Back to Portfolio
ACLN

Accelleron Industries AG

CHF 74.75 CHF 7.4B market cap February 21, 2026
Accelleron Industries AG ACLN BUFFETT / MUNGER / KLARMAN SUMMARY
1 SNAPSHOT
PriceCHF 74.75
Market CapCHF 7.4B
EVCHF 7.6B
Net DebtUSD 206M (~CHF 185M)
Shares98.8M
2 BUSINESS

Accelleron is the world's #1 manufacturer and servicer of large turbochargers for marine engines, power generation, and rail. Spun off from ABB in October 2022 after 100+ years as ABB Turbocharging. Operates a razor-and-blade model where 75% of revenue comes from recurring aftermarket services on an installed base of 180,000+ turbochargers, serviced through 100+ service centers globally. Adds ~10,000 units to the installed base annually. Two segments: Medium & Low Speed (76% of revenue, marine-focused) and High Speed (24%, power generation).

Revenue: USD 1,023M Organic Growth: 7.3%
3 MOAT WIDE

Four reinforcing moat elements: (1) Installed base lock-in -- 180,000+ turbochargers requiring mandatory maintenance every 5,000-7,000 operating hours, creating 25+ year service contracts per unit; (2) Service network scale -- 100+ service centers globally, 15+ years to replicate; (3) Switching costs -- engine-specific designs, safety certifications, marine classification approvals; (4) 100+ years of accumulated engineering know-how and IP from ABB heritage. 40-50% global market share stable for decades. Gross margins of 46% and EBITA margins of 25.6% reflect pricing power in a non-negotiable service.

4 MANAGEMENT
CEO: Daniel Bischofberger (since Mar 2022)

Progressive dividend policy: CHF 0.73 (2022) -> CHF 0.85 (2023) -> CHF 1.25 (2024), representing 71% growth in 2 years. Bolt-on M&A ($56M in 2024 for OMC2 and True North Marine). Net leverage reduced from 1.0x to 0.7x EBITDA despite M&A. CEO compensation CHF 1.87M (25% long-term incentive). CEO holds 12,243 shares. Previously Division President at Sulzer (Rotating Equipment Services, 6 years) and 14+ years at ABB. Reasonable alignment.

5 ECONOMICS
25.6% (op EBITA) Op Margin
~28% ROIC
USD 178M FCF
0.7x Debt/EBITDA
6 VALUATION
FCF/ShareCHF 1.77
FCF Yield2.4%
DCF RangeCHF 41 - 58

Conservative: FCF CHF 175M growing 10% for 5 years, 6% for years 6-10, 2.5% terminal, 9% discount = CHF 41. Optimistic: 14% growth 5yr, 8% next 5yr, 3% terminal, 8.5% discount = CHF 58. Private market value at 18x EBITDA = CHF 50. Owner earnings at 15x = CHF 27. All methods show significant overvaluation at CHF 74.75.

7 MUNGER INVERSION -28.8%
Kill Event Severity P() E[Loss]
P/E compression from 42x to 25x (re-rating) -40% 35% -14.0%
US tariff escalation above 39% on Swiss goods -20% 25% -5.0%
Shipping industry cyclical downturn -25% 20% -5.0%
Chinese competitor gains meaningful marine turbocharger share -30% 10% -3.0%
Energy transition reduces turbocharger demand faster than expected -35% 5% -1.75%

Tail Risk: The non-additive tail scenario combines a global shipping recession with aggressive Chinese competitors offering turbocharger servicing at 40% lower cost, while US tariffs expand to 50%+ and the energy transition suddenly accelerates due to breakthrough battery technology for large vessels. This would compress margins to 15%, halve the P/E, and destroy 70%+ of market cap. Probability: <3%.

8 KLARMAN LENS
Downside Case

In the bear case, the stock re-rates from 42x to 20-25x as growth decelerates to 5-7% organic and tariffs permanently compress margins by 200bp. Revenue growth slows as the new-build shipping cycle peaks and energy transition begins to erode the long-tail installed base growth. Fair value in this scenario is CHF 35-45. The current price embeds a decade of near-perfect execution.

