PVA TePla — Material matters

PVA TePla originated from Pfeiffer Vakuumtechnik. The company has evolved from producing mostly very large vacuum systems for industrial applications, like diffusion bonding and brazing systems, to producing equipment to grow materials like silicon (Si), silicon carbide (SiC) and calcium fluoride (CaF2) and advanced metrology solutions. The latter activity was born from the need for very precise measurement systems for the company’s own processes and was further developed commercially. PVA TePla has a largely outsourced production model and a global client base. The semiconductor industry is, by far, the largest client group and clients range from wafer producers (the slices of silicon that electronic circuits are printed on) to the world’s largest chip makers. Revenues have grown from €97m in 2018 to €263.4m in FY23, largely driven by the company’s semiconductor activities. In FY23, semiconductor sales amounted to 71% of total sales, compared to 60% in 2018 and 50% in 2014 and, as such, it has become by far the largest segment. The materials produced, inspected or measured with PVA TePla’s tools can be linked to global megatrends like digitalisation, decarbonisation and mobility.

While the company has undergone a huge transformation, it is still valued as an industrial company. We compare PVA TePla to a group of semiconductor equipment players, materials technology companies and companies active in metrology inspection tools that are exposed to the same macro, technical and regulatory trends as PVA TePla. Compared to all these groups, PVA TePla trades at large discounts. Furthermore, we have carried out a DCF valuation. In our DCF valuation, we arrive at a value of €35.26 per share. Organic growth will decelerate in FY24 and FY25 to high single digits and accelerate in the years after, especially driven by a new cycle for Metrology. We pencil in a terminal growth rate of 2.0% and the EBITA margin to increase to 18%, from 12.6% in 2022, as PVA TePla benefits from operational leverage and increasing exposure to higher-margin businesses related to semiconductors.

In 2021, management guided to mid-term revenues of €250m in FY24, which reflected a significant acceleration (23.3% CAGR in 2021–23e) compared to previous growth levels (11.5% CAGR in 2014–20). This target was already met in FY23 and management have guided for €270–290m revenues in FY24. PVA TePla’s new mid-term (FY28) target is a sales amount of €500m, or roughly a doubling compared to FY23 sales. To reach this target, PVA TePla will probably need some M&A, especially as it has guided for moderate revenue growth in FY24 and FY25, while the market digests the capacity that was added in the last few years. In 2021, PVA TePla also guided to an EBIT margin of 15% by FY24 (FY23e: 13%), which will be harder to reach. We estimate an EBIT margin of 14.7%, taking into account the FY24 guidance of an EBITDA of €47–51m. We expect PVA TePla to reach the 15% margin by 2025. There is no margin target related to the FY28 revenue target.

PVA TePla’s order book typically spans multiple years due to capacity constraints and long investment timelines at clients, as new semiconductor fabs are very expensive. This is also an important reason for the semiconductor equipment sector’s infamous cyclicality and the reason that order intake (€221.8m in FY23) can be very lumpy for PVA TePla. Sector forecasters expect the semiconductor equipment sector to be stable in 2024 after a meagre 2023. Sector organisation

SEMI noted a decrease in chip equipment sales of 1.3% in 2023 to $106.3bn but it guided for a modest increase of 6.4% in chip-making capacity in FY24. Sector organisation Yole guides for a stable FY24 in terms of wafer fab equipment growth. This should support PVA TePla’s FY24 target of moderate growth and margin development. The reporting of semiconductor companies so far this year shows that growth expectations have shifted to the second half of the year. Although PVA TePla has a unique product offering, there is competition in several market segments. In the materials technology semiconductor segment, for instance, competition is mainly from in house developments of tools by (potential) clients. Metrology instruments for the semiconductor industry are also made by reputable companies like ASML, KLA and Applied Materials, although we believe that PVA TePla is more of a niche player in this segment.

PVA TePla emerged from a management buyout in 1991 of Pfeiffer Vakuumtechnik’s metallurgic activities. At that time PVA TePla was mostly making systems to produce materials under high pressure, vacuum and temperature. Over the years, several activities were added; the most important being the acquisition of the maker of crystal growing processes CGS that was spun off from Leybold Systems in 1999.

