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1. arietee 16 juli 2003 08:55

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   WSJE(7/16) Heard In Europe: Another Look At Versatel's Stk?
   
   woensdag 16 juli 2003 07:45
   Categorie: ALGEMEEN
   
   (From The Wall Street Journal Europe)
   By David Reilly
   
   MENTION VERSATEL Telecom International NV and most investors will shudder.
   
   The Dutch telecom operator was one of the great flameouts of the tech
   bubble. In March 2000, Versatel Telecom's stock reached a peak of about 80
   euros a share as investors rushed to take part in what proved to be an
   illusionary data revolution. A little more than two years later, the
   debt-laden company had filed for bankruptcy as the telecom industry was
   faced with more fiber-optic cable than it knew what to do with and falling
   demand.
   
   In October 2002, Versatel's shareholders were pretty much wiped out as it
   erased 1.7 billion euros in debt by converting bonds into equity at a value
   of about 28 European cents a share. So it's no surprise that plenty of
   investors would prefer to bathe in leeches than give the company another
   chance to bleed their portfolios. But it might be time to let bygones be
   bygones.
   
   Versatel is looking more and more like a company on the mend. True, the
   really big bounce is over for the stock; the shares have risen fourfold
   since their debt-to-equity swap levels and now stand at 1.09 euros on the
   Amsterdam Stock Exchange.
   
   But until May, the company was pretty much a speculative play. Now, even
   though future gains might not be as heady, it's possible to assess the
   company on its fundamentals.
   
   Many who do so believe that the shares have more room to run, and that the
   discount they trade at, compared with the shares of other so-called
   alternative telecom carriers -- operators that sprang up to challenge the
   old national giants -- will narrow over time. Versatel is boosting sales and
   margins in its voice telephone businesses for both business and residential
   customers, as well as through its Internet-service-provider business Zon.
   The latter is being helped along by strong interest in
   digital-subscriber-line (DSL) access, which tends to generate higher average
   revenues per user. While Versatel's main market is the Netherlands, it also
   operates in Belgium and is expanding in Germany, where earlier this year it
   acquired two new businesses.
   
   Of course, Versatel isn't out of the woods yet, and investors will remain
   wary until they get more information from the company's second-quarter
   results scheduled out in early August.
   
   The main issues: whether the company adjusts its full-year forecast
   upward, as promised; the impact the German acquisitions will have on
   earnings; and when the company will start to generate cash.
   
   "The next hurdle for us is free cash flow," acknowledges a
   Versatel spokesman. "The question is, can an alternative telecom
   operator generate positive free cash flow?"
   
   So far, the company has said it's on track to do so in the first quarter
   of 2004. One catch is how it defines free cash flow, namely earnings before
   interest, taxes, depreciation and amortization minus capital expenditure.
   The company excludes working capital from its free-cash-flow definition,
   which is a bit of a waffle. Typically, working capital, or the amount of
   money a company needs to run on a daily basis, is included in such a
   calculation.
   
   The Versatel spokesman says it proceeds that way because certain current
   liabilities can't be calculated. Their exact amounts are dependent on
   decisions from regulators regarding disputed bills from some of big telecom
   operators with which Versatel does business, he says.
   
   In its favor, Versatel includes the full amount of the disputed bill in
   the liabilities. And most quarters, it has been able to reduce these, as
   regulators have lowered bills because they felt Versatel was overcharged. In
   the first quarter, for example, Versatel had a gain of 15 million euros
   related to a disputed bill with Deutsche Telekom AG. There should be another
   gain for the second quarter, since Versatel won a case against KPN NV,
   though the amount of the decision hasn't been disclosed.
   
   Still, this makes it a bit difficult to project how quickly Versatel can
   reduce its working-capital needs. That in turn affects how much cash the
   company will likely have at the end of 2004, which is one key to valuing the
   stock.
   
   Versatel emerged from the throes of bankruptcy with a relatively clean
   balance sheet: It has no debt, and at the end of the first quarter, it had
   cash of 151 million euros. At the same time, it had negative working capital
   of about 100 million euros. If Versatel can reduce the negative working
   capital to about 35 million euros by the middle of 2004, while generating
   only about 23 million euros in what it calls free cash flow for the year as
   a whole, it should have about 140 million euros in cash, said Mark de Boer,
   analyst at Kempen & Co., one of the few brokers to still cover the
   stock.
   
   Under this scenario, the company's enterprise value (market capitalization
   plus net debt) is just 3.8 times consensus 2004 Ebitda of about 90 million
   euros, as estimated by data provider JCF Group. That's a steep discount to
   other alternative telecom operators. Together, this group trades at an
   average multiple of about 6.6 times. Granted, Versatel deserves to trade at
   a discount because of its recent history in bankruptcy court, but not that
   big a discount.
   
   In light of that, what could the company be worth? Apply a 25% bankrupt
   discount to the peer average for a multiple of 5.2 times. And assume, for
   argument's sake, that cash on hand isn't as robust at the end of 2004, say
   about 110 million euros. Keep Ebitda the same because the company isn't
   likely to disappoint in providing a more positive forecast when it reports
   in August. In that case, the stock should be worth about 1.24 euros a share,
   a 14% premium to today. Mr. de Boer takes an even more positive outlook,
   forecasting Ebitda of 100 million euros next year, which helps bring him to
   a target price of 1.40 euros a share.
   
   "You can't forget where they've come from," Mr. de Boer said.
   "Shareholders and creditors gave the company a second chance, but
   they'll never do that again. So they have to make sure there will be no
   negative surprises."
   
   ---
   
   Please send comments and questions to david.reilly@wsj.com
   
   (END) Dow Jones Newswires
   
   
2. [verwijderd] 16 juli 2003 09:28

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   Mooi bericht, een aanbeveling waard!!
3. [verwijderd] 16 juli 2003 09:31

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   Helemaal in lijn met mijn eigen inschatting. We staan gewoon een factor 2 ondergewaardeerd, en dat ze dan vinden dat 25% daarvan 'terecht' is vanwege de surceance... Nou, over een paar jeer is men die surceance heus wel vergeten, en dan krijgen we die 25% er ook weer bij. (Daar groeit de koers dus 33% van gerekend vanaf het lage, ondergewaardeerde bedrag!).
   
   Zomaar 33% extra rendement in een paar jaar, 33% ook berekend over de winst die de normale groei oplevert. Kan het nog beter???