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Premium players expected to increasingly expand into lower price segments Feedback from the IDS 2013 in Cologne NOBEL BIOCARE Bloomberg Rating Price Price Target

STRAUMANN NOBN SW SELL CHF 9.9 CHF 6.6 (6.6)

Bloomberg Rating Price Price Target

STMN SW HOLD CHF 128 CHF 116 (115)

The biennial International Dental Show (IDS), the world's leading trade fair for the dental sector took place from March 12-16 in Cologne. Approx. 125,000 visitors and 2,058 suppliers were present (vs. approx. 115,000 visitors and 1,956 suppliers at the IDS 2011). Conclusion: Low growth and price pressure require expansion of premium players into lower price segments  We view companies’ expectations of a return to high single-digit growth for the premium dental implant market as too bullish. We see a continuation of subdued growth in the lower single-digits, due to: 1) the sluggish economy, 2) increasing competition from value/discount players, 3) no breakthrough product innovations and consequent price increases, and 4) ongoing saturation of certain markets.  In the value/discount segment (approx. 40% of the overall global dental implant market in value), growth rates are expected to be higher and will be driven by increasing demand from price-conscious dentists in developed countries with economic difficulties.  We therefore see an expansion into lower price segments as the only viable alternative for premium players to achieve attractive growth rates going forward.  Currently, premium players still seem reluctant to expand into lower price segments on a larger scale, as they are afraid of cannibalizing their premium sales and diluting their Group margins by offering lower priced dental implant systems. We think that cannibalization can be kept at a low level, if the lower priced dental implants are clearly differentiated from the higher priced ones. If Selling & Marketing costs of the lower priced dental implant system can be kept at a low level, we do not necessarily see a dilution of the overall Group EBIT margin.  If premium players refrain from increasingly expanding into lower price segments, we think they will sooner or later be inclined to give more discounts on their premium implants (driven by increasing competitive pressure from the value/discount players) and will thereby risk their price premium and their high margins. We therefore consider the launch of a clearly differentiated, lower priced dental implant system, under the same brand, and using the existing sales force, a sensible strategy.  Instead of coming up with a long-term strategy on how to further expand into lower price segments, both companies, Nobel Biocare and Straumann, have started to cut costs, which will only support EBIT margins and share price in the short- to mid-term. As both companies do not yet seem to have a clear strategy regarding increasing expansion into lower price segments, we see downside potential for their share price.  We have left our estimates unchanged. The slight increase of the Straumann Price Target (from CHF 115 to CHF 116) is only due to the rolling forward of our valuation model. Only little growth in the premium segment expected going forward  Since the financial crisis in 2008, the premium segment (consisting of the 5 premium dental implant manufacturers: Straumann, Nobel Biocare, Dentsply, Zimmer, and Biomet 3i; representing approx. 60% of the overall global dental implant market in value and approx. 40% in units) of the global dental implant market has shown negative to low single-digit growth.  As the value and particularly the discount segment of the dental implant market consist of many small, local and private companies, no detailed figures for these segments are available. It is though widely acknowledged that during the last few years, growth in these segments has been higher than in the premium segment.  Both Straumann and Nobel Biocare strongly defend their business against value/discount players. Straumann recently won a legal case against Medentis (German discounter), who misleadingly claimed its dental implants had a hydrophilic surface and must now retract this claim. At their IDS analyst and investor presentation, Nobel Biocare showed results of a study comparing a “premium” implant to a “discount” implant, showing that the low-price implant had a significantly higher failure rate than the higher priced implant (low-price implant: 8.2%, higher priced implant: 4.3%).  Most industry players, we talked to at IDS, agreed that there will only be little growth in the premium segment going forward. In the value/discount segment, growth rates are expected to be higher and will be driven by increasing demand from price-conscious dentists in developed countries with economic difficulties. We therefore see an expansion into lower price segments as the only viable alternative for premium players to achieve attractive growth rates going forward.

Gina Francioli (gfr@bellevue.ch) .

22 March 2013


Expansion into lower price segments seems inevitable for premium players  We see two alternatives for a premium player to enter lower price segments: 1) acquire an additional value/discount brand and sell the lower priced implant system through a dedicated sales force (multi-brand strategy) or 2) launch an additional, lower priced dental implant system under the existing premium brand, leveraging on the existing sales force.  So far, most premium players have opted for the first alternative and acquired value/discount brands with strong local presence in their respective home markets. Examples are: Nobel Biocare acquiring Alpha BioTec (Israeli discount-player) in 2008, Dentsply acquiring a stake in DIO (South-Korean value-player) in 2010, Zimmer acquiring Exopro (Brazilian value-player) in 2012, and Straumann acquiring 49% of Neodent (Brazilian value-player) in 2012.  The most widely discussed topic at the IDS was the launch of Camlog’s new, lower priced dental implant system “iSy”. The price for the iSy implant system (EUR 109) is approx. EUR 100 below the price for the other dental implant systems that Camlog has offered to date (general implant prices: < EUR 100 for discount, EUR 100-200 for value, > EUR 200 for premium). Camlog (approx. 90% owned by US company Henry Schein) is a value player with headquarters in Switzerland, production in Germany, and sales in various countries, but a strong footprint only in Germany, where they are the number one or joint number two together with Straumann. As competitive pressure from the discount segment has increased (particularly from Medentis with their ICX-templant implant, running a strong publicity campaign), Camlog decided to expand into the discount segment. Most industry representatives regarded Camlog’s move as brave but also risky and especially considered the way Camlog differentiates the implant systems as smart: iSy is a simplified dental implant system for “standard” indications (“normally” hard bone, low-risk cases, no “complex” cases) that comes in only three different diameters, three different lengths, and with a reduced set of instruments.  Today, most premium players offer different implant systems at different prices, but mostly not outside of the premium segment. Those premium players that already offer implant systems in lower price segments, only do this in certain, defined regions and not on a global basis. Currently, premium players still seem reluctant to expand into lower price segments on a larger scale, as they are afraid of cannibalizing their premium sales and diluting their Group margins by offering lower priced dental implant systems (with similar production costs compared to higher priced implants).  We think that cannibalization can be kept at a low level, if the lower priced dental implants are clearly differentiated from the higher priced ones. As we think there will be an increasing demand for lower priced implants, we see an expansion into lower price segments as a possibility for premium players to: 1) prevent existing customers from switching to a competing value/discount player, and 2) increase their share with their existing customers by winning back this part of the business that their customers have already moved to a competing value/discount player.  If Selling & Marketing costs of the lower priced dental implant system can be kept at a low level (e.g. by leveraging on the existing sales force, selling through internet only, etc.), we do not necessarily see a dilution of the overall Group EBIT margin.  If premium players refrain from increasingly expanding into lower price segments, we think they will sooner or later be inclined to give more discounts on their premium implants (driven by increasing competitive pressure from the value/discount players) and will thereby risk their price premium and their high margins. Competitive pressure in the CADCAM market brings prices down  In recent years, a lot of new players have entered the CADCAM market. The increasing competitive pressure has resulted in price decreases for scanners, CADCAM software, milling machines, and individualized prosthetics.  This trend is also highlighted by a change in strategy that both Straumannn and Nobel Biocare undertook in 2011/12. They significantly lowered the prices for their scanners and since then use the scanner business as an enabler for increased sales in prosthetics. As we expect more milling centers to open up in developing countries and to offer lower prices for individualized prosthetics, we do not expect capacity utilization of centralized milling centers (from Nobel Biocare, Straumann, Zfx, etc.) to increase.  All premium players (except Biomet 3i) offer CADCAM solutions, mostly through co-operation agreements with hardware manufacturers of intra-oral or desktop scanners (Align Technology, E4D, Sirona, Zfx, 3M ESPE, 3Shape, etc.), dental software companies (Dental Wings, E4D, Sirona, Zfx, 3Shape, etc.), and milling machine producers (E4D, Sirona, Zfx, 3M ESPE, etc.). The trend is clearly moving towards “open” CADCAM systems. “Front-end open” means that different scanners of different suppliers can be used with a respective CADCAM software. “Back-end open” means that individualized prosthetic elements (crowns, abutments), designed with a respective CADCAM software, can be produced by different dental laboratories and by different specialized central milling centers. Straumann’s CADCAM system is already open on the front- and the back-end and Nobel Biocare announced at the IDS the first step in opening up their CADCAM system. No product innovations  In terms of product innovation, we have seen nothing new at IDS. We believe the times for breakthrough innovations and consequently price increases for dental implants are essentially over.  Going forward, we only see marginal product-improvements for dental implants, although these modest improvements will still require high expenses. Gina Francioli (gfr@bellevue.ch) .

