ISRA VISION Buy EUR 26.00 - ISRA VISION AG

ISRA VISION 

(CDAX, Technology) 

Buy 

EUR 26.00 

Price EUR 21.32 

Upside 22.0 % 

Value Indicators: EUR Share data: Description: 

DCF: 26.59 

FCF-Value Potential: 25.81 

Bloomberg: 

Reuters: 

ISIN: 

ISR GR 

ISRG 

DE0005488100 

Machine vision systems, optical robot 

guidance systems. 

Market Snapshot: EUR m Shareholders: Risk Profile (WRe): 2011/12e 

Market cap: 93.2 Freefloat 70.0 % Beta: 1.4 

No. of shares (m): 4.4 CEO 25.0 % Price / Book: 

0.9 x 

EV: 126.1 Vision GbR 5.0 % Equity Ratio: 59 % 

Freefloat MC: 65.3 Fidelity 10.1 % Net Fin. Debt / 

1.4 x 

Ø Trad. Vol. (30d): 

113.65 th CI Investments 5.1 % EBITDA: Net Debt / EBITDA: 

1.4 x 

Growth in automation at a reasonable price; Initiate with Buy 

ISRA VISION (Intelligent Systems Robotics and Automation) focuses on machine vision solutions for industrial customers. 

Broadly speaking, ISRA VISION’s systems are used to inspect welds, surfaces, printed pattern, plastic foil and folded carton, identify 

work-pieces, guide robots or check completeness. The vision systems, which typically consist of a camera, a computer and application 

specific software, are able to learn to recognise recurring defects, categorise them and allow for a systematic rectification, resulting in 

improved up-time, higher yield and cost savings for customers. As a result, these systems typically pay off for the customer within less 

than six months. ISRA VISION’s core competence (called BrainWARE®, developed internally) lies in the combination of soft- and 

hardware, incorporating industry-specific process know-how, algorithms to process vision data and an optimal system design to 

produce quality data reliably and quickly. 

ISRA VISION’s more than 6,000 reference installations and its relatively large size in niche markets, claiming double-digit market 

shares, differentiates the company from competitors. ISRA VISION’s focus has resulted in a global number one market position in 

surface inspection, exceeding that of Cognex (focus on machine vision systems for the semiconductor and electronics industry) and a 

top European market position in 3D machine vision. Last but not least, as system uptime is critical for customers, ISRA VISION’s 

service network is a very important prerequisite to winning an order. 

Average EBIT growth of 13% (CAGR 2011/12E-2013/13E) going forward looks plausible, driven by substantial cost savings 

through machine vision technology, a rising trend towards industry automation, supplying healthy long-term growth prospects. The 

company’s track record of generating double-digit profitable growth is impressive. Earnings are additionally defended by ISRA 

VISION’s broad exposure by regions, applications and customers (no single customer accounts for more than 2% of sales). Hence, 

EBIT margins in the past held up very well on double-digit levels, even in the crisis year 2008/09. Apart from the attractive organic 

growth prospects, ISRA VISION looks set to remain acquisitive in order to apply its know-how to other industries and establish a track 

record within new target markets faster. 

Valuation is attractive, too, trading at 1.4x EV/Sales vis-a-vis 18.7% EBIT margin 2012/13e, 8.4x P/E, 0.8x PTB. A multi stage DCFmodel, 

peer group comparison and FCF Value Potential points to a fair value between EUR 23 and EUR 28 per share. In view of the 

company’s proven track record of generating profitable growth in the attractive and growing niche for machine vision technology, we 

initiate coverage with BUY, price target EUR 26 based on FCF Value Potential in 2013E. 

Rel. Performance vs CDAX: 

1 month: 0.5 % 

6 months: 9.3 % 

Year to date: 17.7 % 

Trailing 12 months: 14.0 % 

Company events: 

26.10.12 RS Hamburg 

14.12.12 Prel. 2011/2012 

31.01.13 2011/2012 

28.02.13 Q1 

Roland Rapelius 

rrapelius@warburg-research.com 

+49 (0)40-309537-220 

FY End: 30.9. 

in EUR m 

CAGR 

(10/11-13/14e) 2007/08 2008/09 2009/10 2010/11 2011/12e 2012/13e 2013/14e 

Sales 10.8 % 68.3 58.2 64.8 75.2 82.9 92.1 102.4 

Change Sales yoy n.a. -14.8 % 11.5 % 15.9 % 10.3 % 11.1 % 11.1 % 

Gross profit margin 52.4 % 51.6 % 52.9 % 53.5 % 52.5 % 51.9 % 52.1 % 

EBITDA 9.8 % 18.6 15.2 17.6 21.4 22.8 25.2 28.4 

Margin 27.2 % 26.1 % 27.2 % 28.5 % 27.5 % 27.4 % 27.7 % 

EBIT 11.3 % 12.9 9.3 11.4 14.1 15.4 17.2 19.5 

Margin 18.9 % 15.9 % 17.6 % 18.8 % 18.6 % 18.7 % 19.0 % 

Net income 12.1 % 7.6 6.5 6.9 9.1 9.9 11.2 12.8 

EPS 11.8 % 1.76 1.52 1.61 2.09 2.27 2.56 2.92 

EPS adj. 11.8 % 1.76 1.52 1.61 2.09 2.27 2.56 2.92 

DPS 13.2 % 0.15 0.15 0.20 0.20 0.25 0.26 0.29 

Dividend Yield 1.3 % 1.8 % 1.5 % 1.1 % 1.2 % 1.2 % 1.4 % 

FCFPS -0.61 1.75 -0.15 -0.17 -0.45 0.69 0.44 

EV / Sales 1.2 x 1.0 x 1.3 x 1.4 x 1.5 x 1.3 x 1.2 x 

EV / EBITDA 4.3 x 3.9 x 4.9 x 5.0 x 5.5 x 4.9 x 4.4 x 

EV / EBIT 6.1 x 6.3 x 7.5 x 7.5 x 8.2 x 7.2 x 6.3 x 

P / E 6.8 x 5.4 x 8.3 x 8.4 x 9.4 x 8.3 x 7.3 x 

P / E adj. 6.8 x 5.4 x 8.3 x 8.4 x 9.4 x 8.3 x 7.3 x 

FCF Yield Potential 12.1 % 12.6 % 9.1 % 9.5 % 8.8 % 9.8 % 11.1 % 

Net Debt 27.6 23.8 28.3 30.0 32.9 31.0 30.3 

ROE 20.4 % 8.4 % 8.2 % 9.8 % 9.7 % 9.9 % 10.3 % 

ROCE (NOPAT) 17.7 % 6.9 % 6.8 % 8.0 % 7.9 % 8.2 % 8.7 % 

Guidance: At least EUR 80m sales in 2011/12. 

F U L L N O T E Published 25.10.2012 1


Sales development 


Sales by regions 

2011; in % 

EBIT development 


Source: Warburg Research 



Company Background 

• Global leader in concentrated niche markets for optical surface inspection systems such as flat glass inspection, metals inspection or 

paper inspection. European leader in 3D machine vision. 

• These systems have very short amortisation periods of typically less than 6 months due to significant cost savings and yield 

improvements. 

• ISRA VISION's track record of generating 2-digit sales growth and 2-digit EBIT margins is impressive driven by a largely untapped 

market (penetration only c. 15-20%) and a strong trend towards automation. 

• Management’s interest are aligned with shareholder’s interests as the CEO owns 25% of the company. 

Competitive Quality 

• Strong competitive position based on ISRA VISION's relatively large size as well as over 6,000 reference installations, differentiating 

the company from competition. 

• Key customers are large, globally active blue chip industrial companies who value the one-stop-shop approach which few apart from 

the larger suppliers can deliver 

• Strong global sales and service network, which is constantly extended 

• Competitive defence due to high R&D expenditure 

• Diversification by technology, industry and region limits the dependency in weak economic periods, as evidenced by the company’s 

double-digit EBIT margin even in crisis year 2008/09. 

EBT development 


Sales by segments 

2011; in % 

Net income development 







Investment Case 5 

Business Model 5 

Competitive Landscape 8 

Growth 11 

Valuation 16 

DCF Model 16 

Free Cash Flow Value Potential 18 

Peer-group comparison 19 

Newsflow 20 

Company & Products 21 

Product Range 21 

New product developments 24 

ISRA VISION’s History at a Glance 25 

Management background and shareholder structure 25 

Financials 27 



Company Profile 

Industrial Automation 

(19% of 2010/11 sales) 

Surface Vision 

(81% of 2010/11 sales) 

Products 

3D machine vision for robot guidance and 

Automation of optical surface inspection for 

positioning, assembly (e.g. car glass or tires), 

continuous industrial production processes at high 

handling or paint finishing. Service Incorporates accounts for ca. quality 10% of sales; avg. speeds selling (e.g. price metals, per system paper, € glass, 100,000 plastics). 

vision systems. 

Market positions 

End markets 

Customers 

Worldwide number one supplier of surface inspection systems for continuous production processes. European 

number one in 3D machine vision. Strong position in glass, metal, plastics/non-woven and automotive as well as a 

position among the top three in paper and solar glass 

Ranked from low to high market share: Print, Solar, Plastic, Paper, Automotive, Metal, Glass, Specialty Paper 

Blue-chip customer base with no single customer accounting for >2% of sales, including Daimler, VW, Ford, GM, 

Nissan, Hyundai, Renault, Pilkington, Schott, Q.Cells, First Solar, Nippon Steel, Bao Steel, posco, ThyssenKrupp, 

ArcelorMittal, ChinaSteel MAN, M-real, Kimberly-Clark, StoraEnso, International Paper, manroland, Du Pont, Bayer 

Competitors 

Raw Materials 

Fragmented market – mainly small competitors – Some overlap with Cognex, Perceptron, Advanced Vision 

Technology, Dr. Schenk, GP Solar, Vitronic, BST/Elexis, KLA Tencor, Orbotech, VAI/Voestalpine 

Mainly commodities including personal computers, digital cameras, components 

Source: ISRA, Warburg Research 



Investment Case 

Business Model 

A focus on niche markets in automation technology 

ISRA VISION is highly focused on the niche of machine vision solutions for automation in 

manufacturing and quality control. 

Generally speaking, machine vision technology is used to inspect welds, surfaces, 

printed pattern and folded carton, identify work-pieces, guide robots or check 

completeness. ISRA VISION’s systems are able to learn to recognise recurring defects, 

categorise them and allow for a systematic rectification, resulting in improved up-time 

and cost savings. Also, defective parts are prevented from proceeding to subsequent 

manufacturing stages, thus enabling a 100% quality target in a cost effective way. ISRA 

VISION’s core competence (called BrainWARE®, developed internally) lies in the 

combination of soft- and hardware, incorporating industry-specific process know-how, 

algorithms to process vision data and an optimal system design to produce quality data 

reliably and quickly. Most hardware components are commodities such as personal 

computers and cameras, bought from the market and the final assembly is done inhouse 

on all relevant continents. 

As such, ISRA VISION’s products help customers to solve two important 

problems: to reduce costs through automation and yield management and to increase 

quality through fewer defects. 

