Tecan Group AG

Published: 03 May 2023 19:26 CET

Analyst:

Stephan Analyst
Analyst
stephan.joehri2@adviscent.com
07633115

Rating:Buy View rating history	Country:Switzerland	Sector:Health Care	Subsector:Health Care Equipment & Services
Rating:Buy View rating history	ISIN:CH0012100191	Risk assessment:-	Sustainability Rating:★★★☆☆

Investment Case

During the pandemic, laboratory equipment for PCR tests was in huge demand worldwide. This special boom helped the laboratory equipment supplier Tecan to make an extraordinary profit. Due to the high demand, hardly any discounts had to be granted to customers, and the increasing sales of lucrative consumer goods improved the margin.

Now pandemic-related sales are declining. Already in the first half of the year, it was about one-third of the previous year's figure and now accounts for only about one-tenth of the turnover, the company estimates. It is largely compensated for by a strong increase in other applications that were neglected during the pandemic. On balance, turnover fell organically by 4.3%. Together with the American supplierParamit, which Tecan acquired in 2021 for CHF 920 million, it increased by 29%.

The purchase of Paramit was a transformational move for Tecan. It had been seeking a major acquisition for years. Financially, the purchase was manageable thanks to high net liquidity. Even now, the balance sheet is debt-free on a net basis, which makes further acquisitions possible.

Apparently, the integration of Paramit is going according to plan. The related costs in the current year will be rather less than the budgeted CHF 15 million. Now Tecan has to prove that the subsidiary can bring it to the same high margin level. This seems to be succeeding. A profit contribution is already expected in the current year.

The product range of the two companies is largely complementary; Paramit is active in medical mechatronics and manufactures surgical components as well as instruments, test and diagnostic equipment. The Californian company is considered a leader in robotics, laser technology and automation.

Tecan's valuation, distorted by the Corona euphoria, has now normalised. Together with Paramit, a higher profit margin should be possible.

Conclusion: After the sharp price correction - the company's value has almost halved since autumn 2021 - Tecan's shares are back at a valuation level that makes long-term investments in this defensive stock justifiable. Buy.

Facts & Figures

General Information

ISIN	CH0012100191
Bloomberg Ticker	TECN SW
Price ( CHF )	-
Market Cap ( CHF m )	3,578
Free Float ( % )	99.6442
Net debt	-109.72
Gearing	-14.95
ROE	20.09
Next reporting date	12.03.2022

Valuation

	2024	2025	2026
P/E ( CHF m )	-	-	-
EV/EBITDA ( CHF m )	-	-	-
P/B ( CHF m )	-	-	-
Dividend Yield ( CHF m )	-	-	-

Financial Data

	2024	2025	2026
Revenue ( CHF m )	-	-	-
EBITDA ( CHF m )	-	-	-
Net Profit ( CHF m )	-	-	-
EPS ( CHF )	-	-	-
Dividend ( CHF m )	-	-	-

Performance

Peer Group Comparison

Company name	Market Cap (CHF m)	P/E (CHF m)	EV/EBITDA (Next 12 month) (CHF m)	P/B (CHF m)	Dividend Yield (CHF m)	EPS CAGR (3 years)	EBITDA margin	ROIC	Net debt/EBITDA
Tecan Group AG	3,578	-	-	-	-	-	21.77	19.60	-0.83

Company details

Company Portrait

Tecan Group AG provides laboratory instruments and solutions for pharmaceutical and biotechnology companies, university research departments, and forensic and diagnostic laboratories. It operates through Life Sciences Business and Partnering Business segments. The company offers liquid handling and automation, microplate readers and washers, consumables, NGS reagents, immunoassays and microbodies, and software; Tecan Laberwax, an automation solution; Resolvex, a smart sample preparation solution for use in genomics, synthetic biology, drug discovery, analytical chemistry, cell biology, protein science, applied markets, and ELISA solutions. It also develops and manufactures laboratory instrument manufacturers with essential components comprising precision pumps, valves, robotic arms, and developer software for life science research, diagnostics, and various other industries; Synergence, platform-based automation solution; and Freedom EVO and Fluent instruments. The company operates in Switzerland and Other European countries, North America, Asia, and internationally. Tecan Group AG was founded in 1980 and is headquartered in Männedorf, Switzerland.

Important legal Information

Rating history

14.09.2022	Buy
11.12.2021	Hold
11.12.2021	Attractive
11.12.2021	Hold

* Positive performance in the past is no guarantee of positive performance in the future. The risk of price and foreign currency losses and of fluctuations in return as a result of unfavorable exchange rate movements cannot be ruled out.

General risk information

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Responsible for compilation: Bank (Switzerland) Ltd., Zurich, Switzerland. Responsible supervisory authority: Swiss Financial Market Supervisory Authority FINMA, Laupenstrasse 27, CH-3003 Berne, Switzerland. Responsible for distribution within the meaning of article 8 FinMV [Financial Analysis Market Abuse Ordinance]: Bank Ltd. Responsible for distribution within the meaning of the Directives on the Independence of Financial Research from the Swiss Bankers Association (SBA): Bank (Switzerland) Ltd. Responsible supervisory authority: Swiss Financial Market Supervisory Authority FINMA, Laupenstrasse 27, CH-3003 Berne, Switzerland.

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Essential sources of information

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