Why Market Wrong

The market may be right to pay a premium for this quality, but the magnitude is extreme. Industrial businesses, even exceptional ones, typically trade at 20-30x earnings, not 42x. The market is extrapolating the 426% post-spin-off re-rating as if it's sustainable growth rather than a one-time value recognition event. The quality is undeniable; the price is not.

Why Market Right

The bulls argue this is a "quality compounder" that deserves a premium multiple because of: (1) 75% recurring revenue with 99% FCF conversion; (2) widening moat from dual-fuel retrofits; (3) optionality in data center emergency power (2,600 units delivered in 2024); (4) margin expansion potential to 27-28%; (5) M&A runway in fragmented aftermarket. If growth sustains at 12-15% and margins expand, 35-40x forward earnings may not be unreasonable.

Catalysts

(1) FY2025 results showing organic growth maintained at 10%+ despite tariffs; (2) 2026 margin recovery to 26%+ as tariff mitigation takes effect; (3) Data center / emergency power becoming a recognized third pillar; (4) Dividend increase to CHF 1.70+ signaling management confidence; (5) A significant correction in Swiss equities providing a broad-based entry.

9 VERDICT WAIT
A T2 Resilient
Strong BuyCHF 35
BuyCHF 40
SellCHF 75

Accelleron is one of the finest industrial businesses globally -- a wide-moat, high-return compounder with 75% recurring service revenue, 99% FCF conversion, and a 180,000-unit installed base that compounds for decades. The razor-and-blade model with mandatory 5,000-7,000 hour maintenance cycles is as close to "annuity-like" as industrial revenues get. However, at CHF 74.75 (42x trailing P/E, 23x book), the stock is trading 36-56% above estimated intrinsic value of CHF 48-55. The original Klarman-style opportunity (ABB spin-off forced selling in Oct 2022 at CHF 14) has been fully realized. Patient investors should add to the watchlist and wait for a broad correction, tariff escalation, or shipping downturn to create an entry below CHF 40. At that price, this is a 4-5% portfolio position. At CHF 74.75, it is a pass.

🧠 ULTRATHINK Deep Philosophical Analysis

Accelleron Industries AG -- Ultrathink

A Buffett/Munger/Klarman Meditation on the World's Best Turbocharger Business

The Core Question: What Makes This Business Special?

There is a thought experiment I return to whenever I encounter a business with seemingly extraordinary economics. I ask: if I could wave a magic wand and give a brilliant entrepreneur ten billion dollars, the best engineering team money could buy, and unlimited patience -- could they replicate this business from scratch?

With Accelleron, the answer is an unequivocal no. And that single word tells you almost everything you need to know about the quality of this franchise.

Consider what a competitor would need to build. Not just a factory to manufacture turbochargers -- that is the easy part. They would need one hundred service centers positioned in ports around the world, staffed with engineers who understand thousands of turbocharger variants across decades of product generations. They would need the trust of ship operators who bet their vessels -- worth tens to hundreds of millions of dollars -- on the reliability of critical rotating equipment that operates in some of the harshest environments on Earth. Salt air. Engine vibration. Extreme temperatures. A turbocharger failure at sea can ground a vessel for weeks, costing one hundred thousand dollars per day or more in lost revenue and emergency repairs.

No rational ship operator takes that risk with an unproven supplier. This is not a consumer product where you can win market share through clever marketing. This is an engineering trust relationship built over one hundred years, turbocharger by turbocharger, service call by service call. The Arvy Research note puts it simply: "Entering the business takes fifteen years to build a profitable installed base." Fifteen years is an eternity in business. Most venture-backed companies don't survive five.

And here is what makes it beautiful from an investor's perspective: every turbocharger Accelleron installs today generates mandatory service revenue for the next twenty-five years. The installed base is not just a competitive advantage -- it is a compounding annuity. Today there are one hundred and eighty thousand units. Every year, ten thousand more are added. The base grows, the service revenue grows, and the moat widens with each passing year. It is a business that gets stronger with time, not weaker.

