Topic: Singulus reported disappointing Q3 results below expectations. Sales decreased 39.5% yoy down to

€ 14.1m

(eNuW:

€ 22.0m)

and EBIT came in at

€ -4.9m

(eNuW:

€ -0.4m).

 

Although we don’t have audited figures on the operating segments, the management gave some colour in the conference call. The Solar segment showed weakness in top-line growth due to the postponements of some larger projects. The European market was particular soft caused by uncertain government subsidies which resulted in lower investments

.

Revenues in the life science segment declined significantly caused by a weaker economic environment

.

In contrast to the Solar segment, Life Science is more sensitive to the overall economy. On a positive note,

the Semiconductor segment

saw solid sales, despite a difficult macro environment. Demand was especially positive in China, where Singulus is seen to receive further orders for its cluster tool platform TIMARIS coming in the fourth quarter.

Singulus EBIT for Q3 2023 decreased

from € 8.0m in Q3 2022 to € -4.9m (eNuW: € -0.4m). However, last year’s operating profit was affected by a net positive high single-digit million one-off from a property sale at the Fürstenfeldbruck site. The negative EBIT is mainly attributed to the decrease in top-line and reflects sub-scale operations with insufficient fixed cost coverage.

The company recorded

€ 8.2m in

order intake for the recent quarter, which is 35.4% lower than last year, leading to a significantly reduced backlog of

€ 61.3m, down

34.4% yoy

.

Despite the challenging situation in the first nine months, management still maintains its guidance of € 90-100m in sales (eNuW: € 76.8m) and a low single-digit € m in EBIT (eNuW: € -8.9m).

However, the outlook appears too ambitious given the reduced order-backlog and ongoing project postponements, in our view

. That said, the midterm prospects remain intact with the potential of some larger orders from CNBM for CdTe thin-film modules coming in the next quarters.  

Singulus still operates sub-scale and has difficulties covering its fixed costs. Due to the volatile nature of its project business, visibility as to when the company can sustainably surpass the necessary sales threshold to generate a positive net income (eNuW: around

€ 

105m) remains low.

We hence reiterate HOLD with a reduced PT of

€ 

1.60 based on DCF.