22 March 2013


Nobel Biocare: Will launch the Alpha-Bio Tec brand in China  In 2013, Nobel Biocare will further drive expansion into lower priced segments by launching Alpha-Bio Tec (ABT, Nobel Biocare’s discount brand, <5% of Nobel Biocare Group sales) in China. Nobel Biocare sells ABT dental implants in some markets where they are already present with their Nobel Biocare brand (e.g. France and Italy, where ABT is sold through distributors). However, during the FY-12 results presentation on February 19, CEO Richard Laube clearly stated that they will not launch ABT in the US, as they see a high risk of cannibalization to Nobel Biocare sales (the price of an ABT implant is approx. 25% of the price of a Nobel Biocare implant).  At the IDS, Nobel Biocare announced updates/changes to their Procera CADCAM system for later this year. The company will launch a second-generation 2G desktop scanner and will open up their CADCAM system for 3Shape users. Going forward, users of the competing 3Shape Dental System (intra-oral or desktop scanner and CADCAM software) will get access to Nobel Biocare’s centralized milling for individualized Procera abutments. This is Nobel Biocare’s first step in opening up their Procera system.  We remain cautious on Nobel Biocare shares. Nobel Biocare first needs to confirm that they can 1) sustainably increase operating efficiencies, 2) undertake the “strategic investments” in Sales & Marketing and R&D that are crucial for their mid-term sales growth, 3) grow at least in-line with the market (in all regions), and 4) improve the performance of their weak Procera business.  Given the currently rich valuation of P/E 18.6x 2014E, the many challenges that Nobel Biocare faces, and the continued uncertainty regarding dental implant market growth, we see downside potential for the share price.  Using a 24-month rolling forward EPS of CHF 0.55 on an implied P/E of 12x, we derive an unchanged Price Target of CHF 6.6 and reiterate our SELL rating. Straumann: Will soon decide on further expansion of the Neodent brand  “Expansion into lower price segments” seems to be an important topic at Straumann. During the FY-12 results presentation on February 21, ad-interim CEO and Chairman Gilbert Achermann stated that a decision will soon be taken on whether Neodent (FY-12 sales: CHF 93m) will also be used as a second brand in those European countries with a big discount segment, such as Spain and Italy. He does not consider Neodent to be the right brand to conquer the Asian market, but would rather acquire a brand that is already well positioned in Asia (although he sees limited opportunities for such an acquisition).  At the IDS, Straumann mainly focused on the restorative field and promoted their recently launched CARES Visual 8.0 CADCAM software. With the new software, Straumann has completed the integration of its CADCAM system into the Dental Wings Open Software (DWOS) platform. Straumann’s CADCAM system is open on the front-end for different data input sources (desktop scanner or intra-oral scanner, so far from: Align Technology, 3M ESPE), and open on the back-end, meaning that individualized prosthetics can either be produced in Straumann’s own milling centers or alternatively in third party milling centers.  We remain cautious on Straumann shares. Straumann first needs to demonstrate that: 1) weak Q4-12 market growth in North America was only a temporary dip and that they can again outgrow the market going forward, 2) cost cutting can be performed as planned, and 3) they can undertake selective investments in growing markets such as the US, China, and Brazil to trigger their mid-term sales growth.  Given the currently rich valuation of P/E 18.2x 2014E, the challenges that Straumann faces, and the continued uncertainty regarding dental implant market growth, we see downside potential for the share price.  Using a 24-month rolling forward EPS of CHF 7.27 on an implied P/E of 16x, we derive a Price Target of CHF 116 (115) and reiterate our HOLD rating.

Gina Francioli (gfr@bellevue.ch) .

22 March 2013


NOBEL BIOCARE

ESTIMATES AS OF FEBRUARY 20, 2013/GF

KEY FIGURES CHF MN 1,224 1,167 709 58 10.1 431 IFRS

MARKET CAPITALIZATION ENTERPRISE VALUE NET SALES 2013E NET PROFIT 2013E EPS CAGR 2012-15E IN % SHAREHOLDERS' EQUITY 2013E ACCOUNTING STANDARDS

EUR MN 1,002 955 581 48 9.6 352

PRICE ON MAR 22, 2013 IN CHF PRICE ON MAR 22, 2013 IN EUR DIVIDEND YIELD 2013E IN % DAILY TRADING VOL IN '000 PAR VALUE IN CHF NUMBER OF SHARES IN MN FREE FLOAT MAJOR SHAREHOLDERS

NEXT EVENT: Q1-2013 RESULTS APRIL 25, 2013

9.9 8.1 2.0 717.0 0.4 123.8 100%

SILCHESTER INTERNATIONAL INVESTORS LLP

10.2%

FRANKLIN TEMPLETON

10.1%

GOVERNMENT OF SINGAPORE

5.5%

INVESCO LIMITED

5.0%

GOVERNANCE OF OWNERS LLP

3.2%

NORGES BANK

3.0%

RATIOS

2013E

2014E

2015E

20.9 2.1 1.8 2.8 9.5 1.7 3.6 15.3 1.5 6.2

18.6 1.8 1.7 2.6 8.9 1.7 4.0 19.8 2.0 6.2

16.5 1.6 1.7 2.4 8.3 1.6 4.4 25.4 2.6 6.8

2013E

2014E

2015E

0.47

0.53

0.60

5.3

12.4

12.7

0.47 5.3

0.53 12.4

0.60 12.7

P/E PEG P/SALES P/NAV EV/EBITDA EV/SALES EV/CAPITAL EMPLOYED ROCE IN % ROCE/WACC FCF YIELD IN % PER SHARE DATA (CHF)

2008

2009

2010

2011

2012

EARNINGS

1.34

1.27

0.46

0.39

0.45 1)

- CHANGE IN %

-40.1

-5.3

-63.3

-15.1

14.1

EARNINGS before impairment & xo - CHANGE IN %

1.28 -42.5

1.40 9.6

0.46 -66.8

0.43 -8.2

0.45 5.6

0.55 41.1

0.55 43.4

0.35 75.3

0.15 38.1

0.20 44.5

0.20 42.2

0.20 37.6

0.25 41.7

NET ASSET VALUE - CHANGE IN %

2.71 -24.3

3.80 40.5

3.25 -14.5

2.79 -14.3

3.19 14.3

3.50 9.7

3.83 9.5

4.23 10.4

PER SHARE DATA (EUR)

2008

2009

2010

2011

2012

2013E

2014E

2015E

EARNINGS - CHANGE IN %

0.90 -33.4

0.85 -4.8

0.37 -56.5

0.32 -12.7

0.37 15.0

0.39 4.0

0.44 12.4

0.49 12.7

AVG. NO. OF SHARES (FULLY DILUTED) (MN) CHF/EUR

122.3 0.67

123.9 0.67

123.0 0.80

122.8 0.82

123.1 0.83

123.1 0.82

123.1 0.82

123.1 0.82

DIVIDEND - PAYOUT IN %

1)

1) Adjusted for exceptional FX loss of EUR -11.6m in FY-13, earnings would have decreased in FY-12.

GINA FRANCIOLI

NOBEL BIOCARE HOLDING AG - IMPLIED P/E OF 12X

SHARE PRICE

EPS

Price Target: CHF 6.6 - SELL

96 90 80

8.0 7.0

70

6.0

60

5.0

50

4.0

40 3.0 30 2.0

20

1.0 10

4

0.3 2002

2003

2004

2005

2006

2007

2008

NOBN SW Equity

2009

2010

2011

2012

2013

2014

2015

EPS

Information herein is believed to be reliable, but BANK AM BELLEVUE does not guarantee its completeness or accuracy. Opinions and estimates constitute our judgement and are subject to change without notice. Past performance is not indicative of future results. This material is not intended as an offer or solicitation for the purchase or sale of any shares or other financial instruments. This material is intended solely for our clients and may not be reproduced, distributed or published without our prior consent.


NOBEL BIOCARE

ESTIMATES AS OF FEBRUARY 20, 2013/GF

INCOME STATEMENT (EUR MN)

2009 S%

2010 S%

SALES - CHANGE IN % - CHANGE IN LC IN %

581.4 -6.1 -7.7

576.6 -0.8 -6.4

DENTAL IMPLANTS SALES (BBE) 1) - CHANGE IN % - CHANGE IN LC IN %

473.5 -9.1 -10.7

81

467.0 -1.4 -6.9

PROCERA SALES (BBE) 1) - CHANGE IN % - CHANGE IN LC IN %

107.9 9.9 8.3

19

COGS

113.5

20

GROSS PROFIT - CHANGE IN % - GROSS MARGIN IN %

467.9 -5.2 80.5

SELLING & MARKETING 2)

219.6

38

224.0

ADMINISTRATION RESEARCH & DEVELOPMENT TOTAL OPEX

94.7 25.0 339.4

16 4 58

107.4 31.6 363.1

EBITDA - CHANGE IN % - EBITDA MARGIN IN %

156.3 -3.0 26.9

2)

