24.05.00, TePla AG: BUY
First-quarter results in line with estimates
TePla announced first-quarter results that were mainly in line with our estimates. As we detailed in yesterday?s note, sales improved by 5.2% y-o-y to EUR 2.28m and TePla broke even in the first quarter. TePla should benefit from the recovery in the semiconductor industry and their order income in the first quarter reinforces our belief that our sales and earnings targets will be achieved.
TePla?s sales driver in the first quarter was their semiconductor unit, where sales improved by 44%, from EUR 1.3m to EUR 1.8m. TePla is benefiting from the recovery in the semiconductor industry and we expect further order income in this, their main division, for fiscal 2000. The semiconductor unit generated 80% of sales in the first quarter. We estimate the semiconductor unit will have sales of EUR 8m in fiscal 2000, approximately 50-60% of TePla?s total sales for the year.
We expect other units such as surface technology and PCB (printed circuit boards) to be strengthened through acquisitions. TePla currently is conducting the final financial and legal due-diligence for their planned acquisition in MetroLine Industries. We believe that this acquisition will strengthen their core surface technology unit and we expect unit sales of approximately EUR 10-12m if the deal goes through.
TePla announced co-operation and outsourcing agreements with Mania Technology and Hitachi for the joint distribution of plasma systems and units in foreign markets. Hitachi will sell TePla products under the Hitachi brand name. We expect the first unit sales of both partners beginning in the third or fourth quarters at the earliest. In our view, TePla will benefit from these selling partnerships, which focus on Asia and the US.
TePla?s overall figures are encouraging and we believe the company will, at the least, meet our expectations. We reiterate our BUY rating on TePla with a 6-12 month price target of EUR 40. We believe TePla has tremendous growth opportunities in their business units and good prospects for establishing a leading market position in the US, Europe and Asia.
Cengiz Sen, Commerzbank
Gruß von Garion
|