The application specific machine vision systems are focusing on: 

• Automation of quality inspection 

• Automation of production 

• Yield enhancing production & management decision intelligence 

Company structure 


Robot Vision 

Quality Vision 


automotive 

glass, print, paper/non-woven, plastics, 

metal, solar cells & modules 

Source: ISRA VISION, Warburg Research 

The business model is highly scalable. The combination of hard- and software knowhow 

incorporating intelligent detection algorithms in order to produce fast and reliable 

surface quality data can be applied to various end markets. Therefore, a high scalability 

of the business model – driving bottom-line growth – is achieved by transferring its 

technological expertise to new markets. 

Moreover, important success factors are industry-specific reference installations 

as well as a positive track record in a specific industry. These were important factors for 

ISRA VISION’s acquisitions of Parsytec in 2007 (metals and paper surface inspection 

systems) and Graphikon in 2010 (wafer based solar cells and modules surface 

inspection systems). Both companies are fully integrated and contribute important 

industry-specific know-how to ISRA VISION. Just recently ISRA VISION acquired 3D 



Shape, a small company active in 3D measurement of objects and surfaces. 

ISRA VISION – Diversification limits risk of dependencies 

Multi-Branch Strategy 

Robot Vision 


Quality Vision 

Metal 

Paper 

Print 

Plastics 

Glass 

Solar 

Automotive 

Europe 

Americas 

Asia 

Technologies Industries Regions 


Within these target industries, the company has built up substantial expertise, customer 

relations and reference installations, differentiating the company from competitors. This 

focus and differentiation have resulted in strong global market positions with high doubledigit 

shares in its target markets. 

Reporting divisions 

ISRA VISION operates in two divisions: 

• Surface Vision (81% of 2010/11 sales): Optical surface inspection systems help 

locate, visualise, classify and evaluate defects. It is applied mainly to sheet and 

continuous web products such as flat glass, solar, paper, plastic, non-wovens and 

metal. These materials are checked for defects during the production process, 

preventing defective parts from proceeding to subsequent manufacturing steps. ISRA 

VISION claims global market and technology leadership in surface inspection systems 

for continuous production processes. Originally established as a second-tier division, 

surface vision quickly emerged as the most important division for the company. 

Surface Vision: Foil inspection system 

Source: ISRA VISION 

• Industrial Automation (19% of 2010/2011 sales): Robot vision/guidance systems are 

able to recognise and adjust the position of objects in pinpoint precision (2D or 3D). 



These systems are mainly supplied to the automobile industry, machine tool 

manufacturers, plant and system manufacturers and the original equipment 

manufacturers (OEM). The main contributors to this division are robot vision and quality 

vision systems. The latter can be considered as an add-on for existing customers in the 

automotive, glass, print and packaging industry. ISRA VISION claims a leading position 

for 3D machine vision and robot guidance solutions and market leadership in Europe. 

Technological requirements are demanding - for example a robot that inserts car 

windshields at a tolerance level of less than 1mm or mounts a wheel without scratching 

the car body. Just recently Industrial Automation revenues took a huge leap with order 

entries from a German premium car manufacturer. 

Industrial Automation: Car assembly 


Customers & customer value 

Machine vision systems help to maximise yield. When pricing the finished products 

according to level of quality, machine vision systems are crucial. They generate quality 

data that customers use to maximise their revenues. That way, for example, a steel 

producer is able to identify different sheet steel qualities which can then be sold at 

different price levels to maximise the yield. For example, in automotive, steel quality is 

important because lower grades can be sold to mass producers while higher grades are 

sold to German premium manufacturers. 

A large service network matters as uptime is crucial. End customers - i.e. mainly 

large, globally active blue chip industrial companies - value a one-stop-shop approach 

and a broad product portfolio, setting ISRA VISION apart from smaller players. ISRA 

VISION’s global sales and service network supplies significant competitive strength as 

system uptime is critical. A large sales and service network cannot be run economically 

by a smaller competitor. ISRA VISION’s maintenance service contributes ca. 10% to 

total sales. 

Short amortisation period of typically less than six months. Solutions offered by 

ISRA VISION provide customers with high added value relative to an average system 

price of EUR 100,000: cost reduction, quality improvement, better yield management and 

advanced production methods. For surface vision systems, apart from efficiency and 

quality gains, the customer benefits from process monitoring and upstream feedback for 

analysis and further process improvement. Typically, for surface vision systems 

amortisation is achieved in less than six months. 

In the robot vision segment the customer’s benefit lies in the automation which 

reduces or even eliminates manual work, increases flexibility and makes the assembly 

more accurate, resulting in higher quality and efficiency overall. Considering the total 

costs of a manufacturing cell or a complete production system, the costs of a machine 

vision system account for typically only a fraction of total costs while the value added to 

the process is significant. 



ISRA VISION boasts a total of over 6,000 reference installations. These installations 

are valued by customers in view of a system’s long lifetime and high total system costs 

of several million Euros compared to only EUR 100k for a machine vision system. These 

references are required to be specific with respect to a customer’s industry – such as 

metals, glass, plastic, solar, paper, print etc. and automotive – and with respect to a 

certain process step within this industry (e.g. pre-dryer, dryer, reeler etc. in a paper 

manufacturing process). 

Blue chip customer-list without overdependence. With the various and diverse 

application areas of the product portfolio, a broad variety of industries are supplied by 

ISRA VISION. The customer list includes mainly globally producing, blue-chip industrials 

including Daimler, Audi, VW, Ford, GM, Nissan, Hyundai, Renault, Porsche, Volvo, 

Saint-Gobain, NSG Group, Pilkington, Asahi Glass, Schott, Bosch, Q.Cells, Solarwatt, 

Epcos, aleo, First Solar, JFE, Nippon Steel, Bao Steel, posco, riva, Corus, 

ThyssenKrupp, ArcelorMittal, ChinaSteel, Constantia Packaging, MAN, UPM, M-real, 

Kimberly-Clark, StoraEnso, International Paper, manroland, Du Pont, Bayer. No single 

customer accounts for more than 2% of sales. ISRA VISION maintains long-term 

(contractual) relationships with several customers, providing a high revenue visibility. 

Regional split 

ISRA VISION is headquartered in Darmstadt, Germany and is represented by its 

international subsidiaries and offices worldwide. Marketing, finance, R&D, production 

and purchase are located in Darmstadt. The site in Herten/Germany is ISRA VISION’s 

main assembly site, also incorporating R&D activities. The company has an almost 

balanced global revenue breakdown because of early international expansion, such as 

ISRA VISION, Lansing, Michigan/USA or ISRA VISION France in Lyon. 

ISRA VISION - Regional sales breakdown 

Asia/ROW 

32.4% 

Germany 

26.7% 

Asia/ROW 

37.7% 

Germany 

23.2% 

2010/11 2009/10 

Americas 

21.7% 

Europe excl. 

Germany 

19.3% 

Americas 

15.5% 

Europe excl. 

Germany 

23.6% 


The company is represented in 25 locations in 15 countries worldwide. Recently a 

site in Moscow, Russia was added while a site in Indonesia is being planned. About 75% 

of the workforce is located in Europe, about 15% in Asia and 10% in America. 

Competitive Landscape 

The highly fragmented machine vision market is characterised by a large number of 

smaller players. The average size of a European machine vision company is 29 

employees (ISRA VISION had 454 employees on average in 9M 2011/12). ISRA 

VISION’s competitors vary depending on market segment, application niche and 

geographic market. 

Compared to smaller competitors, differentiation is based on size which enables 

ISRA VISION to offer important services, a complete range of solutions e.g. inspection 

systems at several relevant stages of a production process, and the respective industryrelated 

know-how. Larger, listed competitors include Cognex (US, 2x larger based on 

total revenues, however, in surface inspection which is ISRA VISION’s largest division, 



Cognex generated only 15% of total sales or EUR 31m in 2011). 

Compared to that, ISRA VISION is ca. 70% larger based on 2010/11 sales). Other listed 

peers include Perceptron (US), AVT (Israel) and Basler (Germany). Basler focuses 

mainly on digital cameras and as such is not fully comparable. Also in respect to the 

other companies, a direct comparison should not be over-interpreted as competitors are 

encountered in no more than one market. 

Peer group overview 

Country 

Cognex Perceptron AVT 

US 

Basler 

(focus on cameras) 

US Israel Germany 

Market cap 

Employees 

Avg. EBIT margin 

2006-2011 

CAGR sales 

2006-2011 

€1.2bn €37m €21.7m €38.8m 

955 229 202 294 

14.9% 0.7% -0.4% 3.76% 

6.19% 0.48% 10.06% 1.1% 

Business 

model 

• Offers complete 

machinevision systems 

as well as single 

omponents 

• Two divisions: Modular 

Vision Systems and 

Surface Inspection 

Systems 

• MVS are us ed for 

automation of the 

manufacturing process 

• SIS provide surface 

inspection for materials 

proc essed such as 

metals, paper, plastics 

• Competes with ISRA in 

almost every segment 

(see graphic below) 

• Claims a #1 position as 

a supplier of the 

semiconductor and 

electronics industries 

• Two business units: 

Industrial and 

Commercial Products 

• Industrial Business Unit 

provides highlyconfigurable 

measurement solutions 

to monitor quali ty 

• IBS supplies primarily to 

the automotive sector 

• Commercial Products 

Busines s Unit offers 

inspection products and 

various accessories to 

plumbers, electricians, 

mechanics etc as well 

as do-it-yourself 

homeowner 

• Offers value-added 

services in the field of 

training, maintenace, 

consulting and software 

• Provides products for 

automatic inspection of 

printed materials, press 

and color control and 

reporting software 


the print and paper 

market 

• Main product 

automatically detect 

defects and deviations 

• Offers installation 

trai ning and support 

services 

• Operates directly and 

through dis tributors in 

Europe and the US 

• Manufactures digital 

camers for industrial 

applications , medical 

devices, traffic systems 

and video surveillance 

• Claims to be the #2 

camera supplier 

worldwide 

• Two segments: 

Components (83.7% of 

total sales) and 

Solutions (16.3%) 


terms of optical 

inspection solutions for 

glass (incl. solar panels) 

Source: Company data, Bloomberg, Warburg Research 

Compared to its peer group of listed competitors, ISRA VISION generated the 

highest average sales growth (CAGR 2006-2011). Average EBIT margins over the 

past five fiscal years were also impressive and more resilient than its peers, even in the 

crisis year of 2009, supported by a broad diversification by regions, industries and 

customers. 



Peer group – EBIT margin development 

30% 

20% 

10% 

0% 

-10% 

2006 2007 2008 2009 2010 2011 

-20% 

Cognex Perceptron AVT Basler ISRA 

Source: Bloomberg, Warburg Research 

Perceptron as ISRA VISION’s closest comparable peer in automotive, is expecting 

additional growth in the United States. Basler, which mainly focuses on its Components 

segment, reported a harsh decline of 67% of sales in the relevant Solutions segment, 

which was due to excess capacities in the LCD industry, resulting in a capex decrease. 

In terms of market share, ISRA VISION claims the strongest positioning in the 

following industries (ranked from low to high): 

- Print 

- Solar 

- Plastic 

- Paper 

- Automotive 

- Metal 

- Glass 

- Specialty Paper 

High R&D supplies competitive defence against smaller competitors. ISRA 

VISION’s size allows the company to spend high amounts on R&D (12.9% of 2010/11 

sales, cost of sales accounting) to support its technological expertise. These sums are 

unlikely to be matched by smaller competitors. Among the listed competitors, only 

Cognex’s R&D budget is higher in absolute terms but the product mix and end market 

focus (mainly on semiconductor and electronics) differ from those of ISRA VISION. 