DEPRECIATION & AMORT. & IMPAIRMENT EBIT

27.8

Q2

Q3

Q4

2011 S%

Q1

Q2

Q3

Q4

2012 S%

147.6 2.8 -0.2

149.0 4.2 -2.2

131.0 153.0 2.2 -1.0 -5.1 -3.4

580.5 2.0 -2.7

2013E S%

143.5 5.0 1.5

142.9 128.2 154.6 -7.8 -2.7 0.9 -3.9 0.2 -0.2

569.2 -1.3 -0.7

81

118.6 4.2 0.7

118.0 104.6 128.9 -3.2 -1.3 2.1 0.7 1.6 1.0

470.1 0.7 1.0

83

122.5 3.3 0.0

124.0 5.0 -0.8

109.6 129.1 4.8 0.2 -2.9 -1.6

485.2 3.2 -1.3

84

470.9 -3.0 1.1

109.6 1.6 -4.0

19

25.0 -8.5 -12.0

24.8 -16.9 -13.0

23.6 -4.0 -1.1

25.7 -8.8 -9.9

99.1 -9.6 -9.0

17

25.1 0.6 -1.0

24.9 0.2 -9.0

21.4 23.9 -9.3 -7.0 -15.3 -12.4

95.3 -3.8 -9.2

16

128.6

22

34.4

32.9

32.0

37.4

136.7

24

36.3

36.6

38.3

143.0

25

109.1 0.9 76.1

110.0 -9.5 77.0

96.2 117.2 -4.6 -0.2 75.0 75.8

432.5 -3.5 76.0

111.3 2.0 75.4

112.4 2.2 75.5

99.1 114.7 3.0 -2.1 75.7 75.0

437.5 1.2 75.4

39

67.1

60.6

58.5

66.1

252.2

44

63.9

64.9

61.3

69.6

259.5

45

248.8

19 5 63

19.7 7.2 94.0

19.8 7.2 87.6

19.5 6.6 84.6

20.1 8.0 94.2

79.2 29.0 360.4

14 5 63

19.1 7.6 90.5

17.1 8.8 90.8

17.6 20.5 8.3 10.3 87.1 100.4

74.3 35.0 368.8

13 6 64

69.8 33.5 352.2

23.0 -30.8 16.1

30.2 -19.5 21.1

19.5 22.3 15.2

31.9 15.0 20.6

104.6 -8.7 18.4

29.0 25.9 19.6

30.0 -0.7 20.2

19.8 21.9 1.2 -31.1 15.1 14.3

100.7 -3.7 17.4

7.9

7.8

7.9

8.8

32.5

8.2

8.4

7.9

7.6

32.0

448.0 -4.3 77.7

114.5 -26.7 19.9 5

Q1

29.6

5

6

31.9

559.1 -3.7 0.4

2015E S%

574.0 2.7 2.7

595.5 3.7 3.7

84

484.6 84 2.9 2.9

503.8 4.0 4.0

85

88.2 -7.4 -3.4

16

89.5 16 1.4 1.4

91.7 2.5 2.5

15

137.2

25

139.7 24

143.7

24

434.3 2.9 75.7

451.8 4.0 75.9

45

253.8 44

261.5

44

12 6 63

70.0 12 34.4 6 358.2 62

70.8 35.7 368.0

12 6 62

107.2 6.8 18.7

115.6 7.8 19.4

421.9 -3.6 75.5

100.4 -0.3 18.0 6

2014E S%

30.7

5

31.1

5

31.8

128.6

84.9

15.1

22.4

11.6

23.0

72.1

20.8

21.6

11.9

14.3

68.7

69.7

76.1

83.8

- CHANGE IN %

-3.3

-33.9

-43.0

-25.8

35.9

17.3

-15.1

37.5

-3.4

2.6

-37.9

-4.8

1.5

9.3

10.0

- EBIT MARGIN IN %

22.1

14.7

10.5

15.7

9.0

14.9

12.7

14.1

14.5

9.1

9.4

11.8

12.5

13.3

14.1

EXTRAORDINARY ITEMS (XO)

13.0

0.0

3.9

0.0

0.3

0.3

4.5

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

EBIT before xo - CHANGE IN % - EBIT MARGIN IN % before xo

141.6 -5.1 24.3

84.9 -40.0 14.7

19.0 -28.3 13.3

22.4 -25.8 15.7

11.9 39.4 9.3

23.3 18.8 15.1

76.6 -9.8 13.5

20.8 9.3 14.1

21.6 -3.4 14.5

11.9 14.3 0.0 -38.7 9.1 9.4

68.7 -10.4 11.8

69.7 1.5 12.5

76.1 9.3 13.3

83.8 10.0 14.1

8.7

15.5

2.2

-1.3

-13.2

-4.4

-16.7

-2.0

-3.3

-1.9

-0.5

-7.7

-6.1

-4.7

-3.2

137.2

100.4

17.4

21.1

-1.6

18.7

55.5

18.8

18.4

10.0

13.8

61.0

63.6

71.5

80.5

31.4 22.9

54.7 54.5

4.4 25.4

5.2 0.6 24.8 -39.0

5.4 29.0

15.7 28.3

5.1 27.0

4.4 23.8

3.1 30.6

2.6 19.1

15.1 24.8

15.9 25.0

17.9 25.0

20.1 25.0

NET PROFIT - CHANGE IN % - NET MARGIN IN %

105.8 -3.6 18.2

45.7 -56.8 7.9

13.0 -66.5 9.0

15.9 -19.2 11.1

-2.2 13.3 NM 156.7 -1.7 8.6

39.8 -12.9 7.0

13.7 6.2 9.3

14.0 -11.7 9.4

7.0 11.2 NM -15.9 5.3 7.3

45.8 15.3 7.9

47.7 4.0 8.5

53.6 12.4 9.3

60.4 12.7 10.1

NOPAT

112.5

52.7

14.6

14.8

-20.6

10.2

27.8

12.3

11.5

5.7

10.7

40.1

43.1

50.1

58.0

BALANCE SHEET (EUR MN)

2009

2010

Q1

Q2

Q3

Q4

2011

Q1

Q2

Q3

Q4

2012

2013E

2014E

2015E

LIQUID FUNDS NET CASH (DEBT) FINANCIAL DEBT

242 2 240

240 -13 253

227 -3 231

190 -61 251

189 -62 251

107 -28 136

107 -28 136

118 -13 131

92 -10 102

124 22 103

147 47 100

147 47 100

189 89 100

231 131 100

279 179 100

TOTAL ASSETS - PORPERTY, PLANT & EQUIPMENT - INTANGIBLE ASSETS

723 76 207

771 90 223

738 85 213

683 85 209

671 86 208

592 86 213

592 86 213

593 81 209

575 80 213

583 77 208

601 71 206

601 71 206

610 52 196

627 34 186

651 15 176

423 58.5 137 20

427 55.3 133 23

410 55.6 130 21

362 53.0 125 21

346 51.5 113 21

268 45.2 109 24

268 45.2 109 24

278 46.9 112 21

257 44.7 116 20

274 47.1 103 20

303 50.4 96 20

303 50.4 96 20

341 55.8 93 20

385 61.5 95 20

438 67.3 99 21

134 22

415 19

398 19

377 14

385 12

174 15

174 15

173 13

125 15

126 14

135 19

135 19

134 18

135 19

135 20

318 18.6 36.1

320 0.7 14.3

304 -3.7 4.2

270 249 282 -17.3 -22.9 -12.0 5.3 -0.8 4.4

282 -12.0 13.2

282 -7.4 4.7

303 12.3 4.9

316 26.9 2.5

325 15.5 15.1

325 15.5 15.1

352 8.4 14.1

386 9.5 14.5

426 10.4 14.9

330

335

83

285

285

277

333

309

298

298

266

241

215

PERSONNEL (END OF PERIOD) - CHANGE IN %

2,242 -14

2,433 9

2,427 3

2,493 2,465 2,472 4 3 2

2,472 2

2,489 3

2,518 1

2,547 2,496 3 1

2,496 1

2,496 0

2,521 1

2,571 2

CASH FLOW STATEMENT (EUR MN)

2009

2010

Q1

Q2

Q3

Q4

2011

Q1

Q2

Q3

Q4

2012

2013E

2014E

2015E

NET PROFIT + DEPR. & AMORT. & IMPAIRMENT +/- OTHER NON-CASH ITEMS + DECREASE IN WC /- INCREASE IN WC

106 28 18 26

46 30 5 17

13 8 -15 -5

16 8 7 -7

-2 8 11 18

13 9 -1 14

40 32 1 20

14 8 -2 -3

14 8 1 -5

7 8 6 11

11 8 5 13

46 32 10 15

48 31 0 4

54 31 0 -3

60 32 0 -4

OPERATING CASHFLOW - CAPEX TANGIBLE - CAPEX INTANGIBLE

178 -18 -2

97 -23 -4

1 -3 0

23 -7 0

34 -4 0

35 -3 -1

93 -17 -1

17 -2 -1

18 -1 0

32 -2 -1

37 -2 -1

103 -8 -3

82 -17 -3

82 -17 -3

89 -18 -3

FREE CASH FLOW - ACQUISITIONS/+ DIVESTMENTS +/- FINANCING ACTIVITIES - DIVIDENDS + SALE/- PURCHASE OF TREAS. SHARES

157 -23 -10 -45 -1

70 0 -38 -46 -5

-3 0 -2 0 -5

16 0 -19 -33 0

30 0 -31 0 0

32 0 -116 0 0

75 0 -169 -33 -5

14 0 -6 0 2

16 0 -28 -15 0

29 0 4 0 0

34 0 -10 0 0

93 0 -40 -15 2

62 0 0 -20 0

62 0 0 -20 0

68 0 0 -20 0

79

-19

-10

-36

-1

-85

-132

11

-27

32

24

40

42

42

48

NET FINANCIAL RESULT 3) INCOME BEFORE TAXES TAXES - TAX RATE IN %

CURRENT ASSETS - IN % OF TOTAL ASSETS - RECEIVABLES - INVENTORIES CURRENT LIABILITIES - TRADE PAYABLES SHAREHOLDERS' EQUITY - CHANGE IN % - ROE IN % CAPITAL EMPLOYED

CHANGE IN LIQUID FUNDS (EXCL. FX)

89

66

1) Dental Implants and Procera figures disclosed as of 1H 2011, before: BBE. 2) As of Q1-2011, certain expenses have been reclassified from "Administration" to "Selling & Marketing". 3) 2009: Exceptional FX gains of EUR 26.8m. 2010: Exceptional FX gains of EUR 30.0m. 2011: Exceptional FX loss of EUR -11.6m.

