Capital Markets Equity Research Game 
Berenberg Capital Markets
Equity Research
Game plan adidas – Buy (initiation)
Puma – Hold (initiation)
John Guy
Analyst
+44 20 3465 2674 john.guy@berenberg.com Bassel Choughari
Analyst
+44 20 3465 2675 bassel.choughari@berenberg.com Rupert Trotter
Specialist Sales
+44 20 3207 7815 rupert.trotter@berenberg.com 25 April 2013
Sporting Goods
For our disclosures in respect of section 34b of the German Securities Trading Act (Wertpapierhandelsgesetz – WpHG) and our disclaimer please see the end of this document.
Please note that the use of this research report is subject to the conditions and restrictions set forth in the disclosures and the disclaimer at the end of this document.
Sporting Goods
Table of contents
Game plan
4
Market dynamics
5
Routes to 2015
18
Margin and costs metrics
42
Innovation is essential “skin in the game”
45
Commodity cost pressure or relief?
55
Sporting goods events and share price performance
58
Currency
66
Company KPIs
68
Valuation
71
adidas
76
Financials
101
Puma
104
Financials
127
Disclosures in respect of section 34b of the German Securities
Trading Act (Wertpapierhandelsgesetz – WpHG)
130
Contacts: Investment Banking
133
3
Sporting Goods
Game plan
● We initiate coverage of adidas and Puma. Both companies are in the
●
●
●
●
process of implementing 2015 investment strategies. We believe adidas is at an advanced stage in planning, execution and delivery of its targets compared with Puma. However, we acknowledge the possibility of majority shareholder Kering Group (formerly PPR) acquiring the remaining 17.6% stake in Puma that it does not own at a premium to the current share price, hence Puma’s special situation. adidas offers investors a three-year (FY12-15E) sales and EPS CAGR of 5.5% and 23.2% respectively. We expect adidas to increase its share of the global sporting goods market by 560bp, outperforming average market growth of 1.5x global GDP (FY12-15E). We view FY13 as a transitional year
Equity Research
Game plan adidas – Buy (initiation)
Puma – Hold (initiation)
John Guy
Analyst
+44 20 3465 2674 john.guy@berenberg.com Bassel Choughari
Analyst
+44 20 3465 2675 bassel.choughari@berenberg.com Rupert Trotter
Specialist Sales
+44 20 3207 7815 rupert.trotter@berenberg.com 25 April 2013
Sporting Goods
For our disclosures in respect of section 34b of the German Securities Trading Act (Wertpapierhandelsgesetz – WpHG) and our disclaimer please see the end of this document.
Please note that the use of this research report is subject to the conditions and restrictions set forth in the disclosures and the disclaimer at the end of this document.
Sporting Goods
Table of contents
Game plan
4
Market dynamics
5
Routes to 2015
18
Margin and costs metrics
42
Innovation is essential “skin in the game”
45
Commodity cost pressure or relief?
55
Sporting goods events and share price performance
58
Currency
66
Company KPIs
68
Valuation
71
adidas
76
Financials
101
Puma
104
Financials
127
Disclosures in respect of section 34b of the German Securities
Trading Act (Wertpapierhandelsgesetz – WpHG)
130
Contacts: Investment Banking
133
3
Sporting Goods
Game plan
● We initiate coverage of adidas and Puma. Both companies are in the
●
●
●
●
process of implementing 2015 investment strategies. We believe adidas is at an advanced stage in planning, execution and delivery of its targets compared with Puma. However, we acknowledge the possibility of majority shareholder Kering Group (formerly PPR) acquiring the remaining 17.6% stake in Puma that it does not own at a premium to the current share price, hence Puma’s special situation. adidas offers investors a three-year (FY12-15E) sales and EPS CAGR of 5.5% and 23.2% respectively. We expect adidas to increase its share of the global sporting goods market by 560bp, outperforming average market growth of 1.5x global GDP (FY12-15E). We view FY13 as a transitional year