Therefore direct comparisons are limited. The development of technological innovations 

is one of ISRA VISION’s key strengths. The company focuses on creating additional 

value and achieving a quick return-on-investment for customers. This makes a high 

contribution to the mix of the company’s technology, market and cost leadership position. 

ISRA VISION profits from ongoing market consolidation. Customers, which are 

mainly global manufacturers, prefer to be served by global suppliers and value the onestop-shop 

approach offered by ISRA VISION. Within this environment, the company 

should profit from overall consolidation and should increase its market share. Through 

the acquisitions of Parsytec and Graphikon ISRA VISION gained market share 

inorganically, especially in the metal, print and solar industry. 



Growth 

A high-growth company with favourable market outlook 

ISRA VISION exhibits an impressive track record: Over the last decade the company 

grew profitably with double-digit sales growth rates and double-digit EBIT margins. 

Coupled with a sound balance sheet (57% equity ratio, 31% net gearing) ISRA VISION 

signals financial health and stability which is important for its industrial customers. The 

CAGR from 2001 to 2011 was 15%, generating double-digit EBIT margins even in crisis 

years. 

ISRA VISION - Revenue and EBIT development (EUR m) 

100 

25% 

80 

20% 

60 

15% 

40 

10% 

20 

5% 

0 

0% 

00/01 

01/02 

02/03 

03/04 

04/05 

05/06 

06/07 

07/08 

08/09 

09/10 

10/11 

11/12E 

12/13E 

Sales EBIT EBIT margin 


ISRA VISION - Segment revenue growth (EUR m) 

30 

30% 

20 

20% 

10 

10% 

0 

0% 

-10 

Q1/09 

Q2/09 

Q3/09 

Q4/09 

Q1/10 

Q2/10 

Q3/10 

Q4/10 

Q1/11 

Q2/11 

Q3/11 

Q4/11 

Q1/12 

Q2/12 

Q3/12 

-10% 

-20 

-20% 

-30 

-30% 

Surface Vision Industrial Automation Total change in % (y-o-y) 


The Industrial Automation segment (18.5% of 2010/11 sales) benefits from several 

trends in the automotive industry. The industry is faced with a rising need for efficiency 

increases in the mature markets, the need for new, local production sites in emerging 

markets such as Brazil and China, and generally a high degree of competitiveness, 

which is driving the need for ever higher quality standards and cost advantages. This 

year’s impressive Q3 figures in Industrial Automation were driven by some big orders by 

German premium car manufacturers. 

Order backlog on record levels: The total order backlog rose gradually to EUR 55m 

per end of Q3 with a 50% increase in the Industrial Automation segment in the first nine 



months of 2011/12. 

ISRA VISION - Order backlog (EUR m) 

60 

50 

40 

30 

20 

10 

0 

Q1/10 

Q2/10 

Q3/10 

Q4/10 

Q1/11 

Q2/11 

Q3/11 

Q4/11 

Q1/12 

Q2/12 

Q3/12 


Management’s medium-term financial targets include a sales volume of more than EUR 

100m (like-for-like) with at least stable margins. The gross margin should stay at 60% 

minimum, based on total cost accounting, and an EBT margin target of 20% which is a 

high level in comparison to peers. For 2011/12 ISRA VISION is aiming to reach sales of 

more than EUR 80m (WRe: EUR 83). Taking acquisitions into account, we see sales 

volume climbing beyond the EUR 100m threshold in the medium term. 

We expect average sales growth of 11% and EBIT growth of 13% (CAGR 2012e- 

2014e) as a result of… 

• …rising quality requirements and a rising need for manufacturing efficiency driving the 

need for automation and quality inspection systems in several customer industries. 

• …an extension of sales activities and geographical presence. 

• …a bigger product portfolio: Several products are nearing market launch and lowbudget 

products will be introduced soon. With “Plug & Automate” ISRA VISION enters 

the do-it-yourself terrain. The new generic product family is a ready-to-use automation 

technology for the factory floor. 

• …ISRA VISION’s cost leadership position, which will help to maintain and increase 

profitability levels. 

• …balance sheet improvements: Increasing equity ratio and unused credit lines 

translate into a solid capital endowment for further growth. 

ISRA VISION’s growth is diversified by regions and customer industries. During the 

economic crisis in 2008/09, ISRA VISION’s revenues declined 15% which is only one 

third compared to the German engineering sector decline of 45% (VDMA). This is the 

result of a broad sales exposure to uncorrelated end markets and regions: 



ISRA VISION - regional sales breakdown 2010/11 

Asia/ROW 

32,4% 

Germany 

26,7% 

Americas 

21,7% 

Europe excl. 

Germany 

19,3% 


ISRA VISION - sales split by customer industries 2010/11 

Paper 

17% 

Print 

5% 

Automotive 

16% 

Metal 

19% 

Glass 

20% 

Plastics 

23% 


ISRA Vision - Divisional split 

in EUR m 2008 2009 2010 2011 2012e 2013e 2014e 


Sales Industrial Automation 15.8 10.9 11.5 14.6 19.4 21.6 24.1 

EBIT Industrial Automation 3.0 1.3 1.9 2.5 3.4 3.8 4.4 

margin 19.2% 12.3% 16.3% 17.5% 17.5% 17.7% 18.2% 


Sales Surface Vision 52.4 47.3 53.3 60.6 63.5 70.5 78.2 

EBIT Surface Vision 9.9 7.9 9.6 11.6 12.0 13.4 15.1 

margin 18.9% 16.8% 18.0% 19.1% 18.9% 19.0% 19.3% 

Group 

Sales 68.3 58.2 64.8 75.2 82.9 92.1 102.4 

EBIT 12.9 9.3 11.4 14.1 15.4 17.2 19.5 

margin 18.9% 15.9% 17.6% 18.8% 18.6% 18.7% 19.0% 

Sources: ISRA Vision (historical data), Warburg Research (estimates) 

Growth drivers and market dynamics 

10% average market growth expected by 2015: The total turnover for the global 

machine vision market was estimated at USD 11.2bn in 2010. Until 2015, the market is 

expected to grow to nearly USD 18bn (CAGR 10%, BCC Research).The potential size of 

the market for machine vision technology that ISRA VISION focuses on is estimated at 

EUR 3.2bn sales per year. In terms of application, surface vision technology accounts for 

more than 50% of the market, followed by robot vision and quality vision systems. 



Addressable market has niche character with size of less than EUR 1bn: The actual 

addressable market size is assumed to be between EUR 480m – EUR 640m sales per 

year, based on the assumption that currently not even 20% of the potentially 

addressable market is yet penetrated. However, other industry sources estimate that 

only 10% of the potentially addressable market for machine vision technology is yet 

penetrated, mainly because some sectors have easier tasks to perform than others and 

certain industries including automotive and electronics were able to adopt automation 

technologies earlier than others. 

VDMA in July 2012 said it expects 5% market growth this year after 20% yoy in 

2011 which varies by subsector. The VDMA, the German association for engineering 

and plant engineering, expects the market for industrial machine vision systems and 

components to grow by 5% yoy in 2012 in terms of revenues of suppliers located in 

Germany with customers located in Germany and abroad. In 2011, revenues reached 

EUR 1.5bn for the first time. After 2009 the worldwide automation trend continued even 

more dynamically. Rationalisation, productivity improvements, shorter and faster cycle 

times and quality demands all require automation and surface inspection. 

Machine Vision turnover of German suppliers (EUR m) 

1,800 

1,600 

1,400 

1,200 

1,000 

800 

600 

400 

200 

0 

9% CAGR (00-12E) 

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012E 

Source: VDMA, Warburg Research 

Growth is supported by a low degree of automation. ISRA VISION is expanding in 

both high growth areas such as Eastern Europe, Asia and South America and already 

established markets including Japan. Global car manufacturers are expanding their 

manufacturing capacities in China, underscored by the statements of Dürr, a supplier of 

capital goods to the automotive industry, (mainly paint shops and automation solutions) 

in its recent capital markets day in China. 

South Korea, Thailand, and Malaysia offer further potential to increase the degree of 

automation in its industrial applications, according to the VDMA. The US still has a 

relatively small degree of automation in production facilities and could offer some growth 

opportunities. 

In first nine months of FY 11/12, the US was the fastest growing region for ISRA 

VISION. Europe, however, is expected to remain the most important market, with growth 

opportunities especially in Eastern countries. Even though Germany and Japan are the 

highest automated countries, they have always been lucrative for ISRA VISION and are 

likely to maintain their position as cash cow markets. 

New VDMA figures support our growth scenario. 2011 VDMA figures (published in 

2012) again illustrate that Asia is the fastest growing region for German machine vision 

suppliers. In absolute terms, Asia caught up with Europe and looks set to outperform the 

European market. 

Americas, especially North America, made a huge step forward, according to VDMA, 

with strong growth of 35% in 2011, which is also perceptible in ISRA VISION’s latest 



results. Germany disappointed in 2010 with a 5% decline compared to 2008 but bounced 

back in 2011 with an impressive 20% increase yoy. We compare 2010 to 2008 because 

of the low base in 2009. Again, these numbers refer to the regional sales split of 

suppliers located in Germany only. 

Market - Machine vision sales development by regions 

50% 

40% 

40% 

35% 

30% 

28% 

20% 

20% 

10% 

0% 

-10% 

Germany 

-5% 

2% 

9% 

Europe (excl. 

Germany) 

8% 

Asia 

Americas 

2010 vs 2008 2011 vs 2010 

Source: VDMA, Warburg Research 

Industry-specific investment patterns play a key role for ISRA VISION. Especially 

customers who are engaged in highly competitive environments and low-margin 

businesses could spur growth for ISRA VISION. Also, new quality standards and the 

commitment to green technology could build momentum. Below we have briefly 

summarised recent macro- and micro-trends for ISRA VISION’s relevant industries. 

Industry-specific market dynamics 

Automotive 

Metal 

Glass 

• Large order increases from premium car manufacturers, 

especially in Germ any and China, driven by regional 

expansion, rising quality requirem ents and efficienc y gains. 

• Developm ent of new models goes hand in hand with 

pressur e on higher efficienc y and higher quality 

• com petition is on high levels which could trigger 

investm ents in m argin-im prov ing technology 

• Introduction of new surface vis ion sys tem s for the 

production/processing of steel and alum inium 

• Growth perceptible from USA 

• Risk: Low raw material prices (iron ore at alm ost three year 

low) do not apply enough pressure on m argins 

• Three new innovations about to be launched 

• Including a new generation of surface vision systems for 

inspection of automobile- and floatglass 

• P rosperous especially in China and Japan (new sales 

team ) 

Print 

Plastics 

Solar 

Paper 

• S trong dynam ics 

• DRUPA 2012 triggered momentum : gain of new valuable 

contacts 

• Good results lately 

• New applications 

• Increased marketing activ ities in USA and ASIA could pay 

off 

• Recent downturn perceptible 

• W eak demand expected to continue in the short term 

• Chance: China‘s m anufacturers generate very low yields 

and are forced to im prove m argins; inc reas ing quality 

requirement could also play a role 

• Impressive growth in Q2 and Q3 11/12 

• S pecialty paper (bank notes) prosperous business unit 

• Introduction of low-budget products should further stimulate 

the market 




Valuation 

Valuation based on a multi-stage DCF Model, FCF Value Potential and Peer Group 

Comparison yields the following range of a fair value per share. 