In a nutshell, PVA TePla’s key competence lies in making equipment that can precisely handle vacuum, extreme pressure and temperatures. This is crucial for applications in industrial and semiconductor manufacturing that have high end-requirements on the purity/conformality of material surfaces, for instance for growing SiC, Si material or making perfect bonds between pieces of metal or complex structures. Because of this, PVA TePla also gained extensive experience in materials technology. To reach the levels of precision needed in these process environments, measurement and analytical tools are also critical and PVA TePla started developing and selling such tools, which turned out to be a very attractive business as well.

Roughly speaking, PVA TePla now has two core activities: materials solutions and metrology. Metrology accounts for around one-third of revenues and materials solutions two-thirds.

Materials solutions include all the activities and increasingly processes to create, treat, control and handle materials and applications. For example, PVA TePla produces furnaces to grow boules from SiC powder (SiC is a material used in semiconductors to make electrical vehicles more energy efficient) from which 6” and 8’’ wafers can be cut (see Exhibit 2). It is very difficult to grow this material in order to have a conformality of the boule that can be used for wafer processing. PVA TePla also wants to capitalise on the process knowledge it has obtained by, for instance, offering metrology tools.

Additionally, PVA TePla develops systems and solutions that produce ceramic turbine blades for aircraft engines and SiC coatings of graphite components, mostly for use in the semiconductor industry.

The largest activity within Materials solutions division is producing furnaces/crystal growing systems for creating silicon/SiC ingots/boules (see Exhibit 1) for the semiconductor industry.

PVA TePla can design processes and has the equipment to grow almost any material, from Si and SiC to materials like gallium arsenide (GaAs) and CaF2. In this time of increasing exotic material applications, it is very probable that there will be new applications for PVA TePla as well.

In the industrial segment (29% of sales), vacuum brazing, diffusion bonders and graphite cleaning and coating equipment systems are produced. These also require comprehensive materials knowledge. Clients are found in the energy, automotive, aerospace, medical and agricultural sectors, as well as in the semiconductor industry. Diffusion bonders are used to produce heat exchangers for the hydrogen industry, while vacuum furnaces clean graphite deposits on SiC surfaces and brazing tools are used for turbine parts.

PVA TePla’s customers are the larger European chip and wafer producers, turbine makers for the Aerospace industry, the hydrogen industry, leading edge US logic chip producers and foundries and Asian semiconductor makers.

Within Metrology, PVA TePla offers acoustic, optical and wet chemical non-destructive metrology systems (see Exhibit 4 or video here) for inspecting semiconductor wafers. Some of the largest semiconductor fabs are clients of PVA Tepla in this area.

Metrology activities are reported within the semiconductor segment and have been the fastest growing part of PVA TePla’s activities with a revenue CAGR of 31% in 2015–22. Software (SECS GEM) is also a unique selling point.

PVA TePla’s expertise lies in material process knowledge and the very precise handling of materials in difficult high temperature/pressure environments. The materials that are produced, inspected or measured with PVA TePla’s tools can be linked to global megatrends like digitalisation, decarbonisation and mobility.

In both semiconductor equipment and in most cases for the industrial systems, PVA TePla will be the seller of equipment or systems as mentioned in the previous paragraphs. However, in an increasing number of cases, PVA TePla is also acting as a solutions provider, adding process knowledge to the system sales. In some cases, like diffusion bonding for which the equipment investments are demanding and the volumes a client needs are not that high, PVA TePla also has a service model in which it can offer clients paid access to equipment.

An important part of PVA TePla’s business model is that it outsources the production of parts for its systems as much as possible. Furthermore, it has a modular set up, which means that certain parts like wafer handlers and software can be used in different tools. This modular set up of systems is highly recommended in order to have standardisation and less complexity, which leads to higher margins. Assembly, system control and test are the main activities in PVA TePla’s facilities and this is a usual production set up for semiconductor equipment companies.

Lead times from sale to delivery are usually 12–18 weeks, which is not unusual in the sector. For volume orders, like the orders for silicon pullers, lead times can be much longer, up to several years. A large part of the order intake of PVA TePla is prepaid by clients (contract liabilities were €95.2m at FY23), which reduces the financial risk for the company.

PVA TePla has a flexible supply chain. We expect that there is some risk on individual suppliers for critical components (like certain process chamber parts), but for the largest part this is limited by having multiple suppliers for key components. Key components are for instance components for furnaces and PVA TePla has Czech, Polish and Italian suppliers for this.

