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Page 1: CFA Research Challenge -   Autogrill SpA - UniPV Team

AUTOGRILL S.p.A.

CFA Institute Research Challenge Milan, 11 March 2013

Universita degli Studi di Pavia

Liechtenstein Stock ExchangeAlessandro Greppi ,Fitria, Kinga Karkus, Alberto Scarioni, Leyla Tanzi

Page 2: CFA Research Challenge -   Autogrill SpA - UniPV Team

INVESTMENT SUMMARY COMPANY & INDUSTRY OVERVIEW VALUATIONFINANCIAL

ANALYSIS RISK ANALYSIS

HIGHLIGHTS RECOMMENDATION: BUY TARGET PRICE: EUR 11.4 (20.1% upside)

W H Y I S A B U Y ?

Value through diversification

Expectations for the two division (CAGR):

F&B: 1%; TR&DF: 7.2%

YTD: 14.4%

Last 3 years performance: 17.5%

M A C R O E C O N O M I C R I S K S : Short-term: raw material costs ↑ Long-term: concession costs and airport rents ↑

V A L U AT I O N = > T a r g e t P r i c e 1 1 . 4 € 50%: DCF valuation 40%: Peers comparison (industrial & financial) 10%: Real option

WHY IS A BUY? MACROECONOMIC RISKS:

VALUATION => Target Price EUR 11.4

Page 3: CFA Research Challenge -   Autogrill SpA - UniPV Team

INVESTMENT SUMMARY AGL IM Equity

Price range (last 52 weeks) EUR 6.5 – 9.5

Price (1/2/2013) EUR 9.45

Price target EUR 11.4 (20.1% upside)

P/E 21.1x

INVESTMENT SUMMARY COMPANY & INDUSTRY OVERVIEW VALUATIONFINANCIAL

ANALYSIS RISK ANALYSIS

R E L E V A N T E V E N T S 2 0 1 2 : Spanish concession renewal (100% retention rate) New and renewed TR&DF in Jamaica, Germany,

Mexico, Brazil, Amsterdam, Atlanta Entrance into Turkey and United Arab Emirates

Page 4: CFA Research Challenge -   Autogrill SpA - UniPV Team

COMPANY OVERVIEW

Italian multinational company Deals with people on the move Two main business channels: Food & Beverage and Travel

Retail & Duty Free Operates mainly in airports and motorways (also present

at railway stations, museums, shopping centers, high street, trade fairs)

Present in 37 countries through more than 5,300 POS

INVESTMENT SUMMARY COMPANY & INDUSTRY OVERVIEW VALUATIONFINANCIAL ANALYSIS RISK ANALYSIS

Strong cash flow

generationFlexible cost

structre

High retention

ratesLong-lasting concessions

Page 5: CFA Research Challenge -   Autogrill SpA - UniPV Team

BUSINESS ANALYSIS & COMPETITIVE POSITIONINGA world leader in the concession industry that serves travellers around the world.

DISTRIBUTION CHANNELSGEOGRAPHICAL PRESENCE BRANDS & PRODUCTS

INVESTMENT SUMMARY COMPANY & INDUSTRY OVERVIEW VALUATIONFINANCIAL ANALYSIS RISK ANALYSIS

Page 6: CFA Research Challenge -   Autogrill SpA - UniPV Team

BUSINESS ANALYSIS & COMPETITIVE POSITIONING

FOOD & BEVERAGE

EUR 15-20 bln

AGL SALES (2011): 44% US 35% Italy 21% Other European

Competitors:

TRAVEL RETAIL & DUTY FREE

EUR 34-40 bln

AGL SALES (2011): 75% Europe 25% US

Competitor:

INVESTMENT SUMMARY COMPANY & INDUSTRY OVERVIEW VALUATIONFINANCIAL ANALYSIS RISK ANALYSIS

Page 7: CFA Research Challenge -   Autogrill SpA - UniPV Team

INDUSTRIAL ANALYSIS

Role of GDP

62 % of business is in Europe

=> GDP of Euro area

Flexible cost structure and

financial solidity

Main engine of growth

Slowing economic recovery

High fuel prices

Airport Council International

forecast (ACI) : 4.5% p.a

international traffic growth

High impact on F&B’s

performance

Recession and high fuel price

Italy will decrease, but US

contributes to growth

Airport traffic Motorway traffic

INVESTMENT SUMMARY COMPANY & INDUSTRY OVERVIEW VALUATIONFINANCIAL ANALYSIS RISK ANALYSIS

Italian Motorway traffic vs AGL SalesAGL vs NA Traffic GrowthAGL vs Euro GDP Growth

Page 8: CFA Research Challenge -   Autogrill SpA - UniPV Team

EXPLOITING NEW MARKETS

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 20300

100

200

300

400

500

600

700

800

900

50

75

100

125

150

175

200

225

250

275

300

Revenues (mln $) Fees and Maintenance Costs (mln $) Passengers (mln)

mln

$

Pass

enge

rs

WHY TURKEY? May 2013: Istanbul 3rd international hub (2017, 90mln passengers) Geographical & economical bridge Up to 118 mln tourists in 2011 Corporate taxation: 20%

Page 9: CFA Research Challenge -   Autogrill SpA - UniPV Team

FINANCIAL ANALYSIS

Growth and Profitability

AGL Sales and Ebitda Margin Evolution

FY2009: Hurricane years => Sales: -6%

Flat sales in 2010-12: o F&B down by 2.5%o Tremendous growth

of TR&D +5.4%

Sales CAGR 2012-18E : 3.4%

Historical outperformance of the group

EBITDA margin 2012E : 9.6%

INVESTMENT SUMMARY COMPANY & INDUSTRY OVERVIEW VALUATIONFINANCIAL ANALYSIS RISK ANALYSIS

Page 10: CFA Research Challenge -   Autogrill SpA - UniPV Team

FINANCIAL ANALYSIS

INVESTMENT SUMMARY COMPANY & INDUSTRY OVERVIEW VALUATIONFINANCIAL ANALYSIS RISK ANALYSIS

AGL TR&DF Sales and EBITDA margin evolution AGL F&B Sales and EBITDA margin evolution

Upward trends from airport traffic: New emerging markets Presence at European hubs

Sales CAGR: 7.2 % Sales CAGR: 1 %

Stable Ebitda margin and growth: Struggling European markets Growth after 2014 (post-crisis)

Page 11: CFA Research Challenge -   Autogrill SpA - UniPV Team

FINANCIAL ANALYSIS

INVESTMENT SUMMARY COMPANY & INDUSTRY OVERVIEW VALUATIONFINANCIAL ANALYSIS RISK ANALYSIS

Debt Evolution and Maturity Profile

Covenants : ND/EBITDA < 3.5x EBITDA interest coverage ratio > 4.5x

FCFF

Acc. operating profit 2012-18e : EUR 1.9 bio Acc. operating cash flow 2012-18e : EUR 3.9 bio Cash Conversation rate : 50%

Page 12: CFA Research Challenge -   Autogrill SpA - UniPV Team

VALUATION

I.

III.

II.

