London, UK, 28 June 2021

Riber (ALRIB): Key enabler of compound semiconductors

Demand for Riber's molecular beam epitaxy (MBE) is 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). We expect that management's focus on growing revenues from services to the large installed base will support profit recovery in FY21. A relaxation in export controls or a major evaporator order would potentially represent upside to our estimates and could drive share price appreciation.

At current levels, the shares are trading at a discount to the mean of its peers (Aixtron and Veeco) with respect to prospective EV/sales and EV/EBITDA multiples (eg year one EV/EBITDA 13.9x vs 19.3x). We believe that this level of discount is justified given Riber's smaller market capitalisation and lower margins. However, we see scope for share price appreciation if higher than anticipated numbers of MBE system orders, which could be catalysed by a relaxation of export controls, or receipt of a major evaporator order drive estimate and margin upgrades.

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