VAT Group: Back to Basics

Founded in 1965, VAT Group initially developed within scientific vacuum applications. In the late 1980s, the company pivoted towards the semiconductor industry. This specialization helped it gradually build an oligopolistic position in critical vacuum valves. Concurrently, the group expanded its operations into flat screens, photovoltaics, and research, significantly developing across Asia before its IPO in 2016.

Today, VAT is a strategic player in the semiconductor value chain. It designs and manufactures vacuum valves and systems essential to chip deposition and etching processes, where even the slightest contamination is prohibitive. The group holds approximately a 77% market share in this key segment. Its business is structured between equipment sales, which represent the core of its revenue, and associated services. It uses a technological offering with high barriers to entry, directly exposed to the sector's investment cycles and major technological transitions (AI, advanced nodes, etc.).

Following a phase of declining sales over 2023/2025, the explosion in AI-related demand has restarted a machine that managed to preserve its margins. Geographically, the majority of sales are generated in Asia (73%), followed by the Americas (15%) and the EMEA region (12%). Regarding the business model, VAT derives 82% of its revenue from product sales, with associated services (maintenance, support) accounting for only 18%.

What growth drivers for the future?

VAT's historical strategy could once again become its primary lever. With a 77% market share in vacuum valves for semiconductors, the group is benefiting from the surge in demand. Every new production line translates into new orders for the company, which has successfully met the industry's increasing precision requirements.

However, VAT is aware that relying solely on this segment is risky in the long term. Consequently, the group is diversifying its offering and now provides advanced vacuum modules integrating its valves, as well as innovative solutions such as ALD (Atomic Layer Deposition) valves, which allow for more precise layer deposition, or pin lifters. According to management, these ancillary products should represent 20% of sales by 2029.

An end to the short-term momentum?

When a company already dominates more than 70% of its market, its growth potential appears limited. While VAT's position remains unchallenged, its valuation seems stretched: with a P/E multiple of 58.3x and the share price at an all-time high, room for error is narrow. Driven by the enthusiasm for artificial intelligence, the stock has more than doubled in eight months and is among the twenty or so European players that have managed to follow in the wake of US and Asian companies exposed to the sector.

The underlying momentum is so strong that even the publication of declining Q1 revenue a few days ago did not weigh on the stock much. The market is looking further ahead: 64% growth between 2025 and 2028 sales, with net profit projected to increase by 120% over three years. This momentum is currently sufficient to justify such a lofty valuation.