15分鐘告訴你回報率在15%或更多的保險類股票

Research Highlights
A weekly summary of our Best Ideas and developments within our coverage universe
15 Minutes Could Tell You Which Insurance Stocks Could

Return 15% or More
18 April 2015 24 April 2015
2015 Morningstar, Inc. All rights reserved. The information in this document is the property of Morningstar, Inc.
Reproduction or transcription by any means, in whole or part, without the prior written consent of Morningstar, Inc., is prohibited.
Contents
Research Highlights ...................................................................................................3

15 Minutes Could Tell You Which Insurance Stocks Could Return 15% or More
Industrial Gas Outlook: Harvest Time
Currency Headwinds and Heavy Investment Jab at Google, but Can't Curb Our Enthusiasm
for Its Shares
Best Ideas ..................................................................................................................6
Highlighted Stocks .....................................................................................................9
Avnet AVT
Baxter International BAX
Millicom International Cellular SA MIICF
All market data as of April 23, 2015.
Morningstar Equity Research Highlights | 18 April 2015 24 April 2015

2015 Morningstar. All Rights Reserved. Unless otherwise provided in a separate agreement, you may use this report only in the country in which its original
distributor is based. Data as originally reported. The information contained herein is not represented or warranted to be accurate, correct, complete, or timely.
This report is for information purposes only, and should not be considered a solicitation to buy or sell any security. Redistribution is prohibited without written
permission. To order reprints, call +1 312-696-6100. To license the research, call +1 312-696-6869.
Research Highlights
15 Minutes Could Tell You Which Insurance Stocks Could Return 15% or More
Our presentation A Favorable Outlook Makes It the Right Time for a Deep Look at Insurance,
and Understanding Moats Puts Investors in Good Hands lays out our framework for assessing
opportunities in the insurance sector. Using that framework, we believe W.R. Berkley (WRB),
American International Group (AIG), and Aflac (AFL) are the best opportunities currently
available. With the combination of a narrow moat and Exemplary stewardship, we think W.R.
Berkley is one of the high-water names in the space, and the market is not fully accounting for
the companys leverage to a more attractive market. We think AIGs focus on operational
efficiency sets a course in the right direction, and the current market price underrates its
potential. For Aflac, we think the market is focusing on the near-term decline in demand for life
insurance in Japan and not fully appreciating the positive long-term impact of the countrys
aging population.
Key Takeaways
We are optimistic about the direction of profitability in the property and casualty industry.
W.R. Berkley has significant leverage to improved conditions, since its strict underwriting
discipline leads to swings in its expense ratio across hard and soft markets. During the last
hard market, it averaged a 23% return on equity while earning only an 11% average ROE in
the following soft market. With the stock trading at 1.5 times book value excluding
goodwill and accumulated other comprehensive income, average for commercial P&C
insurers, we think the market is underestimating Berkleys ability to improve results.
We think AIG's focus on growth was the fundamental source of its problems during the
financial crisis, but the current management teams concentration on risk-adjusted returns
and operational efficiency sets a course in the opposite direction. AIGs crisis issues are
mostly resolved, and with management now focused on reducing costs, we expect it to
return to acceptable returns by 2017. With a current market valuation of only 0.8 times
book value excluding goodwill and AOCI, we believe shares are undervalued.
Aflac faces material but manageable near-term issues. But we think that demographic and
regulatory trends provide substantial long-term growth opportunities in its most attractive
business lines and that Aflac will continue to generate material excess returns. Trading at
1.7 times book value excluding AOCI compared with an average of 1.9 times over the past
five years, we think the markets focus on the near term provides an attractive entry point
for one of the strongest life insurance companies.
For further information, please contact:

