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PVA TePla (PVA) reported a 2.3% y-o-y decrease in sales in Q324 and management has set guidance at the lower end of the range for both sales (€270–90m) and EBITDA (€47–51m). Metrology sales held up nicely in the quarter, while sales in the other activities in the semiconductor division showed a decrease. We have lowered our estimates modestly for both FY24 and FY25 given a more challenging expected market environment in wafer fabrication for the semiconductor industry. On our new estimates, PVA trades at an EV/EBITDA FY25e multiple of 3.7x, which we believe is very undemanding.
PVA TePla |
Lower estimates after Q3 results |
Q324 results update |
Technology |
15 November 2024 |
Share price performance
Business description
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PVA TePla is a research client of Edison Investment Research Limited |
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PVA TePla (PVA) reported a 2.3% y-o-y decrease in sales in Q324 and management has set guidance at the lower end of the range for both sales (€270–90m) and EBITDA (€47–51m). Metrology sales held up nicely in the quarter, while sales in the other activities in the semiconductor division showed a decrease. We have lowered our estimates modestly for both FY24 and FY25 given a more challenging expected market environment in wafer fabrication for the semiconductor industry. On our new estimates, PVA trades at an EV/EBITDA FY25e multiple of 3.7x, which we believe is very undemanding.
Year |
Revenue |
EBITDA* |
EPS* |
DPS |
EV/EBITDA |
Yield |
12/22 |
205.2 |
30.0 |
0.82 |
0 |
12.7 |
N/A |
12/23 |
263.4 |
41.5 |
1.22 |
0 |
10.6 |
N/A |
12/24e |
270.3 |
46.7 |
1.36 |
0 |
5.0 |
N/A |
12/25e |
276.0 |
51.4 |
1.51 |
0 |
3.7 |
N/A |
Note: *EBITDA and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Lower guidance after Q3 results
After year-on-year revenue increases in Q1 (+5%) and Q2 (+8.3%) this year, Q3 showed a decrease of 2.3%, to €63.0m. While sales in the industrial segment held up well, sales in the semiconductor segment decreased. This was driven by lower silicon carbide (SiC) crystal-growing equipment sales, partially offset by an increase in metrology equipment sales. EBIT margin decreased to 13.4% in Q324, from 15.4% in Q323 and 15.1% in Q224, mostly driven by higher R&D expenses. Order intake in Q324 (see Exhibit 2) was at a very low level at €34.7m. We expect that most of the order intake related to metrology tools. Order intake for SiC furnaces is very bulky and lumpy and this market is weak at the moment, while there is still a significant backlog. PVA has lowered its FY24 guidance of sales in the range of €270–290m and EBITDA of €47–51m to the lower end of these ranges. In order to reach the lower end of the guided range PVA needs revenues in Q424 of €72–82m (Q423: €72.2m) and EBITDA of €14.6–16.6m (Q423: €17.9m).
Metrology now >50% of semiconductor sales
In the Q3 results call, PVA indicated that metrology sales made up 34% of sales (€67.54m) in the first nine months. We assume that this portion will increase in Q4, which implies that over half of the revenues in the semiconductor segment are now generated by metrology. Management also maintained its confidence in its FY25 guidance of slight top-line growth.
Modest changes to estimates
We have lowered our top-line estimates for FY24 and FY25 by 5–10% and our EBITDA estimates by 3–4%. We now assume modest revenue growth in FY25e for the metrology activities, awaiting final qualification for some larger potential clients, and a continued downturn in the Si/SiC activities, while the plasma activities are expected to be stable. In Industrial Systems we expect growth of 7% in FY25.
Small changes to estimates
Following the Q3 results, we have made modest changes to our estimates in line with management’s new guidance. The strong development in metrology in FY24 also implies that sales of Si and SiC crystal-growing equipment have been weak. This is the most cyclical part of PVA’s activity portfolio and the outlook for this segment in FY25 is also not very strong, as previously built-up capacity is being absorbed. For instance, this is reflected in a >20% lower consensus FY25 sales estimate for PVA’s key client Siltronic compared to the start of the year. As a result, we have decreased our FY25 estimates modestly.
Exhibit 1: Changes to estimates
(€m) |
FY23 |
FY24e old |
FY24e new |
Change |
FY25e old |
FY25e new |
Change |
Total revenue |
263.4 |
284.2 |
270.3 |
-4.9% |
305.9 |
276.0 |
-9.8% |
EBITDA |
41.5 |
47.9 |
46.7 |
-2.6% |
53.2 |
51.4 |
-3.5% |
EBIT |
34.4 |
41.4 |
39.0 |
-5.8% |
46.2 |
43.5 |
-5.9% |
Pre-tax profit |
34.1 |
40.8 |
38.4 |
-5.9% |
45.6 |
42.9 |
-5.9% |
Net income |
24.5 |
29.3 |
27.6 |
-5.9% |
32.8 |
30.8 |
-6.1% |
EPS (€) |
1.13 |
1.35 |
1.27 |
-5.7% |
1.50 |
1.42 |
-5.9% |
Source: PVA, Edison Investment Research
PVA’s order intake has decreased significantly in the last two years, especially in the semiconductor segment, driven by lower orders from wafer fabrication facilities as capacity build outs have decreased. It is expected that in FY25 and FY26 more wafer capacity will be absorbed (see SUMCO estimates) and this implies that order intake will probably increase again sometime in 2025. We expect that the significant €187m backlog consists, for a large part, of previous, long lead-time bulk orders for this segment of the market.
