Lumibird: French-style laser (Breton) – 06-16-2022 at 09:40

A laser for scientific applications developed by Lumibird.  (Image credit: Lumibird)

A laser for scientific applications developed by Lumibird. (Image credit: Lumibird)

The invention of semiconductors in the 1960s is certainly one of mankind’s finest achievements, and it is increasingly because almost everything we use every day, from the toaster to the Tesla passing through our computer and smartphone, cannot function without it today. But another beautiful invention, created around the same time, also greatly shaped our modern life: the laser. And it is light emitted by electricity, which is nothing unusual, but very amplified light, of one wavelength (or colour, which is the same), very intense and coherent, and indeed with a very narrow beam of light, which is less trivial.

It allows you to do all kinds of things depending on the type of laser used, including reading barcodes on a label or reading micro-patterns in the plastic of a CD, carrying high-speed communications transmissions in optical fibers or in the air, precisely cutting and engraving a variety of materials, And printing on paper or 3D printing, doing micrometry (measurement, spectroscopy, etc.), telemetry, detection, etc…, etc…

So we find lasers of all kinds in devices a) that are used a lot: cash registers, communication networks, sensors and other Lidar that equip our cars, and road radars too, b) that are used a lot: medical equipment for ophthalmology, or even c ) Never use (at least we hope so): aiming systems, guidance, etc… Various military equipment.

The eternal question of high tech included: Understanding the file

And we inevitably tell ourselves that all this creates many markets for innovative companies with little knowledge of high technology. Companies that are likely to generate comfortable profit margins, high tech is what they are, and some of them can even be publicly listed, thus capital available to the man on the street, as long as he still has some savings to grow.

Either they are great opportunities for the investor in principle, which nevertheless brings us back to a very classic dilemma, unfortunately! : a) one should invest only in business which one understands (or which one thinks one understands in any case), preferably highly profitable business, but b) if businesses engaged in high-tech trade are often very profitable They are often difficult to understand for anyone who is not a good technician in said profession.

Which is not always without its potential downsides, especially when it comes to new technology that certainly got a lot of excitement in the beginning, with a flurry of IPOs in which it’s fashionable to get involved, and a little less enthusiasm, even a lot less, after that. This is a fairly frequent phenomenon in the stock markets, it’s true.

Lumibird, the “mid-cap” but a major manufacturer of laser-based equipment, seems to fit into this category of good “techno” deals.

Laser specialist of all kinds

Lumibird achieved a turnover of 162 million euros in 2021 with nearly 900 employees, with 23% of its activity in France and the same amount in Europe, 24% in North America, and 19% in Asia. The company masters three of the four main laser technologies, namely solid-state lasers, laser diodes and fiber-optic lasers, and in total holds more than 45 patents and exclusive licenses to produce components and systems for various applications. All this to serve a very diverse clientele as well, but instead focus on cutting-edge technologies in general: the photonics branch (47% of sales) provides research laboratories, and manufacturers of electronics, defense and aerospace above all (with a very small number of large clients, including Thales), and the medical branch (53% turnover) supplies ophthalmologists worldwide, which is no small feat.

Lumibird manufactures some components of its systems in-house, including fibers, diodes, and photodiodes, and for the rest it uses a large number of suppliers in fact. The systems themselves are assembled at six manufacturing sites: Keopsys in Lannion, Quantel Medical in Clermont-Ferrand, Ellex in Adelaide (Australia), Lumibird Mégajoule near Bordeaux, Quantel USA in Bozeman (Montana) and finally Optotek in Ljubjana (Slovenia) ).) . The group sells its products with local Lumibird subsidiaries and also indirectly with sellers, that is, about a hundred distributors in 90 countries.

So Lumibird is a high-tech company with many products, a large and well-diversified clientele, solid positions a priori even if it can change very quickly, and also has a huge advantage to work with technology that is no longer new. , even if it’s still evolving every day: we’re not in completely uncharted territory (and reassure ourselves as best we can).

