HansaMatrix: Latvian high-tech, coming soon in 3D (BUY - initiation of coverage)
We initiate coverage of Latvia’s HansaMatrix, an electronics manufacturing services (EMS) company, with a price target (PT) of EUR 10.26/share and a BUY recommendation, with 32% upside. The company produces electronics based on its clients’ designs but, in contrast to the EMS giants, like Foxconn or Flextronics, HansaMatrix is a “low volume, but also high mix” producer, focusing on small runs of gear, mainly for the industrial and communication sectors (each c.40% of its 2019 revenues). Its positioning in the market and technical fluency in a range of production areas, from printed circuit boards (PCBs) to optics and cutting-edge 3D imaging allows it to generate higher margins than most of its EMS peers. Through its associated company, LightSpace Technologies, where it controls a c.49.86% stake, the company has developed a novel 3D augmented reality (AR) headset, based on multi-plane imaging, with applications in the medical, industrial and aerospace industries. After two years of intense development, the first LightSpace headsets are set to ship next year and should drive an explosive 2019-23E profit CAGR of 85% on our estimates, which is only partly in the share price, in our view.
WOOD & Company is the leading investment bank in Emerging Europe. Founded in 1991 and head-quartered in Prague, our footprint spans the region and touches investors around the globe.
A pioneer in Emerging Europe, WOOD executed many of the first CEE equity trades and landmark investment banking transactions. Our electronic trading platform was the first in the region, and remains the best. We are continually expanding our relevance and reach in these ever-evolving markets.
Our equity market share reflects our stature: 7% in Warsaw, 20% in Bucharest, 16% in Hungary, 40% in Prague and 5% in Vienna. Our distribution is unparalleled, with the largest salesforce in the region, servicing a uniquely diverse investor base.
We couple local expertise with a truly international perspective. With offices on the ground in the region, and in key financial hubs such as London and Milano, we are never far from our clients and we remain at the forefront of what’s afoot in the CEE emerging and frontier landscape.
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