» Technologie « LPKF Laser & Electronics AG WKN: 645000 ISIN: … · 2019. 11. 27. · Pfeiffer...

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LPKF Laser & Electronics AG WKN: 645000 | ISIN: DE0006450000 | Bloomberg: LPK GY

New technologies lift(ed) the stock price YTD We initiate our coverage of LPKF Laser & Electronics AG (LPK) with a HOLD

recommendation and a target price of EUR 13.00, currently 5.5% below yesterday’s

closing price. In our best-case scenario, the market pays the historical premium on the

multiples. In this case, the fair value could rise to EUR 17.

Laser specialist for the processing of micro materials: LPKF is a leading international technology company for laser production processes. Its global customers include consumer electronics, research and education, thin-film solar, automotive, semiconductor manufacturers and medicine technology.

Innovations focus in miniaturization: LPKF's expertise consists in the continuous

development of leading laser technologies, which together with the material and

process understanding used by customers lead to new solutions and applications

to process micro components with high precision, speed and material-saving

processes.

9M-19 continues positive revenue and earnings trend: LPKF was able to further

increase sales in 9M-2019 again. Overall, sales in 9M-2019 increased by +22.6% yoy

to EUR 107.5m. EBIT improved significantly, rising by +206.7% yoy to EUR 15.3m in

9M (14.2% EBIT margin). In addition to the operating result, the working capital

improvement lifted the equity ratio from 60.4% (30.09.2018) to 68.5%.

Guidance increased, FMR in the mid-range: Management raised its sales guidance

of EUR 130-135m to EUR 135-140m at the Capital Markets Day (12.09.) with an EBIT

margin of 12-14% (previously: 8-12%) and confirmed this guidance with the 9M

report. Our FMR expectations for sales and EBIT are EUR 138.3m (+12.7% YoY) and

EUR 18.4m (+170% YoY, 13.3% margin).

HOLD, target price EUR 13.00: our value is based on a multiple model. The TP of

EUR 13.00 corresponds to a PE 2020e of 21.3x and 2021e of 18.1x.

Current risks: i/ worsening economic climate; ii/ project postponements by large

customers; iii/ high growth expectations already priced by the market.

Published: 22.11.2019

HOLD Previously: -

Target price EUR 13.00 (-) Share Price* EUR 13.75 (-5.5%)

* Last XETRA Closing Price

Initial 2019e 2020e 2021e

Sales 138.3 151.0 162.4

EBIT 18.4 21.9 25.6

EPS 0.51 0.61 0.72

Basic Share Data

Number of Shares (million) 24.50 Free Float (in %) 71% Market Cap (in EURm) 337 Trading volume(Ø) 0.032

High (EUR, 52 weeks) 15.40 Low (EUR, 52 weeks) 5.10

Shareholder

Jörg Bantleon 29.0%

Luxempart Pipe SARL (Luxunion S.A.) 5.0%

Sicav Lazard Small Caps EUR 3.0%

Corporate Calendar

FY 2019 24 March 2020

Q1 2020 05 May 2020

Analyst

Felix Lutz

Analyst

[email protected]

+49 (0) 69 - 920 389 14

Contact

FMR Frankfurt Main Research AG

Schillerstrasse 16

60313 Frankfurt am Main

Germany

+49 (0) 69 - 920 389 10

www.fmr-research.de

Source: Factset

Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19

4

6

8

10

12

14

16

LPKF Laser & Electronics AG Germany SDAX Germany CDAX

in EURm (2018-21e) 2016 2017 2018 2019e 2020e 2021e

Sales 10.6% 91.1 102.1 120.0 138.3 151.0 162.4

EBITDA 31.9% 1.3 11.6 14.9 25.9 29.7 34.2

Margin 1.4% 11.4% 12.4% 18.7% 19.7% 21.0%

EBIT 55.4% -6.8 4.0 6.8 18.4 21.8 25.6

Margin -7.4% 3.9% 5.7% 13.3% 14.4% 15.8%

Net income 29.8% -8.8 1.2 8.0 12.5 14.9 17.6

EPS 29.8% -0.40 0.05 0.33 0.51 0.61 0.72

Dividend per share 0.00 0.00 0.00 0.00 0.00 0.00

EV/Sales 2.2 2.3 1.4 2.8 2.7 2.6

EV/EBITDA -29.5 58.6 24.6 21.0 18.7 16.7

P/E -17.5 180.9 16.8 26.9 22.6 19.2

Net debt/ EBITDA 28.9 1.4 -1.1 -1.3 -1.8 -2.2

Source: LPKF AG,FMR

LPKF Laser & Electronics AG

Page 2 of 34

Contents:

Investment Thesis ................................................................................................................................................................... 3

SWOT ...................................................................................................................................................................................... 4

Rating ...................................................................................................................................................................................... 5

Summary ............................................................................................................................................................................. 5

Peer Group-Rating .............................................................................................................................................................. 5

DCF-Model .......................................................................................................................................................................... 7

Scenario Analysis ................................................................................................................................................................ 8

Business Model ..................................................................................................................................................................... 10

Development-Segment ..................................................................................................................................................... 11

Welding Segment .............................................................................................................................................................. 12

Solar Segment ................................................................................................................................................................... 13

Electronics-Segment ......................................................................................................................................................... 14

Service and Support .......................................................................................................................................................... 15

Markets and Technologies .................................................................................................................................................... 16

Thin-film solar market ...................................................................................................................................................... 16

Market for printed circuit boards ..................................................................................................................................... 17

Market for glass wafers .................................................................................................................................................... 18

Financial Measures ............................................................................................................................................................... 20

Successful financial year 2018 .......................................................................................................................................... 20

9M-2019............................................................................................................................................................................ 20

Outlook full year 2019e .................................................................................................................................................... 20

Medium-term Outlook of the Segments .......................................................................................................................... 21

Balance Sheet Adjusted .................................................................................................................................................... 25

Dividend Policy.................................................................................................................................................................. 26

Company Profile ................................................................................................................................................................... 27

Company History .............................................................................................................................................................. 27

Shareholder ...................................................................................................................................................................... 27

LPKF Management ............................................................................................................................................................ 28

Board ................................................................................................................................................................................. 28

Appendix ............................................................................................................................................................................... 29


Page 3 of 34

Investment Thesis LPKF Laser & Electronics AG is a leading international specialist in the production of

laser systems for micromachining. Founded in 1976 and headquartered in Garbsen,

Switzerland, with its 655 employees worldwide, generated sales of EUR 120m in

2018. The company has been listed in the Prime Standard of Deutsche Börse since

1998 (ticker: LPK).

We start LPKF AG's coverage with a HOLD recommendation and a target price of

EUR 13.00, which is 5.5% below the closing price (21.11.) of EUR 13.75. We use a

multiple-model to derive the fair value of LPKF. This corresponds to a PE 2020e of

21.3x and 2021e of 18.1x.

The miniaturization in the production of micro components and the necessary

digitization in the manufacturing process are progressing rapidly and require a

corresponding adaptation of tools and processes in production. We see LPKF as an

innovator in laser material processes and products in many (new) application areas

as well-positioned to take advantage of this situation:

i/ Through continuous research, LPKF develops technologically advanced (laser)

processes to create, together with material science expertise, fundamental

innovations in manufacturing;

ii/ By working closely with customers and understanding their requirements and

processes, these innovations can be introduced or existing processes improved;

iii/ LPKF can offer sales and service through its worldwide subsidiaries and

continuously open up new markets.

Due to high growth in the target markets for the LPKF solutions, combined with the

leading technology, we expect high sales-growth in the coming years (CAGR2018-

20e: 10.6%).