50%: DCF valuation

40%: Peers comparison (Industrial & Financial)

10%: Real option

INVESTMENT SUMMARY COMPANY & INDUSTRY OVERVIEW VALUATIONFINANCIAL ANALYSIS RISK ANALYSIS

Page 13: CFA Research Challenge -   Autogrill SpA - UniPV Team

VALUATION

INVESTMENT SUMMARY COMPANY & INDUSTRY OVERVIEW VALUATIONFINANCIAL ANALYSIS RISK ANALYSIS

DCF ANALYSIS

WACC AssumptionsRisk Free Rate 3.4 % Implicit risk related to the geographical areas where AGL is present at

Market Risk Premium 6.7 % Implicit risk related to the geographical areas where AGL is present at

Beta 0.83 Regressed weekly returns of AGL stock against FTSE MIB INDEX

Cost Of Debt 5.45 % (4.7 %) Cost of debt equals to 5.45%, later expected to reduce to 4.7%

Debt/Equity 220% Renewal of Spanish contracts wil increase it to 230%, from 2014:166%

Tax Rate 31.4 % Weighted average of enterprise tax rates according to sales relevance

TWO-STAGES DCF:

Target price: EUR 11.3 (19.6% upside)

Period: 2012-2018

Long term growth rate: 1.5%

Long run WACC: 8.2%

FCFF

Page 14: CFA Research Challenge -   Autogrill SpA - UniPV Team

CENTRAL SCENARIOBEAR CASE

VALUATION

INVESTMENT SUMMARY COMPANY & INDUSTRY OVERVIEW VALUATIONFINANCIAL ANALYSIS RISK ANALYSIS

EUR 10.0Upside of 6.3%

BULL CASE

EUR 11.3Upside of 19.7%

EUR 12.6Upside of 33.1%

Page 15: CFA Research Challenge -   Autogrill SpA - UniPV Team

VALUATION

REAL OPTION: to capture information and opportunities and to strengthen DCF analysis.

Estimate assets’ market values by:

DCF at weighted cost of capital Using prices from the market

Application to valuation

Debt over Equity ratio 69 %

Enterprise Value EUR 3,944 million

Maturity of the debt 3.59

Risk free rate 3.4 %

Long term growth rate 1.5 %

Long term Wacc 8.1 %

TARGET PRICE:EUR 11.7

REAL OPTION

INVESTMENT SUMMARY COMPANY & INDUSTRY OVERVIEW VALUATIONFINANCIAL ANALYSIS RISK ANALYSIS

Page 16: CFA Research Challenge -   Autogrill SpA - UniPV Team

Very similar to AGL in terms of overall business

I. INDUSTRIAL PEERS

P/E multiple

PEERS COMPARISONVALUATION

INVESTMENT SUMMARY COMPANY & INDUSTRY OVERVIEW VALUATIONFINANCIAL ANALYSIS RISK ANALYSIS

2% 4% 6% 8% 10% 12% 14% 16% 18%0.00

5.00

10.00

15.00

20.00

25.00

SW

DUFN

AGL CPGf(x) = − 142.662006830195 x + 27.5422535373658R² = 0.944327034410394

P/E frw 2013 vs. EPS GROWTH

P/E forward '13 Linear (P/E forward '13)

Page 17: CFA Research Challenge -   Autogrill SpA - UniPV Team

Different business model

BUT listed in the same financial segment: Restaurant

Shares investors’ preferences

II. FINANCIAL PEERS

EV/EBITDA multiple

PEERS COMPARISONVALUATION

X YIntercept Ebitda % Sales growth Beta EV/SALES

AGL 1 9.2% 3.9% 0.85 0.63MCD 1 36.3% 6.1% 0.49 3.67SBUX 1 20.7% 11.2% 0.80 2.61YUM 1 20.5% 11.1% 0.69 2.20SW 1 7.0% 6.7% 0.45 0.61THI 1 24.1% 7.2% 0.24 2.36

BKW 1 60.5% 0.6% 1.00 7.60DRI 1 13.0% 7.1% 0.80 1.00

PNRA 1 17.9% 9.7% 0.99 1.86DNKN 1 52.5% 7.1% 1.00 7.67DUFN 1 15.9% 10.0% 1.07 1.40ARCO 1 8.4% 9.3% 1.34 0.78WTB 1 25.0% 10.1% 0.78 2.44EAT 1 13.9% 2.6% 0.94 1.03CPG 1 8.9% 5.1% 0.72 0.85DPZ 1 18.3% 2.8% 0.78 2.36

INVESTMENT SUMMARY COMPANY & INDUSTRY OVERVIEW VALUATIONFINANCIAL ANALYSIS RISK ANALYSIS

X1= Ebitda %

X2=Sales Growth

X3= Beta

StatisticsF=142R2=0.97

Page 18: CFA Research Challenge -   Autogrill SpA - UniPV Team

INVESTMENT SUMMARY COMPANY & INDUSTRY OVERVIEW VALUATIONFINANCIAL ANALYSIS RISK ANALYSIS

Very similar to AGL in terms of overall business

I. INDUSTRIAL PEERS

PEERS COMPARISONVALUATION

Different business model

BUT listed in the same financial segment: Restaurant

Shares investors’ preferences

II. FINANCIAL PEERS

P/E multiple EV/EBITDA multiple

TARGET PRICE:

EUR 11.2

Page 19: CFA Research Challenge -   Autogrill SpA - UniPV Team

RISK ANALYSIS

INVESTMENT SUMMARY COMPANY & INDUSTRY OVERVIEW VALUATIONFINANCIAL ANALYSIS RISK ANALYSIS

RISKS

Financial

Strategic

Operating

Page 20: CFA Research Challenge -   Autogrill SpA - UniPV Team

RISK ANALYSIS I.

INVESTMENT SUMMARY COMPANY & INDUSTRY OVERVIEW VALUATIONFINANCIAL ANALYSIS RISK ANALYSIS

FINANCIAL RISKS

INTEREST RATE RISK FOREIGN CURRENCY CREDIT RISK LIQUIDITY RISK

EFFECTS

40% fixed-rate debt 60% floating-rate debt

Sales: 32%: North-America 15% : UK

95% of sales comes from concessions

AGL’S

POLICY

Duration of concession portfolio = duration of the debt

Interest rate swaps

Matching assets & liabilities in currencies

Forward FX

End consumers‘ transactions are made in cash

Invoiced trade receivables => bank guarantees

Long contracts duration & high retention rates

Strong CF generation & flexibility on costs and capital expenditure

Page 21: CFA Research Challenge -   Autogrill SpA - UniPV Team

RISK ANALYSIS II.

STRATEGIC RISKS

TRAFFIC FLOWS MACROECONOMY

EFFECTS

High impact of traffic on sales

Effects traffic and well-being of people

AGL’S

POLICY

Channel diversification Constant innovation of products &

customer services Cost cutting to limit impacts on CF

INVESTMENT SUMMARY COMPANY & INDUSTRY OVERVIEW VALUATIONFINANCIAL ANALYSIS RISK ANALYSIS

Page 22: CFA Research Challenge -   Autogrill SpA - UniPV Team

RISK ANALYSIS III.