Brett Horn, CFA | +1 312-384-5440 | brett.horn@morningstar.com

Research Highlights
Industrial Gas Outlook: Harvest Time

Given the global backdrop of economic sluggishness, weaker crude oil prices, and currency
volatility, the tendency might be to write off 2015 as merely the fourth in a string of so-so years
for growth in the industrial gas sector. However, we believe this year marks an industry
inflection point due to a steady stream of large project startups that began in 2014 and will
continue for the next few years. Seeds of major investments earlier this decade will soon
mature into revenue-generating assets. Apropos of a late-cycle industry, accelerating revenue
growth will be paired with moderating capital expenditure budgets and expanding free cash
flows. We judge that declining usage in energy E&P will be more than offset by demand from
new downstream refining, petrochemicals, and industrial customers that benefit from cheaper
fuel and feedstock costs. Investors have flocked to the group as a haven amid economic
uncertainty, pushing up valuations on most names beyond levels that attract value investors
and above our fair value estimates. Praxair (PX) is the one exception. Our biggest difference
with consensus is our view of merchant gas pricing: We expect pricing for major gases to track
local inflation for the next few years, if not lag a bit. Beyond the depressing effect of new
capacity, we believe the growing appetite within the industry for strategies targeting
geographic density implies that managements now favor growing local market share over
achieving higher selling prices.
Key Takeaways
The year 2015 is shaping up as a mixed year overall for industrial gas firms, though the
companies seem well-prepared to cope with slowing economies, weaker crude prices, and
currency volatility.
A steady stream of new project startups are poised to drive accelerating revenue and
earnings growth beginning in the second half of 2015 for the four global majors. Airgas
(ARG), by contrast, will closely follow U.S. economic trends, especially industrial
production.
Stock performance has diverged sharply in recent months. Praxair's underperforming stock
now represents the best value in the group. Stock prices of Europe-based Air Liquide (AI)
and Linde (LIN) have benefited disproportionately from favorable monetary policies and
appear to have delinked from fundamentals for the time being. Investor optimism regarding
both shareholder activism and a new CEO has stretched the valuation of Air Products
(APD).

David Silver, CFA | +1 312-244-7251 | david.silver@morningstar.com

Research Highlights
Currency Headwinds and Heavy Investment Jab at Google, but Can't Curb Our
Enthusiasm for Its Shares
Google (GOOG) posted strong quarterly results that were modestly below our top-line forecast,
but revenue mix (tilted more toward Google properties) and lower expense rates for traffic
acquisition costs helped the bottom line. We think the company's foundation as the dominant
Internet search provider will feed into other critical assets such as YouTube (video) and Android
(mobile) to propel double-digit growth in revenue and earnings for the next several years. Our
wide economic moat rating and $715 fair value estimate both remain, supporting a compelling
investment thesis at the current stock price.
Total revenue grew 12% to $13.9 billion, but the currency impact made for a 5% headwind. This
strong constant currency growth outpaces our estimate for 2015 industrywide digital
advertising growth, primarily because Google provides advertisers a unique capability to better
target advertising in a scalable way, in our view. Clearly, the crown jewels are Search and
YouTube, as Google-owned properties generated 68% of overall revenue, growing 14% on a
GAAP basis. Other initiatives, such as Google Play, Nest, and Google Cloud continue to be small
contributors that add little to the top- or bottom-line results.
Operating margins reflected continued heavy investment, particularly in engineering and
product development personnel. Still, operating margins were 25.8%, only 90 basis points
lower than 2014. We continue to believe that the discretionary nature of Google's investments
masks its true earnings power. We estimate that the firm could deliver operating margins of
approximately 30%, excluding the additional research and development expense allocated
toward new initiatives. Our long-term model is slightly more conservative, reaching a 28%
operating margin by 2019.
We continue to support management's aggressive investment in R&D and data center capacity
(capital expenditures tallied $2.9 billion for the quarter), but management has provided little
visibility about milestones for these investments. Management admits that several investments
may not be successful, but spending on entrepreneurial endeavors serves several purposes,
including defending the threat of disruptive competition and providing incentives to attract and
retain top talent. Nonetheless, cash flow generation is not an afterthought, as free cash flow
(operating cash flows less capital expenditures) increased 80% versus 2014.
Rick Summer, CFA, CPA | +1 (312) 696-6267 | rick.summer@morningstar.com

