Folli Follie

Outperform (from Neutral)

Retail

High Risk (from High Risk)

Mkt. Price:

19.50

Target Price:

24.0

FTSE Market:

446.94
3-Sep-15

Equity Research | Update

RIC: HDFr.AT, BBG: FFGRP GA
Changes
Rating - TP
Target price
24.0

of which DPS

0.00

Previous
Total stock return

34.0
23.0%

Could this be the turnaround in Cash Flow?

EPS

2014a

2015e

2016e

2017e

2.14
3.30
0.37

2.28
2.08
0.80

2.82
2.52
0.99

3.03
3.07
1.06

1,334
54

1,433
94

1,556
109

1,688
103

998
223
202
141

1,222
259
235
153

1,296
285
259
189

1,359
307
279
203

Trading data
1m
3m
6m
2%
3%
-5%
Rel. Performance
-19%
-19%
-32%
Abs. Performance
14.93 31.50
H | L 52w
1305.49
Market cap. (mn)
Shares outstanding (m): 129.3
61% 797.7
Free float (%, mn)
Avg. vol. Traded (52w): 99.8k
Index constituent & weight:
ASE (4.77%), FTSE LC (4.5%), FTSE MI (4.3%)

12m

Valuation
P/E
P/BV
EV/Sales
EV/EBITDA
EV/EBIT
Dividend yield
FCF yield
Per share
EPS
EPS old
DPS
BS data (m)
Sh. Equity
Net debt
P&L data (m)
Revenues
EBITDA
EBIT
Net income

9.1x
0.9x
1.9x
8.7x
9.6x
1.9%
0.3%

8.5x
0.9x
1.6x
7.5x
8.3x
4.1%
1.1%

6.9x
0.8x
1.5x
6.8x
7.5x
5.1%
3.9%

6.4x
0.8x
1.4x
6.3x
6.9x
5.4%
5.7%

26%
-19%

52w performance

300

35.0

250

30.0

200
25.0
150
20.0
100

New Estimates
We have upgraded sales and profitability estimates but adopted a more
conservative stance in FCF generation during 2015-16. In detail, revenues and
EBITDA CAGR 14/17e could reach 10.8% and 11.2% (vs. AFe old 6% and 7.3%)
respectively. For gross profit margin we except pressure in the next couple of years
and then stability close to 49% in the long term (AFe old 50%). FCF could reach
16.2mn in 2015 and increase to 56mn in 2016 reaching yield of 10-13% by
2019-20 (AFe old 7-8%). We see WC pressure to remain for at least the next three
years with WC/Sales ranging around 8% (AFe old 9%). Net debt/EBITDA could
continue decreasing in the coming years closing to zero by 2020 depending on the
CAPEX plans of the company.
1H 15 Snapshot & CC highlights
FFGRP announced 1H 15 figures which came broadly in line in terms of operating
profitability but on lower margins than we anticipated since sales beat our
estimates by a 31.4mn delta. In a glimpse, sales, EBITDA, EBIT and NI stood at
594.3mn (+24.1% y-o-y, AFe 563mn), 128.1mn (+10% y-o-y, AFe 135.4mn),
113.19mn (+6.2% y-o-y, AFe 120.9mn) and 73.2mn (+11% y-o-y, AFe
73.9mn) respectively. On a cash flow basis FCF (Op. CF Inv CF) turned positive
to 13.18mn vs. 17mn in 1H 14. The most important comments from the CC
were: a) JWA target EBITDA margin at 28% for 2015, b) for 3Q in Greece despite
the capital controls effect they were almost flat in July and had a very strong
August; it was tourism and partial return of the consumer sentiment that helped a
lot, c) in China during 3Q they havent seen any problem with their business since
the middle class in the country is very low leveraged, d) no detailed guidance was
given again but it was restated that a double digit growth in top and bottom line is
expected for 2015 with CAPEX standing at 60mn, e) when asked for a listing in
Honk Kong the CEO stated that they are considering their options but no decision
has been taken yet.

15.0

50
0
A-14

Folli Follie generated a healthy free cash flow in 1H 15 of 13.18mn vs. -17mn in
1H 14. It was the combination of prudent WC management, favorable FX trends
and good l-f-l growth in Asian markets. One cannot disregard the troubling
consumer sentiment outlook in China and the gradual turn to a wholesale oriented
model in the Jewelry division which has lower margins. Discounting these factors in
our model we lowered our target price to 24/share from 34 previously but
upgraded our recommendation to outperform from Neutral since we believe that
investors have over penalized the stock due to its Greek listing.

O-14

N-14

J-15

F-15

A-15

M-15

Vol traded (,000s shares) LH scale

Antonis Diapoulis
Analyst
antonis.diapoulis@alphafinance.gr

J-15

10.0
S-15

Adjusted price

Folli Follie is a diversified retail group which offers globally own brand jewels, watches and accessories and resells a
strong brand portfolio in Greece and SEE through department stores. FF operates in 28 countries around the globe
and aims to further expand its presence so as to establish its brand in the international fashion world.

T +30 210 367 7532, +30 210 367 7513

Alpha Finance does and seeks to do business with companies covered in its research reports. Consequently, investors should be aware that the firm may
have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their
investment decision.

Please refer to important disclosures in the Disclosure Appendix

Alpha Finance Equity Research

Rating: Neutral | High risk

Target price:
of which DPS:
Total stock return:
Mkt cap (mn):
Enterprise value
Headline figures
P&L items (mn)
Revenues
Ebitda
Ebit
Pre tax income
Minorities
Net income
EPS ()
DPS ()
No. of shares, weighted
Fixed assets, net
Cash & equivalents
Current assets
Total assets
Equity
Minorities
Long term debt
Long term liabs
Short term debt
Current liabilities
Equity & liabilities
Gross cash flow
working capital
Operating cash flow
Capex
Free cash flow
debt
equity
Dividends
Dividends to mins
Net debt/ (cash)
Y -o - Y change (%)
Revenues
Ebitda
Ebit
Pre tax income
Net income
EPS
Margins (%)
Ebitda
Ebit
Pre tax income
Net income
Ratios & valuation
P/E
P/BV
EV/Sales
EV/EBITDA
EV/EBIT
FCF Yield
Dividend Yield
Payout ratio
Debt/equity
Net debt/ebitda
Interest covered
RoE
RoIC

Folli Follie

24.0
0.00
23%
1305
1940

Share price performance

(%)
1m
6m
Rel
2%
-5%
Abs
-19%
-32%
Free Float:
61.1%
H | L 52w
21.9

Folli Follie
Current Price
Sector: Retail

12m
26%
-19%

19.5

34.4

2011a

2012a

2013a

2014a

2015e

2016e

2017e

1,021
199
174
122
2
90
1.36
0.00
66
2011a
233
136
1,010
1,724
721
18
315
396
417
9
1,724
2011a
116
116
0
36
-35
-54
103
0
-1
596
2011a
3%
0%
-2%
-6%
1%
-8%
2011a
19%
17%
12%
9%
2011a
14.4x
1.7x
1.9x
9.8x
11.2x
-1.8%
0.0%
0%
1.0x
3.0x
2.6x
12%
9%

