Operating exceptionals 0.0 (20.0) (78.0) 0.0 0.0 0.0Net financial charges (6.7) (5.8) (10.7) (9.8) (6.1) (5.6)Pre-tax profit 122.7 112.0 78.5 32.2 53.8 62.6Taxes (35.6) (29.5) (22.1) (9.2) (15.4) (18.0)Net profit 87.1 82.5 56.4 23.0 38.4 44.6Adj net attributable profit 81.6 77.4 56.4 23.0 38.4 44.6


Cash flow Op cash flow (pre-tax) 145.3 14.7 364.8 149.5 84.3 97.1Cash taxes (35.6) (29.5) (22.1) (9.2) (15.4) (18.0)Op cash flow (after-tax) 109.7 (14.8) 342.7 140.3 68.8 79.1Net financial charges (CF) (6.0) (5.9) (5.8) (5.6) 0.0 0.0Net capex (23.0) (24.0) (47.8) (32.0) (33.0) (34.0)Free cash flow 80.7 (44.7) 289.1 102.7 35.8 45.1


Growth (%) Turnover 6.1 3.8 26.8 1.8 3.1 2.1EBITDA 5.7 4.8 25.1 -60.7 24.5 9.9Adj EPS 95.34 -6.70 -26.70 -59.32 67.19 16.30




Heineken Hold

Netherlands Price (20/03/09) €20.15 Market cap €9,871.0mBeverages Target price (12 mth) €23.56 Reuters HEIN.AS



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Share data

No. of shares (m) 490.0Daily turnover (shares) 1,864,910Free float (%) 50.0Enterprise value (€m) 20,249Market cap (€m) 9,871.0


Investment case The justification for our HOLD is threefold. (1) After

the acquisition of S&N assets, Heineken is

sensitive to the UK weakness. Including exposure

to Ireland, Spain, the on-trade/off-trade switch in

Europe, the decelerating East European market and

the US import market, profit momentum is under

pressure. (2) Strategic weaknesses. These include

the vague cost-saving target, but also the changes

visible in the US where the market leaders are now

controlled by brewers that have a strong focus on

premium import brands. (3) There is no quick fix.

We believe share price weakness will continue

given a weak start to the year due to weather

conditions.

Company profile

History Since 1864, Heineken's core activity has been the

production, distribution and marketing of beer. Freddy

Heineken (who died in 2002) internationalised the

company, which is now active in more than 170

countries through local production, exports and

licences. Heineken NV is controlled by Heineken

Holding (50.005%), which is itself controlled by the

Heineken family (50.005%).

Europe Heineken is European market leader with leading

positions in Western and Eastern European countries.

In other European countries, it has smaller local

positions, exports or licences. Blank spots include

Northern Europe. Heineken’s strategy is to become

No.1 or No.2 in local markets through a multiple-brand

strategy. It uses local brands as a platform to distribute

higher-margin premium, speciality and global brands.

Brands include Heineken, Amstel, 33, Aguila-Amstel,

Cruzcampo, Moretti, Murphy's, Zywiec, Warka, Zlaty

Bazant and Desperados.

Western hemisphere

In the US, Heineken is the largest import beer brand

from Europe. In the US import market, Heineken is

second after Modelo (Corona). Brands include Amstel

Light, Heineken Light, Newcastle Brown. Heineken's

US beer market share is c.4% including the

sale/marketing of FEMSA brands. The group has

strong positions in Chile, Argentina and Central

America. Heineken owns a minority of Kaiser-Bavaria

(controlled by FEMSA) in Brazil. In Canada, Molson-

Coors is the distributor.

Rest of the world

Heineken has strong positions in several West and

Central African countries. Its high market shares

generate attractive margins, and c.20-25% of EBIT is

generated in Africa. In SE Asia/Asia-Pacific, China and

India, Heineken has a JV (APB) with Fraser & Neave.

It also has its own (profitable) export activities to

Taiwan, Hong Kong and other countries. In Indonesia,

Heineken controls the dominant player Multi Bintang.

Financials

Yr to Dec (€m) 2005 2006 2007 2008 2009F 2010F

Income statement Turnover 10,796 11,829 11,245 14,319 15,993 16,600EBITDA 2,068.0 2,328.0 2,321.0 2,476.6 2,915.9 3,158.9EBITA 1,358.0 1,549.0 1,694.0 1,829.0 2,023.5 2,259.5Operating exceptionals 0.0 0.0 0.0 0.0 0.0 0.0Net financial charges (114.0) (122.0) (95.0) (485.0) (548.3) (494.1)Pre-tax profit 1,169.0 1,710.0 1,323.0 614.0 1,479.3 1,769.5Taxes (300.0) (365.0) (394.0) (248.0) (376.8) (455.7)Net profit 761.0 1,211.0 807.0 228.0 949.9 1,153.3Adj net attributable profit 843.2 930.0 1,114.9 1,013.6 1,026.3 1,229.7

Balance sheet Working capital 78.0 314.0 58.0 205.0 82.5 85.6Goodwill 2,380.0 2,449.0 2,110.0 7,109.0 7,109.0 7,109.0Tangible fixed assets 5,067.0 4,944.0 4,673.0 6,314.0 6,366.4 6,413.4Other intangible assets 0.0 0.0 0.0 0.0 0.0 0.0L/T investments 1,104.0 1,367.0 1,814.0 2,391.0 2,391.0 2,391.0Net debt 2,685.0 1,905.0 1,773.0 9,355.0 8,270.4 7,340.8L/T non-int-bearing liabs 1,430.0 1,649.0 1,171.0 1,827.0 1,827.0 1,827.0Minority interests (equity) 545.0 511.0 307.0 2,107.5 2,107.5 2,107.5Shareholders' equity 3,969.0 5,009.0 5,404.0 2,729.5 3,743.9 4,723.7

Cash flow Op cash flow (pre-tax) 2,151.0 2,215.0 2,205.0 2,329.6 3,038.4 3,158.9Cash taxes (300.0) (365.0) (394.0) (248.0) (376.8) (455.7)Op cash flow (after-tax) 1,851.0 1,850.0 1,811.0 2,081.6 2,661.6 2,703.2Net financial charges (CF) (114.0) (122.0) (95.0) (485.0) (548.3) (494.1)Net capex (692.0) (662.0) (866.0) (1,173.9) (700.0) (939.5)Free cash flow 1,045.0 1,066.0 850.0 422.7 1,413.3 1,269.7


Growth (%) Turnover 7.3 9.6 -4.9 27.3 11.7 3.8EBITDA 2.6 12.6 -0.3 6.7 17.7 8.3Adj EPS 7.28 10.29 19.88 -9.08 1.25 19.82




IBA Buy

Belgium Price (20/03/09) €4.93 Market cap €131.0mHealth Target price (12 mth) €8.30 Reuters IBAB.BR



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Investment case Despite IBA’s proton therapy (PT) pipeline drying

up, we find earnings momentum appealing.

REBITDA should increase 47% between 2008 and

2010F, leading net profit to triple. We expect the

share of recurring revenues at IBA to grow from

40% in 2007 to 62% in 2009F, increasing visibility

and improving the company’s risk profile. The

radiopharmaceuticals division (58% of 2009F

revenues) should prove resilient and show

profitability improvements in the near future. We

believe the slowdown in PT has been more than

factored into the share price. The stock trades at

historical lows at a 2009F PER of 10.2x, an

EV/EBITDA of 3.0x and a P/BV of 0.8x. BUY.

Company profile IBA (Ion Beam Applications) was founded in 1986 as a

spin-off from the Catholic University of Louvain (UCL).

It has become a leader in the use of particle-

accelerator technology and advanced physics for

industrial and medical markets. The company uses its

technological expertise to deliver solutions in the field

of cancer diagnosis and therapy. This expertise has

been expanded and consolidated through organic and

acquisitive growth. IBA has been listed since 1998 and

employs over 2,000 people around the world. The

company has exited some businesses in recent years

(sterilisation and brachytherapy), and its remaining

divisions reflect its intention to focus on its core

activities related to cancer and other medical

applications. IBA is currently active in four activities:

radiopharmaceuticals, particle therapy, dosimetry and

accelerators, but reports its results along two business

lines: ‘radiopharmaceuticals’ and ‘technology &

equipment’ (composed of particle therapy, dosimetry

and accelerators).

Technology & equipment (55% of 2008 sales) IBA markets a wide range of particle accelerators with

prices up to €40m. Proton accelerators are used for

cancer treatment (proton therapy) and radioisotope

production. Electron accelerators are used in

sterilisation and ionisation (rhodotron, dynamitron). IBA

also develops ancillary equipment, called dosimetry

units, with a good deal of success.

Radiopharmaceuticals (45% of 2008 sales) The production and distribution of radioisotopes is a

fast-growing, but low-margin, activity in IBA’s portfolio.

Radioisotopes are used for one basic application:

diagnostic imaging (PET). This division was expanded

in 2008 following the consolidation of Cisbio in June.

Cisbio has three activities complementary to those of

IBA: (1) the production and distribution of SPECT;

(2) six FDG production centres located in France; and

(3) the production of in vitro diagnostics and an in vitro

drug pre-screening toolbox. IBA acquired Cisbio in

May 2008, and it has been consolidated into our

estimates as of 1 June 2008.

Financials

Yr to Dec (€m) 2006 2007 2008 2009F 2010F 2011F

Income statement Turnover 170.3 213.9 332.6 356.9 386.1 415.6EBITDA 21.2 19.1 23.3 35.8 46.9 54.1EBITA 9.8 11.8 10.8 19.4 26.6 32.3Operating exceptionals 10.4 (4.7) 6.4 0.0 0.0 0.0Net financial charges 0.6 (0.5) (2.6) (1.0) (0.7) (0.7)Pre-tax profit 23.7 6.9 12.1 18.4 25.9 31.6Taxes 7.8 7.0 (6.8) (5.7) (8.0) (5.2)Net profit 30.0 13.8 5.3 12.7 17.9 26.4Adj net attributable profit 31.5 13.8 5.3 12.7 17.9 26.4

Balance sheet Working capital 5.0 2.8 28.9 24.1 32.6 38.6Goodwill 28.1 26.5 28.8 28.8 28.8 28.8Tangible fixed assets 46.4 59.8 78.7 88.3 96.0 102.8Other intangible assets 4.1 4.6 37.8 38.0 37.0 36.0L/T investments 42.1 60.3 105.2 105.2 105.2 109.8Net debt (44.3) (33.9) (17.6) (23.1) (20.7) (23.1)L/T non-int-bearing liabs 33.6 46.4 144.4 144.4 144.4 144.4Minority interests (equity) 0.5 0.7 0.7 0.7 0.7 0.7Shareholders’ equity 135.8 140.8 151.7 162.3 175.0 193.9

Cash flow Op cash flow (pre-tax) 3.1 24.6 12.2 41.5 39.1 48.8Cash taxes 1.8 (1.4) (4.0) (5.7) (8.0) (9.8)Op cash flow (after-tax) 4.9 23.2 8.2 35.8 31.1 39.0Net financial charges (CF) (0.5) 0.6 (1.3) (1.0) (0.7) (0.7)Net capex 9.6 (22.3) (22.1) (26.2) (26.9) (27.5)Free cash flow 14.1 1.4 (15.2) 8.6 3.4 10.8


Growth (%) Turnover 25.1 25.6 55.5 7.3 8.2 7.7EBITDA 52.4 -10.1 22.2 53.3 31.0 15.4Adj EPS 1,057.30 -56.63 -62.07 134.62 41.01 47.63




Imtech Buy

Netherlands Price (20/03/09) €10.34 Market cap €800.3mEngineering & machinery Target price (12 mth) €17.00 Reuters IMUN.AS



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Share data

No. of shares (m) 77.4Daily turnover (shares) 487,489Free float (%) 100 Enterprise value (€m) 1,181.0Market cap (€m) 800.3


Investment case We rate Imtech a BUY because we consider its

business model to be relatively resilient to the

economic cycle. We strongly believe its dominant

market positions – bringing together know-how in

many areas and full service offering – should

enable it to outgrow competition. This is

particularly the case in the Benelux and German

markets, where despite the economic crisis, large

contracts are being awarded. Also, the company

operates in several attractive niche markets, such as

energy, cure & care and marine, where prospects are

still positive. The company reported an order book at

the end of 2008 of €4.5bn (this excludes c.€1bn of

long-term maintenance contracts), maintenance

comprises about 20% of group sales. Imtech has a

sound financial basis and we expect it to continue its

very successful expansion strategy during 2009F, on

its way to achieving its long-term strategic goals.

The biggest problem for the stock is its late-cyclical

character. The lion’s share of the business certainly

is, but we expect the share price to behave like an

early cyclical. The stock trades at a 2009F PER of

5.6x and we have a BUY recommendation.

Company profile Imtech is a holding firm with technical services for

many industries, Imtech’s serviced segments are

private buildings (23% of sales), public buildings (7%),

industry (30%), infra & traffic (15%), care & cure (4%),

marine (13%) and specials (8%). Imtech aims to

become a leading European services company offering

a complete package, with dominant positions in

selected European countries. It aims to achieve €5bn

in revenues in 2012 (versus €3.86bn in 2008) on the

back of organic growth and selective acquisitions. It

aims to have a group EBITA margin of 6% (post

holding costs). Last year the company achieved 5.5%.

Activity portfolio Benelux (30% of sales, 21% of EBITA): electrical and

mechanical engineering activities, No 1 in the

Netherlands and a strong position in Belgium.

Germany & CEE (27% of sales, 28% of EBITA):

Imtech is one of the leading technical service providers

in the fragmented German market. It boasts strong

positions with large industrial companies, which also

provide a stepping stone into CEE. UK, Spain &

Ireland (13% of sales, 15% of EBITA): this cluster

comprises Imtech’s technical services in the UK,

Ireland and Spain. Imtech is successful in the greater

London area, where it is involved in landmark projects.

In Spain, the backbone of the business relates to high-

margin maintenance contracts in oil & gas, while in

Ireland the business is specialised in pharmaceutical

processes. Nordics (2% of sales, 2% of EBITA): Imtech

acquired NVS during 2008. Over the course of 2009 we

forecast this business to account for 9% of sales and

12% of EBITA. ICT, Traffic & Marine (28% of sales, 34%

of EBITA) this is a Europe-wide activity comprising

ICT, traffic control systems and marine services.

Financials

Yr to Dec (€m) 2006 2007 2008 2009F 2010F 2011F



Cash flow Op cash flow (pre-tax) 79.1 160.4 181.1 240.0 245.2 249.2Cash taxes (27.6) (33.3) (41.2) (43.2) (39.4) (42.1)Op cash flow (after-tax) 51.5 127.1 139.9 196.8 205.8 207.0Net financial charges (CF) (10.9) (20.9) (29.3) (38.6) (36.8) (35.8)Net capex (113.3) (147.1) (345.5) (34.0) (35.0) (36.0)Free cash flow (72.8) (40.9) (234.9) 124.3 134.0 135.3


Growth (%) Turnover 19.4 18.3 15.3 9.7 -2.4 2.0EBITDA 26.7 35.7 25.5 12.5 -5.9 4.1Adj EPS 33.49 40.42 24.25 15.30 -7.25 5.46




IPTE Hold

Belgium Price (20/03/09) €1.47 Market cap €10.2mEngineering & machinery Target price (12 mth) €1.50 Reuters IPTE.BR



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Investment case We expect IPTE to face a tough 2009F. Although the

4Q08 order book showed a significant improvement

versus 3Q08, we believe it is too early to speak

about a structural recovery as the recession is still

very much present and should have a negative

impact on demand from OEMs in the short term.

Despite restructuring measures initiated in 2008,

we believe that lower sales levels could put

additional pressure on margins in 2009F and result

in a full-year net loss. Our target price implies a

10% liquidity discount to the median 2009-10F

EV/EBITDA of the Benelux cyclical universe, which

is further warranted, in our view, by IPTE’s

stretched balance sheet. We have a HOLD

recommendation.

Company profile

Overview IPTE (Integrated Production and Test Engineering) is a

supplier of production services to the electronics and

industrial markets in Europe (Contract Manufacturing –

CM) and a global supplier of automated production

equipment for the electronics industry (Factory

Automation – FA). Its client base includes large

electronics manufacturers such as Philips, Siemens,

Bosch, Barco, Ericsson, Motorola and Flextronics.

The company was created in 1992 by five former

Philips engineers as a test engineering firm. IPTE was

listed on the Brussels stock exchange in 2000, and its

business model combines organic and acquisitive

growth, with recent takeovers including the Barco

Electronics Manufacturing division in 1Q07 and

Platzgummer GmbH in 1Q08.

Geographical split of sales: Benelux (63%), Europe

(33%) and America/Asia (4%).

Contract Manufacturing (71% of 2008 sales) The CM division provides electronics production

services to OEMs and electronics subcontractors.

Activities include the production of cables and cable

trees, PCB assembly and testing, production of semi-

manufactures and final product assembly. IPTE targets

the niche markets of industrial electronics and

professional products. Segmental split of sales:

industrial products (63%), automotive (14%),

telecommunications (11%), medical products (10%)

and others (2%).

Factory Automation (29% of 2008 sales) The FA division provides full-scale solutions for

process automation in the production and testing of

PCBs (printed circuit boards) and electronics

assembly. IPTE manufactures modular units that can

be integrated into flexible assembly lines. Segmental

split of sales: automotive (67%), consumer electronics

(15%), telecommunications (6%), industrial products

(2%), medical products (2%) and others (8%).

Financials

Yr to Dec (€m) 2006 2007 2008 2009F 2010F 2011F

Income statement Turnover 138.3 255.3 232.2 210.7 229.4 247.5EBITDA 6.0 16.6 9.1 7.9 10.9 13.5EBITA 3.4 12.4 3.7 2.9 5.6 8.1Operating exceptionals 0.0 0.0 0.0 0.0 0.0 0.0Net financial charges (1.4) (2.7) (3.0) (3.2) (3.1) (3.0)Pre-tax profit 2.0 9.7 0.7 (0.3) 2.5 5.1Taxes (0.1) 1.2 (0.3) 0.0 (0.3) (0.8)Net profit 1.9 10.9 0.3 (0.3) 2.2 4.3Adj net attributable profit 1.9 10.9 0.3 (0.3) 2.2 4.3

Balance sheet Working capital 38.4 48.2 50.7 49.5 47.9 51.7Goodwill 5.9 5.9 8.9 8.9 8.9 8.9Tangible fixed assets 12.2 17.1 21.2 21.2 21.0 21.0Other intangible assets 0.2 0.3 1.3 1.3 1.3 1.3L/T investments 0.0 0.0 1.0 2.0 3.0 4.0Net debt 30.5 28.3 35.6 34.8 31.7 31.1L/T non-int-bearing liabs 0.4 2.0 3.8 4.3 3.4 3.5Minority interests (equity) (0.1) 0.0 0.0 0.0 0.0 0.0Shareholders' equity 23.9 41.7 42.7 41.8 44.1 48.4

Cash flow Op cash flow (pre-tax) 0.4 19.6 6.7 9.1 12.5 9.7Cash taxes (0.1) 1.2 (0.3) 0.0 (0.3) (0.8)Op cash flow (after-tax) 0.3 20.8 6.4 9.1 12.2 9.0Net financial charges (CF) (1.4) (2.7) (3.0) (3.2) (3.1) (3.0)Net capex (3.3) (24.5) (14.3) (5.1) (6.0) (6.3)Free cash flow (4.4) (6.4) (10.9) 0.8 3.1 (0.4)

Ratios (%) EBITDA margin 4.3 6.5 3.9 3.8 4.8 5.5EBITA margin 2.5 4.9 1.6 1.4 2.5 3.3Net margin 1.4 4.3 0.2 -0.2 1.0 1.7ROE 7.9 33.2 0.7 -0.8 5.2 9.3Net debt/equity 128.0 68.0 83.5 83.2 72.0 64.3

Growth (%) Turnover 9.2 84.6 -9.1 -9.2 8.9 7.9EBITDA -12.0 178.2 -45.2 -12.9 37.7 23.6Adj EPS -9.23 416.66 -97.75 N/M N/M 91.63


Valuation (x) EV/turnover 0.3 0.2 0.2 0.2 0.2 0.2EV/EBITDA 6.4 2.3 5.0 5.7 3.8 3.1EV/EBIT 11.3 3.1 12.3 15.6 7.4 5.1Adj PER 4.3 0.8 37.2 N/M 4.5 2.4Price/NAV 0.3 0.2 0.2 0.2 0.2 0.2Dividend yield (%) 0.0 0.0 0.0 0.0 0.0 0.0


Kas Bank Hold

Netherlands Price (20/03/09) €8.00 Market cap €125.6mBanks Target price (12 mth) €8.00 Reuters KASNc.AS



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Investment case 2008 was a difficult year for KAS, facing multiple

headwinds while the underlying business and

balance sheet were solid. Near-term prospects for

operational fundamentals are bleak as results are

likely to be burdened by weak capital markets, a

negative operating leverage and the risk of

impairments continues.

We are upbeat on the medium to long-term

prospects for KAS as global trends indicate more

business opportunities which it should be able to

capitalise on.

2009 is not out of the woods. We view 2009 as an

extremely challenging year for KAS, given difficult

comps and limited earnings visibility. Hence, we

view KAS as vulnerable today as in the previous

downturn (EPS decline of >50%) as a result of its

high fixed cost base and large earnings exposure

to the securities markets. Today, we see additional

risks such as the possibility of further impairments

on its AFS portfolio, lower securities lending

revenues and a flattening yield curve.

Negative operating leverage deters the bottom line.

Management is committed to generating positive

operating leverage, with a target to grow revenues

3% faster than costs in 2009. Given the lack of

announcements to reduce operating costs, we

pencil in an 8% cost decline vis-à-vis a 14%

revenue decline for 2009.

Valuation remains stretched: KAS is trading at a

2009F PER of 11.2x, a premium of 30% to its large

cap peers, compared with a historical 20-25%

discount.

Company profile KAS Bank is a specialist bank in securities services

and related information services. KAS core activities

comprise custody, clearing and settlement of securities

for large- and medium-sized pension funds, insurance

companies, asset managers, investment funds,

brokers and banks. Moreover, KAS provides a range of

support services for treasury, risk management and

portfolio analysis. Out of its Benelux home market the

company seeks expansion to become a pan-European

player. KAS is headquartered in Amsterdam and has

offices in London, Frankfurt and Wiesbaden and

employs approximately 800 people. The company

derives the bulk of its revenues from Europe (93%),

predominantly the Benelux, UK and Germany. Through

its European platform, it offers direct connections to

the most important securities markets in Europe, the

US, Hong-Kong and Dubai.

KAS’s institutional investors clients (62% of FY08

revenue), includes pension funds, insurance

companies, investment funds and asset managers.

KAS is especially well positioned in the small- and

medium-sized pension funds market in the

Netherlands. Three out of the ten largest Dutch

pension funds are clients. Financial institutions (33%)

include banks, brokers and securities traders. Other

(5%) mainly comprises treasury activities such as

foreign currency transactions for clients.

Financials

Yr to Dec 2006 2007 2008 2009F 2010F 2011F

Income statement (€m) Net interest income 16.8 21.6 28.9 25.1 20.0 19.4Net fees and commissions 83.3 93.4 89.2 74.2 81.3 87.8Trading profit 0.0 0.0 0.0 0.0 0.0 0.0Insurance profit 0.0 0.0 0.0 0.0 0.0 0.0Other operating income 19.8 18.2 14.2 14.5 15.0 15.3Total income 119.8 133.2 132.3 113.7 116.2 122.4% of average total assets 1.7 1.8 1.7 1.6 1.6 1.6Total operating costs (93.5) (100.8) (107.3) (99.5) (101.7) (104.0)% of average total assets 1.3 1.4 1.4 1.4 1.4 1.4% of total income 78.0 75.6 81.1 87.6 87.5 85.0Net operating income 26.4 32.5 25.0 14.1 14.5 18.4Provisions (0.7) (6.1) (74.3) 0.0 0.0 0.0Operating profit 25.6 26.4 (49.3) 14.1 14.5 18.4Associates 0.0 0.0 0.0 0.0 0.0 0.0Capital gains, etc 10.5 40.9 (2.7) 0.0 0.0 0.0Pre-tax profit 36.1 67.3 (52.0) 14.1 14.5 18.4Tax (9.5) (16.3) 12.0 (3.6) (3.7) (4.7)% tax rate 26.3 24.3 23.0 25.5 25.5 25.5Minorities 0.0 0.0 0.1 0.0 0.0 0.0Extraordinary & other items 0.0 0.0 0.0 0.0 0.0 0.0Earnings 26.6 50.9 (39.9) 10.5 10.8 13.7Amortisation of goodwill 0.0 0.0 0.0 0.0 0.0 0.0Net inc after amort of gw 26.6 50.9 (39.9) 10.5 10.8 13.7

Balance sheet (€m) Total assets 6,448.5 8,371.8 7,361.4 7,245.8 7,435.2 7,639.2Customer loans 2,687.2 2,353.3 2,433.9 2,482.6 2,532.3 2,582.9% of total assets 41.7 28.1 33.1 34.3 34.1 33.8Other int-earning assets 3,641.8 5,900.6 4,770.6 4,611.9 4,751.7 4,905.1Customer deposits 5,301.1 5,862.9 5,524.0 5,382.9 5,547.7 5,723.8% of total assets 82.2 70.0 75.0 74.3 74.6 74.9Other int-bearing liabilities 835.3 2,145.1 1,612.8 1,637.1 1,662.0 1,687.3Shareholders' funds 217.6 254.9 167.4 168.6 168.4 170.9

Per share data (€) EPS reported 1.79 3.41 (2.70) 0.71 0.72 0.92EPS underlying 1.24 1.62 1.27 0.71 0.72 0.92DPS 1.40 2.60 0.45 0.40 0.41 0.52 Dividend yield 16.7 31.0 5.4 4.8 4.9 6.2 BVPS 14.5 16.9 11.3 11.3 11.3 11.4 14.5 16.9 11.3 11.3 11.3 11.4

Solvency and profitability ratios (%) Tier 1 BIS ratio 14.9 16.0 14.6 14.3 14.4 14.6Total BIS ratio 17.5 18.6 18.1 17.6 17.7 17.8RWA 1,199 1,277 940 987 1,008 1,032 ROA 0.4 0.7 -0.5 0.1 0.1 0.1ROE 12.2 20.0 -23.9 6.3 6.4 8.0


KBC Buy

Belgium Price (20/03/09) €11.62 Market cap €3,955.1mBanks Target price (12 mth) €14.00 Reuters KBC.BR



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Investment case With fears increasing over CEE-R we believe

differentiation is essential as not all countries have

similar risk profiles. In our view KBC is exposed to

the relatively ‘safer’ banking systems in the region,

like the Czech Republic (48% of CEE-R loans),

Slovakia (5%) and Poland (16%). We forecast KBC’s

risk provisions to increase from 0.5% in 2008 to

1.2% for 2009-10 driven by CEE-R (€43bn loans)

and Merchant banking (€76bn).

Capital buffers appear strong enough with Core

Tier 1 ratio at 8.5% for 2009F and capacity to raise

25% of hybrid capital in the insurance operations.

Stress testing the capital base highlights capital

needs of €1.3bn which can be covered by hybrid

capital capacity (€0.5bn) in the insurance

operations and €1.5bn standby facility with the

Flemish government. ABS/CDO risks that dented

confidence in 2008 remain but are much more

contained.

2009 and 2010 will be tough, but in our view this is

more than balanced by an attractive valuation. KBC

is trading at a P/TE multiple of 0.5x and assuming

the harsh scenario of a rights issue today to fully

repay the government securities of 0.8x, in line with

peers.

Company profile

History KBC Bank and Insurance Group (KBC) is one of the

largest financial groups in Belgium, established in 1998

through the merger of Kredietbank (a retail and

corporate bank), ABB (an insurance company) and

CERA (a co-operative bank). KBC pursues a multi-

channel bancassurance strategy with a geographical

focus on Belgium (the domestic market) and Central

and Eastern Europe. KBC consists of five business

units Belgium, Central and Eastern Europe and Russia

(CEE-R), merchant banking, Private Banking and the

Shared Services & Operations (group centre).

The Belgian and CEE-R business units contribute roughly 84% of KBC’s profits. The

Belgian unit comprises all the banking and insurance

activities in Belgium, the retail and private banking

activities of KBC Bank and the insurance activities of

KBC Insurance. The combination of banking and

insurance operations demonstrates that the company

aims to operate as an integrated bancassurance

group. KBC has a top-three market position in

Belgium.

CEE: 28% of 2008 profit and 24% of loan book In CEE, KBC holds top-three positions in the financial

sector, benefiting from its early mover position. The

group embarked on its CEE expansion in 1999 with the

acquisition of CSOB in the Czech Rep and Slovakia. In

2000-05, KBC expanded its position by acquiring

banks and insurance companies in Poland, Hungary,

the Czech Rep and Slovakia. In 2007, KBC added

Bulgaria, Romania, Russia and Serbia to its portfolio

through acquisitions.