Order intake in the fast-growing metrology segment has much smaller lead times and is sometimes not even recorded in the order book as delivery can be made in the same quarter. The vast majority of order intake in the semiconductor sector this year related to metrology tools.
The large order book, together with strong growth in metrology and the stable industrial segment, gives us confidence that our FY25 estimates and management’s guidance are realistic.
|
Exhibit 2: Backlog and order intake |
|
|
Source: PVA TePla |
Exhibit 3: Financial summary
2019 |
2020 |
2021 |
2022 |
2023 |
2024e |
2025e |
2026e |
|
Year end 31 December, €m |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
INCOME STATEMENT |
||||||||
Revenue |
131.0 |
137.0 |
155.7 |
205.2 |
263.4 |
270.3 |
276.0 |
335.7 |
Cost of Sales |
(93.3) |
(93.9) |
(109.0) |
(146.2) |
(185.9) |
(188.7) |
(191.0) |
(229.9) |
Gross Profit |
37.7 |
43.2 |
46.8 |
59.1 |
77.5 |
81.6 |
85.0 |
105.7 |
EBITDA |
16.2 |
22.7 |
23.0 |
30.0 |
41.5 |
46.7 |
51.4 |
60.9 |
Operating profit (before amort. and excepts.) |
13.0 |
19.2 |
18.3 |
25.9 |
36.5 |
41.1 |
45.6 |
53.5 |
Amortisation of acquired intangibles |
(0.7) |
(0.7) |
(0.8) |
(0.8) |
(2.2) |
(2.2) |
(2.2) |
(2.2) |
Exceptionals |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
Share-based payments |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
Reported operating profit |
12.3 |
18.5 |
17.6 |
25.1 |
34.4 |
39.0 |
43.5 |
51.3 |
Net Interest |
(0.5) |
(0.7) |
(0.6) |
(1.3) |
(0.3) |
(0.6) |
(0.6) |
(0.6) |
Joint ventures & associates (post tax) |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
Profit Before Tax (norm) |
12.5 |
18.5 |
17.8 |
24.6 |
36.3 |
40.5 |
45.0 |
52.9 |
Profit Before Tax (reported) |
11.8 |
17.8 |
17.0 |
23.8 |
34.1 |
38.4 |
42.9 |
50.7 |
Reported tax |
(4.1) |
(5.1) |
(5.6) |
(6.1) |
(9.7) |
(10.9) |
(12.2) |
(14.4) |
Profit After Tax (norm) |
8.4 |
13.4 |
12.2 |
18.5 |
26.6 |
29.6 |
32.9 |
38.5 |
Profit After Tax (reported) |
7.7 |
12.7 |
11.4 |
17.7 |
24.4 |
27.5 |
30.7 |
36.3 |
Minority interests |
(0.1) |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
Discontinued operations |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
Net income (normalised) |
8.3 |
13.4 |
12.2 |
18.5 |
26.6 |
29.6 |
32.9 |
38.5 |
Net income (reported) |
7.7 |
12.8 |
11.5 |
17.8 |
24.5 |
27.6 |
30.8 |
36.4 |
Basic average number of shares outstanding (m) |
21.7 |
21.7 |
21.7 |
21.7 |
21.7 |
21.7 |
21.7 |
21.7 |
Average number of shares outstanding diluted (m) |
21.7 |
21.7 |
21.7 |
21.7 |
21.7 |
21.7 |
21.7 |
21.7 |
EPS (€) |
0.36 |
0.59 |
0.53 |
0.82 |
1.12 |
1.27 |
1.42 |
1.68 |
EPS - normalised (€) |
0.38 |
0.61 |
0.56 |
0.85 |
1.22 |
1.36 |
1.51 |
1.77 |
DPS (€) |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
Gross Margin (%) |
28.8 |
31.5 |
30.0 |
28.8 |
29.4 |
30.2 |
30.8 |
31.5 |
EBITDA Margin (%) |
12.4 |
16.6 |
14.8 |
14.6 |
15.8 |
17.3 |
18.6 |
18.1 |
Normalised Operating Margin (%) |
9.9 |
14.0 |
11.8 |
12.6 |
13.9 |
15.2 |
16.5 |
15.9 |
BALANCE SHEET |
||||||||
Fixed Assets |
52.0 |
47.3 |
71.7 |
72.8 |
82.2 |
84.5 |
85.6 |
84.1 |
Intangible Assets |
11.5 |
11.1 |
10.4 |
20.5 |
18.6 |
18.6 |
18.6 |
18.6 |
Tangible Assets |
30.2 |
28.6 |
28.8 |
34.0 |
41.6 |
43.9 |
45.1 |
43.5 |