Best Ideas
Price
Price/
Fair
Value
Market
Cap
Economic
Moat
Rating
Uncertainty
Rating
62
0.78
15.45
Narrow
Medium
QQQQ
2.6
0.62
4.52
None
High
QQQQ
36
0.89
170.63
Narrow
Medium
QQQQ
1845
0.83
81.53
Narrow
Medium
QQQQ
94
0.84
7.9
Narrow
High
QQQQ
Fair
Value
Morningstar
Rating
Analyst
Basic Materials
Nucor (NUE)
48.42
Alumina Ltd
1.61
(AWC)
BHP Billiton
32.05
Ltd (BHP)
BHP Billiton
1531.5
PLC (BLT)
Communication Services
Millicom
International
79
Cellular SA
(MIICF)
Consumer Cyclical
Lane,
Andrew
Taylor,
Mark
Taylor,
Mark
Taylor,
Mark
Nichols,
Allan C.
Weishaar,
Bridget
Hottovy,
R.J.
Weishaar,
Bridget
Wasiolek,
Dan
Gorham,
Philip
Swinand,
Paul
Gap (GPS)
41.22
49
0.84
17.26
Narrow
Medium
QQQQ
Panera Bread
(PNRA)
182.69
190
0.96
4.9
None
Medium
QQQ
PVH (PVH)
105.29
128
0.82
8.69
Narrow
High
QQQQ
1860
0.66
63.42
Narrow
High
QQQQ
430
0.82
8.22
Narrow
Medium
QQQQ
565
0.74
12.91
Wide
High
QQQQ
19
0.72
10.01
Narrow
High
QQQQ
Han, Brian
50
0.72
57.84
None
High
QQQQ
Whiston,
David
42
0.88
60.72
Wide
Medium
QQQQ
Lash, Erin
Priceline Group
1221.1
(PCLN)
Kingfisher PLC
351.8
(KGF)
Swatch Group
418.7
AG (UHR)
Crown Resorts
13.74
Ltd (CWN)
General
35.92
Motors (GM)
Consumer Defensive
Mondelez
International
36.81
(MDLZ)

Best Ideas
Price
Fair
Value
Price/
Fair
Value
Market
Cap
Economic
Moat
Rating
Uncertainty
Rating
Morningstar
Rating
Analyst
Energy
Chesapeake
Energy (CHK)
Cabot Oil &
Gas (COG)
Hanson,
Mark
Hanson,
Mark
Meats,
David
Taylor,
Mark
14.54
27
0.54
9.67
Narrow
High
QQQQQ
32.98
43
0.77
13.63
Narrow
High
QQQQ
14.04
16
0.88
10.41
Narrow
Very High
QQQ
12
0.67
7.82
Narrow
High
QQQQ
Invesco Ltd
(IVZ)
40.81
45
0.91
17.52
Narrow
Medium
QQQQ
Warren,
Greggory
WR Berkeley
(WRB)
49.51
58
0.85
6.23
Narrow
Medium
QQQQ
Horn,
Brett
81.86
93
0.88
45.15
Narrow
Medium
QQQQ
Werner,
Dan
78.99
98
0.81
56.44
Narrow
High
QQQQ
Davis, Erin
5.12
6.5
0.79
38.66
Narrow
High
QQQQ
Puls,
Timothy
21.75
42
0.52
8.5
Narrow
High
QQQQQ
Ellis, David
Encana (ECA)
Santos Ltd
(STO)
Financial Services
Capital One
Financial (COF)
Lloyds Banking
Group PLC
(LLOY)
Banco
Santander
Brasil SA/Brazil
(BSBR)
Apollo Global
Management
LLC (APO)