Financials

Yr to Dec 2006 2007 2008 2009F 2010F 2011F

Income statement (€m) Net interest income 4,158.0 4,089.0 4,992.0 5,121.3 5,328.5 5,587.5Net fees and commissions 1,865.0 1,993.0 1,714.0 1,398.6 1,480.8 1,584.8Trading profit 1,883.0 2,325.0 (3,385.0) 528.6 614.7 776.9Insurance profit 414.0 521.0 631.0 611.6 553.1 561.0Other operating income 1,329.0 875.0 878.0 526.4 552.7 631.9Total income 9,649.0 9,803.0 4,830.0 8,186.4 8,529.9 9,142.1% of average total assets 3.0 2.9 1.4 2.2 2.1 2.0Total operating costs (4,923.0) (5,219.0) (5,599.0) (5,382.6) (5,383.9) (5,631.8)% of average total assets 1.5 1.5 1.6 1.4 1.3 1.2% of total income 51.0 53.2 115.9 65.8 63.1 61.6Net operating income 4,726.0 4,584.0 (769.0) 2,803.8 3,146.0 3,510.3Provisions (175.0) (266.0) (2,233.0) (2,074.8) (1,821.0) (1,073.7)Operating profit 4,551.0 4,318.0 (3,002.0) 729.0 1,325.0 2,436.6Associates 45.0 56.0 0.0 11.7 29.2 28.3Capital gains, etc 0.0 0.0 0.0 0.0 0.0 0.0Pre-tax profit 4,596.0 4,374.0 (3,002.0) 740.8 1,354.2 2,464.8Tax (1,002.0) (969.0) 628.0 (229.8) (299.2) (516.9)% tax rate 21.8 22.2 20.9 31.0 22.1 21.0Minorities (162.0) (122.0) (106.0) (100.6) (102.5) (104.4)Extraordinary & other items (884.0) (137.0) 4,754.0 348.0 0.0 0.0Underlying pre coupon 2,548.0 3,143.0 2,270.0 758.4 952.5 1,843.6Coupon, financial crisis 694.0 137.0 (4,754.0) (348.0) (467.5) (467.5)Net inc after amort of gw 3,242.0 3,280.0 (2,484.0) 410.4 485.0 1,376.1

Balance sheet (€m) Total assets 325,400 355,597 355,317 389,463 429,349 475,922Customer loans 132,400 147,051 157,206 170,165 184,192 199,375% of total assets 40.7 41.4 44.2 43.7 42.9 41.9Other int-earning assets 182,408 194,860 184,619 203,955 226,473 253,409Customer deposits 180,031 192,135 196,733 207,574 219,012 231,080% of total assets 55.3 54.0 55.4 53.3 51.0 48.6Other int-bearing liabilities 287,748 320,033 324,528 346,215 369,988 396,096Shareholders' funds 17,219 17,346 14,210 16,513 16,998 18,239

Per share data (€) Adj EPS 7.27 9.15 6.67 2.23 2.80 5.41EPS after amort of goodwill 9.2 9.5 (7.3) 1.2 1.4 4.0DPS 3.3 3.8 0.0 0.0 0.4 0.45BVPS 49.1 50.3 31.5 32.3 33.8 37.4Adj BVPS 43.2 42.8 22.7 23.6 25.1 28.7

Solvency and profitability ratios (%) Tier 1 BIS ratio 8.7 8.8 9.6 10.8 10.5 10.5Tier 2 BIS ratio 4.0 4.3 4.1 3.9 3.8 4.1Total BIS ratio 12.8 13.0 13.7 14.6 14.3 14.6ROE (underlying) 14.8 18.1 16.0 4.6 5.6 10.1

Credit quality (€m) Gross NPLs 2,221.0 2,386.0 3,239.0 8,097.5 12,146 9,717.0Accumulated provisions 1,541.0 1,505.0 1,949.0 3,742.1 5,426.0 4,340.8Coverage ratio (%) 69.4 63.1 60.2 46.2 44.7 44.7Net NPLs 1,296.4 1,483.0 2,069.6 5,852.3 8,890.6 7,112.5


Kinepolis Buy

Belgium Price (20/03/09) €15.91 Market cap €108.5mLeisure & hotels Target price (12 mth) €22.00 Reuters KIPO.BR



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Investment case We rate Kinepolis a BUY as it is a market leader in

relatively low-cost family entertainment, with a

business model that has proven resilient even in

crisis years. The group seems well equipped to

benefit from its digital capabilities (3D

offer/alternative content), which imply higher ticket

prices. Triggers for Kinepolis could include

announcements of geographical expansion or

acquisitions of distressed assets (auto-financing

allows limited expansion). In addition, we would not

rule out further remodelling of existing theatres

(potential impact on F&B revenues). Finally, we see

mainly long-term real estate development potential,

but still expect a first €2m capital gain on the

Blijweert project in Ghent in 2009. The group trades

at ‘cyclical’ multiples. We rate the shares a BUY

with a TP of €22, targeting a 2009F EV/EBITDA of

5.0x.

Company profile

History Kinepolis originated in 1997 following the merger of the

Bert and Claeys groups. It was listed on the stock

market in 1998 and has since grown to become

Belgium’s market leader and a leading player in the

European market. Kinepolis owns 23 cinema

complexes in Belgium, France, Spain, Poland and

Switzerland, and employs 1,600 people. In 2008, the

group hosted 21.9m cinema visitors and generated

€216.9m in sales.

Key drivers for Kinepolis include innovation and a

customer-friendly approach. Kinepolis has played a

pioneering role in Europe in relation to digital cinema

featuring the DLP technology. The group now has an

extensive platform of digital projectors in Belgium,

France and Spain. In addition to digital Hollywood

productions, cinema visitors can now experience

alternative content in digital format, such as prestigious

shows, TV series, live concerts and sports events.

With the creation of each new complex, Kinepolis

takes another step forward thanks to a number of

innovations. The most striking features are the open

foyer, the seat booking facilities, the ticket pricing and

monitoring system, and the extensive digitalisation of

film, information and communication channels.

In terms of geography, 52% of 2008 sales were

generated in Belgium, 27% in France and 19% in

Spain. In terms of segments, 59% of sales were

generated from ticket sales, 22% from food &

beverages, 14% from media & events, 1% from film

distribution and 4% from real estate (the group owns

c.1,000,000m² in real estate assets).

Financials

Yr to Dec (€m) 2006 2007 2008 2009F 2010F 2011F


Balance sheet Working capital (48.0) (35.5) (29.1) (27.5) (27.6) (28.0)Goodwill 20.5 18.8 18.8 18.8 18.8 18.8Tangible fixed assets 256.4 266.3 256.6 253.1 250.1 238.1Other intangible assets 2.4 2.3 2.5 2.5 2.5 2.5L/T investments 31.6 33.2 29.7 29.7 29.7 29.7Net debt 136.6 138.9 129.2 113.3 98.5 72.9L/T non-int-bearing liabs 18.3 32.6 32.0 32.0 32.0 32.0Minority interests (equity) 1.1 1.1 1.2 1.2 1.2 1.2Shareholders’ equity 107.0 112.4 116.1 130.2 141.8 155.1

Cash flow Op cash flow (pre-tax) 46.7 37.0 46.3 55.7 52.8 53.8Cash taxes (5.2) (3.5) (5.1) (6.3) (5.5) (6.3)Op cash flow (after-tax) 41.5 33.5 41.1 49.3 47.3 47.5Net financial charges (CF) (6.7) (6.9) (8.4) (8.5) (7.5) (6.1)Net capex (19.4) (32.8) (12.7) (20.0) (20.0) (10.0)Free cash flow 15.5 (6.2) 20.1 20.8 19.8 31.4


Growth (%) Turnover 9.5 0.5 2.1 -0.1 0.6 1.5EBITDA 13.0 0.4 8.7 -0.7 0.6 1.5Adj EPS 76.42 -11.84 22.36 -0.25 9.32 14.51




KPN Buy

Netherlands Price (20/03/09) €9.82 Market cap €16,835.4mTelecommunication services Target price (12 mth) €14.00 Reuters KPN.AS

Damien Chew, CFA London (44 20) 7767 5069 [email protected]


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Share data

No. of shares (m) 1,714Daily turnover (shares) 10,984,500Free float (%) 100.0Enterprise value (€m) 28,238Market cap (€m) 16,835


Investment case We believe KPN is still a safe haven given investor

concerns about the risk/reward profile in telecoms

in the wake of the weakening economic

environment. We think KPN should be able to meet

its €2.4bn FCF target for 2009-10, with higher

EBITDA and continued improvements in working

capital offsetting higher pension and cash interest

payments.

In the domestic market, continued cost flexibility

should help KPN deliver EBITDA growth despite the

weak economic environment. In Germany and

Belgium, growth is driven by market share gains.

Simple and good-value tariffs should appeal to

consumers who may be facing pressure on

disposable income. We are optimistic about E-Plus

given that the German mobile market is showing

signs of stabilisation with positive service revenue

growth reported for the first time in 1Q06.

Company profile

Company profile

KPN is the Dutch incumbent telecoms operator,

providing consumers and business customers with

services on fixed and mobile networks including voice,

internet and data services as well as fully managed,

outsourced ICT solutions. In Germany and Belgium, it

pursues a multi-brand strategy with its mobile

operations, and serves multiple customer segments in

consumer and business markets.

The Netherlands KPN’s Dutch operations are organised into the

following business units:

The Consumer Market division is responsible for

strategy, products and services, marketing,

distribution, sales and business development for the

consumer market in the Netherlands.

The Business Market division serves customers

ranging from big multinationals to small businesses.

KPN offers business customers innovative and reliable

ICT solutions.

The Wholesale & Operations division is responsible for

KPN’s fixed and mobile networks in the Netherlands

and serves Wholesale customers.

Mobile International Mobile International covers KPN’s mobile operators in

Germany (E-Plus) and Belgium (BASE), the

international mobile service provider Sympac, and all

mobile Wholesale activities, both home and abroad.

Both E-Plus and BASE offer businesses and

consumers mobile telephony, using multiple brands to

address customer segments.

Mobile Wholesale supplies other companies with

wholesale access to network resources so that they

can offer retail mobile services under their own label.

Financials

Yr to Dec (€m) 2006 2007 2008 2009F 2010F 2011F

Income statement Turnover 12,057 12,632 14,602 14,254 14,579 14,926EBITDA 4,805 4,852 5,001 5,168 5,346 5,445EBITA 2,479 2,600 2,665 2,781 2,970 3,141Operating exceptionals 0.0 0.0 0.0 0.0 0.0 0.0Net financial charges (520.0) (560.0) (704.0) (719.6) (719.9) (731.2)Pre-tax profit 1,710 1,941 1,887 2,169 2,390 2,558Taxes (127.0) 708.0 (550.0) (573.7) (609.4) (652.2)Net profit 1,583 2,652 1,332 1,592 1,777 1,901Adj net attributable profit 1,540 1,570 1,349 1,512 1,673 1,791

Balance sheet Working capital (956.0) (1,367) (2,062) (2,236) (2,349) (2,435)Goodwill 4,569 5,781 5,659 5,659 5,659 5,659Tangible fixed assets 7,965 7,866 7,736 7,923 8,081 8,303Other intangible assets 4,482 4,643 4,401 4,246 3,626 2,902L/T investments 1,182 2,447 2,382 2,382 2,382 2,382Net debt 8,261 10,604 10,840 11,402 11,651 11,864L/T non-int-bearing liabs 4,787 4,248 3,517 3,466 3,288 3,099Minority interests (equity) 1.0 28.0 29.0 32.2 35.9 40.1Shareholders’ equity 4,195 4,490 3,730 3,073 2,424 1,807

Cash flow Op cash flow (pre-tax) 4,394 4,605 5,149 5,088 5,206 5,275Cash taxes 148.0 (251.0) (522.0) (650.0) (825.1) (874.6)Op cash flow (after-tax) 4,542 4,354 4,627 4,438 4,381 4,400Net financial charges (CF) (470.0) (464.0) (597.0) (642.6) (651.3) (669.4)Net capex (1,595) (1,537) (1,751) (2,311) (1,775) (1,654)Free cash flow 2,477 2,353 2,279 1,484 1,955 2,077


Growth (%) Turnover 1.0 4.8 15.6 -2.4 2.3 2.4EBITDA 4.7 1.0 3.1 3.3 3.5 1.8Adj EPS 22.82 9.78 -8.00 17.27 16.54 13.01




Macintosh Hold

Netherlands Price (20/03/09) €7.18 Market cap €155.5mGeneral retailers Target price (12 mth) €8.00 Reuters MCIN.AS



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Investment case FY08 results were in line, and fear of further

deteriorating balance sheet ratios proved

unfounded. Nevertheless, we expect weak market

conditions to continue, with high operating

leverage clearly working against the company.

According to our estimates the company should

inch along on the edge of the precipice regarding

its financial covenants in 2009. Management is

focusing on cash flow generation, ie, actively

managing working capital, also guiding for a lower

capex level and offering a stock dividend instead of

cash. This should be enough to remain within its

financial covenants, but there is little room for

disappointment. We have a HOLD rating as balance

sheet risk has receded for now and the focus on

cash flow generation should help it keep within its

financial covenants. €8.0 TP based on 7x valuation

multiple in line with the previous downturn.

Company profile

Overview

Macintosh is the third-largest company in the Dutch

non-food retail market, specialising in the Living,

Fashion and Automotive & Telecom sectors in the

Benelux. It has around 1277 stores in the Netherlands,

Belgium, France and the UK. Around 85% of sales are

generated in the Benelux market and c.12% in the UK.

Macintosh constantly reviews its portfolio against

profitability standards and growth opportunities, and

each subsidiary must meet individual ROCE

standards. The ROCE target for the group is 12%.

Activities not expected to meet these standards within

a reasonable timeframe are generally divested, in

these trying times the company guided to be more

rigorous on underperforming stores, indicating that

every loss-making store will be closed.

Living (FY08: 24% of sales, 39% of EBIT)

Living consists of the labels Kwantum and GP Decors.

Kwantum offers home furnishing and decorative

products through 98 stores in the Netherlands and 9 in

Belgium at attractive prices and is positioned as

discounter. GP Decors has 54 stores in France

specialising in home decoration at attractive prices.

Fashion (FY08: 52% of sales, 47% EBIT) The Fashion segment consist the labels Scapino,

Brantano (acquired end 2007), Dolcis, Invito, Manfiel,

PRO sport. Macintosh is the market leader in the

Benelux and operates 427 stores in the Netherlands,

163 in Belgium and 149 in the UK.

Automotive & Telecom (FY08: 26% of sales,

15% of EBIT) The Automotive & Telecom segment consists of

BelCompany and Halfords. BelCompany is the largest

supplier of mobile telecom products/services in the

Netherlands (207 stores) and one of the largest

independent telecom retailers in Belgium (85 stores as

of end 2008). It offers a wide range of products,

including all brands of mobile phones, subscriptions,

prepaid products, data products, ADSL and internet

services. Halfords is a specialist retailer of bicycles and

car (PNDs) accessories, with 150 stores in the

Netherlands and 9 stores in Belgium. It is one of the

largest bicycle retailers in the Netherlands, and its

portfolio consists of A-brands and own-brand products.

Financials

Yr to Dec (€m) 2006 2007 2008 2009F 2010F 2011F

Income statement Turnover 914.5 920.0 1,186.5 1,085.1 1,103.7 1,245.2EBITDA 86.1 87.3 77.3 64.1 73.4 93.4EBITA 64.7 66.9 45.6 32.1 41.0 59.8Operating exceptionals 0.0 0.0 8.5 0.0 0.0 0.0Net financial charges (7.1) (4.7) (15.0) (9.4) (8.5) (8.5)Pre-tax profit 57.6 62.2 39.1 22.7 32.5 51.3Taxes (15.4) (14.7) (7.8) (5.5) (7.8) (12.3)Net profit 42.2 47.5 31.3 17.2 24.7 39.0Adj net attributable profit 42.2 47.5 31.3 17.2 24.7 39.0


Cash flow Op cash flow (pre-tax) 44.8 98.0 94.0 62.1 71.1 93.4Cash taxes (15.4) (14.7) (7.8) (5.5) (7.8) (12.3)Op cash flow (after-tax) 29.4 83.3 86.2 56.7 63.3 81.0Net financial charges (CF) (7.1) (4.7) (15.0) (9.4) (8.5) (8.5)Net capex (28.0) (24.0) (28.3) (20.0) (20.0) (25.0)Free cash flow (5.7) 54.6 42.9 27.2 34.8 47.6






Melexis Hold

Belgium Price (20/03/09) €3.50 Market cap €149.8mIT hardware Target price (12 mth) €3.70 Reuters MLXS.BR



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Investment case Melexis is currently sailing through very rough

seas. The weak 4Q08 results and poor outlook

relate to an ‘inventory accelerator’, with a drop in

demand and destocking leading to an even larger

demand drop for the next player in the automotive

supply chain. We expect destocking to bottom out

in 2Q09F, while a potential (modest) revival of car

sales in 2Q08 would only impact Melexis in mid-

3Q09F. Improved car sales, restocking and a

positive US dollar impact should fully support

4Q09F numbers. Our target price is based on a

trough 8x PER on an average of 2009-10F numbers,

which reflects both the short-term dip as well as an

expected revival over the medium term. HOLD.

Company profile Melexis is a Belgian fabless semiconductor

manufacturer that develops, tests and markets a wide

range of integrated semiconductors for the automotive

industry as well as, to a lesser extent, the consumer

electronics industry. The company sells its products to

OEMs. Production is mainly outsourced to X-Fab, a

German-based foundry. Melexis is not a large player in

the global automotive semiconductor market. Its

revenues should place it in the top 20. However,

Melexis claims a leading position in Hall and Pressure

sensors, and a No.3 position in acceleration sensors.

The company has more than 680 employees, 50% of

whom are involved in R&D.

Automotive Applications (73% of 2008 sales)

Melexis’ main focus is on the design and development

of automotive electronics systems. Nearly all

automobile brands worldwide incorporate its ICs.

Growth in the electronic content of automobiles

worldwide demands increasingly capable ICs and IC

sensors. Hall effect devices are used in movement and

position sensing. Pressure and acceleration sensors

are used in various automotive safety applications

such as airbags. Another important product line for

Melexis is systems-on-a-chip, which are used for

window lifters and navigation systems.

Consumer Applications (27% of 2008 sales) Melexis also develops chips for other sectors. Typical

end-products that utilise Melexis’ components are

infrared thermometers, computer game consoles,

entertainment systems, mobile phones, handheld

remote controls and battery charging controllers.

Geographical breakdown of 2008 sales Europe: 43%; Asia: 37%; the US: 13%; ROW: 7%.

Financials

Yr to Dec (€m) 2006 2007 2008 2009F 2010F 2011F


Balance sheet Working capital 48.1 59.1 61.6 50.3 50.8 53.1Goodwill 0.0 0.0 0.0 0.0 0.0 0.0Tangible fixed assets 41.5 46.5 45.0 43.0 42.7 42.5Other intangible assets 2.5 1.1 0.5 0.5 0.5 0.5L/T investments 7.4 8.3 22.3 22.3 22.3 22.3Net debt 29.9 35.4 67.9 51.0 53.0 53.4L/T non-int-bearing liabs 0.0 0.0 0.0 (14.9) (14.9) (14.9)Minority interests (equity) 0.0 0.0 0.0 0.0 0.0 0.0Shareholders' equity 69.6 79.6 61.5 80.0 78.1 79.8

Cash flow Op cash flow (pre-tax) 47.5 41.6 33.6 43.3 40.3 43.4Cash taxes 5.3 2.2 0.4 1.8 3.2 4.5Op cash flow (after-tax) 52.8 43.8 34.1 45.1 43.5 47.9Net financial charges (CF) (2.5) (1.6) (1.4) (1.8) (1.5) (1.4)Net capex (15.4) (15.2) (11.0) (10.0) (11.9) (12.2)Free cash flow 34.9 27.0 21.6 33.3 30.2 34.2


Growth (%) Turnover 16.5 1.6 -8.5 -19.1 16.6 9.2EBITDA 15.4 -6.7 -16.7 -22.6 27.2 12.2Adj EPS 25.15 -0.49 -18.90 -40.78 44.76 15.28




Metris Sell

Belgium Price (20/03/09) €1.00 Market cap €12.3mElectronic & electrical equipment Target price (12 mth) €0.70 Reuters METR.BR



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Investment case Crushed by the cyclical nature of its business and

its gargantuan balance sheet, Metris has

undertaken a cost-cutting plan in recent months

and been given a waiver by banks. The company

forecasts +10%/-10% sales growth in 2009 and FCF

at 15-20% of revenues. This should be just enough

to pay debt interest that we estimate at €6.5m and

€10m of maturing debt in 2009. We do not think

Metris is out of the woods just yet. Financial risk

remains very high as there is no certainty that the

company will meet its guidance on revenues and

Metris’s financial position largely depends on

working capital evolution.

Company profile Metris designs, develops and markets a unique range

of 3D hardware and software inspection systems for

the automotive and aerospace sectors. The company

is a challenger in its market with a market share

estimated at 4.2% by the end of 2007 (up from 2.3% in

2006).

Metris started in 1995 as a spin-off from the University

of Leuven in Belgium, originally as a software

developer for the micro metrology industry. Through

organic and acquisitive growth, Metris now offers a full

range of solutions to fulfil client needs.

Optical Measurement (50% of 2007 sales) Metris is exposed to the fastest-growing segments of

the micro metrology market thanks to a product

portfolio focused on innovation in laser/optical

segments (as opposed to the contact segment). Metris

intends to benefit from the transition from contact to

non-contact metrology solutions and should see its

top-line growth outperforming the market. Metris’s non-

contact measurement tools include laser scanning,

laser radar, iGPS and Optical Coordinate Measuring

Machines (CMMs). These products accounted for 50%

of 2007 sales and are expected to reach 63% of the

product mix by 2010F.

Fixed CMM & Services (50% of 2007 sales)

To push through its innovations to end-customers, in

early 2007 Metris purchased a customer base with the

acquisition of LK (a CMM manufacturer and reputed

after-sales service). This was an important strategic

move as Metris’s key innovative products were

previously distributed indirectly via competitors’ CMMs.

While the acquisition has had a negative impact on

margins, we believe that direct contact with customers

is key for Metris to speed up the adoption rate of its

new technologies. Fixed CMM & Services accounted

for 50% of 2007 sales.

Geographical breakdown of 2007 sales Europe: 30%; US: 36%; UK/RoW: 34%

Financials

Yr to Dec (€m) 2006 2007 2008 2009F 2010F 2011F

Income statement Turnover 61.8 92.8 88.7 79.8 88.0 99.0EBITDA 11.9 15.3 3.7 8.3 17.9 22.2EBITA 5.6 7.3 (9.7) (3.6) 5.2 8.3Operating exceptionals 0.0 0.0 0.0 0.0 0.0 0.0Net financial charges (3.0) (3.1) (7.6) (6.5) (5.9) (5.2)Pre-tax profit 2.6 4.2 (17.3) (10.2) (0.7) 3.0Taxes 1.0 2.3 3.2 (2.0) 0.1 (0.5)Net profit 3.6 6.5 (14.0) (12.2) (0.6) 2.6Adj net attributable profit 3.6 6.5 (14.0) (12.2) (0.6) 2.6

Balance sheet Working capital 22.2 34.2 27.0 20.8 20.5 21.7Goodwill 59.9 102.4 118.6 118.6 118.6 118.6Tangible fixed assets 8.0 12.4 13.8 20.1 28.9 37.0Other intangible assets 3.6 8.1 12.8 12.8 12.8 12.8L/T investments 0.0 0.0 0.0 0.0 0.0 0.0Net debt 2.0 71.9 87.2 98.8 97.1 92.7L/T non-int-bearing liabs 1.4 3.5 0.7 1.1 12.0 23.1Minority interests (equity) 0.0 0.0 0.0 0.0 0.0 0.0Shareholders’ equity 89.5 101.2 84.5 72.3 71.7 74.3

Cash flow Op cash flow (pre-tax) 0.5 3.4 10.9 14.5 18.2 21.0Cash taxes 1.0 2.3 3.2 (2.0) 0.1 (0.5)Op cash flow (after-tax) 1.5 5.7 14.1 12.4 18.3 20.5Net financial charges (CF) (3.0) (2.8) (7.6) (6.5) (5.9) (5.2)Net capex (11.1) (19.4) (17.4) (17.5) (20.7) (20.8)Free cash flow (12.6) (16.5) (10.8) (11.6) (8.3) (5.6)

Ratios (%) EBITDA margin 19.3 16.5 4.1 10.4 20.3 22.4EBITA margin 9.1 7.9 -10.9 -4.5 5.9 8.4Net margin 5.9 7.0 -15.8 -15.3 -0.7 2.6ROE 6.4 6.8 -15.1 -15.6 -0.8 3.5Net debt/equity 2.2 71.0 103.3 136.7 135.5 124.8

Growth (%) Turnover 234.5 50.2 -4.4 -10.1 10.3 12.5EBITDA 88.7 28.8 -76.1 125.7 116.3 23.9Adj EPS 103.48 74.05 13.12 95.01

Per share data (€) Adj EPS 0.29 0.51 (1.11) (0.97) (0.05) 0.21Dividend 0.00 0.00 0.00 0.00 0.00 0.00NAV 7.28 6.92 5.78 4.94 4.90 5.08

Valuation EV/turnover (x) 0.2 0.9 1.1 1.4 1.2 1.1EV/EBITDA (x) 1.2 5.5 27.1 13.4 6.1 4.7EV/EBIT (x) 2.5 11.5 -10.3 -30.8 21.1 12.7Adj PER (x) 3.4 2.0 - - - 4.9Price/NAV (x) 0.1 0.1 0.2 0.2 0.2 0.2Dividend yield (%) 0.0 0.0 0.0 0.0 0.0 0.0


Mobistar Hold

Belgium Price (20/03/09) €46.08 Market cap €2,765.5mTelecommunication services Target price (12 mth) €51.00 Reuters MSTAR.BR



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Investment case Mobistar seems like one of the most defensive

names in Benelux. It performed well in 2008,

successfully growing data revenues by 21.1%, with

the launch of Apple’s iPhone3G being one of the

year’s highlights. However, the sustainability of

data revenue growth requires investments in

network capacity, which might prove costly in the

future. While the €4.55 DPS to be paid this year is

certainly attractive, there is still great uncertainty

over Belgium’s mobile termination rate (MTR)

gliding path as the country’s regulatory body could

see its Board reshuffled in the next few weeks. A

possible delay in the next MTR cut to 2010 could

temper the decline in dividends and should be seen

as a positive trigger.

Company profile Mobistar is the second-largest mobile operator in

Belgium in terms of customer numbers. It is part of the

Orange group, and 50.1% of its shares are owned by

France Telecom. Mobistar launched its Belgian mobile

telephony service in August 1996. In 1998, it launched

its fixed telephony service, and in 1999 it started its

corporate solutions business. The company

repositioned itself as a mobile-centric operator in 2007.

Mobile services (92% of revenues) Mobistar operates an EDGE network, which is

currently being upgraded to the 3G/HSDPA norm. In

the mature Belgian market (98% SIM card

penetration), Mobistar commands a strong number-two

position behind Proximus and has a high proportion of

post-paid customers (54%). Mobistar’s service

revenues are being hit by diminishing roaming fees

and mobile termination rates, explaining the 4.9% drop

in 2007. The firm’s new strategy is aimed at taking

advantage of fixed-to-mobile substitution and fixed-to-

mobile broadband substitution.

Fixed-line services (6%)

Mobistar offers fixed-line telephony and broadband

services to residential and business customers. The

company opted for a convergent approach for the

business and SOHO markets, bundling mobile and

fixed-line products. Following Mobistar’s repositioning

as a mobile-centric operator, this cannot be considered

the core of the company’s strategy.

VOXmobile (2%)

With the acquisition of Luxembourg’s VOXmobile,

Mobistar expanded its mobile service operations in

Benelux. Mobistar’s underleveraged balance sheet

faces few growth opportunities in Belgium and

translates into a generous shareholder remuneration

policy.