Scenario Analysis

With a sales and margin profile that improves beyond expectations, we expect a

positive development of the share price towards EUR 17.00, the average value from

our EV/EBITDA and PE multiple valuation taking into account premiums of 12.3%

and 8%.

In our pessimistic scenario, LPKF does not succeed in further improving its sales and

margins on the level. In this case, we see our EV/Sales FY3 derived value at EUR 11.

Leading technology company

for laser systems for

micromachining

Rating: HOLD, target price

EUR 13.00

Miniaturization to improve

performance in electronics -

LPKF leading supporter

Structurally strong growth in

the target markets

Optimistic scenario: EV/Sales

Multiple at EUR 17

Pessimistic scenario: Derived

value at EUR 11


Page 4 of 34

SWOT Strengths

Due to the focus of activity in the high-tech sector only conditional dependence on

cyclical fluctuations

Diversification into four segments and different industries

High innovative ability of the company

Customer proximity

Speed of innovation

Solid order backlog

Advanced technology strengthens LPKF's market position

On balance, very low debt and high liquidity (unused reserves), as well as high cash

flow generation

Weaknesses

Dependence on two customers (in Solar and Electronics, together 37.5% of sales in

2018)

Risks of development in new technologies (quality, supply chain, market

acceptance)

High budget required for research and development (10% of sales) not always

leading to new products

Opportunities

Substantial sales potential through newly developed products (LIDE, LTP)

New application areas of laser technologies

Development of new customers through the further expansion of sales activities

Risks

Investment cycles in the electronics, solar and automotive industries fluctuate

widely

Increasing share of the project business in the electronics and solar segments

reduce the predictability of the business

Dependence on the economic situation of customers and government budgets

Lack of highly-qualified employees

Exchange rate fluctuations due to very high export share, hence, potential price

disadvantage in Asia

New products, such as LIDE, must first come into focus and then into the customer's

production process.


Page 5 of 34

Rating

Summary We start coverage on LPKF Laser & Electronics AG (LPKF-DE) with a HOLD rating and

a multiple-based target price of EUR 13.00, with a closing price of EUR 13.75 on the

21 November.

Fair value summary

Valuation method Fair value per share

(EUR)

Peer Group EV/Sales (Average) 12.00

Peer Group EV/EBITDA (Average) 13.87

Peer Group PE Multiple (Average) 14.57

DCF 13.04

Source: FMR Research

Peer Group-Rating We compare LPKF with a group of 11 tech companies. There is no player here that

is also active in all markets served by LPKF while using similar technology.

We compare the Factset consensus-rating to get a rough overview of where LPKF

is in comparison. The peer companies have a broad spectrum of market

capitalization ranging from EUR 39m (Singulus) to EUR 12.8bn (Sartorius).

Company description of the peer companies

Coherent Inc Coherent, Inc. designs, manufactures and services lasers and related accessories. The company operates through its OEM Laser Sources (OLS) and Industrial Lasers and Systems (ILS) segments. The ILS segment comprises the Laser Sources, Subsystems and Tools business, which is mainly used for industrial lasers for material processing. The company was founded on May 26 by Eugene Watson in 1966 and is headquartered in Santa Clara, CA.

Sartorius AG Sartorius AG is an international laboratory and process technology provider for the biotech, pharmaceutical and food industries. It operates through its Bioprocess Solutions and Lab Products and Services business units. The company was founded in 1870 by Florenz Sartorius, Sr. and is headquartered in Goettingen, Germany.

Pfeiffer Vaccum Technology AG

Pfeiffer Vacuum Technology AG develops, manufactures and markets components and systems for vacuum generation, measurement and analysis. It operates through the following segments: U.S., Germany, Republic of Korea, Europe, Asia and France. The Company was founded in 1890 by Arthur Pfeiffer and is headquartered in Asslar, Germany.

Carl Zeiss Meditec AG

Carl Zeiss Meditec AG is active in the development, manufacture and marketing of medical products. It is active in the fields of ophthalmology and microsurgery. The company was founded on October 4, 1995 and is headquartered in Jena, Germany.

AIXTRON SE AIXTRON SE supplies deposition equipment to the semiconductor industry. Products include compound semiconductors, silicon semiconductors, organic semiconductors and nanotechnology. The Company was founded in December 1983 by Heinrich Schumann, Holger Jürgensen and Meino Heyen and is headquartered in Herzogenrath, Germany.

Viscom AG Viscom AG produces, develops and sells automated inspection systems for industrial production. It operates in the following segments: serial products, new products and service. The company's product portfolio includes automated optical inspection and X-ray inspection systems used in

Target price of EUR 13.00,

HOLD


Page 6 of 34

industrial electronics manufacturing. Viscom was founded in 1984 by Martin Heuser and Volker Pape and is headquartered in Hanover, Germany.

SÜSS MicroTec SE

SUSS MicroTec SE is a holding company engaged in the manufacture and sale of products with microelectromechanical systems and microelectronics. It operates in the following segments: lithography, bonder, photomask accessories and miscellaneous. The company was founded in 1949 by Karl Süss and is headquartered in Garching, Germany.

Jenoptik AG Jenoptik AG is a holding company which provides products and services for the photonics market. It operates in the following segments: optics and life science; mobility; defense and civil systems. The company was founded in 1991 and is headquartered in Jena, Germany.

Basler AG Basler AG is active in the design, production and sale of industrial cameras. Its products include generators, accessories, software, an embedded vision portfolio and components. The company was founded in 1988 by Norbert Basler and Stefan Berendsen and is headquartered in Ahrensburg, Germany.

Singulus Technologies AG

Singulus Technologies AG develops, produces and sells machines and systems in the fields of vacuum coating technology, surface technology and engineering, wet chemistry and thermal processing technologies. Singulus reports under the following segments: Optical Disk, Solar and Semiconductors. The company was founded by Roland Lacher and Reiner Seiler on June 14, 1995 and is headquartered in Kahl am Main, Germany.

Manz AG Manz AG manufactures electronic components and devices, solar modules and lithium-ion batteries. Manz reports in the following segments: Electronics, solar, energy storage, contract manufacturing and service. Manz was founded in 1987 by Dieter Manz and is headquartered in Reutlingen, Germany.

Source: Factset

To calculate fair values for the LPKF share from the multiples, we calculate averages

and medians of PE, EV/Sales and EV/EBITDA figures. The following table gives an

overview of the peers and their current Factset consensus multipliers.

Peers of LPKF and their Factset rating

Source: Factset, FMR Research

For our calculations we use the medians and multiply them by our respective

estimates. We then adjust for excess cash and cash equivalents (EUR 19.6m) and

financial liabilities (EUR 50.1m) where necessary. The target prices thus obtained

range from EUR 11.41 (EV/Sales FY3) to EUR 15.53 (EV/EBITDA FY1).

