MATELAN Research - ISRA VISION AG

ISRA VISION In-Depth Report
Mid-term growth targets
reiterated
Higher estimates but not
less conservative
Acquisitions still in the
pipeline
Free cash flow expected
to turn positive by yearend
- 36 -
For the mid-term, mgmt reiterated its target of achieving a net sales level of
‘+EUR100m in the next years’. The main elements of its growth strategy
remain (1) the expansion of its market share in its current markets, (2) the
sale of its products into new regions and sales channels as well as (3) the
innovation of new products for existing customers.
The next table illustrates that following good Q3 figures we have become
more optimistic with regard to ISRA’s financials in the coming years, without
leaving the conservative nature of our model behind and accounting for a
potential economic slowdown.
Changes in our model
FY 10/11e Change FY 11/12e Change FY 12/13e Change
€ m new old % new old % new old %
Net sales 74.9 71.4 4.9% 82.4 75.5 9.1% 87.3 80.1 8.9%
Capitalized items 8.0 9.3 -13.8% 9.1 9.3 -1.6% 8.7 9.9 -11.3%
Total Output 82.9 80.7 2.7% 91.5 84.8 8.0% 96.1 90.0 6.7%
Gross profit 49.3 47.8 3.0% 54.2 50.0 8.3% 56.9 53.3 6.7%
Gross margin 59.4% 59.3% 59.2% 59.0% 59.2% 59.2%
EBITDA 20.8 21.1 -1.5% 23.7 22.6 5.0% 25.4 24.1 5.1%
EBITDA margin 25.1% 26.2% 25.9% 26.6% 26.4% 26.8%
EBIT 13.8 14.2 -2.7% 16.4 15.3 7.2% 17.8 16.4 8.5%
EBIT margin 16.7% 17.6% 17.9% 18.0% 18.5% 18.2%
EBT 13.0 13.2 -1.6% 15.5 14.3 8.2% 16.9 15.5 9.3%
EBT margin 15.7% 16.4% 17.0% 16.9% 17.6% 17.2%
Net income 9.0 9.1 -1.6% 10.7 9.9 8.2% 11.7 10.7 9.3%
Net margin 10.8% 11.3% 11.7% 11.7% 12.2% 11.9%
EPS 2.06 2.09 -1.6% 2.46 2.27 8.2% 2.68 2.45 9.3%
Source: MATELAN Research, in EURm
In addition to this organic growth strategy, mgmt continues to work on a
couple of acquisition projects in order to gain access to further markets
and/or to add further technologies to its product portfolio. Management
made it clear that it expects one more acquisition to take place in the current
calender year.
Cash flow for the nine-month period was not as strong as in the first half. As
the graph below shows, gross operating cash flow (ex. changes in NWC)
increased by 12% from EUR12.4m in 9M 09/10 to EUR14.0m in 9m 10/11)
mainly driven by the increase in earnings. However, cash requirements for net
working capital increased over-proportionately (from EUR-8.4m to EUR-
9.9m/18%) due to the strong business expansion. Operating cash flow was
thus almost stable at EUR4m. Capex was just marginally below last year’s
level. Consequently, free cash flow showed a slight improvement from EUR-
3.0m to EUR-2.3m but remained negative. For the full year, free cash flow
should be positive.
Cash flow development
20.000
15.000
10.000
5.000
0.000
-5.000
-10.000
-15.000
-20.000
Source: ISRA VISION, in EURm
9M 09/10 9M 10/11
CAPEX Change in NWC Gross operating cash flow FCF