AlphaValue Equity Research & Stock Reports

Sartorius reported its Q1 17 results slightly ahead of the Street’s expectations, driven by a combination of strong organic growth and higher than expected M&A contribution in the Lab Products division (IntelliCyt, ViroCyt and Essen Bioscience). Net sales increased 13.6% yoy (12.2% in cc) to €343.1m (vs. our expectation of c.€337m) while adjusted EBITDA margin rose 70bp to 24.7%. At the segmental level, strong double-digit growth in the Lab Product segment (21% cc growth, of which 11% was contributed by acquisitions) counterbalanced the expected decline/ normalisation in the Bioprocess division (9.4% growth vs. c.23% in Q1 16). Geographically, while both the US (c.34% of sales) and EMEA (c.44% of sales) grew modestly (4.9% and 8.9% cc growth, respectively), Asia-Pacific (c.23% of sales) recorded an impressive 33.3% cc growth, benefiting from the large contracts won by the company in H2 16 (in the BPS division). Management has maintained its full-year guidance for 12-16% top-line growth and a >0.5ppt improvement in EBITDA margin at the group level. Revenue for the Bioprocess division (BPS) is projected to grow by 9-13% (0.5ppt improvement in underlying EBITDA margin) while the LPS division is expected to post a top-line growth of 20-24% with a c.2ppt improvement in underlying EBITDA margin. Guidance for capex stays at 12-15% of sales.

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Nestle

Nestlé has announced CHF20bn share buy-back by 2020. If any sizeable acquisitions take place during this period, the share buy-back programme will be adapted accordingly. The volume of monthly share buy-backs will depend on market conditions but is likely to be backloaded in 2019 and 2020 to allow the pursuit of value-creating acquisition opportunities. The company expects a net debt/EBITDA ratio of c.1.5x in 2020.

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H & M Hennes & Mauritz

The growth pace has accelerated slightly in Q2. Sales were up 5% in local currencies and 9.6% reported to SEK51,383m. The gross margin has retreated by 50bp to 57.1%, bringing the gross profit to SEK29,345m (+8.8%). The operating margin has stepped up 10bp to 14.9%, increasing the operating profit by 10% to SEK7,650m. Net profit was up 10% to SEK5,897m. In the six months, sales surged by 8.6% (+5% in local currencies) to SEK98,368m. The operating profit was up 5.7% to SEK10,809m, i.e. an operating margin of 11% compared to 11.3% the year before. Net profit amounted to SEK8,354m (+5.7%). As regards regions, H1 sales were boosted by the outperformance of the UK (+6% in local currencies) and China (+11% in local currencies) as well as other growth markets. The momentum remains challenging in the main markets such as Germany (-1% in local currencies) and the USA (+1% in local currencies). Inventory issues are persisting with an increasing stock in trade of 26.9% to SEK32,148m by the end of May. In June, the company expects sales growth of 7% in local currencies.

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KUKA

In Q1 17, revenues jumped 25.7% to €790.8m and the order intake 29.6% to €967.3m. The book-to-bill ratio reached 1.22x. Although all three divisions contributed to increase in order intake, Swisslog experienced the strongest increase of 83.1% to €230.2m (book-to-bill ratio of 1.44x). The order backlog reached €2.26bn (+30.6%). The gross margin declined from 28.1% to 26%. EBITDA increased 14.3% to €56.7m and the EBITDA margin, however, declined from 7.9% to 7.2%. The EBIT margin also declined from 6.4% to 5.9%. The operating performance was mainly driven by higher costs of goods sold (+31.6%) and higher selling expenses (+16%).

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Electricite de France

The nuclear regulator (ASN) has given its position concerning the EPR Flamanville nuclear reactor vessel where it had found anomalies in the construction. It has given the green light for the usage of the vessel. It has separated its results and conditions on the cap and bottom of the vessel. For the bottom part, the regulator believes that it does comply with the technical requirements but needs to have additional security periodical controls for the usage as the regulator estimates these are feasible and can be achieved without major concerns. However, ASN stated that the required technical controls have not been achieved on the cap of the reactor vessel (couvercle). As a result, it has estimated that the usage of this part should be limited in time and needs to be changed. As the regulator estimates that the production of this part could take close to seven years, it has declared that the top of the vessel cannot be used after 2024. The regulator will provide within the next few days the results for public consultation and will provide these again to the council for technological risks. The final results are expected to be released in September 2017 after the consultations have been achieved.

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SES

SES held today its 2017 annual investors day. Speakers included: Karim Michel Sabbagh, group CEO Christophe De Hauwer, Chief of Strategy and Development Officer Steve Collar, CEO of SES networks and previous O3b’s CEO Ferdinand Kayser, CEO of SES Video Martin Halliwell, group CTO Padraig McCarthy, group CFO In a nutshell Management confirmed the previous 2017 guidance (all divisions stable to growing) and said it expects to boost the group’s ROIC from the current 6.5% to 10%, in the medium term. It also expects further decreases in capex and guided for a continuing progressive dividend policy. Lastly, the probability of a deal between SES and OneWeb was almost brought down to zero.

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