Intrinsic Value LEM Holding S.A. (LEHN.SW)

• Previous Close: CHF281.50
• Intrinsic Value: CHF318.40
• Upside potential: +13%

Stock Valuation Context

Business Model And Market Position

LEM Holding SA is a global leader in electrical measurement solutions, specializing in transducers for current and voltage monitoring across industrial and automotive applications. The company operates in two key segments: Industry, serving sectors like renewable energy, power supplies, and automation, and Automotive, focusing on battery management and motor control for conventional and electric vehicles. Its products are critical for applications ranging from smart grids to electric vehicle chargers, positioning LEM as a vital enabler of energy efficiency and electrification trends. With a strong presence in China, the US, and Europe, LEM leverages its Swiss engineering heritage to deliver high-precision, reliable solutions. The company’s diversified end-market exposure mitigates cyclical risks while capitalizing on secular growth in electrification and automation. Its niche expertise in measurement technology provides a competitive moat, supported by long-standing customer relationships and a reputation for innovation in precision sensing.

Revenue Profitability And Efficiency

LEM reported revenue of CHF 405.8 million for FY 2024, with net income of CHF 65.3 million, reflecting a net margin of approximately 16.1%. The company generated CHF 74.4 million in operating cash flow, demonstrating robust conversion of earnings into cash. Capital expenditures of CHF 31.7 million indicate ongoing investments in capacity and innovation, aligning with growth in electrification and automotive demand.

Earnings Power And Capital Efficiency

Diluted EPS stood at CHF 57.26, underscoring LEM’s ability to monetize its specialized product portfolio. The company’s capital efficiency is evident in its disciplined capex approach, with operating cash flow comfortably covering investments. Its focus on high-margin industrial and automotive applications supports sustained profitability despite macroeconomic volatility.

Balance Sheet And Financial Health

LEM maintains a conservative balance sheet with CHF 23.7 million in cash and equivalents against total debt of CHF 95.7 million, reflecting moderate leverage. The company’s liquidity position is adequate, with operating cash flow providing flexibility to service debt and fund growth initiatives without undue strain.

Growth Trends And Dividend Policy

LEM’s growth is tied to global electrification trends, particularly in renewable energy and electric vehicles. The company paid a dividend of CHF 50 per share, signaling confidence in its cash flow stability. While reinvestment remains a priority, the dividend reflects a commitment to shareholder returns amid steady expansion.

Valuation And Market Expectations

With a market cap of CHF 848.7 million and a beta of 0.76, LEM is perceived as a relatively stable industrial play. The valuation reflects expectations of mid-single-digit growth, supported by its niche positioning and exposure to structural demand drivers in energy and automotive markets.

Strategic Advantages And Outlook

LEM’s strategic strengths lie in its technical expertise, global footprint, and diversified customer base. The outlook remains positive, driven by secular tailwinds in electrification, though supply chain dynamics and regional economic shifts warrant monitoring. The company is well-positioned to capitalize on long-term trends in energy efficiency and automotive innovation.

Sources

Company filings, market data