1,110
213
186
131
2
94
1.42
0.00
66
2012a
240
126
1,096
1,816
805
20
429
506
312
5
1,816
2012a
122
98
24
39
-16
9
-10
0
0
615
2012a
9%
7%
7%
7%
5%
5%
2012a
19%
17%
12%
8%
2012a
13.7x
1.6x
1.7x
9.1x
10.4x
-0.8%
0.0%
0%
0.9x
2.9x
3.2x
11%
10%

934
195
173
398
3
345
5.22
0.00
66
2013a
175
252
1,025
1,572
1,160
23
36
64
187
6
1,572
2013a
-1
-7
6
-289
296
-237
46
0
0
-29
2013a
-16%
-9%
-7%
204%
268%
268%
2013a
21%
19%
43%
37%
2013a
3.7x
1.1x
2.1x
10.0x
11.2x
22.7%
0.0%
0%
0.2x
-0.1x
3.3x
29%
11%

998
223
202
193
4
141
2.14
0.37
66
2014a
186
297
1,364
1,970
1,334
27
304
348
47
5
1,970
2014a
200
144
56
52
5
129
0
25
1
54
2014a
7%
15%
17%
-52%
-59%
-59%
2014a
22%
20%
19%
14%
2014a
9.1x
0.9x
1.9x
8.7x
9.6x
0.3%
1.9%
18%
0.3x
0.2x
7.3x
10%
10%

1,222
259
235
204
4
153
2.28
0.80
67
2015e
231
256
1,415
2,059
1,433
27
315
359
35
5
2,059
2015e
181
101
80
64
16
-1
0
54
4
94
2015e
22%
16%
16%
6%
8%
7%
2015e
21%
19%
17%
13%
2015e
8.5x
0.9x
1.6x
7.5x
8.3x
1.1%
4.1%
35%
0.2x
0.4x
6.7x
10%
11%

1,296
285
259
244
4
189
2.82
0.99
67
2016e
266
241
1,518
2,191
1,556
27
315
359
35
5
2,191
2016e
218
108
110
55
56
0
0
66
4
109
2016e
6%
10%
10%
19%
23%
23%
2016e
22%
20%
19%
15%
2016e
6.9x
0.8x
1.5x
6.8x
7.5x
3.9%
5.1%
35%
0.2x
0.4x
12.3x
12%
12%

1,359
307
279
264
4
203
3.03
1.06
67
2017e
303
247
1,632
2,335
1,688
27
315
359
35
5
2,335
2017e
234
96
139
57
81
0
0
71
4
103
2017e
5%
8%
8%
8%
8%
8%
2017e
23%
21%
19%
15%
2017e
6.4x
0.8x
1.4x
6.3x
6.9x
5.7%
5.4%
35%
0.2x
0.3x
13.3x
12%
12%

Folli Follie is a diversified retail

group which offers globally
own brand jewels, watches
and accessories and resells a
strong brand portfolio in
Greece and SEE through
department stores and . FF
operates in 28 countries
around the globe and aims to
further expand its presence so
as to establish its brand in the
international fashion world.

website:
http://www.follifolliegroup.com
all prices as of September 3rd
Research analyst
Antonis Diapoulis
+30 210 367 7532
antonis.diapoulis@alphafinance.gr

source: company data & Alpha Finance Research Estimates

Please read important disclosures at the end of the report.

-1-

Alpha Finance Equity Research

Folli Follie

Folli Follie in a box

Folli Follie Good FCF generation Upgrade to outperform despite lower Target price
Key assumptions:
1.

Summary: Folli Follie continues to successfully establish its international brand by continuing its expansion in China during the
past 12 months. Benefits from the EUR/USD FX rate movement in the start of 2015 and good sales growth resulted in a healthy
FCF generation in 1H 15 which could be sustainable in 2015 but also in the long term. On the other hand, worries over the
Chinese economy and the transition to a wholesale model which has lower margins are potential risks. With this note we have
adopted a weaker FCF growth scenario during 15-16 to our previous estimates in order to discount potential risks and a higher
WACC which yields a significantly lower target price. Nevertheless, the negative absolute performance of the stock during the
past 12 months gives a significant upside from current levels, allowing us to upgrade the recommendation to Outperform from
Neutral.

2.

New Estimates: We expect the group to present revenues and EBITDA CAGR 14/17e of 11% and 11.2% (vs. AFe old 6% and
7%) respectively. In contrast, EBITDA margins are lower by 0.6-1% in the midterm and reach 23% in the long term vs. AFe old
23%. Additionally, we have downgraded 2015-17 FCF yields to 1.1-6% vs. AFe old 6.4-8.6% since we have assumed more
challenges in WC management and higher CAPEX for network expansion.

3.

Target Price: Our 2016 target price stands at 24/share (AFe old 34/share). We have assumed an average WACC of 11.5%
(AFe old 9.3%) a terminal growth of 1.5% (vs. AFe old 2.5%), ERP of 5% and weighted risk free rate of 8% (AFe old 5% each).

4.

Model Assumptions: Our estimates are affected by the following factors: a) the growth of the store network, the working
capital needs generated and revenues l-f-l growth for the Jewelry Watches Accessories (JWA) segment, b) FX volatility for the
gross margins, c) l-f-l sales growth for department store & retail wholesale segments, d) the level of synergies/co-operation with
Dufry, e) macroeconomic and political conditions and f) management tactical decisions. We have assumed that Folli Follie will
operate 739 (unchanged) POS by the end of 2016 and add 31 new per annum on the back of a variable l-f-l of 0.6-1.4% in the l/t
(vs. AFe old 35 Pos & 3-3.5%). For the next two years though (2015-16) we have assumed a small figure in l-f-l growth resulting
from the slowdown in many markets, FX impact and the fact that sales are mostly generated by new Pos rather than organic.
Gross margins will stand at 48-49% (vs. AFe old 50%) in the long term influenced mostly by the JWA segment expansion.

5.

Debt/FCF/CAPEX: We expect net debt to reach to 109mn in 2016 (vs. net cash 29mn in 2013 net debt/EBITDA 2016
0.38x). In the long term (2020) we forecast net debt/EBITDA of -0.15x (AFe old -0.8x), FCF yield of 14% (AFe old 17%) and a
Capex/sales of 4.2% (AFe old 2%).
Key Estimates : TP 25/share (vs AFe old 34)
Revenues - EBITDA POS CAGR 14/17e 10.8%, 11.2% & 5.2% resp., l-f-l 16e 0.6%, 2 yr avg WC/Sales 0.08x, Gross
profit margin 2016 48.5%
Latest news

Announced the exclusive representation of Shiseido products in Greece and Cyprus,

FFGRP will distribute a 0.2/share capital return. The Share buyback program will continue.
1H 15 Highlights

Good 1H 15 results broadly in line with AFe but net income. sales, EBITDA, EBIT and NI stood at 594.3mn (+24.1%
y-o-y, AFe 563mn), 128.1mn (+10% y-o-y, AFe 135.4mn), 113.19mn (+6.2% y-o-y, AFe 120.9mn) and
73.2mn (+11% y-o-y, AFe 73.9mn) respectively. On a cash flow basis FCF (Op. CF Inv CF) turned positive to
13.18mn vs. 17mn in 1H 14.