Best Ideas
Price
Health Care
Baxter
International
(BAX)
Illumina
(ILMN)
Actavis PLC
(ACT)
Express
Scripts Holding
(ESRX)
Elekta AB
(EKTA B)
Fair
Value
Price/
Fair
Value
Market
Cap
Economic
Moat
Rating
Uncertainty
Rating
Morningstar
Rating
Analyst
Andersen,
Karen
71.51
84
0.85
38.8
Wide
Low
QQQQ
192.6
220
0.88
27.7
Narrow
High
QQQ
298.36
330
0.9
79.44
Wide
Low
QQQQ
86.89
100
0.87
63.16
Wide
Medium
QQQQ
Lekraj,
Vishnu
80.45
100
0.8
30.8
Wide
Medium
QQQQ
Morozov,
Alex
26.85
30
0.9
270.24
Wide
Medium
QQQQ
40.39
58
0.7
3.93
Narrow
High
QQQQ
43.75
53
0.83
5.97
Narrow
Medium
QQQQ
547
715
0.77
372.3
Wide
High
QQQQ
Exelon (EXC)
33.09
37
0.89
28.45
Wide
Medium
QQQ
Calpine (CPN)
22.32
26
0.86
8.4
None
High
QQQ
Waterhouse,
Michael
Waterhouse,
Michael
Industrials
General
Electric (GE)
Joy Global
(JOY)
Technology
Avnet (AVT)
Google (GOOG)
Noverini,
Barbara
Webb,
Kwame
Kaur,
Simran
Summer,
Rick
Utilities

Miller,
Travis
Bischof,
Andrew
Highlighted Stocks
Avnet AVT
Morningstar
Rating
QQQQ
Industry
Computer Hardware
Market
Market Cap Price
(USD Bil.)
(USD)
5.97
43.75
Fair
Value
(USD)
53
Price/Fair
Value
0.83
Fair Value
Uncertainty
Medium
Economic
Moat Rating
Narrow
"We have updated our model to reflect managements fiscal fourth-quarter outlook. We
lowered our fiscal 2015 revenue and EPS estimates by roughly 2%, as a higher forecast in the
electronics segment was more than offset by a lower forecast in technology solutions. Shares
are currently trading at a 17% discount to our fair value estimate, and we would be buyers of
the stock for its steady long-term earnings potential.
Analyst Note as of April 24, 2015:
Avnets third-quarter results were not a reason to cheer. Both revenue and EPS missed our
expectations by 4% and 3%, respectively, due to currency headwinds. Furthermore,
management provided a soft outlook for the fiscal fourth quarter based on a USD/EUR exchange
rate of 1.08, leading to a 5% decline in our EPS projection, which had a nonmaterial impact on
our fair value estimate of $53 per share. Beyond the currency issues, however, Avnet exhibited
strong operational performance during the quarter and reported a positive book/bill for the sixth
consecutive quarter. Based on the fundamental strength of Avnets business model, its
intangible assets, and cost advantages, we continue to believe that it has a narrow economic
moat.
Consolidated sales were up 1% to $6.7 billion, as Europe, Middle East, and Africa (30% of
sales) revenue declined 9% year over year due to currency translation. Overall adjusted
operating margin expanded 7 basis points from the prior years quarter to 3.4%, roughly in line
with our estimate.
The electronics marketing segment posted 2% growth (9% in constant currency) for sales of
$4.2 billion. While Americas and EMEA were both up organically, Asia led the segment higher,
with an 11% organic growth rate, by participating in high-volume supply chain engagements.
These deals, however, offset EMEA margin improvements and led to flat segment operating
margins versus the prior years quarter at 4.7%. Our model bakes in segment operating margin
of 4.6% for fiscal 2015 and a gradual rise to 5.1% in 2019.
(continued on next page)