INVESTMENT SUMMARY COMPANY & INDUSTRY OVERVIEW VALUATIONFINANCIAL ANALYSIS RISK ANALYSIS

OPERATING RISKS

REPUTATION CONSUMPTION HABITS CONCESSION FEES CUSTOMER

SATISFACTIONSHOP

EFFECTIVENESS

RISKS

Not being able to satisfy contractual commitments (effects on retention rate & new contracts)

Effects of changes Influence on

profitability False predictions

of performance

Fail to keep service standards and products in line with customers’ expectations

Challenge to provide modern & appealing assortment

AGL’S

POLICY

Monitoring procedures & processes

Trainings to keep high standards

Review of methods & procedures

Wide range of products & brands

High flexibility to respond to changes

High importance on appraising & negotiating contracts

Constant R&D Quality control

(services & raw materials)

Effective & efficient supply chain management

Page 23: CFA Research Challenge -   Autogrill SpA - UniPV Team

FINAL REMARKS

Recommendation:

BUY (EUR 11.4)

Upside of +20%

Market leadership

Strong cash flow generation

Business diversification

Wide range of brand portfolio

INVESTMENT SUMMARY COMPANY & INDUSTRY OVERVIEW VALUATIONFINANCIAL ANALYSIS RISK ANALYSIS

Page 24: CFA Research Challenge -   Autogrill SpA - UniPV Team

Q & A SESSION

Page 25: CFA Research Challenge -   Autogrill SpA - UniPV Team

APPENDIX

Page 26: CFA Research Challenge -   Autogrill SpA - UniPV Team

SWOT ANALYSISSTRENGTHS WEAKNESSES

T&R presence is strategically positioned around the world in order to catch the most of air traffic

AGL works with a lot of brands, specially in the USA T&R is performing well despite the world economic crisis High concessions retention rate (80-85%), the losses are covered

by the new winnings Cash generated from AGL activities is instantly received and is used

for investments AGL invest on products and machineries innovation, collaborating

directly with the producers AGL is present in 37 countries and manages more than 5300 points

of sale in over 1200 locations AGL invests only after winning a concession: the company can

forecast in advance its returns AGL is a value company AGL T&R won new concessions in 2012, Spanish concessions 100%

retention rate

AGL margins depend on commoditires trends AGL F&B sensitive to electricity price Passengers flows, both in airports and motorways, are linked to oil

price F&B is sensitive to electricity price commodities trend AGL businesses are very exposed to uncontrollable macro-shocks A consistent part of AGL businesses is in ITA and SPA that have a

sluggish recover from crisis Bad performances on Italian motorways will last in the future Licensing strategy in the USA make the business subject to

increasing price of raw materials AGL does not hedge from the risk connected to oil price and raw

material increases

OPPORTUNITIES THREATS

New concession contracts or concessions expiring around the world

Potential expansion on high speed railways network Fairs and events around the world will make a lot of people travel Emerging markets growth could create new travelers flows The spin-off between F&B and T&R division could unleash the T&R

hidden value

If economic cycle is negative, AGL cut dividends meanwhile the competitors do not

Terrorism could negatively affect traffic, specially in airports Travelers trends became more volatile from 2008 onwards In 2016 we have the most, EUR 1,350 mln, of AGL debt reaching

maturity Crisis could be longer and heavier than expected in Italy and Spain Emerging markets law suit are different from western countries

and sometimes less transparent AGL is exposed to credit, market (cash flow future fluctuations)

and liquidity risks AGL is exposed to the changes in consumer tastes and their

consumption behavior AGL T&R division is exposed to changes in the cost of rents T&R in UK could suffer of exchange rate risk

Page 27: CFA Research Challenge -   Autogrill SpA - UniPV Team

AUTOGRILL

Food & Beverage RetailSituation Italian-listed company

Product mixFood & beverage, confectionary/food and other ancillary consumer goods

(books, CD, lottery) sold in the little store beside the bars and restaurants

Perfumes, wines and spirits, tobacco, confectionary/foods

Geographical mix

2011 Sales 44.2% were generated in US, 35% in Italy and the rest coming from

other European counties

2011 sales EUR1820m of which around 75% generated in Europe. T&R has been benefiting from the launch of Terminal 5

at Heathrow UK(47% of T&R sales)Well-positioned in western countries. Indirect exposure to emerging market

through European hubs (London, Madrid and Barcelona)Channel mix Present in airports (63%), motorways (30%), railways (2%), Others - high streets,

trade fair, museums and shopping centers(5%)Capex 3.4% - 4.8% of sales 1.8% - 5.4% of salesGrowth CAGR 2012-18E 1% CAGR 2012-18E 7.4% Focus on organic growthContract average 10-25 years 5-10 yearsSales share 69% 31%Sales FY12e EUR 4088mio EUR 2000mioEBITDA FY12e EUR 334.6mio EUR 252.6mioEBITDA margin 8.20% 12.60%

Competitors Compass, Sodexo, Restaurant Group, IMC, Cremonini, Farmi, Elior, SSP Dufry

Page 28: CFA Research Challenge -   Autogrill SpA - UniPV Team

BENCHMARKING WITH COMPETITORSTR&DF FOOD SERVICE

Benchmarking with Dufry Compass SodexoListed public company located in Switzerland. British multinational contract food service and

support servicesFrance company focus on quality of life

services

Higher exposure to luxury items (watches, jewellery,fashion and leather) perfumes & cosmetics. Low-margin products such as

newspapers, books and confectionary

Food service, facility management, service vouchers. Brands : Bon appetit management,

canteen vending, all leisure hospitality, rastaurant

On-site services 96% of group revenue: Flagship product in Meal & Food : Cheque

restaurant (France, Belgium and Chile). Alimentacao Pass (Brazil), Passlunch (Italy),

Meal Card (India), Restaurant Pass (Romania), Ramadan Gift Pass (Turkey)

Strong presence in America (75% of its revenues). Strong leadership in Brazil. Direct

exposure to emerging market in South, North and Central America

NA 43%, Continental Europe 24%, UK & Ireland 12%, RoW 21%.

Core business : Food

Present in North America 37%, Continental Europe 32%, RoW 19%, UK & Ireland 8%.

