London, UK, 18 June 2020
Edison issues outlook on Riber (RIB)
Riber has the dominant share in global molecular beam epitaxy (MBE) equipment. This equipment is used by researchers to develop next-generation compound semiconductor materials used in fibre-optic networks, electronic device displays and sensors for autonomous vehicles as well as for commercial material production. We believe that demand should be supported by exposure to key structural trends such as demand for faster data, next generation displays and the proliferation and evolution of sensors to support greater automation and intelligence (Industry 4.0). The shares trade at a substantial discount to Riber's larger peers that share similar growth drivers.
Riber is currently trading at a discount to both peers on all prospective multiples. While some discount for relative capitalisation and low free float is justified, the size of the discount (eg 0.8x EV/sales for Riber vs 2.4x for our year 1 sample mean) is, in our opinion, unwarranted. This gives ample scope for share price appreciation as investors gain confidence that demand for MBE systems will not be affected in the medium term by the coronavirus outbreak and that Riber can address the delivery issues that marred FY18 and FY19 reported profits.
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