Financials

Yr to Dec (€m) 2006 2007 2008 2009F 2010F 2011F


Balance sheet Working capital (115.1) (136.8) (112.3) (135.6) (134.3) (134.1)Goodwill 10.6 81.5 79.3 79.3 79.3 79.3Tangible fixed assets 491.2 524.0 529.5 555.7 582.0 607.2Other intangible assets 325.5 312.8 284.3 353.0 322.6 292.2L/T investments 0.0 0.0 0.0 0.0 0.0 0.0Net debt (64.6) (0.2) 311.5 401.3 394.6 388.1L/T non-int-bearing liabs 13.0 13.7 16.8 15.1 15.1 15.1Minority interests (equity) 0.0 0.0 0.0 0.0 0.0 0.0Shareholders’ equity 763.8 768.0 452.5 436.0 439.9 441.4

Cash flow Op cash flow (pre-tax) 574.1 604.3 572.6 599.2 561.0 557.0Cash taxes (142.1) (137.9) (130.4) (126.4) (122.7) (121.2)Op cash flow (after-tax) 432.0 466.4 442.2 472.9 438.3 435.8Net financial charges (CF) 0.8 (0.1) (5.5) (22.4) (22.4) (22.2)Net capex (165.2) (227.2) (151.9) (267.1) (163.1) (161.0)Free cash flow 267.6 239.1 284.8 183.3 252.8 252.6


Growth (%) Turnover 6.8 -2.4 1.5 -0.5 -1.0 -0.1EBITDA 6.9 -3.6 -0.1 -2.4 -2.7 -0.9Adj EPS 10.51 -3.22 -0.04 -6.64 -2.58 -0.93




Nutreco Buy

Netherlands Price (20/03/09) €27.00 Market cap €926.1mFood producers & processors Target price (12 mth) €40.95 Reuters NUTR.AS



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Investment case We rate Nutreco a BUY based on three elements. (1)

The company’s resilient profits and management

prudence are good characteristics in recessionary

times. (2) Around 70% of EBITA is generated in two

product groups, premix and fish feed. Both groups,

in which Nutreco has leading positions, benefit

from megatrends related to food safety and

traceability as well as sustainability. After 15 years

of investment in these trends, the changes

demanded by customers are finally to Nutreco’s

advantage. (3) Nutreco’s low valuation. With a

2009F PER of 8.1x and EV/EBITDA of 4.8x, the

valuation is at trough multiples. Our target price of

€41 is supported by a free cash flow yield of 15-

17%.

Company profile

History Nutreco was established through an LBO from BP in

1994 and listed in 1997. Since the early 1980s, it has

benefited from its leading position in the salmon feed

business. The move back into animal nutrition (2004)

was a good one following expansion into salmon

farming and meat processing (1999-00). All

divestments have now taken place. Nutreco is using its

war chest to expand in both developed and developing

markets, in premix/specialities and in fish feed.

Fish feed Nutreco's EBIT is c.30% generated in this activity. In

salmon feed, Nutreco is the global market leader with a

40% share, slightly more than Cermaq’s 40%. Around

one-third of fish feed sales are for other species (such

as trout, halibut, cod, tuna and barramundi) and

Nutreco wants to grow further in these species.

Premix specialities

In premix (c.40% of EBIT), Nutreco is No.2 worldwide,

with a 14% market share after DSM's 20% share.

Nutreco is particularly strong In Europe and

increasingly so in developing markets.

Canada

In Canada (10% of EBIT), Nutreco is the leader in the

animal feed segment with a 23% share. Nutreco has a

high margin through marketing concepts/specialities.

Compound feed and meat processing The main compound feed positions are in Benelux and

Spain/Portugal, and Nutreco has leading positions (10-

15% of EBIT). In Benelux, this is a cash flow

generating business. In Spain, it is necessary to have

control of the chain, which is why Nutreco is also active

in poultry and pork processing. In poultry processing

(0-10% of EBIT), the company has a third of the

market.

Financials

Yr to Dec (€m) 2006 2007 2008 2009F 2010F 2011F


Balance sheet Working capital 67.6 132.2 212.2 177.4 183.2 190.5Goodwill 91.0 319.0 286.2 275.2 264.2 253.2Tangible fixed assets 281.3 429.0 478.1 488.1 488.1 488.1Other intangible assets 0.0 0.0 0.0 0.0 0.0 0.0L/T investments 82.0 95.0 76.7 76.7 76.7 76.7Net debt (275.0) 288.0 388.0 297.5 211.4 118.8L/T non-int-bearing liabs 47.4 61.0 12.2 12.2 12.2 12.2Minority interests (equity) 5.5 8.0 10.5 10.5 10.5 10.5Shareholders' equity 744.0 643.0 642.5 697.2 778.1 866.9

Cash flow Op cash flow (pre-tax) 113.2 97.0 158.3 275.6 264.0 279.6Cash taxes (46.5) (26.4) (37.2) (37.4) (44.0) (48.5)Op cash flow (after-tax) 66.7 70.6 121.1 238.2 220.0 231.1Net financial charges (CF) 7.6 (10.1) (31.8) (33.6) (31.1) (28.6)Net capex (46.7) (78.0) (90.2) (65.0) (56.1) (56.1)Free cash flow 27.6 (17.5) (0.9) 139.5 132.8 146.4


Growth (%) Turnover 0.2 33.6 22.9 -4.0 3.2 4.0EBITDA -17.2 26.0 15.8 3.5 9.6 5.5Adj EPS -28.11 11.55 -5.87 1.48 15.74 9.42




Nyrstar Hold

Belgium Price (20/03/09) €2.77 Market cap €277.0mSteel & other metals Target price (12 mth) €2.50 Reuters NYR.BR



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Investment case 2009 will be very challenging, and we expect

Nyrstar to report negative underlying EBITDA of

€42.8m. However, it should weather the storm due

to its strong current balance sheet and the NWC

improvement from the Glencore deal. Valuation

remains hazardous given our forecasts of negative

EBITDA in 2009F and EBITDA of close to zero in

2010F. Nyrstar currently trades at a 2011F PER of

8.6x. Despite the heavily battered share price, we

believe visibility remains too limited to speculate

on an eventual zinc price recovery. HOLD.

The main downside risks are a weaker-than-

expected NWC impact from the Glencore deal and

further zinc price weakness. The latter seems

unlikely due to the announced 1.7mt (15% of

estimated 2009 demand) production cuts across

the sector, which should underpin the zinc price, in

our view. Upside risks stem from a faster-than-

expected economic/zinc price recovery. Finally,

Glencore’s 7.8% stake in Nyrstar adds some M&A

flavour to the sector, although we do not expect

any short-term deals.

Company profile Nyrstar was created in September 2007 through the

merger of the zinc (and lead) smelting divisions of

Zinifex and Umicore. The company is the world’s

largest zinc smelter, with capacity of 1.1mt of zinc per

annum, which corresponds to a market share of 10%.

Nyrstar has activities in four continents and reported

EBITDA of €146m in 2008. Zinc is predominantly used

for corrosion protection of steel, via galvanised

coatings. According to Brook Hunt, a sector specialist,

damage caused by the corrosion of steel costs roughly

4% of an industrial country’s GDP. Given that only

15% of steel and 50% of worldwide sheet steel are

protected by zinc, there is still an economic justification

for a higher and more intensive use of zinc.

Nyrstar benefits from fairly secure feedstock, as 48%

of its concentrate requirements are provided for by ‘life

of mine’ agreements with OZ Minerals (ex Zinifex).

This is an important asset, especially in times of

concentrate shortage. Furthermore, 20% of Nyrstar’s

feed requirements are sourced from secondary

materials, reducing its dependence on concentrates

and improving profitability (a cost saving of about 5%

vis-à-vis concentrate, according to Nyrstar

management).

Uniquely, Nyrstar has a global presence, with

production facilities on four continents, with sales

stemming mainly from Europe (54%) and Asia-Pacific

(35%). Production assets are efficiently managed, with

upside identified in terms of recovery rate (group

average of 94% to be lifted to 96%, as reflected in our

estimates). In addition, Brook Hunt estimates cash

conversion costs to be in line with industry averages.

In terms of products, the company produces an

extensive range. Special high-grade (SHG) zinc (a

standard product) accounts for 45% of sales and

generates premiums of US$200-300/t. In addition, the

company produces galvanising alloys (25% of sales)

with premiums of 20-40% to SHG and die-cast alloys

(30% of sales) with premiums of 35-50% to SHG.

Financials

Yr to Dec (€m) 2008 2009F 2010F 2011F

Income statement

Turnover 2,409.7 1,646.2 1,978.6 2,174.9EBITDA 145.8 (49.2) (7.4) 93.7EBITA 66.1 (99.2) (57.4) 43.7Operating exceptionals 0.0 0.0 0.0 0.0Net financial charges (13.8) 0.2 (2.0) (4.1)Pre-tax profit (606.3) (92.6) (53.0) 46.0Taxes 11.6 0.0 0.0 (13.8)Net profit (584.9) (92.6) (53.0) 32.2Adj net attributable profit 62.9 (92.6) (53.0) 32.2

Balance sheet

Working capital 223.1 186.3 207.6 250.4Goodwill 3.0 3.0 3.0 3.0Tangible fixed assets 435.9 445.9 455.9 465.9Other intangible assets 0.0 0.0 0.0 0.0L/T investments 92.1 92.1 92.1 92.1Net debt (146.7) (80.9) 3.5 24.0L/T non-int-bearing liabs 189.7 189.7 189.7 189.7Minority interests (equity) 4.5 4.5 4.5 4.5Shareholders’ equity 706.6 614.0 561.0 593.1

Cash flow

Op cash flow (pre-tax) 483.1 (12.4) (28.8) 50.9Cash taxes 11.6 0.0 0.0 (13.8)Op cash flow (after-tax) 494.7 (12.4) (28.8) 37.2Net financial charges (CF) (13.8) 0.2 (2.0) (4.1)Net capex (116.4) (60.0) (60.0) (60.0)Free cash flow 364.5 (72.2) (90.8) (26.9)

Ratios (%)

EBITDA margin 6.1 -3.0 -0.4 4.3EBITA margin 2.7 -6.0 -2.9 2.0Net margin -24.7 -5.6 -2.7 1.5ROE -82.8 -14.0 -9.0 5.6Net debt/equity -20.6 -13.1 0.6 4.0

Growth (%)

Turnover -31.7 20.2 9.9EBITDA -133.8 - -Adj EPS - 42.73 -


Adj EPS 0.63 (0.93) (0.53) 0.32Dividend 0.00 0.00 0.00 0.00NAV 7.07 6.14 5.61 5.93

Valuation

EV/turnover (x) 0.1 0.1 0.1 0.1EV/EBITDA (x) 0.9 -4.1 -38.5 3.3EV/EBIT (x) 2.0 -2.0 -5.0 7.0Adj PER (x) 4.4 - - 8.6Price/NAV (x) 0.4 0.5 0.5 0.5Dividend yield (%) 0.0 0.0 0.0 0.0


Océ Sell

Netherlands Price (20/03/09) €2.28 Market cap €193.3mIT hardware Target price (12 mth) €1.60 Reuters OCEN.AS



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Investment case Océ barely managed to post a positive net result at

the start of this recession, having failed to

capitalise on the boom of the previous years.

Although still within its covenants at end-2008, the

further drying up of new machine sales, the knock-

on effect on recurring sales later in the cycle, and

better capitalised competitors, make a breach well

within reach. On our estimates, the measures

announced will not be enough. The weak macro

backdrop will continue to hurt earnings momentum

and Océ’s cost-cutting efforts may be insufficient

to offset this. We have pencilled in moderate

declines in revenue for 2009 and 100% retention of

restructuring savings, yet we arrive at a loss of

€0.20 per share. We think even a break up and sale

of the different units at this stage would barely

cover the net debt and pension liability.

Company profile Océ manufactures a wide range of digital

copier/printers for corporate environments and

commercial printers. In 2008, Océ, which has 23,000

employees, achieved revenues of €2.9bn.

Océ is organised into three divisions, the digital

document system (DDS) division, the wide format

printing systems (WFPS) division and Océ business

services (OBS). DDS was formed in 2002 to address

all clients with high-volume and high-speed copying/

printing needs – both corporate (offices, repro

departments and data centres) and commercial

printers (copy shops, graphics industry and paper

production).

Océ focuses on the high-volume segment (>50,000

prints per month), where the number of suppliers is

limited. Its main strengths lie in the productivity and

reliability of its machines. Océ retains a direct sales

and service channel. In order to improve its position in

DDS offices in the US, Océ acquired Imagistics at the

end of 2005. Imagistics is a distributor of low-volume

office machines from Konica Minolta, Toshiba and

Sharp.

WFPS encompasses two subdivisions. The technical

document division supplies equipment, software and

services to industrial companies, mechanical

engineering and construction companies and

architects, for wide-format printing. Océ has steadily

strengthened its leading position in this niche.

Although technical printing is mainly in black and white,

the share of colour is growing. Display graphics is a

relatively new market for wide-format graphic

illustrations. The main applications are outdoor and

indoor advertising. Customers are mainly specialised

printers. Océ's position was reinforced in 2001 by the

acquisition of Gretag Professional Imaging.

OBS focuses on the market for document

management services and solutions for the life cycle of

documents (copying, printing, mail processing, records

management and e-discovery). The business operates

both inside and outside a customer’s organisation.

Financials

Yr to Nov (€m) 2006 2007 2008 2009F 2010F 2011F

Income statement Turnover 3,110.3 3,098.2 2,909.0 2,818.2 2,869.9 2,923.2EBITDA 306.2 321.2 219.0 197.7 207.3 206.5EBITA 141.2 161.2 87.0 65.7 75.3 74.5Operating exceptionals 0.0 0.0 0.0 0.0 0.0 0.0Net financial charges (46.0) (40.3) (47.9) (39.9) (37.9) (35.9)Pre-tax profit 56.6 81.3 (1.3) (15.2) (3.6) (2.4)Taxes 0.4 (2.4) 5.1 2.3 0.5 0.4Net profit 54.9 77.1 2.0 (14.7) (4.8) (2.9)Adj net attributable profit 53.1 74.6 (0.6) (17.3) (7.4) (5.4)


Cash flow Op cash flow (pre-tax) 209.3 260.4 121.5 169.6 203.1 203.2Cash taxes 0.4 (2.4) 5.1 2.3 0.5 2.6Op cash flow (after-tax) 209.7 258.0 126.6 171.9 203.7 205.8Net financial charges (CF) (45.5) (39.9) (47.9) (39.9) (37.9) (47.9)Net capex (74.9) (149.0) (140.0) (144.0) (145.0) (146.0)Free cash flow 87.6 66.5 (63.9) (14.6) 18.2 9.3

Ratios (%) EBITDA margin 9.8 10.4 7.5 7.0 7.2 7.1EBITA margin 4.5 5.2 3.0 2.3 2.6 2.5Net margin 1.8 2.5 0.1 -0.5 -0.1 -0.1ROE 7.6 11.0 -0.1 -2.7 -1.2 -0.9Net debt/equity 98.8 84.2 89.7 93.3 95.6 102.4

Growth (%) Turnover 16.2 -0.4 -6.1 -3.1 1.8 1.9EBITDA 19.5 4.9 -31.8 -9.7 4.9 -0.4Adj EPS -31.00 39.62 N/M N/M 57.24 26.43

Per share data (€) Adj EPS 0.63 0.88 (0.01) (0.20) (0.09) (0.06)Dividend 0.58 0.64 0.15 0.15 0.15 0.15NAV 8.16 8.03 7.62 7.29 7.08 6.74

Valuation EV/turnover (x) 0.4 0.4 0.4 0.4 0.4 0.5EV/EBITDA (x) 3.9 3.5 5.6 5.7 5.4 7.6EV/EBIT (x) 11.8 9.3 26.6 45.9 32.7 46.7Adj PER (x) 3.6 2.6 Price/NAV (x) 0.3 0.3 0.3 0.3 0.3 0.3Dividend yield (%) 25.4 28.1 6.6 6.6 6.6 6.6


Omega Pharma Hold

Belgium Price (20/03/09) €17.93 Market cap €434.4mHealth Target price (12 mth) €24.00 Reuters OMEP.BR

Sjoerd Ummels Brussels (32 2) 547 8941 [email protected]


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Investment case Omega Pharma’s full-year 2008 figures published

on 12 March 2009 laid bare its sensitivity to the

economic decline: weak performances in France

and Southern Europe; a disappointing net result;

poor working capital management; and soaring net

debt. 2009 looks set to be a very difficult year for

the company, with rising unemployment and

downbeat consumer sentiment likely to undermine

significant earnings recovery in the short term. We

adopt a wait-and-see stance in anticipation of

tangible proof of successful execution of the

announced – and much-needed – cost-savings

programme. We maintain our HOLD rating and €24

TP, applying a target 2009F PER valuation multiple

of 7.5x (roughly in line with the valuation of the

broader Benelux SMC universe).

Company profile

Description

Omega Pharma (OP) develops, produces and markets

prescription-free medicines and healthcare products to

individual end-consumers in Western Europe, Central

and Eastern Europe (CEE/CIS) and selected markets

beyond Europe. OP is active in the over-the-counter

(OTC) pharmaceutical market, also known as the

Consumer Health market, where a range of

pharmaceutical and healthcare products can be

obtained without a doctor’s prescription. The

company’s activities can be classified into four major

segments:

Personal care products (c.50% of 2008 sales) OP’s personal care products are not registered as

medicines and are commonly available in general retail

outlets and pharmacies (the latter enjoying pharmacy-

exclusive brands). Key sub-segments are skin and

body care products, as well as cosmetics.

Nutritional supplements (c.35% of 2008 sales) Nutritional supplements are not registered as

medicines but are subject to nutritional requirements.

They are widely available through a variety of

distribution channels (supermarkets, bio shops,

pharmacies). The main products are vitamins and

minerals.

Medical devices (c.10% of 2008 sales) Medical devices are not registered as medicines but

often carry a CE label and are primarily sold in

pharmacies. The main products are home diagnostics

and products for the treatment of warts and head lice.

OTC medicines (c.5% of 2008 sales) OTC medicines are officially registered as medicines

but available to the end-consumer without a doctor’s

prescription. Sales in most European countries take

place exclusively in pharmacies (except for the

Netherlands and the UK).

OP runs operations in five major geographical areas

that also serve as reporting segments: Belgium (c.25%

of 2008 sales); France (c.23% of 2008 sales);

Southern Europe (c.18% of 2008 sales); Northern

Europe (c.13% of 2008 sales); Rest of the World

(c.21% of 2008 sales).

Financials

Yr to Dec (€m) 2006 2007 2008 2009F 2010F 2011F



Cash flow Op cash flow (pre-tax) 121.6 134.9 93.4 94.2 136.4 133.5Cash taxes (11.6) (7.9) (7.9) (15.6) (18.4) (19.7)Op cash flow (after-tax) 109.9 127.0 85.5 78.7 118.0 113.9Net financial charges (CF) (23.2) (34.4) (39.9) (30.5) (28.5) (27.5)Net capex (20.5) 253.7 (38.8) (25.6) (26.1) (26.8)Free cash flow 66.2 346.3 6.9 22.6 63.4 59.6


Growth (%) Turnover 8.0 2.8 1.5 2.3 3.4EBITDA -5.9 14.9 14.2 3.0 2.5Adj EPS -22.62 29.13 39.04 4.25 3.90




OncoMethylome Sciences Buy

Belgium Price (20/03/09) €5.45 Market cap €71.7mPharmaceuticals Target price (12 mth) €10.30 Reuters ONCOB.BR

Luke Poloniecki London (44 20) 7767 5851 [email protected]


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Investment case For OncoMethylome Sciences, 2008 was a

successful year, in which methylation-based

diagnostics became a commercial reality in the US.

We believe that the company’s diagnostic tests

covering six cancer types have a sales opportunity

of over US$1bn and should drive the company to

profitability in 2011F. The successful fundraising in

December 2008, a major achievement given the

climate, endorses the strength of the company’s

technology and swells its cash position to a solid

€30m. We believe the stock is significantly

undervalued and value-enhancing catalysts exist

over the coming year to trigger its re-rating. BUY.

Company profile

Overview

OncoMethylome Sciences is a Belgium-based leader

in DNA methylation technology. This is an exciting new

approach to cancer detection and diagnosis that relies

on aberrant methylation (a specific type of chemical

modification) of certain genes correlating with the

development of cancer. This technology may result in

a new generation of ultra-sensitive cancer diagnostics

and improved personalised cancer treatment.

Technology leader OncoMethylome is one of two quoted companies (the

other being Epigenomics) active in this technology

field. We believe its market position is the strongest

given its pre-eminent proprietary technology platform

(methylation-specific PCR) and its unrivalled network

of scientific advisers.

Broad pipeline, strong partners

OncoMethylome has diagnostic products in

development for eight cancer types with a combined

market potential in excess of €1bn, on our estimates.

The most advanced are an early prostate cancer

diagnostic (partnered with Veridex, part of Johnson &

Johnson), and a test to predict treatment response in

brain cancer (partnered with LabCorp and Schering-

Plough). In addition, it gains royalties on a LabCorp

stool-based colorectal cancer test that needs

methylation for detection of the marker. All three tests

were launched in the US in 2008 by LabCorp.

Valuation Our €10.3 target price is based on risk-adjusted NPV.

Financials

Yr to Dec (€m) 2007 2008 2009F 2010F 2011F 2012F

Income statement Turnover 2.6 3.0 5.5 8.9 21.4 45.4EBITDA (10.4) (10.3) (9.8) (10.8) (1.5) 18.3EBITA (11.0) (11.3) (9.3) (10.1) (0.6) 19.3Operating exceptionals 0.0 0.0 0.0 0.0 0.0 0.0Net financial charges 4.0 5.1 5.4 6.3 7.2 8.4Pre-tax profit (7.0) (6.2) (4.4) (4.2) 6.3 27.5Taxes 0.0 0.0 0.0 0.0 0.0 0.0Net profit (7.0) (6.2) (4.4) (4.2) 6.3 27.5Adj net attributable profit (7.0) (6.2) (3.9) (3.8) 6.6 27.7


Cash flow Op cash flow (pre-tax) (11.3) (9.3) (9.3) (10.1) (1.4) 18.4Cash taxes 0.0 0.0 0.0 0.0 0.0 0.0Op cash flow (after-tax) (11.3) (9.3) (9.3) (10.1) (1.4) 18.4Net financial charges (CF) 1.0 1.1 0.4 0.3 0.2 0.4Net capex (0.7) (2.3) (0.9) (1.0) (1.1) (1.0)Free cash flow (11.0) (10.4) (9.7) (10.8) (2.3) 17.7

Ratios (%) EBITDA margin -393.6 -341.3 -178.6 -121.0 -7.2 40.4EBITA margin -415.4 -374.5 -168.5 -112.7 -3.0 42.6Net margin -264.1 -204.8 -80.4 -46.9 29.5 60.7ROE -21.1 -18.5 -15.7 -22.5 46.2 116.6Net debt/equity -97.0 -93.7 -92.4 -89.9 -86.3 -93.0

Growth (%) Turnover -4.7 14.5 82.0 62.5 139.0 112.2EBITDA Adj EPS -15.58 12.03 43.61 1.12 322.62

Per share data (€) Adj EPS (0.59) (0.52) (0.29) (0.29) 0.50 2.10Dividend 0.00 0.00 0.00 0.00 0.00 0.00NAV 2.88 2.75 1.79 1.05 1.03 2.56

Valuation EV/turnover (x) 11.9 11.2 9.1 6.6 2.8 0.9EV/EBITDA (x) (3.0) (3.3) (5.1) (5.5) (38.8) 2.2EV/EBIT (x) (2.9) (3.0) (5.1) (5.7) (67.3) 2.1Adj PER (x) 10.9 2.6Price/NAV (x) 1.9 2.0 3.0 5.2 5.3 2.1Dividend yield (%) 0.0 0.0 0.0 0.0 0.0 0.0


OPG Buy

Netherlands Price (20/03/09) €6.80 Market cap €396.4mHealth Target price (12 mth) €9.50 Reuters OPGNc.AS



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Investment case We rate OPG a BUY with a target price of €9.5. After

a stock price decline of more than 75% since its

peak in July 2007 and 15-20% over the past two

months, we believe the shares have not only

digested the structural pressure on margins in both

NL (eg, the regulatory changes in the Dutch

pharmacy market) and Direct & Institutional, but

have also already priced in potential further

negative changes to regulations. However, the

potential upside and defensive characteristics

seem neglected. As such, we believe OPG offers

investors good value with defensive

characteristics, while offering an option value for

potential positive regulatory changes over the next

six months. In our view, it is unlikely that further

negative regulatory changes will be forced upon

the Pharmacy sector, while there is a chance that

the outcome of the study by the NZa could lead to a

rise in dispensing fees or a lowering of the

clawback. Even a neutral outcome would be a

major trigger for the shares in our view. Valuation

looks attractive, trading at the low-end of its

historical valuation range of c.6-7x, offering a >9%

FCF yield beyond 2009F and a dividend yield of 4-

5%.

Company profile

Overview

OPG is a retailer and distributor of pharmaceutical and

medical supplies. With more than 7,700 employees, it

is active in three channels: (1) operating pharmacies

and wholesaling; (2) providing medical supplies for

home healthcare and related services; and (3)

marketing and distributing pharmaceuticals and

medical supplies to hospitals and nursing homes.

Divisional breakdown

The company has three divisions: Pharmacies

Netherlands, consisting of the Dutch wholesale and

pharmacy chain (40% of 2008 sales and 34% of 2008

EBIT); Pharmacies International, consisting of the Belgian

and Polish retail and wholesale activity (32% of sales and

7% of EBIT); and Direct & Institutional (28% and 72%).

Geographical breakdown Around 60% of revenues are generated in the Dutch

market, and the company also has operations in

Poland (24% of sales), Belgium (8%), Germany,

Denmark, Norway, Hungary, Switzerland and the US.

OPG is market leader in the Dutch pharmacy market,

with 231 pharmacies, with a market share of c.14%.

Its markets are characterised by high long-term growth

due to demographic factors and technological

innovation and by the structure of the healthcare

insurance and reimbursement system.

Strategy

OPG has a well profiled retail chain, and the launch of

the Mediq Pharmacy is clear evidence of this strategy.

OPG aims to increase its role from distribution of

pharmaceutical and medical products to more

consulting and advisory services. It uses two

distribution canals: direct to the customer and indirect

like hospitals. The strategy should result in 8-10% EPS

growth annually and ROIC of at least 15%.

Financials

Yr to Dec (€m) 2006 2007 2008 2009F 2010F 2011F

Income statement Turnover 2,281.0 2,476.6 2,730.5 2,672.0 2,746.1 2,855.9EBITDA 147.3 171.5 121.2 118.6 124.3 133.6EBITA 130.2 156.6 102.5 98.6 104.3 113.6Operating exceptionals 0.0 0.0 5.5 0.0 0.0 0.0Net financial charges (7.3) (10.5) (16.1) (13.0) (10.0) (6.5)Pre-tax profit 122.9 143.0 (117.2) 76.4 86.1 98.9Taxes (20.4) (31.5) (5.9) (19.9) (22.4) (25.7)Net profit 99.9 109.2 (123.5) 53.1 60.2 69.7Adj net attributable profit 99.9 115.1 62.0 59.9 67.0 76.5






Valuation (x) EV/turnover 0.2 0.2 0.2 0.2 0.2 0.2EV/EBITDA 3.7 3.3 5.6 5.5 4.9 4.3EV/EBIT 4.2 3.8 (6.5) 7.3 6.4 5.5Adj PER 4.0 3.5 6.4 6.6 5.9 5.3Price/NAV 0.8 0.7 1.1 1.0 0.9 0.8Dividend yield (%) 8.8 7.9 4.4 5.3 5.9 6.7


Option Hold

Belgium Price (20/03/09) €0.85 Market cap €35.1mIT hardware Target price (12 mth) €1.00 Reuters OPIN.BR



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Investment case Option has been through two very challenging

years, witnessing a huge increase in competition

triggered by the entry of Asian manufacturers

(most significantly Huawei and ZTE) into the

European marketplace. We forecast substantial

operational improvements in 2009 as pricing

pressures on USB devices (representing about 70%

of Option’s sales) start easing. However, we expect

the return to profitability to take time as the

company has little room to improve its cost base, in

our view. We expect the recession to take its toll on

Option’s industry and forecast a modest 5.2%

growth in revenues in 2009 as we expect volume

growth to slow down, largely offset by the easing of

pricing pressures.

Company profile

Overview Option is a leading vendor of wireless data cards,

along with Novatel Wireless and Sierra Wireless.

These cards slot into laptops, enabling them to send

and receive data over a wireless network. Option is

headquartered in Leuven, Belgium. Its main customers

are operators that sell the cards predominantly to

corporate laptop users.

After strong demand at the end of the 1990s, Option

ran into financial difficulties in 2001-02, as demand for

GSM (2G) data cards ran out of steam. At end-2003,

growth re-accelerated thanks to high demand for

GPRS (2.5G) cards, which allowed operators to offer

data transfers to laptop users at reduced costs and

faster speeds. The data card market received another

major boost with the launch of UMTS (3G) cards in

2004.

Going forward, growth is likely to be driven by demand

for HSDPA (3.5G) and next-generation HSUPA cards,

which are being widely deployed by operators

worldwide. Another driver should be recently

announced tier 1 operators Cingular, Orange, TIM,

Telefonica, TeliaSonera and Hutchison 3G. Moreover,

Option could become a major supplier to the potentially

substantial Japanese data card market.

Around end-2005, Option also launched new products,

which should have already represented 25% of

revenues in 2006: (1) wireless modules, which are

data cards integrated inside laptops; (2) wireless

routers, which wirelessly connect all computers in a

home to the outside world via mobile networks at

broadband speeds; and (3) ICON dongles, which are

data cards that can connect to any PC (laptop or

desktop) through the USB slot. These new products

carry lower gross margins than data cards, except for

ICON, which Option expects to be the largest revenue

contributor among these new products.

