UBS began coverage of Centiel AG, a Swiss maker of uninterruptible power supplies (UPS), assigning a "neutral" rating and setting a 12-month price target of CHF5.50. The broker said Centiel's medium-term expansion appears largely factored into the current share price of CHF5.26.
In its initial research, UBS forecast organic sales to compound at roughly 22% per year between FY25 and FY28E, modestly above the company’s own guidance of about 20% annually. UBS highlighted demand from data centers as an important driver - estimating that data center-related revenue would represent around 25% of group sales in FY25 - and projected that this segment could expand at a compound annual growth rate near 44% over FY25-28E.
The bank also modelled the commercial business - which it said accounts for approximately 75% of FY25 sales - to increase at about a 13% rate over the same period.
UBS’s revenue forecast shows growth from CHF46 million in FY25 to CHF81 million by FY28E. On an adjusted basis, UBS expects Centiel’s EBIT to reach CHF18 million by FY28E, which implies an EBIT margin of 21.6% and aligns with the company’s stated medium-term target of above 20%.
Looking further out, UBS projected revenues of CHF107 million and an EBIT margin of 22.3% by FY30E.
The broker ran a reverse discounted cash flow (DCF) analysis and concluded that Centiel’s current share price already discounts reported sales growth of roughly 18% for FY25-30E and an average EBIT margin near 21% - figures that are consistent with UBS’s own estimates. "Using a reverse DCF implies that Centiel’s share price discounts average sales growth (FY25-30E) and EBIT margins (FY26-30E) already in line with our estimates," the note said. UBS said that conclusion leaves limited upside relative to its CHF5.50 price target.
On a peer multiple basis, UBS noted that Centiel is trading at an enterprise value-to-EBIT (EV/EBIT) of 30.8x on a FY27E basis, which is about 34% higher than the peer group median. UBS argued this premium is justified by Centiel’s superior near-term sales and EBIT growth profile - forecast at 19% and 20% respectively for FY25-28E - versus peers, which UBS estimates at 16% sales growth and 12% EBIT growth over the same period.
UBS presented sensitivity scenarios to frame potential valuation outcomes. Its upside case, at CHF8.20, assumes average reported sales growth of 27% and average EBIT margins of 25% for FY27-30E. The downside case, at CHF2.10, reflects average sales growth of 11.3% and EBIT margins of 18.3% across the same timeframe - producing an upside-to-downside ratio of about 1-to-1.1, according to UBS.
The DCF model underpinning UBS’s analysis used a weighted average cost of capital (WACC) of 7.7%, a terminal sales growth rate of 2.5%, and a terminal EBIT margin of 20.9%.
UBS also identified several risks that could affect Centiel’s outlook. These included the potential adoption of 800V DC architecture, which could reduce demand for traditional AC-centric UPS systems; delays entering the U.S. market while awaiting Underwriters Laboratories certification; customer concentration; and supply chain disruption.
Contextual note: UBS’s initiation combines top-line growth forecasts, margin targets, comparable multiples and a DCF sensitivity framework to conclude that most of Centiel’s expected medium-term performance appears priced into the stock at current levels.