1/12 Sector Guide

Pocket Name/ /24-04-2018

Pocket Guide / [Link]

Feintool

Industry Pole position in car transmission market: Feintool's

automotive exposure amounts to >90% of sales and its
Industrial Engineering most important applications are transmission
technologies which are still enjoying strong growth
Rating Price Target thanks to considerable fuel-savings potential. More
efficient gears require more fineblanked parts.
Hold CHF 125
Full pipeline of customer projects should ensure
Ticker FTON SE growth: The company has been awarded important
long-term production programs (e.g. NAG 3), which
Share price CHF 114
should allow System Parts to boost sales over the next
Mkt cap. (mns) CHF 508 few years. Moreover, rising capacity utilization is set to
Free float (%) 40.7 % boost operating profitability.
Trad. vol. (mns) CHF 0.8
Potential gearing down of the market with engine
downsizing: Growing demand for e-mobility & engine
Investment Case downsizing could eventually imply slowing demand for
More direct involvement in China: Huge potential in high-speed transmissions and impact Feintool’s long-
China as demand moves from manual to automatic term outlook. Fortunately, 3-cylinder engines are prone
gearboxes and from small to larger, sporty cars. Feintool to vibrations & noise which can be improved by using
expanded its exposure to the country through M&A, a Feintool’s speed-adaptive dampers (DATs). In terms of
larger salesforce and a broader local manufacturing value per car, these components are much less
footprint. Although this is likely to boost sales, it will be attractive than gearbox content.
margin dilutive.

Recent Newsflow Next Catalysts & Events

24-04-18 - 1Q18 orders & sales (+) 22-08-18 - 1H18 results

Solid start to FY18 with highest orders and sales since We expect dynamic top-line growth and stable EBIT
financial crisis; above VTe & cons. Guidance confirmed. margins.

06-03-18 - FY17 results (+)

Sales above and EBIT in line with expectations. Sales
guidance optimistic.

31-10-17 - 9M17 sales (+)

Growth at both System Parts and Fineblanking Tech was
ahead of expectations. Guidance confirmed.

Analyst
Michal Lichvar , CFA
+41 58 283 77 29 [Link]@[Link]
2/12 Feintool / Pocket Guide Vontobel

Criteria analysis

Weak Strong Comment

Growth profile 1 2 3 4 5 6 – Strong structural growth in automatic gears now
Pricing power 1 2 3 4 5 6 – Competitive but not an issue
Margin resilience 1 2 3 4 5 6 – Low and highly dependent on volumes
Corporate governance 1 2 3 4 5 6 – Transparent management and BoD
Financial metrics 1 2 3 4 5 6 – Sound balance sheet, improving earnings
Valuation 1 2 3 4 5 6 – Stock is fairly valued

Business description Performance

The master of fineblanking: Feintool is a globally oriented technology

company, specializing in fineblanking systems, fineblanked and formed
components. Its products are delivered worldwide to customers mainly
operating in the automotive industry. Having developed the
fineblanking process in the 1950ies, Feintool still dominates the market
with a market share of 87% of installed equipment worldwide.
Headquartered in Lyss, Switzerland, the firm has around 14 global
production plants, technology and service centres in Europe, Japan,
China and the US. Feintool employs around 2,000 people worldwide.

Risks to our investment case

Worsening investment climate: Fineblanking Technology and Automation are strongly linked to the capex cycle in
the automotive and other industries. These investment cycles tend to correlate with economic sentiment and outlook
(e.g. PMI, IFO etc.).

Weakening automotive markets: The key driver for System Parts is number of cars sold. Should Europe fail to
sustainably reverse the negative trend in new car sales by next year, the company could suffer from overcapacities.

Sluggish factory ramp-ups: Feintool is currently modernizing, expanding or ramping-up its production plants to
absorb the attractive global growth potential for new transmission technologies. However, any interruptions in the
production ramp-ups or early program terminations could materially impact profitability.