Strategy: food services, non-food vouchers, support services

Little exposure to motorways. 90% of its revenues coming from airports

Business and industry (41%), Education (16%), Healtchcare & Seniors (19%), Sports and

Leisure (11%), Defence (13%)Corporate (50%), Healthcare & seniors (27%),

Education (23%)3-4% of sales 1.5%-2% of sales 2% of sales

Proactive approach in new concessions and acquisitions (Hudson Group, Brasif and

InterBaires and Folli Follie)

Focus on expanding presence in the fast growing & emerging economies (currently 20%

of business) and cost efficiency. 2011: 9.2% revenue growth on a constant currency basis

Organic revenue driver : focus on large clients and integrated contracts. 2012e: revenue

growth target 7% p.a (JPM estimates)

Concession length 2009 : 3-5 years 41%, 6-9 years 24%, 10+ years 24%, 1-2 years 11% 94% group retention rate Client retention : 94%

8% share of the global travelLargest global food service operator (4% of its

addressable market, of which only 42% has shifted to outsourcing)

Second largest global food service operator

CHF 3182.8mio EUR 16095 EUR 16729mioCHF482mio EUR 1452mio EUR 1210mio

Higher EBITDA margin due to lower concession rents 8-9% 6-7%

Autogrill Sodexo, AGL and Aramark OSS : Compass group, AGL; MS :Edenred

Page 29: CFA Research Challenge -   Autogrill SpA - UniPV Team

P&L ACCOUNTP&L Account (Em) 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018ESales 5,844.6 6,088.4 6,287.5 6,545.8 6,835.3 7,125.6 7,405.7 7,676.7 %growth 2.5% 4.2% 3.3% 4.1% 4.4% 4.2% 3.9% 3.7%Other revenues 154 152.00 163.00 180.00 190.00 206.00 225.00 249.00 %sales 2.6% 2.5% 2.6% 2.7% 2.8% 2.9% 3.0% 3.2%Value of Production 5,998.6 6,240.4 6,450.5 6,725.8 7,025.3 7,331.6 7,630.7 7,925.7 Cost of Production -2,139.6 -2,190.6 -2,254.1 -2,334.8 -2,438.0 -2,541.6 -2,641.5 -2,738.1%revenue -35.7% -35.1% -34.9% -34.7% -34.7% -34.7% -34.6% -34.5%Gross Profit 3,859.0 4,049.8 4,196.4 4,391.0 4,587.3 4,790.0 4,989.2 5,187.5 % margin 66.0% 66.5% 66.7% 67.1% 67.1% 67.2% 67.4% 67.6%% growth 2.8% 4.9% 3.6% 4.6% 4.5% 4.4% 4.2% 4.0%Renting/royalties -1193.9 -1293.0 -1381.0 -1477.0 -1579.0 -1653.1 -1725.5 -1796.3Personnel Expense -1472.6 -1539.0 -1576.0 -1649.5 -1699.9 -1772.1 -1836.6 -1903.8Other Operating costs -575.5 -631.6 -663.5 -654.6 -661.3 -680.5 -705.0 -725.1EBITDA 617.0 586.2 575.9 609.9 647.0 684.2 722.0 762.2 % margin 10.6% 9.6% 9.2% 9.3% 9.5% 9.6% 9.7% 9.9%% growth 1.9% -5.0% -1.8% 5.9% 6.1% 5.8% 5.5% 5.6%Depreciation & Amortization -298.8 -330.0 -336.0 -354.0 -373.0 -391.0 -411.0 -433.0%sales 5.1% 5.4% 5.3% 5.4% 5.5% 5.5% 5.5% 5.6%EBIT 318.2 256.2 239.9 255.9 274.0 293.2 311.0 329.2 % margin 5.4% 4.2% 3.8% 3.9% 4.0% 4.1% 4.2% 4.3%% growth 14.4% -19.5% -6.4% 6.7% 7.1% 7.0% 6.1% 5.8%Net Financial expense -82.8 -89.1 -92.7 -90.9 -92.7 -93.8 -94.8 -97.6Pre-tax profit 234.7 167.1 147.2 165.0 181.3 199.4 216.3 231.6 Taxes -80.3 -52.5 -46.2 -51.8 -56.9 -62.6 -67.9 -72.7Tax rate 34.2% 31.4% 31.4% 31.4% 31.4% 31.4% 31.4% 31.4%Total profit 154.4 114.7 101.0 113.2 124.4 136.8 148.4 158.9 Minorities -12.8 -18.3 -18.9 -19.6 -20.5 -21.4 -22.2 -23.0Net Profit 141.6 96.4 82.1 93.6 103.9 115.4 126.2 135.9 Net margin 2.4% 1.6% 1.3% 1.4% 1.5% 1.6% 1.7% 1.8%% growth 85.5% -31.9% -14.8% 13.9% 11.0% 11.1% 9.3% 7.7%

Page 30: CFA Research Challenge -   Autogrill SpA - UniPV Team

BALANCE SHEETBalance Sheet (Em) 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018EIntangible assets 2154.5 2253.4 2339.5 2448.1 2583.8 2707.6 2829.0 2944.5Tangible assets 923.4 974.5 1018.8 1073.5 1134.7 1197.0 1259.0 1318.9Fin. Assets 26.5 26.5 26.5 26.5 26.5 26.5 26.5 26.5Total Fixed Assets 3,104.4 3,254.4 3,384.8 3,548.1 3,744.9 3,931.1 4,114.5 4,289.9 Inventory 266 275.9 288.6 300.2 313.2 326.2 338.9 352.2Receivables 53.5 60.9 69.2 78.5 88.9 99.8 162.9 184.0Other receivables 227.9 243.6 257.8 274.9 293.9 313.5 333.3 352.7Payable -632.4 -657.0 -685.5 -711.2 -740.4 -764.3 -792.5 -821.7Other liabilities -406.2 -418.3 -433.0 -445.6 -460.4 -474.6 -488.4 -502.7Total NWC -491.2 -494.8 -502.8 -503.2 -504.7 -499.5 -445.8 -435.5Invested Capital 2613.2 2759.6 2882.0 3045.0 3240.2 3431.6 3668.8 3854.4Risk fund provisions -66.5 -91.4 -94.3 -98.2 -102.5 -106.9Severance fund and other -194.5 -182.7 -188.7 -196.4 -205.1 -213.8 -222.2 -230.0Asset held for sales 0 0 0 0 0 0 0NET CAPITAL EMPLOYED 2352.1 2485.5 2599.0 2750.4 2932.6 3111.0 3335.5 3509.3

Group Net equity 779.8 829.9 844.7 944.2 1051.2 1166.6 1327.4 1396.6Minorities 19.6 21.3 21.7 24.2 27.0 29.9 34.0 35.8Total Net Equity 799.4 851.2 866.3 968.5 1,078.2 1,196.5 1,361.4 1,432.4Convertible bonds 0 0 0 0 0 0 0 0L T Liabilities 1568.6 1650.9 1750.3 1800.1 1873.3 1933.9 1994.2 2098.1L T LIABILITY 1568.6 1639.4 1741.5 1796.4 1871.4 1933.9 1998.0 2106.3S T Liabilities 214.2 237.0 247.8 249.5 257.8 264.1 268.5 278.3Liquidity and loans -230 -242.1 -256.6 -263.9 -274.7 -283.6 -292.4 -307.6S T LIABILITY -15.8 -5.1 -8.9 -14.5 -16.9 -19.5 -23.9 -29.3NFP 1,552.8 1,634.3 1,732.7 1,782.0 1,854.4 1,914.4 1,974.1 2,076.9TOTAL SOURCES 2352.2 2485.5 2599.0 2750.4 2932.6 3111.0 3335.5 3509.3

