外文报告：HSBC-Neopost(NEO FP)-121003

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Global Research


Events. With H1 12 sales (published early September) at EUR509m (-2.4% lfl, +5.2%
reported), the group’s performance was hit by a shortfall in hardware sales (-4% in H1). In
terms of profitability, Neopost published last week an operating income below expectations at
EUR122.4m (op. margin of 24.1% vs HSBCe 24.3%) including EUR3.2m in acquisition-
related expenses. Excluding this one-off impact, the operating margin would have been 24.7%
(ie EUR125.6m) while we expected 24.9%. Net attributable income for H1 12 stood at
EUR80m, a 4.7% lfl increase YoY. On other metrics, net debt increased from EUR707m one
year ago to EUR765m at the end of July 2012 mainly due to the GMC acquisition and a
negative forex impact. Gearing is at 102% and the net debt/EBITDA ratio at 2.4x vs
respectively 112% and 2.2x one year earlier.
Analysis. The performance of Neopost in H1 12 on profitability was mainly supported by an
increase of capitalised R&D (EUR3.6m). Reintegrating this amount implies a -70 bp impact at
the operating margin level (24% instead of 24.7% reported).
Outlook. For the top line, the Group confirmed its sales growth target of 2% to 4% (at
constant currencies). Integrating acquisitions (eg GMC with a 10% op. margin), Neopost
indicated that the operating margin for FY12 should be at 25.2% vs a previous guidance at
around 25.5% (excluding GMC). If we include the acquisition-related expenses so far
(EUR3m in FY12), the implied guidance would be 24.7% at current operating income level
(before capitalised R&D). Concerning the dividend, the company confirmed that it will be paid
fully in cash and that ‘the Group intends to keep its 2012 dividend at high level’, implicitly
guiding for a flat dividend YoY (ie EUR3.9 or 9% yield).
Conclusion - Valuation. We consider the current guidance challenging because the recovery
in France could take longer than anticipated and the US could enter a ‘wait & see’ mode as
presidential election is coming soon. On profitability, we slightly change our forecasts (more
capitalised R&D but less acquisition-related expenses). For FY 12, the company’s guidance
implies a 100 bp improvement in operating margin from 24.7% in H1 12 to 25.7% in H2 2012
while the mix should be difficult to reverse (GMC negative impact). On valuation, our DCF
(EUR38) and DDM (EUR44) methods are unchanged. Multiple-based value (EV/EBIT and
PE) is now EUR37 vs EUR34.5 previously. Consequently, our target price is now at EUR40
vs EUR38.5 previously. Underweight rating maintained.
Underweight
Target price (EUR) 40.00
Share price (EUR) 43.66
Potential return (%) -8.4
Note: Potential return equals the percentage
difference between the current share price and
the target price
Performance 1M 3M 12M
Absolute (%) 2.8 3.7 -20.7
Relative (%) 1.7 -3.8 -31.5
Index^ SBF-120
RIC NPOS.PA
Bloomberg NEO FP

Market cap (USDm) 1,938
Market cap (EURm) 1,502

Enterprise value (EURm) 2,225
Free float (%) 98

Neopost (NEO FP)
UW: FY 2012 is still a concern in our view
 H1 12 operating margin was below our forecast, more
particularly after reintegrating capitalised R&D increase
 Neopost FY12 operating margin revision from c25.5% to
25.2% including GMC is consistent with previous guidance
 UW unchanged. TP up from EUR38.5 to EUR40, driven by an
increase in our multiples-based valuation
Telecoms, Media & Technology
Office Electronics
Equity – France
3 October 2012
Christophe Quarante*
Analyst
HSBC Bank Plc, Paris branch
+33 1 56 52 43 12
christophe.quarante@http://wendang.chazidian.com

View HSBC Global Research at:
http://wendang.chazidian.com
*Employed by a non-US affiliate of
HSBC Securities (USA) Inc, and is not
registered/qualified pursuant to FINRA
regulations
Issuer of report: HSBC Bank plc,
Paris branch
Disclaimer &
Disclosures
This report must be read
with the disclosures and
the analyst certifications in
the Disclosure appendix,
and with the Disclaimer,
which forms part of it
Flashnote