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DGAP-News: Silvia Quandt Research GmbH: Linde TP raised to EUR107 (81) on prospects of stronger margin expansion, excessive discount to peers
ID: 194485
(firmenpresse) - Silvia Quandt&Cie. AG, Merchant&Investment Banking / Research Update
29.04.2010 09:19
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Linde
Target price raised to EUR107 (81)on prospects of stronger margin
expansion, excessive discount to peers
RIC: LING.DE
Close 28/04/10: EUR87.4
Rating: Buy
Target price: EUR107(81)
We increase the target price of Linde from EUR81 to EUR107 and sure retain
the Buy rating.
We argue that the stock is undervalued on grounds of
1) approx. 11% and 21% discount to peers' prospective (2011e) EV/EBITDA and
EV/sales, respectively
2) judged against both metrics, only modestly lower EBITDA ROS in 2010/11
while
3) boasting virtually even financial leverage with peers.
· Based on revised earnings forecasts, Linde's rating in our viewlooks
very undemanding. We now anticipate for EBITDA growth in the 2009-12 period
+8.7% p.a. (CAGR) compared with +4% we have hitherto assumed. This goes
along with estimated +7.0% p.a. revenue growth in the same time,
hence indicating margin expansion will take place in coming years.
· We basically assume that the content of on-site business (or tonnage gas)
will gradually increase in coming years which should be the main reason for
margin enhancement in the gases division, apart from healthcare gases'
higher contributions. As large-scale on-site plants are increasingly
becoming mature (after large investments were made in recent years, thanks
to focus on hydrogen expansion, largely used in refineries for cleaner
emissions), profitability widens.
· Large industries, eg chemicals, steel, refineries are boosting
consumption of large-scale gases such as nitrogen, oxygen, hydrogen, andwe
assume strong demand here to stay in the foreseeable future
as global economies are set to expand.
· Linde trades at some 11-21% discount to peers, on EV/EBITDA and EV/sales
2011e forecasts (based on SQR and Reuters consensus estimates) which is
unjustified in our view, given Linde's greater mid- and longterm growth
potential, we believe, in Asia. Here, the company has the largest exposure
to particularly larger industries like chemicals, refineries and steel
sector which are all set to stage disproportional growth, namely in China
and India. We also note that Air Products is going to register high
contributions from its chemicals division this year and possibly next year
to which distorts direct comparisons with pure gases companies like Linde,
Air Liquide and Praxair.
Harald Gruber
+4969959290930
www.silviaquandt.de
29.04.2010 09:19 Ad-hoc-Meldungen, Finanznachrichten und Pressemitteilungen übermittelt durch die DGAP. Medienarchiv unterwww.dgap-medientreff.deundwww.dgap.de---------------------------------------------------------------------------
  
  
  
Datum: 29.04.2010 - 09:19 Uhr
Sprache: Deutsch
News-ID 194485
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