Page 31: CFA Research Challenge -   Autogrill SpA - UniPV Team

CASH FLOW

Cash Flow (Em) 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018EGroup Net Sales 5,844.6 6,088.4 6,287.5 6,545.8 6,835.3 7,125.6 7,405.7 7,676.7 % change YoY 2.5% 4.2% 3.3% 4.1% 4.4% 4.2% 3.9%Group EBITDA 617.0 586.2 575.9 609.9 647.0 684.2 722.0 762.2 % margin 10.6% 9.6% 9.2% 9.3% 9.5% 9.6% 9.7% 9.9%% change YoY 1.9% -5.0% -1.8% 5.9% 6.1% 5.8% 5.5%D&A 298.8 330.0 336.0 354.0 373.0 391.0 411.0 433.0 % of sales 5.1% 5.4% 5.3% 5.4% 5.5% 5.5% 5.5% 5.6%Group EBIT 318.2 256.2 239.9 255.9 274.0 293.2 311.0 329.2 % margin 5.4% 4.2% 3.8% 3.9% 4.0% 4.1% 4.2% 4.3%% change YoY 6.0% -19.5% -6.4% 6.7% 7.1% 7.0% 6.1%Taxes -80.3 -80.4 -75.3 -80.4 -86.0 -92.1 -97.7 -103.4Theoretical tax rate 34.2% 31.4% 31.4% 31.4% 31.4% 31.4% 31.4% 31.4%NOPLAT 237.9 175.8 164.6 175.5 188.0 201.2 213.4 225.9 D&A and other provisions 298.8 330.0 336.0 354.0 373.0 391.0 411.0 433.0 Gross Operating Cash Flow 536.7 505.8 500.6 529.5 561.0 592.2 624.4 658.9 Capex -209.4 -273 -220 -258 -275 -290 -310 -327% of sales -3.6% -4.5% -3.5% -3.9% -4.0% -4.1% -4.2% -4.3%Change in NWC -98.9 -3.6 -8.0 -0.4 -1.6 5.2 53.7Free Cash Flow to Firm 228.4 236.4 288.6 271.9 287.5 296.9 260.7 321.6

Page 32: CFA Research Challenge -   Autogrill SpA - UniPV Team

P&L – FOOD & BEVERAGE

P&L F&B (Em) 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018ESales F&B division 4027.8 4023.8 4088.0 4095.0 4140.5 4215.0 4277.4 4330.8 4381.5% growth 6.4% -0.1% 1.6% 0.2% 1.1% 1.8% 1.5% 1.3% 1.2%% of AGL group sales 70.6% 68.8% 67.1% 65.1% 63.3% 61.7% 60.0% 58.5% 57.1%Other revenues 96.9 114 103.6 90.1 103.5 113.8 115.5 112.6 113.9% sales 2.4% 2.8% 2.5% 2.2% 2.5% 2.7% 2.7% 2.6% 2.6%Cost of production -1356.1 -1374.5 -1443.0 -1474.2 -1455.8 -1458.1 -1467.1 -1468.2 -1474.4% sales -33.7% -34.2% -35.3% -36.0% -35.2% -34.6% -34.3% -33.9% -33.7%Rents and royalties -644.2 -642 -735.2 -776.2 -768.1 -788.2 -808.4 -831.5 -850.0% sales -16.0% -16.0% -18.0% -19.0% -18.6% -18.7% -18.9% -19.2% -19.4%Personnel expense -1240.4 -1256.6 -1194.9 -1156.0 -1230.9 -1274.2 -1293.0 -1317.8 -1337.6% sales -30.8% -31.2% -29.2% -28.2% -29.7% -30.2% -30.2% -30.4% -30.5%Other operating costs -445.2 -450.9 -458.1 -455.4 -459.3 -472.2 -481.4 -476.6 -477.4% sales -11.1% -11.2% -11.2% -11.1% -11.1% -11.2% -11.3% -11.0% -10.9%EBITDA 438.8 413.8 360.3 323.3 329.9 336.2 342.9 349.3 356.0Corporate cost -27.2 -25.3 -25.7 -25.7 -26.0 -26.5 -26.9%sales -0.7% -0.6% -0.6% -0.6% -0.6% -0.6% -0.6% -0.6% -0.6%EBITDA after corporate cost 411.6 388.5 334.6 297.6 303.9 309.7 316.0 322.1 328.4

EBITDA Margin 10.2% 9.7% 8.2% 7.3% 7.3% 7.3% 7.4% 7.4% 7.5%EBITDA growth -5.5% -5.6% -13.9% -11.1% 2.1% 1.9% 2.0% 1.9%

Page 33: CFA Research Challenge -   Autogrill SpA - UniPV Team

P&L – TRAVEL RETAIL & DUTY FREE

P&L TR&DF (Em) 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E

Sales TR&DF division 1675.7 1820.8 2000.0 2192.5 2405.0 2630.0 2858.8 3086.1 3305.2

% growth 8.9% 8.7% 9.8% 9.6% 9.7% 9.4% 8.7% 7.9% 7.1%

% of AGL group sales 29.4% 31.2% 32.8% 34.9% 36.7% 38.5% 40.1% 41.7% 43.1%

Other revenues 31.4 24.1 28.0 31.8 36.1 40.8 45.7 50.9 59.2

% sales 1.9% 1.3% 1.4% 1.5% 1.5% 1.6% 1.6% 1.7% 1.8%

Cost of production -733.8 -765.1 -844.0 -926.3 -1014.9 -1109.9 -1203.0 -1296.2 -1388.2

% sales -43.8% -42.0% -42.2% -42.3% -42.2% -42.2% -42.1% -42.0% -42.0%

Rents and royalties -505.7 -551.2 -608.9 -667.0 -732.9 -802.2 -872.0 -941.6 -1008.5

% sales -30.2% -30.3% -30.4% -30.4% -30.5% -30.5% -30.5% -30.5% -30.5%

Personnel expense -180.6 -192.4 -208.0 -229.1 -251.3 -275.4 -300.2 -324.3 -347.4

% sales -10.8% -10.6% -10.4% -10.5% -10.5% -10.5% -10.5% -10.5% -10.5%

Other operating costs -93.4 -107.8 -114.4 -123.9 -136.7 -146.4 -160.7 -173.5 -183.5

% sales -5.6% -5.9% -5.7% -5.7% -5.7% -5.6% -5.6% -5.6% -5.6%

EBITDA 193.6 228.4 252.6 277.9 305.3 337.0 368.7 401.4 436.9

EBITDA Margin 11.6% 12.5% 12.6% 12.7% 12.7% 12.8% 12.9% 13.0% 13.2%EBITDA growth 29.5% 18.0% 10.6% 10.0% 9.8% 10.4% 9.4% 8.9%

Page 34: CFA Research Challenge -   Autogrill SpA - UniPV Team

DEBT STRUCTUREDebt Issue Available

AmountOriginal

Tenor Maturity Rate Drawn(as of 30/09/12) Covenants

Private Placement Jan-03 $266m 10 years Jan-13 Fixed 6.01% $266m Ebitda interest coverage > 4.5x;

Net debt/Ebitda < 3.5

May-07 $150m 10 years May-17 Fixed 5.73% $150m Jan-03 $60m 8 years Jan-11 Fixed 5.66% $60m Term Loan Mar-08 E275 5 years Mar-13 Floating E275 Mar-08 GBP398 5 years Mar-13 Floating GBP398

