$KTN (-1,29%) Today I would like to introduce you to Kontron in a little more detail, as an interesting zone has been reached both fundamentally and in the chart.
Roughly speaking, Kontron is a full-stack provider (hardware and software) of IoT solutions.
Trends that Kontron plays on:
- IoT
- Industry 4.0 (i.e. networked production machines)
- automation
- Transportation (IoT data networking for trains)
- Defense (especially secure communication solutions)
- Energy and smart home (AI could also be seen here)
With KontronOS, Kontron offers a secure IoT operating system that has been specially developed for machines.
KontronGrid allows up to one million IoT devices to be connected with each other.
Last year, Kontron acquired the Katek Group, adding smart home applications and intelligent energy control (e-cars, photovoltaics) to its portfolio.
Kontron generates the majority of its sales (over 80%) in Europe and the rest mainly in the USA and China. European sales are growing significantly faster.
Summary/investment thesis:
Kontron is a very broadly positioned industrial group that manufactures and services networked technologies for production, defense and energy (AI was also mentioned here at one point). There is an ever-increasing proportion of software, which is slowly increasing margins (gross margin is now around 36-40%).
Kontron has been able to announce new orders in recent months (and also today):
- with automotive manufacturers for 5G communication modules for vehicle networking (volume approx. €250m)
- in the defense sector for high-performance communication computing units for surveillance (volume approx. 165M€)
- in the area of defense for sensors for autonomous air traffic control (20M€)
- in the area of transportation for an innovative platform for interlocking systems
There is also a collaboration with Qualcomm $QCOM (-4,11%) to revolutionize the areas of edge computing and artificial intelligence.
The order backlog is growing steadily and the company is really playing on almost every trend. According to its own statements, there are high barriers to entry.
Here is the CEO's comment:
"Kontron has become the global technology leader of IoT technologies. With our secure KontronOS operating system, innovative solutions for ultra-fast 5G data communication and our de facto IoT standards for special markets such as railroad technology, defense and smart charging technology, we are driving future applications such as artificial intelligence - based on huge amounts of data that only IoT-enabled devices can deliver. We are therefore only at the beginning of a promising growth cycle in IoT technology."
Kontron is currently valued relatively favorably with a P/E ratio of 14.5 and a forward P/E ratio of 11 (5-year average: 19). Sales growth over the next few years is expected to be around 10%, while profits are expected to grow by 20%pa. The stock has not made a great return so far and is moving sideways, but it has risen quite a bit in the last few months. There is a resistance at around 22-22.5€ which has been tested several times (and is also ATH). There is also a dividend yield of 3.2%. The dividend should also continue to grow strongly.
PS: Kontron is sitting on a huge treasure trove of data (from all the IoT machines etc.). This could be leveraged and AI could also be used here, e.g. for digital twins or to optimize production, similar to what $SIE (-0,45%) Siemens is currently doing