Sensitivity analysis

Low High Comment

Cyclicality 1 2 3 4 5 6 – Cyclical car supplier business
Earnings visibility 1 2 3 4 5 6 – Good sales visibility, a bit erratic for earnings
Operating leverage 1 2 3 4 5 6 – Capital intensive, highly standardized production
Dependence on FX movements 1 2 3 4 5 6 – 15% CHF cost exposure and only 2% of sales
Dependence on raw material prices 1 2 3 4 5 6 – >50% of System Parts costs is steel
Dependence on key customers 1 2 3 4 5 6 – Long-term programs with key customers
Dependence on key suppliers 1 2 3 4 5 6 – Dependency on Schuler and Neagary for presses
3/12 Feintool / Pocket Guide Vontobel

Corporate governance Management

Investor communication Chairman

Management communicates openly and is available for roadshows and calls. Annual report A. von Witzleben
and presentations with detailed data covering every angle. since 2009

Track record during last downturn CEO

Company suffered severely during the 2009 downturn with revenues down 35% and Knut Zimmer
incurred hefty losses. Accordingly, management started to streamline the portfolio and since 2018
focus on core capabilities.
CFO
Remuneration & incentives Thomas Bögli
The fixed salary of group management members is determined by a comparison with an since 2009
industry peer group. The variable component is calculated on the EBIT and personal
results. The CEO’s bonus is calculated on the basis of Group EBIT. The variable
component amounts to 30-70% of the fixed salary. Part of the fixed compensation is
received in the form of shares (locked up for up to four years).

SWOT analysis

– Market and technology leader in a niche market – High dependency on automotive industry (>90%)
– Full range supplier of fineblanking solutions – Fineblanking Tech. exposed to volatility of capex cycle
WEAKNESSES

– Global reach, strong presence in all key automotive – Potential conflicts of interests between Finetblanking
STRENGTHS

markets Tech. and System Parts

– Close and longstanding relationships to leading car – Applications limited to sheet metal based components
OEMs and suppliers – System Parts require substantial initial investment
– Solid balance sheet, low goodwill before starting new customer program
– Committed long-term core shareholder with industrial
background

– Solid underlying car market growth, more than half of – Highly competitive automotive supplier industry
which produced in Asia – High exposure to steel prices (at System Parts)
OPPORTUNITIES

– Tightening energy efficiency and fuel-savings standards – Strengthening of CHF vs EUR or USD (17% of costs in
in all major car markets CHF)
THREATS

– Strong growth in automatic transmissions, especially – Potential threats from alternative technologies
China (more comfort and efficiency) (stamping, cutting, casting) or new materials (plastics)
– Trend towards more gears (from 6 to 8/9) – Saturated market for fineblanking presses and
– Consolidating and globalizing the still locally organized dependency on the press suppliers Schuler & Neagary
fineblanking components industry – Engine downsizing

Guidance vs Vontobel and consensus estimates

Guidance: FY18 guidance: company expects turnover between CHF 630-650 mn and an EBIT margin in a range of 7.5-
8%.

Vs Vontobel estimates: FY18 sales estimate of CHF 648.5 mn (4.0% organic & 5.9% reported), EBIT margin estimate
of 7.8%

Vs consensus: FY18 sales estimate of CHF 648.1 mn (5.9%), EBIT margin estimate of 7.8%
4/12 Feintool / Pocket Guide Vontobel

Divisions (all figures as % share of total)

Fineblanking Technology Revenues FY18E CHF 96.4 (14%) EBIT FY18E CHF 4.8 (8%)
Description Fineblanking Technology offers equipment and systems for the fineblanking and forming process
including services for parts design, simulation prototyping and toolmaking. The product range
includes mechanical and hydraulic presses, orbital presses and peripheral systems.
Drivers Growth: 1) Automotive capex cycle, 2) global car output, 3) innovations, 4) more efficient
transmission technologies, 5) safety/comfort requirements, 6) Asian automotive market
Profitability: 1) Workload, 2) pricing environment, 3) lean production, 4) more EUR sourcing
Market shares 87% of the global installed base
Competitors Mori (10% market share), other (3%)
Customers Aisin Seiki (JP), Boscher (DE), Faurecia (FR), Johnson Control (US), ZF (DE), VW (DE)
Suppliers Schuler (DE), Neagary (JP)