Charlie Munger would call this a "lollapalooza" of competitive advantages -- switching costs, network effects, economies of scale, regulatory barriers, and accumulated know-how all reinforcing each other simultaneously.

Moat Meditation: The Fifteen-Year Moat

When I assess moat durability, I try to identify the forces that could erode it and honestly evaluate their probability and timeline.

The most commonly cited threat is decarbonization. If ships go electric, turbochargers become paperweights. But this misunderstands the physics of maritime shipping. A container ship crossing the Pacific carries the equivalent of four million kilowatt-hours of energy in its fuel tanks. To replace that with batteries, you would need roughly forty thousand Tesla Megapacks -- weighing more than the cargo itself. Battery-electric propulsion for large ocean-going vessels is not a near-term technology. It is not even a medium-term technology. The laws of physics, specifically the energy density gap between chemical fuels and batteries, are not a software problem that can be disrupted by a startup.

The more plausible path -- and this is actually positive for Accelleron -- is the transition to alternative fuels like methanol, ammonia, and LNG. Every one of these fuels still uses an internal combustion engine. Every one of those engines still needs turbochargers. In fact, dual-fuel engines are more complex than traditional engines, which means the turbocharger technology and service requirements actually increase. In 2024, nearly half of all new tonnage ordered was alternative-fuel capable. This is not a threat to Accelleron. It is a demand driver.

The second threat is Chinese competition. China has demonstrated the ability to replicate manufacturing capabilities in virtually every industry it targets. But the turbocharger aftermarket business is fundamentally different from, say, solar panel manufacturing. You cannot build a global service network through state subsidy. Ship operators sailing between Rotterdam, Singapore, Houston, and Shanghai need service in all four ports. Building that network requires decades of presence, local relationships, and proven reliability. A Chinese manufacturer could potentially compete on new-build units (and to some extent already does at the lower end), but the high-margin aftermarket service -- which is seventy-five percent of Accelleron's revenue -- is nearly impregnable.

I give this moat a durability estimate of fifteen-plus years with high confidence. It may be twenty-plus years. The installed base lock-in is that powerful.

The Owner's Mindset: Would Buffett Hold This for Twenty Years?

Buffett's ideal business is one he can buy and forget about. "Our favorite holding period is forever." Would Accelleron qualify?

The business itself, absolutely. Seventy-five percent recurring revenue. Near-perfect free cash flow conversion. Low capital requirements. A growing installed base. Pricing power in a non-discretionary service. This is the kind of business Buffett describes as a "castle with a moat" -- the castle (the installed base) keeps getting bigger, and the moat (the service network and switching costs) keeps getting wider.

But Buffett would never buy this stock at today's price. At forty-two times trailing earnings, you are paying for perfection and then some. Buffett's cardinal rule is to buy excellent businesses at fair prices, not excellent businesses at any price. The distinction matters enormously for long-term returns.

Consider: if Accelleron grows earnings at twelve percent annually for the next decade (optimistic but plausible given H1 2025 momentum) and the P/E compresses from forty-two to twenty-five (a reasonable mature-compounder multiple), the stock would be worth approximately CHF ninety in 2036. That is a twenty percent total return over a decade -- or roughly two percent annualized. You could earn more in a Swiss government bond with zero risk.

The math of valuation is unforgiving. When you overpay for quality, the quality works in your favor, but the overpayment works against you. The net result is mediocre returns at best.

Risk Inversion: What Could Destroy This Business?

Inverting, as Munger instructs, I ask: what would have to be true for Accelleron to lose half its value permanently?

Scenario One: A technological discontinuity in marine propulsion that eliminates internal combustion engines within fifteen years. I assign this less than five percent probability. The physics of energy density make this implausible for large vessels.

Scenario Two: A Chinese national champion, backed by state subsidy and a protected domestic market, builds a global service network that undercuts Accelleron on price by forty percent while matching quality. This is the most realistic threat, but it would take fifteen-plus years to execute and would require Chinese manufacturers to first establish reliability credentials in a market where failure is measured in millions of dollars of downtime. Ten percent probability over ten years.