Geographical sales breakdown (2008 sales) Europe: 72%; North America: 13%; RoW: 5%

Financials

Yr to Dec (€m) 2006 2007 2008 2009F 2010F 2011F

Income statement Turnover 279.9 301.5 268.1 282.1 316.0 347.6EBITDA 53.1 22.4 (0.1) 2.1 10.7 20.2EBITA 42.1 2.5 (29.3) (26.1) (19.3) (11.2)Operating exceptionals 0.0 0.0 0.0 0.0 0.0 0.0Net financial charges 0.6 0.1 (0.5) 0.8 0.5 1.5Pre-tax profit 42.7 2.7 (29.8) (25.3) (18.8) (9.7)Taxes (7.4) 3.8 10.8 7.9 3.4 1.7Net profit 35.3 6.4 (19.0) (17.5) (15.4) (7.9)Adj net attributable profit 35.3 6.4 (19.0) (17.5) (15.4) (7.9)

Balance sheet Working capital 41.8 36.6 10.5 30.1 33.8 37.1Goodwill 0.0 0.0 0.0 0.0 0.0 0.0Tangible fixed assets 12.1 20.1 16.3 11.9 7.9 2.4Other intangible assets 33.3 31.8 43.2 24.8 27.4 30.9L/T investments 0.0 0.0 0.0 0.0 0.0 0.0Net debt (35.3) (35.5) (31.2) 0.5 11.5 8.5L/T non-int-bearing liabs 11.3 7.1 4.5 (14.8) (8.1) 4.1Minority interests (equity) 0.0 0.0 0.0 0.0 0.0 0.0Shareholders’ equity 111.2 117.6 98.6 81.1 65.7 57.8

Cash flow Op cash flow (pre-tax) 18.9 27.7 26.0 (17.7) 7.1 16.8Cash taxes (7.4) 3.8 10.8 7.9 3.4 1.7Op cash flow (after-tax) 11.5 31.4 36.9 (9.8) 10.5 18.6Net financial charges (CF) 0.6 0.1 (0.5) 0.8 0.5 1.5Net capex (9.2) (32.4) (26.6) (22.8) (22.0) (19.1)Free cash flow 2.8 (0.8) 9.7 (31.8) (11.0) 0.9

Ratios (%) EBITDA margin 19.0 7.4 0.0 0.7 3.4 5.8EBITA margin 15.1 0.8 -10.9 -9.3 -6.1 -3.2Net margin 12.6 2.1 -7.1 -6.2 -4.9 -2.3ROE 37.7 5.6 -17.6 -19.5 -21.0 -12.8Net debt/equity -31.8 -30.1 -31.6 0.6 17.5 14.8

Growth (%) Turnover 40.9 7.7 -11.1 5.2 12.0 10.0EBITDA 14.9 -57.8 -100.4 418.8 88.7Adj EPS 9.17 -81.79 7.87 11.82 48.64

Per share data (€) Adj EPS 0.86 0.16 (0.46) (0.42) (0.37) (0.19)Dividend 0.00 0.00 0.00 0.00 0.00 0.00NAV 2.70 2.85 2.35 1.94 1.57 1.38

Valuation EV/turnover (x) 0.0 0.0 0.0 0.1 0.1 0.1EV/EBITDA (x) 0.0 0.0 -42.8 17.2 4.3 2.2EV/EBIT (x) 0.0 -0.2 -0.1 -1.4 -2.4 -3.9Adj PER (x) 1.0 5.5 - - - -Price/NAV (x) 0.3 0.3 0.4 0.4 0.5 0.6Dividend yield (%) 0.0 0.0 0.0 0.0 0.0 0.0


Ordina Hold

Netherlands Price (20/03/09) €2.86 Market cap €118.0mSoftware & computer services Target price (12 mth) €2.50 Reuters ORDN.AS



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Investment case We have a HOLD recommendation but the risk is

still to the downside after a recent surge following

the 2008 results. However, we believe the shares

have also already digested a great deal of the bad

news we had anticipated. In addition, consensus

seems more rational while, importantly, the

divestment of BPO brings some relief, although at a

price. Trading at a 2009F PER of 8.2x, we believe

the majority of concerns are largely priced in, but

maybe not all. As such, we see no reason yet to

become more optimistic, as balance sheet

concerns remain while earnings risk is still on the

downside. Our target price is €2.50, reflecting a

PER target multiple of 7x versus 5x previously, to

reflect the slightly improved risk profile after the

divestment of BPO.

Company profile

History

Established in 1973, Ordina is a Dutch IT services

company with a leading position in the Dutch and

Belgian IT services market. Ordina aims to be a market

leader in specific niches: Consulting, ICT and

Application Outsourcing. Ordina is included in the

Dutch midcap index (AMX). Currently Ordina employs

c.5300 FTEs. Ordina has a business partner in India

called Cognizant.

Breakdown by specialism Ordina specialises in consulting, ICT and application

outsourcing. ICT is the largest segment, representing

57% of sales, consulting accounts for 25% and

application outsourcing 18%. The latter business has a

recurring character and comprises longer-term

contracts.

Breakdown by sector

In 2008, Ordina divested the technical automation

business and early in 2009, the BPO activities were

divested to Centric. Public is the largest segment

accounting for 39% of sales, finance is second with

31% and industry third at 30%.

Clients Ordina aims to improve the business processes of

enterprises in the Benelux by providing advisory

services, developing, implementing, integrating and

managing auxiliary applications or taking on a wide

range of business processes including ICT. The top10

clients make up 48% of sales and the top 40, 74%.

The top 10 clients are ABN, ING, Rabo, Achmea

Group, KPN and five Dutch Ministries.

Financials

Yr to Dec (€m) 2006 2007 2008 2009F 2010F 2011F

Income statement Turnover 530.4 665.4 696.5 585.9 556.6 584.5EBITDA 59.5 76.6 31.2 35.7 38.3 42.7EBITA 47.8 62.1 12.4 21.7 24.3 28.7Operating exceptionals (4.6) 0.0 23.7 0.0 0.0 0.0Net financial charges (2.3) (4.7) (5.4) (5.0) (6.0) (4.0)Pre-tax profit 30.8 41.2 (76.2) 8.7 10.3 16.7Taxes (8.3) (10.8) (14.4) (2.3) (2.8) (4.5)Net profit 22.5 30.4 (90.6) 6.3 7.5 12.2Adj net attributable profit 32.6 46.8 15.4 14.3 15.5 20.2

Balance sheet Working capital 0.6 7.5 10.9 (10.8) (9.4) (7.3)Goodwill 223.3 248.2 168.9 160.9 152.9 144.9Tangible fixed assets 21.8 29.1 20.4 15.4 10.4 5.4Other intangible assets 18.8 44.4 71.1 77.1 83.1 94.1L/T investments 6.6 5.8 6.8 6.8 6.8 6.8Net debt 51.4 59.3 83.4 81.7 82.6 78.8L/T non-int-bearing liabs 25.7 21.1 9.7 0.3 0.3 0.3Minority interests (equity) 0.0 0.0 0.0 0.0 0.0 0.0Shareholders' equity 194.0 254.6 163.3 169.6 177.1 181.1

Cash flow Op cash flow (pre-tax) 42.4 77.6 8.4 35.7 36.9 40.6Cash taxes (6.6) 1.2 6.1 6.0 (2.8) (4.5)Op cash flow (after-tax) 35.7 78.9 14.5 41.7 34.1 36.1Net financial charges (CF) (1.6) (4.3) (5.8) (5.0) (6.0) (4.0)Net capex (17.4) (42.8) (40.4) (15.0) (15.0) (20.0)Free cash flow 16.7 31.8 (31.6) 21.7 13.1 12.1


Growth (%) Turnover 19.5 25.5 4.7 -15.9 -5.0 5.0EBITDA 14.2 28.7 -59.3 14.6 7.3 11.5Adj EPS 16.15 33.68 -67.62 -6.76 8.22 30.21


Valuation (x) EV/turnover 0.3 0.3 0.3 0.3 0.4 0.3EV/EBITDA 2.7 2.3 6.5 5.6 5.2 4.6EV/EBIT 4.3 3.9 (2.6) 14.6 12.3 9.5Adj PER 3.3 2.5 7.7 8.2 7.6 5.8Price/NAV 0.6 0.5 0.7 0.7 0.7 0.7Dividend yield (%) 7.0 7.0 0.0 0.0 7.0 7.0


Philips Buy

Netherlands Price (20/03/09) €11.65 Market cap €10,697.6mElectronic & electrical equipment Target price (12 mth) €15.80 Reuters PHG.AS



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Share data

No. of shares (m) 923.0Daily turnover (shares) 8,686,120Free float (%) 100.0Enterprise value (€m) 9,515.2Market cap (€m) 10,698


Investment case Although there is no improvement yet in its (three)

end markets, with the company guiding for a

weakening in 1Q09, the adjustment of fixed costs

(over €400m on an annual basis, skewed towards

2H09) and steps taken in connected displays (TV)

should contain most of the margin damage this

year. Philips trades at a discount to peers and is

net cash, so will survive. We believe the majority of

the portfolio will bottom out in the coming quarters

and see recent share weakness as a buying

opportunity.

Company profile

Royal Philips Royal Philips has many leading market positions in the

worldwide lighting, consumer electronics and medical

devices markets. Following divestment of 81% of its

semiconductor operations in 2006, and, more recently,

the acquisitions of Genlyte and Respironics, Philips

now has three core operating divisions:

Healthcare

Along with Siemens and GE, Philips medical systems

dominates the worldwide medical imaging device

market. Product segments include x-ray, ultrasound,

nuclear medicine and, increasingly, medical IT

services. More recently, the division also includes

home healthcare. The division is focusing its

investment on high margin and growth, and green

activities that should position healthcare well to benefit

from global demographic and healthcare demand

trends.

Lighting

Philips lighting holds the No.1 position in the global

lighting market, again together with GE and Siemens.

The division’s main product lines include lamps,

luminaires, lighting electronics and automotive &

special lighting. The focus of investment is in high-

growth and high-margin technologies such as LED

lighting and other solid-state lighting opportunities.

Consumer lifestyle

The combination of the former consumer electronics,

one of the leading global players, and domestic

appliances divisions, focuses on high growth consumer

segments such as flat panel displays, home

entertainment networks, kitchen appliances and

personal care. Simultaneously, with mobile

infotainment, Philips has transformed the business

model into a flexible outsourcing model, which has

substantially reduced cyclicality.

Financials

Yr to Dec (€m) 2006 2007 2008 2009F 2010F 2011F

Income statement Turnover 26,976 26,793 26,385 23,807 24,504 25,363EBITDA 2,197.0 2,692.0 2,507.0 2,010.0 2,871.0 3,329.8EBITA 1,183.0 2,054.0 1,931.0 1,410.9 2,248.0 2,685.0Operating exceptionals 0.0 0.0 0.0 0.0 0.0 0.0Net financial charges 34.0 2,613.0 (233.0) (140.0) (84.0) (73.0)Pre-tax profit 1,060.0 5,217.0 103.0 515.9 1,588.6 2,029.8Taxes (137.0) (622.0) (286.0) (143.1) (463.6) (588.6)Net profit 5,383.0 4,157.0 (185.6) 368.9 1,121.0 1,437.1Adj net attributable profit 5,383.0 4,157.0 814.4 664.9 1,281.0 1,594.1

Balance sheet Working capital 493.0 1,731.0 1,261.0 874.6 900.2 931.8Goodwill 5,735.0 3,800.0 7,280.0 7,280.0 7,280.0 7,280.0Tangible fixed assets 3,099.0 3,194.0 3,496.0 3,496.0 3,496.0 3,496.0Other intangible assets 11,723 2,835.0 4,477.0 4,073.0 3,657.6 3,232.4L/T investments 2,978.0 3,881.0 2,837.0 2,837.0 2,837.0 2,837.0Net debt (2,425.0) (5,206.0) 568.0 (424.7) (1,432.2) (2,619.7)L/T non-int-bearing liabs (3,325.0) 4,027.0 4,861.0 4,781.0 4,781.0 4,781.0Minority interests (equity) 131.0 127.0 49.0 48.4 49.6 53.1Shareholders' equity 22,997 21,741 15,544 15,267 15,883 16,674

Cash flow Op cash flow (pre-tax) 3,277.0 4,066.0 2,649.0 2,649.2 2,755.5 3,187.3Cash taxes (632.0) (493.0) (286.0) (143.1) (463.6) (588.6)Op cash flow (after-tax) 2,645.0 3,573.0 2,363.0 2,506.1 2,291.9 2,598.7Net financial charges (CF) (211.0) (49.0) (150.8) (87.1) (49.6) (48.9)Net capex (596.0) (580.0) (576.0) (599.0) (623.0) (644.9)Free cash flow 1,838.0 2,944.0 1,636.3 1,820.0 1,619.3 1,904.9

Ratios (%) EBITDA margin 8.1 10.0 9.5 8.4 11.7 13.1EBITA margin 4.4 7.7 7.3 5.9 9.2 10.6Net margin 3.4 17.2 -0.7 1.6 4.6 5.7ROE 27.1 18.6 -1.0 2.4 7.2 8.8Net debt/equity -10.5 -23.8 3.6 -2.8 -9.0 -15.7

Growth (%) Turnover -11.2 -0.7 -1.5 -9.8 2.9 3.5EBITDA -19.4 22.5 -6.9 -19.8 42.8 16.0Adj EPS 99.68 -16.46 -78.54 -12.31 92.67 24.44




Pinguin Buy

Belgium Price (20/03/09) €10.10 Market cap €107.4mFood producers & processors Target price (12 mth) €16.00 Reuters PIGU.BR



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Investment case Pinguin is building a leading position in Europe’s

fragmented frozen vegetable market. Valuations are

attractive: the stock trades at a discount to the

sector despite superior growth prospects. The

bigger story, a potential reverse-takeover by

Univeg, continues to capture the attention of

investors. Further upside, not reflected in our

model, could come from shifts in product mix

(towards higher-margin convenience food) and

entry into growing markets. Pinguin reported a

technical breach of two covenants in December,

but management expects a waiver will be obtained.

Net debt of €114m was inflated by higher working

capital (inventory build-up from an exceptional

harvest). We expect this to reverse in the course of

1H09. Pinguin trades at a c.20% discount to peers

and a c.24% discount to Bonduelle.

Company profile Pinguin is a leading European frozen vegetable

producer, with total production capacity of close to

300,000t of frozen vegetables and 325,000t of frozen

potatoes. Its production capacity is located in Belgium

(vegetables and potatoes, with six sites in total and

combined capacity of 395,000t), the UK (vegetables

only, with five plants and 149,000t) and France

(vegetables only, with one plant and 40,000t).

Geographical exposure (2H07): the UK (42%), France

(18%), Benelux (10%), Germany (9%), Other EU

(15%) and Others (6%).

Frozen vegetables (52% of 2008 operating

income)

The company has an estimated 11% share of the

European frozen vegetable market (No.3 position,

behind Ardo of Belgium and Bonduelle of France).

Pinguin shares a leadership position with Bird’s Eye in

the UK with 30% of the market, through its existing

plant in King’s Lynn (50,000t) and the acquisitions of

Padley (40,000t acquired in June 2007) and Salvesen

(59,000t acquired in August 2007). Pinguin has a

13.5% share of the Belgian frozen vegetable market

and is ranked No.2. Prior to the UK acquisitions,

Pinguin’s main products included peas (17% of sales

in 2005/06), carrots (11%), beans (10%), sweetcorn

(5%) and spinach (5%). Mixes accounted for 18% of

sales. The Padley and Salvesen acquisitions are likely

to add to group sales of peas (Pinguin is now a leading

European pea producer).

Frozen french fries (48%)

Pinguin’s exposure to the potato market is relatively

recent, through the acquisition of Lutosa (announced in

June 2007), a leading Belgian frozen potato producer,

which has an estimated 6% of the European market

(No.4 position) and 3% of the world market.

Financials

Yr to Dec (€m) 2005 2006 2007 2008F 2009F 2010F

Income statement Turnover 149.1 147.3 244.3 456.7 464.3 474.6EBITDA 7.1 10.4 22.9 44.4 49.6 55.1EBITA 0.9 4.2 15.0 23.3 27.8 32.2Operating exceptionals 0.0 0.0 0.0 0.0 0.0 0.0Net financial charges (2.9) (2.5) (7.8) (9.0) (9.1) (8.1)Pre-tax profit (2.0) 1.7 7.2 14.2 18.7 24.1Taxes (0.6) 0.3 (3.0) (5.0) (6.5) (8.4)Net profit (3.2) 2.0 1.5 8.4 11.3 14.8Adj net attributable profit (3.2) 2.0 3.4 8.4 11.3 14.8


Cash flow Op cash flow (pre-tax) 6.2 (3.3) 38.0 42.3 61.9 51.5Cash taxes (0.6) 0.3 (3.0) (5.0) (6.5) (8.4)Op cash flow (after-tax) 5.6 (3.0) 35.0 37.3 55.4 43.1Net financial charges (CF) (2.9) (2.5) (7.8) (9.0) (9.1) (8.1)Net capex (5.9) (4.0) (155.2) (18.3) (39.5) (19.0)Free cash flow (3.2) (9.5) (128.0) 10.0 6.8 16.0

Ratios (%) EBITDA margin 4.7 7.1 9.4 9.7 10.7 11.6EBITA margin 0.6 2.9 6.1 5.1 6.0 6.8Net margin -1.7 1.4 1.0 2.0 2.6 3.3ROE -13.1 5.7 4.4 7.4 9.2 11.0Net debt/equity 166.3 92.7 90.5 75.4 63.5 48.9

Growth (%) Turnover 1.2 -1.2 65.9 86.9 1.7 2.2EBITDA 77.1 47.9 118.8 94.5 11.5 11.3Adj EPS 70.76 14.75 99.39 34.46 31.07

Per share data (€) Adj EPS (0.71) 0.34 0.39 0.79 1.06 1.39Dividend 0.00 0.00 0.00 0.00 0.25 0.35NAV 5.45 6.50 10.34 10.95 12.05 13.21

Valuation EV/turnover (x) 0.6 0.7 0.9 0.4 0.4 0.4EV/EBITDA (x) 13.6 10.6 9.2 4.6 4.0 3.4EV/EBIT (x) 104.1 26.3 14.1 8.8 7.1 5.7Adj PER (x) - 29.2 25.4 12.7 9.5 7.2Price/NAV (x) 1.8 1.5 1.0 0.9 0.8 0.8Dividend yield (%) 0.0 0.0 0.0 0.0 2.5 3.5


Randstad Buy

Netherlands Price (20/03/09) €11.43 Market cap €1,936.7mSupport services Target price (12 mth) €15.00 Reuters RAND.AS



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Investment case We rate Randstad a BUY and the company is one of

our Benelux favourites. We believe the current risk-

reward balance is attractive because our cycle

analysis illustrates that a turn in sentiment could

occur in early 2Q. Meanwhile, the downside risk

seems limited at current valuation levels as the

shares seem to have already priced in further

earnings downgrades, while balance sheet

concerns seem overdone based on our sensitivity

analysis. We acknowledge that given current

uncertainty on the outlook for the labour market,

our call could be slightly early. However, we believe

timing-wise the risk-reward is now attractive

enough to position for a rally. We also know that

when you see the upturn, it is too late. Valuation is

attractive, trading at a 2009F PER of 6.9x, while we

are 6% below consensus. Our trough EPS estimate

for 2009F is 5% above the market trough EPS

estimate for 2010F. In our view, the 2009F PER

multiple already incorporates further earnings

downgrades and concerns on the balance sheet.

We believe the downside risk to our earnings

forecast is fading, although it has not disappeared

altogether.

Company profile

History Randstad was founded in 1960 as one of the first

staffing companies in Europe. Randstad has an EBITA

margin target range of 5-6% through the cycle and

guides for at least 4% in the downturn and more than

6% at the peak of the cycle. Randstad generates

c.22% of sales from specialist staffing. Free float is

c.60-70% and the largest shareholder, founder

F Goldschmeding, owns c.33%.

Geographical spread

Randstad is the world's second largest staffing

company and active in over 50 markets that represent

more than 90% of the world staffing market.

Randstad's mainstay is the Netherlands where it

generates 22% of total sales. Outside the Netherlands,

it generates 23% of sales in France, 11% in North

America, 11% in Germany, 9% in Belgium, 7% in the

UK and Spain, 3% in Italy and 6% in Rest of the World.

Randstad ranks No.1 or No.2 in the Netherlands,

Belgium, Germany, Spain, Poland, Canada, India and

Portugal.

Segmental spread Professional staffing as a percentage of sales is

currently 20%. In terms of breakdown by service

concept, Randstad generates 67% of sales from

staffing, 11% from in-house, 20% from professional

staffing and 2% from HR solutions. Randstad employs

a mono-brand strategy in combination with some

specialist labels. Its main brands are Randstad,

Tempo-Team (the Netherlands, mass-customised),

Yacht (professionals Netherlands/Germany), Sapphire

(IT), Expectra (engineering) and MartinWardAnderson

and Hill McGlynn (UK professional).

Financials

Yr to Dec (€m) 2006 2007 2008 2009F 2010F 2011F

Income statement Turnover 8,186.1 9,197.0 14,038 13,018 12,626 13,408EBITDA 482.0 611.6 818.4 482.0 488.8 594.6EBITA 433.9 560.4 714.1 392.0 398.8 504.6Operating exceptionals 0.0 (5.0) 35.9 0.0 0.0 0.0Net financial charges (2.0) 5.1 (71.7) (46.0) (42.0) (38.0)Pre-tax profit 420.5 545.7 7.7 145.7 209.6 319.4Taxes (85.3) (146.7) 121.0 (0.7) (19.3) (48.9)Net profit 357.8 399.0 128.7 145.0 190.3 270.4Adj net attributable profit 343.7 409.4 492.1 279.9 287.9 375.2

Balance sheet Working capital 271.9 323.8 552.0 480.0 460.0 490.0Goodwill 0.0 0.0 3,315.2 3,179.0 3,047.8 2,886.6Tangible fixed assets 117.1 135.7 190.5 179.5 173.5 177.5Other intangible assets 324.2 433.3 422.0 422.0 422.0 422.0L/T investments 340.9 282.5 76.0 76.0 76.0 76.0Net debt (250.3) 144.2 1,641.0 1,279.0 1,012.6 691.3L/T non-int-bearing liabs 348.3 334.0 535.4 535.4 535.4 535.4Minority interests (equity) 0.0 0.0 0.0 0.0 0.0 0.0Shareholders' equity 956.1 1,188.2 2,416.9 2,559.7 2,668.9 2,863.0

Cash flow Op cash flow (pre-tax) 508.4 549.2 979.0 554.0 508.8 564.6Cash taxes (105.6) (153.0) (205.4) (0.7) (19.3) (48.9)Op cash flow (after-tax) 402.8 396.2 773.6 553.3 489.5 515.6Net financial charges (CF) 0.4 8.2 (9.5) (7.0) (4.0) 0.0Net capex (61.8) (74.4) (92.0) (80.0) (85.0) (100.0)Free cash flow 334.2 322.8 664.9 459.1 393.3 415.6


Growth (%) Turnover 23.3 12.3 52.6 -7.3 -3.0 6.2EBITDA 42.1 26.9 33.8 -41.1 1.4 21.6Adj EPS 42.18 18.48 -5.88 -50.15 2.84 30.33




Reed Elsevier NV Buy

Netherlands Price (20/03/09) €8.23 Market cap €5,821.7mMedia & entertainment Target price (12 mth) €10.70 Reuters ELSN.AS

Simon Wallis, CFA London (44 20) 7767 6787 [email protected]


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Share price 30Dividend 5.6612m f'cst total return 36

Share data

No. of shares (m) 707Daily turnover (shares) 3,610,370Free float (%) 94Enterprise value (€m) 12,562Market cap (€m) 5,822


Investment case Trading conditions are more difficult in most

businesses, yet the resilience of science, medical

and legal is evident. US$150m in additional cost

savings were announced, on top of the US$350m

announced in 2008. Choicepoint, RBI and

Exhibitions probably have further cost flexibility,

not yet taken into account with these numbers.

Consensus estimates look realistic and achievable.

The shares look good value compared with

Pearson and Thomson Reuters. Compared with

Wolters Kluwer, Reed Elsevier has a more reliable

earnings profile and greater value generation. Our

€10.70 EVA target price is maintained and we

reiterate our BUY.

Company profile

History Reed Elsevier (RE) is a publisher of information for

professionals in the scientific, medical, legal and

business fields. Its principal activities are in North

America and Europe. The operating company is 52.9%

owned by Reed Elsevier Plc and 50% by Reed

Elsevier NV.

Science and Medical

RE is global market leader with a c.25% market share

in the scientific publishing field, ahead of several

medium-sized players (with up to 10% market share).

Its Science Direct electronic delivery platform is ahead

of competition. In medical journal publishing, RE

shares a global No.2 position with Wolters Kluwer.

Legal LexisNexis is RE's global brand for legal, news, public

record and business information, including tax and

regulatory publications in print or online. RE is one of

the two largest US legal publishers together with

Thomson. In addition, RE Legal operates in c.100

countries, including sizeable positions in the UK,

France, Italy, Germany and Netherlands.

Business Reed Business Information is a large business

publisher of titles such as Variety, Elsevier, FEM,

Farmers Weekly and Australian Doctor. Revenues are

33% in North America, 35% in Continental Europe and

the remainder in the UK and rest of the world. RE also

has a large exhibitions and event management

company.

Financials

Yr to Dec (£m) 2006 2007 2008 2009F 2010F 2011F

Income statement Turnover 5,398 4,584 5,334 6,544 6,558 6,798EBITDA 1,372 1,285 1,546 1,925 1,992 2,177EBITA 1,210 1,137 1,379 1,700 1,763 1,939Operating exceptionals 0.00 0.00 0.00 0.00 0.00 0.00Net financial charges (158) (139) (174) (358) (322) (267)Pre-tax profit 721 812 617 774 1,139 1,367Taxes (96) 82 (155) (245) (329) (381)Net profit 623 1,200 476 525 807 982Adj net attributable profit 796 765 919 1,029 1,106 1,283

Balance sheet Working capital 970 2,741 (84) 507 1,456 2,583Goodwill 2,802 2,462 4,901 4,926 4,926 4,926Tangible fixed assets 298 239 329 322 316 313Other intangible assets 2,524 2,089 4,404 4,115 3,826 3,533L/T investments 143 751 395 328 314 292Net debt 3,006 3,151 6,400 6,740 6,816 6,805L/T non-int-bearing liabs 1,134 933 2,162 2,160 2,160 2,160Minority interests (equity) 13 11 28 32 36 40Shareholders' equity 1,966 2,965 953 864 1,423 2,239

Cash flow Op cash flow (pre-tax) 1,372 1,285 1,546 1,925 1,992 2,177Cash taxes (170) (239) (215) (268) (288) (334)Op cash flow (after-tax) 1,202 1,046 1,331 1,656 1,704 1,843Net financial charges (CF) (160) (148) (179) (358) (322) (267)Net capex (196) (145) (172) (216) (220) (230)Free cash flow 846 753 980 1,082 1,162 1,346

Ratios (%) EBITDA margin 25 28 29 29 30 32EBITA margin 22 25 26 26 27 29Net margin 12 26 9.00 8.08 12 15ROE 32 36 23 58 71 54Net debt/equity 152 106 652 752 467 299

Growth (%) Turnover 4.49 -15 16 23 0.21 3.67EBITDA 6.69 -6.34 20 25 3.50 9.29Adj EPS 6.68 -4.19 40.80 11.44 7.46 16.03

Per share data (€) Adj EPS 1.02 0.98 1.37 1.53 1.64 1.91Dividend 0.41 0.43 0.44 0.47 0.49 0.56NAV N/A N/A N/A N/A N/A N/A

Valuation EV/turnover (x) 3.2 3.4 3.0 2.6 2.6 2.5EV/EBITDA (x) 12.5 11.9 10.2 8.9 8.6 7.9EV/EBIT (x) 14.2 13.8 11.6 10.1 9.7 8.8Adj PER (x) 15.1 14.2 11.4 10.1 9.4 8.1Price/NAV (x) N/A N/A N/A N/A N/A N/ADividend yield (%) 3.2 3.6 3.8 3.9 4.1 4.8


Royal Dutch Shell A - Euro Hold

Netherlands Price (20/03/09) €16.73 Market cap €104,557.8mOil & gas Target price (12 mth) €19.80 Reuters RDSa.AS

Jason Kenney Edinburgh (44 131) 527 3024 [email protected]


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Share data

No. of shares (m) 6,581.0Daily turnover (shares) 11,286,400Free float (%) 100.0Enterprise value (US$m) 173,037Market cap (US$m) 149,280


Investment case To support 2-3% upstream volume growth (to 2012

and beyond) and capacity additions/efficiency

gains downstream, RD Shell has a capital intense

business framework. Despite pressure from lower

oil/gas prices of late and a weak refining outlook

(implying negative free cash flow and a profitability

squeeze near term) it has low gearing and balance

sheet flexibility to survive an extended period of

economic (and oil macro) gloom. It also has a

defensive cash generative marketing and trading

business, and should see cash support from

sizeable upstream investment cost recovery in PSC

licences globally. Sector cost deflation could also

assist cash balances in time. An early rebound in

oil prices would help, of course, but either way

dividends look sustainable, if not able to grow.