Name PE FY1 PE FY2 PE FY3 EV/Sales FY1 EV/Sales FY2 EV/Sales FY3EV/EBITDA

FY1

EV/EBITDA

FY2

EV/EBITDA

FY3

Coherent, Inc. 25.7x 16.2x 11.0x 2.4x 2.2x 1.9x 13.0x 8.9x 6.5x

Manz AG - 24.7x 6.2x 0.7x 0.6x 0.4x 19.9x 7.6x 4.5x

SINGULUS TECHNOLOGIES AG 20.9x 3.6x 2.8x 0.4x 0.3x 0.2x 6.2x 2.4x 2.0x

Basler AG 53.3x 38.7x 28.7x 3.4x 3.1x 2.7x 19.4x 15.9x 12.7x

JENOPTIK AG 21.1x 19.9x 18.9x 1.9x 1.9x 1.8x 12.4x 11.7x 11.0x

SUESS MicroTec SE 27.3x 14.9x 10.5x 1.1x 1.0x 0.9x 15.9x 8.8x 6.3x

Viscom AG 19.4x 14.6x 10.3x 1.1x 1.0x 0.9x 10.1x 8.3x 6.2x

AIXTRON SE 32.4x 28.0x 21.8x 2.7x 2.5x 2.3x 15.2x 13.0x 10.3x

Carl Zeiss Meditec AG 53.8x 45.4x 40.4x 6.6x 6.1x 5.6x 31.5x 28.2x 25.9x

Pfeiffer Vacuum Technology AG 31.7x 25.4x 21.7x 2.4x 2.3x 2.1x 17.2x 14.1x 12.2x

Sartorius AG 54.1x 46.2x 40.0x 6.9x 6.0x 5.4x 25.5x 21.8x 19.7x

Peergroup Durchschnitt 34.0x 25.2x 19.3x 2.7x 2.4x 2.2x 16.9x 12.8x 10.7x

Peergroup Median 29.5x 24.7x 18.9x 2.4x 2.2x 1.9x 15.9x 11.7x 10.3x

Determination of peer group

PE, EV/Sales and EV/EBITDA

multiples


Page 7 of 34

Multiple valuation of LPKF


For the target price of EUR 13.00 we calculate the following multiples:

Multiples at EUR 13.00 target price

2019e 2020e 2021e EV/Sales 2.5 2.3 2.1 EV/EBITDA 13.4 11.7 10.2 EV/EBIT 18.9 15.9 13.6 PE 25.5 21.3 18.1


DCF-Model Our discounted cash flow model is based on the following assumptions:

The weighted average cost of capital (WACC): We set the risk-free rate at 2.0% and

assume an equity risk premium of 6.0% and a debt risk premium of 3.0%. We have

set the beta factor to 1.2 and assume that the long-term target equity ratio at

market values is 80%. With these assumptions, we arrived at a capital cost rate

(WACC) of 8.06%.

Phase 1 (2019e-21e): We calculate the Free Cash Flows (FCF) for Phase 1 according

to our detailed financial projections, which we have described in the Financial

Section. We expect revenue to increase by 9.2% and 7.5% in 2020e and 2021e,

respectively, while the EBIT margin improves to 15.8% in 2021e.

Phase 2 (2022e-28e): Phase 2 covers the years 2022e to 2028e. For this period, we

anticipate revenue growth with declining growth rates (CAGR2022-28e 4.1%), with

the EBIT margin seen at 16.0% over the long term.

Terminal Value: For the calculation of the final value, we set a long-term growth

rate of 2.0% for free cash flow. Based on our estimates, we arrive at a fair value of

the company of EUR 348.5m.

LPKF Laser&ElectronicsEPS

2019e

EPS

2020e

EPS

2021e

Sales

2019e

Sales

2020e

Sales

2021e

EBITDA

2019e

EBITDA

2020e

EBITDA

2021e

0.51 0.61 0.72 138.3 151.0 162.4 25.9 29.7 34.2

Peergroup Median 29.5x 24.7x 18.9x 2.4x 2.2x 1.9x 15.9x 11.7x 10.3x

Discount

Multiple 29.5x 24.7x 18.9x 2.4x 2.2x 1.9x 15.9x 11.7x 10.3x

Abgeleiteter

Unternehmenswert335.6 327.9 310.0 410.8 348.8 351.4

+ Kasse 19.6 19.6

- Finanzschulden -50.1 -50.1

- Minderheiten 0.0 0.0

Abgeleitete

Marktkapitalisierung305.09 297.33 279.44 380.31 318.26 320.84

Anzahl der Aktien 24.50 24.50 24.50 24.50 24.50 24.50

Fairer Wert pro Aktie 15.06 15.08 13.55 12.45 12.14 11.41 15.53 12.99 13.10

WACC: 8,06%

DCF delivers fair value of

EUR 13.04 per share


Page 8 of 34

To this end, we add the cash on hand and deduct the financial liabilities and the

minority interests at market values, thus achieving a fair value of EUR 319.5m or

EUR 13.04 per share.

DCF-MODEL


Scenario Analysis Optimistic Scenario

If LPKF succeeds in substantially increasing its sales growth and profitability, we see

the possibility that the market will be led by the valuations of the EV/Sales or

another premium paid to the peers. In our base calculation, we do not consider this

premium (about 8-12%). In this case, a share price of up to EUR 17 would be

possible.

The following chart shows the historical EV/EBITDA and PE trading margins of LPKF

shares and their peer companies (median values). The average historical discount

lies in the viewing area at 12.3% or at 7.9%.

PHASE 1 PHASE 2 PHASE 3

in EURm 2019E 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E

Sales 138.3 151.0 162.4 171.6 180.5 186.8 192.4 197.2 202.2 207.2

Y-o-Y growth 15.3% 9.2% 7.5% 5.7% 5.2% 3.5% 3.0% 2.5% 2.5% 2.5%

EBIT 18.4 21.8 25.6 27.5 28.9 29.9 30.8 31.5 32.4 33.1

EBIT margin 13.3% 14.4% 15.8% 16.0% 16.0% 16.0% 16.0% 16.0% 16.0% 16.0%

Income tax on EBIT -5.4 -6.4 -7.5 -8.1 -8.5 -8.8 -9.1 -9.3 -9.6 -9.8

Depreciation and amortisation 7.5 7.9 8.6 9.1 9.6 9.9 10.2 10.4 10.8 11.1

Change in net working capital 17.8 4.0 -0.6 -0.5 -0.5 -0.3 -0.3 -0.2 -0.3 -0.3

Net capital expenditure -5.0 -9.0 -5.9 -6.3 -6.6 -9.8 -10.2 -10.4 -10.8 -11.1

Free cash flow 33.3 18.3 20.1 21.8 22.9 20.9 21.4 21.9 22.5 23.1

Present values 33.0 16.8 17.0 16.9 16.5 13.8 13.1 12.4 11.7 11.1 186.3

Present value Phase 1 66.7 Risk free rate 2.00% Target equity ratio 80%

Present value Phase 2 95.4 Equity risk premium 6.00% Beta 1.2

Present value Phase 3 186.3 Debt risk premium 3.00% WACC 8.06%

Total present value 348.5 Tax shield (Phase 3) 30.0% Terminal growth 2.00%

+ Excess cash/Non-operating assets 19.6

- Financial debt -48.6

+ Minority interests 0.0 1.0% 1.5% 2.0% 2.5% 3.0%

Fair value of equity 319.4 7.06% 13.94 14.73 15.67 16.82 18.25

7.56% 12.84 13.48 14.24 15.14 16.24

Number of shares (m) 24.5 8.06% 11.90 12.43 13.04 13.76 14.63

8.56% 11.08 11.52 12.02 12.61 13.31

Fair value per share (in EUR) 13.04 9.06% 10.36 10.73 11.15 11.64 12.20

Sensitivity analysis

Terminal growth rate

WACC

With premium on up to

EUR 17 possible


Page 9 of 34

Historic EV/EBITDA-FY2 and PE-FY2 multiples to peer group


Pessimistic Scenario

In our pessimistic scenario, we assume that LPKF will not continue its sales and

margin growth as expected. This could essentially be due to poor sales of the LIDE,

LTP or electronics systems. In the solar sector too, follow-up orders may now be

delayed after the last major order, since the solar business is project business.

Possible market correction or an ongoing period of weakness could support this

scenario. In such a scenario, the market could be guided by the EV/Sales FY2

valuation (EUR 11.41 per share) and re-evaluated for lower sales or margin levels

in the DCF model.