5

Guidance: FY-13: 12.3%-12.8% at CER FY-14: +50-100bps FY-15: +50-100bps

GINA FRANCIOLI

High CF driven by unsustainably low Capex.

Information herein is believed to be reliable, but BANK AM BELLEVUE does not guarantee its completeness or accuracy. Opinions and estimates constitute our judgement and are subject to change without notice. Past performance is not indicative of future results. This material is not intended as an offer or solicitation for the purchase or sale of any shares or other financial instruments. This material is intended solely for our clients and may not be reproduced, distributed or published without our prior consent.


Sales decline of approx. -17% in Japan, due to negative media coverage.

NOBEL BIOCARE - QUARTERLY SALES

ESTIMATES AS OF FEBRUARY 20, 2013/GF

(EUR MN)

2009

S%

2010

S%

Q1

S%

Q2

S%

Q3

S%

Q4

S%

2011

S%

Q1

S%

Q2

S%

Q3

S%

Q4

S%

2012E

S%

2013E

S%

2014E

S%

2015E

S%

EMEA - Change in % - Change in lc in %

261.1 -9.8 -7.4

45

248.3 -4.9 -6.9

43

63.2 0.3 -1.2

44

62.5 -6.2 -6.2

44

48.0 -5.3 -5.3

37

63.2 -7.1 -7.0

41

237.0 -4.6 -4.9

42

60.6 -4.1 -4.4

41

60.6 -3.0 -3.6

41

46.8 -2.5 -3.7

36

62.1 -1.7 -2.7

41

230.1 -2.9 -3.6

40

225.6 -2.0 -1.2

40

229.0 1.5 1.5

40

235.4 2.8 2.8

40

Americas - Change in % - Change in lc in %

206.3 -6.4 -8.0

35

202.7 -1.7 -7.4

35

52.0 11.3 8.8

36

51.7 -6.3 4.1

36

48.2 -1.6 6.5

38

56.8 9.7 9.9

37

208.6 2.9 7.2

37

55.4 6.5 2.7

38

57.9 12.0 1.3

39

54.2 12.4 0.3

41

61.0 7.4 2.8

40

228.5 9.5 1.8

39

228.2 -0.1 3.2

41

239.4 4.9 4.9

42

252.3 5.4 5.4

42

Asia/Pacific - Change in % - Change in lc in %

114.0 4.1 -5.1

20

125.6 10.2 -2.1

22

28.3 4.9 -4.8

20

28.7 -13.6 -12.6

20

32.0 0.3 -0.8

25

34.6 3.2 -2.1

22

123.6 -1.6 -5.1

22

31.6 11.8 3.8

21

30.5 6.3 -5.6

20

30.0 -6.2 -15.5

23

29.9 -13.6 -14.9

20

121.9 -1.4 -8.6

21

105.3 -13.6 -2.0

19

105.6 0.3 0.3

18

107.8 2.1 2.1

18

TOTAL GROUP SALES - CHANGE IN % - CHANGE IN LC IN %

581.4 -6.1 -7.7

100

576.6 -0.8 -6.4

100

143.5 5.0 1.5

100

142.9 -7.8 -3.9

100

128.2 -2.7 0.2

100

154.6 0.9 -0.2

100

569.2 -1.3 -0.7

100

147.6 2.8 -0.2

100

149.0 4.2 -2.2

100

131.0 2.2 -5.1

100

153.0 -1.1 -3.4

100

580.5 2.0 -2.7

100

559.1 -3.7 0.4

100

574.0 2.7 2.7

100

595.5 3.7 3.7

100

(EUR MN)

2009E

2010E

Q1E

Q2E

Q3

Q4

2011

Q1

Q2

Q3

Q4

2012E

2013E

2014E

2015E

Dental Implants 1) - Change in % - Change in lc in % - In % of total sales

473.5 -9.1 -10.7 81

467.0 -1.4 -6.9 81

118.6 4.2 0.7 83

118.0 -3.2 0.7 83

104.6 -1.3 1.6 82

128.9 2.1 1.0 83

470.1 0.7 1.0 83

122.5 3.3 0.0 83

124.0 5.0 -0.8 83

109.6 4.8 -2.9 84

129.3 0.3 -1.6 85

485.2 3.2 -1.3 84

470.9 -3.0 1.1 84

484.6 2.9 2.9 84

503.8 4.0 4.0 85

Procera 1) - Change in % - Change in lc in % - In % of total sales

107.9 9.9 8.3 19

109.6 1.6 -4.0 19

25.0 -8.5 -12.0 17

24.8 -16.9 -13.0 17

23.6 -4.0 -1.1 18

25.7 -8.8 -9.9 17

99.1 -9.6 -9.0 17

25.1 0.6 -1.0 17

24.9 0.2 -9.0 17

21.4 -9.3 -15.3 16

23.7 -7.8 -12.4 15

95.3 -3.8 -9.2 16

88.2 -7.4 -3.4 16

89.5 1.4 1.4 16

91.7 2.5 2.5 15

- Prosthetics (BBE) - Change in % - Change in lc in % - In % of Procera sales

78.4 9.0 7.4 73

78.4 0.0 -5.6 72

16.9 -13.5 -17.0 68

20.5 -4.2 -0.3 82

19.6 11.5 14.4 83

22.3 11.8 10.7 87

79.3 1.1 1.7 80

17.2 2.0 -1.0 69

20.4 -0.6 -7.0 82

18.3 -6.7 -14.0 85

22.1 -0.8 -3.1 93

78.0 -1.6 -6.3 82

73.7 -5.5 -1.5 84

74.8 1.5 1.5 84

77.0 3.0 3.0 84

- Equipment (BBE) - Change in % - Change in lc in % - In % of Procera sales

29.5 4.1 2.5 27

31.2 5.9 0.3 28

8.1 4.1 0.6 32

4.3 -48.9 -45.0 18

4.0 -42.9 -40.0 17

3.4 -57.3 -58.3 13

19.8 -36.5 -35.9 20

7.9 -2.4 -5.4 31

4.5 3.9 -2.6 18

3.1 -22.1 -29.4 15

1.8 -47.6 -49.9 8

17.3 -12.7 -17.4 18

14.5 -16.0 -12.0 16

14.7 1.0 1.0 16

14.7 0.0 0.0 16

CURRENCIES

2009

2010

Q1

Q2

Q3

Q4

2011

Q1

Q2

Q3

Q4

2012

2013E

2014E

2015E

USD/EUR - Change in %

0.72 5.9

0.76 5.0

0.73 1.1

0.69 -11.7

0.71 -8.5

0.74 0.7

0.72 -4.8

0.77 4.7

0.78 12.2

0.80 12.9

0.77 3.8

0.78 8.2

0.75 -3.7

0.75 0.0

0.75 0.0

1) Dental Implants and Procera figures disclosed as of 1H 2011, before: BBE.

Guidance: "Modest sales growth".

GINA FRANCIOLI

Information herein is believed to be reliable, but BANK AM BELLEVUE does not guarantee its completeness or accuracy. Opinions and estimates constitute our judgement and are subject to change without notice. Past performance is not indicative of future results. This material is not intended as an offer or solicitation for the purchase or sale of any shares or other financial instruments. This material is intended solely for our clients and may not be reproduced, distributed or published without our prior consent.


NOBEL BIOCARE - DISCOUNTED CASH FLOW MODEL (EUR MN)

ESTIMATES AS OF FEBRUARY 20, 2013/GF

2013E

2014E

2015E

2016E

2017E

2018E

2019E

2020E

2021E

2022E

TV

NET SALES - CHANGE IN % - CHANGE IN LC IN %

559 -3.7 0.4

574 2.7 2.7

596 3.7 3.7

621 4.3 4.3

648 4.3 4.3

675 4.1 4.1

702 3.9 3.9

728 3.7 3.7

754 3.5 3.5

779 3.3 3.3

787 1.0 1.0

EBIT - CHANGE IN % - IN % OF SALES

70 1.5 12.5

76 9.3 13.3

84 10.0 14.1

92 9.5 14.8

100 8.6 15.4

102 2.8 15.2

105 2.6 15.0

108 2.4 14.8

110 2.1 14.6

112 1.9 14.4

94 -15.6 12.0

31 5.5 -4.2 157.4

31 5.4 1.3 155.2

32 5.3 2.3 153.1

31 5.1 -1.0 145.2

31 4.8 -1.3 137.3

31 4.6 0.3 132.3

30 4.3 -2.3 124.4

30 4.2 -0.4 119.4

30 4.0 -0.8 114.3

29 3.7 -3.8 106.5

4 0.5 -86.4 100.0

EBITDA - CHANGE IN % - IN % OF SALES

100 -0.3 18.0

107 6.8 18.7

116 7.8 19.4

123 6.6 19.8

131 6.1 20.2

134 2.2 19.8

135 1.4 19.3

138 1.7 18.9

140 1.5 18.6

141 0.7 18.1

98 -30.2 12.5

./. TAXES PAID - IN % OF EBITDA ./. NON-CASH ITEMS ./. NET INCREASE IN NET WORKING CAPITAL - IN % OF SALES ./. CAPITAL EXPENDITURES (BEFORE ACQ.) - IN % OF SALES

