Stepping Up The Pace
Fair Value €92.8m Current market cap: €72.9m
Luke Poloniecki +33 (0)1 56 68 75 49 Equity Analyst firstname.lastname@example.org Caroline Lacroux Equity Analyst email@example.com +33 (0)1 56 68 75 89
1st July 2008
ITALY - Expandi
Bloomberg Reuters 52 week High / Low (€) Market Cap (€m) EV (BGe) (€m) Volume 6m Avge (in shares) Free float (June 2008) EPS growth 09-11e (CAGR) Gearing (2007 pro forma) Dividend yield (2007 pro forma) YE: 31 Dec Sales (€m) % change yoy EBITDA (€m) EBIT (€m) EBIT margin, % EPS (€) EV / Sales EV / EBIT PE (x) 2008e 49.4 22.7% 1.8 (0.2) nm (0.1) 2.1x na na 2009e 65.2 32.0% 9.6 7.7 11.8% 0.4 1.6x 13.7x 16.0x 2010e 73.9 13.4% 13.0 11.1 15.0% 0.7 1.4x 9.5x 10.6x PRL IM PRL.MI 10.8 / 6.6 72.9 105 7,628 32.5% 42.2% 119.8% None 2011e 82.4 11.6% 16.2 14.3 17.3% 0.9 1.3x 7.4x 7.9x
Pierrel is a European leader in Pharmaceutical Outsourcing, offering Contract Research (CRO) and Contract Manufacturing (CMO) for the development and production of existing and nascent therapeutics. Three recent CRO acquisitions bolted onto an established CMO platform, have given Pierrel the critical mass and full-service offering necessary to open up the lucrative, and less competitive mid-Pharma market.
High earnings visibility: With its unique, integrated services offering, the group’s capabilities encompass early clinical development through to largescale production, rendering it highly appealing to mid-size drug developers seeking the outsourcing route. Long-term contracts with high renewal rates, lower overall risks, and give great visibility over revenue streams. Competitive advantage: Proven expertise in both CRO and CMO holds Pierrel in good stead. With 50 years of CMO manufacturing experience and a truly Pan-European CRO network - across 14 countries - Pierrel has significant competitive advantages. Strong sector growth: Global CMO and CRO markets are set to enjoy 9.2% and 7.0% CAGRs 2006-2011e: Pharmas are increasingly turning to outsourcing, to focus on core areas of R&D and marketing. Solid organic and external growth drivers: Experienced management team has a proven track record in M&A, both in target selection and deal execution. Low risk profile: CRO activities are already profitable, with profitability at group level expected in FY 2008. Pierrel enjoys a backlog of almost €44m (December 2007). Exciting opportunities in the growing Generics market should also see Pierrel opening doors mid-term. Plentiful newsflow. Forthcoming catalysts include an acquisition by yearend/1H09, and FDA approval of the Capua plant (mid 2009) opening up the all-important US market. 27% upside potential: Our SOTP DCF methodology derives a Fair Value of €92.8m.
12 11 10 9
8 7 6 5 4 May-06
Oct-06 Dec-06 Feb-07 May-07 Pierrel
Sep-07 Nov-07 Feb-08 Expandi (rebased)
CAC Mid & Small 190 (rebased)
Please see the section headed “Important information” on the back cover.
Sales growt h / EBIT margin
20.0% 31.0% 26.0% 21.0% 10.0% 16.0% 11.0% 6.0% 1.0% 2008e 2009e 2010e 2011e 0.0% 15.0%
2007C 90.9% nm nm nm
2007PF 198.2% nm nm nm
2008e 22.7% 3.6% nm nm
2009e 32.0% 14.7% 11.8% nm
2010e 13.4% 17.5% 15.0% 51.6%
2011e 11.6% 19.6% 17.3% 33.5%
Growth Credentials Sales growth, % EBITDA margin, % EBIT margin, % EPS growth (diluted), %
344.6% nm nm nm
Sales growt h, %
EBIT margin, %
F R EE C A S H FL OW ( €m ) / EB I TD A 15.0 m a r g i n ( %) 20% 15%
10% 5.0 5% 2007C 2008e 2009e 2010e 2011e ( 5.0) 0% - 5%
Income statement (key data) Total revenues ...of which CMO ...of which CRO Gross profit Operating expenses EBITDA Depreciation & Amortisation EBIT PBT (Profit before income tax) Net profit (loss) Diluted Earnings per share (€) Cash Flow (+) Depreciation (+) Amortisation (+) Decrease (increase) in working capital requirement (WCR) Net cash from...
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