Oddo Seydler AG: Preliminary net earnings hit by impairment of deferred tax assets; EBIT and revenue roughly in line (BUY: EUR 2,30)

First Take - Newsflow

Broadcasting | Germany

Splendid Medien AG

Buy  | Target price : 2.30 EUR

Price (21/03/2017) : 1.73 EUR | Upside : 33 %

Est.chg

2016e

2017e

$T ypCap$ 1583 40 1 1 x 6425 2

EPS

-

-

S

Preliminary net earnings hit by impairment of deferred tax assets; EBIT and revenue roughly in line

Publication date 22.03.2017 17:33

Writing date 22.03.2017 08:42

3.2

3.0

2.8

2.6

2.4

2.2

2.0

1.8

1.6

1.4

1.2

1.0

Dez 13Mrz 14Jun 14Sep 14Dez 14Mrz 15Jun 15Sep 15Dez 15Mrz 16Jun 16Sep 16Dez 16Mrz 17

Top line slightly better than expected, EBIT roughly in line

Splendid Medien posted preliminary revenue, EBIT and net profit figures today, 22 March. While revenue and EBIT were roughly in line with our expectations, net profit was € 2.3m lower (see table) The main reason for this miss was a € 1.9m impairment of deferred tax assets. Given the two profit warnings last year, it is understandable that management should be more cautious on its 2016 earnings than at the beginning of last year. While the company missed on the net profit level, the € 1.9m non-cash adjustment helps it to enter 2017 with a clean slate. In view of the net earnings reduction, the company will also omit its dividend for 2016 (we had anticipated € 0.10 per share) because i) it does not want to reduce its equity ratio even further, and ii) it needs more financial power to restore its earnings to former earnings levels (e.g. an EBIT margin of 5-6% as in 2015).

Splendid Medien AG Splendid Medien AG Relative to Media (Rebased)

Capital SPM GY | SPME.DE

2016 key figures

Preliminary	Oddo Seydler est.	 in € m	Guidance
Revenues	51.9	50.6	+1.3	50-53
EBIT	-1.3	-1.2	-0.1	-1.0 to -1.5
Net profit	-3.9	-1.6	-2.3	-

Market Cap (EURm)	17
Enterprise value (EURm)	25
Extrema 12 months	1.70	2.95
Free Float (%)	32.3
Performance (%)	1m	3m	12m
Absolute	-5.7	-0.5	-33.4
Perf. rel. Country Index	-6.2	-4.5	-39.6
Perf. rel. Media	-3.8	1.4	-29.0
P&L	12/16e	12/17e	12/18e
Sales (EURm)	51.9	59.9	65.5
EBITDA (EURm)	23.7	22.6	25.6
Current EBIT (EURm)	-1.3	2.6	3.6
Attr. net profit (EURm)	-4	1.6	2.3
Adjusted EPS (EUR)	-0.40	0.16	0.23
Dividend (EUR)	0.00	0.00	0.10
P/E (x)	ns	10.7	7.4
P/B (x)	1.0	0.7	0.6
Dividend Yield (%)	0.0	0.0	5.8
FCF yield (%)	ns	1.8	5.5
EV/Sales (x)	0.59	0.41	0.36
EV/EBITDA (x)	1.3	1.1	0.9
EV/Current EBIT (x)	ns	9.6	6.6
Gearing (%)	36	32	26
Net Debt/EBITDA(x)	0.3	0.3	0.3

Source : Oddo Seydler Bank, Company Data

Outlook for 2017: nothing out of the ordinary

Regarding 2017, the company guides for revenues of € 55-60m and EBIT of € +1.0-2.0m. For the first time Splendid also provided guidance for net earnings, i.e. slightly positive.