WACC TG Sensitivity
WACC/Tg
10.5%
11.5%
12.5%

Please read important disclosures at the end of the report.

0.5%
24.8
22.2
20.2

1.5%
27.0
24.0
21.6

2.5%
29.9
26.2
23.2

-2-

Alpha Finance Equity Research

Folli Follie

Valuation Assumptions Snapshot - Sensitivity

Valuation
We perform a DCF analysis for Folli Follie group on top of which we add the valuation of the
stake held in Dufry. Our valuation exercise now yields a 2016 target price of 24/share (AFe
old 34). We have assumed a variable average WACC of 11.5% (AFe old 9.3%), an ERP and
weighted Rf of 8% and 5% respectively (AFe old 5% both) and a terminal growth rate of 2%
(vs. AFe old 2.5%) in order to grasp the long term upside potential of the company due to
exposure foreign markets like China. Our valuation uses what we believe are fair estimates for
the business of the company, taking into account the risky environment it operates in.
Folli Follie DCF model
(mn eu)
Revenues
EBITDA
EBIT * (1 - tax rate) (I)
CAPEX
Depreciation & Amortization
- (Capex - Depreciation) (II)
- Change in Working Capital (III)
Reinvestment (II+III=IV)
Free Cash Flow (I-IV)
WACC
Discounting Factor
Discounted FCF
PV of Cash Flows
+ Residual Value
Terminal Growth Rate
- Net Debt
- Minorities
+ Dufry stake
Equity Value
Shares (mn)
Dividend per Share
DCF per share

FY 12a
1110
213
136
39
27
12
98
110
25
11.0%
395
1115
2.0%
109
4
209
1606
67
0.00
24.0

FY 13e
934
195
150
-289
21
-310
-7
-318
468
12.1%

FY 14e
998
223
146
52
21
31
144
175
-29
11.8%

FY 15e
1222
259
173
64
24
40
101
141
33
12.2%

FY 16e
1296
285
198
55
26
29
108
137
61
11.4%
90%
55

FY 17e
1359
307
211
57
27
30
96
126
86
11.4%
81%
69

FY 18e
1423
328
228
60
29
31
94
125
102
11.4%
72%
74

FY 19e
1487
349
242
63
30
33
65
97
145
11.4%
65%
94

FY 20e
1552
370
257
66
32
34
48
82
175
11.4%
58%
102

Assumptions
ERP:5%, Beta 1
Rf: 8%

Source: Company data | AFe |

Please read important disclosures at the end of the report.

-3-

Alpha Finance Equity Research

Assumptions by segment

Folli Follie

In this section we present a detailed review of our main assumptions and any changes we
have incorporated.
1.

Jewelry Watches Accessories:

a.

Network: FF operated 677 by 1H 15. By the end of the current year we

expect FF to operate 693 (AFe old 701) points of sale out of which 443 in
Asia (AFe old 436), 151 in Europe (AFe old 154), 25 in North America (AFe
old 37) and an additional 74 spread worldwide (AFe old 74 - airport
terminals). Thus, we have assumed 46 new POS in 2016, and then 31 per
annum (vs. AFe old 35). Total number of POS at to 863 by 2020 (vs. AFe
old 900). Net additions are mostly in China and some in Europe. For the US
we have very few net additions (1 per annum) as the companys strategy is
yet unclear.

JWA Stores Forecast

900

25%

22.0%

800

770

739

18.3%

693

662

700

17.3%

607
600
500

20%
15%

539
488

7.9%

437

10.0%

9.7%

10%
7.3%

400

5.6%5%

3.6%

0.7%

300

0.6%

1.4%
0%

-2.6%

200

-5%

100
-8.1%
0

-10%
2010a

2011a

2012a

POS

2013a

2014a

2015e

JWA revenues growth %

2016e
l-f-l

Source: company data, AFe |RHS:% y-o-y change, LHS: stores absolute number| please note that in 2015e l-f-l
in gross and includes FX impact of c. 10%

b.

Revenues (71-72% of l/t sales): We expect revenues to grow with a GAGR

14/17e of 11.4% (vs. AFe old 7.2%) mostly fueled by sales in Asia (CAGR
14/17e 13.2% vs. AFe old 7.7%), POS net additions in other areas,
synergies from Dufry airport shops and favorable FX rates. 2015 Like for like
growth excluding any FX gains should stand at -2.5% in Asia (AFe old -2%),
-5% in Europe (AFe old -3%) and highly negative in the US (AFe old 5%).
We see these trends reversing by single digit figures from 2017 onwards.

c.

Gross Profit margin: Historically, Gross profit margins stood at 56-58%. We

feel that as older units mature, new pos enter the network and most
importantly the company reverses to a more wholesale oriented model,
margin could drop 2-4% in the long term settling to 52% (vs. 53-54%
previously).

d.
Please read important disclosures at the end of the report.

CAPEX: Having set an average of 31 POS net additions per annum we

-4-

Alpha Finance Equity Research

Folli Follie

expect total capex including any reallocations and maintenance to reach

50mn per annum (l/t CAPEX/Sales 5% - AFE old 2%).
JWA Profitability margins evolution

30%
58%

25%

23%

23%

27%

25%

60%

28%

27%
26%

28%
27%

27%

58%
56%

56%
21%

24%

20%

28%

27%

26%

21%
55%

54%

54%

54%

15%

52%

10%

51%

51%

52%
50%

5%

48%

0%

46%
2010a

2011a

2012e

2013a

EBITDA Margin (LHS)

2014a

2015e

EBIT Margin (LHS)

2016e

2017e

Gross Profit Margin (RHS)

Source: company data, AFe

2.

Department Stores:
a.

Network: FF operates six department stores, four in Athens (Attica, Golden

Attica, Attica in the Mall and Factory Outlet) and two in Thessaloniki (Attica
North and one in the center of the city which opened recently in late 2014).

b.

Revenues (13-14% of l/t sales): This segment continues to have a strong

performance since 2Q 13. It has been affected by the conditions in the
Greek economy in 1H 15 but not in terms of sales but mostly margins. We
expect sales CAGR 14/17e of 7.2% (vs. 3.8% previously).

Department sales evolution & Profitability

250.0
36%

200.0

36%

36%

36%

36%

36%
36% 36%

35%

150.0

35%

100.0

35%

50.0

34%

34%

0.0
-50.0

34%
2010a

2011a

2012a

2013a

2014a

2015e

2016e

2017e

33%

I. Attica

II. Golden Attica (NorthLandmark)

III. Factory Outlet

IV. Attica North

V. Attica The Mall Athens

VI. Attica Tsimiski

Gross Profit Margin

Source :company data, AFe | RHS: Gross profit margin, LHS: Revenues per POS, mn eu

c.