Jun-05 €200m 10 years Jun-15Floating (Euribor) 3 months + 0.75%

b.p€200m Ebitda interest

coverage > 4.5x

Net debt/Ebitda < 3.5

Syndicated revolving credit facilities Jun-12 €200m 17 months Nov-13 Floating (Euribor) 0

Ebitda interest coverage > 4.5x;

Net debt/Ebitda < 3.5

Jun-05 E300 7 years Jun-12Floating (Euribor) 3 months + 0.35%

b.p0

Autogrill Spa Jul-11 €700m 5 years Jul-16 Floating (Euribor) €294m + GBP

31m + $250m May-07 E500 7 years May-14 Floating $60m + E355m

WDF Group SA Jul-11 €650m 5 years Jul-16 Floating (Euribor) Ebitda interest coverage > 4.5x

Net debt/Ebitda < 3.5

Mar-08 E125m 5 years Mar-13 Floating GBP20m

Page 35: CFA Research Challenge -   Autogrill SpA - UniPV Team

DEBT COMPOSITIONDEBT IN CURRENCY DEBT RATE

Page 36: CFA Research Challenge -   Autogrill SpA - UniPV Team

DEBT RATIO

Debt Key Ratios 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018ENet Debt/EBITDA (x) 2.52 2.79 3.01 2.92 2.87 2.80 2.73 2.72Coverage Ratio (x) 3.84 2.89 2.52 2.76 2.89 3.06 3.23 3.36Net Debt/Equity (x) 1.94 1.92 2.00 1.84 1.72 1.60 1.45 1.45Debt/Equity (x) 2.23 2.20 2.30 2.11 1.97 1.84 1.66 1.66(EUR)m 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018ETotal Debt 1782.8 1876.4 1989.3 2045.9 2129.1 2198.0 2266.5 2384.6Total Net Debt 1552.8 1634.3 1732.7 1782.0 1854.4 1914.4 1974.1 2076.9Cash 230.0 242.1 256.6 263.9 274.7 283.6 292.4 307.6Cost of debt 5.3% 5.5% 5.4% 5.1% 5.0% 4.9% 4.8% 4.7%

Page 37: CFA Research Challenge -   Autogrill SpA - UniPV Team

RAW MATERIALS’ COSTS

Page 38: CFA Research Challenge -   Autogrill SpA - UniPV Team

DCF - BULL CASEDCF Bull case

(EUR mln) 2012 2013 2014 2015 2016 2017 2018Sales Rev Turn 6088.4 6340.0 6645.8 6959.3 7265.5 7563.4 7850.8Growth 4.1% 4.8% 4.7% 4.4% 4.1% 3.8%Ebitda 586.80 595.00 639.00 688.00 737.45 784.33 831.40Growth 1.4% 7.4% 7.7% 7.2% 6.4% 6.0%Ebitda margin 9.64% 9.38% 9.62% 9.89% 10.15% 10.37% 10.59%Amortization & other provisions 329.7 330.0 347.0 363.0 379.3 393.3 406.7Amortization & Other/Capex 5.4% 5.2% 5.2% 5.2% 5.2% 5.2% 5.2%Ebit 257.06 265.00 292.00 325.00 358.19 391.03 424.73Growth 3.1% 10.2% 11.3% 10.2% 9.2% 8.6%Ebit margin 4.22% 4.18% 4.39% 4.67% 4.93% 5.17% 5.41%Capex 273 265 285 300 315 335 360Capex /Sales 4.5% 4.2% 4.3% 4.3% 4.3% 4.4% 4.6%Free Operating CF 236.7 254.8 262.7 287.6 304.8 272.8 327.8FCFF ps 0.93 1.00 1.03 1.13 1.20 1.07 1.29

Wacc calculationsYears 2012 2013 2014 2015 2016 2017 2018Risk free rate 3.4% 3.5% 3.6% 3.7% 3.8% 3.9% 4.0%Beta Equity 0.82 0.84 0.86 0.88 0.9 0.92 0.93Mkt risk premium 6.7% 6.6% 6.5% 6.4% 6.3% 6.2% 6.0%Cost of Equity 8.9% 9.0% 9.2% 9.4% 9.5% 9.5% 9.7%Tax Rate 31.4% 31.4% 31.4% 31.4% 31.4% 31.4% 31.4%Debt/ Equity 220.0% 230.0% 205.0% 192.0% 181.0% 166.0% 150.0%Cost of debt 5.45% 5.25% 5.10% 4.95% 4.80% 4.71% 4.60%WACC 7.9% 7.9% 8.0% 8.0% 8.0% 8.1% 8.1%Discount Rate 0.93 0.86 0.79 0.74 0.68 0.63

Valuation SummaryCur Mkt Cap 2404Curr Entp Val 3944Eqy Sh Out (mln) 254Long Term Growth Rate 2.0%Long Term WACC 8.1%Net Financial pos. (mln) 1540Cumulated FCF ps 2017 5.15Terminal Value 21.5Discount Rate TV 8.1%Discounted Terminal Value 13.5

Cumulated DCF 18.6Equity Value ps 12.6Price as date 9.45Upside/(downside) 33.20%

Page 39: CFA Research Challenge -   Autogrill SpA - UniPV Team

DCF - BEAR CASEDCF Bear case

(EUR mln) 2012 2013 2014 2015 2016 2017 2018

Sales Rev Turn 6088.3 6200 6340.8 6510.3 6666.5 6815.9 6954.9Growth 1.8% 2.3% 2.7% 2.4% 2.2% 2.0% Ebitda 586.00 555.00 571.00 591.00 609.99 627.75 644.72Growth -5.3% 2.9% 3.5% 3.2% 2.9% 2.7%Ebitda margin 9.62% 8.95% 9.01% 9.08% 9.15% 9.21% 9.27%Amortization & other provisions 325 325 329 336 343 350 355Amortization& Other/Capex 5.3% 5.2% 5.2% 5.2% 5.2% 5.1% 5.1%Ebit 260.88 230.00 242.00 255.00 266.66 278.09 289.33Growth -11.8% 5.2% 5.4% 4.6% 4.3% 4.0%Ebit margin 4.28% 3.71% 3.82% 3.92% 4.00% 4.08% 4.16%Capex 272 201 190 198 209 219 231Capex /Sales 4.5% 3.2% 3.0% 3.0% 3.1% 3.2% 3.3%Free Operating CF 235.7 289.8 305.4 314.5 312.1 267.7 308.7FCFF ps 0.93 1.14 1.20 1.24 1.23 1.05 1.22

Wacc calculationsYears 2012 2013 2014 2015 2016 2017 2018Risk free rate 3.4% 3.5% 3.6% 3.7% 3.8% 3.9% 4.1%Beta Equity 0.82 0.84 0.86 0.88 0.9 0.92 0.93Mkt risk premium 6.7% 6.6% 6.5% 6.4% 6.3% 6.2% 6.0%Cost of Equity 8.9% 9.1% 9.3% 9.4% 9.5% 9.6% 9.7%Tax Rate 31.4% 31.4% 31.4% 31.4% 31.4% 31.4% 31.4%Debt/ Equity 220.0% 230.0% 221.0% 215.0% 212.0% 205.0% 192.0%Cost of Debt 5.5% 5.4% 5.4% 5.3% 5.3% 5.2% 5.1%WACC 8.0% 8.0% 8.1% 8.1% 8.1% 8.2% 8.2%Discount Rate 0.93 0.86 0.79 0.73 0.68 0.63