Considering that management was forced to issue 2 profit warnings last year, its guidance for 2017 can be considered conservative. We believe the company understands that it must meet its guidance this year. From this perspective we are not surprised that our current estimates are somewhat above the company's guidance (EBIT and net income) and we leave our group estimates unchanged: revenue of € 59.9m, EBIT of € 2.6m, and net profit at € 1.6m. We now lower our DPS for 2017e from € 0.10 to € 0 as we expect the group to continue its re- strengthening process, which will probably preclude a dividend. From 2018e, however, we expect DPS to return to € 0.10 per share.

2017 a transition year

As mentioned above, 2017 should be a transition year with the company's key goals being restoring some financial momentum and regaining investors' trust; as such we are confident the company will achieve its guidance for 2017.

Next Events

04.04.2017 Earnings Release

17.05.2017 Earnings Release

31.08.2017 Earnings Release

Marcus Silbe, CEFA (Analyst)

[phone]

[e-mail]

Page 1/4

Conflict of interests:

Oddo Securities, a division of Oddo et Cie, limited sharepartnership - Bank authorised by ACPR. Oddo & Cie and/or one of its subsidiaries could be in a conflict of interest situation with one or several of the groups mentioned in this publication. Please refer to the conflict of interests section at the end of this document.

Page 2/4

SPME.DE | SPM GY Broadcasting | Germany	Buy Upside	32.87%		Price 1.73EUR TP 2.30EUR
PER SHARE DATA (EUR)	12/11	12/12	12/13	12/14	12/15	12/16e	12/17e	12/18e
Adjusted EPS	0.52	0.37	0.37	0.09	0.30	-0.40	0.16	0.23
Reported EPS	0.52	0.37	0.37	0.09	0.30	-0.40	0.16	0.23
Growth in EPS(%)	-	-30.3%	2.1%	-75.4%	ns	ns	ns	43.5%
Net dividend per share	0.10	0.00	0.00	0.05	0.10	0.00	0.00	0.10
FCF to equity per share	0.43	-0.53	-0.25	-0.30	0.27	-0.01	0.03	0.09
Book value per share	2.06	2.33	2.60	2.57	2.82	2.32	2.48	2.71
Number of shares market cap	9.79	9.79	9.79	9.79	9.79	9.79	9.79	9.79
Number of diluted shares	9.79	9.79	9.79	9.79	9.79	9.79	9.79	9.79
VALUATION	12/11	12/12	12/13	12/14	12/15	12/16e	12/17e	12/18e
12m highest price	1.45	2.56	3.00	2.94	2.75	2.95	1.97
12m lowest price	0.59	1.32	2.10	1.65	1.92	1.74	1.70
(*) Reference price	1.09	2.02	2.46	2.41	2.31	2.33	1.73	1.73
Capitalization	10.7	19.8	24.1	23.6	22.6	22.8	16.9	16.9
Restated Net debt	-4.1	2.0	5.4	9.3	7.1	8.1	7.8	6.8
Minorities (fair value)	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Financial fixed assets (fair value)	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Provisions	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Enterprise Value	6.6	21.7	29.5	32.8	29.7	30.9	24.7	23.8
P/E (x)	2.1	5.5	6.6	26.2	7.7	ns	10.7	7.4
P/CF (x)	0.8	1.2	1.3	1.0	1.0	0.9	0.8	0.7
Net Yield (%)	9.1%	0.0%	0.0%	2.1%	4.3%	0.0%	0.0%	5.8%
FCF yield (%)	39.4%	ns	ns	ns	11.9%	ns	1.8%	5.5%
P/B incl. GW (x)	0.53	0.87	0.95	0.94	0.82	1.00	0.70	0.64
P/B excl. GW (x)	0.53	0.87	0.95	0.94	0.82	1.01	0.70	0.64
EV/Sales (x)	0.16	0.43	0.54	0.50	0.52	0.59	0.41	0.36
EV/EBITDA (x)	0.4	1.3	1.5	1.4	1.3	1.3	1.1	0.9
EV/EBIT (x) (*) historical average price	1.6	5.1	6.8	17.7	8.8	ns	9.6	6.6
PROFIT AND LOSS (EURm)	12/11	12/12	12/13	12/14	12/15	12/16e	12/17e	12/18e
Sales	41.8	50	55	66	57	52	60	65
