Template for HA Research Notes - ISRA VISION AG

ISRA Vision
Investment case
Competitive Quality
Founded in 1985 as a supplier of „Intelligent Systems Robotics and
Automation”, ISRA Vision’s focus is on the niche of machine vision technology
for automation of manufacturing and quality control. Machine vision systems
typically consist of a camera, PC and software. In essence, products are
computers that can “see” and thus help to solve customers’ problems.
ISRA Vision’s focus within the market for machine vision technology is on the
high-end i.e. application-specific standard products and complex generic
standard products. It does not focus on the low-end machine vision market for
simple generic standard products such as sensors, basic hard- and software
modules and components. As a result, the average selling price per ISRA
Vision system is € 150,000.
ISRA Vision’s core competences of combing hard- and software know-how
incorporating intelligent detection algorithms in order to produce fast and
reliable surface quality data can be applied to various end markets. The fact
that ISRA Vision owns this know-how is a major driver of growth and returns.
Therefore, the scalability of the business model – driving bottom line growth -
looks high with respect to the transfer of existing technological competences.
Moreover, important success factors are industry-specific references as well
as a positive track record in a specific industry. These have been important
rationales for ISRA Vision’s acquisition of Parsytec (metals and paper surface
inspection systems) and Graphikon (wafer based solar cells and modules
surface inspection systems).
Differentiation is based on size, service network, reference installations and
track record.
• Competitors are a few larger and a large number of smaller local
suppliers. Compared to the smaller competitors, differentiation is based on
size which enables ISRA Vision to offer complete solutions (i.e. inspection
systems at several relevant stages of an entire production process) and
the respective industry-related know-how. Listed competitors include
Cognex (US, 2x larger based on total revenues, however, in surface
inspection which is ISRA Vision’s largest division, Cognex generated 15%
of ttl sales in 2010 only, translating into c. € 31m. Compared to that, ISRA
Vision is c. 70% larger based on 2009/10 sales). Other listed peers include
Perceptron (US) and AVT (Israel).
• Customers, machine builders who integrate the machine vision
functionality in a complete machine or end customers - i.e. mainly large,
globally active blue chip industrial companies - value a one-stop shopping
approach and a broad product portfolio, setting ISRA Vision apart from
smaller players. They also value ISRA Vision’s global sales and service
network as system uptime is critical. For example, a glass production line
more or less runs non-stop, 24/7 for several years, setting high
requirements for service and maintenance. A large sales and service
network cannot be run economically by a smaller competitor.
• Reference installations matter to customers in view of a systems’ long
lifetime and high total system costs of several € m compared to only €
150k for a machine vision system. These references are required to be
specific with respect to a customer’s industry – such as metals, glass,
automotive, plastic, solar glass, paper, print etc. – and with respect to a
certain process step within this industry (e.g. pre-dryer, dryer, reeler etc. in
a paper manufacturing process). ISRA Vision boasts a total of over 6,000
reference installations and a blue-chip customer base.
4 Hauck & Aufhäuser Institutional Research