Gross Profit margin: Department stores used to enjoy high gross profit
margins of 35-36% before the crisis. In 1H 15 margin remained high at
35.7%. Since new store openings have not put much pressure in this

Please read important disclosures at the end of the report.

-5-

Alpha Finance Equity Research

Folli Follie

segment we have kept mid and long term margins stable to 34% (AFe old
midterm 35%, L/T 35%).
d.

CAPEX: We identify maintenance CAPEX at c. 1mn per annum from 2015

onwards since we assume no new stores (l/t CAPEX/sales 1%).

3.

Retail Wholesale:
a.

Network/Revenues (14-15% of sales): This segment combines a number of

retail activities spread in four countries namely Greece, Cyprus and Bulgaria.
FF operates both as wholesale distributer for a number of brands but also
has set up some retail reseller networks for some of them. Economic
environment is mixed in 1H 15 but sales were up 40%. Unfortunately,
expansion generated negative margins thus EBITDA stood at -2.3mn in 2Q
15. We have set revenue CAGR 14/17e of 12.2% (vs. AFe old 2.2%) on the
back of long term prospects.

b.

Gross Profit margin: Revenues have been good but profitability has not
followed. Margins dropped to 6% in 1H 15 and given the circumstances in
these markets in order for FF to attract sales it must sacrifice profits. We
estimate gross profit margin in the long term will reach c. 45% vs. AFe old
50%.

c.

CAPEX: Low CAPEX mostly maintenance in the range of 1.8-2mn per

annum (l/t CAPEX/sales 2% - unchanged to AFe old)

Retail/wholesale sales evolution & Profitability

250
200

60%
51%

46%
40%

48%

48%

48%50%

40% 40%

40%

150

30%
100

20%

50

10%

0%
2010a

2011a

Greece

2012a

2013a

Romania

2014a
Bulgaria

2015e

2016e

2017e

Gross profit margin

Source: company data, AFe

Please read important disclosures at the end of the report.

-6-

Alpha Finance Equity Research

Folli Follie

4.

Folli Follie Group1:

a.

Key Financial Forecasts: We estimate revenue and EBITDA CAGR 14/17e of

10.8% and 11.3% (vs. AFe old 6% and 7.3%). Gross profit margin will
reach 48.3% n 2015 and it should gradually stabilize to 49.2% in the long
term (2020). Similarly, EBITDA margin, seen at 21.2% in 2015, should
gradually converge to 23.4% in the long term.

b.

Debt: We estimate that by the end of 2015 net debt will stand at 94.4mn
(gross amount not excluding money market products if any). In the coming
years we expect that net debt will reach to c. 109mn by 2016 (net
debt/EBITDA 0.4x) and transform to net cash by 2020 assuming that the
company enters a more mature expansion phase.

c.

Working Capital/CAPEX/FCF: Working capital management is the most

important aspect of FF business. We still believe that the operating cycle will
remain high pushing capital needs up. Fortunately in 1H 15 the company
presented a healthy FCF of 13.18mn vs. -17mn in 1H 14. The company
has not given any guidance but we believe that the trend will remain
positive and growing in the coming years. FCF could be positive in 2015 and
from 2016 we expect a healthy FCF yield of c.4% (l/t now stands at 14%
vs. AFe old 17%).

For detailed accounts refer to the financial sector of this report

Please read important disclosures at the end of the report.

-7-

Alpha Finance Equity Research

Folli Follie

Forecast Changes
Forecast Changes
P&L (mn eu)
Revenues
% change

2013a

2014a

934.2
-15.8%

998.1
6.8%

Cost of Goods sold

% change

463.5
-16.2%

496.3
7.1%

515.0
3.8%

631.8
27.3%

557.0
8.1%

667.0
5.6%

596.4
7.1%

696.4
4.4%

Gross profit
% change
% margin

470.7
-15.5%
50.4%

501.8
6.6%
50.3%

515.0
2.6%
50.0%

590.2
17.6%
48.3%

554.9
7.8%
49.9%

629.1
6.6%
48.5%

593.8
7.0%
49.9%

662.7
5.3%
48.8%

EBIT
% change
% margin

173.4
-6.7%
18.6%

202.4
16.7%
20.3%

204.7
1.2%
19.9%

234.8
16.0%
19.2%

229.1
11.9%
20.6%

258.8
10.2%
20.0%

250.0
9.1%
21.0%

279.2
7.9%
20.5%

EBITDA
% change
% margin

194.7
-8.5%
20.8%

223.0
14.5%
22.3%

226.2
1.4%
22.0%

259.0
16.1%
21.2%

250.9
10.9%
22.6%

284.5
9.9%
22.0%

272.1
8.4%
22.9%

306.5
7.7%
22.6%

Finacials

224.24

-9.56

0.19

-30.73

0.19

-14.98

-5.22

-14.82

397.6
203.6%
42.6%

192.8
-51.5%
19.3%

198.7
3.1%
19.3%

204.1
5.9%
16.7%

223.1
12.3%
20.1%

243.8
19.5%
18.8%

244.8
9.7%
20.6%

264.4
8.4%
19.5%

50.11
12.6%

47.36
24.6%

28.80
14.5%

47.05
23.1%

38.23
17.1%

51.11
21.0%

38.87
15.9%

57.37
21.7%

2.87

4.14

3.25

4.14

3.25

4.14

3.25

4.14

344.7
267.8%
36.9%

141.3
-59.0%
14.2%

166.6
17.9%
16.2%

152.9
8.2%
12.5%

181.6
9.0%
16.3%

188.5
23.3%
14.5%

202.7
11.6%
17.0%

202.9
7.6%
14.9%

PBT
% change
% margin
Taxes
rate
Minorities
Net income
% change
% margin

Please read important disclosures at the end of the report.

2015e
new
1030.0 1222.0
3.2%
22.4%
old

2016e
old
new
1111.9 1296.1
8.0%
6.1%

2017a
old
new
1190.2 1359.0
7.0%
4.9%

CAGR 14/17
old
new
6.0% 10.8%

6.9%

11.2%

12.8%

12.8%

-8-

Alpha Finance Equity Research

Forecast Changes (per

Segment)
(mn eu)
Sales of JWA
% change
% of total
Travel Retail
% change
% of total
Retail & Whole Sale
% change
% of total
Department stores
% change
% of total
Other
% change
% of total
Revenues
% change
EBIT
Jewllery, Watches Accessories
% change
% margin
% of total
Travel Retail
% change
% margin
% of total
Retail & Whole Sale
% change
% margin
% of total
Department stores
% change
% margin
% of total
Other
% change
% margin
% of total
EBIT
% change
% margin

Folli Follie

2014a

2015e
new
735.6
860.0
5.0%
22.0%
71.4%
70.4%
140.6
185.7
13.9%
35.7%
14.7%
15.2%
151.2
173.4
4.3%
13.0%
13.6%
14.2%
2.6
2.9
2.0%
2.0%
0.3%
0.2%
old

