Company description: An energy and mobility player
Schaltbau Holding supplies products and technologies primarily for rail infrastructure and rolling stock and also for the automotive and capital goods industries. All products are focused on smart protection for mobility and DC power. Schaltbau is one of the few specialists in smart DC energy concepts. The geographical split of FY20 revenues is as follows: Germany 36%, other Europe 47%, Asia 10% and the US 7%. Schaltbau Holding employs around 2,900 staff.
Activities: Expanding beyond rail in high-growth segments
Schaltbau was founded in 1929 as a producer of switches and heaters for the railway sector, and in 1956 it entered the capital goods market. In 1987, Pintsch was acquired, which focuses on rail infrastructure. Schaltbau was listed in 1992 and in 1995 it acquired Bode, a manufacturer of door systems. In 2000, the company name was changed to Schaltbau Holding and since then the company has expanded its business both organically and via several acquisitions.
In March 2021, Schaltbau provided a new segmentation (see Exhibit 1) with a split between core rail activities (68% of FY20 revenues) and components and DC applications (32%). Rail consists of infrastructure, rolling stock/bus, refurbishment and aftersales, where Schaltbau expects modest growth. Components and DC-applications is focused on battery-powered DC applications in growth areas in new energy, new industry and e-mobility, building on its experience in DC-rail components.
Exhibit 1: Schaltbau’s segment overview
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Source: Schaltbau Holding
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Schaltbau operates under four brands: Pintsch, Bode, Schaltbau GmbH and SBRS, as shown in Exhibits 2 and 3.
Exhibit 2: Revenues by brand FY20
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Exhibit 3: EBIT by brand FY20
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Source: Schaltbau Holding
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Source: Schaltbau Holding
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Exhibit 2: Revenues by brand FY20
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Source: Schaltbau Holding
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Exhibit 3: EBIT by brand FY20
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Source: Schaltbau Holding
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Pintsch (part of Rail segment)
Pintsch focuses on safety-relevant products for railway infrastructure, with customers such as Deutsche Bahn Netz, Norwegian Railways and Dutch Pro-Rail. Pintsch will benefit from the investment plans of Deutsche Bahn (DB) to expand, update and digitise its rail infrastructure (€86bn in 2020–30). Due to the higher usage of rail track, demand for systems that ensure maximum occupancy of tracks will significantly increase. Pintsch manufactures the following product range:
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Level crossings, including trackside signals and barrier drives.
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Point heating systems to keep the points’ movable components free of snow and ice.
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Lighting systems for tunnels and track fields.
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Interlocking systems for safety controlling and supervision of routes and signals.
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Axle counting systems to control the occupation status of rail sections through the detection of passing railway vehicles, thereby using wheel sensors that divide the track into sections.
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Shunting technology for fully automated formation of trains in shunting yards, plants and ports.
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Digitisation and diagnostics via the system Diagon, which collects infrastructure data (eg for predictive maintenance). Diagon is compatible with Deutsche Bahn’s system Diana.
Exhibit 4: Examples of Pintsch’s product range
Level crossings |
Point heating systems |
Interlocking systems |
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Source: Schaltbau Holding
The rail infrastructure market is very fragmented and global market shares are small. Pintsch is a strong player in Germany in its chosen segments. Within level crossings, there is one other large player: Scheidt & Bachmann (not listed). Competitors in the different segments are Siemens, Bombardier, Frauscher (wheel sensors and axle counters) and Voestalpine.
Bode (part of Rail segment)
Bode is a supplier of door and access systems for trains, buses, commercial and electric vehicles. We estimate that rail represents 85% of Bode’s revenues, while automotive contributes the other 15%. The latter was hit much harder by the COVID-19 pandemic, affecting the division of activities in favour of rail. Customers in rail include Stadler, Hitachi, Siemens, Alstom/Bombardier, CRRC and CAF; and customers in automotive include Daimler, Iveco and MAN. Bode works with long-term framework contracts based on the customer’s platform strategy whereby suppliers have to comply with the set standards, which includes product testing. Bode’s orderbook is therefore relatively long.
Exhibit 5: Bode product range
Entrance systems for metro trains |
Entrance systems autonomous vehicles |
Outward swinging doors for buses |
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Source: Schaltbau Holding
Bode is developing from traditional door systems towards smart systems that will enable digital features, such as access control, ticketing and monitoring. Bode collaborates with automotive supplier Brose to develop smart door systems for people movers (autonomous e-shuttle buses for up to 15 passengers). Another new type of vehicle is the courier, express and parcel (CEP) vehicle for last mile delivery. According to McKinsey & Company, the last-mile delivery cost per parcel with an automated delivery vehicle is 40% lower when compared to delivery with a traditional vehicle.