System Parts Revenues FY18E CHF 572 (86%) EBIT FY18E CHF 54.9 (92%)
Description Provider of technology and solutions for the series production of fineblanked parts and cold-
formed components. System Parts operates production facilities in Europe (5 plants), Asia (3) and
the US (2).
Drivers Growth: 1) Car production output, 2) launch of new car models/platforms, 3) tightening energy
efficiency standards, 4) increasing quality, safety, comfort requirements, 5) shift towards more
gears, 6) Asian car market
Profitability: 1) Capacity utilization is by far the most important swing factor, 2) pricing, 3)
restructuring program (US operations and H+S)
Market shares Vte 15-20% for certain applications (seating, drive train, safety)
Competitors Specialists: MPI (US), Precision Resource Group (US), Hoerbiger (AT), Burkland (US); Tier 1
suppliers: ZF (DE), Lear (US), Faurecia (FR)
Customers BorgWarner (US), Daimler (DE), Imasen (JP), Johnson Control (US), Lear (US), ZF (DE), VW
(DE), Renault (FR)
Suppliers NA
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DCF valuation
Criteria analysis Explicit forecast period Transition period Terminal
DCF/EVA valuation 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E
Invested capital (average) CHF mns 411 413 410 408 407 409 412 416 420 422
ROIC % 8.6 9.5 10.3 10.6 11.1 11.5 12.0 12.4 12.5 12.5
ROIC-WACC % 2.8 3.1 3.4 3.2 3.6 3.8 4.1 4.3 4.3 4.1
Economic profit (EVA) CHF mns 11.4 12.7 13.8 13.2 14.5 15.5 17.0 18.1 18.0 17.2
Discounted EVA CHF mns 7.49 11.5 11.5 10.1 10.3 10.1 10.2 9.98 9.05 7.87
NWC intensity % 13.2 12.8 12.7 12.3 12.3 12.3 12.3 12.3 12.3 12.3
Implied P&L and FCF 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E
Revenues CHF mns 649 680 713 748 785 824 866 900 927 941
Revenues growth % 5.9 4.9 4.9 4.8 5.0 5.0 5.0 4.0 3.0 1.5
EBIT CHF mns 50.7 55.9 60.1 61.8 64.6 67.2 70.7 73.7 74.9 75.1
EBIT margin % 7.8 8.2 8.4 8.3 8.2 8.2 8.2 8.2 8.1 8.0
Tax rate % 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0
NOPLAT (Invested capital * ROIC) CHF mns 35.5 39.1 42.1 43.3 45.2 47.1 49.5 51.6 52.5 52.6
Depreciation CHF mns 43.1 43.4 38.2 38.9 38.9 37.9 40.0 40.0 42.5 45.0
Other non-cash items CHF mns -1.55 -1.50 -1.46 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Change in NWC CHF mns -2.31 -1.88 -3.46 -1.23 -4.60 -4.83 -5.07 -4.26 -3.32 -1.71
Capex CHF mns -50.0 -35.0 -35.0 -35.0 -35.0 -36.0 -38.0 -40.0 -42.5 -45.0
FCF to the firm CHF mns 24.7 44.2 40.4 46.0 44.5 44.1 46.4 47.3 49.1 50.9
Discounted FCF CHF mns 16.3 39.8 33.7 35.3 31.7 28.9 27.9 26.1 24.7 23.3
Weighted cost of capital 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E
Cost of equity % 6.8 7.0 7.2 7.4 7.5 7.7 7.9 8.1 8.2 8.4
After-tax cost of debt % 2.1 2.4 2.8 3.2 3.2 3.3 3.3 3.4 3.4 3.5
Market cap/EV % 80.0 86.7 93.3 100 100 100 100 100 100 100
WACC % 5.9 6.4 6.9 7.4 7.5 7.7 7.9 8.1 8.2 8.4
Net present value (NPV) 2018E Sensitivity analysis for NPV per share (avg. WACC vs. term. EBIT margin)
WACC
Explicit and transition period FCF CHF mns 265 EBIT\ 6.9% 7.4% 7.9% 8.4% 8.9% 9.4% 9.9%
Discounted cont. value of FCF CHF mns 338 5.0% 113 104 95.7 88.8 82.7 77.3 72.6
Terminal value as % of EV % 56.1 6.0% 127 116 106 98.2 91.1 84.9 79.4
Terminal rev. growth assumption % 1.5 7.0% 140 128 117 108 99.5 92.5 86.3
Enterprise value (EV) CHF mns 603 8.0% 154 140 127 117 108 100 93.1
Net debt CHF mns 76.9 9.0% 168 151 138 126 116 108 100.0
Minorities CHF mns 0.00 10.0% 181 163 148 136 125 115 107
Associates CHF mns 0.00 11.0% 195 175 159 145 133 123 114
Other adjustments to EV CHF mns 0.00
Implied market cap CHF mns 526
Equivalent total # of listed shares mns 4.46
Reporting currency to CHF rate x 1.00
Net present value (NPV) per
CHF 118
share
NPV per share 12 months
CHF 125
forward
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Financials
Criteria analysis
Segment information by Business Units
Revenues 2012 2013 2014 2015 2016 2017 2018E 2019E
Fineblanking Technology CHF mns 99.4 98.6 98.3 87.8 92.7 91.4 96.4 98.4
System Parts CHF mns 296 359 420 438 479 547 572 602
Revenue growth 2012 2013 2014 2015 2016 2017 2018E 2019E
Fineblanking Technology % -9.5 -0.7 -0.3 -10.7 5.6 -1.4 5.5 2.0
System Parts % 28.9 21.0 17.1 4.3 9.4 14.2 4.5 5.2
EBIT 2012 2013 2014 2015 2016 2017 2018E 2019E
Fineblanking Technology CHF mns 8.23 6.50 6.64 4.57 8.20 3.98 4.82 5.90
System Parts CHF mns 12.1 21.3 35.0 35.8 46.9 52.6 54.9 59.0
EBIT margin 2012 2013 2014 2015 2016 2017 2018E 2019E
Fineblanking Technology % 8.3 6.6 6.8 5.2 8.8 4.4 5.0 6.0
System Parts % 4.1 5.9 8.3 8.2 9.8 9.6 9.6 9.8