704.9
9.7%
70.6%
136.9
28.8%
13.7%
153.5
12.7%
15.4%
2.8
2.0%
0.3%

2016e
new
800.9
922.4
8.9%
7.3%
72.0%
71.2%
143.4
189.4
2.0%
2.0%
14.8%
14.6%
164.9
181.4
9.1%
4.6%
12.9%
14.0%
2.7
2.9
2.0%
2.0%
0.2%
0.2%
old

2017e
old
new
869.3
973.9
8.5%
5.6%
73.0%
71.7%
146.3
193.2
2.0%
2.0%
14.4%
14.2%
171.9
188.9
4.2%
4.2%
12.3%
13.9%
2.7
3.0
2.0%
2.0%
0.2%
0.2%

CAGR 14/17
old
new
7.2% 11.4%
2.2%

12.2%

3.8%

7.2%

-1.1%

2.0%

998.1
6.8%

1030.0
6.0%

1222.0
22.4%

1111.9
8.0%

1296.1
6.1%

1190.2
7.0%

1359.0
4.9%

6.0%

10.8%

186.9
16.6%
26.5%
92.4%
13.9
49.9%
10.2%
6.9%
11.93
41.6%
7.8%
5.9%
-10.42
124.8%
-372.2%
-5.2%

191.0
3.7%
26.0%
93.3%
12.6
14.5%
9.0%
6.2%
9.37
18.6%
6.2%
4.6%
-8.29
0.1%
-318.8%
-4.1%

225.1
20.4%
26.2%
95.9%
9.8
-29.8%
5.3%
4.2%
11.86
-0.6%
6.8%
5.1%
-11.91
14.3%
-417.1%
-5.1%

211.0
10.5%
26.4%
92.1%
13.3
5.3%
9.3%
5.8%
12.92
37.8%
7.8%
5.6%
-8.10
-2.4%
-305.2%
-3.5%

245.1
8.9%
26.6%
94.7%
12.1
23.8%
6.4%
4.7%
14.69
23.8%
8.1%
5.7%
-13.13
10.2%
-450.7%
-5.1%

229.8
8.9%
26.4%
91.9%
13.9
5.1%
9.5%
5.6%
14.64
13.3%
8.5%
5.9%
-8.31
2.6%
-307.1%
-3.3%

262.7
7.2%
27.0%
94.1%
14.5
19.9%
7.5%
5.2%
16.87
14.9%
8.9%
6.0%
-14.87
13.3%
-500.5%
-5.3%

7.1%

12.0%

0.0%

1.4%

7.1%

12.3%

-7.3%

12.6%

202.4
16.7%
20.3%

204.7
5.1%
19.9%

234.8
16.0%
19.2%

229.1
11.9%
20.6%

258.8
10.2%
20.0%

250.0
9.1%
21.0%

279.2
7.9%
20.5%

7.3%

11.3%

196.0
14.2%
27.8%
87.9%
15.1

201.9
3.3%
27.4%
89.2%
14.1

235.2
20.0%
27.3%
90.8%
11.1

222.3
10.1%
27.8%
88.6%
14.5

255.4
8.6%
27.7%
89.8%
13.3

241.3
8.6%
27.8%
88.7%
14.9

273.0
6.9%
28.0%
89.1%
15.5

7.2%

11.7%

-0.3%

0.9%

Forecast Changes
Cash Flow Metrics
FCF
FCF yield
Operating Cycle
WC
Cash

Please read important disclosures at the end of the report.

2014a

2015e
new
81.87
16.16
6.2%
1.1%
310.00
321.00
88.34
101.30
303.98
255.70
old

4.54
0.3%
364.80
144.10
297.17

2016e
new
66.39
55.64
5.0%
3.9%
328.00
335.00
117.45
108.14
303.55
241.20
old

2017e
new
107.34
81.40
8.6%
5.7%
336.00
348.00
96.32
95.54
336.69
247.45
old

-9-

Alpha Finance Equity Research

Folli Follie

Financials
Profit & Loss (mn eu)

2011a

2012a

2013a

2014a

2015e

2016e

2017e

Revenues

1021.4

1110.0

934.2

998.1

1222.0

1296.1

1359.0

% change

2.7%

8.7%

-15.8%

6.8%

22.4%

6.1%

4.9%

0.0

553.2

586.3

652.6

769.7

817.2

860.5

504.9

553.2

463.5

496.3

631.8

667.0

696.4

% change

2.8%

9.6%

-16.2%

7.1%

27.3%

5.6%

4.4%

Gross profit

516.5

556.9

470.7

501.8

590.2

629.1

662.7

Cost of Goods sold

% change

2.6%

7.8%

-15.5%

6.6%

17.6%

6.6%

5.3%

% margin

50.6%

50.2%

50.4%

50.3%

48.3%

48.5%

48.8%

174.0

185.8

173.4

202.4

234.8

258.8

279.2

% change

-1.5%

6.8%

-6.7%

16.7%

16.0%

10.2%

7.9%

% margin

17.0%

16.7%

18.6%

20.3%

19.2%

20.0%

20.5%

24.8

27.0

21.3

20.6

24.2

25.8

27.3

198.7

212.8

194.7

223.0

259.0

284.5

306.5

% change

0.2%

7.1%

-8.5%

14.5%

16.1%

9.9%

7.7%

% margin

19.5%

19.2%

20.8%

22.3%

21.2%

22.0%

22.6%

121.9

131.0

397.6

192.8

204.1

243.8

264.4

EBIT

Depreciation
EBITDA

PBT
% change

-6.0%

7.4%

203.6%

-51.5%

5.9%

19.5%

8.4%

% margin

11.9%

11.8%

42.6%

19.3%

16.7%

18.8%

19.5%

30.6

35.3

50.1

47.4

47.1

51.1

57.4

25.1%

26.9%

12.6%

24.6%

23.1%

21.0%

21.7%

1.8

2.0

2.9

4.1

4.1

4.1

4.1

Net income

89.5

93.7

344.7

141.3

152.9

188.5

202.9

% change

1.4%

4.7%

267.8%

-59.0%

8.2%

23.3%

7.6%

% margin

8.8%

8.4%

36.9%

14.2%

12.5%

14.5%

14.9%

1.356

1.420

5.221

2.140

2.284

2.816

3.030

-8.4%

4.7%

267.8%

-59.0%

6.7%

23.3%

7.6%

Taxes
rate
Minorities

EPS
% change

Source: AFe | company data

Please read important disclosures at the end of the report.