According to Schaltbau, the global market for door systems to rolling stock was valued at around €800m in 2018, with its market share at 18–20% globally and 30–35% in Europe. Bode considers itself the number one player in Europe, although the other major player in the segment, Knorr-Bremse, claims the same. Other players are Chinese Kangni, Japanese Nabtesco and US Wabtec.
Schaltbau GmbH (part of Components segment)
Schaltbau GmbH develops and manufactures electromechanical components and customised solutions for railway and industry segments. Its products are contactors, connectors, snap-action switches and driver’s desk equipment (see Exhibit 6 and explanatory text underneath). Customers are rail OEMs Alstom/Bombardier, CRRC, Siemens and Stadler. Its order book is relatively short as revenues are product driven, with the company supplying a range of over 1,000 products.
Exhibit 6: Schaltbau GmbH product range
Contactors |
Connectors |
Snap-action switches |
Driver’s desk equipment |
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Source: Schaltbau Holding
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Contactors are electrical devices for switching a large amount of electrical power through its contacts (switching an electrical circuit on and off). Contactors safely extinguish electric arcs within milliseconds. Schaltbau contactors are equally suitable for alternating current (AC) and DC networks and can cope with widely varying supply voltages.
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Connectors are used for reliable transmission of energy and signals. Schaltbau’s connectors have high material and temperature resistance as well as resistance to shock and vibration. They have to be durable enough to withstand years of continuous operation, under harsh environmental conditions.
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Snap-action switches are switches that provide double safety: a switch with double-break contacts and positive opening operation, which guarantees that the contacts will open, even when they have become welded together or the spring of the snap mechanism has broken.
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Driver’s desk equipment: Schaltbau delivers complete driver’s desk, modular and configurable master controllers, toggle switches and interactive screens and consoles. The portable driver console can be connected via plug and play and is immediately ready for use.
Schaltbau GmbH’s original focus was on the railway market, which is rather mature and more predictable in developed countries. We estimate that the rail market represents c 80% of divisional revenues and that relatively high top-line growth should come from the new areas such as new DC energy applications, new mobility and automation solutions (ie material handling). Schaltbau is constructing the NExt factory with a locally CO2-free energy concept. This should facilitate the anticipated growth in new segments as of autumn 2022.
Exhibit 7: Schaltbau GmbH applications
Railway |
Industry |
New energy |
New mobility |
Light rail |
Machinery and plant engineering |
Stationary battery energy storage |
e-buses |
Multiple-unit trains |
Tunnel and mining |
Wind turbines and PV systems |
e-trucks |
Suburban trains |
Medical technology |
Tracking systems for wind turbines and PV systems |
e-cars |
Underground trains |
Battery test stands |
Fuel cells |
Battery charging stations |
High speed trains |
Building control |
Battery charging stations |
Battery test stands |
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Test systems |
Energy conversion |
e-fork lift trucks |
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DC power network |
Battery second life |
AGV |
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e-boats |
Source: Schaltbau Holding, Edison Investment Research
The markets in which Schaltbau GmbH is active are very fragmented thus global market shares per participant are small. Competitors are large multinationals such as ABB, Siemens, Schneider Electric, Sensata Technologies, TE Connectivity, TT Electronics and Wabtec. When looking at the DC segment, Schaltbau GmbH is one of the larger players globally with an estimated share of 20%.
SBRS (partly Rail segment and partly Components)
SBRS has two main activities: 1) the partial or complete modernisation and refurbishment of rolling stock, including service, and 2) high-performance fast charging solutions for electric cars, buses and commercial vehicles (see Exhibit 8 and explanatory text underneath). Rail operators are the customers for refurbishments and bus service operators are the customers for the charging solutions.
Exhibit 8: SBRS product range
Fast charging solutions |
Refurbishment of rolling stock |
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Source: Schaltbau Holding
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Fast charging solutions (around two thirds of SBRS’s revenues): SBRS develops charging infrastructure systems for electric vehicles, including fast charging, depot charging and DC charging. SBRS’s modular BalanceStar charging stations provide recharging cycles of only 5-10 minutes. If available, power for charging can be drawn from existing DC systems, such as the overhead transmission wire or switchgear from the substation.