Segment information by Regions

Revenues 2012 2013 2014 2015 2016 2017 2018E 2019E
Europe CHF mns 232 272 270 259 288 335 339 354
America CHF mns 103 117 136 163 169 172 184 193
Asia and RoW CHF mns 91.8 89.0 96.7 87.0 95.9 106 126 133
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Income Statement 2012 2013 2014 2015 2016 2017 2018E 2019E
Revenues CHF mns 427 436 503 509 552 612 649 680
Gross profit CHF mns 225 243 267 270 307 332 355 373
Total operating expenses CHF mns -181 -196 -204 -209 -231 -249 -262 -274
EBITDA CHF mns 44.4 47.0 62.9 61.4 83.1 83.2 93.8 99.3
Depreciation of tangible assets CHF mns -19.7 -24.5 -25.7 -26.7 -32.8 -33.8 -39.9 -40.3
EBITA CHF mns 24.7 22.5 37.2 34.8 50.2 49.4 53.9 59.0
Amortization of intangibles CHF mns -1.34 -2.18 -2.04 -1.87 -1.81 -3.14 -3.14 -3.09
Impairment and amortization of goodwill CHF mns 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
EBIT CHF mns 23.4 20.4 35.1 32.9 48.4 46.3 50.7 55.9
Total operating one-off items CHF mns 0.00 0.00 0.00 0.00 -7.08 0.00 0.00 0.00
Adjusted EBIT CHF mns 23.4 20.4 35.1 32.9 41.3 46.3 50.7 55.9
Net financial result CHF mns -5.32 -5.61 -3.23 -3.69 -3.19 -6.20 -2.90 -2.90
Extraordinary result CHF mns 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Pretax profit CHF mns 18.1 14.8 31.9 29.2 45.2 40.1 47.8 53.0
Taxes CHF mns -5.31 0.08 -7.29 -9.14 -13.2 -12.4 -13.9 -15.4
Group net profit CHF mns 12.8 14.8 24.6 20.1 32.1 27.7 34.0 37.6
Minority interests CHF mns 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Shareholders' net profit CHF mns 12.8 18.8 35.4 20.1 32.1 27.7 34.0 37.6
Total one-off items CHF mns 0.00 0.00 -7.87 0.00 -4.96 0.00 0.00 0.00
Adjusted net profit CHF mns 12.8 18.8 27.5 20.1 27.1 27.7 34.0 37.6
Growth 2012 2013 2014 2015 2016 2017 2018E 2019E
Revenues % 18.5 2.0 15.6 1.1 8.5 10.9 5.9 4.9
Organic revenues % 9.0 7.0 17.2 4.4 5.4 8.1 4.0 4.9
Gross profit % 24.9 7.7 9.9 1.2 13.8 8.2 6.9 5.0
EBITDA % 39.3 5.9 33.8 -2.4 35.2 0.2 12.7 5.9
EBIT % 36.0 -13.0 72.6 -6.4 47.2 -4.4 9.6 10.2
Net profit % -13.3 47.4 88.0 -43.3 59.7 -13.5 22.4 10.8
Net profit adjusted % -13.3 47.4 46.2 -27.1 35.0 2.4 22.4 10.8
Margin analysis 2012 2013 2014 2015 2016 2017 2018E 2019E
Gross margin % 52.8 55.7 53.0 53.0 55.6 54.3 54.8 54.9
EBITDA margin % 10.4 10.8 12.5 12.1 15.0 13.6 14.5 14.6
EBITA margin % 5.8 5.2 7.4 6.8 9.1 8.1 8.3 8.7
EBIT margin % 5.5 4.7 7.0 6.5 8.8 7.6 7.8 8.2
Adjusted EBIT margin % 5.5 4.7 7.0 6.5 7.5 7.6 7.8 8.2
Tax rate % 29.3 -0.5 22.8 31.3 29.1 30.8 29.0 29.0
Net profit margin % 3.0 4.3 7.0 3.9 5.8 4.5 5.2 5.5
Adjusted net profit margin % 3.0 4.3 5.5 3.9 4.9 4.5 5.2 5.5

