5 International Mid-Cap Robotics Stocks

No person does automation just like the Japanese. From robots delivering meals in in style chain eating places to thermostats that can draw you a shower and let you know when it’s prepared, the nation is gentle years forward of most. In lots of instances, Japanese automation addresses particular cultural use instances that simply haven’t caught on overseas. Equally, cultural variations in how firms function imply that investing in Japanese firms as a foreigner isn’t straightforward.

In our current piece on three of the most important industrial robotics firms on the market, we shortlisted FANUC (6954.T) as an organization of curiosity noting its profile extra resembles worth than development. That leaves us with eleven names from our record of 14 promising robotics firms, 5 of that are Japanese companies that fall exterior the scope of what we’re on the lookout for. If we would like Japanese robotics publicity, we’ll put money into FANUC. That leaves us with the six worldwide companies seen under.

Credit score: Nanalyze / knowledge from Yahoo Finance

FARO Applied sciences drops off the record as a result of it’s too small. We’re left with 5 mid-cap robotics shares from 5 totally different nations. It’s essential to notice these are categorized as “robotics shares” by the 2 largest robotics ETF suppliers, although some may disagree as to the quantity of pure-play publicity you’re truly receiving. With that in thoughts, let’s take a better have a look at every firm (numbers in USD until in any other case said).

Tecan Group

Whereas half of their 2022 annual report accommodates nothing however arbitrary ESG drivel, about 5 pages present a verbose description of what the corporate does. At a income section stage, the enterprise is damaged down into “Life Sciences” and “Partnering” the place the latter includes companions bringing Tecan’s options to market beneath their very own model names. What options? Pages 24-29 of their 2022 annual report outline their total addressable markets (TAMs) which sum to about $22 billion and run the gamut from laboratory automation devices to in-vitro diagnostics.

• Life Science Analysis ($4-5 billion) – laboratory automation section with consumables, service, and spare components
• In-Vitro Diagnostics ($4 billion) – dominated by gross sales to diagnostics firms with reagents/consumables (80%) and devices (20%).
• Medical Mechatronics ($13-15 billion) – a part of the broader medical gadget market and consists of devices and mechanical and robotic modules managed by customized electronics.

Segmenting their revenues by the above classes would make quite a lot of sense, however as a substitute, you want a secret decoder wheel to determine the place revenues are literally coming from apart from the aforementioned obscure “Life Sciences” and “Partnering” buckets.

A big focus of their current investor presentation is the acquisition of a agency referred to as Paramit which “greater than doubled” Tecan’s unique complete addressable market in an space referred to as “medical mechatronics.” Merchandise embody sub-modules for robotic surgical procedure programs, power based mostly gadgets and platforms, cardiovascular controllers, moveable defibrillators, house hemodialysis programs, affected person monitoring, and telemedicine gadgets. One in every of their capabilities permits for “parallel screening of a whole bunch of antibody interactions,” one thing that sounds just like the AbCellera (ABCL) worth proposition. General drivers of above-average development are stated to be genomics, protein evaluation, significantly workflows of mass spectrometry, and cell and tissue evaluation.

Concerning our personal portfolio publicity, there’s an overlap right here with what BICO Group (BICO.ST) does when it comes to laboratory automation publicity. If we had been on the lookout for further life sciences robotics publicity, we’d lean in direction of Intuitive Surgical (ISRG). Buyers on the sidelines selecting between BICO Group and Tecan Group may go for the latter given their bigger dimension, supplied they may overlook the lack of 3D-bioprinting publicity you get with BICO.

Renishaw

Renishaw breaks down revenues into two segments – 1) Manufacturing Applied sciences and a pair of) Analytical Devices and Medical Gadgets – the latter constituting simply 5% of complete revenues. Specializing in Manufacturing Applied sciences, we see three sub-segments, one in every of which is additive manufacturing.