A somewhat turbulent history: quite a few acquisitions in fact

Remember that Lumibird is the ex-Quantel company, a company created in 1970 to develop commercial applications for lasers, and then a brilliant technical innovation, which became a manufacturer of lasers used in ophthalmology, with the development of various and diverse systems, in particular a contract with the Atomic Energy Authority for the Mégajoule project , a diabolical machine built near Bordeaux to simulate nuclear explosions.

Listed in 1997, Quantel expanded through acquisitions (Big Sky USA, then Nuvonyx, Wavelight Aesthetic), ending up in 2016 selling the management team’s stake to a holding company. on group management. In 2017, ESIRA brought in two more laser companies: Keopsys and LEA Photonics, more industry-oriented, aerospace/defense, etc… and Quantel changed its name to Lumibird, a company whose capital is controlled by 52% (and more in rights voting)) by ESIRA, whose head office is now at Lannion on Côtes d’Armor, and no longer in Ulis (Essonne).

Lumibird has continued to evolve largely through acquisitions, notably Halo Photonics and Optotek Medical (Slovenia) in 2019, and above all, Ellex in 2020 (for A$100 million), specializing in lasers (and ultrasounds). audio). Eye disease treatment. The company also recently acquired small distributors of medical equipment: EssMed and Brinch, in Scandinavia, and finally a subsidiary of the Swedish group Saab, which specializes in laser telemetry for military applications.

Great looking accounts, no doubt

Le chiffre d’affaires 2021 progresse de +28% avec l’intégration d’Ellex sur 12 mois (contre 6 en 2020) et de +11% sans cela, c’est-à-dire en organique, ce qui n’est not bad. If we look at profitability, we can only see that Lumibird makes a decent living with an operating margin (current operating profit, i.e. profit before bankers’ financial charges and corporate taxes are paid to tax authorities, relative to sales volume) of 12.2% over the last fiscal year ending at the end of December 2021, after 11.1% in 2020. Margin not really great for high tech, but at a good level in absolute terms, which got +1.1 points in one year, including +2.4 points for the medical branch with the contribution of Ellex.

We can also note that the group has a very strong balance sheet with a net debt/equity leverage ratio of just 4% at the end of December 2021, and that doesn’t spoil anything, a largely positive cash position. Lots of cash on hand for a bit of short-term financial debt. The balance sheet, to be determined, which survived the shock of the Ellex acquisition well thanks to a good capital increase (€36 million to €9 per new share) to fund said acquisition, and thanks to very low debt at the end of 2019, after the two previous fundraisings : 7.8 million euros in 2018 and 25.1 million in 2019.

Prospects: somewhat enjoyable a priori

Lumibird table sur une croissance organique de +8% par an moyenne ces prochaines années, une croissance tirée en principe par les volumes, avec qui plus est le soutien de quelques grands contrats : notamment chez Thales pourmes, avecsy desé composés avecsy desé composers le Rafale de Dassault Aviation, et pour les transmissions de deux types de satellites, et chez trois constructeurs automobiles US qui doivent bientôt lancer la fabrication en grande séries de systèmes ADAS de conduite (pas tout à fait mais presque lid) autoantnome les association.

This is in the context of a somewhat favorable price a priori, many markets, particularly in the military and medical, are relatively sheltered markets, with moreover, according to management, the ability to pass on component cost increases to customers, i.e. reasonable pricing power. And relatively protected margins as well, which should improve further in the future because the company has, again according to management, several tools to improve cost pricing: 1) volumes, which are good, 2) in increasing the share of direct sales, 3) by working on job costs Support, 4) by improving production processes, and finally, 5) by reintegrating production.

Only downside: Lumibird should continue to invest aggressively in its production and R&D capabilities in 2022, as well as install at a new location in Lannion, possibly investing more than it can self-finance, in other words not generating free cash flow positivity, or even consuming A little money.

Either little or no value creation in 2022 if we think, which is never wrong even if it seems a bit primitive, that real value creation lies in cash generation in euro ringing and faltering (and less in EVA-earned accounts). What the market seems to be taking notice as well, the stock price is down -24% since the start of the year, much more than the Cac Mid & Small (-14%).

But today’s investments bring tomorrow’s profits, that’s a known fact. And damn! Short term: This is not what we are here for.

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