Revenues by Business Units 2018E Revenues by Regions 2018E

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Balance Sheet 2012 2013 2014 2015 2016 2017 2018E 2019E
Cash and cash equivalents CHF mns 25.4 28.6 41.7 31.6 92.8 52.4 68.2 101
Marketable securities CHF mns 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Inventories CHF mns 40.7 36.5 38.8 41.0 45.1 56.4 58.3 57.8
Accounts receivable CHF mns 100.0 107 108 115 113 140 142 147
Prepayment and accrued income CHF mns 5.79 4.66 4.43 3.51 3.11 4.27 3.55 3.73
Other current assets CHF mns 0.17 0.04 0.04 0.01 2.29 2.55 2.55 2.55
Total current assets CHF mns 172 177 193 191 256 255 275 312
Tangible assets CHF mns 176 180 195 198 237 280 288 280
Other intangible assets CHF mns 7.79 7.77 6.36 6.52 8.26 20.6 19.9 18.6
Goodwill CHF mns 12.9 13.1 8.64 10.2 10.1 23.2 23.2 23.2
Financial assets CHF mns 5.25 6.49 5.74 2.86 1.59 1.63 1.63 1.63
Other non-current assets CHF mns 12.9 14.5 18.4 18.1 17.3 16.7 16.7 16.7
Total non-current assets CHF mns 215 222 234 236 275 342 349 341
Total assets CHF mns 387 399 427 427 531 597 624 653
Accounts payable CHF mns 69.7 75.4 68.0 64.3 70.7 74.8 78.2 82.0
Short-term interest-bearing debt CHF mns 70.1 25.2 18.3 26.2 15.9 30.7 30.7 30.7
Accrued expenses and deferred income CHF mns 25.9 27.5 32.8 29.7 33.4 42.5 40.4 39.5
Other current liabilities/provisions CHF mns 8.08 9.68 8.77 9.44 11.8 16.4 16.4 16.4
Total current liabilities CHF mns 174 138 128 130 132 164 166 169
Long-term interest-bearing debt CHF mns 30.6 36.4 32.8 16.4 93.0 104 104 104
Pension liabilities (long-term portion) CHF mns 39.5 32.7 56.5 62.6 63.1 59.5 59.5 59.5
Other non-current liabilities CHF mns 2.33 2.18 1.87 1.52 1.42 1.79 1.79 1.79
Provisions CHF mns 5.95 6.05 5.54 8.93 11.4 12.8 12.8 12.8
Total non-current liabilities CHF mns 78.4 77.4 96.7 89.4 169 178 178 178
Total liabilities CHF mns 252 215 225 219 301 342 343 346
Total interest-bearing debt CHF mns 101 61.6 51.1 42.6 109 134 134 134
Ordinary share capital CHF mns 39.1 44.5 44.5 44.5 44.6 44.6 44.6 44.6
Share premium & retained earnings CHF mns 95.3 139 158 163 185 211 236 262
Shareholders' equity CHF mns 134 184 203 208 230 255 280 307
Minority interests CHF mns 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Group equity CHF mns 134 184 203 208 230 255 280 307
Total liabilities and equity CHF mns 387 399 427 427 531 597 624 653