EBITDA	15.5	16.6	20.2	23.9	23.7	23.7	22.6	25.6
Depreciations	-11.3	-12.3	-15.9	-22.0	-20.4	-25.0	-20.0	-22.0
Current EBIT	4.2	4.3	4.3	1.9	3.4	-1.3	2.6	3.6
Published EBIT	4.6	4.2	4.1	2.0	3.7	-1.3	2.6	3.6
Net financial income	-0.9	-0.8	-0.7	-0.6	-0.6	-0.6	-0.6	-0.6
Corporate Tax	1.4	0.2	0.3	-0.5	-0.2	-2.0	-0.4	-0.7
Net income of equity-accounted companies	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Profit/loss of discontinued activities (after tax)	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Minority interests	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Attributable net profit	5.1	3.6	3.7	0.9	2.9	-3.9	1.6	2.3
Adjusted attributable net profit	5.1	3.6	3.7	0.9	2.9	-3.9	1.6	2.3
BALANCE SHEET (EURm)	12/11	12/12	12/13	12/14	12/15	12/16e	12/17e	12/18e
Goodwill	0.3	0.3	0.3	0.3	0.3	0.3	0.3	0.3
Other intangible assets	0.4	0.4	0.4	0.3	0.3	0.1	0.1	0.0
Tangible fixed assets	10.8	19.7	24.1	28.0	25.7	23.5	29.1	33.3
WCR	8.5	7.4	10.6	10.7	12.6	14.2	10.2	7.9
Financial assets	4.9	6.5	6.3	6.7	6.7	6.1	6.1	6.1
Ordinary shareholders equity	20.2	22.8	25.5	25.1	27.6	22.7	24.3	26.6
Minority interests	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Shareholders equity	20.2	22.8	25.5	25.1	27.6	22.7	24.3	26.6
Non-current provisions	8.9	9.5	10.8	11.8	11.0	11.5	11.8	12.2
Net debt	-4.1	2.0	5.4	9.3	7.1	8.1	7.8	6.8
CASH FLOW STATEMENT (EURm)	12/11	12/12	12/13	12/14	12/15	12/16e	12/17e	12/18e
EBITDA	15.5	16.6	20.2	23.9	23.7	23.7	22.6	25.6
Change in WCR	1.8	-2.1	0.1	-0.9	-1.0	-1.4	4.3	2.7
Interests & taxes	-0.9	-1.2	-1.1	-1.2	-1.0	-0.6	-1.0	-1.3
Others	-0.4	0.9	-0.4	-0.1	0.3	3.3	0.0	0.0
Operating Cash flow	16.0	14.3	18.8	21.7	22.1	25.0	25.9	27.0
CAPEX	-11.7	-19.5	-21.3	-24.7	-19.4	-25.1	-25.6	-26.1
Free cash-flow	4.2	-5.2	-2.5	-2.9	2.7	-0.1	0.3	0.9
Acquisitions / disposals	0.0	0.1	0.0	0.1	0.0	0.0	0.0	0.0
Dividends	0.0	-1.0	-1.0	-1.0	-0.5	-1.0	0.0	0.0
Net capital increase	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Others	0.2	2.4	1.2	3.0	-1.8	0.0	0.0	0.0
Change in net debt	4.2	-6.1	-3.4	-3.8	2.2	-1.1	0.3	0.9
GROWTH MARGINS PRODUCTIVITY	12/11	12/12	12/13	12/14	12/15	12/16e	12/17e	12/18e
Sales growth	-	19.8%	9.6%	20.2%	-14.0%	-8.6%	15.5%	9.3%
Lfl sales growth	-	19.8%	9.6%	20.2%	-14.0%	-8.6%	15.5%	9.3%
Current EBIT growth	-	2.2%	0.8%	-56.9%	81.1%	ns	ns	39.8%
Growth in EPS(%)	-	-30.3%	2.1%	-75.4%	ns	ns	ns	43.5%
Net margin	12.3%	7.1%	6.7%	1.4%	5.2%	-7.5%	2.7%	3.5%
EBITDA margin	37.0%	33.1%	36.9%	36.1%	41.8%	45.7%	37.7%	39.1%
Current EBIT margin	10.0%	8.5%	7.9%	2.8%	5.9%	-2.5%	4.3%	5.5%
CAPEX / Sales	-28.1%	-39.0%	-38.7%	-37.4%	-34.1%	-48.4%	-42.7%	-39.8%
WCR / Sales	20.3%	14.8%	19.2%	16.2%	22.1%	27.3%	17.1%	12.0%
Tax Rate	-36.4%	-6.8%	-7.5%	36.4%	6.5%	ns	19.6%	24.0%
Normative tax rate	30.0%	30.0%	30.0%	30.0%	30.0%	30.0%	30.0%	30.0%
Asset Turnover	-	2.1	1.7	1.8	1.5	1.3	1.5	1.6
ROCE post-tax (normative tax rate)	-	12.5%	9.6%	3.5%	6.0%	-2.3%	4.6%	6.2%
ROCE post-tax hors GW (normative tax rate)	-	12.7%	9.7%	3.5%	6.1%	-2.4%	4.7%	6.3%
ROE	-	16.7%	15.2%	3.6%	11.1%	-15.5%	6.8%	9.0%
DEBT RATIOS	12/11	12/12	12/13	12/14	12/15	12/16e	12/17e	12/18e
Gearing	-21%	9%	21%	37%	26%	36%	32%	26%
Net Debt / Market Cap	-0.39	0.10	0.22	0.39	0.31	0.35	0.46	0.40
Net debt / EBITDA	ns	0.12	0.27	0.39	0.30	0.34	0.34	0.27
EBITDA / net financial charges	18.0	19.7	29.7	40.3	41.0	39.5	37.6	42.7

