Schmolz+Bickenbach - Thesis

All,

Please find our analysis of Schmolz+Bickenbach here.

We are not fans of the current CoC trade, but are fans of the shares post rights issue and possibly post Q4 reporting in March as we see volumes bottoming out around that time (some more work to be done there, but data is scarce / polluted).

Thesis:

Post Reorg equity over the next year appreciates in the order of 40% as volumes return.

CoC:

The company released further details on its rights issue today, which appears set to trigger the CoC clause, but continues to leave open the possibility of no trigger, for instance in the event that the issue is popular at CHF 0.25 and the family - like Liwet - only takes up 77%. Then Haefner could chose to take up only to just under 33% and still control the board - no CoC triggered. Still, Plan A is to trigger the clause - apparently.

Wolfgang