Investments & other |
10.3 |
7.6 |
32.5 |
18.3 |
21.9 |
21.9 |
21.9 |
21.9 |
Current Assets |
128.9 |
129.8 |
168.4 |
217.5 |
223.2 |
248.3 |
291.6 |
377.4 |
Stocks |
65.2 |
67.6 |
59.2 |
75.0 |
94.6 |
97.1 |
99.1 |
120.5 |
Debtors |
27.4 |
24.8 |
32.6 |
73.6 |
57.0 |
58.5 |
55.2 |
62.1 |
Cash & cash equivalents |
25.5 |
29.6 |
57.6 |
27.1 |
20.1 |
41.3 |
85.9 |
143.4 |
Other |
10.8 |
7.8 |
19.1 |
41.8 |
51.4 |
51.4 |
51.4 |
51.4 |
Current Liabilities |
96.1 |
79.3 |
126.3 |
147.6 |
130.2 |
130.2 |
143.9 |
191.8 |
Creditors |
10.8 |
8.0 |
11.1 |
18.3 |
18.8 |
19.3 |
19.7 |
24.0 |
Tax and social security |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
Short term borrowings |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
Other |
85.3 |
71.3 |
115.2 |
129.3 |
111.4 |
110.8 |
124.2 |
167.8 |
Long Term Liabilities |
27.6 |
28.6 |
31.1 |
38.7 |
47.7 |
47.7 |
47.7 |
47.7 |
Long term borrowings |
3.3 |
1.7 |
1.2 |
5.1 |
14.5 |
14.5 |
14.5 |
14.5 |
Other long-term liabilities |
24.2 |
26.9 |
29.9 |
33.6 |
33.3 |
33.3 |
33.3 |
33.3 |
Net Assets |
57.2 |
69.2 |
82.7 |
104.1 |
127.4 |
154.9 |
185.6 |
221.9 |
Minority interests |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
Shareholders' equity |
57.2 |
69.2 |
82.7 |
104.1 |
127.4 |
154.9 |
185.6 |
221.9 |
CASH FLOW |
||||||||
Operating Cash Flow |
22.4 |
21.6 |
22.4 |
44.2 |
32.1 |
35.2 |
38.6 |
45.9 |
Working capital |
(23.0) |
(13.6) |
36.4 |
(58.3) |
(30.1) |
(4.0) |
15.0 |
19.6 |
Net operating cash flow |
(0.6) |
8.1 |
58.9 |
(14.1) |
2.0 |
31.1 |
53.6 |
65.5 |
Capex |
(12.5) |
0.6 |
(34.0) |
(21.3) |
(10.8) |
(10.0) |
(9.0) |
(8.0) |
Acquisitions/disposals |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
Net interest |
(1.0) |
1.6 |
0.5 |
(3.9) |
(9.4) |
0.0 |
0.0 |
0.0 |
Equity financing |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
Dividends |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
Other |
(1.4) |
(4.3) |
3.5 |
5.3 |
1.8 |
0.0 |
0.0 |
0.0 |
Net Cash Flow |
(15.5) |
6.0 |
28.8 |
(33.9) |
(16.4) |
21.1 |
44.6 |
57.5 |
Opening net debt/(cash) |
(37.6) |
(22.1) |
(27.9) |
(56.4) |
(22.1) |
(5.7) |
(26.8) |
(71.4) |
FX |
0.1 |
0.2 |
0.4 |
0.5 |
(0.1) |
0.0 |
0.0 |
0.0 |
Other non-cash movements |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
Closing net debt/(cash) |
(22.1) |
(27.9) |
(56.4) |
(22.1) |
(5.7) |
(26.8) |
(71.4) |
(128.9) |
Source: Company accounts, Edison Investment Research
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Research: Financials
Metro Bank (Metro) has published a trading update that shows that it returned to profitability in October. This is consistent with previous guidance of a return to profitability during Q424 and the bank has reiterated its guidance for a mid- to upper single-digit FY25 return on tangible equity (RoTE). The October net interest margin of 2.48% also points to faster improvement than we had anticipated. Separately, the bank reported that it has resolved Financial Conduct Authority (FCA) enquiries into legacy transactions monitoring systems and control. The £16.7m financial penalty is non-recurring and equivalent to c 2.5p of tangible book value per share. At this stage, we have not adjusted the forecasts set out in our recent initiation note and will review these with the full year results.