Update
Ongoing semi pick-up and new information re the e-beam technology have recently driven the stock price to a level largely above the consensus price target. While the long-term story of the e-beam technology remains highly attractive, the most recent stock price advances (+ 45 % in less than 3 months) requires some time to get digested by investors.
What is the e-beam technology?
The e-beam technology was developed in close cooperation with the liquid food packaging giant Tetra Pak. The application is based on X-ray tubes and one of its principal application is to sterilize surfaces. In the conventional application of X-rays, electrons are accelerated inside a tube to hit a target, most often high-melting wolfram, upon which X-rays are emitted. In using the hermetically sealed e-beam technology, electrons are accelerated and pushed through an ultra-thin membrane. Upon the impact of the electrons on the target surface they are neutralizing microorganisms, curing links, or hardening materials.
The E-Beam technlogy:
Potential applications:
- Packaging sterilization process (Nutrition industry, food, etc)
- Ink and coating curing (special chemical companies)
- Sterilization of medical products (pharma)
- Food and seed preservation (Nutrition industry)
- Pollution and abatement control (waste management)
- Wire and cable insulation cross-linked (high technology)
Sales-Potential:
It is expected that the company will be able to increase e-beam sales tenfold over a 7 year period and to generate EBITDA margins in the regions of 15 % to 18 %.
Risks to the share price:
Given that the technology developed by COTN, is highly sensible to the semi equipment market. A sudden stop in the semi recovery cycle will make the share price very vulnerable
for a severe correction. However, neither the company, its customers and co-developers, the market organizations do see such a scenario at the moment.
Company profile, investment opportunity and asset management integration:
| Metric | Rating |
| Operational risks: | Average |
| Expected growth: | Well above average |
| Long term value creation: | Highly excellent |
| Positive competitive advantage: | Well above average |
| Management excellence: | Average |
| Financial strength: | Above average |
| Investment orientation: | Group “Best-in-Class” Swiss Industrials, Growth, GARP |
Price ranges:
| Buy: | Only for customers |
| Sell | Only for customers |
| Stop-loss: | Only for customers |
| Fair-value: | Only for customers |