SFPI Group

As a result of the negative surprise in FY18, we have reduced our EPS forecasts for FY19 onwards since we now take a more cautious view on the recovery: +25bp increase in the EBIT margin per year vs previously a +50bp increase in the EBIT margin per year. Automatically, this has a stronger impact on FY20 (-50bp impact on EBIT margin) than on FY19 (25bp impact on the EBIT margin). This change alone explains most of the change in our EPS.

We have lowered the reference multiples as we have reviewed our assumptions on the improvement in the EBIT margin from 50bp per year to 25bp. Note that we have not changed the multiples for each division with the exception of DOM security, which has seen its multiple decrease from 11x to 10x.

The lower expected EBIT than previously forecasted explains most of the decrease in our DCF. We have left the 2022-29 growth forecasts as well as the capex forecasts unchanged, which are the two most important parameters in a DCF valuation.