16 22.8 0 4 -0.6 -20 3.5

20 26.4 0 -3 0.4 -20 3.5

20 24.0 0 -4 0.6 -21 3.5

22 23.8 0 -12 2.0 -22 3.5

24 23.6 0 -13 2.0 -23 3.5

24 23.4 0 -14 2.0 -24 3.5

24 23.2 0 -14 2.0 -24 3.5

25 23.0 0 -15 2.0 -25 3.5

25 22.8 0 -15 2.0 -26 3.5

25 22.6 0 -16 2.0 -27 3.5

21 22.4 0 -8 1.0 -4 0.5

69 -31.6

64 -6.1

71 11.0

67 -5.9

72 6.4

73 1.3

73 0.1

73 0.7

73 0.5

73 -0.9

65 -10.2

+ DEPRECIATION & AMORTIZATION - IN % OF SALES - CHANGE IN % - IN % OF CAPEX

FREE CASH FLOW (BEFORE INTEREST) - CHANGE IN % WEIGHTED AVERAGE COST OF CAPITAL RISK FREE INTEREST RATE IN % MARKET RISK PREMIUM IN % BETA VS. SMI COST OF EQUITY IN % AVG. INTEREST RATE ON DEBT IN % TAX RATE IN % COST OF DEBT (TAX ADJUSTED) IN % DEBT IN % OF EV WACC IN % ENTERPRISE VALUE NUMBER OF YEARS DISCOUNT FACTOR DISC. FREE OPERATING CASH FLOWS SUM OF DCF 2013E - 2022E

3.0 5.5 1.4 10.7 4.0 20.0 3.2 10.4 9.9

0.8 0.93 63.7

1.8 0.84 54.4

2.8 0.77 54.9

3.8 0.70 47.0

4.8 0.64 45.5

5.8 0.58 41.9

6.8 0.53 38.2

7.8 0.48 35.0

PERPETUAL GROWTH RATE IN % TERMINAL VALUE EV = DISCOUNTED FREE CASH FLOWS + NET CASH (DEBT) TOTAL VALUE (IN EUR) NUMBER OF SHARES IN MN VALUE PER SHARE (IN EUR)

8.8 0.44 32.0

9.8 0.40 28.8 441.3 1.0 290.0 731.3 46.8 778.1 123.8 6.3

VALUE PER SHARE (IN CHF)

60%

40%

7.7

- VALUATION GAP IN % (EQUITY VALUE PER SHARE / SHARE PRICE)

-22.3

SENSITIVITY SHARE PRICE AT VARIOUS EBITA MARGINS AND TV GROWTH RATES

TV EBITA MARGIN

TV GROWTH RATE

8 -1.0 -0.5 0.0 0.5 1.0 1.5 2.0 2.5

10 6.7 6.8 6.9 7.0 7.1 7.3 7.4 7.6

11 6.9 7.0 7.2 7.3 7.4 7.6 7.7 7.9

SHARE PRICE AT VARIOUS WACC AND TV GROWTH RATES

12 7.2 7.3 7.4 7.5 7.7 7.9 8.0 8.3

13 7.4 7.5 7.6 7.8 7.9 8.1 8.3 8.6

14 7.6 7.7 7.9 8.0 8.2 8.4 8.6 8.9

15 7.8 8.0 8.1 8.3 8.5 8.7 8.9 9.2

10.4 6.9 7.0 7.1 7.2 7.3 7.5 7.7 7.8

10.9 6.6 6.7 6.8 6.9 7.0 7.1 7.3 7.4

11.4 6.4 6.4 6.5 6.6 6.7 6.8 6.9 7.1

WACC

TV GROWTH RATE

8 -1.0 -0.5 0.0 0.5 1.0 1.5 2.0 2.5 EUR/CHF

8.9 7.8 8.0 8.2 8.3 8.6 8.8 9.1 9.4 1.22

9.4 7.5 7.6 7.8 7.9 8.1 8.3 8.5 8.8

9.9 7.2 7.3 7.4 7.5 7.7 7.9 8.1 8.3

GINA FRANCIOLI

Information herein is believed to be reliable, but BANK AM BELLEVUE does not guarantee its completeness or accuracy. Opinions and estimates constitute our judgement and are subject to change without notice. Past performance is not indicative of future results. This material is not intended as an offer or solicitation for the purchase or sale of any shares or other financial instruments. This material is intended solely for our clients and may not be reproduced, distributed or published without our prior consent.


STRAUMANN

ESTIMATES AS OF FEBRUARY 22, 2013/GF

KEY FIGURES CHF MN 1,976 1,836 677 100 21.7 673 IFRS

MARKET CAPITALIZATION ENTERPRISE VALUE NET SALES 2013E NET PROFIT 2013E EPS CAGR 2012-15E IN % SHAREHOLDERS' EQUITY 2013E ACCOUNTING STANDARDS

PRICE ON MARCH 22, 2013 IN CHF DIVIDEND YIELD 2013E IN % DAILY TRADING VOL IN '000 PAR VALUE IN CHF NUMBER OF SHARES IN MN FREE FLOAT MAJOR SHAREHOLDERS THOMAS STRAUMANN GOVERNMENT OF SINGAPORE (GIC) RUDOLF MAAG SIMONE MAAG DE MOURA CUNHA PARVUS ASSET MANAGEMENT LLP GABRIELLA STRAUMANN SPRUCEGROVE INVESTMENT MGMT

NEXT EVENT: Q1-2013 SALES APRIL 30, 2013

RATIOS P/E P/E before xo (impairment & restructuring) PEG P/SALES P/NAV EV/EBITDA EV/SALES EV/CAPITAL EMPLOYED ROCE IN % ROCE/WACC FREE CASH FLOW YIELD IN %

128 2.9 72.7 0.1 15.4 1) 61.9% 17.3% 13.8% 12.2% 5.2% 5.1% 3.4% 3.0%

2013E

2014E

2015E

19.8 19.8 0.9 2.9 2.9 12.3 2.7 8.2 43.0 5.1 5.6

18.2 18.2 0.8 2.8 2.7 11.7 2.6 8.8 50.8 6.0 5.7

15.9 15.9 0.7 2.3 2.1 11.3 2.1 4.5 40.4 4.8 7.5

PER SHARE DATA (CHF)

2008

2009

2010

2011

2012

2013E

2014E

2015E

EARNINGS - CHANGE IN %

0.52 -95.4

9.38 1692.4

8.36 -10.9

4.54 -45.7

2.36 -48.1

6.45 173.7

7.05 9.3

8.04 14.0

EARNINGS before xo (imp. & restructuring) - CHANGE IN %

11.60 3.0

9.38 -19.2

8.36 -10.9

7.12 -14.8

4.45 -37.4

6.45 44.9

7.05 9.3

8.04 14.0

DIVIDEND - PAYOUT IN %

3.75 716.5

3.75 40.0

3.75 44.9

3.75 82.6

3.75 159.1

3.75 58.1

3.75 53.2

3.75 46.7

NET ASSET VALUE - CHANGE IN %

34.51 -13.6

40.09 16.2

44.36 10.7

42.96 -3.1

40.84 -4.9

43.54 6.6

46.84 7.6

59.70 27.5

15.6

15.6

15.7

15.6

15.5

15.5

15.5

15.5

AVG. NO. OF SHARES (FULLY DILUTED) (MN)

1)

1) Excluding treasury shares. 2) 2015E: Including Neodent (fully consolidated).

2)

GINA FRANCIOLI

STRAUMANN HOLDING AG - IMPLIED P/E OF 16X

SHARE PRICE

2)

EPS

Price Target: CHF 116 (115) - HOLD

400

25.0

350 20.0 300

250

15.0

200

10.0 150

100

5.0

64

4.0 2003

2004

2005

2006

2007

2008

2009

STMN SW Equity

2010

2011

2012

2013

2014

2015

EPS

Information herein is believed to be reliable, but BANK AM BELLEVUE does not guarantee its completeness or accuracy. Opinions and estimates constitute our judgement and are subject to change without notice. Past performance is not indicative of future results. This material is not intended as an offer or solicitation for the purchase or sale of any shares or other financial instruments. This material is intended solely for our clients and may not be reproduced, distributed or published without our prior consent.