Our current fundamental earnings model does not include any M&A activities.

Consequently, every upcoming M&A transaction offers an increase in our top line

estimates. Following the reorganization of its finances, LPKF had cash on hand of

around EUR 20.5m and an equity ratio of 68.5% as at September 2019, which

could be used for further acquisitions.

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00

18.00

LPKF Laser & Electronics AG EVEBITDA - FY2 PeersMedian EV/EBITDA

0.00

10.00

20.00

30.00

40.00

50.00

60.00

LPKF Laser & Electronics AG PE - FY2 PeersMedian EV/EBIT

Pessimistic value at EUR 11.41

No M&A included


Page 10 of 34

Business Model LPKF Laser & Electronics AG, founded in 1976, is an international specialist

manufacturer of systems and systems for laser-based production processes for

micro material processing headquartered in Garbsen.

In 2018, the Prime Standard listed company generated sales of EUR 120m with 655

employees and has production facilities in Garbsen (Electronics), Suhl (Solar), Fürth

(Welding) and Naklo, Slovenia (LaserSource and Development).

According to their respective application field LPKF operates in four segments –

i/ Development, ii/ Electronics, iii/ Welding and iv/ Solar – and has branches in the

core markets Germany, USA, China, Japan and Korea. LPKF works with external

distributors for non-core countries.

Segments and Solutions

Development, 20% sales Electronics, 29% sales Welding, 19% sales Solar, 32% sales

Systems for PCB development and research

Systems for electronics production Systems for plastic welding Systems for the production of solar cells and for laser transfer printing (LTP)

Research institutions and universities

Consumer Electronics, Semiconductor Industry, PCB production, microsystems technology

Automotive supply industry, medical technology

Solar industry

Source: LPKF Laser & Electronics AG

LPKF has customers in 70 countries, the export share is about 90% of sales. The

largest share is in the market in Asia-Pacific, where much of the world's consumer

electronics and solar industries are produced. The development segment generates

sales in all regions.

Sales by region

Source: LPKF Laser & Electronics AG, 2018

Deutschland11%

Übriges Europa

26%

Nordamerika21%

Asien41%

Sonstige1%

Specialist for laser-based

processes and production

plants

4 segments and worldwide

branches


Page 11 of 34

Development-Segment In 2018, LPKF generated revenue of EUR 24.3m (20.8% of Group sales) in the

development segment, with an EBIT margin of 18.0% (EUR 4.2m). In the past, LPKF

was able to maintain sales at your level of over EUR 20m and in most cases

anticipate a double-digit EBIT margin.

In development, LPKF sells machines and equipment for PCB prototyping and micro

material processing. Customers can thus produce in-house prototypes, process

various substrates quickly and at high to very high quality. The advantage for the

customer: i/ Their data stays in the house and ii/ the prototype's production time

can be significantly reduced.

LPKF offers solutions in the field of structuring, drilling, punch-through, separation

and assembly (SMT) of printed circuit boards with up to eight layers. In this process,

increasingly laser technology (series: ProtoLaser) is used. LPKF circuit board plotters

and ProtoLaser are controlled with in-house CAM software (CircuitPro), which

quickly implements complex layouts and allows intuitive operation.

Customers in the development sector worldwide come mainly from the research

environment (universities, schools and industry); LPKF claims to own 60% market

share.

LPKF is maintaining the continuous development of its products and expanding

market leadership.

Development Segment: Sales and EBIT in EURm


20.9

25.1 25.5

22.6

24.4 25.0

1.92.7 3.3 2.0

5.34.5

9.1%

10.8%

12.9%

8.8%

21.7%

18.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

-

5.0

10.0

15.0

20.0

25.0

30.0

2013A 2014A 2015A 2016A 2017A 2018A

Sales EBIT EBIT margin

Development with 21% of

sales, 18% EBIT margin

Research and development

clients, 60% market share

worldwide

Strengthening market

leadership


Page 12 of 34

Welding Segment In the welding segment, LPKF achieved sales of EUR 22.2m in 2018 (18.5% of Group

sales) with an EBIT margin of -7.2% (EUR 1.6m).

For joining sensitive electronic components, for example in the automotive

industry, medical technology or consumer electronics, LPKF offers systems that

precisely and permanently weld (3D) plastic parts to each other, e.g. the LPKF

PowerWeld 3D. It can be connected very small to large parts. The systems are

integrated with the customer (individually, in existing production lines) (series

InlineWeld) or sold as a standalone system (series PowerWeld). Also, LPKF offers

contract manufacturing for the customer, mainly for small and medium lots.

As the market leader in Europe and TOP 3 player in plastic welding worldwide, LPKF

supplies customers from the automotive, medical technology, consumer and

consumer electronics sectors.

In addition to laser welding, there are other methods of plastic bonding from the

competition. Although LPKFs offers a very low-stress and material-saving approach

with the laser process, the technology still has to prevail on the market. The goal is

to supply global players worldwide with the leading technological solution in the

area of plastic joining.

Welding Segment: Sales and EBIT in EURm


23.3 24.0 25.4

22.2

0.1-0.1

0.6

-1.6

0.4%

-0.4%

2.4%

-7.2% -8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

(5.0)

-

5.0

10.0

15.0

20.0

25.0

30.0

2015A 2016A 2017A 2018A


Welding – Laser welding of

plastic

Market leader in Europe

Focus on turnaround


Page 13 of 34

Solar Segment In the Solar segment, LPKF generated revenue of EUR 38.9m (32.4% of Group sales)

in 2018, with an EBIT margin of 15.4% (EUR 8.4m).

In the solar industry, efficient and cost-effective processes are needed to play an

increasingly important role as an energy source in the era of sustainable energy

production. LPKF has focused on the development of processes and the

optimization of parameters in all steps of laser structuring in CdTe and CIGS

technologies, taking into account cost-efficiency as well as technological aspects.

LPKF works very closely with major thin-film module manufacturers and is the

market leader with the Allegro system series.

To test production processes or to investigate new manufacturing processes, LPKF

has also developed the "Presto" – a multifunctional structuring tool for laboratory

use.

Also located in the solar sector is the Laser Transfer Printing (LTP). Here, similar to

screen printing, ceramic pigments are applied to glass substrates, for example with

the LPKF Callisto. The advantage in the approach of LTP is in the non-contact

application technique, which does not require new screens, their manufacture and

storage.

With the LTP process (sole supplier), LPKF essentially competes with alternative

printing processes, which are cheaper but have some disadvantages.

Solar Segment: Sales and EBIT in EURm


Thin-film methods are used only by a few large module manufacturers. LPKF strives

to act as a partner to these few companies, and in addition to being the market

leader in the area of CdTe, aims to develop further in CIGS production. Continuous

improvement of manufacturing speed and processes is very important to keep the

technological advantage for the customers.

8.5

13.9

20.6

38.9

-3.8

-1.0

1.5

6.0

-44.7%

-7.2%

7.3%

15.4%

-50.0%

-40.0%

-30.0%

-20.0%

-10.0%

0.0%

10.0%

20.0%

(10.0)

(5.0)

-

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

2015A 2016A 2017A 2018A


Solar - Laser structuring of

thin film solar cells

Presto for testing purposes in

the laboratory

LTP – Printing process for

ceramic paints

World leader in thin-film solar

(CdTe)


Page 14 of 34

Electronics-Segment In 2018, LPKF generated EUR 35m in sales in the Electronics segment (28.8% of

Group sales) with an EBIT margin of 2.3% (EUR 0.8m). In 2013, LPKF had a high sales

volume in Electronics, driven by LDS technology. When sales of LDS machines

dropped significantly, sales halved in 2015 to EUR 30m, with a correspondingly

negative EBIT margin (-2.0% at EUR 0.6m).

