Topic: Nynomic announced the 100% acquisition of art photonic (13th pillar of the Nynomic group), which should be highly value accretive during the coming years thanks to significant synergy potential.

In detail, art photonic is a Berlin-based expert in the development and production of highly specialized fiber optic cables used for optical measurement technology with a focus on mid-infrared (MIR) wavelength, making it highly compatible with the the recently acquired NLIR (early Oct.). Its products enable ultra-fast transmission of light to the measurement point and back to the sensor to process the received data. Both acquisitions support Nynomic's strategy to bring MIR in a scalable way into production processes integrated into stationary machines, production plants, commercial vehicles and similar, thus expanding Nynomic's future solution portfolio.

In 2023e, art photonics is seen to generate some € 4m sales with an EBIT margin of roughly 10% (eNuW). Thanks to significant cross-selling opportunities across Nynomic’s broad customer base, we expect art photonic’s annual sales growth potential to be at around 20% for the next three to four years. The resulting positive operating leverage should quickly enable EBIT margins of >15%, in our view. While the purchase price was not disclosed, we expect it to be in line with Nynomic’s recent acquisitions, i.e. ~1x EV/sales, or € 4m in the case of art photonics, making it a clearly value accretive deal.

Additional acquisitions to follow in H1 2024e. Carried by its inherently cash flow generating business model, the € 18.9m capital increase in May and in line with its buy and build strategy, Nynomic looks set to acquire 1-2, potentially also larger targets with up to € 20m sales during FY 2024e.

Further positive newsflow to stem from a strong Q4 and a continued strong momentum throughout 2024e. Following solid 9M results with € 83m sales and a 10% EBIT margin, Nynomic looks set to report a disproportionally strong Q4 due to confirmed call-off dates of formerly delayed orders, several new projects within structurally growing markets. Q4 sales should come in at € 37.6m (+14% yoy, eNuW) with an EBIT margin of 19.7% (eNuW). With several products (e.g. Spectral Engines) beginning to gain traction and structurally growing demand for existing solutions, organic sales growth during the next years should exceed 10% (eNuW).

BUY with an unchanged € 54 PT based on DCF.