Highlighted Stocks
The technology solutions segment posted a sales decline of 1.3%, as the computing
components business (10% of segment sales) remained the weak link. As expected, the EMEA
subsegment is beginning to turn around, as previous execution issues are corrected and
reorganization is paying off. In the first nine months of fiscal 2015, the regions operating margin
expanded 38 basis points in constant currency.
Avnet expects further improvements as vendors technology refreshes are launched and
channel inventory depletion ends in the next couple of quarters. Although improvements in
EMEA are not flowing to segment results (due to currency translation), we expect technology
solutions segment margins to pick up substantially in a normalized currency environment.
Operating margins for the segment in the quarter expanded 32 basis points year over year to
2.7%, and the segment is on track to achieve our estimated 3% margin for fiscal 2015.
We have updated our model to reflect managements fiscal fourth-quarter outlook. We lowered
our fiscal 2015 revenue and EPS estimates by roughly 2%, as a higher forecast in the
electronics segment was more than offset by a lower forecast in technology solutions. Shares
are currently trading at a 17% discount to our fair value estimate, and we would be buyers of
the stock for its steady long-term earnings potential.
Valuation as of April 7, 2015:
Our fair value estimate for Avnet is most sensitive to business cycles, revenue mix of valueadded services, and Avnets acquisition strategy.
Our bull-case scenario assumes a faster recovery of Avnets higher-margin business in
developed economies and more activity on design registrations. This scenario also assumes
that Avnet will significantly reduce the PC business and other lower-margin hardware sales in
the technology solutions segment. Based on these assumptions, we estimate that revenue will
grow by 5% annually over the next five years and consolidated operating margin will expand to
4.3% in 2019, about 100 basis points above its long-run historical average. Our bull-case fair
value estimate is $65 per share.
Our bear-case scenario assumes that Avnet will face stiff competition in acquiring value-added
players and in new design registrations. We estimate that sales growth will be relatively
sluggish at 2.2% annually over the next five years and operating margins will shrink to 2.7% in
2019. Our fair value estimate in this scenario is $36 per share.
Simran Kaur | 312-384-4920 | simran.kaur@morningstar.com

10
Highlighted Stocks
Baxter International BAX

Morningstar
Rating
QQQQ
Industry
Medical Instruments
& Equipment
Market Cap Market

Fair
Price/Fair
(USD Bil.) Price (USD) Value (USD) Value
Fair Value
Uncertainty
Economic
Moat Rating
38.8
Low
Wide
71.51
84
0.85
"We've previously modeled a 7% top line and 9% EPS headwind for Baxter in our 2015 forecast,
but we expect to slightly reduce our EPS estimates for the year based on continued currency
movements. Overall, we still think the combined firm offers steady prospects for mid-singledigit top-line growth beyond 2015 and high-single-digit growth in cash flow from operations,
using 2015 as a base year. With significant declines in anticipated capital expenditures for
Baxalta after 2015, we also think the two firms will be able to maintain the dividend payout of
the combined firm today, and can support low-single-digit dividend growth over the next
several years.
Baxter's 4% constant-currency sales growth (2% decline as reported) and adjusted EPS of $1 in
the first quarter were ahead of the firm's guidance and in line with our expectations, and we're
not planning any significant changes to our fair value estimate. We're still waiting for Baxter's
investor meetings in mid-May for more details about management's long-term growth
expectations, capital structure, and capital-allocation policies after the planned spin-off of
Baxalta (likely July 1). We continue to think that as a combined firm, Baxter has the economies
of scale in plasma and medical products and intangible assets in hemophilia to support a wide
moat, although we are still evaluating the moat ratings for the new Baxter and Baxalta.
As expected, Baxter's 2015 is shaping up to be a trough year, with foreign-exchange
headwinds affecting the entire firm and competition to cyclophosphamide (part of the new
Baxter) and key hemophilia product Advate (included in Baxalta) also weighing on growth.
We've previously modeled a 7% top line and 9% EPS headwind for Baxter in our 2015 forecast,
but we expect to slightly reduce our EPS estimates for the year based on continued currency
movements. Overall, we still think the combined firm offers steady prospects for mid-singledigit top-line growth beyond 2015 and high-single-digit growth in cash-flow from operations,
using 2015 as a base year. With significant declines in anticipated capital expenditures for
Baxalta after 2015, we also think the two firms will be able to maintain the dividend payout of
the combined firm today, and can support low-single-digit dividend growth over the next
several years.