Knowledge of how to handle and treat (exotic) materials like SiC, gallium nitride (GaN) and CaF2, combined with the control PVA TePla has over process chambers under high pressures and temperatures, driven by its metrology and analysis tools and through software, are its key unique selling points.

In recent years, PVA TePla has made more of a distinction between its materials technology activities, in which all materials process knowledge, mostly its vacuum technology, is combined, and its metrology activities. We do not have the exactly matching revenue numbers (see Exhibit 5) but would expect more detail on the company’s capital markets day on 16 May 2024.

The semiconductor market, by far PVA TePla’s most important end market, is continuously looking for specific properties that can be provided by exotic materials like SiC for high switching power with limited energy loss in high power devices like EVs, or GaN and GaAs in smaller applications like smartphones.

Also, with other new developments in the semiconductor industry like hybrid bonding for advanced packaging of chips (a way to squeeze several chips in one package; chiplets) or new transistor architectures (like Gate All Around), the properties needed from materials have become increasingly critical. This is the reason that materials technology has become more important in the sector. Large companies like Shin Etsu, Entegris and Coherent provide these materials, while companies like Applied Materials, LAM Research and ASM International make equipment that can handle them in chip fabrication designs. PVA Tepla serves a niche between these large players, providing equipment, usually crystal growing, or metrology/inspection equipment.

With semiconductor markets more driven by e-mobility, digitisation and energy transition, compared to industrial end markets, PVA TePla’s exposure to this sector is swiftly increasing. However, advanced materials are also becoming more and more important in other industries like aerospace, energy infrastructure (hydrogen/LNG) and medtech, which also show significant growth.

In FY23, semiconductor sales amounted to 71% of total sales, compared to 60% in 2018 and 50% in 2014. In fact, this exposure will be higher, as a substantial part of the industrial activities is semiconductor related.

Originally, PVA TePla’s semiconductor exposure was largely towards Si crystal growing systems: selling furnaces using the so-called Czochralski process to grow ingots from a seed crystal, especially for wafer-producers. Later, PVA TePla also produced furnaces for growing SiC boules. Now the company additionally offers graphite cleaning equipment.

Within the Industrial segment, PVA TePla always had deep knowledge on the treatment of mostly metal surfaces. With diffusion bonders, steel particles can create a perfect seamless bond under high temperature and pressure, with sintering, graphite layers can be deposited on components that are used to produce energy efficient inverters and vacuum brazing equipment can be used for high-voltage interrupters.

SiC is an example of how PVA TePla wants to move away from being a systems-only seller to a solutions provider. SiC is an essential material to reduce energy consumption in electric cars as it enables more efficient power switching in the aforementioned inverters for instance. As such, it increases the range of an electric vehicle by several percentage points. In addition to the systems to grow the SiC boules, PVA TePla also offers metrology tools.

As geometries are shrinking fast in the semiconductor sector, measurement and analysis tools are becoming more and more important within the semiconductor value chain. US equipment suppliers Onto Innovation, Camtek and Applied Materials and, to an increasing extent, ASML are good examples of suppliers of equipment in this segment. Swiss companies Comet and Inficon are also in the market for metrology/inspection tools.

In the last few years, metrology has become the largest segment in PVA TePla’s semiconductor activities, driven by 25%+ CAGR revenue growth in the last eight years. This reflects the increased importance of metrology and analysis in the value chain. The cost of developing processed wafers has increased dramatically as 1) the geometries are getting smaller and smaller (nearing 1nm now), 2) the number of developed layers on wafers has increased and 3) more different kinds of materials are used.

In the front-end chip making process, the fabrication of processed wafers, detecting defects or irregularities on and/or below the wafer surface, preferably early in the process, saves lots of time and hence money, as production time in the increasingly sophisticated fabs is getting more and more expensive.

In advanced packaging, the process of assembly and packaging (multiple) dies into one complex package, metrology has become much more important as well and we see this as a large area of growth for PVA TePla. Complex chip packages are quickly gaining traction after AMD’s first application with hybrid bonding. Intel and TSMC are the most important players in this advanced segment.

The size of the industrial metrology market was $9.7bn in 2022 and, according to Verified Market Research, it will grow with a CAGR of 9.5% to 2030 (see here).

PVA TePla’s revenue profile has always been difficult to forecast. Because of the lumpiness of order intake and the long lead times, especially from Si crystal pullers, order intake is not a great proxy for PVA TePla’s revenues. For instance, in 2021 PVA TePla received an order from a large German silicon wafer producer for €95m for silicon crystal pullers, which are being delivered in FY23–25.

