Kontron (AO) | Buy | Ticking the box

Research evidence excerpt

Kontron (AO) | Buy | Ticking the box

Kontron Buy | Target Price: EUR30.00

Company description Management

Kontron (formerly S&T) is a global IoT provider with industry leading experience Hannes Niederhauser, CEO

and a proprietary, mission-critical software platform. The group is engaged in a Clemens Billek, CFO

variety of different niches such as high-speed trains or green technologies (all Key shareholders

chargers, solar inverters). Free float 61.08%

Ennoconn Corp. 26.61%

Amiral Gestion 5.24%

Naneva B.V. (PPF Holdings B.V.) 5.09%

Investment case Valuation methodology

Kontron's growth story should continue as the company We value Kontron with a DCF valuation using a WACC of 9.5%, a

operates in a well-protected, niche segment of the multi-billion long-term growth rate of 3.0%, and a long-term EBIT margin of

euro addressable market in embedded systems. 13%.

With the acquisition of KATEK, Kontron should be able to deliver Risks to our rating

smart charging and solar inverter solutions upgraded with its Longer and more severe downturn in PV inverter market.

proprietary software framework, which fulfils highest safety Lower demand and thus declining sales growth for IoT solutions

requirements allowing Kontron to access electricity grid and EV in Europe.

data. Stronger-than-expected future competition in the OEM wall

This should yield considerable cost benefits and enable the charger business.

intelligent usage of fluctuating energy generation from wind/PV

through the connection and management of the relevant

devices and drive group gross margins sustainably above 40%.

Catalysts

Launch of upgraded GreenTec products (smart wall chargers

and PV inverters) and further customer wins with OEM wall

charging business.

Continued organic growth of existing Kontron business.