Attempting to grasp how robotics comes into play is troublesome. Exterior sources inform us about cobot and robotic {hardware} elements that Renishaw manufactures together with a robotic surgical gadget that may be discovered of their miniscule medical gadget section. ChatGPT helped us uncover some collaborations between FANUC and Renishaw, although these hardly appear to be main contributors in direction of revenues. You may make extra of a case that Renishaw is an additive manufacturing agency, and certainly it’s present in ARK Make investments’s 3D-Printing ETF (fifteenth largest holding with a weighting of three.47%), however with out understanding how a lot income is coming from these sub-segments, it’s unattainable to inform.

John Bean Tech

“JBT to discover a pure-play FoodTech technique,” is the primary cause the corporate provides as to why we must put money into the agency. They’re presently not a pure play as a result of 1 / 4 of revenues come from AeroTech with the rest positioned under within the meals chain, so to talk.

With an over 50,000 world set up base of equipment, almost half the corporate’s revenues are recurring, representing components, consumables, refurbishments, leases, and repair. Over the following three years they’re anticipating to make use of as much as $1.3 billion in fixed-rate debt to accumulate further development of their FoodTech section together with a predictive upkeep resolution they’ve developed referred to as OmniBlu. Whereas the newest investor deck hints at a transfer in direction of a pure play on FoodTech, it turns into complicated afterward because the slides discuss up the potential of their AeroTech division which they’re speculated to be shifting away from.

Individuals at all times have to eat, so there’s a sure attraction to FoodTech, however John Bean is hardly younger and recent. With a heritage going again to 1884, they could discover it powerful to determine modern applied sciences of their area with out buying some thrilling enterprise capital-backed applied sciences that might assist them steal market share from giant gamers on this area like Tetra Pak or GEA Group. Like the following two firms on our record, there appears to be an absence of “blue ocean” alternative within the robotics/automation applied sciences being mentioned.

ATS

ATS addresses the “specialised automation product manufacturing necessities” of firms throughout quite a lot of industries with greater than half their revenues coming from life sciences. Natural revenues grew at a compound annual growth rate (CAGR) of almost 9% over the previous 5 years, development that’s been supplemented by constant acquisitions over time main to just about $1 billion in debt on their stability sheet. Leverage isn’t essentially a nasty factor for a worthwhile firm, however ATS has additionally amassed round $1.2 billion in goodwill and intangible property that recommend they could be overpaying for development. Additionally of concern is a enterprise mannequin the place the vast majority of revenues come from “building contracts” versus gross sales of services or products. The result’s a blended gross margin of round 28% which is among the many lowest in right this moment’s record alongside our final firm, Cargotec.

Cargotec

Cargotec is a worldwide chief in cargo-handling equipment for ships, ports, terminals, and native distribution. It’s a worthwhile firm that has market management positions in key geographies, however not one which seems to be doing a lot disruption apart from their electrical car portfolio and discuss of buying development sooner or later. Final yr, the corporate started a restructuring initiative which targeted on figuring out core companies which might be rising and worthwhile whereas establishing plans to exit the remainder when market situations enable.

We use the time period development loosely, because the agency has traditionally seen development across the 6% vary with non-core companies affected by declining development.

Inexperienced traders may discover the “eco portfolio” enticing because it’s experiencing development above the corporate’s total product portfolio of which it now constitutes over 30%. With a brand new CEO on board this yr, focus is claimed to be positioned on robotics, electrification, and digitalization. The restructuring efforts ought to finally result in divesting much less worthwhile enterprise segments which ought to shore up their weak gross margin.

Conclusion

Thematic ETF suppliers usually discover a lack of pure-play constituents and resort to stretching the bounds of what one may contemplate to be a robotics firm. Industrial automation is a mature enterprise section that doesn’t signify the type of robotics know-how we’re trying to get publicity to. There’s a distinction between consolidating old-school firms in a specific area versus shopping for thrilling enterprise capital-backed robotics know-how firms which may signify giant multi-billion greenback TAMs which might be simply across the nook. We didn’t discover any of right this moment’s firms to be a very compelling substitute for our current funding in Teradyne (TER).

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