Valuation SummaryCur Mkt Cap 2404Curr Entp Val 3944Eqy Sh Out (mln) 254Long Term Growth Rate 1.0%Long Term WACC 8.2%Net Financial pos. (mln) 1540Cumulated FCF ps 2017 5.43Terminal Value 17.1Discount Rate TV 8.2%Discounted Terminal Value 10.7

Cumulated DCF 16.1Equity Value ps 10.04Price as date 9.45Upside/(downside) 6.27%

Page 40: CFA Research Challenge -   Autogrill SpA - UniPV Team

DCF – CENTRAL SCENARIO (WACC CALCULATIONS)

Valuation SummaryCur Mkt Cap 2.404Curr Entp Val 3.944Eqy Sh Out (mln) 254.4Long Term Growth Rate 1.5%Long Term WACC 8.1%Net Financial pos. (mln) 1.54Cumulated FCF ps 2017 5.21Terminal Value 19.3Discount Rate TV 8.2%Discounted TV 12.1Cumulated DCF 17.2Equity Value ps 11.3Price as date 9.45Upside/(downside) 19.66%

Wacc calculationsYear 2012 2013 2014 2015 2016 2017 2018Free Risk Rate 3.4% 3.5% 3.6% 3.7% 3.8% 3.9% 4.0%Beta Equity 0.82 0.84 0.86 0.88 0.9 0.92 0.93Mkt Risk Premium 6.7% 6.6% 6.5% 6.4% 6.3% 6.2% 6.0%Cost of Equity 8.9% 9.0% 9.2% 9.4% 9.5% 9.6% 9.8%Beta Leveraged 2.06 2.17 2.07 2.97 2.04 1.97 1.99Cost of Equity 17.2% 17.8% 17.4% 17.0% 16.6% 16.0% 16.2%Tax Rate 31.4% 31.4% 31.4% 31.4% 31.4% 31.4% 31.4%Debt/ Equity 220.0% 230.0% 211.0% 197.0% 184.0% 166.0% 166.0%Debt / D+E 68.8% 69.7% 67.8% 66.3% 64.8% 62.4% 62.4%Cost of debt 5.5% 5.4% 5.1% 5.0% 4.9% 4.8% 4.7%Wacc 7.9% 7.9% 8.0% 8.0% 8.0% 8.1% 8.1%Compound Wacc 7.9% 16.5% 25.9% 36.0% 47.0% 58.8%Discount Rate 0.93 0.86 0.79 0.74 0.68 0.63

AGL DCF (m €) 2012 2013 2014 2015 2016 2017 2018Sales Rev Turn 6088.4 6287.5 6545.8 6835.3 7126.6 7406.7 7677.7Growth 3.3% 4.1% 4.4% 4.2% 3.9% 3.6%Ebitda 586.80 575.00 609.00 647.00 684.73 722.35 762.59Growth -2.0% 5.9% 6.2% 5.8% 5.6% 5.5%Ebitda margin 9.64% 9.15% 9.30% 9.47% 9.60% 9.75% 9.92%Amortization&other provisions 330 336 354 373 391 411 433Amortization & other / Capex 5.4% 5.3% 5.4% 5.5% 5.5% 5.6% 5.6%Ebit 257.98 239.80 255.12 274.20 292.28 311.86 328.53Growth -9.0% 6.9% 7.3% 6.8% 6.5% 6.3%Ebit margin 4.22% 3.81% 3.90% 4.01% 4.11% 4.20% 4.28%Capex 273 220 258 275 290 310 327Capex /Sales 4.5% 3.5% 3.9% 4.0% 4.1% 4.2% 4.3%Change in Net Working Capital (3.6) (8.0) (0.4) (1.6) 5.2 53.7 10.2Change in NWCapital / Sales -0.06% -0.13% -0.01% -0.02% 0.07% 0.72% 0.13%Free Operating Cash Flow 237 288 271 288 297 261 321FCFF ps 0.93 1.13 1.07 1.13 1.17 1.02 1.26

Page 41: CFA Research Challenge -   Autogrill SpA - UniPV Team

DCF - FOOD & BEVERAGEDCF Bear case

(EUR mln) 2012 2013 2014 2015 2016 2017 2018Sales Rev Turn 4088.0 4095.0 4140.5 4215.0 4277.4 4330.8 4381.5Growth 0.2% 1.1% 1.8% 1.5% 1.3% 1.2% Ebitda 334.00 297.50 303.80 310.00 316.10 322.22 328.18Growth -10.9% 2.1% 2.0% 2.0% 1.9% 1.8%Ebitda margin 8.17% 7.26% 7.34% 7.35% 7.39% 7.44% 7.49%Amortization & other provisions 197 186 189 191 193 196 199

Amortization& Other/Capex 4.8% 4.5% 4.6% 4.5% 4.5% 4.5% 4.5%

Ebit 137.48 111.50 114.90 119.20 123.19 126.46 129.25Growth -18.9% 3.0% 3.7% 3.3% 2.7% 2.2%Ebit margin 3.36% 2.72% 2.78% 2.83% 2.88% 2.92% 2.95%Capex 237 180 188 180 172 161 152Capex /Sales 5.8% 4.4% 4.5% 4.3% 4.0% 3.7% 3.5%Free Operating CF 48.9 68.5 66.6 81.3 81.0 99.0 123.9FCFF ps 0.19 0.27 0.26 0.32 0.32 0.39 0.49

Wacc calculationsYears 2012 2013 2014 2015 2016 2017 2018Risk free rate 3.4% 3.5% 3.6% 3.7% 3.8% 3.9% 4.0%Beta Equity 0.82 0.84 0.86 0.88 0.9 0.92 0.93Mkt risk premium 6.7% 6.6% 6.5% 6.4% 6.3% 6.2% 6.0%Cost of Equity 8.9% 9.0% 9.2% 9.4% 9.5% 9.6% 9.7%Tax Rate 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0%Debt/ Equity 220.0% 230.0% 205.0% 192.0% 181.0% 165.0% 155.0%Cost of Debt 5.5% 5.4% 5.1% 5.0% 4.9% 4.8% 4.7%WACC 7.7% 7.7% 7.7% 7.8% 7.8% 7.9% 7.9%Discount Rate 0.93 0.86 0.80 0.74 0.69 0.64

Valuation SummaryCur Mkt Cap 1603Curr Entp Val 2604Eqy Sh Out (mln) 1.0Long Term Growth Rate 7.9Long Term WACC 1000Net Financial pos. (mln) 1.55Cumulated FCF ps 2017 7.19Terminal Value 7.9Discount Rate TV 4.53Discounted TV 6.11Cumulated DCF 2.17Equity Value ps 1603Price as date 2604Upside/(downside) 1.0

