05 August 2014

Earnings review

DLSI

France | Support services

Buy (Buy)

Target price

EUR 15.40



Current price

EUR 10.97

Baptiste de Leudeville

bdeleudeville@keplercheuvreux.com

+41 22 994 1573

Difficult Q2 for sales, FY forecasts unchanged

Lower-than-expected sales in Q2 and H1

Decrease in domestic market but still above market average

Dynamism confirmed in foreign countries (+6% YOY)

Full-year sales guidance (EUR190m) reiterated

DLSI failed to confirm a good start of the year in Q2 (-2.3%) Revenues for H1 were slightly positive (+0.3% YOY at EUR84.9m, +1.30% LFL), but failed to reach our expectations (EUR86.8m, +2.5% forecasted), due to a decline in Q2 (-2.3% to EUR45.5m vs. +1.8%). The French domestic market failed to confirm the pick-up in Q1 and reached EUR58.3m (-2.1% YOY vs. +1.8% expected). The performance remains above the market average (-3.4% by end of June 2014) according Prism'Emploi. Foreign countries (growth driver) came in at EUR26.6m, up by 6%. The group confirmed its guidance to reach EUR190m in full-year
2014 (in line with our forecasts), notably helped by good momentum at the start of the second semester.

Results recovery expected in 2014

In 2013, operating margin rose to 3.6%, i.e. close to 2008 pre-crisis levels.

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Market data

Market cap (EURm)

28

Free float

34%

No. of shares outstanding (m)

3

Avg. daily trading volume('000)

7

YTD abs performance

50.3%

52-week high (EUR)

15.90

52-week low (EUR)

4.55

16

14

12

10

8

6

4

Aug 13 Nov 13 Feb 14 May 14

Thanks to developments abroad (foreign countries now represents close about one-third of total sales) and the full impact of the CICE effect, we estimate that the recovery could continue. We expect EBIT margin of
4.2% for 2014 (+60bps YOY) and 4.3% for 2015 (i.e. back to the 2007 record high).

Return to historical peak

As DLSI is expected to bounce back to its historical performance in terms of results and FCF generation, we believe that the share price could once again go back to its highs seen in May and June. Adding in the potential resumption of the external growth strategy (good track record), we estimate that it is a good time to Buy the stock.

Price

DJ Stoxx 600 (rebased)

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