Company profile

Overview

The Royal Dutch Shell Group grew out of an alliance

made in 1907 whereby Royal Dutch and Shell

Transport merged their interests on a 60:40 basis while

remaining separate and distinct entities. After a

reserves crisis in 2004 and a subsequent change in

management, the two companies unified to become

Royal Dutch Shell in 2005. Today RD Shell is a top five

super major operating in around 140 countries.

Exploration & production E&P activities account for over half of post-tax

earnings. Oil and gas production is c.3.2m b/d. Main

producing areas are the US, Nigeria, the UK, the

Netherlands and Norway. Qatar, Nigeria, Canada,

Russia, Kazakhstan, US deepwater and Australia offer

some of the main sources of growth.

Refining and marketing The prime focus of this business is the sale, marketing

and transportation of fuels, lubricants and speciality

products. The group has an interest in c.40 refineries,

with a total distillation capacity of over 4.0m b/d.

(Europe c.45%). Total petroleum product sales were

c.6.4m b/d in 2008 (Europe 28%, US 22%).

Chemicals Using its focused portfolio of crackers and selected

first-line derivatives, RD Shell produces and sells

petrochemicals products that are widely used in

plastics, coatings and detergents by global industry. It

has refocused towards Asia of late (Nanhai JV with

CNOOC, crackers in Singapore, Qatar).

Gas & power Having divested its interest in Intergen (power) in

2005, this business is now focused on the processing,

selling and transportation of natural gas by pipeline

and LNG tankers (where the group is a global leader).

Key gas/LNG growth is expected from Qatar, Australia,

Nigeria and Russia. A new world-scale gas to liquids

plant in Qatar is expected on-stream in 2011.

Financials

Yr to Dec (US$m) 2007 2008F 2009F 2010F 2011F

Income statement \ Brent (US$/bbl) 72.86 97.07 50.00 60.00 65.00Exploration & Production 25,755 35,043 10,378 18,064 19,150Refining & Marketing 11,318 5,582.5 3,932.6 4,150.2 4,183.4Chemicals 1,780.0 334.0 445.1 530.7 614.4Gas & Power 387.0 1,947.1 1,879.1 2,306.3 2,523.5Other items 801.0 (433.2) 280.6 480.8 671.7Op profit (bef gw amort & except) 35,690 38,240 16,365 25,251 26,885Net financial charges (CF) 540.0 680.0 (947.6) (1,829.6) (2,670.9)Adj pre-tax profit 45,514 49,899 22,914 31,972 33,690% ch adj pre-tax profit 8.6 9.6 (54.1) 39.5 5.4Pre-tax profit 48,177 52,905 22,914 31,972 33,690Taxes (18,650) (24,344) (10,976) (15,315) (16,138)Minorities (595.0) (199.0) (151.8) (200.0) (220.4)Net profit 28,932 28,362 11,786 16,457 17,331Adj net attributable profit 26,269 25,356 11,786 16,457 17,331% ch adj net attributable profit 15.6 (3.5) (53.5) 39.6 5.3Oil & gas production (kbpd) 3,314.1 3,248.2 3,253.3 3,324.0 3,458.3Volume growth (%) (4.6) (2.0) 0.2 2.2 4.0

Balance sheet Total fixed assets and L/T investments 154,073 165,831 183,027 200,405 219,583Working capital 4,054.0 (7,168.0) (7,240.7) (6,676.2) (6,323.5)L/T non-interest-bearing liabilities 23,716 21,716 21,716 21,716 21,716Enterprise net assets 134,411 136,947 154,070 172,013 191,544Group equity 125,968 128,866 131,144 137,635 143,649Net debt 8,443.0 8,081.0 22,926 34,378 47,895Capital employed 134,411 136,947 154,070 172,013 191,544

Cash flow Operating cash flow (pre-tax) 52,774 68,748 38,501 48,197 51,723Capital expenditures (net of disposals) (15,795) (30,589) (30,736) (31,955) (35,250)Change in working capital (6,206.0) 7,935.0 72.7 (564.4) (352.8)Other 22,465 21,464 10,273 11,628 12,214Free cash flow 18,656 12,970 (4,158.8) (902.9) (2,336.2)

Ratios (%) EBITDA margin 13.7 11.3 9.2 11.8 12.6Operating margin 10.0 8.3 4.8 7.3 7.7Net debt/equity 6.7 6.3 17.5 25.0 33.3ROACE 20.1 17.7 8.1 10.2 9.9ROE 25.2 22.6 9.2 12.3 12.3

Growth (%) EBITDA 2.7 6.2 -40.0 31.9 7.6Net profit 25.5 -2.0 -58.4 39.6 5.3EPS 28.54 -0.30 -58.87 39.31 5.31

Valuation EV/DACF (x) 4.5 3.5 6.1 5.5 5.5Adj EPS (US$) 4.19 4.12 1.89 2.64 2.78Adj PER (x) 5.4 5.5 12.0 8.6 8.2Price/NAV (x) 1.1 1.1 1.1 1.0 1.0DPS (US$) 1.43 1.61 1.68 1.77 1.85Dividend yield (%) 6.3 7.1 7.4 7.8 8.2


Royal Ten Cate Buy

Netherlands Price (20/03/09) €12.70 Market cap €311.0mDiversified industrials Target price (12 mth) €16.03 Reuters NTCN.AS



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Investment case We believe a stronger US dollar (11% tailwind YTD)

and lower raw material prices (aramids, PE, PP) will

compensate for hesitant clients. In the defence-

related business, the policy of governments is not

expected to differ greatly from the past. Defender M

materials are sold out for the year ahead and, in

vehicle armour, projects (MRAP, Stryker) have been

announced (but not yet finalised). In other

protective fabrics, the European market for work

wear for industrial users is cautious but the

professional wear market remains positive.

Building rates for modern civil aircraft with large

composite content (ie, Airbus A380) have not been

reduced. In geosynthetics, governmental stimulus

packages for infrastructure should help. Remarks

on the defence business and the significant margin

upside in geosynthetics and grass might well prove

our estimates to be too cautious. BUY.

Company profile TenCate produces technical textiles and synthetic

materials used in a wide range of applications. The

company’s main activities comprise the production of

artificial grass, antiballistic and flame-resistant

materials, aerospace composites and protective

fabrics. TenCate also manufactures textiles used in

civil engineering, agriculture and other industries, as

well as fabrics for outdoor applications. TenCate’s

roots date back to early 1700. It operates in the US,

Europe, Australia and Asia. Since the early 1990s, the

company has transformed its operations from

traditional textiles to become a specialist in technical

textiles, plastics and rubber products. The company is

a global company, headquartered in Almelo.

Adv textiles & composities (2008: 46.5% of

sales)

TenCate’s advanced textiles & composite division

consist of three business units. The protective &

outdoor fabrics division produces protective and safety

fabrics for applications in specialist professions

(military and fire-fighters) and industry and for outdoor

applications. Mainly active in Europe and the US, the

company is a global market leader in safety fabrics.

The aerospace activity delivers composites mainly to

the aerospace industry. Armour composites makes

composites for bullet- and stab-proof vests, and

armoured vehicles used by armed forces.

Geosynthetics & grass (2008: 48% of sales) Geonsynthetics produces synthetic fabrics, non-

wovens and grids used in civil engineering projects.

The grass activity operates in two markets, synthetic

grass used for sports pitches and for landscaping.

Following the recent acquisition of Mattex, TenCate

has become the segment market leader by a

significant margin.

Technical components & services (2008: 5.5%

of sales) TenCate Enbi is a global designer and manufacturer of

paper transport and image transfer rollers, focusing

primarily on the office equipment industry. The division

also serves the automotive and telecommunications

industries.

Financials

Yr to Dec (€m) 2006 2007 2008 2009F 2010F 2011F

Income statement Turnover 769.9 886.0 1,032.6 1,102.2 1,162.3 1,223.9EBITDA 73.2 102.1 126.1 131.9 136.1 136.5EBITA 50.1 73.0 95.4 99.1 101.5 100.1Operating exceptionals 0.0 0.0 0.0 0.0 0.0 0.0Net financial charges (4.6) (11.3) (13.7) (18.6) (17.8) (17.3)Pre-tax profit 45.5 58.1 70.1 68.6 71.7 70.8Taxes (11.4) (11.9) (19.1) (17.1) (17.9) (17.7)Net profit 76.1 46.4 51.1 51.4 53.8 53.1Adj net attributable profit 34.1 46.1 51.1 51.4 53.8 53.1


Cash flow Op cash flow (pre-tax) 64.3 69.6 69.7 117.0 121.7 121.8Cash taxes (11.4) (11.9) (19.1) (17.1) (17.9) (17.7)Op cash flow (after-tax) 52.9 57.7 50.6 99.8 103.8 104.1Net financial charges (CF) (5.6) (8.0) (9.6) (13.1) (12.5) (12.2)Net capex (27.5) (81.4) (60.0) (32.8) (38.0) (43.7)Free cash flow 19.8 (31.7) (19.0) 54.0 53.3 48.2


Growth (%) Turnover 12.2 15.1 16.5 6.7 5.4 5.3EBITDA 26.6 39.5 23.5 4.6 3.1 0.3Adj EPS 49.28 22.16 7.87 -3.72 4.53 -1.26




SBM Offshore Hold

Netherlands Price (20/03/09) €10.63 Market cap €2,157.8mSupport services Target price (12 mth) €10.00 Reuters SBMO.AS



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No. of shares (m) 149.7Daily turnover (shares) 2,095,080Free float (%) 100.0Enterprise value (US$m) 3,719.0Market cap (US$m) 2,157.8


Investment case SBMO faces a difficult period, with stagnating

demand and clients seeking lower capex. Most

future FPSO projects are on the back burner and

turnkey business is not very active either. However,

SBMO should show good figures and we estimate it

will keep its promise of 5-10% EBIT margin for

turnkey in 2009, implying a doubling of results in

this division and supportive of 20% EPS growth.

We keep our HOLD rating and target price of €10.

There is enough reason to foresee a good future for

SBMO’s products, its risk is limited and the

valuation is attractive at a 2009F EV/EBITDA of 5.8x.

However, the current US$45 oil price and credit

crisis do not encourage clients to make early

decisions on projects, nor is SBM’s execution risk

gone.

Company profile

Profile

SBM Offshore designs, builds and operates

equipment, vessels and complete systems for the

global offshore oil & gas industry. This encompasses

the design and construction of FPSOs (floating storage

and offloading vessels) and FSOs (based on the same

principle but with oil, gas and water separation carried

out in a separate facility), in addition to associated

equipment.

SBMO aims to keep its position through advanced

technology and to be a preferred supplier by

maintaining its excellent record in timing, delivery

without cost overruns and operational performance. It

aims to have oil majors and NOCs on its client list and

targets large complicated FPSOs. In the future, it aims

to participate in the booming LNG industry by

designing and building offshore import terminals.

The group also contracts and operates FPSOs under

long-term leases to oil companies. In early 2009, SBM

Offshore had 11 FPSOs and three

FSOs/MOPUstor/semisubs in operation, with one and

two under construction respectively. This gives a

worldwide leading position in lease FPSOs with an

estimated market share of 35%. SBMO’s lease

portfolio contributes the lion’s share (70-80%) of EBIT

except for 2007, when it contributed as little as 55%.

Financials

Yr to Dec (US$m) 2006 2007 2008 2009F 2010F 2011F


Balance sheet Working capital (25.0) 158.2 (304.7) (304.7) (304.7) (304.7)Goodwill 25.0 25.0 25.0 25.0 25.0 25.0Tangible fixed assets 1,662.2 1,962.4 2,565.4 2,795.4 2,965.4 3,110.4Other intangible assets 8.0 10.5 21.7 19.7 17.7 15.7L/T investments 83.8 101.2 433.4 433.4 433.4 433.4Net debt 579.1 868.1 1,463.8 1,552.0 1,554.9 1,540.6L/T non-int-bearing liabs 49.2 44.1 35.3 35.3 35.3 35.3Minority interests (equity) 0.3 4.3 6.2 9.2 12.2 15.2Shareholders' equity 1,118.7 1,333.4 1,234.7 1,371.5 1,533.6 1,687.9

Cash flow Op cash flow (pre-tax) 477.6 548.3 531.0 640.2 721.3 738.8Cash taxes (4.7) (3.2) (5.3) (13.1) (14.4) (14.0)Op cash flow (after-tax) 472.9 545.1 525.7 627.0 706.9 724.8Net financial charges (CF) (31.5) (22.4) (38.0) (76.0) (70.0) (70.0)Net capex (309.0) (555.8) (987.6) (500.0) (500.0) (500.0)Free cash flow 132.4 (33.0) (499.8) 51.0 136.9 154.8


Growth (%) Turnover 31.0 44.3 6.5 2.0 4.4 -4.8EBITDA 18.7 14.8 -3.2 20.6 12.7 2.4Adj EPS -6.67 19.27 -16.19 19.06 8.89 -2.82

Per share data (US$) Adj EPS 1.55 1.85 1.55 1.84 2.01 1.95Dividend 0.77 0.93 0.93 0.93 0.93 0.93NAV 8.01 9.37 8.48 9.16 10.20 11.17



Sligro Hold

Netherlands Price (20/03/09) €16.7 Market cap €730.0mFood & drug retailers Target price (12 mth) €15.0 Reuters SLIGR.AS



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Investment case We rate Sligro a HOLD with a DCF/7x trough 2009F

PER-based target price of €15. Some two years

after the acquisition of a large part of the former

Edah operations it seems that Sligro will give its

Food retail operations a last chance to turnaround.

On 30 March the Group will explain in greater detail

how it believes it can improve returns. This event

makes it unlikely that we could expect a change in

strategy, i.e. the sale of Food retail, short term.

Besides a last effort with Food retail, little growth

should be expected within the bigger Foodservice

division due to pressure on out-of-home spending

by consumers.

Company profile

History

Founded in 1935, Sligro traded edible oils and fats.

Through organic growth and acquisitions, it achieved a

leading position in the Dutch food distribution market.

With the acquisitions of Prisma (2000), Em-Té (2002)

and a 50% stake in a legal entity that acquired the

Edah stores (2006), Sligro entered the food retail

arena. Focusing on its foodservice activities, Sligro

acquired Ven, a major foodservice player in the

Netherlands, in 2004, and Inversco in 2006.

Foodservice (67% of 2008 sales) The foodservice division services the professional

food-sellers market (hotels, restaurants and small

retailers). The company owns a national network of

cash & carry outlets under the Sligro brand and also

offers delivery services. With c.€1.4bn pa in sales,

Sligro ranks No.1 in this market. Competitors include

Makro (Metro, Ger) and Deli XL (Bidvest, S-Africa).

The institutional market (eg, hospitals) is served by

Van Hoeckel and Inversco.

Food wholesale and retail (33% of 2008 sales) Sligro entered the home market via the acquisition of

Prisma at the end of 2000. Prisma acts as wholesaler

to Golff and Meermarkt supermarkets, among others.

Golff and Meermarkt are medium-sized supermarkets.

In 2002, Sligro acquired Em-Té, a supermarket

operator with c.€100m pa in sales and a very strong

market position in the Tilburg region. The most recent

acquisition, c.80 former Edah stores in 2006, has

helped bring the group's Dutch market share to 2.7%.

Its main competitors are Albert Heijn (31.3% market

share), Schuitema (13.4%), Sperwer (6.1%) and Super

de Boer (6.8%).

Financials

Yr to Dec (€m) 2005 2006 2007 2008 2009F 2010F



Cash flow Op cash flow (pre-tax) 74.1 108.1 109.0 128.8 142.9 146.8Cash taxes (22.4) (23.1) (16.0) (15.8) (24.3) (25.7)Op cash flow (after-tax) 51.7 85.0 93.0 113.0 118.6 121.1Net financial charges (CF) (3.4) (6.5) (9.8) (10.2) (9.5) (7.5)Net capex (38.2) (197.3) (75.7) (29.9) (42.2) (43.1)Free cash flow 10.1 (118.8) 7.4 72.9 66.8 70.5


Growth (%) Turnover 7.1 7.5 24.4 4.9 0.3 2.1EBITDA -5.3 13.3 13.4 8.9 -0.1 2.7Adj EPS -14.12 20.85 17.35 -4.95 -2.07 5.33




Smit International Hold

Netherlands Price (20/03/09) €39.25 Market cap €696.2mTransport Target price (12 mth) €35.00 Reuters SMTNc.AS



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Investment case 2009 remains uncertain, as Smit’s largest and one

of its two core activities, Harbour Towage (30% of

2008 EBITA), suffers the unprecedented shipping

downturn. Antwerp and Vancouver seem most

vulnerable. Non-core (Heavy Lift, Salvage) is doing

quite well, better than we anticipated, but remains

deeply cyclical and hence unpredictable. With

capex in energy markets down, we expect a further

slide of earnings in 2010, hitting all divisions except

Terminals. We keep our HOLD recommendation

and target price of €35 based on peer group/DCF

valuation. Valued at 5.3x 2009F EV/EBITDA does

not give upside, given uncertainties, and with (in

our view) Boskalis’ potential interest in Smit

disappearing over the horizon (in spite of what

Boskalis management reports).

Company profile Smit International is c.100 years old and has vested

positions in harbour towage, terminals, salvage,

transport and heavy lifting. It has booked strong results

since a reorganisation in 2002. A new strategy has

been implemented to transform Smit into a focused

and growth company (via acquisitions and organically).

Harbour Towage (2008: 26% of revenues and 30% of EBIT)

This business provides the vital link between ship and

berth, as well as other port-related activities. It has

strong positions in three of the biggest harbours in the

world – Rotterdam, Antwerp and Singapore – and

additional towage concessions in Panama and

Vancouver. It is building up a position in Brazil, with 18

tugs in six harbours. With the acquisition of URS in

2008, Smit has become larger in harbour towage.

Terminals (10%, 9%) The business involves managing and operating

terminals on- and offshore and providing associated

services. It has a leading position with as many as 20

terminals, mainly in West Africa and the Middle East.

Salvage (16%, 13%) The business offers salvage and maritime emergency

response services and wreck removal. It also takes

care of the environment with specialised services to

remove oil and chemicals. With a 25-35% share, Smit

is the world market leader, famous for complex

salvage operations (such as the Kursk).

Transport (30%, 33%)

Leading provider of transport solutions for clients with

special needs. Apart from short-term contracts,

transport now has a couple of long-term (one- to five-

year) contracts for services with seagoing tugs.

Heavy Lift (15%, 22%)

Heavy lift lends equipment to salvage, but also carries

out heavy lift work in South America, Asia and the Gulf

of Mexico.

Financials

Yr to Dec (€m) 2006 2007 2008 2009F 2010F 2011F


Balance sheet Working capital 28.8 33.9 29.3 82.2 99.3 114.7Goodwill 0.0 0.0 0.0 0.0 0.0 0.0Tangible fixed assets 257.7 332.7 629.8 641.6 693.2 699.5Other intangible assets 12.9 29.3 31.3 31.3 31.3 31.3L/T investments 78.0 105.1 73.0 81.9 90.6 93.4Net debt 60.4 109.9 305.1 279.2 279.3 242.2L/T non-int-bearing liabs 27.8 31.1 23.5 23.5 22.7 (3.7)Minority interests (equity) 0.5 0.9 0.6 0.6 0.6 0.6Shareholders' equity 288.7 365.6 567.0 659.4 737.5 825.5

Cash flow Op cash flow (pre-tax) 89.6 112.1 131.8 157.7 137.9 126.8Cash taxes (21.1) (19.3) (18.7) (15.5) (13.6) (14.3)Op cash flow (after-tax) 68.5 92.8 113.1 142.1 124.3 112.5Net financial charges (CF) (3.6) (3.2) (11.0) (8.5) (8.5) (8.5)Net capex (68.4) (136.0) (254.0) (82.0) (82.0) (84.0)Free cash flow (3.5) (46.4) (151.9) 51.6 33.8 20.0


Growth (%) Turnover 22.6 16.1 28.5 -3.1 -0.8 4.3EBITDA 50.5 21.8 40.9 -4.1 -8.1 8.2Adj EPS 103.86 37.31 -7.37 -16.11 -15.51 12.62




Solvay Hold

Belgium Price (20/03/09) €46.96 Market cap €3,988.6mChemicals Target price (12 mth) €55.00 Reuters SOLB.BR



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Investment case Weak results in chemicals and plastics will be

somewhat compensated for by excellent pharma.

We expect 60% of REBIT to be earned in pharma in

2009F as the fenofibrate franchise continues to

grow and the margins increase on the back of

restructuring. In plastics, we estimate sales will

decline (above all PVC) 18.3% YoY in 2009F,

reflecting a fall in both volumes and pricing. We

expect the divisional REBIT margin to fall to 4.0%,

down 310bp from 2008. In chemicals, we forecast a

YoY sales decline of 10%, with significantly higher

pricing in soda ash and caustic soda realised in

contracts (although caustic prices are coming

down), offsetting the lower volumes seen YTD and

expected in the year ahead. All in all, we forecast a

120bp drop in the REBIT margin, from 7.7% to 6.5%

YoY in 2009. The shares still trade at a slight

discount to the chemicals sector although Solvay’s

pharma unit dampens the effect of a downturn.

Company profile

Overview

Solvay was founded in 1863. Since then, it has grown

to become a global group organised under three

business units: pharmaceuticals, chemicals, plastics &

processing. It differs from a couple of years ago due to

its stronger leadership position in chemicals, its focus

on the less cyclical plastics business and the brighter

outlook for pharma beyond 2006.

Pharmaceuticals

Pharmaceuticals are becoming increasingly important

for Solvay in terms of absolute profit contribution while

simultaneously providing good profitability expectations

and smoothing cyclicality. In 2008, pharmaceuticals

generated 28% of overall sales and a record 50% of

EBIT. The therapeutic area of products (and pipeline)

focuses on cardio metabolic, neuroscience, flu

vaccines and pancreatic enzymes.

Chemicals In 2008, chemicals generated 33% of overall sales and

24% of group EBIT. This division is comprised of

essentials (soda ash, hydrogen peroxide, caustic soda)

and speciality/specialist chemicals (eg, epichlorohydrin,

fluor derivatives). An important feature of Solvay's

chemicals portfolio in comparison with other chemical

companies is that it consists primarily of inorganic

chemicals.

Plastics & processing Historically, Solvay has always had a strong focus on

polymers. In 2008, the division generated 33% of

overall sales and 24% of group EBIT. Solvay's plastics

division has changed drastically in recent years:

divestment of basic PP activities, divestment of half of

its HDPE activities and acquiring of engineering

polymers. With this focus, the company has become a

top-three player worldwide in PVC. Solvay's plastics

production gives the group an advantage in the

plastics processing sector. These include Inergy

(automotive, mainly plastic fuel tanks) and pipes and

fittings (Pipelife). In specialty (high performance)

polymers, the company also holds a top-three position

worldwide.

Financials

Yr to Dec (€m) 2006 2007 2008 2009F 2010F 2011F

Income statement Turnover 9,398.0 9,573.0 9,490.0 8,613.2 8,781.2 9,048.4EBITDA 1,621.0 1,714.0 1,437.0 1,241.2 1,447.2 1,551.8EBITA 1,099.0 1,192.0 966.0 771.2 971.2 1,063.8Operating exceptionals 0.0 0.0 0.0 0.0 0.0 0.0Net financial charges (82.0) (58.0) (112.0) (100.0) (90.0) (85.0)Pre-tax profit 874.0 1,165.0 593.0 621.2 846.2 943.8Taxes (179.0) (337.0) (143.0) (155.3) (211.6) (236.0)Net profit 669.0 781.0 406.0 421.9 590.7 663.9Adj net attributable profit 812.0 750.0 386.0 471.9 625.7 698.9

Balance sheet Working capital 901.0 1,164.0 923.0 776.7 804.7 849.3Goodwill 1,214.0 1,210.0 1,667.0 1,667.0 1,667.0 1,667.0Tangible fixed assets 3,869.0 3,885.0 4,218.0 4,168.0 4,168.0 4,168.0Other intangible assets 721.0 662.0 726.0 841.1 898.6 893.5L/T investments 1,472.0 1,242.0 1,139.0 1,139.0 1,139.0 1,139.0Net debt 1,258.0 1,307.0 1,596.0 1,401.8 1,207.2 893.4L/T non-int-bearing liabs 2,463.0 2,398.0 2,332.0 2,332.0 2,332.0 2,332.0Minority interests (equity) 242.0 156.0 296.0 296.0 296.0 296.0Shareholders' equity 4,214.0 4,303.0 4,450.0 4,220.3 4,500.4 4,853.7

Cash flow Op cash flow (pre-tax) 1,492.0 989.0 1,473.0 1,287.5 1,319.2 1,407.2Cash taxes (211.0) (238.0) (143.0) (155.3) (211.6) (236.0)Op cash flow (after-tax) 1,281.0 751.0 1,330.0 1,132.2 1,107.6 1,171.3Net financial charges (CF) 0.0 0.0 (393.0) (100.0) (90.0) (85.0)Net capex (581.0) (433.0) (900.0) (500.0) (550.0) (550.0)Free cash flow 700.0 318.0 37.0 532.2 467.6 536.3


Growth (%) Turnover 1.9 -0.9 -9.2 2.0 3.0EBITDA 5.7 -16.2 -13.6 16.6 7.2Adj EPS -7.54 -48.35 22.25 32.59 11.70




Super de Boer Buy

Netherlands Price (20/03/09) €2.6 Market cap €300.0mFood & drug retailers Target price (12 mth) €4.2 Reuters SDB.AS



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Investment case We see Super de Boer as worth c.€2.5 per share

from a cash flow point of view (DCF). However, we

are convinced that Super de Boer will be at the

centre of the next round of consolidation in the

Dutch market and that Casino would like to sell its

57% stake and, as such, we value it on a potential

takeover price of €4.2 per share. Possible interest

could come from Ahold, Schuitema and Sperwer, or

a combination thereof. While Ahold has made no

comment on this, it has the deepest pockets and, in

our view, the highest synergy possibilities. If Ahold

were to pay €4.2 per share (our target price), its

Albert Heijn chain would still be able to realise a

pre-tax ROIC of 15%. Note that Casino paid

respectively €3.7 and €4.3 per share for two

tranches of 6% bought from investor, Amber Fund,

in January and March 2008.

Company profile

History Laurus came into existence in 1998 through the

merger of Vendex Food Group and De Boer Unigro,

forming the then second-largest food retail company in

the Netherlands behind Albert Heijn (Ahold), with a

26% market share. Following eight years of setbacks

due to inadequate concepts and poor execution, the

decision was made in 2006 to sell two of the three

remaining supermarket chains and focus on the Super

de Boer chain. On 1 January 2008, Laurus changed its

name to Super de Boer. French retailer, Casino, owns

a 57% stake with an option (until end-2009) to increase

this to 63%.

Super de Boer

With a market share of 6.8%, Super de Boer ranks fifth

behind Albert Heijn, C1000, Aldi and Plus. Super de

Boer is positioned as a high-quality supermarket

formula with attractive prices. Today’s reality, however,

is that quality perception is average, while selling

prices are not far off the highest in the market. In the

most recent GfK supermarket comparison report

(December 2008), Super de Boer was ranked No.15

by Dutch consumers, up from No.20 in mid-2008.

Following the sale of 44 underperforming stores in

2007, Super de Boer’s store portfolio consists of 312

stores that generate annual net sales of c.€1.7bn. 173

of these stores are run by franchisees.