Valuation summary – fair value (EUR per share) 

DCF Model 25.0 - 28.3 

Free Cash Flow Value Potential 22.5 - 25.8 

Peer Group Comparison 23.4 - 24.3 

Sources: ISRA VISION (reported data), Warburg Research (estimates) 

DCF Model 

A DCF-model yields a fair value per share between EUR 25 and EUR 28 

Our key model assumptions are as follows: 

• Sales growth in the foreseeable future looks set to remain at low doubledigit 

levels on the back of an ongoing trend towards automation and the 

need to increase manufacturing efficiency and quality standards. 

• EBT margins at high levels near 20% look plausible driven by sales growth 

and operating leverage. Margins look set to erode gradually over time 

anticipating increasing competitiveness, partly defended by the company’s 

R&D and innovative products. 

• Working capital requirements are expected to remain at high levels owing 

to the customer structure. 

• Capex requirements are expected to remain at levels between 10% and 

12% of sales in the foreseeable future, mainly driven by capex for internally 

produced and capitalised assets while capex for PPE is expected to 

account for possibly between EUR 0.5m to EUR 1m going forward. 

Reason: the product portfolio determines most of ISRA VISION’s asset 

value whereas PPE requirements are limited. 



DCF Model 

Detailed forecast period Transitional period Term. Value 

Figures in EUR m 11/12e 12/13e 13/14e 14/15e 15/16e 16/17e 17/18e 18/19e 19/20e 20/21e 21/22e 22/23e 23/24e 

Sales 82.9 92.1 102.4 110.5 119.4 128.9 139.3 147.6 156.5 164.3 172.5 179.4 184.8 

Sales change 10.3 % 11.1 % 11.1 % 8.0 % 8.0 % 8.0 % 8.0 % 6.0 % 6.0 % 5.0 % 5.0 % 4.0 % 3.0 % 2.0 % 

EBIT 15.4 17.2 19.5 21.0 22.7 24.5 25.8 27.3 28.2 28.8 29.3 28.7 27.7 

EBIT-margin 18.6 % 18.7 % 19.0 % 19.0 % 19.0 % 19.0 % 18.5 % 18.5 % 18.0 % 17.5 % 17.0 % 16.0 % 15.0 % 

Tax rate (EBT) 31.0 % 31.0 % 31.0 % 31.0 % 31.0 % 31.0 % 31.0 % 31.0 % 31.0 % 31.0 % 31.0 % 31.0 % 31.0 % 

NOPAT 10.6 11.9 13.4 14.5 15.7 16.9 17.8 18.8 19.4 19.8 20.2 19.8 19.1 

Depreciation 7.4 8.0 8.9 9.6 10.3 11.2 12.1 12.8 13.6 14.2 14.9 15.5 16.0 

in % of Sales 8.9 % 8.7 % 8.7 % 8.7 % 8.7 % 8.7 % 8.7 % 8.7 % 8.7 % 8.7 % 8.7 % 8.7 % 8.7 % 

Changes in provisions 0.0 0.1 0.1 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.1 0.1 

Change in Liquidity from 

- Working Capital 9.0 5.9 8.4 6.8 7.3 7.9 8.5 6.9 7.3 6.5 6.8 5.7 4.4 

- Capex 10.3 10.4 11.4 12.4 13.3 12.9 13.9 14.0 14.7 15.4 16.2 16.9 16.1 

Capex in % of Sales 12.4 % 11.3 % 11.2 % 11.2 % 11.2 % 10.0 % 10.0 % 9.5 % 9.4 % 9.4 % 9.4 % 9.4 % 8.7 % 

Other 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 

Free Cash Flow (WACC 

Model) 

-1.3 3.6 2.5 5.1 5.6 7.5 7.6 10.9 11.1 12.3 12.3 12.9 14.7 16 

PV of FCF -1.3 3.3 2.1 4.0 4.0 4.9 4.6 6.1 5.8 5.9 5.4 5.2 5.5 92 

share of PVs 2.79 % 34.90 % 62.32 % 

Model parameter 

Valuation (m) 

Derivation of WACC: Derivation of Beta: Present values 2023/24e 55 

Terminal Value 92 

Debt ratio 30.00 % Financial Strength 1.20 Financial liabilities 34 

Cost of debt 2.9 % Liquidity 1.60 Pension liabilities 2 

Market return 9.00 % Cyclicality 1.20 Hybrid capital 0 

Risk free rate 4.00 % Transparency 1.20 Minority interest 1 

Others 1.60 Market val. of investments 0 

Liquidity 6 No. of shares (m) 4.4 

WACC 8.44 % Beta 1.36 Equity Value 116 Value per share (EUR) 26.59 

Sensitivity Value per Share (EUR) 

Terminal Growth 

Delta EBIT-margin 

Beta (WACC) 1.25 % 1.50 % 1.75 % 2.00 % 2.25 % 2.50 % 2.75 % Beta (WACC) -1.5 pp -1.0 pp -0.5 pp 0.0 +0.5 pp +1.0 pp +1.5 pp 

1.65 (9.4 %) 19.53 19.99 20.49 21.01 21.58 22.18 22.83 1.65 (9.4 %) 16.65 18.10 19.56 21.01 22.47 23.93 25.38 

1.50 (8.9 %) 21.80 22.35 22.95 23.59 24.28 25.02 25.82 1.50 (8.9 %) 18.89 20.46 22.02 23.59 25.16 26.72 28.29 

1.43 (8.7 %) 23.05 23.67 24.32 25.03 25.79 26.62 27.51 1.43 (8.7 %) 20.15 21.77 23.40 25.03 26.66 28.29 29.92 

1.36 (8.4 %) 24.40 25.08 25.81 26.59 27.44 28.36 29.35 1.36 (8.4 %) 21.50 23.20 24.89 26.59 28.28 29.98 31.68 

1.29 (8.2 %) 25.85 26.60 27.41 28.28 29.22 30.25 31.37 1.29 (8.2 %) 22.98 24.75 26.51 28.28 30.05 31.81 33.58 

1.22 (7.9 %) 27.42 28.25 29.15 30.12 31.18 32.33 33.59 1.22 (7.9 %) 24.58 26.43 28.27 30.12 31.96 33.81 35.66 

1.07 (7.4 %) 30.96 31.99 33.10 34.32 35.66 37.14 38.77 1.07 (7.4 %) 28.25 30.28 32.30 34.32 36.35 38.37 40.40 

Sources: ISRA VISION, Warburg Research 



Free Cash Flow Value Potential 

Fair value between EUR 23 to EUR 26 per share looks reasonable 

Smaller companies rarely bear sufficient resemblance to peers in terms of geographical exposure, 

size or competitive strength and long-term returns often are flawed by the lack of sufficient visibility. 

Therefore, a Free Cash Flow based valuation has additionally been conducted. 

The “FCF Value Potential" reflects the ability of the company to generate sustainable free cash flows. 

It is based on the "FCF potential" - a FCF "ex growth" figure - which assumes unchanged working 

capital and pure maintenance capex. A value indication is derived by discounting the “FCF potential” 

of a given year with the weighted costs of capital. 

Free Cash Flow Value Potential – ISRA VISION 

Figures in EUR m 2008 2009 2010 2011 2012e 2013e 2014e 

Net Income before minorities 8.0 6.4 7.0 9.1 10.0 11.3 12.8 

+ Depreciation + Amortisation 5.7 5.9 6.2 7.3 7.4 8.0 8.9 

- Net Interest Income -1.6 -1.0 -0.9 -1.0 -0.9 -0.9 -0.9 

- Maintenance Capex 5.7 5.9 6.2 7.3 7.2 8.0 8.9 

+ Others 0.0 0.0 0.0 0.0 0.0 0.0 0.0 

= Free Cash Flow Potential 9.6 7.4 7.8 10.1 11.1 12.1 13.7 

Free Cash Flow Yield Potential 7.6% 5.9% 6.2% 8.0% 8.6% 9.6% 10.9% 

WACC 8.4% 8.4% 8.4% 8.4% 8.4% 8.4% 8.4% 

= Enterprise Value 126.0 126.0 126.0 126.0 128.9 127.0 126.3 

= Fair Enterprise Value 113.7 87.9 92.9 119.9 131.3 143.9 162.4 

- Net Debt (Cash) 28.1 28.1 28.1 28.1 30.9 29.0 28.2 

- Pension Liabilities 2.0 2.0 2.0 2.0 2.0 2.0 2.1 

- Others 0.0 0.0 0.0 0.0 0.0 0.0 0.0 

- Market value of minorities 0.0 0.0 0.0 0.0 0.0 0.0 0.0 

+ Market value of investments 0.0 0.0 0.0 0.0 0.0 0.0 0.0 

= Fair Market Capitalisation 83.7 57.9 62.9 89.9 98.5 112.9 132.1 

No. of shares (m) 4.4 4.4 4.4 4.4 4.4 4.4 4.4 

= Fair value per share (EUR) 19.13 13.24 14.39 20.56 22.52 25.81 30.22 

premium (-) / discount (+) in % -12.8% -39.7% -34.4% -6.3% 2.6% 17.6% 37.7% 

Sensitivity Fair value per Share (EUR) 

WACC 

9.9% 15.21 10.21 11.19 16.42 17.98 20.85 24.61 

9.4% 16.38 11.11 12.14 17.66 19.34 22.33 26.28 

8.9% 17.68 12.12 13.20 19.03 20.84 23.97 28.14 

8.4% 19.13 13.24 14.39 20.56 22.52 25.81 30.22 

7.9% 20.77 14.51 15.73 22.29 24.41 27.89 32.56 

7.4% 22.63 15.95 17.25 24.25 26.56 30.24 35.21 

6.9% 24.76 17.59 18.99 26.49 29.01 32.93 38.25 




Peer-group comparison 

Fair value indication between EUR 23 and EUR 24 per share 

Based on EV/EBIT and EV/EBITDA 2012E, respectively, the peer group comparison 

yields a fair value between EUR 23 and EUR 24 per share. 

That said, a peer group comparison is not very relevant, in our view, as a peer with a 

comparable business model, similar end market exposure by industries, market position, 

and market capitalisation does not seem to be on offer. 

Peergroup overview 

Peergroup - Key Figures 

ISRA Vision LC Price MC EV 

EPS Sales EBITDA EBIT 

in LC in LC m in LC m 12e 13e 14e 12e 13e 14e 12e 13e 14e 12e 13e 14e 

Cognex USD 35.73 1,532.0 1,141.3 1.53 1.92 n.a. 327.0 364.3 393.0 98.1 119.0 112.0 81.5 101.4 98.1 

Perceptron USD 5.66 47.9 20.3 0.30 0.45 0.51 61.0 60.5 65.0 4.6 6.7 7.7 n.a. n.a. n.a. 