- 10 -

Alpha Finance Equity Research

Folli Follie

Sales B/D (mn eu)

Sales of JWA

2011a

2012a

2013a

2014a

493.3

583.8

642.4

% change

3.6%

18.3%

% of total

48.3%

52.6%

106.2

98.4

% change

-9.4%

% of total

10.4%

Retail & Whole Sale

Department stores

2015e

2016e
922.4

2017e

704.9

860.0

973.9

10.0%

9.7%

22.0%

7.3%

5.6%

68.8%

70.6%

70.4%

71.2%

71.7%

106.3

136.9

185.7

189.4

193.2

-7.3%

8.0%

28.8%

35.7%

2.0%

2.0%

8.9%

11.4%

13.7%

15.2%

14.6%

14.2%

125.9

123.8

136.2

153.5

173.4

181.4

188.9

% change

-7.7%

-1.7%

10.0%

12.7%

13.0%

4.6%

4.2%

% of total

12.3%

11.2%

14.6%

15.4%

14.2%

14.0%

13.9%

5.1

3.7

2.5

2.8

2.9

2.9

3.0

% change

-27.1%

-20.0%

-2.5%

2.0%

2.0%

2.0%

2.0%

% of total

0.5%

0.3%

0.3%

0.3%

0.2%

0.2%

0.2%

0.0

0.0

0.0

0.0

0.0

0.0

0.0

1021.4

1110.0

934.2

998.1

1222.0

1296.1

1359.0

2.7%

8.7%

-15.8%

6.8%

22.4%

6.1%

4.9%

2014a

2015e

2016e

Other

Intersegment
Revenues
% change

Source: AFe | company data

Gross Profit B/D (mn eu)
JWA

2011a

2012a

276.3

322.5

% change

0.0%

16.7%

% margin

56.0%

55.2%

% of total

53.5%

57.9%

42.8

38.9

Retail & Whole Sale

2013a
348.8

472.9

2017e

377.1

438.6

502.0

8.2%

8.1%

16.3%

7.8%

6.1%

54.3%

53.5%

51.0%

51.3%

51.5%

74.1%

75.2%

74.3%

75.2%

75.7%

48.8

69.1

89.1

90.9

92.7

% change

-7.6%

-9.2%

25.5%

41.7%

28.9%

2.0%

2.0%

% margin

40.3%

39.5%

46%

51%

48%

48%

48%

% of total

8.3%

7.0%

10.4%

13.8%

15.1%

14.5%

14.0%

44.9

43.5

48.6

54.5

62.0

64.7

67.4

Department stores
% change

-3.1%

-3.3%

11.9%

12.1%

13.7%

4.4%

4.2%

% margin

35.7%

35.1%

35.7%

35.5%

35.7%

35.7%

35.7%

% of total

8.7%

7.8%

10.3%

10.9%

10.5%

10.3%

10.2%

Other

1.0

0.3

0.5

0.7

0.5

0.6

0.6

% change

-32.9%

-64.5%

38.8%

38.1%

-21.2%

13.3%

2.0%

% margin

18.8%

9.2%

18.9%

23.3%

18.0%

20.0%

20.0%

% of total

0.2%

0.1%

0.1%

0.1%

0.1%

0.1%

0.1%

Gross profit

516.5

556.9

470.7

501.8

590.2

629.1

662.7

% change

2.6%

7.8%

-15.5%

6.6%

17.6%

6.6%

5.3%

% margin

50.6%

50.2%

50.4%

50.3%

48.3%

48.5%

48.8%

Source: AFe | company data

Please read important disclosures at the end of the report.

- 11 -

Alpha Finance Equity Research

Folli Follie

EBITDA B/D (mn eu)

Jeweler, Watches
Accessories

2011a

2012a

2013a

2014a

2015e

2016e

114.4

132.4

171.5

196.0

235.2

% change

-8.4%

15.7%

29.5%

14.2%

20.0%

8.6%

6.9%

% margin

23.2%

22.7%

26.7%

27.8%

27.3%

27.7%

28.0%

% of total

57.6%

62.2%

88.1%

87.9%

90.8%

89.8%

89.1%

-8.7

-6.3

10.4

15.1

11.1

13.3

15.5

% change

557.6%

-27.7%

-265.4%

44.6%

-26.0%

19.0%

16.6%

% margin

-8.2%

-6.4%

9.8%

11.0%

6.0%

7.0%

8.0%

% of total

-4.4%

-3.0%

5.4%

6.8%

4.3%

4.7%

5.0%

11.1

6.4

9.7

13.0

13.0

15.8

17.9

% change

-24.8%

-41.9%

50.2%

34.9%

-0.7%

21.6%

13.7%

% margin

8.8%

5.2%

7.1%

8.5%

7.5%

5.5%

5.8%

% of total

5.6%

3.0%

5.0%

5.9%

5.0%

5.5%

5.8%

Retail & Whole Sale

Department stores

Other

255.4

2017e
273.0

-2.34

-3.5

-5.0

-1.1

-0.3

0.1

0.1

% change

80.4%

49.1%

44.2%

-78.9%

-73.1%

-151.0%

2.0%

% margin

-45.8%

-94.1%

-192.7%

-37.9%

-10.0%

5.0%

5.0%

% of total

-1.2%

-1.6%

-2.6%

-0.5%

-0.1%

0.1%

0.0%

EBITDA

198.7

212.8

194.7

223.0

259.0

284.5

306.5

% change

0.2%

7.1%

-8.5%

14.5%

16.1%

9.9%

7.7%

% margin

19.5%

19.2%

20.8%

22.3%

21.2%

22.0%

22.6%

Source: AFe | company data

Please read important disclosures at the end of the report.

- 12 -

Alpha Finance Equity Research

Balance Sheet (mn eu)

Cash & Cash Equivalent
Inventories
Trade receivables
Other Current Assets
Derivatives
Other Financial assets at FV
through profit
Current Assets

Folli Follie

FY 11a
135.5
339.2
399.5
136.1
0.1

FY 12e
126.5
377.6
445.5
146.3
0.0

FY 13e
251.6
254.8
390.4
127.7
0.0

FY 14e
297.2
366.6
533.8
166.0
0.4

FY 15e
255.7
467.4
505.5
186.0
0.0

FY 16e
241.2
502.5
568.2
206.0
0.0

FY 17e
247.4
543.7
614.4
226.0
0.0

0.1
1010.4

0.0
1096.0

0.0
1024.5

0.0
1363.9

0.0
1414.6

0.0
1517.9

0.0
1631.5

233.2
103.7
252.8
73.8
0.0
0.4
22.3
27.3
713.5

240.1
99.6
252.8
72.9
0.5
0.6
22.6
30.8
719.9

175.3
11.9
91.9
76.1
14.5
153.7
3.5
20.4
547.3

185.8
11.7
94.5
76.0
0.7
207.2
0.0
29.8
605.7

231.4
11.4
94.5
70.2
0.0
207.2
0.0
29.8
644.6

266.5
11.1
94.5
64.4
0.0
207.2
0.0
29.8
673.5

302.7
10.8
94.5
58.5
0.0
207.2
0.0
29.8
703.6

1723.9

1815.8

1571.8

1969.6

2059.2

2191.4

2335.1

L/T Debt
Deferred tax liabilities
Employee benefit liabilities
Total l/t provisions
Other l/t liabilities
L/T Liabilities