In the field of electronics, LPKF offers several solutions for the processing of printed

circuit boards: first lasers for the production of stencils (StencilLaser P6060 and

G6080), further separators for rigid and flexible printed circuit boards (MicroLine

2000 Ci) as well as lasers for cutting and drilling printed circuit boards (MicroLineX

5000). Through its internal brand, LaserMicronics, LPKF also offers the cutting,

drilling and structuring of materials as a service.

The Electronics division also includes the Laser Induced Deep Etching (LIDE) and

Laser Direct Structuring (LDS) processes. The LIDE process is used to drill very fine

structures in glass (wafers). Since LIDE places very high demands on the process,

LPKF also offers its customers the option of manufacturing the glass wafers in their

own clean room as a service and supplying them to customers in the semiconductor

and electronics industries worldwide. This clean room is expected to be completed

by mid-2020.

Laser Direct Structuring, LDS, (ProtoLaser 3D) can be used to structure 3D printed

circuit boards and apply printed circuit board structures to three-dimensional

plastic parts. Weight and space can be saved with this method. In the past, LPKF

installed LDS machines worldwide for the production of mobile phone antennas.

With the increasing use of "smart" components and edge computing – more

sensors in less space – and new materials, LDS is a solution.

The electronics customers mainly come from the area of PCB manufacturing and

the electronics industry. With LIDE, other markets must develop, or the process

must be implemented with manufacturers. LPKF is the most technologically

advanced and field-leading company.

As a technology leader, LPKF is working increasingly closely with customers to

address these issues with advanced solutions and to engage (new) customers in

new opportunities for micromachining.

Stencil laser

LIDE-Method

LDS-Method

Fragmented customers

depending on the solution,

LPKF as the leading provider

Expansion of the customer

base, development of new

solutions


Page 15 of 34

Electronics Segment: Sales and EBIT in EURm


Service and Support For the laser products sold as a stand-alone system, integrated equipment or

custom solution, LPKF offers its customers in the core markets of i/ technical

support, ii/ commissioning and training, iii/ maintenance and calibration, iv/ spare

parts and the v/ process optimization or installation of upgrades. Here, the

customer can choose between three different service packages, Basic, Classic and

Premium Service. Overall, LPKF recorded an increase in the service business (9M-

2019: +47% yoy).

75.7

51.2

29.9 30.6 31.7 34.6

21.3

9.4

-0.6

-4.4

0.9 0.8

28.1%

18.4%

-2.0%-14.4%

2.8% 2.3%

-20.0%

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

(10.0)

-

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

2013A 2014A 2015A 2016A 2017A 2018A


Service offers for customers


Page 16 of 34

Markets and Technologies LPKF is active in several markets with its innovative solutions, whereby the

respective market growth is not always decisive. For LPKF as a technology company,

investing in technology (laser) and integrating it into existing workflows/creation of

new products is fundamentally crucial, regardless of how much later the machines

are sold. Through its strong commitment to research and development as well as

close cooperation with customers, LPKF can continuously improve existing

solutions and develop new technologies (basic research) whose applications and

impact are not immediately obvious.

Below we present market analyzes in the areas of i/ thin-film solar modules, ii/ the

mass market for printed circuit boards and electronic assemblies, and iii/ the

market for glass wafers.

Thin-film solar market Thin-film solar modules can be subdivided into three types, depending on the

constituents: i/ cadmium telluride (CdTe), ii/ copper indium gallium di-selenide

cells (CIGS) and iii/ amorphous thin-film silicon. LPKF generates the most revenue

in the solar sector with a customer that produces CdTe cells and increasingly

positions itself for the CIGS process as well.

Worldwide annual PV production by technology

Source: Fraunhofer Institute, Date between 2000-2010 by Navigant; Data from 2011ff. IHS Markit; Graph: PSE GmbH 2018

The global thin-film solar market is driven by the increasing cost and performance

efficiency of thin-film solar modules along with the increasing demand for green

electricity/increasing sustainability awareness. Another stimulus of the market

(mainly in the industrialized countries) are regulatory measures for energy supply.

Market growth is expected by experts from 12% (Maximize Market Research) to

20% (Researchnester) with a CAGR2019-27 in the coming years, starting from a

relatively small market share so far.

Diversified across multiple

markets

Various thin-film technologies

Drivers for thin-film solar:

increasing efficiency,

decreasing (installation) costs,

regulation


Page 17 of 34

Global market for thin-film solar cells in billion USD

Source: Maximize Research

In the scribing of thin-film cells, there are mainly two competitors worldwide,

Manz and Mitsuboshi Diamond with different market shares – depending on the

technology.

Market for printed circuit boards i/ an increasing number of applications of semiconductors (sensors), ii/ increasing

use of electronics in various applications, iii/ the increase in Internet use (IoT), and

v/ the increased demand for environmentally friendly printed circuit boards.

Market researchers see a CAGR rate of 3.1% - 4.3% between 2018 and 2024.

With the growing demand for printed circuit boards from numerous end-user

industries, the circuit board market also faces some limitations, such as competitive

prices and volatility in commodity pricing and regulations for electronic waste. The

major challenges facing the market include changes in the supply of raw materials

and increased competition at regional and national levels. These limitations and

challenges could negatively impact the market.

16,318,4

20,7

23,4

26,4

29,8

33,6

37,9

42,7

0,0

5,0

10,0

15,0

20,0

25,0

30,0

35,0

40,0

45,0

2017 2018 2019 2020 2021 2022 2023 2024 2025

CAGR: 12.8%


Page 18 of 34

Global PCB market in billion USD

Source: Lucintel Research

The competition for LPKF in printed circuit board processing consists mainly of

regional suppliers.

Market for glass wafers Especially in the semiconductor industry, there has been a great deal of interest in

glass in recent years. Glass has valuable electrical (insulating), physical (low thermal

expansion) and chemical (chemical resistance) properties that make it an ideal

material for a wide range of processes not only in the semiconductor industry but

also in all other industries. In addition to being used as a substrate in electronic

components and integrated circuits, glass can be used in the LCD and display sector,

as (color) filters, loudspeakers and in photovoltaic cells.

Companies are starting to use glass wafers and other glass materials/substrates

because of the advantages such as flexibility, flatness and mechanical rigidity in

production. In addition to the properties mentioned glass is very inexpensive.

At LPKF, the electronics sector is also home to the trend-setting LIDE process, the

micromachining of glass to an unprecedented level of precision.

The specific market for glass wafers is seen as 19.4% growth with a CAGR2019-25.

72,775,8

79,182,5

86,089,7

0,0

10,0

20,0

30,0

40,0

50,0

60,0

70,0

80,0

90,0

100,0

2019 2020 2021 2022 2023 2024

CAGR: 4.3%


Page 19 of 34

Global market for glass wafers in billion USD

Source: QYResearch

The competitors in the field of glass drilling are from alternative production

processes, such as Schott or Coherent, which are currently not yet able to match

the precision of LPKF.

0,38

0,46

0,55

0,66

0,78

0,93

1,12

0,00

0,20

0,40

0,60

0,80

1,00

1,20

2018 2019 2020 2021 2022 2023 2024

CAGR: 19.4%


Page 20 of 34

Financials

Successful financial year 2018 In the financial year 2018, LPKF was able to increase its turnover by 17.5% yoy to

EUR 120m, with all segments except welding showing significant growth. Also, the

company achieved an increase in EBIT of 73% yoy to EUR 6.8m (vs. EUR 4.0m) with

an EBIT margin of 5.7%.