AVT EUR 4.10 21.8 14.0 0.66 0.71 0.66 41.0 42.5 45.5 4.3 n.a. n.a. 3.8 5.1 5.5 

Basler EUR 11.76 41.2 61.1 1.08 1.24 1.37 55.4 60.3 66.4 13.8 15.2 15.0 6.5 7.3 7.9 

ISRA Vision EUR 21.95 96.0 128.9 2.27 2.56 2.92 82.9 92.1 102.4 22.8 25.2 28.4 15.4 17.2 19.5 


Peergroup – Valuation Multiples 

Peergroup 

ISRA Vision LC Price MC EV 

P / E EV / EBITDA EV / EBIT 

in LC in LC m in LC m 12e 13e 14e 12e 13e 14e 12e 13e 14e 

Cognex USD 35.73 1,532.0 1,141.3 23.38 18.63 n.a. 11.63 9.59 10.19 14.00 11.26 11.63 

Perceptron USD 5.66 47.9 20.3 18.87 12.72 11.21 4.41 3.03 2.65 n.a. n.a. n.a. 

AVT EUR 4.10 21.8 14.0 6.17 5.76 6.21 3.25 n.a. n.a. 3.69 2.73 2.52 

Basler EUR 11.76 41.2 61.1 10.89 9.52 8.62 4.44 4.03 4.09 9.40 8.37 7.73 

Average 14.83 11.66 8.68 5.93 5.55 5.64 9.03 7.45 7.30 

Median 14.88 11.12 8.62 4.43 4.03 4.09 9.40 8.37 7.73 

ISRA Vision EUR 21.95 96.0 128.9 9.67 8.57 7.52 5.66 5.11 4.54 8.37 7.48 6.61 

Valuation difference to Average 53% 36% 15% 5% 9% 24% 8% 0% 10% 

Fair value per share based on Average 33.66 29.84 25.34 23.39 24.48 29.08 24.28 21.83 25.01 




Newsflow 

Solid Q3 results, outlook confirmed: Q3 results reported on August 31 were solid with 

9M sales growth of 11% yoy mainly driven by new orders in the industrial automation 

segment. EBIT margins increased slightly, owing to operating leverage. Cash flow from 

operations improved to EUR 10.5m in 9M (from EUR 4.1m in 9M 10/11) mainly driven by 

working capital management. 

Order backlog per end of Q3 increased to c. EUR 55m which is impressive (EUR 

40m in 9M 10/11). The equity ratio of 58% (vs. 57% at the end of Q3 last year) is very 

solid. Against this backdrop, management reiterated its outlook for 2011/12 with a sales 

target of at least EUR 80m (WRe: EUR 83m). 

ISRA VISION – Q3 2011/12 results (FY ends 30.09.) 

in EUR m Q3/12 Q3/11 yoy 9M/12 9M/11 yoy 

Sales 20.3 19.0 6.9% 57.6 51.7 11.5% 

Gross profit 11.1 10.6 5.5% 31.4 28.3 10.9% 

margin 54.8% 55.5% 54.6% 54.8% 

EBIT 3.8 3.4 9.1% 10.7 9.6 12.1% 

margin 18.5% 18.1% 18.6% 18.5% 

EPS in EUR 0.56 0.51 9.8% 1.58 1.41 12.1% 


Smaller acquisition in September 2012: on September 5, the company announced the 

acquisition of 3D-Shape, a smaller 3D machine vision specialist (sales of c. EUR 1.5m) 

supplying in-depth knowledge of 3D shape measurement of objects and surfaces. The 

technology can be applied in the fields of quality control and precision measurement. 

Next datapoint: preliminary Q4 2011/2012 results due on December 14, 2012. 

ISRA Vision - Event activity chart 

0.50 

0.43 

Volume (Shrs. in Mil.) 15-Oct-2010 to 18-Oct-2012 High: 22.75 Low: 14.56 Last: 22.18 Price (EUR) 

1 

25.00 

23.14 

0.36 

0.29 

0.21 

0.14 

0.07 

3 

2 

21.29 

19.43 

17.57 

15.71 

13.86 

0.00 

1.11 4.11 7.11 10.11 1.12 4.12 7.12 10.12 

12.00 

Volume(Left) Price (Right) Event 

Date Event Type Event Description Source Impact(%)* 

1 05-Sep-12 Deal Activity ISRA VISION AG acquired 3D-Shape GmbH for an undisclosed amount. The... Mergerstat 4,09 

2 21-Mrz-12 Corporate Actions Ex-date for dividend payment of €0.25 Pricing -2,54 

3 30-Mrz-11 Corporate Actions Ex-date for dividend payment of €0.20 Pricing -4,00 

*As a default, the impact column displays the percentage price change of the stock based on three days prior and three days after the event took place. 

Sources: FactSet, Warburg Research 



Company & Products 

Product Range 

ISRA VISION reports in two divisions: Surface Vision (81.5% of sales in 2010/11) and 

Industrial Automation (18.5% of sales). To take a closer look at the technology, however, 

it is reasonable to further divide the Industrial Automation segment into Robot Vision and 

Quality Inspection. 


Today’s quality standards demand high quality levels with regard to complex surfaces. 

These can be homogenous, patterned, printed, coated and colored. ISRA VISION offers 

inspection solutions for glass, plastics/non-wovens, painted finished parts, paper and 

print products. Customers gain flexibility through ISRA VISION’s basic concept of 

standard modules and components developed in-house. This concept classifies, 

visualises and archives the detected defects. With the help of intelligent software, 

defects do not proceed to subsequent production steps thus helping to produce in a costeffective 

way. 

Surface Vision: Metal inspection 


Characteristics: 

• Image database of defects 

• Real-time image processing 

• Teaching Process (see graphic below) 

• Statistical evaluation of the results 

• User-friendly configuration 

• Easy integration into existing process cycles 

• System can be controlled and monitored. 



Automatic generation of training data 

Type A 

High confidence 

ok 

Classifier 

Type B 

Evaluation of 

classification 

Low confidence 

Type ? 

Unknown 

Training 

unknown 

uncertain 

Teacher 

Ask teacher 


EPROMI / Expert5i modules 

Quality data provided by surface inspection systems is crucial to manufacturers but 

alone not sufficient to improve processes. EPROMI – Enterprise PROduction 

Management Intelligence – is a software suite that enables customers to have access to 

all relevant information and its evaluation, thereby supporting management decisions. 

With EPROMI production management can exercise direct control over operations in the 

production hall. Data is provided in a clear and compact format and can be connected to 

business management data such as order and resource planning. The so-called Expert5i 

modules then analyse and weigh-up all of the information and generate knowledgebased 

suggestions for the decision makers. Combining the information in different ways 

reveals correlations and unleashes optimisation potential for processes. The tool also 

works in a preventative way: if problems are likely to occur, operators will receive early 

warnings and relevant intervention options. 

Robot Vision 

Robot guidance has been the core competence since ISRA VISION was founded in 

1985. Nowadays, robotic technology has become an important economic factor in 

industrial automation and provides a huge number of application opportunities. Ever 

since, the company has been regularly introducing technology to new markets. An 

example is Floatscan 5D for glass inspection which enables five inspection steps in a 

single product, thereby contributing to cost-effective production. 

Robot Vision gives industrial robots intelligent eyes. With these eyes, robots can 

recognise and adjust the position of objects with pinpoint precision. It provides the 

handling system with information on where the component to be moved is located. ISRA 

VISION offers a broad range of robot vision products – from simple pick & place 

applications to complex 3D tasks. 



Robot Vision: Multiple eyes for the three dimensional world 


Technologies: 

• Fast and precise position determination of components using robust algorithms 

• Coordination between the camera system, the robot, the object and the cell 

• Resistance to transmission errors between the image processor and the robot via 

several interfaces and protocols 

• Add-ons: quality measurement, inspection and documentation of the results 

• Simplification of the software and the interface to make it user-friendly 

Core components: 

• High-performance frame grabbers (developed in-house) 

• Sensors for robot-suited miniature cameras, stereo sensors and 3D form matching 

sensors 

• Supporting technology: easy-to-use software with components for measuring, 

inspecting, communication, data archiving and user support 

New product line: “Plug & Automate” 

With “Plug & Automate” ISRA VISION steps into the do-it-yourself terrain. The new 

generic product family is a ready-to-use automation technology for the factory floor. 

Customers can use the tools for various tasks (robot guidance, measurement technology 

and quality assurance). The sensors already incorporate all common communication and 

robot interfaces. Depending on the budget and the need, customers are able to buy 

sensors, the software suite or the entire package. The clear and simply designed 

software (based on Windows 8) has a tablet-like touch control. The easy 

parameterisation approach makes programming and thereby experts redundant. 

Revenue contribution is not expected before 2012/2013. 



Plug & Automate 


Quality Inspection 

Quality inspection systems involve the inspection of presence, contours and 

measurements, the assurance of complete assembly and right positions and the 

verification of article or production codes. An example of a quality inspection solution 

offered by ISRA VISION is the inspection of placed rivets in the aerospace production. 

New product developments 

For ISRA VISION, the focus of new technology lies on the generation of higher ROI and 

added value for customers. In the last two years the company has launched more than 

20 new innovations, emphasising its technological leadership. In the first nine month of 

2011/12 ISRA VISION invested a total of EUR 9.4m in R&D, thereof EUR 6.4m for new 

products which are nearing market launch. Some technologies, which will most likely 

contribute to ISRA VISION’s growth story in the next quarters, are briefly described 

below. 

Floatscan 5D 

Floatscan 5D is a next generation inspection system with patented high-speed LED 

technology for float glass production. It includes five optical channels in one sensor. The 

multi-modal lighting system is able to carry out different lighting effects, making multiple 

angle arrangements redundant. It detects a far greater number defects than conventional 

systems due to higher light intensity. On top of this, it not only locates the defects but 

assess where and why the defects occurred. The upgraded software provides a greater 

differential defect classification. Floatscan 5D has a high potential as even smallest 

defects in the float glass production can cause serious problems in higher processing 

steps. It is estimated that with this technology customers can save up to EUR 1m per 

year. 

PrintSTAR (extended portfolio) 

PrintSTAR is the world-leading inspection system in the print industry that enables both 

quality and process control. Recently, ISRA VISION launched the third generation series. 

It offers new features in that it provides in-line PDF verification in colour using a single 

reference image. This image is compared with the “golden master” produced during the 

first print run. It is now possible to compare printed sheets with the proofed master sheet 

during the actual running production. In case of deviations between the PDF and the 

print image, the defect can be corrected before expensive machine time and paper is 

wasted. With the new series, gaps in the digital inspection chain are eliminated. 



PATTERNSCAN 

The PATTERNSCAN system offers a 100% optical in-line inspection of pattern glass for 

the solar industry. The system is equipped with ISRA VISION’s new multi-mode and 

multi-view lighting technologies. The extremely fast and switchable LEDs enable as yet 

unequalled inspection performances by detecting even smallest defects and scratches. 

The low operating cost and technical requirements make it an interesting tool to increase 

yields and save material, which is crucial in the competitive solar industry. Less than one 

year after market launch, PATTERNSCAN was already sold 50 times to solar panel 

manufacturers (primarily in Asia). 