• Valuation method

  Our target prices are established on a 12-month timeframe and we use three valuation methods to determine them. First, the discounting of available cash flows using the discounting parameters set by the Group and indicated on Oddo Securities' website. Second, the sum-of-the-parts method based on the most pertinent financial aggregate depending on the sector of activity. Third, we also use the peer comparison method which facilitates an evaluation of the company relative to similar businesses, either because they operate in identical sectors (and are therefore in competition with one another) or because they benefit from comparable financial dynamics. A mixture of these valuation methods may be used in specific instances to more accurately reflect the specific characteristics of each company covered, thereby fine-tuning its evaluation.

• Sensitivity of the result of the analysis/ risk classification:

  The opinions expressed in the financial analysis are opinions as per a particular date, i.e. the date indicated in the financial analysis. The recommendation (cf. explanation of the recommendation systematic) can change owing to unforeseeable events which may, for instance, have repercussions on both the company and on the whole industry.

• Our stock market recommendations

  Our stock market recommendations reflect the RELATIVE performance expected for each stock on a 12-month timeframe. Buy: performance expected to exceed that of the benchmark index, sectoral (large caps) or other (small and mid caps).

  Neutral: performance expected to be comparable to that of the benchmark index, sectoral (large caps) or other (small and mid caps). Reduce: performance expected to fall short of that of the benchmark index, sectoral (large caps) or other (small and mid caps).

• The prices of the financial instruments used and mentioned in this document are the closing prices.