9M-2019 In the first nine months of 2019, LPKF recorded an increase in revenue of 22.6% to

EUR 107.5m after EUR 87.7m in the previous year. EBIT tripled from EUR 5.0m to

EUR 15.3m, with a margin of 14.2% (previous year: 5.7%).

The tax liability amounted to EUR 4.0 so that a consolidated result of EUR 10.9m or

EUR 0.45 per share was generated.

In 9M-19, LPKF was able to successfully increase sales in Electronics (+32.2%),

Welding (+23.2%) and Solar (+29.1%); after a difficult Q3-19 Development was -

1.7% weaker yoy. Order backlog was EUR 32.1m, below the previous year's

EUR 54.4m.

P&L 9M-2019 vs. 9M-2018 incl. New guidance from 09.09.2019

Source: LPKF Laser & Electronics AG, FMR Research AG

Outlook full year 2019e On the day of its Capital Market Day, LPKF had raised its revenue and earnings

forecast for 2019 and raised long-term EBIT margin targets. For the full year 2019,

the Managing Board expects stable growth in the global economy, with

consolidated sales of between EUR 135m and EUR 140m (previously: EUR 130m to

EUR 135m) and an EBIT margin of between 12% and 14% (previously: 8%-12%). This

corresponds to an ROCE between 20% and 25% (previously: 10%-15%). In the

following years, LPKF wants to further increase profitability and achieve an EBIT

margin of more than 14% (previously: more than 12%).

We expect sales of EUR 138.3m and EBIT of EUR 18.4m for the full year 2019e

(margin of 13.3%).

EUR m 9M 2019 9M 2018 YoY in % 2018 New guidance Before

Sales 87.7 107.5 -18.4% 120.0 135-140 130-135

EBIT 5.0 15.3 -67.4% 6.8

EBIT margin 5.7% 14.2% 5.7% 12-14% 8-12%

Net attributable profit 3.8 10.9 -65.0% 8.0

in % of sales 4.4% 10.2% 6.7%

EPS 0.17 0.45 -62.3% 0.33

Sales and margin increase

Sales- and margin

development continues

upward trend

EUR 0.45 per share (vs.

EUR 0.17 in 9M-18)

Increase in sales and margins

in all segments

LPKF increases 2019 guidance:

EUR 135-140m in sales at 12%

-14% EBIT margin


Page 21 of 34

FMR outlook full year 2019e


Medium-term Outlook of the Segments LPKF's strategic goals are sustainable with profitability improvement together with

a growth strategy for newly developed products. We see the company in its current

position on a sustainably good path. In addition to the further optimization of

established business areas, organic sales will be driven by the sale of LIDE systems

(in the electronics segment) in the next few years.

Outlook for the Development-Segment

In recent years, turnover in the development sector has risen steadily as LPKF, as

market leader (60% market share), works closely with clients worldwide and is

generally known for the quality of its machines due to regular updates. For 2019e,

we expect a slight decline to EUR 23.7m and a continuous increase in turnover to

EUR 25.5m by 2021e.

For the EBIT margin, we forecast a level of 15.0% in 2019e (EUR 3.6m), which will

improve to 16.0% in the coming years.

Sales and EBIT progress in the development segment in EURm


EUR m 2018 H1-2019 2019e yoy

Sales 120.0 72.7 138.3 15.3%

EBIT 6.8 10.1 18.4 170.6%

EBIT margin 5.7% 13.9% 13.3%

Net attributable profit 8.0 7.2 12.5 56.3%

in % of sales 6.7% 9.9% 9.0%

EPS 0.33 0.30 0.51 54.5%

22.6 24.4 25.0 23.7

24.9 25.5

2.0

5.34.5

3.6 4.0 4.18.8%

21.7%

18.0%

15.0%16.0% 16.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

-

5.0

10.0

15.0

20.0

25.0

30.0

2016A 2017A 2018A 2019E 2020E 2021E


Sales of LIDE systems are

crucial for profitability in the

coming years

Sustainable growth with a

solid EBIT margin


Page 22 of 34

Outlook for the Electronics-Segment

The Electronics segment has developed volatilely in recent years. Although sales

have increased again since 2015, the margin only returned to positive territory after

the 2017/18 restructuring.

Thanks to great customer interest in the solutions, successful restructuring and now

also business from the LIDE segment, we expect growth to EUR 40.5m in 2019e and

a continuous increase in sales to EUR 46.8m by 2021e.

We forecast an EBIT margin of 13.2% in 2019e (EUR 5.4m), which will improve to

16.0% in the coming years - driven by high-margin LIDE business.

Sales and EBIT development in the Electronics segment in EURm


30.6 31.7 34.6

40.5 43.7

46.8

-4.4

0.9 0.8

5.4 6.27.5

-14.4%

2.8% 2.3%

13.2% 14.1%16.0%

-20.0%

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

(10.0)

-

10.0

20.0

30.0

40.0

50.0

2016A 2017A 2018A 2019E 2020E 2021E


Return of profitability after

restructuring; Growth through

new technologies


Page 23 of 34

Outlook for the Welding-Segment

The Welding segment has also been volatile in recent years. After the revenue

setback in 2018, we expect revenue to rise in 2019e as the good half-year business

continues. LPKF was able to refocus the segment on its clients and intensify its

cooperation. Thanks to the good technology, we expect turnover to grow to

EUR 25.7m (+16% YoY) in 2019e and turnover to increase continuously to

EUR 30.1m by 2021e.

By 2020e at the latest, LPKF should reach break-even with a higher turnover volume

and then (2021e) achieve a margin of 5.0% (EUR 1.5m).

Sales and EBIT development in the Welding segment in EURm


24.0 25.4

22.2

25.7 27.9

30.1

-0.1

0.6

-1.6 -0.1

0.8 1.5

-0.4%

2.4%

-7.2%

-0.5%

3.0%

5.0%

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

(5.0)

-

5.0

10.0

15.0

20.0

25.0

30.0

35.0

2016A 2017A 2018A 2019E 2020E 2021E


Break-even 2020e


Page 24 of 34

Outlook for the Solar-Segment

The Solar segment has shown impressive growth since 2016 and achieved a good

EBIT margin of 15.4% in 2018. Based on the current order situation and the result

shown in 9M-2019, we expect renewed growth in sales and EBIT to EUR 48.4m

(+24.3% YoY) and EUR 9.7m (20% margin) respectively. Currently, most orders

come from a customer in the CdTe thin-film solar segment. LPKF is working to

optimize the manufacturing processes for the cells (CdTe and CIGS technology) and

to generate new customers.

The LTP business is also integrated into the Solar segment. With the approval, we

see the starting signal for solid growth in the coming years as given.

For 2019e-21e we expect revenue growth of 15.7% YoY to EUR 60.0m with an EBIT

margin of 20% in 2019e and 21% in 2021e – slightly improved by new customer

acquisition and the LTP business.

Sales and EBIT development in the Solar segment in EURm


13.9

20.6

38.9

48.4

54.5 60.0

-1.0

1.5

6.09.7 10.9

12.6

-7.2%

7.3%

15.4%

20.0% 20.0%21.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

(10.0)

-

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

2016A 2017A 2018A 2019E 2020E 2021E


Currently very good order

situation, growth from 2020e

onwards with the market


Page 25 of 34

Outlook for the LPKF Group

Based on our expectations for the four segments, we expect LPKF to generate

turnover of EUR 138.3m in 2019e with an EBIT margin of 13.3% (EUR 18.4m). We

then expect turnover growth of 9.2% in 2020e and 7.5% in 2021e. We forecast an

EBIT margin of 14.5% in 2020e and 15.8% in 2021e.