314.7
30.9
9.4
3.4
37.2
395.5

428.8
36.1
8.3
3.7
29.3
506.2

35.9
12.8
2.5
3.5
9.7
64.4

304.3
19.0
3.7
3.5
17.7
348.3

315.3
19.0
3.7
3.5
17.7
359.3

315.3
19.0
3.7
3.5
17.7
359.3

315.3
19.0
3.7
3.5
17.7
359.3

S/T debt
Derivatives
Trade & Other Payables
Current Income Tax
Current Tax Liabilities
Dividends payable
S/T liabilities

417.2
0.0
154.0
8.6
8.7
0.1
588.6

312.2
0.0
152.3
15.0
4.9
0.1
484.5

186.6
0.0
120.3
11.5
5.6
0.0
323.9

46.8
0.0
181.9
26.8
5.0
0.0
260.5

34.8
0.0
173.1
26.8
5.0
0.0
239.7

34.8
0.0
182.7
26.8
5.0
0.0
249.4

34.8
0.0
194.6
26.8
5.0
0.0
261.2

Share Capital
Share Premium
Other Reserves
Other Equity
Retained earnings
Equity

20.1
145.2
-22.9
-95.7
674.7
721.4

20.1
145.2
-14.3
-114.6
768.2
804.7

20.1
145.2
47.7
-130.7
1077.8
1160.1

20.1
95.0
291.7
-38.0
965.3
1334.1

20.1
95.0
291.7
-38.0
1064.7
1433.4

20.1
95.0
291.7
-38.0
1187.2
1556.0

20.1
95.0
291.7
-38.0
1319.1
1687.9

Minority Interests

18.4

20.4

23.3

26.8

26.8

26.8

26.8

739.8

825.1

1183.4

1360.9

1460.2

1582.8

1714.7

1723.9

1815.8

1571.8

1969.6

2059.2

2191.4

2335.1

Tangible Fixed Assets

Intangible Assets
Goodwill
Investment property
Investments in Subsidies
Investments available for sale
Deferred tax claims
Other long term assets
Non Current Assets
Total Assets

Equity & Minorities

Total Liabilities

Source: AFe | company data

Please read important disclosures at the end of the report.

- 13 -

Alpha Finance Equity Research

Cash Flow(mn eu)

Net income

Folli Follie

2011a

2012a

2017e

188.5

202.9

27.0

21.3

20.6

24.2

25.8

27.3

-8.7

-25.5

9.2

0.0

0.0

0.0

-2.4

2.6

-2.9

15.4

0.0

0.0

0.0

Plus: Minorities

1.8

2.0

2.9

4.1

4.1

4.1

4.1

Plus: non cash taxes

0.4

4.8

-4.2

9.7

0.0

0.0

0.0

minus: other non-cash items

0.0

0.0

337.0

0.0

0.0

0.0

0.0

Plus Dividends received

0.0

0.0

0.0

0.0

0.0

0.0

0.0

115.8

121.6

-0.8

200.3

181.2

218.5

234.3

Plus: Chng in Acc Payable

-9.2

-1.7

-32.0

61.6

-8.8

9.6

11.9

Plus: Chng in other current Liabilities

25.1

-1.5

0.0

0.0

0.0

0.0

0.0

Less: Chng in Acc. Receivable

64.4

46.1

-4.9

90.1

-28.3

62.6

46.2

Less: Other Receivable

24.9

10.1

31.4

20.0

20.0

20.0

20.0

Gross Cash Flow

Less: Chng in Inventories

1.8

2016e

152.9

Plus: Chng in Taxes Payable

24.8

2015e

141.3

Plus: Chng in Provisions

93.7

2014a

344.7

Plus: Depreciation & Amortization

89.5

2013e

42.2

38.4

-65.8

95.6

100.8

35.2

41.2

115.7

97.9

(7.3)

144.1

101.3

108.1

95.5

0.1

23.6

6.5

56.2

79.9

110.3

138.8

35.6

35.3

-200.6

26.1

63.4

54.4

57.1

0.0

4.2

-88.4

25.6

0.3

0.3

0.3

(35.5)

(15.8)

295.5

4.5

16.2

55.6

81.4

-0.2

0.0

0.0

24.7

53.5

66.0

71.0

Plus: Equity Chng

103.0

-10.2

45.9

0.4

0.0

0.0

0.0

Plus: Debt Chng

-54.1

9.2

-237.0

128.6

-1.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

-1.3

0.0

0.0

0.6

4.1

4.1

4.1

-13.4

7.7

20.7

-62.2

0.7

0.0

0.0

0.2

0.1

0.0

-0.4

0.4

0.0

0.0

1.7

(9.0)

125.1

45.6

(41.5)

(14.5)

6.2

135.5

126.5

251.6

297.2

255.7

241.2

247.4

Working Capital Chng

Operating Cash Flow
Less: Purchases of Fixed Assets
Less: Chng in Investments
Free Cash Flow
Less: Dividends Paid

Plus: Grants Chng

Less: Dividends to Minorities
Plus: Consolidation adjustments
Plus: Other
Chng in Cash Position
Cash Position

Source: AFe | company data

Please read important disclosures at the end of the report.

- 14 -

Alpha Finance Equity Research

Folli Follie

DISCLOSURE APPENDIX
ALPHA FINANCE INVESTMENT SERVICES S.A. (Alpha Finance)

Headquarters: 5, Merlin Street, GR 106 71 Athens, www.alphafinance.gr

T +30-210-367 7400, F +30-210-331 1193, reception@alphafinance.gr
Ministry of Development, S.A. Registration Number: 19420/06/B/89/01,G.E.MI.1176701000
Regulated by the Hellenic Capital Market Commission, License No. 42/13.04.1989
Analyst Certification
The research analyst(s) undersigned and responsible for the preparation of this report certify (-ies) that a) the views expressed in this report accurately
reflect their (his/her) personal views about any and all of the securities or issuers mentioned in this report and b) no part of the analysts compensation
was, is, or will be, directly or indirectly related to the specific recommendations or views expressed in this research report. Analysts receive compensation
based upon various factors, including the quality and accuracy of research, productivity, experience, individual reputation, competitive factors and feedback
from clients.
Company specific regulatory disclosures
Disclosure checklist for companies mentioned & other price data information
Reuters
Rating
Price

Price date/time

Disclosure

Folli Follie
HDFr.AT
Neutral
19.94
Official close @
15 September 2015
2
Source: Alpha Finance
1. Alpha Finance and/or its affiliate(s) has acted as manager/co-manager/adviser in the underwriting or placement of securities of this company within the
past 12 months
2. Alpha Finance and/or its affiliate(s) has received compensation for investment banking services from this company within the past 12 months
3. Alpha Finance makes a market in the securities of this company
4. Alpha Finance and its affiliate(s) owns five percent or more of the total share capital of this company
5. The company and its affiliate(s) owns five percent or more of the total share capital of Alpha Finance and its affiliates
6. Alpha Finance has sent the research report to the company prior to publication for factual verification
7. Following 6, Alpha Finance has changed the contents of the initially sent research report, with respect to: no change
8. Alpha Finance has received compensation from the company for the preparation of this research report
Major changes vs. previous research reports
Date of report
Price on report date ()
15/9/2014
29.45

TP ()
34

Rating
Neutral

Forward1 EPS ()
2.5

Source: Alpha Finance | 1: next years EPS used from December onwards
Ratings and target price history
Price chart for Folli Follie

Rating history for Folli Follie

DATE
16/01/2013
22/10/2013
17/02/2014
15/09/2014
04/09/2015

Rating
outperform
neutral
neutral
neutral
outperform

Share Price ()
13.5
20.1
25
29.3
19.94

Price Target ()
16.6
18.9
25
34
24

Regulatory disclosures
This report has been prepared by Alpha Finance Investment Services S.A. (Alpha Finance), a wholly owned subsidiary of Alpha Bank A.E. Alpha Finance is
regulated by the Hellenic Capital Markets Commission (HCMC). Alpha Finance has in effect management policies to identify and confront potential conflicts
of interest that could arise in the research division of the company and/or its affiliates (Chinese Walls).