Financials

Yr to Dec (€m) 2006 2007 2008 2009F 2010F 2011F

Income statement Turnover 2,894.0 1,858.0 1,685.0 1,741.9 1,800.9 1,861.9EBITDA 145.0 47.0 51.0 48.8 53.6 58.4EBITA 102.0 21.0 25.0 22.0 26.0 30.0Operating exceptionals (17.0) 0.0 0.0 0.0 0.0 0.0Net financial charges (15.0) (11.0) (11.0) (5.0) (3.0) (3.0)Pre-tax profit 70.0 10.0 14.0 17.0 23.0 27.0Taxes 0.0 0.0 (16.0) 0.0 0.0 0.0Net profit 70.0 10.0 (2.0) 17.0 23.0 27.0Adj net attributable profit 70.0 10.0 (2.0) 17.0 23.0 27.0

Balance sheet Working capital (18.0) (14.0) (20.0) (23.3) (25.4) (25.4)Goodwill 22.0 20.0 19.0 19.0 19.0 19.0Tangible fixed assets 117.0 114.0 119.0 122.2 125.5 125.5Other intangible assets 6.0 6.0 4.0 4.0 4.0 4.0L/T investments 64.0 54.0 68.0 68.0 68.0 68.0Net debt 78.0 77.0 67.0 54.9 33.2 33.2L/T non-int-bearing liabs 72.0 52.0 43.0 43.0 43.0 43.0Minority interests (equity) 0.0 0.0 0.0 0.0 0.0 0.0Shareholders' equity 41.0 51.0 80.0 92.0 115.0 115.0

Cash flow Op cash flow (pre-tax) 123.0 (28.0) 32.0 47.1 55.7 60.5Cash taxes 0.0 0.0 0.0 0.0 0.0 0.0Op cash flow (after-tax) 123.0 (28.0) 32.0 47.1 55.7 60.5Net financial charges (CF) (15.0) (11.0) (11.0) (5.0) (3.0) (3.0)Net capex 405.0 36.0 (6.0) (30.0) (30.9) (30.9)Free cash flow 513.0 (3.0) 15.0 12.1 21.8 26.6


Growth (%) Turnover -8.4 -35.8 -9.3 3.4 3.4 3.4EBITDA 1,971.4 -67.6 8.5 -4.4 9.8 9.0Adj EPS -85.71 35.29 17.40

Per share data (€) Adj EPS 0.61 0.09 (0.02) 0.15 0.20 0.24Dividend 0.00 0.00 0.00 0.00 0.00 0.00NAV 0.36 0.44 0.70 0.80 1.00 1.00

Valuation EV/turnover (x) 0.1 0.2 0.2 0.2 0.2 0.2EV/EBITDA (x) 2.6 8.0 7.2 7.3 6.2 5.7EV/EBIT (x) 3.7 18.0 14.7 16.1 12.8 11.1Adj PER (x) 4.3 30.0 17.6 13.0 11.1Price/NAV (x) 7.3 5.9 3.7 3.3 2.6 2.6Dividend yield (%) 0.0 0.0 0.0 0.0 0.0 0.0


Telenet Group Buy

Belgium Price (20/03/09) €13.28 Market cap €1,461.9mTelecommunication services Target price (12 mth) €18.00 Reuters TNET.BR



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Investment case Telenet is the main cable operator in Belgium and a

key player in the Belgian telecoms market. Its

underlying revenues are defensive as the company

enjoys a comfortable market position. Telenet is

mainly exposed to the residential segment (91% of

revenues), and its revenues should be resilient

thanks to its reliance on bundles. The good

momentum of its digital TV business should be

sustained by the acquisition last year of Interkabel

(whose digital penetration is very low). Despite its

high leverage, Telenet’s financial position is solid

as the company does not face any debt maturity

within the next three years. In case of a recovery,

its gearing should mean it is well positioned to

benefit from an expansion of valuation multiples.

Company profile Telenet is a cable operator located in the north of

Belgium (Flanders), offering a quadruple-play service

(digital television, broadband, fixed and mobile

telephony). The company has its own network, with

1.7m cable TV customers to which it can offer its

bundles. The launch of a mobile product in 2006 on

Mobistar’s network completed Telenet’s product

portfolio. In addition, Telenet can sell its broadband

internet and telephony products and services to 0.8m

subscribers on a Partner Network.

Telenet’s revenues were well balanced in 2007, with

34% from television, 35% of revenues from broadband

internet and 22% from residential telephony. Telenet

also serves business customers through its Telenet

Solutions division, which provides voice, data, internet

and television products to private and public

institutions and accounted for 9% of Telenet’s

revenues in 2007.

The company’s current growth engine is internet

broadband, but the launch of a digital platform and the

digital migration of its basic television subscribers are

at the core of its strategy, opening new avenues for

revenue growth. Telenet generated 10% organic

growth in 2007.

Financials

Yr to Dec (€m) 2006 2007 2008F 2009F 2010F 2011F

Income statement Turnover 813.4 931.8 1,016.3 1,160.1 1,217.6 1,266.2EBITDA 366.6 442.9 487.7 549.8 584.6 608.0EBITA 143.7 205.2 225.8 267.3 306.9 347.7Operating exceptionals 0.0 0.0 0.0 0.0 0.0 0.0Net financial charges (101.0) (211.8) (118.4) (155.6) (146.6) (134.5)Pre-tax profit 42.7 (6.6) 93.1 111.7 160.4 213.2Taxes (34.3) 27.4 (54.1) (35.7) (51.3) (68.2)Net profit 8.4 20.8 39.0 75.9 109.1 145.0Adj net attributable profit 8.4 20.8 39.0 75.9 109.1 145.0

Balance sheet Working capital (253.2) (257.9) (261.6) (270.3) (283.7) (296.2)Goodwill 1,426.3 1,355.1 1,574.9 1,568.4 1,561.2 1,555.3Tangible fixed assets 974.4 1,008.6 996.0 970.0 941.0 917.5Other intangible assets 0.0 0.0 0.0 0.0 0.0 0.0L/T investments 0.0 0.0 0.0 0.0 0.0 0.0Net debt 1,347.5 1,941.8 2,074.8 1,954.1 1,793.1 1,604.3L/T non-int-bearing liabs 0.0 0.0 0.0 0.0 0.0 0.0Minority interests (equity) 0.0 0.0 0.0 0.0 0.0 0.0Shareholders’ equity 721.7 170.1 222.9 298.8 407.9 552.9

Cash flow Op cash flow (pre-tax) 446.0 635.4 466.9 562.1 600.3 622.5Cash taxes (34.3) (47.5) 0.0 (35.7) (51.3) (68.2)Op cash flow (after-tax) 411.7 587.9 466.9 526.3 548.9 554.2Net financial charges (CF) (101.0) (211.8) (118.4) (155.6) (146.6) (134.5)Net capex (218.2) (208.8) (230.0) (250.0) (241.4) (231.0)Free cash flow 92.6 167.3 118.5 120.7 161.0 188.8

Ratios (%) EBITDA margin 45.1 47.5 48.0 47.4 48.0 48.0EBITA margin 17.7 22.0 22.2 23.0 25.2 27.5Net margin 1.0 2.2 3.8 6.5 9.0 11.5ROE 1.1 4.7 19.8 29.1 30.9 30.2Net debt/equity 186.7 1,141.5 930.8 653.9 439.6 290.2

Growth (%) Turnover 10.2 14.6 9.1 14.1 5.0 4.0EBITDA 11.6 20.8 10.1 12.7 6.3 4.0Adj EPS 125.29 86.10 94.79 43.62 32.95




Tessenderlo Buy

Belgium Price (20/03/09) €22.46 Market cap €622.1mChemicals Target price (12 mth) €24.00 Reuters TESB.BR



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Investment case We rate Tessenderlo a BUY for: (1) its diversified

nature, which mitigates risk; (2) its market

leadership in most of its product areas, with a

focus on niches; (3) its emphasis on customised

quality products; (4) its high level of integration;

(5) its sound financial structure (net debt/EBITDA at

0.85x); and (6) its attractive dividend yield (6.1%).

Share price triggers could include execution of

Tessenderlo’s announced strategy: (1) to develop

further the Plastics Converting activities in Europe;

(2) to strengthen its position in the world’s gelatine

top three; (3) to develop activities that combine

service provision and the gleaning of value from

by-products; and (4) to divest activities with ROCE

below 12%. Valuation seems undemanding relative

to peers, which trade at a 2010F EV/EBITDA of 4.5x.

Company profile Tessenderlo is a diversified international chemicals

group headquartered in Belgium. It operates in three

sectors: Chemicals, Plastics Converting and

Specialities. It employs c.8,100 employees in more

than 100 branches in 20 countries, achieving €2.8bn

revenues in 2008 (of which c.80% in Europe).

Chemicals (51% of sales, 77% of REBIT 2008) This division comprises the Inorganics, Chlor-Alkali

and PVC activities. In Inorganics, Tessenderlo

produces specialty fertilisers (world market leader in

liquid sulphur-based fertilisers, worldwide No.2 in

potassium sulphate (after K+S) and European market

leader in caustic potash) and animal nutrition

(worldwide No.2 in animal feed phosphates).

Furthermore, it is Europe’s sixth-largest S-PVC

producer, serving end-markets in packaging, consumer

goods, cables and construction. Lastly, in Chlor-Alkali,

the group produces detergents (European market

leader in caustic potash and caustic soda) and

industrial chemicals.

Plastics Converting (28% of sales, 9% of REBIT) Tessenderlo has pursued a downstream integration

policy and taken over several PVC producers. The

products, comprising profiles and plastic pipe systems,

are almost all intended for the construction and

renovation sectors. Closely linked to PVC processing

is the production of compounds for the injection and

extrusion market. Plastics Converting is also

responsible for distribution to end-users in a number of

countries. This enables it to improve its market position

and profitability. Tessenderlo is the No.1 producer of

plastic pipe systems in Benelux and the third-largest in

France. The group is also the second-largest TPE

compounder (thermoplastic elastomers) and the fifth-

largest producer of PVC compounds in Europe.

Specialities (21% of sales, 14% of REBIT) Specialities comprises a number of diverse activities.

Fine Chemicals makes products for the agro-chemical,

pharmaceutical and perfume industries. The Gelatine

unit turns the skins and bones of cattle and pigs into

high-quality gelatine for use in the food and

pharmaceutical industries. Tessenderlo is the third-

largest manufacturer of high-quality gelatines

worldwide. Natural Derivatives processes animal by-

products to make materials for the pet food and soap

industries.

Financials

Yr to Dec (€m) 2008 2009F 2010F 2011F

Income statement

Turnover 2,765.0 2,306.4 2,352.5 2,399.6EBITDA 344.7 200.0 205.3 222.6EBITA 239.1 100.0 103.8 119.5Operating exceptionals 0.0 0.0 0.0 0.0Net financial charges (21.6) (20.0) (10.2) (8.0)Pre-tax profit 202.1 91.0 104.8 123.0Taxes (61.7) (24.0) (28.1) (33.5)Net profit 140.5 67.0 76.7 89.5Adj net attributable profit 163.9 67.0 76.7 89.5

Balance sheet

Working capital 556.8 463.4 472.6 482.1Goodwill 38.3 38.3 38.3 38.3Tangible fixed assets 652.0 652.0 652.0 652.0Other intangible assets 39.9 39.9 39.9 39.9L/T investments 80.6 80.6 80.6 80.6Net debt 294.6 171.6 142.9 103.0L/T non-int-bearing liabs 171.0 171.0 171.0 171.0Minority interests (equity) 2.0 2.0 2.0 2.0Shareholders’ equity 900.0 929.6 967.5 1,016.9

Cash flow

Op cash flow (pre-tax) 156.8 293.4 196.0 213.1Cash taxes (61.7) (24.0) (28.1) (33.5)Op cash flow (after-tax) 95.1 269.4 167.9 179.7Net financial charges (CF) (21.6) (20.0) (10.2) (8.0)Net capex (108.2) (100.0) (101.5) (103.0)Free cash flow (34.7) 149.4 56.2 68.6

Ratios (%)

EBITDA margin 12.5 8.7 8.7 9.3EBITA margin 8.6 4.3 4.4 5.0Net margin 5.1 2.9 3.3 3.7ROE 15.6 7.3 8.1 9.0Net debt/equity 32.7 18.4 14.7 10.1

Growth (%)

Turnover -16.6 2.0 2.0EBITDA -42.0 2.6 8.4Adj EPS -59.11 14.48 16.69


Adj EPS 5.92 2.42 2.77 3.23Dividend 1.33 1.35 1.40 1.45NAV 32.49 33.56 34.93 36.71

Valuation

EV/turnover (x) 0.3 0.3 0.3 0.3EV/EBITDA (x) 2.7 4.0 3.7 3.3EV/EBIT (x) 3.8 8.0 7.4 6.1Adj PER (x) 3.8 9.3 8.1 7.0Price/NAV (x) 0.7 0.7 0.6 0.6Dividend yield (%) 5.9 6.0 6.2 6.5


TiGenix Buy

Belgium Price (20/03/09) €3.03 Market cap €74.4mHealth Target price (12 mth) €6.30 Reuters G9U.BR

Luke Poloniecki London (44 20) 7767 5851 [email protected]


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Investment case We believe the market has over-penalised TiGenix

for the delay to ChondroCelect, which still looks set

to be the first product to gain EU approval for

repairing damaged knee cartilage. We now expect

the EU regulatory opinion in 2Q09, which if positive

will also raise the company’s acquisition appeal.

ChondroCelect has demonstrated long-term clinical

superiority to standard surgical treatment, and we

see significant potential in EU and US, forecasting

peak sales of c.€100m pa which should drive

profitability as early as 2011F.

Company profile

Overview TiGenix is a Belgium-based biomedical company that

is developing biological treatments for damaged joints.

Its lead product, ChondroCelect, aims to repair

damaged knee cartilage more durably than existing

methods. It has no in-market revenues and is loss-

making.

ChondroCelect and cartilage repair

Over 2m patients pa are diagnosed with knee cartilage

damage, and we believe this represents a substantial

(>€1bn) market opportunity. TiGenix aims to develop a

series of biological treatments for damaged joints, and

its lead product, ChondroCelect, is the first ever to

have successfully undergone a pivotal Phase III trial

designed to meet FDA and EU regulatory standards.

ChondroCelect could be launched in Europe in 2H09

and in the US in late 2010. ChondroCelect's key

competitor will be Genzyme's Carticel which, although

available in the US since 1995, is not supported by

controlled clinical trial data.

Pipeline opportunities TiGenix is developing a more convenient ‘next-

generation’ ChondroCelect product (in which the

cartilage-forming cells are embedded in a 3D matrix

that can be implanted via arthroscopy), which also has

the potential to extend usage into the lucrative

osteoarthritis market. This is set to enter clinical

studies in 2009. Other research areas include

meniscus and allogeneic (non-self) cartilage repair.

Valuation and risks

TiGenix’s shares initially rose significantly after the

March 2007 IPO (which took place at €5.0/share) but

have since suffered in the biotech sector sell-off that

followed the US credit crunch. We continue to see

substantial fundamental upside based on our risk-

adjusted NPV and on the possibility of M&A interest

from one of the larger orthopaedic players.

Financials

Yr to Dec (€m) 2007 2008 2009F 2010F 2011F 2012F

Income statement Turnover 0.2 0.3 2.7 10.0 46.8 71.2EBITDA (12.7) (16.5) (15.2) (15.1) 10.6 28.8EBITA (13.1) (16.5) (15.6) (15.7) 9.9 28.1Operating exceptionals 0.0 0.0 0.0 0.0 0.0 0.0Net financial charges 1.2 1.3 0.4 0.1 0.1 0.4Pre-tax profit (12.0) (15.2) (15.3) (15.7) 9.9 28.4Taxes 0.0 0.0 0.0 0.0 0.0 0.0Net profit (12.0) (15.2) (15.3) (15.7) 9.9 28.4Adj net attributable profit (12.0) (15.2) (15.2) (15.7) 10.0 28.5

Balance sheet Working capital (0.9) (0.5) 1.1 2.7 3.0 3.2Goodwill 0.5 0.4 0.6 0.8 0.9 1.1Tangible fixed assets 1.4 2.5 3.5 4.9 5.3 5.6Other intangible assets 0.0 0.0 0.0 0.0 0.0 0.0L/T investments 0.0 0.0 0.0 0.0 0.0 0.0Net debt (39.1) (25.2) (10.8) (11.3) (22.1) (51.7)L/T non-int-bearing liabs 0.0 0.0 0.0 0.0 0.0 0.0Minority interests (equity) 0.0 0.0 0.0 0.0 0.0 0.0Shareholders' equity 38.7 25.4 11.1 13.1 24.2 53.9

Cash flow Op cash flow (pre-tax) (12.1) (15.4) (15.0) (14.0) 12.0 30.4Cash taxes 0.0 0.1 0.0 0.0 0.0 0.0Op cash flow (after-tax) (12.1) (15.3) (15.0) (14.0) 12.0 30.4Net financial charges (CF) 1.3 1.4 0.4 0.1 0.1 0.4Net capex (1.2) (1.2) (1.2) 0.0 0.0 0.0Free cash flow (12.0) (15.1) (15.8) (13.9) 12.1 30.8

Ratios (%) EBITDA margin -5,607.0 -5,141.7 -555.9 -151.0 22.6 40.4EBITA margin -5,790.3 -5,141.7 -572.1 -157.1 21.2 39.4Net margin -5,272.7 -4,724.3 -560.0 -157.5 21.1 39.8ROE -52.2 -47.3 -84.1 -130.3 53.1 72.6Net debt/equity -101.0 -99.2 -97.7 -86.3 -91.4 -95.9

Growth (%) Turnover -45.4 41.4 751.7 265.5 368.5 52.2EBITDA 171.5Adj EPS 15.80 -23.02 -0.51 4.59 185.03

Per share data (€) Adj EPS (0.50) (0.62) (0.62) (0.59) 0.37 1.05Dividend 0.00 0.00 0.00 0.00 0.00 0.00NAV 1.58 1.03 0.42 0.48 0.89 1.99

Valuation EV/turnover (x) 155.6 153.5 23.3 6.9 1.3 0.4EV/EBITDA (x) (2.8) (3.0) (4.2) (4.6) 5.6 1.1EV/EBIT (x) (2.7) (3.0) (4.0) (4.4) 6.1 1.1Adj PER (x) 8.2 2.9Price/NAV (x) 1.9 2.9 7.2 6.3 3.4 1.5Dividend yield (%) 0.0 0.0 0.0 0.0 0.0 0.0


TKH Group Hold

Netherlands Price (20/03/09) €7.19 Market cap €252.7mElectronic & electrical equipment Target price (12 mth) €7.75 Reuters TWKNc.AS



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Investment case TKH is facing difficult market conditions, mainly in

its Building and Industrial divisions. We are less

worried about Telecom as we expect a stable

performance here in 2009. At the latest analyst

meeting we took comfort from TKH’s potential to

cut costs rapidly. TKH is not only able to reduce

flex workers in various units (for instance the tyre

unit), but also can move quickly in case demand

tumbles further by reducing commercial costs. If

things get significantly worse it could reduce

expenses on innovations. While we realise that this

is a vital part of TKH’s success and long-term

strategy, we see this as a relative play, and the

competition is faced with the same grim market

environment. At this stage of the cycle earnings

visibility is very poor, which prevents us from

upgrading based on the low valuation alone, HOLD.

Company profile

Overview TKH is a group of companies specialising in providing

solutions, creating and supplying innovative telecom,

building and industrial solutions. With 25 companies

worldwide, TKH is a global player. Growth is

concentrated in northwest Europe, Eastern Europe and

Asia. The company has three divisions:

Telecom solutions (18% of 2008 sales)

Home networking, internet telephone and IP-TV have

become normal in everyday life. These developments

ask for faster traffic in broadband that can cope with

the network burden. TKH solutions range from the

basic infrastructure to home network solutions for both

the outdoor- and indoor telecom market. The division is

divided in three main categories: fibre-cable networks,

copper networks and indoor telecom systems.

Building solutions (34% of 2008 sales) TKH equips office buildings, homes and hospitals with

state of the art intercom and surveillance systems,

networks for access control, networks for indoor

telecommunication and controlled lighting and air

conditioning systems. For dwellings the company

develops intelligent systems that make life more

comfortable and safer. The building solutions division

is divided in three categories: building technologies,

security systems and connectivity systems.

Industrial solutions (48% of 2008 sales)

TKH offers innovative, efficient solutions that enable

customers to produce at lower costs and achieve more

flexibility. In the specialty cable sector this leads to

innovative solutions. In collaboration with

manufacturers, TKH has developed concepts for tyre-

building systems for the production of car tyres. The

industrial solutions division is split into two categories:

connectivity systems and manufacturing systems.

Strategy TKH sees its security business growing from the current

7% of sales to 20% of sales in 2012. The targeted EBIT

margin range is 9% to 10%, the ROCE target is 18% to

20% and solvency should be at least 35%. The

company believes this can be achieved on the basis of

turnover growth and by striving for a strong position in

the high-potential segments of (indoor) telecom,

security, building solutions and industrial solutions.

Financials

Yr to Dec (€m) 2006 2007 2008 2009F 2010F 2011F



Cash flow Op cash flow (pre-tax) (17.0) 64.1 82.2 90.4 78.0 81.6Cash taxes (14.6) (12.4) (15.0) (14.3) (13.1) (15.1)Op cash flow (after-tax) (31.6) 51.7 67.2 76.0 64.9 66.5Net financial charges (CF) (3.7) (6.2) (7.8) (8.3) (8.1) (7.8)Net capex (16.5) (26.1) (31.7) (6.5) (12.0) (33.0)Free cash flow (51.9) 19.4 27.7 61.2 44.8 25.8






TNT Hold

Netherlands Price (20/03/09) €12.35 Market cap €4,433.6mSupport services Target price (12 mth) €14.00 Reuters TNT.AS

Axel Funhoff Brussels (32 2) 547 7275 [email protected]


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Investment case We rate TNT a HOLD, given its 60% sales gearing to

the Express business, which is currently suffering

from unprecedented rates of volume decline, given

the rapid deterioration in economic activity around

the globe. 1Q09 and 2Q09 could well be very weak,

with airfreight volumes declining by over 20% year

on year. However, we do not expect 3Q09 (and

potentially even 2Q09) to show a sequential decline

in volumes and earnings power. Going into 2010,

we believe TNT has an investment case centred on

operating leverage. In Mail (40% of sales), TNT

faces additional pressure from the full opening of

the Dutch mail market as of 1 April 2009 – an

additional earnings challenge for the group.

Company profile

History TNT (formerly TPG) evolved from the 1996 merger of

PTT Post (Dutch national postal service) and logistics

company TNT. PTT Post, incorporated as part of KPN

in 1989, acquired TNT in 1996 and became the sole

shareholder of GD Express Worldwide. In 2005, the

company renamed itself TNT. The Dutch government

no longer holds any TNT shares.

Mail TNT’s Mail division provides collecting, sorting,

transporting and distributing services for domestic and

international mail, including letters, printed matter and

parcels, as well as distributing addressed direct mail

and unaddressed mail (ie, the item of correspondence

does not carry an individual address). The Mail division

also provides a range of value-added services such as

data and document management services, including

printing and distributing direct marketing material.

Express

TNT’s Express business provides on-demand door-to-

door express delivery services for customers sending

documents, parcels and freight. TNT offers regional,

national and worldwide express delivery services,

primarily for business-to-business customers. The

Express business includes TNT’s in-night business,

which provides in-night distribution services across

most of Europe. Deliveries can be picked up late

afternoon or early evening for delivery the same night.

TNT is a global express player and No.2 in Europe,

after DHL.

Financials

Yr to Dec (€m) 2006 2007 2008 2009F 2010F 2011F

Income statement Turnover 10,346 10,783 11,259 10,609 10,711 10,918EBITDA 1,607.0 1,552.0 1,381.0 1,226.1 1,192.3 1,454.3EBITA 1,283.0 1,203.0 982.0 846.5 807.0 1,070.9Operating exceptionals 0.0 0.0 0.0 0.0 0.0 0.0Net financial charges (51.0) (94.0) (147.0) (199.6) (227.6) (227.6)Pre-tax profit 1,227.0 1,110.0 802.0 638.9 571.4 835.3Taxes (396.0) (316.0) (242.0) (175.7) (151.4) (221.4)Net profit 830.0 791.0 556.0 459.0 415.6 609.3Adj net attributable profit 830.0 791.0 556.0 459.0 415.6 609.3

Balance sheet Working capital 5,503.0 7,227.0 7,018.0 7,402.0 7,497.6 7,711.6Goodwill 0.0 0.0 0.0 0.0 0.0 0.0Tangible fixed assets 823.0 847.0 793.0 841.7 893.3 948.1Other intangible assets 0.0 0.0 0.0 0.0 0.0 0.0L/T investments 483.0 590.0 508.0 536.6 566.9 599.2Net debt 211.0 268.0 311.0 332.8 336.9 351.2L/T non-int-bearing liabs 6,382.0 7,759.0 7,520.0 7,948.3 9,009.1 9,944.6Minority interests (equity) 409.0 10.0 25.0 25.0 25.0 25.0Shareholders’ equity 2,122.0 2,252.0 2,430.0 1,684.8 2,926.4 3,336.2

Cash flow Op cash flow (pre-tax) 5,139.0 1,568.0 1,073.0 214.2 1,169.1 947.0Cash taxes (396.0) (316.0) (242.0) (175.7) (151.4) (221.4)Op cash flow (after-tax) 4,743.0 1,252.0 831.0 38.5 1,017.7 725.6Net financial charges (CF) (51.0) (94.0) (147.0) (199.6) (227.6) (227.6)Net capex 53.0 (334.0) 56.0 0.0 0.0 0.0Free cash flow 4,745.0 824.0 740.0 (161.1) 790.1 498.0


Growth (%) Turnover 2.9 4.2 4.4 -5.8 1.0 1.9EBITDA 8.7 -3.4 -11.0 -11.2 -2.8 22.0Adj EPS 15.57 5.45 -23.08 -19.52 -9.46 46.63




TomTom Hold

Netherlands Price (20/03/09) €3.46 Market cap €426.6mElectronic & electrical equipment Target price (12 mth) €3.00 Reuters TOM2.AS



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Share data

No. of shares (m) 123.3Daily turnover (shares) 1,150,960Free float (%) 43.0Enterprise value (€m) 1,375.0Market cap (€m) 426.6


Investment case We rate TomTom a HOLD with downside risk as a

rights issue remains likely. Given the lack of

visibility and uncertainty surrounding: (1) 2009

earnings and the chance of them falling short of

expectations; and (2) the possibility of a breach in

bank covenants and hence a rights issue, we see

little reason to Buy the stock at the present time. In

the short-to-medium term, we even see downside

risk on mounting fears of a rights issue, as 1Q09 is

set to be a bad quarter with a potential loss. Based

on our expectations, there is little room for

manoeuvre and much hope is being placed on a

pick-up in 2Q09. If this does not happen, a rights

issue seems almost inevitable. In a (post) rights

issue scenario, we could see the stock trading at

c.€2.40-3.00 at best, ie, a PER of 10x (re-rating to

more normal growth multiples as balance sheet

concerns fade), assuming an at least 30%

discounted rights issue price and at least €275m

capital required. Our €3.00 target price is based on

a combination of: (1) a non-rights issue scenario in

which we use a target 2009F PER of 7x (reflecting

the high risk profile) and arrive at a c.€3.40 fair

value; and (2) the €2.40-3.00 rights issue scenario

price range. Long-term upside remains attractive

but short-term risks prevail, in our view.

Company profile

Overview TomTom is the clear European market leader in the

personal navigation device (PND) market. The

company began focusing on personal satellite

navigation in 2001 and has grown strongly since then.

General TomTom is building a global brand name, which it aims

to make the most widely recognised brand in personal

navigation. It is in the process of rapidly increasing its

number of outlets in the US, while penetration in

Europe is already quite high. The majority of

TomTom’s products are distributed to retailers through

several large national and regional distribution

companies, but the company also has direct

relationships with larger European and US retail chains

and its products are also sold online.

Strategy TomTom’s strategy is to expand its product portfolio

with various personal navigation products and

services. Adding new functions to current products and

entering new segments of the navigation market

should drive future growth. Since the acquisition of

Tele Atlas in early 2008, TomTom is uniquely

positioned to benefit from long-term sat-nav growth,

and has hence become virtually device neutral. In the

short term, the combination is expected to yield various

sales and cost synergies.

Growth opportunities The company is in discussions with wireless operators

and mobile phone manufacturers to distribute the

TomTom/Tele Atlas Mobile navigation software

product. In addition, TomTom is in talks with various

car manufacturers about a TomTom in-dash product

aimed at the mass-market of medium-sized vehicles

that are normally sold without built-in navigation

devices.

Financials

Yr to Dec (€m) 2007 2008 2009F 2010F 2011F

Income statement

Turnover 1,737.1 1,674.0 1,448.9 1,461.0 1,673.7EBITDA 451.3 320.0 273.6 289.1 318.1EBITA 444.4 302.6 247.0 262.4 291.5Operating exceptionals 0.0 1,063.8 0.0 0.0 0.0Net financial charges (12.8) (46.0) (80.0) (73.0) (67.0)Pre-tax profit 415.0 217.2 81.1 103.5 138.5Taxes (114.1) (70.0) (20.3) (25.9) (34.6)Net profit 300.9 147.2 60.8 77.6 103.9Adj net attributable profit 300.9 143.1 60.8 77.6 103.9

Balance sheet

Working capital 43.8 (87.4) (118.7) (118.7) (93.7)Goodwill 56.3 854.7 854.7 854.7 854.7Tangible fixed assets 17.8 53.2 51.5 49.9 53.2Other intangible assets 0.0 1,011.2 960.3 914.3 868.4L/T investments 0.0 38.6 38.6 38.6 38.6Net debt (514.0) 1,067.4 948.4 823.2 701.7L/T non-int-bearing liabs (96.3) 289.5 263.8 263.8 263.8Minority interests (equity) 0.0 5.0 6.0 7.5 9.5Shareholders' equity 1,352.4 508.4 568.2 644.3 746.2

Cash flow

Op cash flow (pre-tax) 162.6 462.8 269.3 279.1 283.1Cash taxes (113.4) (79.2) (20.3) (25.9) (34.6)Op cash flow (after-tax) 49.2 383.6 249.1 253.2 248.5Net financial charges (CF) 19.1 (29.5) (70.0) (63.0) (57.0)Net capex (16.8) (69.6) (60.0) (65.0) (70.0)Free cash flow 51.6 284.5 119.1 125.2 121.5

Ratios (%)

EBITDA margin 26.0 19.1 18.9 19.8 19.0EBITA margin 25.6 18.1 17.0 18.0 17.4Net margin 17.3 8.8 4.2 5.3 6.2ROE 22.3 15.8 11.3 12.8 14.9Net debt/equity -38.0 207.9 165.2 126.3 92.9

Growth (%)

Turnover N/A -3.6 -13.4 0.8 14.6EBITDA N/A -29.1 -14.5 5.6 10.0Adj EPS N/A -55.83 -57.80 27.67 33.86



Valuation (x)

EV/turnover (0.1) 0.9 0.9 0.9 0.7EV/EBITDA (0.3) 4.7 5.0 4.3 3.5EV/EBIT (0.3) (1.9) 8.5 7.1 5.5Adj PER 1.3 3.0 7.0 5.5 4.1Price/NAV 0.3 0.8 0.8 0.7 0.6Dividend yield (%) 0.0 0.0 0.0 0.0 0.0


Transics Hold

Belgium Price (20/03/09) €3.67 Market cap €29.7mSoftware & computer services Target price (12 mth) €4.10 Reuters TRAN.BR



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Investment case We believe Transics has a very attractive long-term

profile due to a number of structural growth

drivers, which include a potential increase in fuel

costs going forward, stricter European legislation

on road transport and sound geographical

expansion opportunities. In the short term,

however, Transics is exposed to the dramatic

decline in truck sales and lower volumes within the

road transport industry due to the economic

slowdown. With the industry offering no sign of a

potential short-term recovery, we do not forecast a

recovery in Transics’ revenues before 2010F, while

the expanded cost base (c.30% increase in

employees) could put pressure on margins in

2009F and 2010F. We have a HOLD

recommendation.