Scenario Three: Accelleron's management makes a catastrophic acquisition -- paying three billion dollars for a business outside their core competence, leveraging the balance sheet, and destroying returns on capital. This is the Munger incentive risk: if management is incentivized on revenue growth and EPS, the temptation to make transformational acquisitions exists. However, the current track record of small bolt-on M&A (fifty-six million in 2024) and disciplined capital allocation is reassuring. Five percent probability.

None of these scenarios reaches the threshold of probable permanent impairment. The business is genuinely resilient.

Valuation Philosophy: The Buffett Paradox

This is where Accelleron presents the classic Buffett Paradox: a wonderful business at a terrible price.

My conservative DCF yields CHF forty-one per share. My optimistic DCF yields CHF fifty-eight. The private market value based on comparable transactions is approximately CHF fifty. The stock trades at CHF seventy-four point seventy-five.

Seth Klarman would say: "The single greatest edge an investor can have is a long time horizon." But even with an infinite time horizon, overpaying still reduces returns. If you buy at CHF seventy-five and the intrinsic value is CHF fifty, you have a negative margin of safety. You are starting in a hole. Compounding from a hole is still compounding, but your starting point matters enormously.

The opportunity that existed in October 2022 -- when ABB shareholders were dumping their spin-off shares at CHF fourteen to eighteen, five to six times owner earnings -- was a generational bargain. That was Accelleron trading at a deep value price for a wide-moat compounder. At CHF fourteen, you had a four hundred percent margin of safety. Today, at CHF seventy-five, you have a negative forty percent margin of safety. Same business. Completely different investment.

The Patient Investor's Path

The discipline required here is the hardest discipline in investing: the discipline to admire from afar. To say, "This is a wonderful business, and I will not buy it."

I have seen this pattern many times. An investor discovers a high-quality business, falls in love with the economics, and convinces themselves that any price is justified because the business is so good. This is what Munger calls "liking tendency" -- you like the business so much that you pay too much for it. The antidote is simple math.

Here is what I would do:

First, add Accelleron to the permanent watchlist. This business deserves monitoring in perpetuity. It is the kind of franchise where, when the opportunity comes, you want to be ready to act immediately and with conviction.

Second, define the entry price. Accumulate below CHF forty. Strong Buy below CHF thirty-five. At these prices, you would be paying twenty to twenty-two times earnings for a wide-moat business growing at seven to twelve percent organically -- a genuinely attractive proposition with a meaningful margin of safety.

Third, identify the scenarios that could create such an opportunity. A global shipping recession. A broad European equity sell-off. Tariff escalation that temporarily crushes margins. A misunderstood acquisition that spooks the market. These events would not impair the long-term value of the business, but they would create the kind of temporary price dislocation that rewards patient capital.

The greatest risk for the patient investor is not missing out. It is buying something wonderful at a terrible price and spending a decade earning two percent annually while convincing yourself it was a great investment because the business is so good.

Accelleron is an A-quality business. Grade A, no asterisk. It is one of the finest industrial franchises I have encountered. But investing is not a beauty contest for businesses. It is a transaction between price and value. And today, the price is winning.

Wait for the pitch.

Executive Summary

Accelleron is the world's dominant manufacturer and servicer of large turbochargers for marine engines, power generation, and rail -- a business with a razor-and-blade model where 75% of revenue comes from recurring aftermarket services. Spun off from ABB in October 2022, the company holds approximately 40-50% global market share with an installed base of 180,000+ turbochargers serviced through 100+ service centers worldwide. The business generates exceptional returns (ROE 51%, ROIC 28%, EBITA margin 25.6%) and converts nearly 100% of net income to free cash flow.

Investment Thesis in 3 Sentences: Accelleron is a hidden gem -- a wide-moat, high-return industrial compounder disguised as a boring turbocharger business. The 75% recurring service revenue with 5,000-7,000 operating-hour mandatory maintenance cycles creates visibility and resilience unmatched in industrial manufacturing. However, at 42x trailing P/E and CHF 74.75, the market has already discovered this quality, pricing in near-perfection with no margin of safety.

