Detection Technology - Brisk earnings growth ahead
DT has successfully navigated through external obstacles and now has a prime opportunity to concentrate on growth, business development, and profitability. Despite uncertain economic conditions, the underlying demand remains robust.
The widest X-ray detection provider
DT specializes in the development, manufacturing, and marketing of digital X-ray detection solutions for medical, security, and industrial applications. The company adopts an asset-light business model by focusing solely on value-adding processes. With the recent acquisition of Haobo Imaging, DT now offers a complete range of digital X-ray detection technologies, expanding its market exposure to approx. EUR 3bn. DT aims to establish itself as the growth leader in selected X-ray imaging segments. To achieve this, the company consistently invests approx. 11% of its net sales in R&D annually. While keeping the option open for inorganic revenue expansion, DT has made only two acquisitions in its history.
Few obstacles faced, now time to scale up
Over its history, the company has demonstrated strong growth, achieving a CAGR of 18% during 2010-22. However, DT has recently faced challenges due to various market disruptions, including the COVID-19 pandemic and component shortages. These factors have constrained the company's growth and negatively impacted its profit margins. Despite global economic uncertainty, the growth outlook for DT appears promising. The growth is supported by increased investments in aviation security and its recent expansion into the TFT FPDs markets. Furthermore, starting from a soft 2022, DT's EBIT is expected to show a significant improvement in the coming years. It is worth noting that some of this positive expectation is already reflected in the stock price.
Valuation little elevated but not challenging
We made no changes to our estimates. DT guides double-digit growth for Q2 and H1 as a group. We anticipate the company delivering y/y growth of 15% and an EBIT margin of 11.8% in 2023 Based on our estimates, we consider the current valuation to be neutral or slightly elevated, with surprises in growth being one of the key drivers of the stock's performance. We retain our HOLD rating and TP of EUR 17.5.
DT specializes in the development, manufacturing, and marketing of digital X-ray detection solutions for medical, security, and industrial applications. The company adopts an asset-light business model by focusing solely on value-adding processes. With the recent acquisition of Haobo Imaging, DT now offers a complete range of digital X-ray detection technologies, expanding its market exposure to approx. EUR 3bn. DT aims to establish itself as the growth leader in selected X-ray imaging segments. To achieve this, the company consistently invests approx. 11% of its net sales in R&D annually. While keeping the option open for inorganic revenue expansion, DT has made only two acquisitions in its history.
Few obstacles faced, now time to scale up
Over its history, the company has demonstrated strong growth, achieving a CAGR of 18% during 2010-22. However, DT has recently faced challenges due to various market disruptions, including the COVID-19 pandemic and component shortages. These factors have constrained the company's growth and negatively impacted its profit margins. Despite global economic uncertainty, the growth outlook for DT appears promising. The growth is supported by increased investments in aviation security and its recent expansion into the TFT FPDs markets. Furthermore, starting from a soft 2022, DT's EBIT is expected to show a significant improvement in the coming years. It is worth noting that some of this positive expectation is already reflected in the stock price.
Valuation little elevated but not challenging
We made no changes to our estimates. DT guides double-digit growth for Q2 and H1 as a group. We anticipate the company delivering y/y growth of 15% and an EBIT margin of 11.8% in 2023 Based on our estimates, we consider the current valuation to be neutral or slightly elevated, with surprises in growth being one of the key drivers of the stock's performance. We retain our HOLD rating and TP of EUR 17.5.