MATELAN Research - ISRA VISION AG

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ISRA VISION In-Depth Report … 8.6% in the medium term are conservative estimates - 28 - machine vision companies (11%), though the industry forecast is probably too low. In contrast, we remain below the more aggressive forecast for the European machine vision market (20%). Moreover, we remain below management’s expectations in most industries. We purposely do not extrapolate current growth rates into the future. In fact, we already account for the effects from a potential economic slowdown in 2012. However, we still arrive at an average sales growth of 8.6% over the coming five years. Expected growth by area of activity 30% 25% 20% 15% 10% 5% 0% Automotive Metal Source: MATELAN Research Glass Plastics Paper 2010/11e 2009/10 - 2014/15e Solar Print
ISRA VISION In-Depth Report FINANCIAL ANALYSIS Conservative growth … … and margin assumptions - 29 - DRAWING A CONSERVATIVE GROWTH SCENARIO On the basis of the earlier described market analysis we have updated our financial forecasts for ISRA. The chart below illustrates how ISRA’s positioning in the different customer industries adds up to the group’s sales growth. We had already pointed out that we work on rather conservative assumptions for ISRA’s growth within its different industry segments. The chart below now illustrates that we price-in a material slowing of growth over the coming years. For 2012, we still anticipate a double-digit growth rate on the back of ISRA’s strong order backlog and the late cyclical nature of the industry. A potential economic slowdown should, however, show in subsequent years. We still expect ISRA to outgrow the global economy but staying conservative we only work with mid single-digit rates. Overall, we still arrive at a CAGR of 8.6% for the period 2009/10 to 2014/15e and remain below management’s target to reach more than EUR100m in sales in the medium term. It must be mentioned that these assumptions not only leave room for upward revisions, they are also based purely on organic growth. We had already pointed out that there is an opportunity to consolidate the market further. Development of net sales 120 100 80 60 40 20 0 09/10 10/11e 11/12e 12/13e 13/14e 14/15e Source: MATELAN Research, in EURm 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% Metall Paper Print Plastics Solar Glass Automotive Overall growth (r.s.) The following picture gives additional evidence of the conservative nature of our model. Despite a continuous increase in sales and ISRA’s ongoing optimisation efforts, we assume just a slight margin increase over the period 2010/2011e to 2014/2015e on gross profit as well as on EBIT level to 60% and 19.8%, respectively. As already pointed out in the valuation part of this report, we employ even lower rates for our terminal value calculation.
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