STRAUMANN

ESTIMATES AS OF FEBRUARY 22, 2013/GF

INCOME STATEMENT (CHF MN)

2009 S%

2010 S%

SALES - CHANGE IN % - CHANGE IN LC IN %

736.4 -5.4 -2.1

737.6 0.2 4.6

COGS

149.5

GROSS PROFIT - CHANGE IN % - GROSS MARGIN IN %

586.9 -7.1 79.7

OTHER INCOME SELLING & ADMINISTRATION RESEARCH & DEVELOPMENT TOTAL OPEX - CHANGE IN %

2.4 384.8 39.1 421.5 -28.7

EBITDA - CHANGE IN % - EBITDA MARGIN IN %

218.4 -20.3 29.7

DEPRECIATION

30.4

EBITA - CHANGE IN % - EBITA MARGIN IN %

22.6

2)

150.6

367.3 -6.4 4.8 20

587.0 0.0 79.6 52 5 57

2.8 385.1 40.5 422.7 0.3

4

27.0

52 5 57

20.7

21

1.1 233.4 19.1 251.4 16.5

4

11.8

64 5 68

7.3

27

1.6 178.9 19.9 197.2 -4.7

3

13.7

55 6 60

4.4

24

2.7 412.3 39.0 448.6 6.1

4

25.5

59 6 65

11.7

23

0.9 203.5 22.5 225.1 -10.4

4

12.5

56 6 62

3.9

22

0.9 220.1 26.1 245.4 24.4

3

14.9

68 8 76

3.6

23

1.8 423.6 48.7 470.5 4.9

5

27.4

62 7 69

7.5

22

1.8 369.0 43.4 410.6 -12.7

55 6 61

148.7 26.7 22.0 4

90.0 -31.7 13.1 1

150.6 526.4 -1.0 77.8

117.4 -25.4 17.1

32.8 -27.6 10.1 1

154.7

2013E S% 677.0 -1.4 -0.7

531.5 0.6 77.5

47.7 -19.1 14.7

57.2 -33.9 15.8 2

71.5

2012 S% 686.3 -1.1 -1.6

253.1 6.3 78.0

69.7 -29.1 19.3

131.9 -28.7 19.0 1

83.3

H2 S% 324.6 -0.5 -3.2

278.4 -4.1 77.0

157.4 -25.7 22.7

45.4 -40.0 13.9 2

165.0

H1 S% 361.7 -1.5 -0.2

528.5 -10.0 76.2

59.0 -33.7 18.1

86.5 -20.9 23.5 3

88.1

2011 S% 693.6 -6.0 4.1

238.2 -12.6 73.0

98.3 -20.0 26.8

184.9 -1.6 25.1 3

77.0

H2 S% 326.3 -5.5 1.8

290.3 -7.7 79.0

211.9 -3.0 28.7

188.0 -21.9 25.5

AMORTIZATION IMPAIRMENT

20

H1 S%

25.9

4

122.8 36.5 18.1 1

7.1

2014E S%

1)

2015E

696.8 2.9 2.9

864.0 24.0 24.0

154.0 22

192.1

542.8 3.1 77.9

671.9 23.8 77.8

1.8 375.5 54 44.5 6 418.2 60 1.9

1.8 464.7 50.4 513.3 22.7

157.0 5.5 22.5

214.9 36.9 24.9

25.5

4

27.1

131.5 7.1 18.9 1

7.0

1

29.2

0.0

40.2

0.0

40.2

0.0

21.5

21.5

0.0

0.0

0.0

EBIT

165.4

164.3

38.9

40.9

79.9

53.3

7.7

61.0

115.8

124.5

158.6

- CHANGE IN % - EBIT MARGIN IN %

309.4 22.5

-0.7 22.3

-60.6 10.6

-37.5 12.5

-51.3 11.5

36.8 14.7

-81.1 2.4

-23.7 8.9

89.7 17.1

7.6 17.9

27.3 18.4

17.5

17.5

EBIT before xo (impairment & restructuring) - CHANGE IN % - EBIT MARGIN IN % before xo

165.4 -22.4 22.5

164.3 -0.7 22.3

79.2 -19.8 21.6

40.9 -37.5 12.5

120.2 -26.8 17.3

53.3 -32.7 14.7

46.2 12.9 14.2

99.5 -17.2 14.5

115.8 16.3 17.1

124.5 7.6 17.9

158.6 27.3 18.4

7.8 0.0

-4.6 0.0

-1.8 0.0

-0.5 0.2

-2.3 0.2

0.6 -1.6

0.0 -4.2

0.6 -5.7

0.7 3.7

1.2 5.5

1.1 0.9

INCOME BEFORE TAXES

173.2

159.6

37.1

40.5

77.6

52.3

3.6

55.9

120.1

131.3

160.6

TAXES - TAX RATE IN %

-26.8 15.5

-28.6 17.9

1.4 -3.7

-8.0 19.8

-6.7 8.6

-8.6 16.4

-10.9 305.8

-19.5 34.8

-20.4 17.0

-22.3 17.0

-28.1 17.5

NET FINANCIAL RESULT CONTRIBUTION FROM ASSOCIATES

Including Neodent (fully consolidated).

22

54 6 59

3

187.8 42.8 21.7

0.0

RESTRUCTURING

S%

NEODENT MINORITIES

3

FY-13 EBIT: Incl. CHF 25m, i.e. +370bps from cost cutting program FY-14 EBIT: Incl. CHF 37m, i.e. +530bps from cost cutting program

-8.2

NET PROFIT - CHANGE IN % - NET MARGIN IN %

146.4 NM 19.9

131.1 -10.5 17.8

38.5 -53.1 10.5

32.5 -33.9 10.0

71.0 -45.9 10.2

43.8 13.7 12.1

-7.3 -122.5 -2.3

36.4 -48.6 5.3

99.7 173.7 14.7

109.0 9.3 15.6

124.2 14.0 14.4

NET PROFIT before xo (imp. & restructuring) - CHANGE IN % - NET MARGIN IN %

146.4 NM 19.9

131.1 -10.5 17.8

78.7 -4.0 21.4

32.5 -33.9 10.0

111.2 -15.2 16.0

43.8 -44.4 12.1

25.1 -22.7 7.7

68.8 -38.1 10.0

99.7 44.9 14.7

109.0 9.3 15.6

124.2 14.0 14.4

NOPAT

153.0

127.3

36.6

32.1

68.8

44.3

13.7

57.9

100.3

109.9

125.2

0.0 2.3 0.6

8.0 3.3 6.6

8.0 5.5 7.2

0.0 9.5 12.4

0.0 9.5 14.2

Details to Neodent Acquisition: Neodent-related amort. of inventory step-up Neodent-related amort. of intangibles Neodent profit attributable to STMN

(13.4)

(13.4)

2009

2010

H1

H2

2011

H1

H2

2012

2013E

2014E

2015E1)

LIQUID FUNDS NET CASH (DEBT) FINANCIAL DEBT

262 260 1

350 349 1

325 325 1

377 375 2

377 375 2

117 116 1

141 140 0

141 140 0

192 192 0

248 248 0

354 352 1

TOTAL ASSETS - PROPERTY, PLANT & EQUIPMENT - INTANGIBLE ASSETS - INVESTMENTS IN ASSOCIATES

803 138 178 0

854 123 152 0

790 115 98 6

811 111 101 7

811 111 101 7

815 107 98 257

773 97 76 -7

773 97 76 249

809 86 69 253

859 76 62 259

957 72 248 17

445 55.4 110 72

539 63.1 111 73

530 67.1 125 72

556 68.5 110 67

556 68.5 110 67

317 39.0 132 64

317 41.0 104 64

317 41.0 104 64

368 45.4 104 63

429 50.0 107 66

580 60.6 134 83

123 83

111 91

98 82

111 90

111 90

136 124

107 94

107 94

106 93

110 97

136 121

BALANCE SHEET (CHF MN)

CURRENT ASSETS - IN % OF TOTAL ASSETS - RECEIVABLES - INVENTORIES CURRENT LIABILITIES - TRADE AND OTHER PAYABLES MINORITIES

47

SHAREHOLDERS' EQUITY - CHANGE IN % - ROE IN %

626 16.4 25.2

696 11.2 19.8

662 5.8 6.0

671 -3.5 4.8

671 -3.5 10.4

648 -2.0 6.7

631 -5.9 -1.1

631 -5.9 5.6

673 6.6 15.3

724 7.6 15.6

923 27.5 15.1

375

353

320

279

279

269

242

242

224

209

410

PERSONNEL (YEAR-END) - CHANGE IN %

2,170 -1

2,361 9

2,413 6

2,452 4

2,452 4

2,555 6

2,517 3

2,517 3

2,405 -4

2,405 0

3,211 34

CASH FLOW STATEMENT (CHF MN)

2009

2010

H1

H2

2011

H1

H2

2012

2013E

2014E

2015E1)

146

131

38

32

71

44

-7

36

100

109

124

+ DEPR. & AMORT. & IMPAIRMENT

53

48

59

18

77

16

40

56

33

32

56

+/- OTHER NON-CASH ITEMS

25

2

-13

1

-12

-5

11

5

0

0

0

- CONTRIBUTION FROM ASSOCIATES

0

0

0

0

0

2

4

6

-4

-6

-1

+ MINORITIES

0

0

0

0

0

0

0

0

0

0

8

21

-5

-27

31

4

-26

37

11

0

-3

-19

OPERATING CASH FLOW

245

176

58

83

140

30

84

115

129

133

169

- CAPEX TANGIBLE

-23

-18

-8

-6

-14

-9

-7

-15

-15

-15

-16

-8

-4

-3

-3

-6

-2

-3

-4

-4

-4

-5

FREE CASH FLOW - ACQUISITIONS

214 -7

154 0

47 -6

74 0

121 -6

20 -218

75 -48

95 -266

110 0

113 0

148 -120

+/- FINANCING ACTIVITIES

-33

-1

1

0

1

-2

1

-1

0

0

0

-58

-59

-59

0

-59

-58

0

-58

-58

-58

-58

3

3

-3

-29

-32

0

-5

-5

0

0

0

-4

-9

-4

7

3

-3

1

-2

0

0

0

114

88

-24

52

27

-260

24

-237

52

55

-29

CAPITAL EMPLOYED

NET PROFIT

+ DECREASE IN WC/- INCREASE IN WC

- CAPEX INTANGIBLE

- DIVIDENDS + SALE/- PURCHASE OF TREAS. SHARES +/- OTHERS CHANGE IN LIQUID FUNDS

Lower amortization charges due to higher goodwill.

