SECTOR: INDUSTRIALS COMPANY: BELDEN, INC.

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SECTOR INDUSTRIALSCOMPANY BELDEN, INC.

• Sr. Analysts Helene Sajer
• Jr. Analysts Malcolm Angus, Raymond Chen,
  Tyrone Cheung, Shirin Krall, Derek Loren, John
  Saad, Xiao Yang

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Investment Recommendation
Company Belden, Inc.
Recommendation BUY
Current Price 36.70
1yr Target Price 46.17
Upside 25.8
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The Communications Equipment Industry

• Consists of small cap companies who manufacture
  copper and fiber optic cable, networking, and
  connectivity products. Customers include OEMs
  and Distributors, and their products are used in
  Industrial automation, transportation,
  infrastructure, consumer electronics, and
  enterprises.

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Industry Snapshot
6.1 billion in industry revenue in 2010
Ticker Company Name Market Cap (M) Revenue (M) Sales Growth EPS ()
BDC Belden, Inc. 1700 4800 14 2.32
BGC General Cable Corp. 2200 1600 11 1.33
PLPC Preformed Line Products Co. 362 314 22 5.31
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Company Definition

• Belden manufactures cable, networking, and
  connectivity solutions for a variety of markets
  including enterprise, industrial, and broadband
• Belden offers thousands of wire and cable
  products such as multi-conductor, paired,
  coaxial, flat and optical fiber cables, plus
  portable cordage, molded cable assemblies,
  hook-up and lead wire
• Product offerings also includes a complete
  selection of data network connectivity products
  and structured cabling systems and services,
  enclosures and racks, surface raceway systems,
  and cable management accessories

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Belden, Inc.
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Revenue Breakdownby Segment Product
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Supply Chain
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Products and Applications
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Trend Developing Infrastructure in Asia

• Currently 23 of families have internet access in
  China
• China Telecom plans to increase number of optical
  fiber broadband from 30 million to 100 million in
  five years
• China plans to invest 300 billion over 5 years
  in infrastructure, 80 will be in broadband
• Indian government plans to spend 150 billion
  rupees (3.3 Billion) on infrastructure over the
  next few years

Belden Acquired LTK Wiring Based in Hong Kong
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Belden in Emerging Markets

• 25 of Beldens portfolio benefits from E.M
• Rev from Brazil, India, China have 6-10 growth
  rates over 2010
• On 4 April 2011 Belden Acquired Poliron Cabos
  Electricos Especiais Ltda in Brazil for 30 mil.
• "This acquisition allows us to be a legitimate
  player in one of the more attractive emerging
  markets

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Belden in Asia Pacific

• 16 growth Year over Year, 6 of this is organic
  growth
• Asia has grown from 5 of Beldens business to
  21, and is expected to increase another 1 by
  2013
• The Networking Segment in Asia has grown 34
  organically in 2010
• In 2007 Belden Acquires Hirschmann Automation And
  Control with three manufacturing joint ventures
  in China

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Belden In Asia Pacific
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Trend / Opportunities Raw Materials Costs

• The cost of copper, BDCs principal raw material
  grew by 129 in 2010
• Copper demand expected to increase by 6.4
• China to increase copper imports by 17
• Belden has historically shown its ability to pass
  on rising costs of raw materials to their
  consumers

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Trend Fiber Optics
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Belden Signal Transmission

• Positioned as the technology leader in signal
  transmission, with the capability of solving
  customers end-to-end requirements for
  high-bandwidth solutions
• Broad casting 25 growth last quarter Coax
  Connectivity Solutions acquisition
• Brand most trusted and used for all Olympics and
  major sporting events

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Belden Increasing Market Share through
Acquisitions

• Feb 2007 Acquired Hong Kong Based LTK Wiring for
  195 million (revenue of 220 Million)
• March 2007 Acquired Hirschmann Automation and
  control for 260 Million
• April 2007 Acquired Lumberg Automation
  Components in Germany for 75 million
• June 2008 Acquired Trapeze Networks for 133
  million, and sold Trapeze in 2010 for a 20
  million profit
• November 2010 Acquired GarretCom for 52 million
  and Tomas Betts for 78 Million
• April 2011 Acquired Poliron Cabos Electricos
  Especiais in Brazil for 30 million, and expects
  the acquisition to break even in 2011

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Financials Stock Performance
Company M. Cap (m) Revenue (m) Sales Growth EBITDA (m) EPS () Inventory Turnover
Belden Inc. 1700 4800 14 200 2.32 7.1x
Belden, Inc.
Total Debt (m) 551
Debt / Equity 0.86x
Current Ratio 2.4x
Quick Ratio 1.8x
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Valuation
Year 2011-e 2012-e 2013-e 2014-e 2015-e
FCF (MM) 191.48 236.31 280.45 298.71 313.65
Comps TEV/EBITDA 30 P/S 20
DCF 50
WACC 10.84
Growth Rate 2
DCF EV 2,369.58
1yr Target Price 51.01
TEV/EBITDA 9.5x
1yr Target Price 40.49
P/S 1.1x
1yr Target Price 42.58
46.17 25.8
1yr Target Price
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Risks Sensitivities
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Company Analysis

• Increasing market share through two new
  acquisitions in 2010 and one in April 2011
• Increasing revenue by developing manufacturing
  facilities abroad, focusing on growth in Asia
  segment and emerging markets
• Managing the cost of raw materials as copper
  prices reach all time highs

Investment Recommendation Investment Recommendation
Company Belden, Inc.
Recommendation BUY
Current Price 36.70
1yr Target Price 46.17
Upside 25.8
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Questions?
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Backup Slides
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Time Series

• 1 Yr Revenue Growth vs. P/S