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Refurbishment of rolling stock (around one third of SBRS’s revenues): after refurbishment, trains have a new and modern appearance and will fulfil the latest technical standards. SBRS’s product offering includes door systems, air conditioning, driver’s cabs, control systems and components. SBRS has developed the ‘I-Door-Scape’ interior door system for rolling stock (see Exhibit 8). SBRS has access to the complete product portfolio of the Schaltbau Group.
SBRS is a relatively small activity of Schaltbau Holding and is active in relatively small market segments. A competitor in refurbishments is Wabtec, competitors in fast bus charging are ABB and Heliox and competitors in passenger car fast charging are Alfen, Siemens and FastNed.
Schaltbau Holding’s strategy is based on the following four pillars:
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Focusing on performance over pure revenue growth. Management is steering on EBIT margins, return on capital employed (ROCE) and cash generation. Margin improvement will be mainly driven by 1) better margins in the rail segment via higher efficiency, cutting costs and reducing complexity, and 2) strong growth at higher-margin Schaltbau GmbH.
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Profitable growth in its core rail infrastructure and rolling stock/bus activities by benefiting from the modernisation and digitisation trend within the sector.
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Increasing the proportion of aftersales, service and rail modernisations. These higher margin activities account for 12% of revenues and management aims at 20% by 2026.
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Leveraging its DC technology by benefiting from the increasing use of this technology beyond rail in relatively new attractive markets such as new energy, new industry and new mobility.
The Rail division represented 68% of FY20 revenues and management expects that to decline to 60% by 2026. Looking at revenue guidance for 2026, this implies a CAGR of 4.7–5.8% (see Exhibit 9). Growth in the Components division is expected at 11–12% pa, growing to 40% of revenues in 2026, up from 32%. Growth is driven by new energy, new industry and new mobility.
Exhibit 9: Revenue ambitions for 2026e per market segment
Business segment |
Brands active in respective market segments |
Revenue 2020 % of total |
Revenue 2020 (€m) |
Revenue 2026e % of total |
Revenue 2026e of €750m |
Revenue 2026e of €800m |
CAGR at revenue of €750m |
CAGR at revenue of €800m |
Rail |
Pintsch, Bode, SBRS |
68% |
342 |
60% |
450 |
480 |
4.7% |
5.8% |
Components |
Schaltbau GmbH, SBRS |
32% |
161 |
40% |
300 |
320 |
11.0% |
12.2% |
Total |
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100% |
502 |
100% |
750 |
800 |
6.9% |
8.1% |
Source: Schaltbau Holding, Edison Investment Research
The strategic direction for the four brands is summarised below:
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Pintsch: reduce manufacturing costs, optimise processes, move to more digital products and grasp a large chunk of the investments by Deutsche Bahn.
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Bode: further efficiency measures, simplifying processes, more concentration of production and assembly and closer cooperation with subsidiaries.
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Schaltbau: leverage expertise in safe DC switching, change to more modular design, enhance process efficiency in the supply chain and expand position in new markets. The focus is on building the NExT Factory in 2021–22e for more flexibility and test laboratories for automotive.
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SBRS: expand in project business and international markets such as Italy, the UK and the US.
Convertible bond to finance new factory
In March 2021, Schaltbau Holding announced the issue of a mandatory convertible bond of €60m. According to IFRS, this mandatory convertible bond with a fixed conversion rate has to be treated as equity. The net proceeds of €57.4m will be split in three parts: financing the NExt factory (50–60% of net proceeds), reducing net debt and creating more financial flexibility (25–30%) and financing potential add-on acquisitions (15–20%).
For this mandatory convertible bond with shareholder subscription rights, the company has a pre-placement agreement with investors for 100% of the bond’s volume. Shareholders that are supporting this issue are AiC Group, Teslin Capital Management, Active Ownership Gruppe and Axxion which represent an estimated 46% of the outstanding share capital of the company.
The issuance of the bond is scheduled on or around 23 April 2021, with the subscription period running to 16 April. The bond carries a nominal rate of 0.5% and the fixed conversion price is €29 per share, the convertible thus being in the money based on the company’s current share price. The bond will mature on 30 September 2022 and the mandatory conversion will increase the number of shares outstanding by 2.1m to 10.9m (+23%).
Schaltbau Holding’s ambition for 2026 is for revenues of €750–800m (CAGR of 7–8%) and a high single-digit EBIT margin. As such, Schaltbau aims to perform better than its chosen peer group of rail infrastructure and rolling stock peers, such as Alstom, Stadler, Knorr-Bremse, Vossloh and Wabtec, which on average generate 6–8% EBIT margins. All four brands should meet this target.
Exhibit 10: Schaltbau financial ambitions for 2026
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Source: Schaltbau Holding
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