First Sensor is focused on three segments: industrial, medical and mobility. All three markets benefit from several mega-trends that are driving demand for sensors and sensor systems. These mega-trends are the transition to Industry 4.0 in which processes are controlled by machines sharing information from sensors; miniaturisation of medical equipment; and the proliferation of sensors in automobiles, culminating in autonomous driving.
Written by
First Sensor |
Technology |
Share price graph
Share details
Business description
Analyst
|
Sensing the future
First Sensor is focused on three segments: industrial, medical and mobility. All three markets benefit from several mega-trends that are driving demand for sensors and sensor systems. These mega-trends are the transition to Industry 4.0 in which processes are controlled by machines sharing information from sensors; miniaturisation of medical equipment; and the proliferation of sensors in automobiles, culminating in autonomous driving.
Strategy drives growth in all three segments
During H118, group revenues grew by 7.9% year-on-year to €74.4m. This was driven primarily by a 27.5% jump in sales to the medical segment which was linked to higher demand for pressure and flow sensors from the standard parts portfolio. Sales to the industrial segments and mobility segments grew by 3.4% and 3.6% respectively. Growth here was driven by pressure sensors which are used in applications such as industrial process automation and electrohydraulic steering and by optical solutions for process control and distance detection. Industrial growth was held back by disruption to output in Q118 when an ERP (Enterprise Resource Planning) system was launched. Demand for optical sensors for distance detection (LiDAR) and pressure sensors, coupled with internationalisation efforts resulted in strong growth in both North America and Asia (25.3% and 19.7% respectively). EBIT margin rose from 4.9% to 5.5% despite higher maintenance expenses and recruitment costs as the company hired new production and R&D staff to secure future growth. EBIT increased by 20.3% to €4.1m. Net debt widened by €7.7m to €30.5m and gearing by 9.0pp to 36.9% compared with end FY17.
Management reiterates FY18 guidance
Noting a 12.5% y-o-y increase in the order backlog of €102.1m at end June 2018, of which more than half is scheduled for delivery during H218, and an expectation of improved growth rates in both the industrial and mobility segments, management reiterated the guidance given in March. This is for €150-160m sales with an EBIT margin between 7% and 9%. Management’s mid-term goal is a 10% EBIT margin.
Valuation: Margin limits share price appreciation
First Sensor’s shares are trading at a slight discount to the mean for our sample of companies in the global sensor market with regards to prospective EV/EBITDA (9.7x vs 10.3x) and a premium with regards to prospective P/E (27.6x vs 18.6x). The company’s prospective EBITDA margin is below the lower bound of the range of its peers (7.9% vs 10.5-25.0%), limiting potential for share price appreciation.
|
Consensus estimates
Source: First Sensor data, Bloomberg |
|
|
Research: Financials
FinLab’s H118 results were influenced by the fall in Heliad Equity Partners’ share price and limited revaluation of non-listed holdings. However, after the balance sheet date FinLab announced several positive developments, including the partial profitable exit from Deposit Solutions and new financing rounds at several holdings. According to management, these should translate into NAV/share of around €23 at end-September 2018, ie c 18% higher than the figure as at end-June 2018. Based on this estimate, FinLab is currently trading at an 11% discount to end-September NAV.