3)

1) 2015E: Including Neodent (fully consolidated). 2) 2011: Impairment of CHF 40.2m intangible assets related to acquisition of Japanese distributor in 2007. 3) 2011/12: Share buyback between September 1, 2011 and August 31, 2012. Shares were not canceled. FY-11: 164,500 shares bought back. FY-12: 49,470 shares bought back.

GINA FRANCIOLI

Acquisition of additional 26% of Neodent. Acquisitions: - 49% of Neodent: CHF 261m - 14% of Dental Wings: CHF 5m

Information herein is believed to be reliable, but BANK AM BELLEVUE does not guarantee its completeness or accuracy. Opinions and estimates constitute our judgement and are subject to change without notice. Past performance is not indicative of future results. This material is not intended as an offer or solicitation for the purchase or sale of any shares or other financial instruments. This material is intended solely for our clients and may not be reproduced, distributed or published without our prior consent.


Further declining markets in Italy, Spain, Germany.

STRAUMANN - QUARTERLY SALES (CHF MN)

2009

S%

2010

S%

Q1

S%

Europe - Change in % - Change in lc in %

462.4 -7.6 -2.2

63

444.9 -3.8 3.2

60

113.9 -8.8 2.2

60

105.4 -9.7 0.3

North America - Change in % - Change in lc in %

155.3 -2.3 -1.4

21

164.7 6.1 8.7

22

40.1 -3.7 8.0

21

Asia/Pacific - Change in % - Change in lc in %

95.2 -1.3 -4.6

13

100.5 5.5 2.1

14

25.5 0.0 2.2

RoW - Change in % - Change in lc in %

23.4 1.6 8.0

3

27.5 17.4 12.3

4

TOTAL GROUP SALES - CHANGE IN % - CHANGE IN LC IN %

736.4 -5.4 -2.1

100

737.6 0.2 4.6

100

Dental Implants (BBE) - Change in % - Change in lc in %

670.3 -6.7 -3.3

91

665.1 -0.8 3.7

Digital Solutions (CAD/CAM) (BBE) - Change in % - Change in lc in %

40.0 3.9 7.2

5

Regeneratives (BBE) - Change in % - Change in lc in %

26.1 18.1 21.4

4

CURRENCIES

2009

2010

Q1

Q2

Q3

Q4

2011

EUR/CHF - Change in %

1.51 -4.9

1.38 -8.6

1.29 -11.8

1.25 -10.6

1.16 -13.1

1.23 -6.9

USD/CHF - Change in %

1.09 0.2

1.04 -4.0

0.94 -10.5

0.87 -21.5

0.82 -20.0

0.91 -6.3

1) 2015E: Including Neodent (fully consolidated).

Q2 S%

Q3

S%

Q4 S%

59

84.4 -8.7 1.7

56

100.7 -9.2 -3.4

37.9 -13.2 9.6

21

35.2 -7.9 11.3

23

14

26.2 0.0 8.9

15

24.0 -2.4 5.2

8.9 24.8 26.9

5

9.4 39.2 48.5

5

7.1 9.2 18.1

188.4 -5.4 4.3

100

90

167.7

46.0 15.0 19.4

6

26.5 1.6 6.0

4

2012

S%

2013E

S%

2014E

S%

2015E1)

S%

56

378.1 -6.5 -5.1

55

365.9 -3.2 -4.5

54

367.3 0.4 0.4

53

373.9 1.8 1.8

43

43.3 2.1 0.0

26

173.7 11.7 6.4

25

180.3 3.8 4.6

27

192.6 6.8 6.8

28

206.9 7.4 7.4

24

16

24.4 -2.1 -1.0

15

103.9 3.2 -0.3

15

99.4 -4.3 2.5

15

103.5 4.1 4.1

15

109.1 5.4 5.4

13

4

6.4 -14.9 -10.4

4

30.5 -7.3 -3.0

4

31.4 2.9 5.0

5

33.3 6.3 6.3

5

174.2 422.5 422.5

20

156.8 100 4.0 -2.0

167.8 100 -4.4 -4.2

686.3 -1.1 -1.6

100

677.0 -1.4 -0.7

100

696.8 2.9 2.9

100

864.0 24.0 24.0

100

142.1 5.9 -0.1

152.4 -2.5 -2.2

91

617.3 0.0 -0.5

90

614.4 -0.5 0.2

91

630.0 2.5 2.5

90

787.1 24.9 24.9

91

5

39.4 -20.3 -20.9

6

30.3 -23.1 -22.5

4

30.9 2.0 2.0

4

33.9 9.6 9.6

4

4

4

32.3 9.4 10.0

5

35.8 11.0 11.0

5

43.0 20.0 20.0

5

2011

S%

Q1

S%

Q2

S%

57

404.4 -9.1 0.2

58

106.5 -6.5 -2.1

58

95.6 -9.2 -7.0

54

82.3 -2.5 -5.3

52

93.7 -7.0 -6.3

42.4 2.8 12.0

24

155.6 -5.5 10.2

22

44.7 11.3 14.0

24

43.8 15.6 7.0

25

42.0 19.4 5.1

27

16

25.0 3.0 5.7

14

100.7 0.2 5.5

15

25.0 -1.9 -2.4

14

28.9 10.2 4.2

16

25.6 6.3 -2.4

5

7.5 4.7 11.1

4

32.9 19.6 26.0

5

8.9 0.2 4.3

5

8.3 -11.9 -7.4

5

6.9 -2.6 1.4

185.1 100 -1.8 1.6

176.6 -1.2 -2.1

100

160.0 0.5 -0.4

91

178.9 100 -7.4 5.2

150.7 100 -6.7 5.1

175.6 100 -4.4 1.8

693.6 -6.0 4.1

100

89

159.2

89

134.1

89

156.3

89

617.3 -7.2 2.9

89

162.8 -2.9 0.5

88

13.4

7

12.8

7

10.7

7

12.5

7

49.4 7.5 17.6

7

14.5 7.6 11.0

8

7.3

4

6.9

4

5.8

4

6.8

4

26.8 1.0 11.1

4

7.8 7.1 10.5

ESTIMATES AS OF FEBRUARY 22, 2013/GF

Q3 S%

91

Q4 S%

Temporary dip 7.8due 5 to: 8.1 9.0 5 - no-29.1more iTero sales -35.6 -27.0 - hurricane Sandy -30.0 -33.0 -35.4 fiscal/political uncertainty 4 7.5 4 6.9 4 7.3 8.9 8.0

18.0 12.0

7.8 8.0

29.5 10.1 9.6

Q1

Q2

Q3

Q4

2012

2013E

2014E

2015E

1.23 -10.7

1.21 -6.1

1.20 -4.0

1.20 4.1

1.21 -1.8

1.21 -2.2

1.23 2.0

1.23 0.0

1.23 0.0

0.89 -14.9

0.92 -2.0

0.94 7.7

0.96 16.8

0.93 2.0

0.94 5.8

0.93 -0.7

0.93 0.0

0.93 0.0

Including Neodent (fully consolidated).

Including -1.0%lc from transferred and discontinued businesses.

GINA FRANCIOLI

Information herein is believed to be reliable, but BANK AM BELLEVUE does not guarantee its completeness or accuracy. Opinions and estimates constitute our judgement and are subject to change without notice. Past performance is not indicative of future results. This material is not intended as an offer or solicitation for the purchase or sale of any shares or other financial instruments. This material is intended solely for our clients and may not be reproduced, distributed or published without our prior consent.


