MATELAN Research - ISRA VISION AG

ISRA VISION In-Depth Report
Building a broad peer
group
No peer fully
comparable to ISRA
Overview of the positioning of the peers
Fields of Business
Comment
Source: MATELAN Research
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In addition to the DCF model, we have applied a peer group analysis based
on the most common multiples, EV/Sales, EV/EBITDA, EV/EBIT and PE
for the FY 2011 and 2012, respectively. Among the listed machine vision
companies, Basler and Viscom are probably the closest peers as they are also
listed in Germany and they are also pure machine vision companies. In order
to get a broader perspective of the valuation of machine vision companies,
we do also look at the companies listed abroad (Cognex, Perceptron and
Orbotech) and AVT, which has shifted focus to some extent following the
acquisition of GMI. In addition, we have looked at Elexis, which is also not a
pure machine vision company but offers a broad portfolio of automation
technologies to the steel, printing and plastics industry. Elexis is currently
being taken-over and thus yields decent transaction multiples.
A short overview of the competitors is provided in the table below. It shows
that companies vary greatly in the degree of diversification, ranging from
highly focused small players such as Viscom, AVT and Perceptron to large
players, such as Orbotech and Cognex. It has to be noted that none of the
players are fully comparable to ISRA as each one only partly matches ISRA’s
industry mix. More information as to what extent they compete with ISRA
can be found in the section on the competitive landscape.
Basler Viscom Cognex Perceptron Orbotech AVT Elexis
Approx. 80% of sales
come from MV
components,
particularly digital
cameras. Remainder
is achieved with
inspection solutions
for LCD glass.
Profits from strong
demand for
components. Weak
solutions business was
scaled down: Optical
Media Inspection,
Sealing Inspection &
Solar Wafer
Inspection were sold
to a strategic investor
Considering different
reporting years …
… and accounting
standards
Leading supplier of
inspection systems
for the electronics
industry
High dependency on
the electronics
industry as well as on
a few large
customers. Profits
from strong upswing
in demand from the
electronics industry
Worldwide #1 one
in optical inspection
components.
Leading supplier of
optical inspection
solutions to a broad
range of industries.
Profits from high
demand for
components and
compact 'ready to
use' vision systems
Supplier of
measurement and
inspection
applications for
automotive and
manufacturing
companies
Leading supplier of optical
inspection systems for the
production of printed
circuit boards and flat
panel displays
High dependency on Profits from strong
the automobile upswing in demand from
industry. Solutions the electronics industry
base on laser
technology. Profits
from high demand
from the automobile
industry.
Leading supplier of
advanced optical
inspection systems
for the packaging and
label printing
industry. Also a
leading supplier of
pressroom
automation systems.
High dependency on
the printing industry.
Company reports in
USD, while share
trades in Euro,
weakening of the
USD thus has a
negative impact on
valuation.
Supplier of factory
automation
technologies for the
steel, printing and
plastics industry.
Elexis is currently
being taken over by
SMS GmbH which
already holds an
84.4% equity stake in
the company.
For the interpretation of results from the peer group comparison it is
important to keep two points in mind that result from different accounting
practices: ISRA, as well as Cognex and Perceptron, have broken fiscal years.
In essence, this should lead to an increase of the premium for the fiscal year
under consideration that comprises more of the previous calendar year. That
means, this would justify multiples for Cognex (FY ends in June) being higher
than for ISRA (FY ends in September). ISRA’s multiples again should be
higher than Basler’s, where the fiscal year corresponds to the calendar year.
The second bias results from the companies’ different treatment of
development costs: while all companies reporting in accordance with IFRS
are required to activate development costs, those who report in accordance
with US GAAP are not. This effect can skew margins in favour of the
former. As activated development costs are being written down over a certain
period of time, the margin difference is highest with regard to EBITDA and
is somewhat mitigated at lower levels. Two main conclusions arise from this:
firstly, valuation-wise it justifies per se a certain premium for those reporting