At FY23 the order book amounted to €278.3m, somewhat lower than FY22, and order intake was €221.8m, which signals another strong year. In general terms, Exhibit 6 indicates that backlog and order intake justify expectations of an increasing revenue base in the coming years.

Like the highly cyclical semiconductor industry, orders and revenues from the industrial sector have been notoriously difficult to forecast. This segment of PVA TePla had negative growth in 2017 and 2021. Nevertheless, overall growth amounted to 78.8% between 2017 and 2023 or a CAGR of 15.1%. This is also much faster growth than the market for industrial systems.

We expect that this is because of PVA TePla’s positioning higher in the materials technology value chain and exposure to fast-growing market segments like semiconductors.

As PVA TePla’s business is split into semiconductor and industrial segments, we use the same approach in our model and estimates.

Global semiconductor equipment spending, which is typically what PVA TePla’s semiconductor activities are, is not the best predictor of PVA TePla’s future revenues (see Exhibit 7). If we consider several subsegments, like wafer fab spending and test equipment spending, there seems to be limited or no correlation. This is because the dynamics of the two most important segments, crystal pullers and metrology, are completely different. Demand for crystal pullers is high when shortages in wafer supply start to build up, and demand for metrology is high when production of chips is at a high. These two dynamics do not coincide.

Investments in bare wafer capacity are an important driver for PVA TePla’s crystal pulling activities, and these usually precede investments in equipment going into the fabs that process the wafers.

For Si (mostly used in PC/smartphone) and SiC (mostly used in EVs) demand dynamics are also different. Investments in metrology are mostly done when fabs are nearing fab readiness and correlate more with chip production and are, by nature, much later in the process.

It is clear is that PVA TePla has underperformed the general equipment market in only two of the last five years and its revenues increased 164% over this period, compared to the market’s 90%.

After a weak 2023, the semiconductor industry is in for a better 2024, with growth of 13.1% expected by sector organisation World Semiconductor Trade Statistics, driven by a better anticipated market environment for mobile, PC and data centre, especially driven by AI. Research organisation International Data Corporation (IDC) expects a 4% increase for smartphone and a 2% growth of PC market sales, and Statista expects a 2.6% increase for the automotive market. All in all, this leads to growth forecasts between 13% (Deloitte) and 20% (IDC) for the semiconductor market in 2024. Nevertheless, it should be noted that Q1 reporting so far from semiconductor companies like TSMC and ASML points to more muted development.

Within the semiconductor sector, this should result in a cyclical recovery for memory chips after two very slow years. For logic chips (like processors for PCs and smartphones), and especially for memory and logic chips for data centres, growth is expected this year.

Supply is also looking better. In 2024–27 many new fabs are planned. Sector organization SEMI expects 94 200mm and 300mm new fabs to come online between 2022 and 2026, 78 of which have begun operation, or are in the process of adding equipment or under construction. Of those, 63 are in Asia with 30 in China; 18 are in the US; and 13 are in Europe and the Middle East, according to SEMI’s World Fab Forecast 3Q23. All these fabs will need equipment, which will benefit equipment makers.

As such, we expect 2024 to be another good year for PVA TePla’s most important segment and we expect that this will continue in 2025, with some slowdown in growth in 2026 due to cyclicality.

By 2030, the global semiconductor industry is expected to reach a size of $1tn (several sources: a.o. DigiTimes, McKinsey, SEMI) from c $534bn expected in 2023 (Gartner). This growth will be driven by AI, digitisation and e-mobility. The capital intensity of the industry is also expected to increase, as geometries are getting smaller and material requirements more demanding. This combination of higher capital intensity and a higher revenue base bodes well for players like PVA TePla, which are exposed to the faster-growing part of equipment sales like metrology.

For FY24 we expect revenue growth of 8.2% for PVA TePla’s semiconductor activities, followed by 7.5% in 2025 as previously installed capacity is absorbed. We estimate a return to higher growth levels of 15.4% in 2026, driven by a new cycle in metrology equipment.

