Viscofan: Is organic growth poised to recover?
Going into the FY18 results season we maintain our NEUTRAL rating on Viscofan but cut our FV by 10% from Eur59.60 to Eur53.8 after cutting our estimates at the EBITDA level for 2018E-2020E by c. 6% and net income by c. 10%. This follows a disappointing organic growth performance in 3Q18 and it remains to be seen if this was just a weak period in Asian markets, as the company claims and as we expect, or whether pressure on volumes will continue. Although the lower base effect in 2018E impacts our estimates going forward and valuation, we still believe Viscofan is a global leader with an undisputed position in an industry that has been growing organically at a mid-single digit and therefore its organic growth should recover in the coming quarters. Despite Viscofan’s strengths, we view them as already reflected in its share price and current multiples.Viscofan is the parent company of the Viscofan Group. Co. is divided into two major operational subgroups. The companies comprising the Naturin GmbH subgroup are engaged in the manufacture and distribution of artificial casings (small and big diameter collagen and plastics) for the meat industry. Through its wholly-owned subsidiary IAN, S.A., Co. also manufactures and distributes canned vegetables (asparagus, olives and tomato).
Haitong is the first international Chinese investment bank and our goal is to be the primary channel for capital flows into and out of China. During 2015 the Senior Management Team in London was expanded significantly to focus on this objective and to provide a full-service cross-asset markets business coupled with sector-focused investment banking. We work closely with our world-wide network of offices to bring a true depth of understanding to all client situations.
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