This week, we focus on ABB’s elevated deal with automation, the continued demand for Danaher’s COVID exams, and Taiwan Semiconductor’s enlargement plans for manufacturing. We’re additionally internet hosting a dialogue with ROBO International strategic advisor, Dr. Henrik Christensen, concerning the evolution of robotics on August 18th. Reserve your seat right here.
Please get pleasure from these insights from our analysis crew.
ROBO: ABB Expands Its Focus Throughout Industrial Automation
ABB, the Switzerland-based energy and automation big and a member of the ROBO International Robotics & Automation Index since inception, continues to refocus its portfolio on its finest companies. Earlier this week, the corporate agreed to promote its mechanical energy transmission enterprise to RBC Bearings for $2.9bn in money, which represents an EV/EBITDA of 21x.
Final week, the corporate revealed it could purchase ASTI Cellular Robotics, a Spain-based chief in autonomous cellular robots, one of many fastest-growing segments of the robotics business. Over the previous 9 months, ABB has additionally introduced plans to divest its turbocharging and energy conversion companies, in addition to its intention to IPO its electrical car charging enterprise. Final yr, ABB additionally accomplished the sale of a majority stake in its energy grids enterprise to Hitachi for as much as $8bn.
These transactions imply ABB is now left with an elevated deal with industrial automation, which now accounts for almost 60% of income, with the corporate having fun with world main positions in course of automation (#1), robotics (#2), and movement management (#1 in energy drives). That is additionally translating into increased valuation multiples and robust share worth efficiency. Over the previous two years, ABB has returned a complete of 180% and seen its ahead PE a number of develop from 16x to 28x.
HTEC: Cepheid Effectively Positioned Regardless of COVID Testing Uncertainty
The uncertainty of ongoing demand for COVID-19 testing has pushed appreciable volatility among the many many diagnostic firms that held the highlight final yr. Nonetheless, Cepheid, a number one world diagnostic firm and subsidiary of HTEC member Danaher, has seemingly been resilient to those waves. Along with reporting a powerful earnings print final week with a beat and lift, Danaher famous that there has not been any decline in demand for its SARS-CoV-2 exams, and it has even raised its COVID testing steerage from 45M to 50M exams for FY21. That is amidst a interval when different testing firms are reducing their COVID testing steerage as a consequence of declining volumes. (e.g. US day by day testing volumes have come down from almost 2 million in January to <500,000 right now.)
We consider this sturdy demand validates Cepheid’s know-how management place. Final March, Cepheid launched the primary speedy COVID-19 PCR take a look at. What makes this take a look at distinctive is that it might probably produce a lead to 45 minutes, and it may be executed on the level of care, like on the physician’s workplace. This contrasts with different PCR exams that have to be despatched to massive reference labs and might take a number of days and even weeks to show round outcomes. Ultimately, extra COVID exams can be provided in a multiplex format to incorporate different viruses, like flu A, flu B, and RSV. Though we count on general COVID testing volumes to say no over time, we consider Cepheid can be a market chief over the long term because the market more and more calls for these multiplex capabilities on the level of care.
THNQ: TSM to Ramp Up Semiconductor Manufacturing Capabilities
THNQ Index Member Taiwan Semiconductor, the world’s largest semiconductor producer, has been energetic this previous yr in planning out its diversification technique. In keeping with TSM’s annual assembly this week, the corporate is engaged in constructing crops in Germany and Japan-based on buyer demand. That is important information because the German plant could be TSM’s first European-based semiconductor plant and a continuation of its increasing manufacturing plan exterior of Taiwan.
As megatrends round synthetic intelligence and edge computing gadgets speed up, TSM is in a race to construct out its world provide chain, balancing geopolitical points and prospects’ orders. Throughout the globe, semiconductor firms have cranked up their manufacturing to deal with the continuing capability scarcity. TSM, for instance, introduced earlier this yr its intention to spend over $100 billion over the subsequent 3 years to ramp up its capabilities in increasing its manufacturing capability.
TSM controls roughly half the world’s contract chip manufacturing and the position the corporate performs has solely strengthened through the pandemic with the accompanying digital transformation acceleration and provide chain disruption which have rattled the business. This enlargement technique is likely one of the largest indicators of a decentralizing of semiconductor manufacturing exterior of China and Taiwan. Whereas it could take years for the business as an entire to diversify chip manufacturing exterior of those areas, longer-term, the initiative to have native chip manufacturing will assist speed up the adoption of synthetic intelligence, IoT, and edge computing whereas simplifying the availability chain course of and lowering tariff prices.