The potential catering contract for the new airport in Istanbul: In 1Q 2017/2018, DO & CO entered into negotiations on a further extension of the existing 2 year catering supply contract with Turkish Airlines. This contract, governs the terms for the new yet to be opened third airport in Istanbul. We treat a positive decision for this contract as the most important trigger for the shares of DO&CO over the next 12 months. Given the political situation in Turkey and the huge scope of this airline catering contract (RCBe: EUR 200 mn pa), with Turkish Airlines for 10 years we think that competition will be intense for this tender. We now fear that the intense competition could even result in a loss of this important customer or other concessions (signing fees or similar) for DO & CO, which would trigger massive earnings downgrades for the group.
 
Valuation no longer attractive: Our new target price of EUR 63 (EUR 77.0) is based on DCF-valuation as demonstrated on pages 4-5 of this report. The main reason for our target price reduction is a significant revision of our earnings estimates over the next three years, which also leads to lower sales and free cash flow assumptions for the transition period and over the longer term. Based on our new estimates DO & CO trades on an EV/EBIT multiple of 15.9x for 03/2019e, which is below its peers, which trade at an EV/EBIT multiple of 18.3x. Given the high uncertainty regarding the upcoming tender about the catering contract for the new yet to be opened third airport in Istanbul and the ongoing weakness of the Turkish Lira we see now reason why DO & CO should trade in line or above its peers.