If we take out silicon growing systems, there is quite a lot of information about wafer capacity and demand in the market. Looking at the Q3 presentation from Sumco, a Japanese wafer manufacturer that consistently tracks the market, global wafer capacity should increase gradually in 2024, followed by a steeper increase in 2025. However, demand trends are not that positive in 2024 due to destocking but are expected to increase in 2025 according to the presentation. This is not a precise forecaster for PVA TePla’s crystal growth activities, as PVA TePla’s client group might behave differently and because geographical differences are large (for instance Chinese capacity build-up is more politically driven, compared to the US and Europe). However, this gives some indication of what growth could roughly look like.

On the other hand, Industrial systems is also gaining traction and order intake in this segment has also been on a much higher level in the past five years, from €40m in 2017 to €82m in 2022. Although we expect growth in this segment to be much lower than in the semiconductor segment, it will still amount to c 30% in 2023 and we expect this to level off to c 8% in the years thereafter, as important end markets, especially EV automotive, seem to be slowing down. It is possible for PVA TePla to achieve this relatively high growth as its sophisticated systems have more applications in advanced products.

PVA TePla’s FY23 revenues came in ahead of FY23 guidance at ‘the upper end of the €240–260m range’. This implied a very strong Q4 of €72.3m (Q3: €64.5m). The order book amounted to €278.3m and this indicates that 2024 and 2025 are likely to be strong years as well. PVA TePla has received prepayments for the larger orders of €71.6m (FY22: €63.8m) on total contract liabilities of €95.3m, so customer commitment to these orders is strong.

All in all, this leads us to the following revenue estimates:

Gross margins have varied over the years largely between 23% and 32% depending on what system sales were dominant in the revenue mix. In general, gross margins in Industrial systems are lower compared to Semiconductor systems. This explains the overall gradually increasing trend we expect to continue in the following few years towards 31% (ie the higher end of the historical range). Gross margins for semiconductor systems can run up to much higher percentages, typically between 40% and 60% (lower end ASMPT, higher end Besi for instance).

With revenue growth expected in the coming years, we expect operating leverage to increase EBITDA margins towards 18% from the c 15.8% realised in FY23. This implies that opex will decrease towards 13.4% of sales compared to 13.7% in FY23, as fixed costs will be a relatively lower percentage of sales when sales go up.

Depreciation and amortisation is at a higher level compared to the years before 2023 as a result of the acquisition of MPA Industries at the end of FY22. As there is a net cash position, financial costs are low. For the coming years we have pencilled in €0.6m per year. PVA TePla’s tax rate is expected to be stable at c 28.4%. All in all, our estimates suggest that reported net profit should accelerate towards €33m by FY25 (EPS: €1.51), compared to €24.4m (EPS: €1.12) in FY23.

Large working capital swings are usual for PVA TePla, mostly because of the large prepayments received from its clients. The prepayments mostly reflect orders for silicon crystal pullers but also other larger tools. For instance, a large German wafer manufacturer gave an order in 2021 for €95m of silicon crystal pullers for delivery in FY23–25 and made a large prepayment.

This was one of the most important reasons that working capital as a percentage of sales fluctuated between -10% and +21% of sales in FY21 and FY22. In FY23, it has become even higher, at 27.6% of sales, as a result of prepayments that are lower compared to FY22 and higher receivables due to an elevated turnover. In the conference call after the FY23 results, management indicated that working capital will also increase in 2024 but we expect it to decrease afterwards. These swings in working capital also led to big swings in operational cash flows.

Capex and cash flow from investments are also very volatile but averaged €8.4m in the last eight years. For FY23, the cash flow from investing activities was €10.8m. For FY24 we anticipate a relatively high level of €10m as a result of ongoing fab investments at MPA.

PVA TePla does not distribute dividends, nor does it have a buyback programme. Cash proceeds are reinvested in the business.

Due to the nature of PVA TePla’s business, with long-term contracts that are largely prepaid as explained above, PVA TePla has a relatively inflated balance sheet. Against its contract liabilities, there is a relatively large position of cash, term deposits, work in progress (contract assets) and inventories.

PVA TePla had cash (€20.1m) and financial assets (€10.0m), comprising mostly term deposits and term cash investments. Of this (near) cash, a large portion is committed to liabilities (contract liabilities at FY23 of €95.3m), especially for orders for silicon crystal pullers. Furthermore, there are €50.6m contract assets and €94.6m in inventories, which are also partly dedicated to these large orders.

Depending on these large orders, working capital has been either positive (more contract assets/inventory) or negative (large cash prepayments), a situation that we do not see a lot at other semiconductor equipment companies. ASML, which also has large orders and expensive tools is the best comparator in this respect. In FY23, we have seen contract liabilities decrease while inventories were building up with a somewhat higher amount.