Surface Master 

The Surface Master is a product line for the metal industry, providing surface inspection, 

quality assessment, process monitoring and statistical analysis for decision making. The 

defect recognition rate is >98% and system availability >99.8%. It contains an industryleading 

multi-stage classifier which, in case of detection, immediately takes action to 

correct and improve the production process. According to ISRA VISION, newest lighting 

and fastest camera technology, highest resolution and image quality coupled with the 

shortest pay-back period makes Surface Master systems a must-have for metal 

manufacturers. The first roll-outs took place in Q3 2011/12. 

Acquisition of 3D Shape 

Most recently, ISRA VISION has acquired a smaller 3D machine vision specialist called 

‘3D Shape’. While its size (sales of c. EUR 1.5m) is not meaningful, the in-depth knowhow 

in 3D technology strengthens ISRA VISION’s own product portfolio. 3D Shape was 

founded as a university spin-off and focuses on 3D shape measurement of objects and 

surfaces. The technology can be applied in the fields of quality control and precision 

measurement. According to ISRA VISION, 3D Shape boasts important customer 

relationships in the glass, semiconductor – opening up additional growth potential -, 

medical and automotive industry. 

ISRA VISION’s History at a Glance 

Company history 

Foundation of ISRA 

Systemtechnik GmbH 

at the Technical 

University of 

Darmstadt, Germany 

by Enis Ersü and other 

experts 

ISRA supervised 

TEXAUGE, a commercial 

and scientific project for 

fast surface texture 

inspection 

After the creation of 

ISRA Vision AG, the 

company went 

public; Volkswagen 

achieved equipment 

for the Transparent 

Factory 

ISRA was 

awarded as 

one of the Top 

100 most 

innovative 

German SMEs. 

Integration of 

Parsytec 

Integration of 

Graphikon GmbH 

solar market 

penetration 

1985 1988 

1996 1997 2000 

2001- 

2006 

2007 2010 

First system for 

automotive 

development obtained 

the Hessian 

Innovation Award 

Enis Ersü, CEO, 

carried out a spin-off 

and founded the ISRA 

Vision GmbH; first 3D 

robot vision system 

followed 

Several acquisitions 

and co-operations were 

placed. Long-term 

contractual agreements 

were signed 

Expansion to 

Shanghai. Today 

ISRA is represented 

in 15 countries 


Management background and shareholder structure 

The major shareholder, Mr. Enis Ersü, is the founder and CEO of ISRA VISION. The free 

float of ca. 70% is calculated excluding the stake of the CEO and Vision GbR is an 

investment vehicle of ISRA VISION employees. Other shareholdings are included in the 



free float. The company is publicly listed in the Prime Standard of the Frankfurt Stock 

Exchange. At the moment, the company has 4.4m shares outstanding. 

Shareholder structure 

Fidelity; 10.1% 

Enis Ers ü; 25.2% 

CI Inves tments; 5.1% 

Vision GbR; 5.0% 

Argos; 3.3% 

Panamera Found.; 3.2% 

DW S Inv.; 3.1% 

Other; 42.2% 


ISRA VISION – Management team 

Enis Ersü 

• CEO since 1998 founded ISRA Vision GmbH (transformed from a 

university spin-off) 

• Studied engineering at the Technical University of Darmstadt 

• Former VDMA chairman (machine vision division) 

Hans-Jürgen Christ 

• Co-CEO and CEO of Parsytec 

• Head of sales 

• Studied engineering at the Technical University of Darmstadt 

Werner Rothermel 

• Member of the exec. board 

• Head of production and 

engineering 

• Graduated engineer 

Dr. Johannes Giet 

• Member of the exec. board 

• Head of research 

• Expert in Surface Vision 

systems 

Martin Heinrich 

• Head of finance 

• Former financial officer at 

IS RA 




Financials 

High gross margins set the stage for operating leverage 

The basis for operating leverage is supplied by high gross margins at levels of 60% 

based on total cost accounting and of 53% based on cost of sales accounting. The 

company’s operating cost base is relatively lean, mainly driven by SG&A and R&D costs. 

In the mid-term, the following cost structure looks plausible, in our view: 

• Sales and marketing expenses look set to remain below 18% of sales on average as 

the distribution of the product is mainly done directly. General and administration 

should stay at ca. 5% of sales 

• Since the machine vision market offers largely untapped potential, driven by the need 

to constantly invest in new product developments and increase efficiency, total R&D 

costs are assumed at around 12% of sales. 

• Depreciation and amortisation should stay at around levels of 9% of sales (included in 

cost of sales) 

• The financial result is assumed around 1% of sales, driven by low interest rates and low 

net debt levels of EUR 28m per end of 2010/11, expected to decline going forward. 

• EBIT margins look set to increase from 18.8% last year to levels of 20% in the short to 

mid term, driven by degression of fixed costs. 

Operating Leverage – ISRA Vision 

2.5 

2.0 

1.5 

1.0 

0.5 

0.0 

2009 2010 2011 2012e 2013e 2014e 

Operating Leverage 

OPEX / Sales 

Gross margin 

EBIT margin 

40.0% 

35.0% 

30.0% 

25.0% 

20.0% 

15.0% 

10.0% 

5.0% 

0.0% 

Sources: ISRA Vision (historical data), Warburg Research (forecasts) 

Strong balance sheet 

ISRA VISION’s total assets of EUR 179m at the end of Q3 2011/12 are mainly 

• Fixed assets (EUR 95.5m, 53% of total assets), thereof intangible assets of EUR 84m 

(47% of total asset), of which goodwill accounts for EUR 37m or 21% of total assets 

mainly resulting from acquisitions, internally produced and capitalised assets and 

software and licenses. 

• Accounts receivable and Inventory account for 40% of total assets. 

• Assets are financed to a large extent by equity (EUR 103m, 57% equity ratio). 

• The book value of equity looks set to increase from EUR 98m per end of 2010/11 

towards EUR 130m as of end 2013/14e. 



Balance Sheet Quality – ISRA Vision 

140,0 

120,0 

100,0 

80,0 

60,0 

40,0 

20,0 

0,0 

2008 2009 2010 2011 2012e 2013e 2014e 

40,0% 

35,0% 

30,0% 

25,0% 

20,0% 

15,0% 

10,0% 

5,0% 

0,0% 

Net Debt Book value of Equity Net Gearing 


Returns analysis 

Returns on capital employed look set to increase going forward, driven by an expected 

increase in EBIT margins as well as an expected increase in capital turnover on the back 

of ongoing sales growth. Cyclicality of returns should be limited owing to ISRA VISION’s 

broad sales exposure, diversified by industries, regions and customers which should limit 

overdependence. 

ROCE Development – ISRA Vision 

25.0% 

20.0% 

15.0% 

10.0% 

5.0% 

0.0% 

2008 2009 2010 2011 2012e 2013e 2014e 

0.64 

0.62 

0.60 

0.58 

0.56 

0.54 

0.52 

0.50 

0.48 

0.46 

ROCE EBIT-margin Capital Employed Turnover 




DCF model 

Detailed forecast period Transitional period Term. Value 

Figures in EUR m 11/12e 12/13e 13/14e 14/15e 15/16e 16/17e 17/18e 18/19e 19/20e 20/21e 21/22e 22/23e 23/24e 

Sales 82.9 92.1 102.4 110.5 119.4 128.9 139.3 147.6 156.5 164.3 172.5 179.4 184.8 

Sales change 10.3 % 11.1 % 11.1 % 8.0 % 8.0 % 8.0 % 8.0 % 6.0 % 6.0 % 5.0 % 5.0 % 4.0 % 3.0 % 2.0 % 

EBIT 15.4 17.2 19.5 21.0 22.7 24.5 25.8 27.3 28.2 28.8 29.3 28.7 27.7 

EBIT-margin 18.6 % 18.7 % 19.0 % 19.0 % 19.0 % 19.0 % 18.5 % 18.5 % 18.0 % 17.5 % 17.0 % 16.0 % 15.0 % 

Tax rate (EBT) 31.0 % 31.0 % 31.0 % 31.0 % 31.0 % 31.0 % 31.0 % 31.0 % 31.0 % 31.0 % 31.0 % 31.0 % 31.0 % 

NOPAT 10.6 11.9 13.4 14.5 15.7 16.9 17.8 18.8 19.4 19.8 20.2 19.8 19.1 

Depreciation 7.4 8.0 8.9 9.6 10.3 11.2 12.1 12.8 13.6 14.2 14.9 15.5 16.0 

in % of Sales 8.9 % 8.7 % 8.7 % 8.7 % 8.7 % 8.7 % 8.7 % 8.7 % 8.7 % 8.7 % 8.7 % 8.7 % 8.7 % 

Changes in provisions 0.0 0.1 0.1 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.1 0.1 

Change in Liquidity from 

- Working Capital 9.0 5.9 8.4 6.8 7.3 7.9 8.5 6.9 7.3 6.5 6.8 5.7 4.4 

- Capex 10.3 10.4 11.4 12.4 13.3 12.9 13.9 14.0 14.7 15.4 16.2 16.9 16.1 

Capex in % of Sales 12.4 % 11.3 % 11.2 % 11.2 % 11.2 % 10.0 % 10.0 % 9.5 % 9.4 % 9.4 % 9.4 % 9.4 % 8.7 % 

Other 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 

Free Cash Flow (WACC 

Model) 

-1.3 3.6 2.5 5.1 5.6 7.5 7.6 10.9 11.1 12.3 12.3 12.9 14.7 16 

PV of FCF -1.3 3.3 2.1 4.0 4.0 4.9 4.6 6.1 5.8 5.9 5.4 5.2 5.5 92 

share of PVs 2.79 % 34.90 % 62.32 % 

Model parameter 

Valuation (m) 

Derivation of WACC: Derivation of Beta: Present values 2023/24e 55 

Terminal Value 92 

Debt ratio 30.00 % Financial Strength 1.20 Financial liabilities 34 

Cost of debt 2.9 % Liquidity 1.60 Pension liabilities 2 

Market return 9.00 % Cyclicality 1.20 Hybrid capital 0 

Risk free rate 4.00 % Transparency 1.20 Minority interest 1 

Others 1.60 Market val. of investments 0 

Liquidity 6 No. of shares (m) 4.4 

WACC 8.44 % Beta 1.36 Equity Value 116 Value per share (EUR) 26.59 

Sensitivity Value per Share (EUR) 

Terminal Growth 

Delta EBIT-margin 

Beta (WACC) 1.25 % 1.50 % 1.75 % 2.00 % 2.25 % 2.50 % 2.75 % Beta (WACC) -1.5 pp -1.0 pp -0.5 pp 0.0 +0.5 pp +1.0 pp +1.5 pp 

1.65 (9.4 %) 19.53 19.99 20.49 21.01 21.58 22.18 22.83 1.65 (9.4 %) 16.65 18.10 19.56 21.01 22.47 23.93 25.38 

1.50 (8.9 %) 21.80 22.35 22.95 23.59 24.28 25.02 25.82 1.50 (8.9 %) 18.89 20.46 22.02 23.59 25.16 26.72 28.29 

1.43 (8.7 %) 23.05 23.67 24.32 25.03 25.79 26.62 27.51 1.43 (8.7 %) 20.15 21.77 23.40 25.03 26.66 28.29 29.92 

