A_López-VEOLIA_ENVIRONNEMENT_(VIE.FP)_DOWNGRADE_TO_N(V):INCREASED_TAX_IN_FRANCE_COMPOUNDS-2012-10-11.pdf
《A_López-VEOLIA_ENVIRONNEMENT_(VIE.FP)_DOWNGRADE_TO_N(V):INCREASED_TAX_IN_FRANCE_COMPOUNDS-2012-10-11.pdf》由会员分享,可在线阅读,更多相关《A_López-VEOLIA_ENVIRONNEMENT_(VIE.FP)_DOWNGRADE_TO_N(V):INCREASED_TAX_IN_FRANCE_COMPOUNDS-2012-10-11.pdf(13页珍藏版)》请在三一文库上搜索。
1、 abc Global Research Transformation in progress: By the end of 2012 we estimate that Veolia will have reduced its debt from EUR14.7bn at the half year to EUR11.6bn through selling UK Water and US solid waste and deconsolidating its transport JV (VTD) and Berlinerwasser debt. This gives it the scope
2、to invest in future growth. An upcoming catalyst is the announcement of the appointment of a new Chief Operating Officer expected imminently. This is important to Veolia: The COO will manage the asset disposal process and reduce costs in France. France challenges to earnings growth: investors are sc
3、eptical that Veolia can deliver cost cutting in France despite managements assurances that staff reductions will largely be achieved through retirement or voluntary redundancies. The market will be looking closely at whether it is able to fulfil its cost cutting promises and also whether contracts w
4、ill be renewed at lower margins and returns. Industrial and Commercial production in Europe remains depressed and low recyclate prices offer little positive news for 2013 earnings. Political risk perception is also much higher than we have seen previously due to the change in taxation charges in Fra
5、nce. Any growth in earnings ex France will restore confidence that Veolia is able to diversify political risk. TP cut to EUR9 from EUR11.5 on the back of revised estimates; rating downgraded to Neutral (V). We use the average of three valuation methods to value Veolia: DCF, DDM and sum-of-parts base
6、d on peer group multiples. Our revised target price is now EUR9 (from EUR11.5), on the back of revised estimates and updated peer group multiples because: In its 1H result, Veolia flagged that weakness in certain industrial sectors affected the business of the Environmental Services division, and we
7、 include new French dividend tax and reduced tax allowances on debt downgrading earnings. Veolia will have to deliver several quarters of recurring operating profit before investors are confident about the investment proposition. Company report Nat Resources lower peer group multiples; higher beta;
8、and higher tax; rating downgraded to Neutral (V) Neutral (V) Target price (EUR) 9.00 Share price (EUR) 8.33 Potential return (%) 8 Note: Potential return equals the percentage difference between the current share price and the target price Dec 2011 a 2012 e 2013 e HSBC EPS 0.58 0.49 0.86 HSBC PE 14.