Sales and EBIT development LPKF in EURm


Balance Sheet Adjusted After a capital increase in August 2018 and the operational turnaround, a large part

of the debt financing could be repaid in 2018, bringing the equity ratio to 60%.

Thanks to good working capital management, the equity ratio now reached 68.5%

in 9M-2019. We expect an equity ratio of 73.2% through sustainable working capital

monitoring and positive free cash flow in the coming years.

91 102

120

138 151

162

(6.8)

4.0 6.8 18.4 21.9

25.6

-7.4%

3.9%5.7%

13.3%14.5%

15.8%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

(20)

-

20

40

60

80

100

120

140

160

180

2016A 2017A 2018A 2019E 2020E 2021E

Revenues EBIT EBIT margin

FMR: Increasing sales and

profitability in the coming

years

Capital increase and

operational turnaround allow

room for takeover


Page 26 of 34

Equity (in EURm) and equity ratio


LPKF aims to finance its investments solely from cash flow. M&A activities can be

financed again from this situation. Thanks to the WC management (improvement

of EUR 14.7m in 9M 2019, mainly due to the reduction of inventories and

receivables) and the constantly improving profitability, we see a high cash

conversion of >70% in the coming years and consider the financing to be secured.

EBIT and free cash flow in EURm


Dividend Policy LPKF did not pay any dividends for the financial year 2018 but instead focused on

further debt relief and investments. The Executive Board believes a dividend

payment for the financial year 2019 in 2020 is likely in the event of planned

development. Currently, we do not respect dividends in our model. As we expect

LPKF to generate enough cash dividends in general are financed.

54.3 54.2

77.7

90.2

105.2

122.8

46.5% 46.5%

60.4%69.5% 71.3% 73.2%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

120.0%

140.0%

0

20

40

60

80

100

120

140

2016A 2017A 2018A 2019E 2020E 2021E

Equity Equity ratio

-1.8

3.35.8

33.3

19.8 20.1

11.8 12.8

9.0

18.4

21.9

25.6

-5

0

5

10

15

20

25

30

35

40

2016A 2017A 2018A 2019E 2020E 2021E

Free Cash Flow EBIT

Internal financing through

cash flow

Dividend payments in 2020

planned


Page 27 of 34

Company Profile

Company History Historical Development (Selection)

1976 Foundation of LPKF

1984 USA sales and service office

1989 Entry into laser technology for PCB structuring

1993 First Stencil Laser

1994 Production site in Slovenia

1998 Initial public offering

2000 Office in China; Entry into the field of plastic welding

2001 First laser system for drilling and structuring printed circuit boards

2006 LDS process for three-dimensional circuit carriers is used in series production

2007 Start with the structuring of thin-film solar cells

2008 ProtoLaser S as the first laser system worldwide for structuring laminated substrates

2010 Industrial UV laser cutting

2011 First sales office in Japan

2012 LPKF becomes leading supplier of solar scriber

2013 New sales office in South Korea

2015 Acquisition of LTP Startup

2018 First LIDE system goes to a semiconductor manufacturer


Shareholder The LPKF (Bloomberg: LPK) has been listed on the Frankfurt Stock Exchange since

March 1998. The largest shareholders are Mr. Jörg Bantleon, who owns a total of

29.95% of the shares in both privately held shares and the attributable shares of

German Technology AG. Other shares are held by the Luxempart SARL (> 5%), the

Sicav Lazard Small Caps Euro (> 3%) and the Société Générale (share of> 3%). All

three are attributed to free float, which is 71%.

LPKF has a market capitalization of approximately EUR 337m (November 2019).

High free float of approx. 71%


Page 28 of 34

LPKF AG Shareholder Structure


LPKF Management Dr. Götz Bendele, CEO

Dr. Bendele, born 1970, is Chairman of the Management Board and member of the

Management Board since May 2018. He is appointed until April 30, 2021.

Christian Witt, CFO

Mr. Witt, born 1971, is CFO since September 2018 and appointed until August 31,

2021.

Board Dr. Markus Peters, Chairman

Dr. Peters, born 1964, is member of the Supervisory Board since July 13, 2017,

elected until AGM 2024 and Chairman of the Supervisory Board since October 16,

2017.

Dr. Dirk Michael Rothweiler, Deputy Chairman

Dr. Rothweiler, born 1963 is member of the Supervisory Board since June 14, 2017,

elected until the end of the 2022 Annual General Meeting, Deputy Chairman of the

Supervisory Board since June 6, 2019

Prof. Dr. Ludger Overmeyer

Professor Overmeyer, born 1964, is member of the Supervisory Board since 6 June

2019 and elected until the end of the Annual General Meeting 2024.

Jörg Bantleon; 29,0%

Luxempart Pipe

SARL (Luxunion S.A.); 5,0%

Sicav Lazard Small

Caps Euro; 3,0%

Société Générale S.A.; 3,0%

Restlicher Streubesitz;

