Topic: Singulus released solid Q3 numbers in line with preliminary results (published on 7 November).

To recap: Sales increased 44% to € 20.3m from a low comparable base due to project postponements in FY23 and supported by a solid order backlog. Sales were particularly driven by the Life Science Segment with € 9.2m sales in Q3 (+131% yoy) and the Semiconductor segment (€ 5.6m; +87% yoy). On the other hand, Solar declined by 23% to € 5.5m due to project postponements. In addition, decreasing solar module prices due to competitive pricing from China, impacts the competitiveness of European producers materially.

EBIT came in at € 0.6m, considerably above last year's numbers (€ -4.9m in Q3’23) thanks to a favorable product mix towards the more profitable Semiconductor Segment. Already since the start of the year, Semiconductor has shown a strong uptick in demand, contributing € 31.6m in order intake during 9M’24 (45% of total order intake).

In addition, the company has several cost saving measures in place: Already in 2022 Singulus closed the Fürstenfeldbruck site, which saves the company c. € 2m in OPEX (as stated in the Q1’23 CC). For instance, R&D expenses decreased to € 3.6m in 9M’24 (vs. € 4.9m in 9M’23) and general administration costs decreased to € 6.1m (vs. € 6.4m in 9M’23).

Order intake increased 126% yoy to € 18.5m from a muted comparable base, leading to a solid order backlog of € 69m (vs. € 61m in Q3’23), driven by a strong demand in the Semiconductor segment.

Although Singulus’ operating business is moving in the right direction, the company is still operating subscale and needs above € 95m sales (eNuW) to achieve profitability for net income on a sustainable basis. Furthermore, Singulus has an equity deficit of € -44.8m and its financing structure is heavily dependent on its largest shareholder (17%) and customer CNBM. Although the collaboration with the Chinese partner worked out well yet, it is still a major risk which deserves consideration before investing in the stock.

We reiterate HOLD with an unchanged PT of € 1.6 based on DCF.