German Stock Ideas
RWE, Daimler, Software AG,
Rheinmetall, Bauer AG
Andreas Neubauer, DVFA
Head of Research
(49) 69 910 31900
andreas.neubauer@db.com
Ingo Schmitz, CFA
Strategist
(49) 69 910 31910
ingo.schmitz@db.com
Stefan Bielmeier
Research Analyst
49 69 910 31789
stefan.bielmeier@db.com
This month we recommend being buyers of RWE, Daimler, Software AG,
Rheinmetall and Bauer AG.
Deutsche Bank AG/London
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Bank does and seeks to do business with companies covered in its research reports. Thus, 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. Independent, third-party research (IR) on certain companies covered by DBSI's research
is available to customers of DBSI in the United States at no cost. Customers can access IR at
http://gm.db.com/IndependentResearch or by calling 1-877-208-6300. DISCLOSURES AND ANALYST CERTIFICATIONS ARE
LOCATED IN APPENDIX 1.
Special Report
Top picks
RWE (RWEG.DE),EUR62.04 Buy
Daimler (DAIGn.DE),EUR25.74 Buy
Software AG (SOWG.DE),EUR52.57 Buy
Rheinmetall (RHMG.DE),EUR27.30 Buy
Bauer AG (B5AG.DE),EUR26.71 Buy
Companies featured
RWE (RWEG.DE),EUR62.04 Buy
2007A 2008E 2009E
DB EPS (EUR) 5.29 6.20 7.10
P/E (x) 15.8 10.0 8.7
EV/EBITA (x) 9.8 7.6 7.1
Daimler (DAIGn.DE),EUR25.74 Buy
2007A 2008E 2009E
DB EPS (EUR) 3.77 3.64 2.26
P/E (x) 16.7 7.1 11.4
EV/EBITA (x) 5.4 4.1 6.5
Software AG (SOWG.DE),EUR52.57 Buy
2008A 2009E 2010E
DB EPS (EUR) 4.55 5.05 5.61
P/E (x) 9.8 10.4 9.4
EV/EBITA (x) 6.9 7.4 6.7
Rheinmetall (RHMG.DE),EUR27.30 Buy
2007A 2008E 2009E
EPS (EUR) 4.14 3.92 2.36
P/E (x) 15.2 7.0 11.6
EV/EBITA (x) 10.7 6.9 10.5
Bauer AG (B5AG.DE),EUR26.71 Buy
2007A 2008E 2009E
DB EPS (EUR) 4.23 5.89 4.21
P/E (x) 11.8 4.5 6.3
EV/EBITA (x) 8.6 4.8 5.7
Global Markets Research Company
RWE
Management just confirmed its guidance for 2008, which calls for an increase in
group earnings by more than 10% and a dividend payout of 70%- 80% (higher
than 50%-60%) of sustainable net income. Even more important RWE already sold
in advance its power generation for 2009/2010 and was thus able to secure the
high prices for the near future. The stock looks attractive and trades below sectoraverage
multiples on 8.6x 2009E P/E (versus sector 10.9x) and a 5.2x 2009E EV/
EBITDA (sector 7.5x).
Daimler
Daimler will release final earnings for 2008 on 17 February, around noon. In the
final quarter we anticipate earnings on a group level to decline by 74% to
EUR358m. Management will in our view announce a second core programme, and
we do not rule out that Mercedes will announce plant closures in their overseas
activities Brazil/South Africa. Furthermore we see headcount reductions at
Mercedes and trucks, and we anticipate that management will target a total