Balance sheet analysis 2012 2013 2014 2015 2016 2017 2018E 2019E
Net working capital (NWC) CHF mns 50.9 45.6 50.7 65.5 56.8 83.1 85.4 87.3
NWC/revenues % 11.5 11.1 9.6 11.4 11.1 11.4 13.0 12.7
NWC/total assets % 13.2 11.4 11.9 15.4 10.7 13.9 13.7 13.4
Inventory days days 58 73 58 61 64 66 71 69
Receivables days days 93 87 78 80 75 75 79 78
Payables days days 128 137 110 101 100 95 95 95
Net debt (+) / net cash (-) CHF mns 75.3 33.0 9.33 11.1 16.2 81.9 66.1 33.0
Equity/total assets % 34.8 46.1 47.5 48.7 43.3 42.7 44.9 47.0
Net debt/equity (gearing) % 56.1 17.9 4.6 5.3 7.0 32.1 23.6 10.8
Net debt/EBITDA x 1.7 0.7 0.1 0.2 0.2 1.0 0.7 0.3
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Cash flow statement 2012 2013 2014 2015 2016 2017 2018E 2019E
Group profit CHF mns 12.8 18.8 35.4 20.8 32.1 27.7 34.0 37.6
Depreciation + Amortization CHF mns 19.7 27.2 28.1 28.5 34.6 36.9 43.1 43.4
Goodwill impairment CHF mns 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Non-cash financial income (-)/expenses (+) CHF mns 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Inc. (+)/decr.(-) in deferred taxes CHF mns -0.40 -2.56 -3.29 3.04 16.4 12.3 0.00 0.00
Inc. (+)/decr.(-) in pension provisions CHF mns 1.60 3.60 3.05 -0.98 1.08 -1.97 0.00 0.00
Inc. (+)/decr.(-) in other provisions CHF mns 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other non-cash changes/adjustments CHF mns -3.78 -0.53 -2.54 1.13 -4.83 0.19 0.00 0.00
Operation cash flow (before chng in NWC) CHF mns 29.9 46.6 60.8 52.5 79.3 75.2 77.0 81.0
Inc. (-)/decr. (+) in NWC CHF mns -4.20 2.86 -9.99 -12.4 -5.20 -36.7 -2.31 -1.88
CF from operating activities CHF mns 25.7 49.4 50.8 40.1 74.1 38.5 74.7 79.2
Capex CHF mns -24.7 -35.6 -35.5 -27.3 -61.2 -53.9 -50.0 -35.0
Operating free cash flow (FCF) CHF mns 0.99 13.8 15.3 12.8 12.9 -15.4 24.7 44.2
Invest.(-)/disp.(+) of tang./intang. CHF mns 1.87 2.20 0.86 0.85 0.84 1.52 0.00 0.00
Invest.(-)/disp.(+) of associates CHF mns 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Invest.(-)/disp.(+) of non-core assets CHF mns 2.87 -1.46 0.95 2.83 0.95 -0.04 0.00 0.00
Acquisitions CHF mns -10.0 0.00 21.6 -6.29 0.00 -24.7 0.00 0.00
Other adjustments CHF mns 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
CF from investing activities CHF mns -29.9 -34.9 -12.1 -29.9 -59.4 -77.1 -50.0 -35.0
Proceeds from issue of share capitals CHF mns 0.00 32.7 -2.11 0.00 0.25 0.05 0.00 0.00
Disposal (+)/ purchase (-) of shares CHF mns -0.82 -0.30 0.00 0.00 0.00 0.00 0.00 0.00
Inc. (+)/decr. (-) in equity CHF mns -0.82 32.4 -2.11 0.00 0.25 0.05 0.00 0.00
Dividend paid CHF mns -3.06 -3.90 -5.36 -6.67 -6.69 -8.92 -8.92 -11.1
Inc. (+)/decr.(-) in interest bearing debt CHF mns 1.95 -39.3 -18.5 -12.4 53.9 2.84 0.00 0.00
Other adjustments CHF mns 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
CF from financing activities CHF mns -1.92 -10.8 -25.9 -19.1 47.5 -6.04 -8.92 -11.1
Translation impact CHF mns -0.36 -0.55 0.32 -1.25 -0.97 4.27 0.00 0.00
Inc. (+)/decr. (-) in cash CHF mns -6.57 3.22 13.1 -10.2 61.2 -40.4 15.8 33.0

Cash flow analysis 2012 2013 2014 2015 2016 2017 2018E 2019E
Operating cash flow margin % 6.0 11.3 10.1 7.9 13.4 6.3 11.5 11.6
Capex/revenues % 5.8 8.2 7.0 5.4 11.1 8.8 7.7 5.1
Capex/depreciation % 125.4 130.8 126.0 95.7 176.6 145.8 116.1 80.6
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Price 2012 2013 2014 2015 2016 2017 2018E 2019E

