Investment philosophy

Investment report June 2025 - View into the portfolio

Elmos Semiconductor SE
 

Elmos, a new addition to the ACATIS Fair Value Deutschland ELM fund, is among the top ten values with a fund weighting of approximately 4%. The company, which was founded by Prof. Zimmer and Dr. Weyer in 1984, celebrated its 40th anniversary last year. Together, the founders own about 39% of the share capital. 

Elmos develops customer-specific semiconductor solutions that are mainly installed in vehicles and which assume critical control, measurement and signal processing functions. By focusing on automotive applications (92% of sales revenues), Elmos supports the implementation of driver assistance systems, autonomous driving, efficient drive concepts as well as intelligent wiring and sensor architecture. The company's portfolio includes products that make a significant contribution to global sustainability goals such as containing climate change and promoting good health (estimated 24% of sales revenues in 2023). The ultrasound ICs, which provide Elmos with a leading market position, are particularly noteworthy in this context. This key technology enables precise 360° environmental sensing, supports emergency brake and parking systems, increases safety for passengers and road users, and works independently of light and weather conditions. 

Elmos regularly invests around 10-15% of its sales revenues in research and development. The newest generation of these sensors integrates AI-based signal processing, reduces energy consumption by up to 75% and is therefore particularly well suited for use in electric vehicles and autonomous mobility solutions. Elmos products definitely contribute to increased sustainability, road safety and a more stress-free driving experience. They also enable lighter and energy-efficient vehicle electronics. Moreover, they also help with temperature control and energy optimization. Assistance systems reduce the risk of accidents.

The company's financial numbers are no less impressive. Profitability (in the form of the gross margin) is between 45% and 48%, with an EBIT margin of 25%. In 2024, the ROCE was almost 25%. The equity ratio is 70%, and net liquidity will probably turn positive this year. In the last ten years, sales revenues grew by 10.2% p.a., and the operating result by 23.2% p.a. Elmos is planning for further growth by 2030. Sales revenues are supposed to climb to EUR 1 billion, which would correspond to an annual growth rate of 11.5%. In terms of the operating result, the company is planning for an EBIT margin of 25%, which could result in EUR 250 million (absolute value). This represents growth of approximately 45% compared to 2024.

At this time, the top priority for the Management Board is to improve cash generation. The significant decline in the tax and investment rate will help in this regard. Another focus area concerns the reduction in net working capital. Therefore we expect significantly higher free cash flow margins. Currently, the share is listed at a moderate P/E ratio of 11 (2025 basis).


Kind regards

Christoph Gebert (fund advisor)
Ehrke & Lübberstedt AG