STRAUMANN - DISCOUNTED CASH FLOW MODEL (CHF MN)

ESTIMATES AS OF FEBRUARY 22, 2013/GF

2013E

2014E

2015E

2016E

2017E

2018E

2019E

2020E

2021E

2022E

TV

SALES 1) - CHANGE IN % - CHANGE IN LC IN %

677 -1.4 -0.7

697 2.9 2.9

724 4.0 4.0

760 4.9 4.9

797 4.9 4.9

834 4.7 4.7

871 4.5 4.5

909 4.3 4.3

946 4.1 4.1

982 3.9 3.9

992 1.0 1.0

EBIT - CHANGE IN % - IN % OF SALES

116 89.7 17.1

125 7.6 17.9

131 5.0 18.0

141 7.8 18.5

151 7.1 18.9

156 3.6 18.7

162 3.4 18.5

167 3.1 18.3

172 2.9 18.1

176 2.7 17.9

119 -32.5 12.0

33 -5.5 4.9 172.0

32 -1.6 4.7 164.4

32 -0.8 4.4 156.8

32 -0.2 4.2 149.2

32 -0.5 4.0 141.6

32 -0.9 3.8 134.0

31 -1.4 3.6 126.4

31 -2.0 3.4 118.9

30 -2.6 3.1 111.3

29 -3.2 2.9 103.7

5 -82.8 0.5 100.0

EBITDA - CHANGE IN % - IN % OF SALES

149 26.7 22.0

157 5.5 22.5

163 3.8 22.5

173 6.2 22.8

183 5.7 23.0

188 2.8 22.5

193 2.5 22.1

197 2.3 21.7

201 2.1 21.3

205 1.8 20.9

124 -39.5 12.5

./. TAXES PAID - IN % OF EBITDA ./. NON-CASH ITEMS ./. NET INCREASE IN NET WORKING CAPITAL - IN % OF SALES ./. CAPITAL EXPENDITURES (BEFORE ACQ.) - IN % OF SALES

20 13.7 0 0 0.0 -19 2.8

22 14.2 0 -3 0.4 -20 2.8

23 13.9 -1 -4 0.5 -21 2.8

24 13.7 0 -4 0.5 -22 2.8

25 13.7 0 -4 0.5 -23 2.8

26 13.7 0 -4 0.5 -24 2.8

26 13.7 0 -4 0.5 -25 2.8

27 13.7 0 -5 0.5 -26 2.8

28 13.7 0 -5 0.5 -27 2.8

28 13.7 0 -5 0.5 -28 2.8

17 13.7 0 -5 0.5 -5 0.5

FREE CASH FLOW (BEFORE INTEREST) - CHANGE IN %

109 15.5

112 2.7

115 2.9

124 7.5

131 5.9

134 2.4

137 2.2

140 1.9

142 1.7

144 1.4

97 -32.7

+ DEPRECIATION & AMORTIZATION - CHANGE IN % - IN % OF SALES - IN % OF CAPEX

WEIGHTED AVERAGE COST OF CAPITAL RISK FREE INTEREST RATE IN % MARKET RISK PREMIUM IN % BETA VS. SMI COST OF EQUITY IN % AVG. INTEREST RATE ON DEBT IN % TAX RATE IN % COST OF DEBT (TAX ADJUSTED) IN % DEBT IN % OF EV WACC IN %

3.0 5.5 1.0 8.5 4.0 17.0 3.3 0.0 8.5

ENTERPRISE VALUE NUMBER OF YEARS DISCOUNT FACTOR DISC. FREE OPERATING CASH FLOWS SUM OF DCF 2013E - 2022E

0.8 0.94 102.4

1.8 0.86 96.9

2.8 0.80 91.9

3.8 0.73 91.0

4.8 0.68 88.8

5.8 0.62 83.8

6.8 0.57 78.9

7.8 0.53 74.1

PERPETUAL GROWTH RATE IN % TERMINAL VALUE EV = DISCOUNTED FREE CASH FLOWS + NET CASH (DEBT) + CONTRIBUTION FROM NEODENT (@ avg. P/E 16x) TOTAL VALUE (CHF) NUMBER OF SHARES IN MN

8.8 0.49 69.5

9.8 0.45 64.9 842.2 1.0 582.5 1,424.7 140 227 1,791.8 15.4

VALUE PER SHARE (CHF) - VALUATION GAP IN % (EQUITY VALUE PER SHARE / SHARE PRICE)

59%

41%

116 -9.3

SENSITIVITY SHARE PRICE AT VARIOUS EBITA MARGINS AND TV GROWTH RATES

TV EBITA MARGIN

TV GROWTH RATE

116 -1.0 -0.5 0.0 0.5 1.0 1.5 2.0 2.5

10 103 104 106 107 109 112 114 117

11 105 107 109 111 113 115 118 121

SHARE PRICE AT VARIOUS WACC AND TV GROWTH RATES

13 111 113 115 117 119 122 126 130

14 113 115 117 120 123 126 130 134

15 116 118 120 123 126 129 133 138

9.0 104 106 107 109 111 113 116 119

9.5 101 102 103 105 106 108 110 113

10.0 97 98 100 101 102 104 106 108

WACC

TV GROWTH RATE

1) Estimates excluding Neodent.

12 108 110 112 114 116 119 122 125

116 -1.0 -0.5 0.0 0.5 1.0 1.5 2.0 2.5

8 117 120 122 125 129 132 137 143

8.0 112 114 117 119 122 125 129 133

8.5 108 110 112 114 116 119 122 125

GINA FRANCIOLI

Information herein is believed to be reliable, but BANK AM BELLEVUE does not guarantee its completeness or accuracy. Opinions and estimates constitute our judgement and are subject to change without notice. Past performance is not indicative of future results. This material is not intended as an offer or solicitation for the purchase or sale of any shares or other financial instruments. This material is intended solely for our clients and may not be reproduced, distributed or published without our prior consent.


Disclaimer “This document was produced by and the opinions expressed are those of Bank am Bellevue as of the date of writing and are subject to change. It has been prepared solely for information purposes and for the use of the recipient. It does not constitute an offer or an invitation by or on behalf of Bank am Bellevue to any person to buy or sell any security. Any reference to past performance is not necessarily a guide to the future. The information and analysis contained in this publication have been compiled or arrived at from sources believed to be reliable but Bank am Bellevue does not make any representation as to their accuracy or completeness and does not accept liability for any loss arising from the use hereof. The issuer of the securities referred herein or a Bellevue group company may have acted upon the information and analysis contained in this publication before being made available to clients of Bank am Bellevue. A Bellevue group company may, to the extent permitted by law, participate or invest in other financing transactions with the issuer of the securities referred herein, perform services or solicit business from such issuers, and/or have a position or effect transactions in the securities or options thereof during the last three years. Derivative or structured products are complex instruments, typically involve a high degree of risks and are intended for sale only to investors who are capable of understanding and assuming the risks involved. Investments in Emerging Markets are speculative and considerably more volatile than investments in established markets. Some of the main risks are Political Risks, Economic Risks, Credit Risks, Currency Risks and Market Risks. Furthermore, investments in foreign currencies are subject to exchange rate fluctuations. Before entering into any transaction, you should consider the suitability of the transaction to your particular circumstances and independently review (with your professional advisors as necessary) the specific financial risks as well as legal, regulatory, credit, tax and accounting consequences. This document may not be reproduced either in whole, or in part, without the written permission of Bank am Bellevue.” For US clients “Bank am Bellevue and its research analysts are not members of the Financial Industry Regulatory Authority and are not subject to the FINRA Rules on Research Analysts and Research Reports and the attendant restrictions and required disclosures required by that rule. All persons receiving this report and wishing to buy or sell any of the securities discussed herein should do so through a representative of Auerbach Grayson & Company. If the report is to be distributed to more than major U. S. Institutional Investors Auerbach Grayson & Company accepts responsibility for the contents of this report as provided for in SEC Releases and SEC staff no-action letters. Auerbach Grayson & Company and its affiliates do not own one per cent (1%) or more of any class of equity securities issued by any of the companies discussed in this report. Auerbach Grayson & Company and its affiliates have not received any investment banking compensation from any of the issuers discussed in this report in the past twelve months, and does not intend to seek or expect to receive investment banking compensation from any of the issuers discussed in this report in the next three (3) months. Auerbach Grayson & Company has not acted as manager or co-manager of any public offering of securities issued by any of the companies discussed in this report in the past three (3) years. Neither Auerbach Grayson & Company nor any of its officers own options, rights or warrants to purchase any of the securities of the issuers whose securities are discussed in this report. Auerbach Grayson & Company does not make a market in any of the securities discussed in this report, and it and its associated persons do not stand ready to buy from or sell to any customers, as principal, any of the securities discussed in this report.” For UK clients “Bank am Bellevue AG is a company limited by shares incorporated in Switzerland with a Swiss Banking License which has no permanent place of business in the UK and which is not an authorised person for the purposes of the Financial Services and Markets Act 2000. The protections provided by the UK regulatory system will not be available to the recipients of any information or documentation provided by Bank am Bellevue AG and compensation under the Financial Services Compensation Scheme will not be available. The information contained in this document is subject to change without notice, its accuracy is not guaranteed, it may be incomplete or condensed and it may not contain all material information relating to the [investments or companies] referred to in it. Neither Bank am Bellevue AG nor any of its directors, officers or employees nor any other person shall have any liability whatsoever (for damages, in negligence or otherwise) howsoever arising from any use of this document or its contents or otherwise arising in connection with this communication. This communications is only made to or directed at persons in the UK who are investment professionals (as defined in Article 19 of the Financial Services and Markets Act 2000 (Financial Promotions) Order 2005) with professional experience in matters relating to investments of the type to which this communication relates. Bank am Bellevue AG will not engage in any activity arising from this communication with any person who is not an investment professional, and persons who are not investment professionals with professional experience in matters relating to investments of the type to which this communication relates should not rely on it.” This document is not a prospectus and does not constitute or include an offer or invitation to subscribe for or to purchase any investment.”

Gina Francioli (gfr@bellevue.ch) .

22 March 2013

Feedback from the IDS 2013 in Cologne  

March 22, 2013

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