Schweizer Electronic AG (SCE.DE) fair value

ACCE thesis

Schweizer Electronic makes printed circuit boards and electronic assemblies for industrial and automotive customers, most of it in Germany, with a business built on low-volume, high-mix production that larger contract manufacturers often avoid. The company trades at a trailing P/E of 2.1 against a forward P/E of 30.3, a gap that suggests the reported earnings base is depressed and the market doubts that the recent revenue growth of 4.4% will convert into profit. Gross margin of 5.1% and an operating margin of -0.4% leave little cushion, so any recovery in volumes or pricing would matter far more here than in a higher-margin peer. Return on equity of 33.8% reflects a small equity base rather than strong economics, and at a market cap of about 14M EUR the stock is thinly covered and illiquid, which is a constraint for a fund of our size as much as a source of mispricing. The question for a deeper look is whether the forward earnings estimate is credible given sub-zero operating margins, and that is best answered from the order book and the cost base, not from the headline multiples.