Page 42: CFA Research Challenge -   Autogrill SpA - UniPV Team

DCF - TRAVEL RETAIL & DUTY FREEDCF Bear case

(EUR mln) 2012 2013 2014 2015 2016 2017 2018Sales Rev Turn 2000.0 2192.5 2405.0 2630.0 2858.8 3086.1 3305.2Growth 9.6% 9.7% 9.4% 8.7% 8.0% 7.1% Ebitda 252.40 278.00 305.80 337.00 368.50 400.88 434.63Growth 10.1% 10.0% 10.2% 9.3% 8.8% 8.4%Ebitda margin 12.62% 12.68% 12.72% 12.81% 12.89% 12.99% 13.15%Amortization & other provisions 133 150 165 182 198 215 234

Amortization& Other/Capex 6.7% 6.8% 6.9% 6.9% 6.9% 7.0% 7.1%

Ebit 119.00 128.50 141.00 155.40 170.39 185.47 200.29Growth 8.0% 9.7% 10.2% 9.6% 8.9% 8.0%Ebit margin 5.95% 5.86% 5.86% 5.91% 5.96% 6.01% 6.06%Capex 36 40 70 95 128 149 170Capex /Sales 1.8% 1.8% 2.9% 3.6% 4.5% 4.8% 5.1%Free Operating CF 183.1 182.0 174.3 173.5 167.8 174.9 183.6FCFF ps 0.72 0.72 0.69 0.68 0.66 0.69 0.72

Wacc calculationsYears 2012 2013 2014 2015 2016 2017 2018Risk free rate 3.4% 3.5% 3.6% 3.7% 3.8% 3.9% 4.0%Beta Equity 0.82 0.84 0.86 0.88 0.9 0.92 0.93Mkt risk premium 6.7% 6.6% 6.5% 6.4% 6.3% 6.2% 6.0%Cost of Equity 8.9% 9.0% 9.2% 9.4% 9.5% 9.6% 9.7%Tax Rate 28.0% 28.0% 28.0% 28.0% 28.0% 28.0% 28.0%Debt/ Equity 220.0% 230.0% 215.0% 210.0% 200.0% 191.0% 188.0%Cost of Debt 5.45% 5.35% 5.10% 5.00% 4.90% 4.80% 4.75%WACC 8.2% 8.2% 8.2% 8.2% 8.2% 8.3% 8.3%Discount Rate 0.92 0.85 0.79 0.73 0.67 0.62

Valuation SummaryCur Mkt Cap 801Curr Entp Val 1341Eqy Sh Out (mln) 2.7%Long Term Growth Rate 8.3%Long Term WACC 540Net Financial pos. (mln) 3.17Cumulated FCF ps 2017 12.7Terminal Value 8.3%Discount Rate TV 8.07Discounted TV 11.2Cumulated DCF 9.12Equity Value ps 801Price as date 1341Upside/(downside) 2.7%

Page 43: CFA Research Challenge -   Autogrill SpA - UniPV Team

REAL OPTION

DCF real option 2012 2013 2014 2015 2016 2017 2018 FCF ps 0.93 1.13 1.07 1.13 1.17 1.02 1.26Wacc 7.9% 7.9% 7.9% 8.0% 8.0% 8.1% 8.1%Compound Cost of Equity 7.9% 16.5% 25.9% 36.0% 47.0% 58.5%

Discount Rate 0.93 0.86 0.79 0.74 0.68 0.63DCF EVALUATION Discounted Cash Flow 1.05 0.92 0.90 0.86 0.70 0.79

Cumulated 1.05 1.96 2.86 3.72 4.42 5.21

VALUATIONCumulated FCF ps 2018 5.21Discounted Terminal Value 12.1Cumulated DCF 17.36Price (S) 17.36Strike (K) 6.3Expiration Date 09.17.2016Volatility 11.8%LN (S/K) 1.022d1 5,150d2 4,926N(d1) 1,000N(d2) 1,000Call Price 11.75

Page 44: CFA Research Challenge -   Autogrill SpA - UniPV Team

PORTFOLIO STRUCTURE

COMPANY NAME MKT CAP (MLN €) WEIGHT

AUTOGRILL 2404 7.45%DUFRY 3072 9.52%

SODEXO 10473 32.45%COMPASS 16322 50.58%

TOTAL 32271 100.00%

BETA STATISTICS

BETA ALPHA 1.21 0.00STD ERROR 0.13 0.00R^2 - STD ERROR ESTIMATION Y 0.32 0.04STATISTIC F – DEGREE OF FREEDOM 94.16 202.00

SS REGRESSION – SS RESIDUALS 0.12 0.27

Page 45: CFA Research Challenge -   Autogrill SpA - UniPV Team

MULTIPLES

Page 46: CFA Research Challenge -   Autogrill SpA - UniPV Team

MULTIPLES

Page 47: CFA Research Challenge -   Autogrill SpA - UniPV Team

BOARD OF DIRECTORS & SHAREHOLDERS STRUCTURE

Executive

Non Executive

Independent

for Code

Independent

for T.U.F.

Board of directors

Internal control &

Corp. Gov.

Commitee

Human resources Committe

e

Strategy &Investm

ents Committe

e

Related-party

Transaction

Commitee

X Benetton Gilberto Chairman

X Tondato Da Ruos Gianmario Chief Executive Officer

X Benetton Alessandro Director

X X X Barracco Alessandro Director X

X X X Camuffo Arnaldo Director X

X X X Giavazzi Francesco Director X

X X X Jesi Marco Director X

X X X Malguzzi Alfredo Director X X X

X X X Mangiagalli Marco Lead Director X X

X Mion Gianni Director X

X X X Orlando Stefano Director X X

X Roverato Paolo Director X X

Page 48: CFA Research Challenge -   Autogrill SpA - UniPV Team

INVESTMENT SUMMARY COMPANY & INDUSTRY OVERVIEW VALUATIONFINANCIAL ANALYSIS RISK ANALYSIS

GEOGRAPHICAL PRESENCE

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Page 49: CFA Research Challenge -   Autogrill SpA - UniPV Team

DISTRIBUTION CHANNELS

INVESTMENT SUMMARY COMPANY & INDUSTRY OVERVIEW VALUATIONFINANCIAL ANALYSIS RISK ANALYSIS

47%44%

4%5%

F&B Sales breakdown

Airports Motorways Railway stationsOthers

98%

2%TR&DF Sales breakdown

Airports Motorways

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Page 50: CFA Research Challenge -   Autogrill SpA - UniPV Team

BRAND AND PRODUCT PORTFOLIO

FOOD & BEVERAGE TRAVEL RETAIL & DUTY FREE

Property Licenced

INVESTMENT SUMMARY COMPANY & INDUSTRY OVERVIEW VALUATIONFINANCIAL ANALYSIS RISK ANALYSIS

BRAN

DSPR

ODU

CTS First and second dishes

Salads Desserts Coffee

Spirits Cigars and cigarettes Fashion brand glasses, jewelrys Perfums and cosmetics Chocolate and food Travel essentials BACK