Price (year-end or current) CHF 54.65 70.00 101.80 88.10 109.20 118.00 114.00 114.00
High CHF 69.45 75.90 102.00 108.00 129.00 132.00 129.60 NA
Low CHF 54.65 52.00 70.20 80.50 72.40 109.80 104.00 NA
Average basic shares outstanding ('000) 772 4,454 4,454 4,451 4,452 4,458 4,460 4,460
Year-end basic shares outstanding ('000) 781 4,454 4,454 4,449 4,455 4,460 4,460 4,460
Average fully diluted shares ('000) 772 4,454 4,454 4,451 4,452 4,458 4,460 4,460
Market capitalization CHF mns 42.7 312 453 392 487 526 508 508
Enterprise value CHF mns 156 345 463 403 503 608 574 541
Per-share data 2012 2013 2014 2015 2016 2017 2018E 2019E
EPS (reported) CHF 16.5 4.23 7.95 4.51 7.20 6.22 7.62 8.44
EPS (adjusted) CHF 16.5 4.23 6.18 4.51 6.09 6.22 7.62 8.44
FCF CHF 1.28 3.10 3.44 2.87 2.91 -3.45 5.54 9.90
Net cash (+) / net debt (-) CHF -96.4 -7.40 -2.09 -2.49 -3.63 -18.4 -14.8 -7.41
BVPS (reported) CHF 172 41.3 45.6 46.7 51.6 57.2 62.8 68.8
Dividend CHF 5.00 1.20 1.50 1.50 2.00 2.00 2.50 2.60
Payout ratio % 30.2 28.4 18.9 33.3 27.8 32.1 32.8 30.8

Valuation 2012 2013 2014 2015 2016 2017 2018E 2019E

P/E (reported) x 3.30 16.6 12.8 19.5 15.2 19.0 15.0 13.5
P/E (adjusted) x 3.30 16.6 16.5 19.5 17.9 19.0 15.0 13.5
P/Op. free cash flow x 42.7 22.6 29.6 30.7 37.6 -34.2 20.6 11.5
P/Book (reported) x 0.32 1.70 2.23 1.89 2.12 2.06 1.81 1.66
EV/Sales x 0.37 0.79 0.92 0.79 0.91 0.99 0.89 0.80
EV/EBITDA x 3.52 7.33 7.35 6.56 6.05 7.31 6.12 5.45
EV/EBIT x 6.67 16.9 13.2 12.2 10.4 13.1 11.3 9.69
EV/Op. free cash flow x 158 25.0 30.2 31.5 38.8 -39.6 23.2 12.3
EV/Equity free cash flow x -36.5 23.7 12.0 39.6 34.1 -15.8 23.2 12.3
EV/Invested Capital x 0.63 1.40 1.77 1.44 1.61 1.49 1.38 1.32
FCF yield % 2.31 4.43 3.38 3.26 2.66 -2.92 4.86 8.69
Dividend yield % 9.15 1.71 1.47 1.70 1.83 1.69 2.19 2.28

Profitability ratios & ROIC 2012 2013 2014 2015 2016 2017 2018E 2019E
Average invested capital CHF mns 216 247 254 271 297 360 411 413
NOPLAT CHF mns 17.6 15.1 25.7 23.4 33.9 32.4 35.5 39.1
Economic profit (EVA) CHF mns -1.71 -6.90 3.09 -0.72 7.50 0.40 -1.10 2.39
ROIC % 8.1 6.1 10.1 8.6 11.4 9.0 8.6 9.5
ROE % 10.0 11.8 18.3 9.8 14.6 11.4 12.7 12.8
ROA % 3.6 3.8 6.0 4.7 6.7 4.9 5.6 5.9

Enterprise value 2012 2013 2014 2015 2016 2017 2018E 2019E
Market capitalization CHF mns 42.7 312 453 392 487 526 508 508
Net Debt (+) / net cash (-) CHF mns 75.3 33.0 9.33 11.1 16.2 81.9 66.1 33.0
Value of minorities CHF mns 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Value of associates CHF mns 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other adjustments for EV calculation CHF mns 38.2 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Enterprise value CHF mns 156 345 463 403 503 608 574 541
11/12 Feintool / Pocket Guide Vontobel

Disclaimer & Disclosures – Equity Research

Criteria analysis
1. Analyst declaration
This Vontobel Report has been produced by the organizational unit responsible for investment research (Research unit, sell-side analysis) of Bank Vontobel AG. Bank Vontobel AG
is subject to supervision by the Swiss Financial Market Supervisory Authority (FINMA). The authors listed on page 1 confirm that this report gives a complete and precise reflection of
their opinion of the analysed company and that they have neither directly nor indirectly received compensation for their assessment or opinion. The compensation of the authors of
this report is not directly related to the investment banking volume generated between Vontobel Group and the analysed company.
The author(s) of this document owns securities in the analysed companies: None
The document was not submitted to the analysed companies before publication or distribution
2. Disclosure of conflicts of interest
As an internationally active company, Vontobel Group is subject to a number of provisions in drawing up and distributing its investment research documents. The maker and
distributors of this financial analysis point out the following potential conflicts of interests: The author and its associated companies
– will or are attempting to generate investment banking business with the analysed companies within the next three months,
– conduct transactions with securities of the analysed companies from time to time
– have participated in capital market transactions/the issue of securities of the following analysed companies in the last 12 months: None
– have been active as Market Maker in equities of the following analysed companies in the last 12 months: None
– have provided other publicly known Investment Banking services for the following companies mentioned in this report in the last 12 months: None
– have received compensation for products and services outside Investment Banking from the following analysed companies: None
– hold mandatory disclosable (%) of the voting rights of the following analysed companies: None
– have executives who are members of the board of the analysed companies: None and
– have executives who are members of the board of Bank Vontobel AG or affiliated companies: None
– have no significant financial interest in the analysed companies and
– have reached no agreement with the analysed companies regarding this financial analysis.