1.36 (8.4 %) 24.40 25.08 25.81 26.59 27.44 28.36 29.35 1.36 (8.4 %) 21.50 23.20 24.89 26.59 28.28 29.98 31.68 

1.29 (8.2 %) 25.85 26.60 27.41 28.28 29.22 30.25 31.37 1.29 (8.2 %) 22.98 24.75 26.51 28.28 30.05 31.81 33.58 

1.22 (7.9 %) 27.42 28.25 29.15 30.12 31.18 32.33 33.59 1.22 (7.9 %) 24.58 26.43 28.27 30.12 31.96 33.81 35.66 

1.07 (7.4 %) 30.96 31.99 33.10 34.32 35.66 37.14 38.77 1.07 (7.4 %) 28.25 30.28 32.30 34.32 36.35 38.37 40.40 

• Sales growth looks set to remain clearly above GDP growth driven by automation trend and need to increase efficiency 

• EBIT margins assumed to remain at high levels driven by sales growth and operating leverage 

• Margins look set to erode slightly thereafter assuming increased competitiveness, partly defended by the company’s R&D 

• Working capital requirements are expected to remain at high levels owing to the customer structure 



Free Cash Flow Value Potential 

Warburg Research's valuation tool "FCF Value Potential" reflects the ability of the company to generate sustainable free cash flows. It is based on the 

"FCF potential" - a FCF "ex growth" figure - which assumes unchanged working capital and pure maintenance capex. A value indication is derived by 

discounting the “FCF potential” of a given year with the weighted costs of capital. The fluctuating value indications over time add a timing element to the 

DCF model (our preferred valuation tool). 

in EUR m 2007/08 2008/09 2009/10 2010/11 2011/12e 2012/13e 2013/14e 

Net Income before minorities 8.0 6.4 7.0 9.1 10.0 11.3 12.8 

+ Depreciation + Amortisation 5.7 5.9 6.2 7.3 7.4 8.0 8.9 

- Net Interest Income -1.6 -1.0 -0.9 -1.0 -0.9 -0.9 -0.9 

- Maintenance Capex 5.7 5.9 6.2 7.3 7.2 8.0 8.9 

+ Other 0.0 0.0 0.0 0.0 0.0 0.0 0.0 

= Free Cash Flow Potential 9.6 7.4 7.8 10.1 11.1 12.1 13.7 

Free Cash Flow Yield Potential 12.1 % 12.6 % 9.1 % 9.5 % 8.8 % 9.8 % 11.1 % 

WACC 8.44 % 8.44 % 8.44 % 8.44 % 8.44 % 8.44 % 8.44 % 

= Enterprise Value (EV) 79.1 58.7 86.0 106.4 126.1 124.3 123.5 

= Fair Enterprise Value 113.7 87.9 92.9 119.9 131.3 143.9 162.4 

- Net Debt (Cash) 28.1 28.1 28.1 28.1 30.9 29.0 28.2 

- Pension Liabilities 2.0 2.0 2.0 2.0 2.0 2.0 2.1 

- Other 0.0 0.0 0.0 0.0 0.0 0.0 0.0 

- Market value of minorities 0.0 0.0 0.0 0.0 0.0 0.0 0.0 

+ Market value of investments 0.0 0.0 0.0 0.0 0.0 0.0 0.0 

= Fair Market Capitalisation 83.7 57.9 62.9 89.9 98.5 112.9 132.1 

No. of shares (total) (m) 4.4 4.4 4.4 4.4 4.4 4.4 4.4 

= Fair value per share (EUR) 19.13 13.24 14.39 20.56 22.52 25.81 30.22 

premium (-) / discount (+) in % 5.6 % 21.1 % 41.7 % 

Sensitivity Fair value per Share (EUR) 

9.94 % 15.21 10.21 11.19 16.42 17.98 20.85 24.61 

9.44 % 16.38 11.11 12.14 17.66 19.34 22.33 26.28 

8.94 % 17.68 12.12 13.20 19.03 20.84 23.97 28.14 

WACC 8.44 % 19.13 13.24 14.39 20.56 22.52 25.81 30.22 

7.94 % 20.77 14.51 15.73 22.29 24.41 27.89 32.56 

7.44 % 22.63 15.94 17.25 24.25 26.56 30.24 35.21 

6.94 % 24.76 17.59 18.99 26.49 29.01 32.93 38.25 

• A high market share in its targeted niche markets supply a certain level of defence against new entrants 

• The beta takes into account the low liquidity 



Valuation 

2007/08 2008/09 2009/10 2010/11 2011/12e 2012/13e 2013/14e 

Price / Book 0.7 x 0.4 x 0.7 x 0.8 x 0.9 x 0.8 x 0.7 x 

Book value per share ex intangibles 1.11 2.09 1.65 3.25 5.00 6.74 8.71 

EV / Sales 1.2 x 1.0 x 1.3 x 1.4 x 1.5 x 1.3 x 1.2 x 

EV / EBITDA 4.3 x 3.9 x 4.9 x 5.0 x 5.5 x 4.9 x 4.4 x 

EV / EBIT 6.1 x 6.3 x 7.5 x 7.5 x 8.2 x 7.2 x 6.3 x 

EV / EBIT adj.* n.a. n.a. n.a. n.a. n.a. n.a. n.a. 

P / FCF n.a. 4.9 x n.a. n.a. n.a. 31.1 x 48.9 x 

P / E 6.8 x 5.4 x 8.3 x 8.4 x 9.4 x 8.3 x 7.3 x 

P / E adj.* 6.8 x 5.4 x 8.3 x 8.4 x 9.4 x 8.3 x 7.3 x 

Dividend Yield 1.3 % 1.8 % 1.5 % 1.1 % 1.2 % 1.2 % 1.4 % 

Free Cash Flow Yield Potential 12.1 % 12.6 % 9.1 % 9.5 % 8.8 % 9.8 % 11.1 % 

*Adjustments made for: - 



Consolidated profit and loss 

In EUR m 2007/08 2008/09 2009/10 2010/11 2011/12e 2012/13e 2013/14e 

Sales 68.3 58.2 64.8 75.2 82.9 92.1 102.4 

Change Sales yoy n.a. -14.8 % 11.5 % 15.9 % 10.3 % 11.1 % 11.1 % 

COGS 32.5 28.2 30.5 34.9 39.4 44.3 49.0 

Gross profit 35.8 30.0 34.3 40.2 43.5 47.8 53.4 

Gross margin 52.4 % 51.6 % 52.9 % 53.5 % 52.5 % 51.9 % 52.1 % 

Research and development 7.5 7.7 8.3 9.7 10.3 11.1 12.3 

Sales and marketing 11.1 10.3 11.5 13.7 14.6 16.0 17.7 

Administration expenses 4.4 3.8 3.8 4.2 4.4 4.8 5.3 

Other operating expenses 0.0 0.0 0.0 0.0 0.0 0.0 0.0 

Other operating income 0.2 1.0 0.8 1.4 1.2 1.3 1.4 

Unfrequent items 0.0 0.0 0.0 0.0 0.0 0.0 0.0 

EBITDA 18.6 15.2 17.6 21.4 22.8 25.2 28.4 

Margin 27.2 % 26.1 % 27.2 % 28.5 % 27.5 % 27.4 % 27.7 % 

Depreciation of fixed assets 0.6 0.6 0.6 0.6 0.8 1.3 1.4 

EBITA 18.0 14.6 17.0 20.8 21.9 23.9 26.9 

Amortisation of intangible fixed assets 5.0 5.4 5.5 6.7 6.6 6.7 7.4 

Goodwill amortization 0.0 0.0 0.0 0.0 0.0 0.0 0.0 

EBIT 12.9 9.3 11.4 14.1 15.4 17.2 19.5 

Margin 18.9 % 15.9 % 17.6 % 18.8 % 18.6 % 18.7 % 19.0 % 

EBIT adj. 12.9 9.3 11.4 14.1 15.4 17.2 19.5 

Interest income 0.4 0.1 0.1 0.1 0.1 0.1 0.1 

Interest expenses 2.0 1.1 0.9 1.1 1.0 1.0 1.0 

Other financial income (loss) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 

EBT 11.3 8.3 10.6 13.2 14.5 16.3 18.6 

Margin 16.6 % 14.2 % 16.3 % 17.5 % 17.5 % 17.7 % 18.2 % 

Total taxes 3.3 1.8 3.6 4.0 4.5 5.1 5.8 

Net income from continuing operations 8.0 6.4 7.0 9.1 10.0 11.3 12.8 

Income from discontinued operations (net of tax) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 

Net income before minorities 8.0 6.4 7.0 9.1 10.0 11.3 12.8 

Minority interest 0.4 0.0 0.1 0.1 0.1 0.1 0.1 

Net income 7.6 6.5 6.9 9.1 9.9 11.2 12.8 

Margin 11.1 % 11.1 % 10.6 % 12.1 % 12.0 % 12.1 % 12.5 % 

Number of shares, average 4.3 4.3 4.3 4.3 4.4 4.4 4.4 

EPS 1.76 1.52 1.61 2.09 2.27 2.56 2.92 

EPS adj. 1.76 1.52 1.61 2.09 2.27 2.56 2.92 

*Adjustments made for: 

Guidance: At least EUR 80m sales in 2011/12. 

Financial Ratios 

2007/08 2008/09 2009/10 2010/11 2011/12e 2012/13e 2013/14e 

Total Operating Costs / Sales 33.5 % 35.6 % 35.3 % 34.7 % 33.9 % 33.2 % 33.1 % 

Operating Leverage n.a. 1.9 x 2.0 x 1.5 x 0.9 x 1.1 x 1.2 x 

EBITDA / Interest expenses 9.3 x 13.4 x 18.7 x 19.6 x 22.3 x 24.7 x 27.8 x 

Tax rate (EBT) 29.5 % 22.3 % 34.1 % 30.5 % 31.0 % 31.0 % 31.0 % 

Dividend Payout Ratio 8.1 % 10.0 % 12.4 % 9.5 % 10.9 % 9.9 % 9.9 % 

Sales per Employee 183,565 153,438 168,878 171,584 176,732 183,801 191,153 

Sales, EBITDA 


Operating Performance 

in % 

Performance per Share 






Consolidated balance sheet 


Assets 

Goodwill and other intangible assets 69.7 71.5 80.4 82.8 85.5 88.2 91.2 

thereof other intangible assets 0.0 0.0 0.0 0.0 0.0 0.0 0.0 

thereof Goodwill 38.7 37.6 37.3 36.5 36.5 36.5 36.5 

Property, plant and equipment 2.6 2.7 2.8 3.5 3.8 3.5 3.1 

Financial assets 0.0 0.9 1.2 1.1 1.1 1.1 1.1 

Other long-term assets 0.0 0.0 0.0 0.0 0.0 0.0 0.0 

Fixed assets 72.3 75.1 84.4 87.5 90.4 92.8 95.4 

Inventories 17.2 15.1 14.1 18.8 23.0 23.6 26.2 

Accounts receivable 37.8 37.1 46.9 50.3 56.3 62.6 69.5 

Liquid assets 12.6 7.2 8.0 5.8 3.0 4.9 5.7 

Other short-term assets 9.8 7.4 7.5 8.0 9.5 9.8 9.9 

Current assets 77.4 66.7 76.6 82.9 91.7 100.9 111.3 

Total Assets 149.7 141.8 160.9 170.4 182.1 193.7 206.7 

Liabilities and shareholders' equity 

Subscribed capital 4.3 4.4 4.4 4.4 4.4 4.4 4.4 

Capital reserve 25.4 31.7 38.1 44.9 54.4 62.1 71.5 

Retained earnings 37.2 37.8 38.1 38.6 38.6 38.6 38.6 

Other equity components 7.6 6.5 7.0 9.1 10.0 12.6 14.8 

Shareholder's equity 74.5 80.4 87.5 96.9 107.3 117.6 129.2 

Minority interest 1.2 0.8 0.8 0.8 0.8 0.8 0.8 

Total equity 75.7 81.2 88.3 97.7 108.2 118.5 130.1 

Provisions 3.6 4.5 3.2 4.3 4.3 4.3 4.4 

thereof provisions for pensions and similar obligations 1.8 1.8 1.9 2.0 2.0 2.0 2.1 