9、3 17.0 9.7 Performance 1M 3M 12M Absolute (%) -10.1 -7.9 -22.3 Relative (%) -9.0 -15.6 -31.2 Note: (V) = volatile (please see disclosure appendix) 9 October 2012 Verity Mitchell* Analyst HSBC Bank plc +44 20 7991 6840 Adam Dickens* Analyst HSBC Bank plc +44 20 7991 6798 Jos A Lpez* Analyst HSBC Ba
10、nk plc +44 20 7991 6798 View HSBC Global Research at: http:/ *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 Disclaimer lower peer group multiples; higher beta; and higher tax; rating downgra
11、ded to Neutral (V) 4 Veolia Environnement (VIE FP) Multi-Utilities 9 October 2012 abc and the GDP growth estimates for 2013 in those markets. We note that both Veolia and Suez Environnement have similar exposure to the other European markets, apart from their home country. Revenue split in 1H 2012 a
12、nd GDP growth 2013e 4.8% 2.5% 1.8% 1.3% 1.5% 0% 10% 20% 30% 40% 50% France GermanyUKAsia PacRoW 1% 2% 3% 4% 5% VIESEVIGDP growth 2013e Source: Company data, HSBC estimates Veolia will need to focus in growing its business in higher growth markets in Asia Pacific and UK. UK a growth opportunity: wate
13、r and waste management have been identified by the UK government as being of strategic importance in economic recovery. The UK has an aggressive approach to ensuring a decrease in the volumes of waste sent to landfill through a ratcheting up of the landfill tax from its current level of GBP48 per to
14、nne to GBP80 by 2015. This has allowed the UK divisions of waste management companies under our coverage Viridor Waste (Pennon PNN.L, Neutral, 731p), SITA (Suez Environnement) and Veolia Environnement to increase prices even as volumes in the UK decline. It has also precipitated the signing of a num
15、ber of very significant long-term integrated waste management contracts. These will underpin 2013 earnings for these companies and there are a further significant number of public private partnerships (PPP) waste contracts that will be let in the next two to three years. Veolia may use the proceeds
16、from its UK water sale to reinvest in building new waste facilities with more resilience to waste volumes and with access to renewable subsidies for energy from waste. Low recyclate prices persist We set out below the recent trend in prices of paper and plastic in UK as a proxy for the global trends
17、. We see the deterioration in H1 has not continued so this may stabilise H2 revenues. We expect margin stability for H2. 2012 response from the company We look to Veolia to update the market at Q3 on the progress of the accelerated programme of cost cutting announced at H1. Reduction of investments
18、by EUR500m in 2012-2013. EUR50m in additional targeted net cost reductions, with an increase to EUR170m Asia: IP growth Europe: IP growth China HK Australia India -4% 0% 4% 8% 12% 16% 1Q 12a2Q 12e3Q 12e4Q 12e1Q13e2Q 13e ChinaHKAustraliaIndia Germany France UK -4% -2% 0% 2% 4% 6% 1Q 12a2Q 12e3Q 12e4Q
19、 12e1Q13e2Q 13e EurozoneGermany FranceUK Source: HSBC estimates Source: HSBC estimates 5 Veolia Environnement (VIE FP) Multi-Utilities 9 October 2012 abc (from EUR120m) in 2013 and to EUR470m (from EUR420m) in 2015. Other objectives for 2012-13 Asset disposals of EUR5bn. 60% of this is already signe
20、d or completed. Reduce the group net financial debt below EUR12bn. Dividend payment of EUR0.70 for FY2012. Other objectives post-2013 Organic revenue growth of over 3% p.a. Growth in adjusted operating cash flow of over 5% p.a. Debt leverage ratio (net financial debt/(operating cash flow before chan
21、ges in working capital +principal payments on operating financial assets) of 3.0x. Return to a dividend payout ratio in line with the Companys historical average. French taxation Recent share price weakness of Veolia relative to our European universe has been exacerbated in our view by increases in
22、taxation of corporates in France. We have increased the taxation on dividends in line with the governments policy of 3%, representing a EUR16m hit to net income. There are also proposed reductions in tax allowances on interest which may have more of a material effect on Veolia in the future. Change
23、in estimates We have revised our estimates based upon a much more pessimistic view of earnings growth in Veolias businesses after the H1 results. In addition we have incorporated the increase in number of shares outstanding as a result of the option of scrip dividend for 2011 diluting EPS. There are
24、 three permutations of changes in estimates: Those that are a function of reduced underlying profits from the deteriorating economic conditions we highlight above. This is clearly indicated in the reduction in EBITDA. Change in scope we are removing the contribution from Berlinerwasser from EBITDA a
- 配套讲稿:
如PPT文件的首页显示word图标,表示该PPT已包含配套word讲稿。双击word图标可打开word文档。
- 特殊限制:
部分文档作品中含有的国旗、国徽等图片,仅作为作品整体效果示例展示,禁止商用。设计者仅对作品中独创性部分享有著作权。
- 关 键 词:
- A_L pez VEOLIA_ENVIRONNEMENT_ VIE FP _DOWNGRADE_TO_N INCREASED_TAX_IN_FRANCE_COMPOUNDS 2012 10 11
链接地址:https://www.31doc.com/p-3730595.html