3. Research rating history

The Ratings and/or Rating Outlook of the analysed companies were last changed as follows:
Feintool[FTON.S] was last changed from Suspended Coverage to Hold on 16-05-17
4. Global rating breakdown
VT Research universe VT Research universe Share of VT IB clients in rating category
No. As % As %
Buy 34 31 21
Hold 73 67 26
Reduce 2 2 0

The table above is revised at the beginning of each quarter, i.e. it currently reflects the status as at 31 March 2018.

5. Rating plotter charts

The data used for the share price and/or price target chart may have to be adjusted to reflect corporate actions undertaken by the company.

Not Rated: Currently Restricted, Suspended Coverage, or no rating assigned to company due to e.g. advising of analysed company in a capital market transaction, temporary
suspension of analyst coverage or a similar reason.

For company specific disclosures, such as Research rating history or Rating plotter charts, please refer to the most recent company specific information provided by Bank Vontobel
under "[Link] and/or contact Bank Vontobel for further information.

6. Methodology/Rating system
Bank Vontobel’s financial analysts apply a variety of valuation methodologies (e.g. DCF and EVA modelling, 'sum-of-the-parts', break-up and event-related analysis, peer group and
market multiple comparisons) to their own financial projections for the companies they cover. Overall, our investment recommendations take into consideration an assessment of the
company in its entirety and of the sector to which it belongs ("bottom-up approach"). Price target calculation is based on a number of factors, observations and assumptions,
including but not limited to: key business performance indicators and ratios, public and private valuation multiples, comparison with one or more peer groups of comparable
companies, overall equity market valuations, and with the company's own history and track record.

The stock recommendations published by Vontobel’s research team are defined as follows:

Rating Definition

Large Cap SLI Index (incl. tolerance)/non-Swiss stocks of similar market capitalisation
Buy Price target (when set) implies 10% or more upside on a 12-month horizon
Hold Price target (when set) implies 0-10% upside on a 12-month horizon
Reduce Price target (when set) implies downside on a 12-month horizon

Mid & small cap Other Swiss stocks/non-Swiss stocks of similar market capitalisation
Buy Price target (when set) implies 15% or more upside on a 12-month horizon
Hold Price target (when set) implies 0-15% upside on a 12-month horizon
Reduce Price target (when set) downside on a 12-month horizon

Restricted Coverage is temporarily restricted (no price target)

Suspended Coverage Coverage is temporarily suspended (no price target)
12/12 Feintool / Pocket Guide Vontobel

Analysts are required to review their recommendations under the following conditions:
Buy: When upside to price target falls below 5% (all caps).
Hold: When upside to price target reaches or exceeds 15% for large caps or 20% for mid & small cap;
when downside to price target reaches or exceeds 5% (all caps).
Reduce: When upside to price target reaches or exceeds 5% (all caps).
We reserve the right to waive repeated changes of recommendation during periods of unusually high equity market or specific stock price volatility

The use of the valuation methods does not rule out the risk that the stock fails to achieve the "fair value" within the projected period. Numerous factors influence share price
performance. Unforeseen changes can arise from the emergence of competitive pressure, from a change in demand for the products of an issuer, technological development, from
macroeconomic activity, exchange rate fluctuation or from a shift in society’s moral concept. Changes in taxation law or supervisory regulations can often have a grave, unforeseen
impact. This discourse on valuation methods and risk factors does not claim completeness.

For more information on our methodology and rating system see [Link].

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This research report is for information purposes only and does not constitute a solicitation to invest or investment advice. This report has been written without regard for the financial
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The author neither guarantees that the equities discussed in this report are accessible to recipients nor that they are suitable for them. This research report has been produced for
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If non-institutional investors receive this report it is recommended they seek advice from an asset manager or investment advisor prior to making an investment decision.
The maker of this report does not regard recipients of this report as clients if there are no other business or contractual relations.
No part of this material may be reproduced or duplicated in any form, by any means, or redistributed, without acknowledgement of source and prior written consent from Vontobel
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