Company profile Founded in 1990, Transics is the No.2 in Europe in the

fleet management solutions (FMS) market, with 15%

market share. FMS is a complex information system

that enables companies in the transport and logistics

sector to manage all aspects relating to a fleet of

vehicles with real-time information in order to increase

efficiency, reduce costs and improve customer

services.

Organisation

The company has a centralised organisation based in

Ieper (Belgium) with c.200-strong staff at end-2007. Its

workforce is split as follows: 25% in R&D, 33% in

customer care, 35% in sales and marketing and the

rest in administration.

Transics offers the whole value chain in FMS solutions,

from on-board computer devices (bundling hardware

and software) to maintenance and services.

Product sales (70% of 2008 sales INGE) Product sales consist of the On-Board Computer

(OBC) hardware and related software. When installed

in a truck, an OBC device enables the tracking of the

vehicle and its goods, exchanging data with the client’s

information systems (technical data of the vehicle,

activity reporting, navigation, etc). The list price ranges

from €2,000 to €2,500.

Recurring sales (27% of 2008 sales INGE) Recurring sales encompass all recurring elements

linked to the OBC from maintenance to telecoms

communication. This should continue to grow in the

future faster than the installed base as the service

offering is growing.

Field services (3% of 2008 sales INGE)

Field services revenues derive from the billable hours

related to project implementation, training and

consulting.

Geographic breakdown of sales (2007F) Belgium: 25%; Netherlands and France: 57%; Rest of

Europe: 18%.

Financials

Yr to Dec (€m) 2006 2007 2008 2009F 2010F 2011F

Income statement Turnover 25.3 43.5 43.7 36.7 43.1 54.8EBITDA 7.3 13.2 8.8 4.1 7.2 13.1EBITA 5.1 10.7 5.7 0.9 3.9 9.4Operating exceptionals 0.0 0.0 0.0 0.0 0.0 0.0Net financial charges (2.8) (3.8) (1.9) (1.2) (0.6) 0.0Pre-tax profit 2.3 6.9 3.8 (0.3) 3.3 9.4Taxes (1.8) (1.7) (1.6) 0.1 (1.1) (3.1)Net profit 0.5 5.2 2.2 (0.2) 2.2 6.3Adj net attributable profit 0.5 5.2 2.2 (0.2) 2.2 6.3


Cash flow Op cash flow (pre-tax) 7.7 9.0 10.1 4.8 6.4 11.5Cash taxes (1.8) (1.7) (1.6) 0.1 (1.1) (3.1)Op cash flow (after-tax) 5.9 7.4 8.5 4.9 5.3 8.4Net financial charges (CF) (2.8) (3.8) (1.9) (1.2) (0.6) 0.0Net capex (38.0) (3.2) (3.1) (2.6) (2.9) (2.6)Free cash flow (34.9) 0.3 3.5 1.2 1.8 5.8

Ratios (%) EBITDA margin 29.0 30.2 20.2 11.1 16.8 23.9EBITA margin 20.3 24.6 13.1 2.4 9.0 17.2Net margin 2.0 12.0 5.0 -0.7 5.1 11.5ROE 6.7 24.3 5.7 -0.6 5.5 14.4Net debt/equity 495.4 30.9 22.3 19.7 14.2 0.0

Growth (%) Turnover 36.0 72.3 0.4 -16.0 17.4 27.4EBITDA 56.5 79.7 -33.1 -53.6 76.6 81.3Adj EPS -65.46 1,041.49 -58.29 N/M N/M 188.60


Valuation (x) EV/turnover 2.0 0.9 0.9 1.0 0.8 0.5EV/EBITDA 6.8 3.1 4.4 9.1 4.9 2.3EV/EBIT 9.8 3.8 6.7 41.6 9.2 3.2Adj PER 65.0 5.7 13.6 N/M 13.6 4.7Price/NAV 3.4 0.8 0.8 0.8 0.7 0.6Dividend yield (%) 0.0 0.0 0.0 0.0 0.0 0.0


UCB Sell

Belgium Price (20/03/09) €20.90 Market cap €3,766.2mPharmaceuticals Target price (12 mth) €19.50 Reuters UCB.BR

Mark Clark London (44 20) 7767 6358 [email protected]


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Share data



Investment case Irrespective of whether UCB is able modestly to

grow ‘underlying’ earnings in 2009 (as it targets),

we believe that sustained medium to long-term

growth for the company relies heavily on Cimzia

gaining approval in rheumatoid arthritis (RA). The

FDA asked for more safety data in January 2009

(we do not know what its concerns were) and a

regulatory decision here is unlikely until late-2009.

This represents a major risk for the shares.

Meanwhile, UCB shares are trading roughly in line

with mid-cap pharma peers on 2010F PER and at a

premium to large-cap pharma (8x), suggesting that

the risks are skewed to the downside if there are

any regulatory setbacks.

Company profile

Background UCB is a Euronext Brussels-listed biopharmaceutical

company that is focused on CNS and immunology.

The company has divested its chemicals activities in

recent years and acquired Celltech and Schwarz

Pharma, with the aim of becoming “the next generation

biopharma company”. It is now a pure pharma

business, and thus does not report divisionally. Its

largest-selling product, Keppra (for epilepsy),

accounted for c.40% of 2008 sales. Its sales split:

Europe 47%; North America 40%; Rest of World 13%.

New drugs versus old UCB has a broad late-stage pipeline, with five new

drugs in the launch phase (Neupro, Vimpat, Cimzia in

Crohn's disease, Toviaz and Xyzal) and key drug

Cimzia undergoing registration in RA. However, it

faces a tough transition, as patents protecting half its

business expire between end-2007 and 2H10. UCB is

attempting to manage this difficult transition through

cost-cutting and business reorientation (the SHAPE

programme). While this limits the downside to earnings

in the short term, we see a significant risk that UCB will

fail to meet its target of “an intensive growth period

from 2010” if there is any new product disappointment.

Valuation

Our target price of €19.5 is based on a combination of

a SOTP (using NPV for pipeline compounds), peer

multiple comparisons and DCF.

Financials

Yr to Dec (€m) 2006 2007 2008 2009F 2010F 2011F

Income statement Turnover 3,144.4 3,188.0 3,026.6 2,704.5 2,776.9 2,969.6EBITDA 747.1 645.0 732.7 631.2 662.8 666.0EBITA 670.1 570.0 635.7 532.7 562.9 564.5Operating exceptionals 0.0 0.0 0.0 0.0 0.0 0.0Net financial charges (48.4) (125.0) (156.0) (110.0) (90.0) (75.0)Pre-tax profit 620.2 216.0 (42.7) 227.7 349.9 384.5Taxes (228.4) (60.0) 30.4 (70.6) (105.0) (115.4)Net profit 391.4 157.0 41.7 157.1 244.9 269.2Adj net attributable profit 392.9 386.0 564.1 352.1 367.9 374.2

Balance sheet Working capital (64.0) (147.0) (110.0) (1,226.0) (1,245.4) (1,241.6)Goodwill 2,486.5 2,293.0 2,169.0 2,131.5 2,086.5 2,034.0Tangible fixed assets 665.0 758.0 623.0 624.5 634.6 654.2Other intangible assets 0.0 0.0 0.0 0.0 0.0 0.0L/T investments 667.0 446.0 316.0 316.0 316.0 316.0Net debt 2,108.0 1,915.0 2,346.0 477.1 305.6 159.1L/T non-int-bearing liabs 1,267.0 1,574.0 1,214.0 1,936.0 1,970.4 1,980.8Minority interests (equity) 198.0 1.0 2.0 2.0 2.0 2.0Shareholders' equity 4,574.0 4,263.0 4,015.0 4,010.0 4,092.7 4,200.7

Cash flow Op cash flow (pre-tax) (3,799.8) 908.0 (497.3) 1,426.2 664.3 662.2Cash taxes (128.0) (228.4) (146.0) 30.4 (70.6) (105.0)Op cash flow (after-tax) (3,927.8) 679.6 (643.3) 1,456.6 593.7 557.2Net financial charges (CF) (40.0) (125.0) (115.0) (110.0) (90.0) (75.0)Net capex (165.0) (251.0) (185.0) (175.0) (185.0) (196.0)Free cash flow (4,132.8) 303.6 (943.3) 1,171.6 318.7 286.2

Ratios (%) EBITDA margin 23.8 20.2 24.2 23.3 23.9 22.4EBITA margin 21.3 17.9 21.0 19.7 20.3 19.0Net margin 12.5 4.9 (0.4) 5.8 8.8 9.1ROE 10.9 3.6 1.0 3.9 6.0 6.5Net debt/equity 44.2 44.9 58.4 11.9 7.5 3.8

Growth (%) Turnover 53.9 1.4 -5.1 -10.6 2.7 6.9EBITDA 41.3 -13.7 13.6 -13.9 5.0 0.5Adj EPS -7.57 -1.76 46.15 -37.58 4.48 1.70




Umicore Hold

Belgium Price (20/03/09) €13.61 Market cap €1,592.4mChemicals Target price (12 mth) €14.00 Reuters UMI.BR



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Investment case We expect no trigger until there are signs of a

recovery in car production or a stock market re-

rating. We recognise the vulnerability of earnings to

the Catalysts activity (23% of sales), which is

directly linked to the ailing global car production

market and which has been the main value and

profit driver. With lack of visibility on both the

industry’s speed of destocking and re-stocking,

and the revival in demand for cars, we expect the

stock to flatline over the coming months. Umicore’s

two other activities are likely to show a mixed

performance, with Advanced Materials proving

relatively resilient to the recession and Precious

Metals Services heading south until 2011, hit by

weakening volumes (and lower pricing from 2011

after Umicore’s hedge on metals prices comes to

an end).

Company profile

History Umicore is a speciality chemicals group with

headquarters in Brussels. The company has shifted its

focus from metals & mining (through the demerger of

Cumerio and capacity reductions in zinc smelting)

towards downstream and application-oriented products

(organically and through acquisitions, notably OM

Group in 2003).

Umicore has transformed itself into a materials

technology group focused on high-value-added

applications derived from special and precious metals.

The company operates in markets exposed to

structural growth drivers such as pollution control,

electronic scrap recycling, rechargeable batteries and

strongly growing electronic applications that require

special metal compounds.

Geographical split of sales: Europe 64%, Asia 13%,

Americas 18% and Africa 5%.

Precious metals & catalysts (30% of 2008 REBIT) Umicore is a leading world player in recycling complex

materials containing precious metals. It ranks number-

one worldwide for catalytic converters for diesel

engines.

Advanced materials (20%) This division produces high-purity metals, alloys,

compounds and advanced materials for a wide range

of applications. It is world leader in cobalt components

and germanium-based products.

Precious metals services (52%) Umicore is the world’s leading recycler and refiner of

complex materials containing precious metals (notably

silver, palladium and rhodium). The facility at Hoboken,

near Antwerp, is the most advanced precious metals

recycling and recovery operation in the world.

Zinc specialities (13%) Umicore is a leader in downstream zinc applications,

which consist mainly of the transformation of zinc into

building products (rolled and pre-formed zinc products

for roofing, rainwater systems decoration) and zinc

chemicals (zinc oxides used in tyres and zinc powders

used in protective coating and paints for marine

applications).

Financials

Yr to Dec (€m) 2006 2007 2008 2009F 2010F 2011F


Balance sheet Working capital 859.4 906.7 852.0 791.7 790.4 786.9Goodwill 92.4 94.5 123.1 123.1 123.1 123.1Tangible fixed assets 716.4 622.7 709.2 778.1 828.0 853.6Other intangible assets 18.4 17.8 0.0 0.0 0.0 0.0L/T investments 528.1 404.8 298.0 298.0 298.0 298.0Net debt 812.9 177.9 333.4 335.6 274.5 185.0L/T non-int-bearing liabs 413.5 338.1 316.8 275.6 296.9 309.7Minority interests (equity) 49.1 39.3 41.7 35.4 37.7 40.3Shareholders’ equity 939.0 1,491.2 1,290.4 1,344.2 1,430.3 1,526.7

Cash flow Op cash flow (pre-tax) (20.8) 390.7 462.5 380.3 383.6 418.4Cash taxes (38.7) (57.5) (67.2) (34.6) (51.4) (63.4)Op cash flow (after-tax) (59.5) 333.2 395.3 345.7 332.2 355.1Net financial charges (CF) (48.4) (40.4) (52.0) (30.9) (28.1) (21.5)Net capex (154.5) 377.8 (196.2) (200.0) (185.0) (180.0)Free cash flow (262.4) 670.6 147.1 114.8 119.1 153.6


Growth (%) Turnover 34.2 -5.7 10.3 -5.9 1.3 -0.4EBITDA 32.2 11.0 -6.9 -21.5 19.5 8.5Adj EPS 36.25 231.00 -79.75 -0.67 32.32 13.51




Unilever NV Buy

Netherlands Price (20/03/09) €13.6 Market cap €38,312.2mFood producers & processors Target price (12 mth) €18.5 Reuters UNc.AS



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Share data

No. of shares (m) 2,815.0Daily turnover (shares) 11,715,200Free float (%) 100.0Enterprise value (€m) 45,326Market cap (€m) 38,312


Investment case Dilution impact and weak 1Q09 results are now

more than reflected in trough multiples (2009F PER

of 10.4x). The market is forgoing a 2Q09 volume

recovery from a substantial reinvestment push, in

our view.

The drop in guidance and announcement of the

category-led organisation will lead Unilever to the

next phase of its transformation. The new internal

targets on volume-versus-value growth should

drive focus on market share, while a simplified

supply chain, above-average investment in R&D

and investment increasingly routed to its top

brands should lead to improved volume execution.

Our analysis shows that 1Q09 should be the low

point both for volumes and margins. We expect

positive volume growth from 2Q09, driven by

substantial reinvestment. Consensus has priced in

a fall in margins YoY (INGF -30bp to 14.3% in 2009)

mainly due to the dilutive impact from disposals

and reinvestment of savings.

Company profile

History

Unilever was formed in 1930 when Dutch Margarine

Unie merged with British soapmaker and food

producer Lever Brothers. Margarine Unie had grown

through mergers with margarine companies in the

1920s. Lever Brothers was founded in 1885. Unilever

has two divisions: HPC and Foods. By purchasing

Bestfoods in 2000, Unilever made its biggest

acquisition, adding the €2.3bn Knorr brand to its

portfolio.

Foods This is Unilever’s largest division, with turnover of

€21.6bn in 2007, 54.5% of the group total. The division

is active in a number of categories and holds

worldwide No.1 positions in dressings, ice cream,

spreads and tea (among others). Global brands

include Knorr, Lipton, Magnum, Hellmann’s and

SlimFast. A study is currently being carried out on the

underperforming frozen foods unit, and this may be put

up for sale.

Home & Personal Care HPC contributed €18.7bn in revenues in 2007, 45.5%

of the group total. 60% of this amount (€11.3bn) came

from personal care operations, with the €7.4bn balance

from home care. Within the total, personal care is

showing strong growth, driven by global brands such

as Dove and Axe/Lynx. Homecare is dominated by

laundry (€6bn in revenues), which is showing more

pedestrian growth of 1-2%, as it is a mature category

in developed markets. In HPC, one disposal still needs

to be completed: US laundry with sales of around

€800m.

Financials

Yr to Dec (€m) 2006 2007 2008 2009F 2010F 2011F

Income statement Turnover 39,642 40,187 40,523 39,829 41,602 43,466EBITDA 6,594.3 6,758.0 6,905.0 6,588.4 6,951.6 7,371.0EBITA 5,807.3 5,954.0 6,117.0 5,784.2 6,143.1 6,559.3Operating exceptionals 0.0 0.0 0.0 0.0 0.0 0.0Net financial charges (577.0) (252.0) (257.0) (478.2) (472.9) (319.2)Pre-tax profit 4,831.3 5,184.0 7,129.0 4,683.3 5,271.8 6,194.2Taxes (1,146.0) (1,128.0) (1,844.0) (1,259.6) (1,382.4) (1,621.7)Net profit 4,745.3 3,888.0 5,027.0 3,157.9 3,599.8 4,256.8Adj net attributable profit 3,588.3 4,092.5 4,040.3 3,698.1 3,993.8 4,410.2

Balance sheet Working capital (2,117.3) (1,742.0) (1,610.0) (1,697.1) (1,706.0) (1,802.3)Goodwill 17,206 16,755 16,091 16,021 15,976 15,931Tangible fixed assets 6,276.0 6,284.0 5,957.0 5,989.2 6,012.7 6,070.3Other intangible assets 0.0 0.0 0.0 0.0 0.0 0.0L/T investments 4,089.0 4,335.0 2,919.0 2,919.0 2,919.0 2,919.0Net debt 11,962 7,809.3 7,741.3 6,589.8 5,124.6 3,061.1L/T non-int-bearing liabs 6,606.0 5,004.0 5,937.0 5,937.0 5,937.0 5,937.0Minority interests (equity) 442.0 432.0 424.0 424.0 424.0 424.0Shareholders' equity 11,221 12,387 9,948.0 10,281 11,716 13,696

Cash flow Op cash flow (pre-tax) 6,303.5 6,259.7 8,203.0 5,940.5 6,409.5 7,250.9Cash taxes (1,146.0) (1,128.0) (1,844.0) (1,259.6) (1,382.4) (1,621.7)Op cash flow (after-tax) 5,157.5 5,131.7 6,359.0 4,680.9 5,027.1 5,629.2Net financial charges (CF) (662.0) (555.0) (400.0) (453.2) (422.9) (319.2)Net capex (934.0) (883.0) (1,099.0) (836.4) (832.0) (869.3)Free cash flow 3,561.5 3,693.7 4,860.0 3,391.3 3,772.2 4,440.7






Unit 4 Agresso Buy

Netherlands Price (20/03/09) €8.20 Market cap €215.3mSoftware & computer services Target price (12 mth) €10.00 Reuters UNI4.AS



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Investment case We rate U4A a BUY as we believe that despite

challenging market conditions, the EBITDA

guidance for 2009 is within reach, given good

visibility on 1H09, supported by 42% recurring

revenues. We foresee further improvement of the

gross margin due to lower third party hiring, while

the contribution from the CODA acquisitions and

related synergies will give further support. In

addition, the restructuring in Spain should start to

kick in later this year. Balance sheet risks seem

mitigated now that the dividend has been passed

and we are confident that U4A will remain within its

covenants and forecast 2.1-2.2x 2009F net

debt/EBITDA versus a covenant of 2.75x. However,

the shares continue to price in earnings and

balance sheet risks, trading at c.5x 2009F PER,

which we believe is overdone. Note that 42% of

U4A’s business is recurring (maintenance) and

c.40% of sales is generated in the public sector.

Company profile

Overview

Unit 4 Agresso is an international provider of business

management software. The company develops, sells,

implements and supports Enterprise Resource

Planning (ERP) solutions. These encompass finance,

procurement, projects, payroll and HR. The key

characteristics of its products are flexibility and post

implementation agility.

Sales breakdown

The company is active in 19 countries including the

Benelux (31% of FY08 revenues), the UK (22%),

Sweden (14%), Spain (11%), Norway (8%), Germany

(5%) and North America (5%).

Sales totalled €394m in FY08 divided into maintenance

(42%), services (40%) and licence revenues (18%).

Unit 4 Agresso targets its software at project-based

and service-oriented organisations. Key verticals in

which the company specialises are government,

education, business services, professional services,

engineering and the healthcare sector. The main

strategic priorities are an increase in scale, by means

of organic growth, alliances and acquisitions, and a

focus on specialised standard products for vertical

markets.

Financials

Yr to Dec (€m) 2006 2007 2008 2009F 2010F 2011F

Income statement Turnover 230.7 311.5 393.6 389.0 400.5 428.9EBITDA 42.4 51.9 70.1 70.0 75.2 81.1EBITA 36.6 39.4 53.4 52.8 57.9 62.6Operating exceptionals 0.0 0.0 0.0 0.0 0.0 0.0Net financial charges 2.0 1.6 (13.1) (8.0) (6.0) (4.0)Pre-tax profit 28.0 27.0 19.3 24.8 31.9 37.2Taxes (7.5) (6.2) (0.9) (4.5) (5.6) (6.7)Net profit 20.4 20.5 18.4 20.4 26.4 30.5Adj net attributable profit 31.0 34.5 39.4 40.4 46.4 52.0

Balance sheet Working capital 28.0 (22.4) (30.3) (28.6) (20.6) (7.2)Goodwill 101.3 120.4 255.9 235.9 215.9 194.5Tangible fixed assets 20.8 25.7 32.6 36.1 39.7 43.7Other intangible assets 31.3 38.5 39.7 41.8 43.7 27.5L/T investments 15.7 12.7 14.1 14.1 14.1 14.1Net debt 30.8 (20.7) 167.3 134.4 102.5 61.0L/T non-int-bearing liabs 33.3 30.4 47.0 47.0 47.0 47.0Minority interests (equity) 2.1 28.0 0.0 0.0 0.0 0.0Shareholders' equity 130.9 137.2 97.5 117.8 143.1 164.5

Cash flow Op cash flow (pre-tax) 41.9 57.1 63.9 68.4 67.1 67.6Cash taxes (3.3) (5.3) (10.8) (4.5) (5.6) (6.7)Op cash flow (after-tax) 38.6 51.8 53.1 63.9 61.6 60.9Net financial charges (CF) (0.7) 0.7 1.7 (8.0) (6.0) (4.0)Net capex (58.6) 10.2 (233.7) (22.8) (22.6) (6.2)Free cash flow (20.7) 62.7 (178.9) 33.1 33.0 50.7

Ratios (%) EBITDA margin 18.4 16.7 17.8 18.0 18.8 18.9EBITA margin 15.9 12.6 13.6 13.6 14.5 14.6Net margin 8.9 6.7 4.7 5.2 6.6 7.1ROE 15.6 15.3 15.7 18.9 20.2 19.8Net debt/equity 23.1 -12.6 171.6 114.1 71.7 37.1

Growth (%) Turnover N/M 35.0 26.3 -1.2 2.9 7.1EBITDA N/M 22.4 35.0 -0.1 7.3 7.9Adj EPS N/M 10.42 12.84 1.98 14.29 11.40




USG People Hold

Netherlands Price (20/03/09) €5.89 Market cap €375.2mSupport services Target price (12 mth) €6.00 Reuters USGP.AS



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Investment case We have a HOLD rating as we believe USG

continues to be one the riskiest staffing companies

in our universe. Although the shares have digested

a great deal of bad news already and also

incorporate much lower expectations in terms of

potential trough earnings, the risk profile remains

high, in our view, because of the poor outlook and

risky balance sheet. Note that USG is a late cycle

staffing company due to its specialist and SME

exposure, while it is relatively vulnerable in a

downturn due to its inflexible cost base. Following

the 2008 results we raised our recommendation to

HOLD as recent cash flow trends, net debt position,

and cost cutting measures taken, combined with

increased visibility on cash outflows in 2009F,

made us more comfortable with the bank

covenants. Even based on our already rather

negative sales and gross margin assumptions, USG

still seems to have room to manoeuvre on the

covenants, while even in case of a breach we do

not expect a rights issue but rather a penalty

waiver, as USG could even (as a last resort) take

part of its receivables off the balance sheet, which

would keep them within covenants. As a result, we

apply a slightly higher target multiple of 8.0x and

arrive at a €6.0 target price.

Company profile

History USG is the fifth largest staffing company in the world

and formed in 1997 as a result of a merger between

Goudsmit and Unique International. In 2002, USG

acquired Start and in 2005, USG merged with Solvus

and became the No. 5 player in Europe and generates

c.40% in specialist staffing. Management sees EBITA

margin throughout the cycle of 4.5-7.0%. Founder, A.

Mulder owns c.17.5%.

Geographical breakdown USG is active in 13 countries, including the

Netherlands (42%), Belgium (21%), France (14%),

Spain/Portugal (8%), Germany (8%), Italy (4%),

Switzerland, Austria, and Poland (together 3%). USG

holds a strong market position in the Benelux with a

No.2 position in both Netherlands and Belgium. In

France, USG ranks No.7.

Segmental breakdown USG People generates c.60% of sales in general

staffing, 30% in specialist staffing, 9% in professional

and 1% in special services. White collar staffing

accounts for around 40% of sales. USG is a strong

player in the SME segment in the Netherlands. USG

generates c.40% of Dutch sales and c.20% of group

sales from the SME segment. Within

specialist/professional staffing USG is mainly active in

admin/finance & accounting, engineering, legal, and

ICT. Its main brands are Start People, Content,

Unique, and USG Innotiv.

Financials

Yr to Dec (€m) 2006 2007 2008 2009F 2010F 2011F

Income statement Turnover 3,536.7 3,887.5 4,025.0 3,244.2 3,115.9 3,250.5EBITDA 232.4 287.2 238.1 125.6 143.7 172.0EBITA 206.4 260.0 209.4 96.4 114.5 142.8Operating exceptionals 3.7 (6.3) 0.0 0.0 0.0 0.0Net financial charges (32.0) (33.1) (52.1) (36.0) (32.0) (28.0)Pre-tax profit 146.8 204.6 72.6 29.2 51.3 83.6Taxes (50.9) (68.3) (45.8) (8.8) (15.4) (25.1)Net profit 114.8 135.8 25.1 19.9 35.3 57.5Adj net attributable profit 114.6 145.7 49.8 41.8 57.1 79.3




Growth (%) Turnover 78.8 9.9 3.5 -19.4 -4.0 4.3EBITDA 89.0 23.6 -17.1 -47.3 14.4 19.7Adj EPS 114.16 26.38 -66.31 -21.36 32.59 38.88




Vopak Buy

Netherlands Price (20/03/09) €29.45 Market cap €1,832.6mTransport Target price (12 mth) €35.00 Reuters VOPA.AS



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Investment case Vopak not only delivered strong 2008 figures, but it

was also one of the few companies to give such an

early concrete outlook for 2009. Vopak guides 2009

EBITDA including participations to grow 5% at least

to €450m, nearing its 2009/10 €475-550m target.

Super contango is not the driver, rather

management’s long-term approach towards

customers (service quality), anticipating at an early

stage changing storage functions and significant

capacity expansions with long-term contracts,

support our favourable view and we do not expect

these factors to disappear. 2009 bodes well for

Vopak. Our target price is €35, or 7.2x 2009F

EVEBITDA. We see Vopak as one of the most

attractive and solid plays of the Benelux small-

midcaps, and it is one of our favourite stock picks.

Company profile Vopak is the leading international provider of

independent tank storage and related logistics

services. It was formed through the 2002 spin-off of the

logistics arm of the former Vopak, which also included

chemicals distribution (Univar). Vopak operates

logistics services in chemicals and oil with an

international network of 80 terminals and total capacity

as of 1 January 2009 of 27.1m m3.

Chemicals EMEA (2007: 38% revenues, 30%

EBIT) Strong position, with 4.1m m³ across Europe, led by

Antwerp and Rotterdam. Different chemicals but also

gas storage.

Oil EMEA (23%, 27%)

This is Vopak’s backbone with 9.8m m³ storage or 46%

of the total. Operations in Europe dominate (Rotterdam

hub), but there are growing interests in the Middle East

and Africa. It is the market leader in this region.

Asia (26%, 28%)

Mix of oils and chemicals storage with 17 terminals

totalling 4.8m m³. Led by the Singapore hub with total

capacity near 2m m³, but it also has important

terminals in China (Caojing, a fully integrated chemical

park). Vopak is the leading company in this growth

region.

North America (10%, 9%) 80% chemicals, 20% oil storage with nine terminals,

seven of which are in the US; capacity of 2.3m m³.