• All publications by Oddo Securities or Oddo Seydler concerning the companies covered and mentioned in this document are available on the research site: www.oddosecurities.com

Recommendation and target price changes history over the last 12 months for the company analysed in this report

Date	Reco	Price Target (EUR)	Price (EUR)	Analyst
12.12.16	Buy	2.30	1.77	Marcus Silbe, CEFA
22.08.16	Buy	3.20	2.18	Marcus Silbe, CEFA

Recommendation split
Buy	Neutral	Reduce
Our whole coverage	(414)	48%	43%	9%
Liquidity providers coverage	(152)	52%	43%	5%
Research service coverage	(66)	56%	41%	3%
Investment banking services	(39)	69%	26%	5%

Risk of conflict of interest :

Investment banking and/or Distribution
Has Oddo Group, or Oddo & Cie, or Oddo Seydler managed or co-managed in the past 12 months a public offering of securities for the subject company/ies?	No
Has Oddo Group, or Oddo & Cie, or Oddo Seydler received compensation for investment banking services from the subject company/ies in the past 12 months or expects to receive or intends to seek compensation for investment banking services from the subject company/ies in the last 12 months?	No
Research contract between Oddo group & the issuer
Oddo & Cie and the issuer have agreed that Oddo & Cie will produce and disseminate investment recommendations on the said issuer as a service to the issuer	Yes
Liquidity provider agreement and market-making
At the date of the distribution of this report, does Oddo Group, or Oddo & Cie, or Oddo Seydler act as a market maker or has Oddo Group or Oddo & Cie, or Oddo Seydler signed a liquidity provider agreement with the subject company/ies?	Yes
Significant equity stake
Does Oddo Group, or Oddo & Cie, or Oddo Seydler own 5% or more of any class of common equity securities of the subject company/ies?	No
Does the subject company beneficially own 5% or more of any class of common equity of Oddo & Cie or its affiliates?	No
Disclosure to Company
Has a copy of this report ; with the target price and/or rating removed, been presented to the subject company/ies prior to its distribution, for the sole purpose of verifying the accuracy of factual statements ?	No
Have the conclusions of this report been amended following disclosure to the company/ies and prior its distribution?	No
Additional material conflicts
Is Oddo Group, or Oddo & Cie, or Oddo Seydler aware of any additional material conflict of interest?	No
Personal conflicts of interest
Have those responsible for the drafting of the present document acquired shares from the issuer concerned by the present financial analysis?	No
Have those responsible for the drafting of the present document received remuneration directly linked to investment firm service transactions or any other kind of transaction they carry out or any trading commissions they, or any legal person who is part of the same group, receive?	No

Page 3/4

Statement of conflict of interests of all companies mentioned in this document may be consulted on Oddo & Cie's: www.oddosecurities.com

Disclaimer:

Disclaimer for Distribution by Oddo & Cie to Non-United States Investors:

This research publication is produced by Oddo Securities ("Oddo Securities"), a division of Oddo & Cie ("ODDO"), which is licensed by the Autorité de Contrôle Prudentiel et de Résolution (ACPR) and regulated by the Autorité des Marchés Financiers ("AMF"), and/or by ODDO SEYDLER BANK AG ("Oddo Seydler"), a German subsidiary of ODDO, regulated by Bundesanstalt für Finanzdienstleistungsaufsicht ("BaFin").

The research, when distributed outside of the U.S., is intended exclusively for non-U.S. customers of ODDO and cannot be divulged to a third-party without prior written consent of ODDO. This document is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment.

This research has been prepared in accordance with regulatory provisions designed to promote the independence of investment research. "Chinese walls" (information barriers) have been implemented to avert the unauthorized dissemination of confidential information and to prevent and manage situations of conflict of interest. This research has been prepared in accordance with French and German regulatory provisions designed to promote the independence of investment research. The recommendation presented into this document is reviewed and updated at least following each Quarterly Report published by the issuer purpose of this Research Report.

At the time of publication of this document, ODDO and/or Oddo Seydler, and/or one of its subsidiaries may have a conflict of interest with the issuer(s) mentioned. While all reasonable effort has been made to ensure that the information contained is not untrue or misleading at the time of publication, no representation is made as to its accuracy or completeness and it should not be relied upon as such. Past performances offer no guarantee as to future performances. All opinions expressed in the present document reflect the current context and which is subject to change without notice. The views expressed in this research report accurately reflect the analyst's personal views about the subject securities and/or issuers and no part of his compensation was, is, or will be directly or indirectly related to the specific views contained in the research report.

