Research, Charts & Company Announcements
Research Tree provides access to ongoing research coverage, media content and regulatory news on BILFINGER SE. We currently have 5 research reports from 2 professional analysts.
Frequency of research reports
Research reports on
Rebirth of the Phoenix? Compelling new strategy but 2020 targets look ambitious
15 Feb 17
Key information: • EBIT at €-231m versus consensus of €-138m. • Adjusted EBITA at €15m versus loss of €23m in FY2015. • Adjusted EBITA margin at 0.4%. • Adjusted net income at -114m versus consensus of €60m. • Bilfinger targets an adjusted EBITA margin of c.5% in 2020. • Dividend higher than expected and share buy-back announced. • Bilfinger CEO said that it expects the company to be cash positive by year end. • Cash flow from operating activities at €-224m versus €39m in 2015.
BILL(finger): unsound 9m performance, messy conference call, higher restructuring BILL(finger)
10 Nov 16
Key information: • Adjusted EBITA and adjusted net profit from continuing operations improved compared to previous year. • Adjusted EBITA improves to €21m despite a significant decline in volume. • Order backlog declined by 19% in total (organically -15%). • Over the 9m period, Bilfinger has burnt close to €250m of cash. • Power division: orders received decreased by 30%. • Power division: order backlog decreased by 40% (organically -37%). • Power division: EBITA of -€1m, but output volume continues to decline significantly. • Power division: falling orders received will, however, lead to decreasing utilisation in several business units. • Industrial division: orders received increased by 3%. • Industrial division: order backlog was 9% below the prior year figure (organically -4%). • Industrial division: decrease in EBITA but margin of 5.1%, slightly above the previous year with significantly lower output volume. • Capital Markets Day on 14 February 2017: Presentation of strategy and implementation plan.
A lot of work ahead!
07 Nov 16
Business Historically, Bilfinger was a construction company with 95% of its revenues stemming from this business in 2000 and only 5% from services. As a result of numerous acquisitions (in the Industrial, Power and Building & Facility field) and disposals (of Concession, Construction and more recently the whole Building & Facility division), the company is no longer a construction company but a provider of services for industrial plants (and power plants: the Power division is up for sale on a unit basis). Indeed, after the divestment of the Building & Facility division and the strategic decision to focus on the Industrial division, Bilfinger is a leading international industrial services provider. The company delivers customised engineering and services to customers in the process industry. Bilfinger enhances the efficiency of assets, increases their availability and reduces maintenance costs. The portfolio covers the entire value chain: from consulting, engineering, fabrication and installation through to comprehensive maintenance concepts and their implementation including turnarounds. Bilfinger stands for the highest standards of quality and thus meets the strict requirements of customers active in the chemical (20%), energy (29%), oil & gas sectors (31%) and pharmaceutical sectors (4%) as well as other sectors (16%). The company generates an annual output volume of more than €4bn with about 40,000 employees. Bilfinger has a c.€1.5bn market cap. Recommendation and upside We initiate Bilfinger with a sell recommendation and 15% downside. Main earnings drivers: • Restructuring: as the restructuring goes on, financial performance should be improved. • A recovery in the oil and gas sector: this would have a positive effect on the top line and hence the bottom line. Need to know Bilfinger has suffered in the past two years from turmoil in the energy and oil & gas sectors to which many of its important customers belong, resulting in six profit warnings within two years. The first three warnings, which took place between June and September 2014, were the result of the former management not appreciating the gravity of the situation, being too optimistic and trying to stay on board. As a result of the first two profit warnings the management in place at that time led by CEO Roland Koch was fired. Investor trust was also hit by the abrupt departure of Per Utnegaard although it now seems that the fit with the company had not been ideal. Bilfinger in effect acts as a private equity company by buying and selling engineering-related businesses. Call it a de facto specialist fund. In our view, some of these transactions may have been intended to delay or mask the unwinding of aggressive past accounting practices. The company’s poor earnings quality may have been masked by acquiring companies and allocating more to intangibles, notably goodwill, in order to provide room for future earnings growth through lower-than-required depreciation expenses. However, as the power market has collapsed the goodwill impairment has underlined the fact that some of the profits recognised in the past may have been borrowed from the future, which is now the present. The goodwill impairment also shows that Bilfinger paid too much for these businesses by buying them at the top of the cycle, which is not great for a private equity type business. In our view, the sale of the Building and Facility division, the company’s most profitable division, was driven by the need to avoid tapping the equity market and the company’s limited access to the debt market with pressure from bankers due to the rapid deterioration in the unsellable Power division. As a result of the sale of the Building & Facility division, the two remaining divisions, namely Industrial and Power, are respectively unmanageable and unsellable under current conditions. The Industrial division needs to be extensively restructured, which means high restructuring costs, and the Power division needs to be broken down into three baskets, namely what can be sold, what can be restructured and what needs to be shut down, implying additional restructuring costs. Finally, if the proceeds from the sale of the Building and Facility division are not fully absorbed in this restructuring process they will have to be reallocated to new acquisitions, which means transaction costs. Overall, we are not sure the company can exit this process without destroying additional shareholder value in the medium term. History tells us that it is not that easy to rebuild a sound business from the scraps of an inefficient one. Next trigger Owing to this legacy of missed targets and following several months of strategic review, the new CEO Thomas Blade will need to present a set of fairly conservative targets to give the market some form of anchor. In a sense, Bilfinger has learned from its mistakes meaning that we see some potential for upside risk linked to the new targets expected to be announced imminently. We nonetheless prefer to await their announcement before taking a more positive view on the stock as these targets may fall short of market expectations.