Alpha Finance Equity Research

Folli Follie

Valuation method
Our valuation for the FF Group is based on a DCF model. We use a WACC rate of 11.5% with terminal growth rate of 2% to value the group.
Risk rating
We rate the FF Group as high risk based on the qualitative/ quantitative assessment of risk we apply on the company (see definitions of risk below). We
consider the following the biggest investment risks for the shares: a) Greek Economic environment Political risk Consumer behavior b) FX risk (any
strengthening of the euro against other currencies like Yen and USD would adversely affect the business travel retail sector) ,c ) Interest rate risk Prices
inflation Credit risk Liquidity risk Inventory risk, d) Cost Pressures might arise from manufacturing goods in foreign countries (inflationary
pressures in labor costs or raw materials), e) Maintaining its brand perception as affordable luxury goods., f) Further downturn in the Greek tourist
industry.
Definitions of Fundamental and Risk Ratings and Allocations
RISK RATING
High (H)

Relative to

Horizon2

Coverage3

IB services4

TRP1 > +15%

ASE Index

Dec.11

10/50

10.0%

16/50

0.0%

4/50

0.0%

Alpha Finance belongs to the same group of companies

1/50

0.0%

Alpha Finance is currently rendering investment banking services

0/50

0.0%

No rating currently available

19/50

0.0%

Low (L)

TRP1 > +5%

Outperform O/P
FUNDAMENTAL
RATING

Medium (M)

Neutral N

(5%) < TRP < +5%

Underperform U/P

TRP < (5%)

Restricted (G) R(G)

Restricted (IB) R (IB)
Under review UR/ Not rated NR

TRP < (15%)

Source: Alpha Finance | Data as of 31.12.10 | 1: Total Return Potential (=capital return + dividend yield) | 2: except otherwise stated | 3: Percentage of
companies under coverage within this category as of 31.12.10 | 4: Percentage of companies within this rating category for which investment banking
services were provided over the past 12 months, as of 31.12.10. In several occasions, subject to the analyst's view and/or due to volatility of the shares,
the ratings applied may fall out of the brackets described in the table above.
The Alpha Finance universe consists of 50 companies accounting as of 31.12.10 for 79.9% of total market value
Risk ratings explained
We derive the overall risk rating for a stock by applying a 60% weight on quantitative and a 40% weight on qualitative factors. We use a scale from 1 to 3
to describe low, medium and high risk respectively. We compute two different quantitative risks namely liquidity and volatility. We assign equal weights
to liquidity and volatility risks to arrive at a so-called trading or quantitative risk for the specific stock researched. Using a scale of 1-to-3 scale, each
analyst also assigns a qualitative risk that is entirely up to his/her discretion to determine. Following this, we calculated the combined risk of the specific
stock applying the weights mentioned earlier. All IPOs are classified high risk for 12 months after their listing date.
Definitions of Risk Ratings
Quant factor

Definition

Brackets

Risk rating

Liquidity

Number of shares traded over the last 12 months as % of

total shares outstanding

If less than or equal to 33%

If greater than 33% but less than or equal to 66%
If greater than 66%

High
Medium
Low

If equity volatility against the markets is greater than 2

If equity volatility against the markets is greater than 1.5
but less than or equal to 2
If equity volatility against the markets is less than or
equal to 1.5

High
Medium

Volatility

The standard deviation of daily changes during the last

12 months. Volatility is used as a statistical measure of
dispersion and indicates the propensity of a specific
equity to suffer large swings in price. The stocks volatility
is measured against the volatility of the ASE index

Low

Source: Alpha Finance | Data as of 31.12.10 | The quant factors are updated at the end of each calendar quarter
General disclaimer
This report has been prepared by Alpha Finance.
This report by no means provides investment advice as to any financial instruments contained herein. We aim to express our value judgments as to
possible or existing investments, without any existing contractual obligation to our clients. We cannot assume any liability for any investments undertaken
by our clients, since these investments will be a product of their own free will. The information contained in this report has been taken from sources,
which we deem to be reliable. We do not represent that such information is accurate or complete and it should not be relied upon as such. All opinions
and estimates expressed herein constitute our judgment as of this date and are subject to change without notice. Past performance is not indicative of
future results. The opinions and recommendations herein do not take into account individual client circumstances, objectives or needs. This report is
published solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial
instruments.
2014 Alpha Finance. All rights reserved. This report may not be reproduced or redistributed, in whole or in part, without the written permission of Alpha
Finance and Alpha Finance accepts no liability whatsoever for the actions of third parties in this respect.

Alpha Finance Equity Research

Folli Follie

Alpha Finance Investment Services S.A.

Member of the AE, CSE
5 Merlin street,
106 71 Athens
Greece
T +30-210-367 7400
F +30-210-331 1193
reception@alphafinance.gr
www.alphafinance.gr

Equities Research
Manousos Stathoudakis, Director
Antonis Diapoulis
Angelos Chorafas
Nikos Katsenos
Katia Zahari
research@alphafinance.gr
T +30-210-367 7545

Sales & Trading

Spyros Malavazos, Director
Equities Sales | Foreign
Institutions
Natasa Martseki, Director
Vassilis Galleos
Ioannis Batistakis
Equities Sales & Trading |
Institutions
Kostas Tzimos
Maria Vryoni
Giota Kouli
Chris Xikis

Market Making |
Equities & Derivatives
Andreas Papanayotopoulos,
Director
Stelios Tzaras
International Markets |
Sales & Trading
Andreas Papanayotopoulos,
Director
Giannis Giouremos
George Sarris
Sofia Giannakou

Derivatives Sales & Trading

Lefteris Syrrakos, Director
Andreas Markogiannis
Angelos Kostis
Stavros Tsimpos
Equities Trading | Retail
Andreas Tzevelekos, Head
Maria Saranti
name.surname@alphafinance.gr

Equities Sales | Retail

Pantelis Tsitos, Director
Kostantinos Kostoulas,
Deputy Director
Leonidas Kyriakopoulos
Stavroula Galani
Lazaros Koutromanos
Kleanthis Schinas