NEW YORK, NY / ACCESSWIRE / October 5, 2017 / SeeThruEquity, a leading independent equity research and corporate access firm focused on small-cap and micro-cap public companies, today announced it has initiated coverage on Cemtrex, Inc. (NASDAQ: CETX) with a 12-month price target of US $6.45.
The report is available here: CETX Initiation Report.
We initiate coverage on Cemtrex Inc. (Nasdaq CM: CETX, “Cemtrex”) with a price target of $6.45. With headquarters in Farmingdale, NY, and more than 500 employees at locations in India, China, Germany and Romania, Cemtrex is a diversified global technology company that offers a full suite of industrial and manufacturing solutions to customers in the electronics, medical device, automotive, consumer and industrial sectors. Cemtrex has demonstrated robust growth through large accretive acquisitions undertaken by management, resulting in revenues rising from approximately $12mn in 2012 to $120mn in 2017E, with 24 consecutive quarters of profitability. We see the company as overlooked on Wall Street and deeply undervalued relative to peers in the industrial manufacturing and electronics manufacturing (EMS) industry. Indeed, at the recent price of $2.84, Cemtrex trades at 7.1x our estimate for 2017E EPS of $0.40, versus peer multiples in the EMS sector that range from 15x to 20x.
Highlights from the report include:
Targeting Growth Areas of Technology and Industrial Manufacturing
Cemtrex’s operations are divided into two market segments: Electronics Manufacturing Services (EMS) and Industrial Products and Services (IPS). The company’s core EMS service offerings include advanced engineering, assembly and design services, and prototype development, which allows the company to offer a full end-to-end solution for original equipment manufacturer (OEM) partners to develop and introduce new products. This segment is targeting growth opportunities including increased connectivity in automobiles, internet-connected “wearables”, as well as automation and robotics in industrial and medical sectors. The IPS segment offers broad-based services, industrial air filtration, environmental control systems, and environmental and process monitoring solutions. Cemtrex is focused on growing its air filtration and environmental solutions for emerging market-based industrial companies, which management estimates represents a massive total available market of more than $40 billion.
Recent Developments Focus on Visibility, Tender Offer for Key Tronic
On September 5, 2017, Cemtrex issued a tender offer for shares of Spokane, Washington-based EMS company Key Tronic (KTCC), in a one for one stock transaction. We were pleased to see that, as part of the announcement, Cemtrex reiterated its outlook for approximately 30% YoY topline growth in FY17E, with revenues expected to be in a range of $118mn to $120mn. In an announcement reiterating its offer, Cemtrex management highlighted the contrast between its own growth and performance with what management views as the relative under-performance of Key Tronic, citing higher returns, growth and profit margins at Cemtrex, among the many metrics in which Cemtrex had outperformed Key Tronic. While Cemtrex has a history of making accretive acquisitions to accelerate its growth, we note that the terms of the offer represent a significant discount to recent prices of Key Tronic, and therefore it seems more likely to highlight that Cemtrex is undervalued than to complete the acquisition.
Initiate Coverage with a Price Target of $6.45
We initiate coverage of Cemtrex with a price target of $6.45, indicating potential upside of 127.1% versus the recent price of $2.84 on October 2, 2017. Cemtrex has generated exceptional growth over the last several years, and appears deeply undervalued relative to peers in the EMS industry. The target of $6.45 suggests a P/E ratio 13.1x trailing EPS of $0.49, and 16.1x our 2017E estimate of $0.40 per share.
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About Cemtrex, Inc.
Cemtrex Inc. (Nasdaq: CETX) is a global, diversified industrial and manufacturing company that provides a wide array of solutions to meet today’s technology challenges and is rapidly growing through acquisitions. Cemtrex provides manufacturing services of advanced custom engineered electronics, industrial contracting services, monitoring instruments for industrial processes and environmental compliance, and equipment for controlling particulates, hazardous pollutants and greenhouse gases used in carbon trading globally.
Since its founding in 2011, SeeThruEquity has been committed to its core mission: providing impactful, high quality research on underfollowed smallcap and microcap equities. SeeThruEquity has pioneered an innovative business model for equity research that is not paid for and is unbiased. SeeThruEquity is the host of acclaimed investor conferences that are the ultimate event for publicly traded companies with market capitalizations less than $1 billion.
SeeThruEquity is approved to contribute its research reports and estimates to Thomson One Analytics (First Call), the leading estimates platform on Wall Street, as well as Capital IQ and FactSet. SeeThruEquity maintains one of the industry’s most extensive databases of opt-in institutional and high net worth investors. The firm is headquartered in Midtown Manhattan in New York City.
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