Debt & renewables dominate
09 Jan 14
A total of £3.1bn was raised in the funds sector in the fourth quarter of 2013, exceeding total funds raised for the whole of 2012 (£2.7bn). The alternative asset and income theme continued to dominate, with most successful vehicles offering yields in excess of 5%.
Summary of fund raising in the sector
03 Oct 13
Three successful fund raises were announced this morning, two IPOs and one placing: - DP Aircraft I (Dr Peters) – IPO at £c70m with Canaccord (oversubscribed). - Chenavari Capital Solutions Fund (Asset Backed Securities) – IPO at c£130m with Dexion (50% of the target). - John Laing Infrastructure (JLIF) – £243m under a placing (the maximum) with JPM Cazenove. Next to announce are the two C-Shares from ABAA (Monday) and BRNA (Thursday). Updated Q4 fund raising table follows, almost at £3bn now at the top end of the targets.
The tide is turning
20 Apr 17
Any investor worth their salt knows it is impossible to precisely call a bottom in a particular stock. For Gattaca, though, we believe this moment has now passed given the compelling valuation (6.9x EV/EBIT vs 9.8x sector average), attractive 9.8% unlevered cashflow yield and constructive secular trends supporting its specialist markets. Sure, Net Fee Income (NFI) like-for-likes (LFL) have fallen of late, yet equally there are now early indications that organic growth may soon turn positive.
19 Apr 17
We take a look at the supply and demand dynamics of the world’s largest diamonds. Less than 200 very large (>200 carat) gem quality diamonds have ever been found, yet 23 of these have been found in the past three years. This dramatic increase is being driven by a combination of the rapid increase in the number of billionaires and hence price and demand, combined with technological developments that have improved large diamond recovery and a certain amount of geological good luck.
19 Apr 17
Lombard Risk Management* (LRM): Beats demanding growth and profit forecasts (CORP) | Frontier Developments* (FDEV): Steaming ahead (CORP) | Tax Systems* (TAX): Right place, right time (CORP) | Acal (ACL): Stronger H2 and brighter outlook (BUY) | Fenner (FENR): Interim results signal upgrades (BUY) | Minds + Machines* (MMX): US and Europe domain sales (CORP)
Small Cap Breakfast
19 Apr 17
Global Ports Holding—Intention to float on Standard List. International cruise ports operator. Seeking $250m raise including $75m primary offer. Dorcaster—Schedule One Update. Admission now expected 3 May. RTO of Escape Hunt raising £14m at 135p Verditek— Intention to float on AIM. On Admission, the Company's subsidiaries will be involved in advanced solar photovoltaic, filtration and absorption technologies specialising in providing environmental services. Raising £3.5m. Admission in May. Eddie Stobart Logistics— Schedule 1. Admission expected 25 April but capital raising details TBC. ADES International Holding— Intends to join the Standard List in May raising up to $170m plus a vendor sale. Provider of offshore and onshore oil and gas drilling and production services in the Middle East and Africa. Admission expected in May. Tufton Oceanic Assets– Offer extended to 9 May to enable investors to complete further due diligence.