11
Highlighted Stocks
For the new Baxter, competition and an evolving dialysis strategy will pressure the top line in
2015, and there is less clarity about the timing of Gambro synergies. Competition for highmargin cancer therapy cyclophosphamide has arrived, and Baxter now anticipates that U.S.
sales will fall from $450 million in 2014 to $150 million in 2015. Baxter is also forgoing some
international hemodialysis tenders (products from the Gambro acquisition) due to poor pricing,
in an effort to focus on higher-margin opportunities such as acute renal care and peritoneal
dialysis offerings. Management maintains that the $300 million in Gambro synergies are still on
track to be realized by 2017, but acknowledges that they are behind expectations for
recognizing these synergies, which does create some uncertainty about the operating leverage
potential for this lower-margin portion of the new Baxter. We think the new Baxter will be
increasingly focused on international opportunities in higher-margin businesses like biosurgery
and nutritionals.
For Baxalta, we think near-term performance will continue to beat management and investor
expectations, but long-term threats remain. Hemophilia blockbuster Advate continues to hold
up better than expected after three quarters of competition from Biogen's Eloctate in the U.S.,
with only 2% erosion in market share. The firm's plasma business is also rebounding, as Feiba
continues to see double-digit growth among inhibitor patients and as HyQvia's U.S. launch is
capturing more market share than we expected at this early stage. However, longer term, if
Roche's ACE910 (entering Phase III this year) and Alnylam's ALN-AT3 (releasing more Phase I
data this year) remain on track, Baxalta will be much more reliant on breadth (the recent
SuppreMol acquisition in immunology, as well as biosimilar and oncology platforms) as opposed
to depth (next-generation products like BAX 855 and BAX 826 don't stack up well against these
potentially disruptive threats, and Baxter's own gene therapy programs are expected to have a
long road to market). Biosimilar Enbrel, MM-398 in pancreatic cancer, and pacritinib in
myelofibrosis are three of the more intriguing launch opportunities in 2016-17.
Baxter remains on our Best Ideas list, as we think the Baxalta spin-off will unlock long-term
growth potential that outweighs the resulting near-term dis-synergies. We highlighted the
competitive advantages that Baxter, CSL, and Grifols all hold in the plasma market in our
January 2015 Healthcare Observer "The Global Plasma Markets Narrow Moat: Impressive Cost
Advantages, and Disruptive Innovation Still Distant."

12
Highlighted Stocks
Valuation as of Nov. 6, 2015:

Our fair value estimate for Baxter stands at $84 per share. While we have included higher
assumptions for near-term dis-synergies due to the splitparticularly affecting our 2015 and
2016 growth rateswe continue to think growth will rebound on both sides of the business in
the years that follow. Overall, after the acquisition of Gambro, we think the combined Baxter is
capable of 5% top-line growth and 6% bottom-line growth through 2018. While near-term
headwinds include competition from branded (hemophilia) and generic (Suprane and
cyclophosphamide) entrants, we think a return to strong Gammagard/HyQvia supply and the
launch of new pipeline products will help counter these pressures over the next few years.
After the Gambro acquisition, gross margins have slightly deteriorated but are poised to
improve, as the slightly lower medical products segment margins are countered by
manufacturing synergies. Thanks to commercial synergies on the marketing and administrative
expense line over this period, we expect Baxter's adjusted operating margin to climb back to
22% by 2018, following a period of dis-synergies.
We still include a long-term EBI growth estimate of 4% in our valuation, as we think the two
new businesses will have improved focus on the areas that will be most likely to drive longterm growth, including innovation in biopharmaceuticals and hospital contracting in the new
Baxter. We assign Baxter an 8% cost of equity and assume that $300 million in annual share
repurchases in 2014 could climb to $500 million within five years as Gambro's debt obligations
shrink.
Karen Andersen, CFA | +1 (312) 384-4826 | karen.andersen@morningstar.com