This research report does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. Clients should consider whether any advice or recommendation in this research is suitable for their particular circumstances and, if appropriate, seek professional advice, including tax advice.

Disclaimer for Distribution by Oddo New York to United States Investors:

This research publication is produced by Oddo Securities, a division of ODDO and/or by Oddo Seydler.

This research is distributed to U.S. investors exclusively by Oddo New York Corporation ("ONY"), MEMBER: FINRA/SIPC, and is intended exclusively for U.S. customers of ONY and cannot be divulged to a third-party without prior written consent of ONY. This document is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment.

This research has been prepared in accordance with regulatory provisions designed to promote the independence of investment research. "Chinese walls" (information barriers) have been implemented to avert the unauthorized dissemination of confidential information and to prevent and manage situations of conflict of interest. This research has been prepared in accordance with French and German regulatory provisions designed to promote the independence of investment research.

At the time of publication of this document, ODDO and/or Oddo Seydler, and/or one of its subsidiaries may have a conflict of interest with the issuer(s) mentioned. While all reasonable effort has been made to ensure that the information contained is not untrue or misleading at the time of publication, no representation is made as to its accuracy or completeness and it should not be relied upon as such. Past performances offer no guarantee as to future performances. All opinions expressed in the present document reflect the current context and which is subject to change without notice.

Rule 15a-6 Disclosure:

Under Rule 15a-6(a)(3), any transactions conducted by ODDO and/or Oddo Seydler, and/or one of its subsidiaries with U.S. persons in the securities described in this foreign research must be effected through ONY. As a member of FINRA, ONY has reviewed this material for distribution to U.S. persons as required by FINRA Rules 2241(h) applicable to dissemination of research produced by its affiliate ODDO.

FINRA Disclosures:

• Neither ONY, ODDO, nor Oddo Securities, nor Oddo Seydler beneficially owns 1% or more of any class of common equity securities of the subject company.

• The research analyst of Oddo Securities or Oddo Seydler, at the time of publication of this research report, is not aware, nor does he know or have reason to know of any actual, material conflict of interest of himself, ODDO, Oddo Securities, Oddo Seydler or ONY, except those mentioned in the paragraph entitled "Risk of Conflict of Interest."

• Oddo Securities or ODDO or Oddo Seydler may receive or seek compensation for investment banking services in the next 3 months from the subject company of this research report, but ONY would not participate in those arrangements.

• Neither ONY, ODDO, Oddo Securities, nor Oddo Seydler has received compensation from the subject company in the past 12 months for providing investment banking services except those mentioned in the paragraph of "Risk of Conflict of Interest".

• Neither ONY., ODDO, Oddo Securities nor Oddo Seydler has managed or co-managed a public offering of securities for the subject company in the past 12 months except those mentioned in the paragraph of "Risk of Conflict of Interest" .

• ONY does not make (and never has made) markets and, accordingly, was not making a market in the subject company's securities at the time that this research report was published.

Regulation AC:

ONY is exempt from the certification requirements of Regulation AC for its distribution to a U.S. person in the United States of this research report that is prepared by an Oddo Securities research analyst because ODDO has no officers or persons performing similar functions or employees in common with ONY and ONY maintains and enforces written policies and procedures reasonably designed to prevent it, any controlling persons, officers or persons performing similar functions, and employees of ONY from influencing the activities of the third party research analyst and the content of research reports prepared by the third party research analyst.

Page 4/4

Contact Information of firm distributing research to U.S. investors: Oddo New York Corporation, MEMBER: FINRA/SIPC, is a wholly owned subsidiary of Oddo & Cie; Philippe Bouclainville, President ([e-mail]) 150 East 52nd Street New York, NY 10022 212-481-4002.