First Berlin Equity Research on 26/03/2024 initiated coverage on ParTec AG (ISIN: DE000A3E5A34/ Bloomberg: JY0 GR). Analyst Simon Scholes placed a BUY rating on the stock, with a EUR 220.00 price target.

Partec has designed, patented and brought to market a new type of supercomputer, which for a given initial financial outlay, performs calculations faster, has lower operating cost, and is more readily scalable than competing designs. Partec’s machines are based on its patented dynamic Modular System Architecture (dMSA). dMSA represents a breakthrough in supercomputing architecture. This is because it allows all the CPUs (central processing units) and GPUs (graphic processing units) within a supercomputer to communicate with each other – even those in different nodes. This is not possible with the two main competing supercomputer architectures, massively parallel processing systems and cluster supercomputers. The advantage of dMSA is that it avoids the inefficiency of static node architecture, where one of the nodes may be overloaded, while another node might still have remaining computing power. dMSA reduces the hardware resources required to perform a given computation at a given speed. It also allows processing tasks to be more readily allocated away from more energy intensive CPUs to less energy intensive GPUs, thereby lowering operating costs. Furthermore, dMSA-based computers are easier to scale in both directions than MPP systems or cluster computers. Partec is an established player in supercomputers. Together with its partners, it has delivered five modular supercomputers since 2017, all of which placed among the world’s top 40 fastest machines upon introduction, and generated own sales of ca. €174m. In November 2024 Partec plans to complete construction of JUPITER, Europe’s first exascale supercomputer (10 to the power of 18 floating point operations per second) for the Jülich Research Centre in Germany. JUPITER is expected to generate ca. €100m in revenue for Partec and be the second fastest supercomputer in the world when it begins operations. So far supercomputers have mainly been the preserve of governments and research institutes. We expect supercomputer market growth to accelerate in coming years because of increased deployment of AI machines. Using a DCF valuation model, we value Partec at €220 per share. Our recommendation is Buy.