60,1%


Page 29 of 34

Appendix

P&L


in EURm 31.12.2016 31.12.2017 31.12.2018 31.12.2019 31.12.2020 31.12.2021

Revenues 91.1 102.1 120.0 138.3 151.0 162.4

YoY grow th 23.3% 6.9% 6.4% 3.9% -0.6% 0.9%

Changes in inventory 2.6 2.9 5.2 4.0 3.0 3.2

as % of revenues 2.9% 2.8% 4.3% 2.9% 2.0% 2.0%

Cost of Materials -31.0 -33.8 -48.0 -55.3 -58.9 -61.7

as % of revenues -34.1% -33.1% -40.0% -40.0% -39.0% -38.0%

Personnel expense -43.9 -41.9 -44.3 -44.1 -47.3 -50.3

as % of revenues -48.2% -41.0% -36.9% -31.9% -31.3% -31.0%

Other operating expense -23.3 -23.3 -21.7 -20.5 -21.1 -22.7

as % of revenues -25.6% -22.9% -18.1% -14.8% -14.0% -14.0%

Other operating income 5.8 5.7 3.7 3.5 3.0 3.2

as % of revenues 6.3% 5.6% 3.1% 2.5% 2.0% 2.0%

EBITDA 1.3 11.6 14.9 25.9 29.7 34.2

as % of revenues 1.4% 11.4% 12.4% 18.7% 19.7% 21.0%

Depreciation and amortisation (incl. PPA) -8.1 -7.7 -8.1 -7.5 -7.9 -8.6

as % of revenues -8.8% -7.5% -6.7% -5.4% -5.2% -5.3%

EBIT -6.8 4.0 6.8 18.4 21.9 25.6

as % of revenues -7.4% 3.9% 5.7% 13.3% 14.5% 15.8%

Net financial results incl. equity results -0.8 -0.9 -0.9 -0.6 -0.5 -0.5

EBT (Earnings before income taxes) -7.6 3.0 6.0 17.9 21.4 25.1

as % of revenues -8.3% 3.0% 5.0% 12.9% 14.1% 15.5%

Income taxes -1.2 -1.9 2.1 -5.4 -6.4 -7.5

as % of EBT 16.4% -61.8% 34.6% -30.0% -30.0% -30.0%

Net income -8.8 1.2 8.0 12.5 14.9 17.6

Minorities 0.0 0.0 0.0 0.0 0.0 0.0

Adjusted net income after minorities -8.8 1.2 8.0 12.5 14.9 17.6

Net margin in % -9.7% 1.1% 6.7% 9.0% 9.9% 10.8%

Shares outstanding (in m) 22.3 22.3 24.5 24.5 24.5 24.5

Earnings per share -0.40 0.05 0.33 0.51 0.61 0.72


Page 30 of 34

Balance Sheet


in EURm 31.12.2016 31.12.2017 31.12.2018 31.12.2019 31.12.2020 31.12.2021

Assets

Non-current assets 66.4 63.9 64.8 62.4 63.5 60.9

as % of total assets 56.8% 54.8% 50.3% 48.1% 43.0% 36.3%

Intangible assets (incl. Goodwill) 15.3 15.4 15.2 15.6 16.1 16.5

Property and buildings 38.6 38.6 37.8 36.8 39.3 38.3

Other assets 12.5 9.8 11.8 10.0 8.1 6.1

Current assets 50.5 52.7 64.0 67.4 84.1 106.9

as % of total assets 43.2% 45.2% 49.7% 51.9% 57.0% 63.7%

Inventories 25.0 25.5 25.7 22.0 18.9 20.3

Accounts receivable 19.8 19.4 30.5 16.6 18.1 19.5

Other receivables and other assets 2.2 4.4 4.0 4.3 4.7 5.0

Cash and cash equivalents 3.6 3.3 3.7 24.5 42.4 62.0

Total assets 116.9 116.6 128.8 129.8 147.6 167.7

Shareholders´ equity and liabilities

Shareholderś equity 54.3 54.2 77.7 90.2 105.1 122.7

as % of total equity and liabilities 46.5% 46.5% 60.4% 69.5% 71.3% 73.2%

Subscribed capital 22.3 22.3 24.5 24.5 24.5 24.5

Other equity 32.1 32.0 53.2 65.7 80.7 98.2

Equity attributable to shareholders 54.3 54.2 77.7 90.2 105.1 122.7

Minorities 0.0 0.0 0.0 0.0 0.0 0.0

Financial debt 43.5 41.0 20.0 8.1 8.1 8.1


Long-term financial liabilities 22.6 20.0 17.4 5.5 5.5 5.5

Short-term financial liabilities 20.9 21.0 2.6 2.6 2.6 2.6

Liabilities 15.0 16.7 25.3 22.8 24.9 26.8


Accounts payable 3.1 3.2 6.9 5.5 6.0 6.5

Other liabilities 11.9 13.5 18.4 17.3 18.9 20.3

Provisions 4.2 4.6 5.7 8.6 9.3 10.0


Pension provisions and similar obligations 0.3 0.3 0.3 0.3 0.3 0.3

Provisions 0.0 0.0 0.0 0.0 0.0 0.0

Other provisions 3.9 4.3 5.5 8.3 9.1 9.7

Total equity and liabilities 116.9 116.6 128.8 129.8 147.6 167.7


Page 31 of 34

Cashflow Statement


in EURm 31.12.2017 31.12.2018 31.12.2019 31.12.2020 31.12.2021

Net income 1.2 8.0 12.5 14.9 17.6

Depreciation and amortisation 7.7 8.1 7.5 7.9 8.6

Change in Working Capital -0.2 -1.2 17.8 4.0 -0.6

Cash flow from operating activities 8.6 14.9 37.8 26.8 25.6

CAPEX -4.7 -8.6 -5.0 -7.5 -5.9

Cash flow from investing activities -4.7 -8.6 -5.0 -7.5 -5.9

Change in debt -2.5 -21.0 -11.9 0.0 0.0

Net proceeds from capital increase 0.0 2.2 0.0 0.0 0.0

Dividend payments 0.0 0.0 0.0 0.0 0.0

Other financing activities 0.0 -0.1 0.0 0.0 0.0

Cash flow from financing activities -2.4 -18.8 -11.9 0.0 0.0

Total change in cash and cash equivalents 1.4 -12.5 20.8 19.3 19.7

Other changes in cash and cash equivalents -1.6 12.9 0.0 0.0 0.0

Cash and cash equivalents at the start of the period 3.6 3.3 3.7 24.5 43.9

Cash and cash equivalents at year´s end 3.4 3.7 24.5 43.9 63.5


Seite 32 von 34

Declaration of liability (disclaimer) and mandatory details pursuant to Section 85 Securities Trading Act (WpHG), EU Market Abuse Regulation (EU Regulation No.

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2. Mandatory details

a) First publication: 22.11.2019,

b) Time conditions of expected updates: quarterly

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d) Previous analyses: No analysis was published in the 12 months before publication of this analysis that contains a recommendation for a specific investment decision

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(vii.) has other significant interests with regard to the company being analysed, for example clients with the company being analysed.


Page 33 of 34

Company Disclosure(s)

LPKF Laser & Electronics AG -

b) FMR Frankfurt Main Research AG has concluded a cooperation agreement with Oddo Seydler Bank AG, on the basis of which this financial analysis is compiled.

Oddo Seydler Bank AG is acting as the agent of the issuer, which is either the subject of the financial analysis itself or its financial instruments are the subject of the

financial analysis.

Neither Oddo Seydler Bank AG nor an affiliated company, nor any person who contributed to the compilation

(i.) has an involvement in the share capital of the issuer of at least 5 per cent;

(ii.) was involved in the management of a syndicate within the past five months that issued financial instruments of the issuer in the context of a public tender;

(iii.) managed financial instruments of the issuer on a market by means of concluding purchase or sale agreements:

(iv.) has, within the past twelve months, concluded an agreement regarding services in connection with investment banking business or received a service or

performance promise from such agreement, with issuers which either themselves or the financial instruments thereof, are the subject of the financial analysis;

(v.) is in possession of a net sales or purchase position which exceeds the threshold of 0.5% of the total issued share capital of the issuer;

(vi.) has concluded an agreement regarding the preparation of investment recommendations with the issuer.

(vii.) has other significant interests with regard to the company being analysed, for example clients with the company being analysed.

Company Disclosure(s)

LPKF Laser & Electronics AG iii, vi

Valuation history for the last 12 months:

Date of publication Recommendation Price at publication Target price

22.11.2019 HOLD 13.75 13.00

4. Creation and distribution

a) Responsibility for creation and distribution

FMR Frankfurt Main Research AG

Registered office: Frankfurt am Main; Commercial Register No. HRB 113537, Frankfurt am Main district court; Chairman: Marcus Silbe

b) Issuer

Felix Lutz, Analyst

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5. Investment recommendation details

Investment recommendation details - stocks:

BUY: In our opinion, the stock will demonstrate an absolute price gain of at least 10 % in a 12-month period.

HOLD: In our opinion, the stock will not exceed or fall below an absolute price gain or loss of 10% in a 12-month period.

Sell: In our opinion, the stock will demonstrate an absolute price loss of at least 10 % in a 12-month period.


Page 34 of 34

6. Sensitivity of the evaluation parameters

The figures from profit and loss calculations, cash flow statements and balance sheets which form the basis of the company evaluation are date-related estimates

and therefore subject to risks. These may change at any time without prior notice. Regardless of the evaluation methods used, there are significant risks that the

price goal/trend will not be achieved within the expected time frame. The risks include unforeseeable changes with regard to competition pressure, demand for the

products of an issuer and the offer situation with respect to materials required for production as well as non-occurrence of the assumed development. Such deviations

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this information. Therefore, we cannot guarantee or ensure the accuracy, completeness or correctness of the information or opinions contained in this document.

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8. Summary of the basis for evaluation

Individual issuers: Current and recognised evaluation methods (e.g. DCF method and Peer Group Analysis) are used for company analysis purposes. The DCF method

calculates the value of the issuer based on the sum of the discounted cash flows, i.e. the cash value of the future cash flows of the issuer. The value is therefore

determined on the basis of expected future cash flows and the applied discount rate. In Peer Group Analysis, issuers listed on the stock exchange are evaluated by

comparing ratios (e.g. price/profit ratio, Enterprise Value/turnover, Enterprise Value/EBITDA, Enterprise Value/EBIT). The comparability of the ratios is primarily

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