Initiation of Coverage – 16.11.2022

FAE Technology Società Benefit S.p.A. was established in 1990 in Gazzaniga (BG) by Francesco Lanza for the production of small series of electronic boards. To date, the Company operates in the electronics sector, offering services in the field of industrial design and solutions. FAE Technology, managing the design and prototyping phases up to the production of series of boards and electronic systems and the development of Proof of Concept (PoC), is able to enable electronic innovation extremely quickly in different sectors. Specifically, the Company through its two Lines of Business, Solutions and Online Solutions, operates in the design, development of PoC, industrial design, prototyping and supply of solutions in the field of embedded electronics and custom electronic products. 

The Company, in carrying out its activities in the EMEA area, operates mainly within the EMS market and also in new sectors with strong growth potential. The EMS market in Western Europe is expected to grow with a CAGR of 4.5%, from € 12.69 billion in 2020A to € 15.84 billion in 2025E. In total, the EMEA region will grow with a CAGR of 4.6%, from € 31.18 billion in 2020 to € 38.94 billion in 2025. In addition to traditional sectors of interest, the Company also operates in new sectors with strong growth potential, such as the transport electrification market.

We have conducted the valuation of FAE Technology equity value based on the DCF methodology and market multiples of comparable companies sample. The DCF method (which in the calculation of the WACC includes for prudential purposes also a specific risk of 2.5%) provides an equity value of € 64.7 Mln. The equity value of FAE Technology using the market multiples is equal to € 50.8 Mln. The result is an average equity value of approx. € 57.7 Mln. The target price is € 3.85, BUY rating and MEDIUM risk.

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