Historically Cheap, but the Margin of Safety Is Still Thin

Catalysts

• Electronics-complexity super-cycle — AI datacentres, EVs and advanced display / semiconductor nodes require ever-finer photomasks, ultra-precise die bonding and higher-reliability SMT lines, directly fueling sales of Pattern Generators, dispensing/coating and photonics tools.
• Proven pricing power — gross margin has averaged 54 % over the past decade (≈ 40 % lowpint), showing customers pay a premium for Mycronic’s precision and uptime.
• Valuation upside — current P/E sits below the long-term 22–28× band, leaving room for mean-reversion if double-digit growth persists.

Assumptions

• Revenue CAGR last:
  • 3 years 13%
  • 5 years 11.1%
  • 7 years 8.9%
  • 10 years 15%
  Past revenue growth has oscillated between ≈ 9 % and 15 % over the 3-, 5-, 7- and 10-year periods, forming a fairly even spread; using the midpoint, a forward CAGR of about 12 % is a reasonable base-case assumption.
• Average net profit margins last:
  • 3 years 18.1%
  • 5 years 18.1%
  • 7 years 18.9%
  • 10 years 20.1
  Despite a gradual softening, net profit has hovered close to 18 % for several years; therefore, we project the company will maintain roughly an 18 % margin going forward.

Risks

• Cycle & tech risk: AI/EV capex or mask-writer replacement cycle slows, or alternative lithography/packaging cuts demand—growth below 12 % and margin compression.
• Competitive / policy risk: rivals narrow the technology gap or export controls limit sales to key Asian customers—pricing power and backlog take a hit.

Valuation

• The Company has been trading at average PE multiples at:
  • 3 years 28.6X
  • 5 years 28.3X
  • 7 years 24.6X
  • 10 years 22.2X
  Mycronic has traded on 22–28× P/E over the past decade, supported by low leverage and durable pricing power. Comparable companies sit in a 14–34× band with an averge of 27x, with the industry average around 23×. Balancing its premium positioning against that benchmark, the model applies a forward multiple in the upper half of the historical range—25.5×.
• Simply's discount rate of 6.05% is left unchanged.

__________________________________________________________

Divisions

Pattern Generators

• Revenue: SEK 2,592 M
• EBIT: SEK 1,447 M → 55.8% margin

High Flex

• Revenue: SEK 1,497 M
• EBIT: SEK 170 M → 11.4% margin

High Volume

• Revenue: SEK 1,109 M
• EBIT: SEK 173 M → 15.6% margin

Global Technologies

• Revenue: SEK 983 M
• EBIT: SEK 106 M → 10.8% margin

__________________________________________________________

Business Model

Value Proposition

• Enables high-precision, automated electronics production for demanding industries (e.g., semiconductors, automotive, medtech).
• Solves needs for miniaturization, speed, flexibility, and quality in manufacturing.

Perceived Value of Offering

• Seen as a premium technology provider with strong innovation and reliability.
• Offers long-term value through system uptime, software updates, and global service support.
• Trusted for critical production steps like mask writing and SMT jet printing.

What Is Being Sold

• Capital equipment: Mask writers, SMT machines, jet printers, dispensing systems.
• Software: Factory automation, analytics, and configuration tools.
• Services: Installation, support, upgrades, training, and maintenance.
• Consumables: Spare parts, nozzles, stencils, etc.

Go-to-Market

• Direct sales force in major regions (Asia, Europe, North America).
• Regional service and support hubs for local responsiveness.

Revenue Model – Who Pays and How

• Customers: Electronics manufacturers (OEMs, EMS, foundries).
• Payment types:
  • One-time capital purchases for hardware.
  • Recurring revenues from software licenses, service contracts, spare parts.
• Revenue recognized via product delivery and over time for services.