Financial liabilites (total) 38.4 29.2 34.5 33.9 33.9 33.9 33.9 

thereof short-term financial liabilities 13.5 2.2 11.3 14.4 14.4 14.4 14.4 

Accounts payable 8.3 5.3 7.1 8.0 9.1 10.1 11.2 

Other liabilities 23.8 21.6 27.9 26.6 26.7 26.9 27.1 

Liabilities 74.0 60.6 72.7 72.7 74.0 75.2 76.6 

Total liabilities and shareholders' equity 149.7 141.8 160.9 170.4 182.1 193.7 206.7 


2007/08 2008/09 2009/10 2010/11 2011/12e 2012/13e 2013/14e 

Efficiency of Capital Employment 

Operating Assets Turnover 1.4 x 1.2 x 1.1 x 1.2 x 1.1 x 1.2 x 1.2 x 

Capital Employed Turnover 0.7 x 0.6 x 0.6 x 0.6 x 0.6 x 0.6 x 0.6 x 

ROA 10.5 % 8.6 % 8.2 % 10.4 % 11.0 % 12.1 % 13.4 % 

Return on Capital 

ROCE (NOPAT) 17.7 % 6.9 % 6.8 % 8.0 % 7.9 % 8.2 % 8.7 % 

ROE 20.4 % 8.4 % 8.2 % 9.8 % 9.7 % 9.9 % 10.3 % 

Adj. ROE 20.4 % 8.4 % 8.2 % 9.8 % 9.7 % 9.9 % 10.3 % 

Balance sheet quality 

Net Debt 27.6 23.8 28.3 30.0 32.9 31.0 30.3 

Net Financial Debt 25.8 22.0 26.5 28.1 30.9 29.0 28.2 

Net Gearing 36.4 % 29.3 % 32.1 % 30.7 % 30.4 % 26.2 % 23.3 % 

Net Fin. Debt / EBITDA 138.7 % 144.7 % 150.3 % 131.1 % 135.8 % 115.1 % 99.5 % 

Book Value / Share 17.3 18.9 20.4 22.3 24.5 26.9 29.6 

Book value per share ex intangibles 1.1 2.1 1.6 3.2 5.0 6.7 8.7 

ROCE Development 

Net debt 


Book Value per Share 

in EUR 






Consolidated cash flow statement 


Net income 8.0 6.4 7.0 9.1 10.0 11.3 12.8 

Depreciation of fixed assets 0.6 0.6 0.6 0.6 0.8 1.3 1.4 

Amortisation of goodwill 0.0 0.0 0.0 0.0 0.0 0.0 0.0 

Amortisation of intangible assets 5.0 5.4 5.5 6.7 6.6 6.7 7.4 

Increase/decrease in long-term provisions -1.8 0.2 -0.2 -0.2 0.0 0.1 0.1 

Other non-cash income and expenses 2.6 4.1 5.4 3.2 0.0 0.0 0.0 

Cash Flow 14.4 16.7 18.3 19.5 17.4 19.3 21.8 

Increase / decrease in inventory -1.3 2.2 0.4 -4.7 -4.2 -0.6 -2.6 

Increase / decrease in accounts receivable -7.9 2.0 -10.9 -3.1 -6.0 -6.3 -6.9 

Increase / decrease in accounts payable 1.1 -4.5 -0.2 -1.5 1.1 1.0 1.1 

Increase / decrease in other working capital positions 0.0 0.0 0.0 0.0 0.0 0.0 0.0 

Increase / decrease in working capital (total) -8.1 -0.3 -10.6 -9.3 -9.0 -5.9 -8.4 

Net cash provided by operating activities 6.4 16.4 7.7 10.1 8.3 13.4 13.4 

Investments in intangible assets -13.0 -8.6 -8.2 -9.9 -9.2 -9.4 -10.4 

Investments in property, plant and equipment -0.7 -0.7 -0.6 -1.1 -1.1 -1.0 -1.0 

Payments for acquisitions -13.5 -1.9 -1.6 0.0 0.0 0.0 0.0 

Financial investments 0.0 0.0 0.2 0.0 0.0 0.0 0.0 

Income from asset disposals 0.0 0.0 0.0 0.0 0.0 0.0 0.0 

Net cash provided by investing activities -22.5 -10.8 -10.2 -10.9 -10.3 -10.4 -11.4 

Change in financial liabilities 9.0 -9.2 4.7 -0.6 0.0 0.0 0.0 

Dividends paid -0.7 -0.6 -0.7 -0.9 -0.9 -1.1 -1.1 

Purchase of own shares -0.5 -0.6 -0.6 -0.2 0.0 0.0 0.0 

Capital measures 0.0 0.0 0.0 0.0 0.0 0.0 0.0 

Other -1.5 -0.4 -0.4 0.5 0.0 0.0 0.0 

Net cash provided by financing activities 6.3 -10.8 3.0 -1.2 -0.9 -1.1 -1.1 

Change in liquid funds -9.8 -5.3 0.5 -1.9 -2.8 1.9 0.8 

Effects of exchange-rate changes on cash 0.0 -0.1 0.3 -0.3 0.0 0.0 0.0 

Cash and cash equivalent at end of period 12.5 7.2 8.0 5.8 3.0 4.9 5.7 


2007/08 2008/09 2009/10 2010/11 2011/12e 2012/13e 2013/14e 

Cash Flow 

Free Cash Flow -2.6 7.4 -0.6 -0.7 -2.0 3.0 1.9 

Free Cash Flow / Sales -10.6 % 12.1 % -1.6 % -1.2 % -2.4 % 3.3 % 1.9 % 

Free Cash Flow Potential 9.6 7.4 7.8 10.1 11.1 12.1 13.7 

Free Cash Flow / Sales -10.6 % 12.1 % -1.6 % -1.2 % -2.4 % 3.3 % 1.9 % 

Free Cash Flow / Net Profit -95.6 % 109.3 % -15.3 % -9.7 % -19.7 % 26.8 % 15.0 % 

Interest Received / Avg. Cash 6.4 % 1.4 % 0.8 % 1.4 % 2.7 % 3.1 % 2.3 % 

Interest Paid / Avg. Debt 10.4 % 3.4 % 3.0 % 3.2 % 3.0 % 3.0 % 3.0 % 

Management of Funds 

Investment ratio 19.9 % 16.0 % 13.5 % 14.6 % 12.4 % 11.3 % 11.2 % 

Maint. Capex / Sales 8.3 % 10.2 % 9.5 % 9.7 % 8.7 % 8.7 % 8.7 % 

Capex / Dep 240.3 % 156.9 % 141.9 % 151.5 % 139.6 % 130.3 % 129.1 % 

Avg. Working Capital / Sales 33.8 % 79.6 % 77.4 % 76.6 % 79.2 % 79.4 % 78.5 % 

Trade Debtors / Trade Creditors 456.0 % 695.3 % 664.1 % 631.7 % 618.7 % 619.8 % 620.5 % 

Inventory Turnover 1.9 x 1.9 x 2.2 x 1.9 x 1.7 x 1.9 x 1.9 x 

Receivables collection period (days) 202 233 264 244 248 248 248 

Payables payment period (days) 93 69 84 83 84 83 83 

Cash conversion cycle (Days) 201 246 207 245 273 243 244 

CAPEX and Cash Flow 


Free Cash Flow Generation 

Working Capital 






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DISCLOSURE ACCORDING TO § 34B OF THE GERMAN SECURITIES TRADING ACT AND FINANV 

The valuation underlying the rating of the company analysed in this report is based on generally accepted and widely used methods of 

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SOURCES 

All data and consensus estimates have been obtained from FactSet except where stated otherwise. 



Section 34b of the German Securities Trading Act in combination with the FinAnV requires an enterprise preparing a 

securities analysis to point out possible conflicts of interest with respect to the company that is the subject of the analysis. 

A conflict of interest is assumed, in particular, when the enterprise preparing the analysis … 

-1- … or companies affiliated with this enterprise holds 5% or more of the share capital of the analysed company 

-2- 

-3- 

-4- 

… or companies affiliated with this enterprise was a member in a consortium which acquired the shares of the 

analysed company within the last twelve months 

… or companies affiliated with this enterprise manages the securities of the analysed company on the basis of 

an existing contract 

… or companies affiliated with this enterprise over the previous 12 months has been providing investment 

banking services for the analysed company for which a compensation has been or will be paid 

-5- … effected an agreement with the analysed company for the preparation of the financial analysis 

-6- … or companies affiliated with this enterprise regularly trade in shares or derivatives of the analysed company 

-7- 

… or the analyst responsible for this company has other important financial interests in relation to the analysed 

company such as e.g. the performance of mandates for the analysed company 

Company Disclosure Link to the historical price targets and rating changes (last 12 months) 

ISRA VISION 5 http://www.mmwarburg.com/disclaimer/disclaimer_en/DE0005488100.htm 



INVESTMENT RECOMMENDATION 

Investment recommendation: expected direction of the share price development of the financial instrument up to the given price target 

in the opinion of the analyst who covers this financial instrument. 

-B- Buy: The price of the analysed financial instrument is expected to rise over the next 12 months. 

-H- 

Hold: 

The price of the analysed financial instrument is expected to remain mostly flat over the 

next 12 months. 

-S- Sell: The price of the analysed financial instrument is expected to fall over the next 12 months. 

“-“ Rating suspended: The available information currently does not permit an evaluation of the company. 

WARBURG RESEARCH GMBH – RESEARCH UNIVERSE BY RATING 

Rating Number of stocks % of Universe 

Buy 107 57 

Hold 69 37 

Sell 10 5 

Rating suspended 3 2 

Total 189 100 

WARBURG RESEARCH GMBH – ANALYSED RESEARCH UNIVERSE BY RATING … 

… Looking only at companies for which a disclosure according to § 34b of the Germany Securities Trading Act and the 

FinAnV has to be made. 

Rating Number of stocks % of Universe 

Buy 95 59 

Hold 55 34 

Sell 9 6 

Rating suspended 2 1 

Total 161 100 

PRICE AND RATING HISTORY ISRA VISION AS OF 25.10.2012 

The chart has markings if Warburg Research GmbH 

changed its rating in the last 12 months. Every marking 

represents the date and closing price on the day of the 

rating change. 



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