With the fast-growing revenue base and a decrease of contract liabilities in the year, working capital increased to 27.6% of revenues in FY23, from 21% in FY22. After FY24, in which we expect a further build-up of working capital, we have pencilled in a return to c 4% working capital as a percentage of sales, which was the average over the last eight years.

PVA TePla originated from an MBO by Peter Abel in 1991 of the metallurgic activities of Pfeiffer Vakuumtechnik, which made mostly vacuum systems for the industry. Mr Abel remained the main shareholder (30%) of PVA TePla up to last year. After the sale of his participation, there is no longer an overhang of shares in the market. A number of larger financial shareholders have stepped in, with Lucerne the largest shareholder currently, with a 6.6% stake, Morgan Stanley with 6.4% and Lazard and Henderson both with over 5% stakes. The free float amounts to 77%.

The leadership changed in June 2017 when Alfred Schopf took over the helm. He resigned for personal reasons at the end of his term in 2021 and Manfred Bender, former CEO of German tech company Pfeiffer Vacuum, took over. In 2023, Mr Bender also stood down personal reasons and current CFO and now CEO Jalin Ketter took over, first as speaker of the board, and she was appointed CEO as of 1 January 2024.

COO Oliver Höfer is the longest serving member of the board and has been with PVA TePla since 2007. He has been COO since 2013.

The supervisory board members are chairman Alexander von Witzleben, former CEO of Jenoptik and member of the supervisory board since 2004, Markus Thoma (plasma expert), Myriam Jahn (who is also on the supervisory board of Süss Microtec) and Gernot Hebestreit (who has an academic background and worked at Grant Thornton as partner and member of the executive board).

PVA TePla’s order book typically spans multiple years due to capacity constraints and long investment timelines at clients, as new semiconductor fabs are very expensive. This is also an important reason for the semiconductor equipment sector’s infamous cyclicality and the reason that order intake (€104.9m in H123) can be very lumpy. This makes financial predictability more difficult on one hand, while on the other hand long-term orders provide visibility.

Sector analysts expect the semiconductor equipment sector to recover in 2024 after a poor 2023. SEMI recorded a 1.3% decrease in chip equipment sales in 2023 and expects an increase of 4.4% in 2024 in its December outlook. This should help PVA TePla reach its FY24 target, as well as margin development. FY23 reporting by semiconductor companies points to a difficult H124 followed by a stronger H224 and generally more cautious statements on the market environment, albeit still growth.

Although PVA TePla has a unique product offering, it faces competition in several market segments. In the materials technology semiconductor segment, for instance, competition is mainly from in-house development of tools by (potential) clients. Metrology instruments for the semiconductor industry are also made by reputable companies like ASML, KLA, Onto Innovation and Applied Materials, although we believe PVA TePla is more of a niche player in this segment.

In the process of valuing PVA TePla, we have established where the company is positioned in the competitive field and value chain. Given its very specific profile, with activities in the different fields of metrology and materials technologies, there is not really a comparable peer that carries out both activities. However, looking at PVA TePla’s activity profile, we have separated its activities into three fields and compare its valuation with those groups. We have also included a DCF valuation.

Our discounted cash flow model is based on the following assumptions:

Our DCF model suggests a fair value for PVA TePla of €35.26 per share.

In Exhibit 9, we show how the DCF value changes with different inputs of perpetual growth and EBIT margin (left-hand side) and WACC (right-hand side).

Because of its diversified profile, it is difficult to put PVA TePla in a particular group of comparable companies. We have differentiated between three groups of companies that we believe share an important part of their activities with PVA TePla:

It is clear that there are large valuation differences within these groups depending on their orientation: multiples for Mersen (more power semis/distribution), a smaller French and more trading-oriented firm, are much lower than for the rest of the companies, while Besi has a premium valuation based on its leading position in hybrid bonding equipment. In addition, there are large differences between the groups: the multiples of semiconductor equipment companies are higher on average compared to inspection tools/metrology, which are higher than advanced materials.

In the context of the multiples of all of these groups it is clear that PVA TePla’s multiples are not demanding. At our DCF fair value of €35.26, PVA TePla would trade at an FY24e EV/EBITDA multiple of 15.5x, which is still undemanding compared to two of the three reference groups.