13
Highlighted Stocks
Millicom International Cellular SA MIICF

Morningstar
Rating
QQQQ
Industry
Communication
Services
Market
Market Cap Price
(USD Bil.)
(USD)
Fair
Price/Fair Fair Value
Value (USD) Value
Uncertainty
Economic
Moat Rating
7.9
94
Narrow
79
0.84
High
"We think Millicom's growth despite the currency headwinds is very impressive. On an organic
basis revenue growth was 3.6% in mobile, 18% in cable, 42.9% in mobile financial services,
(and 64.6% in other, which is primarily handsets. On the wireless side, the firm's subscriber
base grew 14.6% to 57.4 million, with particular strength in Africa. However, this growth was
partially offset by lower average revenue per user, which declined 6.7% in Africa.
Millicom reported solid first-quarter results, despite further currency headwinds. The company
remains our favorite European telecom stock, and we reiterate our fair value estimates of SEK
788 per share and $94 per ADR and narrow economic moat rating. The firm's reported revenue
grew 22% year over year thanks to the acquisition of UNE in Colombia versus our full-year
projection of 14.4%. With UNE being acquired in August 2014 Millicom won't benefit from the
acquisition in the last part of the year. Excluding UNE, the firm's revenue increased 9.7% in local
currency terms. However, this reduced to 2.2% in dollars, which was a larger currency impact
than in 2014's fourth quarter. Fortunately, currencies appear to be stabilizing with the
Colombian peso slightly stronger so far in April.
We think Millicom's growth despite the currency headwinds is very impressive. On an organic
basis, revenue growth was 3.6% in mobile, 18% in cable, 42.9% in mobile financial services,
and 64.6% in other, which is primarily handsets. On the wireless side, the firm's subscriber base
grew 14.6% to 57.4 million, with particular strength in Africa. However, this growth was
partially offset by lower average revenue per user, which declined 6.7% in Africa. We continue
to expect Africa to be the primary driver of wireless subscriber growth, but greater revenue
gains will be derived from cable and mobile financial services. We were pleased to see strong
organic cable growth on top of the UNE acquisition, which makes this segment meaningful,
with 5.2 million subscribers.
While the acquisition of the lower-margin UNE business pushed the firm's EBITDA margin down
as expected, excluding UNE total costs actually declined. The EBITDA margin for the quarter
was 33.1% above our full-year estimate of 32%, but the first quarter is historically the year's
strongest. Thus, we continue to project that the full year will be in line with our estimate.
14
Highlighted Stocks
Valuation as of Feb. 19, 2015:

We are maintaining our fair value estimate of $94 per share. Including a full year of UNE's
results, we expect revenue growth of about 15% in 2015. We then expect revenue growth to
average a bit over 7% for the following four years. We anticipate significant subscriber growth
in Africa with lower amounts in Latin America, which will be partially offset by reduced ARPUs.
However, we also expect significant increases in data usage and growth in broadband, pay
television, and financial services. We project the acquisition of UNE to pressure Millicom's
EBITDA margin this year, but then margins to improve as cost-cutting occurs from integrating
UNE into Colombia's existing assets and revenue growth outstrips cost increases. Despite our
revenue and margin growth assumptions, we remain below the company's midrange goal of
delivering $9 billion in revenue and 35% EBITDA margins in 2017. While the company reports in
dollars, the various operations have significant exposure to currency movements that could
materially affect our estimates.
Allan C. Nichols, CFA | +31 (0) 20 560 2931 | allan.nichols@morningstar.com

15

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15分鐘告訴你回報率在15%或更多的保險類股票

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Research Highlights

15 Minutes Could Tell You Which Insurance Stocks Could

Research Highlights ...................................................................................................3

Morningstar Equity Research Highlights | 18 April 2015 24 April 2015

For further information, please contact:

Morningstar Equity Research Highlights | 18 April 2015 24 April 2015

Industrial Gas Outlook: Harvest Time

For further information, please contact:

Morningstar Equity Research Highlights | 18 April 2015 24 April 2015

Morningstar Equity Research Highlights | 18 April 2015 24 April 2015

Morningstar Equity Research Highlights | 18 April 2015 24 April 2015

Morningstar Equity Research Highlights | 18 April 2015 24 April 2015

Morningstar Equity Research Highlights | 18 April 2015 24 April 2015

Morningstar Equity Research Highlights | 18 April 2015 24 April 2015

Morningstar Equity Research Highlights | 18 April 2015 24 April 2015

Baxter International BAX

Market Cap Market

Morningstar Equity Research Highlights | 18 April 2015 24 April 2015

Morningstar Equity Research Highlights | 18 April 2015 24 April 2015

Valuation as of Nov. 6, 2015:

Morningstar Equity Research Highlights | 18 April 2015 24 April 2015

Millicom International Cellular SA MIICF

Valuation as of Feb. 19, 2015:

Morningstar Equity Research Highlights | 18 April 2015 24 April 2015

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