Latin America (7%, 6%)

Mainly chemicals storage and a little bit of oil with a

capacity of 0.9m m³. 13 terminals with strong positions

in Brazil and Mexico, but also in countries such as

Ecuador, Chile and Peru.

Financials

Yr to Dec (€m) 2006 2007 2008 2009F 2010F 2011F

Income statement Turnover 778.1 853.0 923.5 969.7 979.4 1,018.5EBITDA 273.9 361.1 393.7 435.8 423.1 440.7EBITA 180.6 253.8 283.8 306.4 279.9 284.4Operating exceptionals 0.0 0.0 0.0 0.0 0.0 0.0Net financial charges (44.2) (42.9) (37.6) (47.0) (51.7) (46.5)Pre-tax profit 172.4 249.3 284.6 303.4 278.2 290.9Taxes (25.5) (51.2) (54.9) (60.4) (53.4) (55.9)Net profit 131.9 182.9 213.2 225.4 206.3 216.5Adj net attributable profit 129.4 181.1 212.0 224.2 205.1 215.3

Balance sheet Working capital (74.1) (117.2) (54.1) (56.1) (56.3) (64.5)Goodwill 0.0 0.0 0.0 0.0 0.0 0.0Tangible fixed assets 1,090.7 1,385.0 1,693.0 1,863.5 1,970.3 2,014.0Other intangible assets 61.7 78.9 45.4 45.4 45.4 45.4L/T investments 309.1 316.7 540.2 559.2 584.2 612.2Net debt 425.7 561.9 996.7 994.2 990.1 929.6L/T non-int.-bearing liabs. 226.5 221.6 218.8 229.7 229.7 218.3Minority interests (equity) 64.2 70.2 76.0 83.6 86.9 86.9Shareholders' equity 671.0 809.7 933.0 1,104.5 1,236.8 1,372.4

Cash flow Op cash flow (pre-tax) 317.0 394.9 327.8 448.8 423.3 437.3Cash taxes (27.4) (36.6) (54.9) (60.4) (53.4) (55.9)Op cash flow (after-tax) 289.6 358.3 272.9 388.4 369.9 381.4Net financial charges (CF) (33.0) (34.7) (37.6) (47.0) (51.7) (46.5)Net capex (267.6) (445.7) (1,106.0) (305.0) (255.0) (205.0)Free cash flow (14.0) (124.6) (871.9) 35.2 62.0 128.7


Growth (%) Turnover 13.8 9.6 8.3 5.0 1.0 4.0EBITDA 26.3 31.8 9.0 10.7 -2.9 4.1Adj EPS 40.65 39.86 17.08 5.77 -8.54 4.99




VPK Packaging Hold

Belgium Price (20/03/09) €17.00 Market cap €140.9mPackaging Target price (12 mth) €17.00 Reuters VPK.BR



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Investment case We expect further pressure on paper demand in

2009. VPK management has indicated that volumes

have declined 13% YTD, but given the weaker 2H08,

we expect them to decline 5% for the full year. In

addition, paper capacity expansion of 1.6mt has

been announced in Europe (ie, +6%). As a

consequence, paper prices are down 50% YoY. VPK

should be able to withstand this, helped by its

vertical integration into packaging. We expect

packaging prices to decline 15% YoY. Including the

acquisition of Mondi Saint-Quentin (€45m in sales),

we expect 2009F sales to decline 12% to €501.2m.

We expect EBITDA to decline 14% to €45.1m,

implying a flat 9% margin, anticipating that lower

energy and maintenance costs will compensate for

lower pricing. Company guidance on 2009 capex

and acquisitions is €40-45m. We expect net debt to

end 2009 flat at €107.3m, implying net debt/EBITDA

at 2.4x.Given that maintenance capex amounts to

only €5m, VPK has room to cut back its capex plan

during the year if market conditions worsen, in

order to maintain balance sheet strength.

2009 should be a challenging year, but VPK should

be able to withstand this, helped by its vertical

integration, customer portfolio in food and fast-

moving consumer goods, geographical spread and

sound financial position. We rate the stock a HOLD

with a €17 TP, targeting a 2010F EV/EBITDA of 5x.

Company profile VPK is a vertically integrated packaging group, mainly

active in the Western European market. The group

generated revenues of €571m in 2008.

VPK processes locally collected recycled paper into

new paper via its own paper mills. Most of the paper is

subsequently processed into packaging products, such

as corrugated board, solid board, cores and corner

profiles. The company was organised into four

divisions: Paper Recycling (sold early 2008), Paper

Production, Packaging, and Trade (sold in December

2007).

At the end of 2008, VPK owned a 460kt paper mill in

Belgium, a 455kt capacity in corrugated board, with

plants in Belgium, France, the Netherlands, the UK,

Poland and Romania, a 75kt capacity in solid board,

with plants in Belgium and France, and an 80kt

capacity in cores.

VPK employs about 3,000 staff, the bulk of whom are

in Western Europe.

VPK has a build and buy strategy. It is especially

interested in investing in the new EU member states in

Central and Eastern Europe, where expected GDP

growth is significantly higher than in Western Europe.

Financials

Yr to Dec (€m) 2006 2007 2008 2009F 2010F 2011F

Income statement Turnover 526.6 613.1 571.1 501.2 521.3 531.7EBITDA 60.6 70.6 52.2 45.1 49.5 53.2EBITA 31.6 38.9 12.9 12.1 16.5 20.2Operating exceptionals 0.0 0.0 0.0 0.0 0.0 0.0Net financial charges (3.8) (5.2) (16.9) (6.4) (6.4) (6.1)Pre-tax profit 30.4 34.2 13.9 5.7 10.1 14.0Taxes (4.0) (4.5) 6.4 (1.1) (2.0) (2.8)Net profit 26.4 29.7 20.3 4.6 8.1 11.2Adj net attributable profit 26.4 29.7 20.3 4.6 8.1 11.2


Cash flow Op cash flow (pre-tax) 29.6 68.7 62.8 50.9 45.1 50.9Cash taxes (4.0) (4.5) 6.4 (1.1) (2.0) (2.8)Op cash flow (after-tax) 25.5 64.1 69.2 49.8 43.1 48.1Net financial charges (CF) (3.8) (5.2) (16.9) (6.4) (6.4) (6.1)Net capex (32.3) (61.7) (65.0) (45.0) (30.0) (30.0)Free cash flow (10.5) (2.8) (12.7) (1.6) 6.7 12.0


Growth (%) Turnover 16.4 -6.8 -12.2 4.0 2.0EBITDA 16.3 -26.1 -13.5 9.8 7.4Adj EPS 12.47 -30.99 -77.37 76.87 38.44




Wavin Buy

Netherlands Price (20/03/09) €1.89 Market cap €154.3mConstruction & building materials Target price (12 mth) €2.86 Reuters WAVIN.AS



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Investment case The underlying operations in 2008 have made us

more positive than before as debt issues have been

deftly managed and, correcting for the spike in raw

material prices, underlying margins were quite

acceptable. This year, with a further €32m in cost

savings kicking in, as well as (much) lower raw

material inputs boosting the gross margin, a lot of

the demand collapse has been priced into the

shares. The collapse in the prices of the polymers

used by Wavin should boost the gross margin by at

least 200bp (at least €28m on our 2009F sales

estimate) but possibly by a lot more. We believe

this positive effect is grossly underestimated by the

market. We note that business is generally slow

when it is cold outside and it just so happens that

we have had a very cold winter in Europe thus far.

This means that the trading update on 6 May is

likely to look quite dismal, so investors should be

prepared. Low risk of rights issue and at a discount

to its peers.

Company profile

History Wavin is Europe’s leading supplier of plastic pipe

systems and solutions. In 2008, it reported revenues of

€1.58bn and net profit of €32m. The company provides

integrated above- and below-ground solutions for

water supply, sewer, drainage, infiltration, surface

heating and cooling, soil and waste and last-mile

telecoms, mainly to customers in the European

construction and utility markets.

In addition to top-quality products, Wavin offers

customers end-to-end solutions, which include

consultation and design services, product support and

implementation and after-sales service. Wavin is

headquartered in Zwolle (the Netherlands) and is

active in 28 European countries, with c.40

manufacturing sites and approximately 7,000

employees.

In recent years, the group has been actively expanding

across Europe through acquisitions, the opening of

new plants and depots and the extension of its sales

network. In April 2005, it acquired UK-based Hepworth

Building Products. In 2007, it acquired O’Brian in

Ireland and a Norwegian player, Polyfemos, active in

last-mile telecom solutions. Most recently, the

company acquired Pilsa Plastic, a Turkish

manufacturer of plastic pipe systems. Wavin offers

solutions to two strategic market segments.

Building & installation (39% of 2008 sales) Wavin is a full-range supplier of above-ground plastic

pipe systems in and around the building. It offers

products and solutions for tap water, surface heating

and cooling, soil and waste, electricity and rainwater

applications.

Civil & infrastructure (61% of 2008 sales) Wavin is an expert supplier of below-ground pipe

systems for civil and infrastructure projects. Within this

segment, it offers systems for sewer, drainage,

drinking water and telecom applications. Products

include manholes and inspection chambers, infiltration

units and gullies.

Financials

Yr to Dec (€m) 2006 2007 2008 2009F 2010F 2011F

Income statement Turnover 1,501.5 1,618.5 1,581.2 1,421.0 1,385.5 1,427.0EBITDA 199.0 212.1 162.5 155.9 147.2 145.4EBITA 148.2 157.0 108.3 101.9 95.2 93.4Operating exceptionals (16.6) (2.7) (10.3) (17.0) 0.0 0.0Net financial charges (84.1) (35.0) (45.8) (38.0) (37.0) (36.0)Pre-tax profit 79.7 121.0 42.7 41.9 56.7 55.9Taxes (6.3) (28.0) (10.6) (10.5) (15.3) (15.1)Net profit 71.7 91.2 32.1 31.4 41.4 40.8Adj net attributable profit 82.0 95.7 46.8 39.4 45.9 46.3




Growth (%) Turnover 12.8 7.8 -2.3 -10.1 -2.5 3.0EBITDA 21.7 6.6 -23.4 -4.1 -5.6 -1.2Adj EPS 81.63 -1.57 -50.92 -16.18 16.56 0.87




Wessanen Hold

Netherlands Price (20/03/09) €2.8 Market cap €189.3mFood producers & processors Target price (12 mth) €3.3 Reuters BSWSc.AS



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Investment case The disappointing 2008 results and subsequent

drop in the share price mean that until clarity is

provided on the new reality and especially on the

disposal(s), we believe investors will remain on the

sidelines. Currently, Wessanen trades at a 2009F

PER of 5.2x. We believe it is too late to sell but too

early to buy.

The capital allocation decision did not come as any

great surprise to us. Wessanen decided to change

its dividend policy and cut its dividend from €0.65

to €0.20 in 2008 and moved to a payout ratio of 35-

45% of earnings. Now it needs to secure its balance

sheet as 2008 ended with a net debt/EBITDA of 2.9x

(just in line with covenants at 3.0x).

We believe the market was surprised to hear that

Wessanen was not (yet) willing to look at disposing

of its TOL division in the US and start with a clean

slate to focus entirely on Europe. We estimate the

potential proceeds for ABC at 1x sales, or c.€145m

(which is slightly below 10x EV/EBITDA).

Company profile Wessanen's history dates back to 1765 when Adriaan

Wessanen and Dirk Laan began their trade in mustard,

canary and other seeds. During the last decades of the

20th century, Wessanen acquired a large number of

companies worldwide.

It is a multinational food company that markets,

distributes and produces health and premium products

in Europe (38% of 2007F sales) and North America

(62%). Distribution services account for 62% of 2007F

sales vs 38% for Branded products.

Wessanen's biggest division consists of Tree Of Life

(TOL) North America, which markets and distributes

natural and speciality food products in the US and

Canada to supermarkets and natural food shops. TOL

Europe leads the European market in the marketing

and distribution of healthy and natural food products

and specialities to supermarkets and speciality shops.

International brands include Beckers, Kame and

Daily’s in the premium food segment, while Bjorg,

WholeEarth, Gaylord Hauser and Zonnatura are

brands focusing on the health segment.

Financials

Yr to Dec (€m) 2006 2007 2008 2009F 2010F 2011F





Growth (%) Turnover -14.9 -1.0 1.5 8.9 4.7 2.9EBITDA 7.9 9.0 -5.0 16.5 11.9 2.0Adj EPS 51.77 9.83 -16.48 4.30 13.51 2.26




Wolters Kluwer Hold

Netherlands Price (20/03/09) €11.53 Market cap €3,291.3mMedia & entertainment Target price (12 mth) €13.20 Reuters WLSNc.AS

Simon Wallis, CFA London (44 20) 7767 6787 [email protected]


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Share price 14Dividend 0.0012m f'cst total return 14

Share data

No. of shares (m) 286Daily turnover (shares) 3,102,260Free float (%) 93Enterprise value (€m) 5,347Market cap (€m) 3,291


Investment case Further earnings risk depends on the ability of

subscription and non-cyclical revenues to hold

firm. Given the precedent set in 2003, investors

should not take this as a given. One-off factors do

not fully explain the negative surprise to revenues

in 2008. In particular, the answer to the following

question is pertinent: ‘What was the run rate for

subscription organic revenue growth in 2H08 and

how did it compare with 1H08?’. On a long-term

view, we believe the stock now offers better value.

The valuation implies no value creation. This is

potentially overly pessimistic regarding the

terminal value. But the stock is not unique in

apparent value and there is an absence of positive

catalysts. We maintain our €13.2 target price and

HOLD recommendation.

Company profile

Overview

Wolters Kluwer (WK) provides content, software and

information solutions to professionals in legal, financial,

tax, accounting, medical and business fields. WK has

deployed FCF to acquire fast growing software and

services businesses in professional niches. Online

revenues (including CD-ROMs) now represent c.50%

of divisional revenues compared with c.38% in 2004.

Legal, Tax & Regulatory Europe (39% revenue)

LTRE focuses on the legal, fiscal/financial, human

resources, public administration, health, safety &

environment and transport client segments with

publications and software products. WK has a broad

presence across Europe with leading brands such as

Teleroute and Lamy in France, Kluwer in the

Netherlands, Croner CCH in the UK and Luchterhand

in Germany.

Tax, Accounting and Legal (c.26% of revenue) TAL provides accountants and attorneys in

corporations as well as US government agencies with

legal, tax and accounting information products and

services. Examples of WK companies are CCH Group,

a leading US tax publisher, and Aspen Publishers.

Health (c.20% of revenue) The health division provides pharma, medical and

practitioner information as well as clinical tools to

professional users. Brands include distribution

platforms such as Ovid and content providers such as

Lippincott, Facts & Comparisons and Medispan.

Corporate & Financial Services (c.14% of

revenue) The CFS division provides compliance and productivity

tools for corporate legal and financial compliance

professionals. Examples of WK companies are

Bankers Systems Inc and CT Corporation.

Financials

Yr to Dec (€m) 2006 2007 2008 2009F 2010F 2011F

Income statement Turnover 3,377 3,413 3,374 3,716 3,755 3,893EBITDA 635 747 756 819 843 918EBITA 556 667 678 733 756 828Operating exceptionals 0.00 0.00 0.00 0.00 0.00 0.00Net financial charges (98) (102) (119) (138) (123) (106)Pre-tax profit 347 430 386 380 443 542Taxes (68) (100) (71) (71) (86) (110)Net profit 321 917 313 306 353 428Adj net attributable profit 344 421 423 448 477 544

Balance sheet Working capital (764) (705) (761) (741) (721) (701)Goodwill 2,784 2,706 3,373 3,373 3,373 3,373Tangible fixed assets 163 140 146 146 146 146Other intangible assets 1,149 1,064 1,227 1,150 1,082 1,017L/T investments 292 85 127 127 127 127Net debt 2,037 1,802 2,252 2,020 1,731 1,377L/T non-int-bearing liabs 391 274 413 413 413 413Minority interests (equity) 2.00 36 33 36 39 42Shareholders' equity 1,194 1,178 1,414 1,586 1,824 2,130

Cash flow Op cash flow (pre-tax) 612 709 740 799 823 898Cash taxes (17) (106) (91) (71) (86) (110)Op cash flow (after-tax) 595 603 649 727 736 788Net financial charges (CF) (126) (108) (94) (138) (123) (106)Net capex (93) (125) (140) (153) (163) (169)Free cash flow 376 370 415 437 450 512

Ratios (%) EBITDA margin 19 22 22 22 22 24EBITA margin 16 20 20 20 20 21Net margin 9.54 27 9.34 8.31 9.49 11ROE 24 28 24 20 21 22Net debt/equity 170 148 156 125 93 63

Growth (%) Turnover 0.09 1.07 -1.14 10 1.06 3.66EBITDA 1.76 18 1.21 8.30 2.92 8.91Adj EPS 6.23 29.09 6.19 6.49 4.75 12.56


Valuation EV/turnover (x) 1.65 1.49 1.64 1.44 1.36 1.24EV/EBITDA (x) 8.77 6.80 7.31 6.53 6.07 5.24EV/EBIT (x) 13 9.30 9.97 9.08 8.35 7.03Adj PER (x) 11 8.34 7.86 7.38 7.04 6.26Price/NAV (x) 2.95 2.75 2.29 2.08 1.83 1.59Dividend yield (%) 0.00 0.00 0.00 0.00 0.00 0.00


Rankings

Fig 17 Six-month average daily traded volume (€m)

Belgium Netherlands

AB InBev 92.58 Unilever 181.70

KBC 29.89 ArcelorMittal 177.36

Belgacom 27.42 Philips 115.05

Fortis 27.41 Royal Dutch Shell 114.37

Delhaize 25.50 KPN 102.51

Solvay 19.34 Ahold 68.91

Colruyt 16.28 Aegon 59.71

Mobistar 16.03 ASML 57.96

GBL 15.25 Akzo 53.46

Dexia 14.40 Heineken 46.47

Umicore 14.04 DSM 36.22

UCB 12.53 Reed Elsevier 34.17

Bekaert 5.44 TNT 34.14

Telenet 3.50 Wolters Kluwer 25.29

CNP 2.92 Fugro 18.89

Omega Pharma 2.87 Randstad 18.57

Agfa 2.50 SBM Offshore 16.83

Tessenderlo 2.23 TomTom 11.27

Ackermans & Van Haaren 2.11 Boskalis 10.19

Nyrstar 2.11 Crucell 8.31

EVS 1.86 BAM 7.84

Euronav 1.83 Nutreco 7.47

CMB 1.65 Vopak 6.75

Barco 0.98 Imtech 5.20

GIMV 0.95 USG 4.72

CFE 0.65 AMG 3.85

D’Ieteren 0.63 CSM 3.84

Arseus 0.22 Aalberts 3.19

IBA 0.20 Smit 3.02

Option 0.17 OPG 2.70

Melexis 0.16 Wessanen 2.59

Kinepolis 0.10 OCE 1.61

Atenor 0.09 Arcadis 1.38

Metris 0.07 Draka 1.35

Exmar 0.06 Royal Ten Cate 1.28

Duvel 0.06 Heijmans 1.26

Transics 0.04 Ordina 1.25

Tigenix 0.04 Binckbank 1.18

OMS 0.03 Sligro 1.14

Pinguin 0.02 Wavin 1.07

VPK 0.02 Unit 4 Agresso 0.62

Alfacam 0.02 Grontmij 0.53

IPTE 0.01 Exact 0.53

Emakina 0.00 Ballast Nedam 0.46

Eriks 0.43

TKH 0.36

Brunel 0.22

Super de Boer 0.20

Beter Bed 0.15

Kas Bank 0.13

Gamma 0.12

Macintosh 0.11

Belgium average 7.8 Netherlands average 23.7

Belgium median 1.7 Netherlands median 3.8

Source: Factset

_


Fig 18 2009F dividend yield (%)

Belgium Netherlands

Euronav 10.0 Gamma 29.3

CMB 9.6 Heijmans 10.7

Barco 9.3 Brunel International 10.5

Mobistar 8.9 Royal Dutch Shell 10.1

Belgacom SA 8.7 Exact Holding 10.0

Melexis 8.6 CSM 9.9

EVS 8.5 AEGON 9.3

GIMV 7.6 SBM Offshore 8.7

Atenor 7.2 BAM 8.4

CFE 6.3 Wavin 8.2

Tessenderlo 6.0 Wessanen 7.6

Exmar 5.8 Grontmij 7.6

Bekaert 5.6 TKH Group 7.1

VPK Packaging 5.1 KPN 7.1

GBL 5.0 Boskalis 7.1

Umicore 4.8 Royal Ten Cate 6.6

Solvay 4.7 Océ 6.6

Kinepolis 4.4 Imtech 6.5

UCB 4.3 Smit International 6.4

Ackermans & van Haaren 4.1 Arseus 6.3

IBA 4.0 Eriks 6.3

Omega Pharma 3.6 Philips 6.0

Delhaize 3.3 Unilever NV 5.8

D’Ieteren 2.8 Akzo Nobel 5.8

Colruyt 2.6 Fugro 5.8

Pinguin 2.5 DSM 5.5

CNP 2.4 ArcelorMittal 5.3

Duvel Moortgat 2.3 OPG 5.3

AB InBev 0.0 Nutreco 5.0

Agfa 0.0 Ballast Nedam 4.7

Alfacam 0.0 Binckbank 4.7

Dexia 0.0 Arcadis 4.6

Emakina 0.0 Aalberts 4.6

IPTE 0.0 Macintosh 4.4

KBC 0.0 Randstad 4.3

Metris 0.0 Vopak 4.0

Nyrstar 0.0 Sligro 3.9

OncoMethylome Sciences 0.0 USG People 3.9

Option 0.0 Beter Bed 3.5

Telenet Group 0.0 Heineken 3.1

TiGenix 0.0 TNT 2.8

Transics 0.0 Ahold 2.5

ASML 1.7

AMG 0.0

Crucell 0.0

Draka 0.0

Fortis 0.0

Kas Bank 0.0

Ordina 0.0

Super de Boer 0.0

TomTom 0.0

Unit 4 Agresso 0.0

Wolters Kluwer 0.0




_


Fig 19 2009F EV/EBITDA (x)

Belgium Netherlands

Option 17.2 Crucell 10.0

Metris 13.2 Beter Bed 7.4

Atenor 12.3 Super de Boer 7.3

Exmar 10.3 Heineken 6.9

AB InBev 9.1 Unilever NV 6.9

Transics 9.1 Wolters Kluwer 6.9

Emakina 8.8 USG People 6.7

Colruyt 8.3 Randstad 6.7

UCB 6.7 Arseus 6.4

EVS 6.4 SBM Offshore 5.8

Melexis 6.3 Sligro 5.7

Omega Pharma 6.2 Océ 5.7

Telenet Group 6.2 Vopak 5.6

Alfacam 6.0 BAM 5.6

IPTE 5.7 Ordina 5.6

CMB 5.7 Akzo Nobel 5.6

Umicore 5.6 ArcelorMittal 5.6

Mobistar 5.5 Royal Dutch Shell 5.6

Duvel Moortgat 5.5 Exact Holding 5.5

Agfa 5.1 DSM 5.5

Delhaize 4.7 CSM 5.5

Belgacom SA 4.6 OPG 5.5

Solvay 4.3 KPN 5.5

Kinepolis 4.3 Smit International 5.3

Bekaert 4.1 Macintosh 5.2

D’Ieteren 4.1 Eriks 5.2

Pinguin 4.0 Aalberts 5.1

Tessenderlo 4.0 TomTom 5.0

Euronav 3.9 Unit 4 Agresso 5.0

VPK Packaging 3.3 Reed Elsevier NV 5.0

IBA 3.0 Nutreco 4.8

CFE 2.2 Grontmij 4.8

Barco 2.0 Philips 4.8

Ackermans & van Haaren N/A TKH Group 4.8

CNP N/A Arcadis 4.8

Dexia N/A Gamma 4.7

GBL N/A Imtech 4.6

GIMV N/A Royal Ten Cate 4.6

KBC N/A Wessanen 4.4

Nyrstar N/A Ahold 4.3

OncoMethylome Sciences N/A Fugro 4.0

TiGenix N/A Wavin 3.9

TNT 3.9

Brunel International 3.9

Heijmans 3.7

Ballast Nedam 3.6

Boskalis 3.5

Draka 3.2

AMG 2.9

AEGON N/A

ASML N/A

Binckbank N/A

Fortis N/A

Kas Bank N/A





Fig 20 2009F PER (x)

Belgium Netherlands

Emakina 40.3 Binckbank 30.7

Alfacam 36.5 Crucell 21.0

CNP 20.6 Super de Boer 17.6

Telenet Group 19.3 Philips 16.2

Colruyt 16.1 DSM 15.7

Exmar 16.0 ArcelorMittal 15.1

Atenor 15.5 Beter Bed 14.4

Duvel Moortgat 14.0 Royal Dutch Shell 12.0

Umicore 13.5 Kas Bank 11.3

AB InBev 13.2 KPN 10.8

Barco 12.0 Ballast Nedam 10.5

EVS 11.9 Sligro 10.4

Mobistar 10.8 Unilever NV 10.4

UCB 10.7 Ahold 9.9

GBL 10.9 USG People 9.7

IBA 10.3 TNT 9.7

Ackermans & van Haaren 10.1 Heineken 9.6

Pinguin 9.6 Akzo Nobel 9.4

Delhaize 9.4 Arcadis 9.1

Tessenderlo 9.3 Macintosh 9.0

Melexis 9.1 Exact Holding 9.0

Belgacom SA 8.7 Wolters Kluwer 8.4

Solvay 8.2 Brunel International 8.3

Bekaert 7.9 Ordina 8.2

CMB 7.8 Vopak 8.2

Kinepolis 7.2 Nutreco 8.1

VPK Packaging 6.2 Arseus 7.9

Omega Pharma 5.6 SBM Offshore 7.8

Euronav 5.4 Smit International 7.6

KBC 5.2 CSM 7.3

D’Ieteren 4.4 Boskalis 7.0

Dexia 4.4 TomTom 7.0

CFE 3.4 Randstad 6.9

Agfa 2.1 Fugro 6.9

GIMV N/A Aalberts 6.7

IPTE N/A OPG 6.6

Metris N/A AMG 6.4

Nyrstar N/A Grontmij 6.3

OncoMethylome Sciences N/A Royal Ten Cate 6.0

Option N/A Imtech 5.6

TiGenix N/A TKH Group 5.5

Transics N/A Unit 4 Agresso 5.4

Wessanen 5.2

Draka 5.0

Eriks 4.8

Reed Elsevier NV 4.6

BAM 4.3

Wavin 3.9

Heijmans 2.6

Gamma 1.4

Fortis 1.1

AEGON N/A

ASML N/A

Océ N/A




_


Fig 21 2009F net debt/EBITDA (x)

Belgium Netherlands

Metris 11.7 ASML 6.9

Exmar 8.1 Gamma 4.3

AB InBev 4.4 BAM 3.8

IPTE 4.4 USG People 3.7

Telenet Group 3.6 TomTom 3.5

Omega Pharma 3.3 Aalberts 3.2

Alfacam 3.1 Océ 3.1

D’Ieteren 2.7 Wavin 2.9

OncoMethylome Sciences 2.2 Heineken 2.8

Euronav 2.2 Macintosh 2.8

Kinepolis 2.2 Heijmans 2.7

Agfa 2.0 Randstad 2.7

CMB 1.9 Draka 2.6

Transics 1.8 Eriks 2.6

Bekaert 1.8 Reed Elsevier NV 2.5

Pinguin 1.7 SBM Offshore 2.4

Nyrstar 1.6 Wolters Kluwer 2.4

Melexis 1.6 Arseus 2.4

Delhaize 1.5 CSM 2.3

VPK Packaging 1.2 Ordina 2.3

Solvay 1.1 Vopak 2.3

Umicore 1.0 Wessanen 2.3

CFE 1.0 Royal Ten Cate 2.2

Belgacom SA 0.9 KPN 2.2

Tessenderlo 0.9 OPG 2.1

UCB 0.8 ArcelorMittal 2.1

TiGenix 0.7 Unit 4 Agresso 1.9

Mobistar 0.7 TKH Group 1.7

Barco 0.2 Smit International 1.6

Option 0.2 DSM 1.6

Emakina 0.0 Imtech 1.5

Duvel Moortgat -0.3 Nutreco 1.2

IBA -0.6 Super de Boer 1.1

Colruyt -0.8 Akzo Nobel 1.1

EVS -1.0 Unilever NV 1.0

Ackermans & van Haaren N/A AMG 1.0

Atenor N/A Ballast Nedam 1.0

CNP N/A Sligro 0.9

Dexia N/A Arcadis 0.9

GBL N/A Royal Dutch Shell 0.7

GIMV N/A Fugro 0.7

KBC N/A Grontmij 0.7

Beter Bed 0.5

Ahold 0.4

TNT 0.3

Philips -0.2

Boskalis -0.3

Exact Holding -0.8

Brunel International -1.3

Crucell -3.3

AEGON N/A

Binckbank N/A

Fortis N/A

Kas Bank N/A





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