Verdict: WAIT -- Exceptional business at a premium price. Accumulate below CHF 50, Strong Buy below CHF 38.

Phase 0: Opportunity Identification (Klarman)

Why Does This Opportunity Exist?

It doesn't -- at least not today. Accelleron traded at CHF 14.20 at its all-time low in October 2022, just days after the ABB spin-off. That was the Klarman moment: forced selling from ABB shareholders who didn't want a turbocharger company, combined with spin-off complexity and zero analyst coverage. The stock has since appreciated 426% in 3.3 years.

The original opportunity was textbook:

  • Forced selling: ABB shareholders received Accelleron shares and many sold immediately (wrong market cap, wrong index, wrong mandate)
  • Complexity/stigma: Turbochargers seen as fossil fuel-adjacent, ESG-unfriendly (ABB itself cited sustainability misalignment as reason for spin-off)
  • Institutional constraints: Too small at CHF 1.7B market cap for many funds; no analyst coverage initially
  • Neglect: Boring industrial niche, no consumer brand recognition

Today at CHF 7.4B and 42x P/E, the stock is fully discovered. There is no clear mispricing reason. The current price reflects strong execution and market recognition of the business quality.

Phase 1: Risk Analysis (Inversion Thinking)

1. Decarbonization / Energy Transition Risk

The existential question: If shipping decarbonizes, do turbochargers become obsolete?

Assessment: LOW-to-MODERATE risk over 15+ years, potentially POSITIVE near-term.

  • Turbochargers are fuel-agnostic. Accelleron's next-generation products handle methanol, ammonia, methane, and hydrogen. In 2024, nearly half of all new tonnage ordered was alternative-fuel capable -- all requiring turbochargers.
  • The shipping fleet replacement cycle takes 25+ years. The existing 180,000 turbocharger installed base will need servicing regardless of new-build fuel type.
  • Full battery-electric propulsion for large vessels (the only scenario that eliminates turbochargers) remains physically impractical for trans-oceanic shipping. Energy density of batteries vs. fuel is off by orders of magnitude.
  • Intermediate fuels (LNG, methanol, ammonia) all use internal combustion engines requiring turbochargers.

Risk quantification: P(turbochargers obsolete in 15 years) < 5%. P(demand erosion >20%) = 10-15%.

2. Concentration / Customer Risk

  • 50% of business tied to marine applications
  • No single customer concentration disclosed, but large shipping companies (Maersk, MSC, CMA CGM) are likely significant
  • Dual-fuel retrofit demand is actually increasing customer engagement

Risk quantification: Moderate. Marine is cyclical but the service component (75% of revenue) provides substantial counter-cyclical resilience.

3. Competitive Dynamics

Competitors: MAN Energy Solutions (Volkswagen subsidiary), Mitsubishi Heavy Industries, Napier (Wabtec), IHI Corporation.

  • Market has been stable for decades with Accelleron as clear #1
  • 15-year barrier to entry for building a profitable installed base
  • Competitors would need to replicate 100+ global service centers and 100+ years of engineering know-how
  • No credible new entrant threat identified

Risk quantification: LOW. Oligopoly structure is deeply entrenched.

4. Valuation Risk (PRIMARY RISK)

At 42x trailing P/E, 23x book value, and 7.6x EV/Sales:

  • Any earnings miss or growth deceleration will be punished severely
  • A re-rating from 42x P/E to 25x P/E (still premium) implies -40% downside
  • The stock has appreciated 426% in 3.3 years -- mean reversion risk is real

Risk quantification: HIGH. This is the primary risk for new investors.

5. US Tariff Risk (NEW - 2025)

  • 39% US tariff on Swiss goods effective August 2025
  • Management lowered 2025 EBITA margin guidance by 100bp to 24-25%
  • Plans to mitigate through pricing and value chain reconfiguration by 2026
  • US is estimated at ~15-20% of revenue

Risk quantification: MODERATE near-term, likely manageable over 12-18 months.

6. Leverage Risk

  • D/E ratio of 137% (net leverage 0.7x EBITDA)
  • CHF 250M outstanding credit facility + CHF 180M bond (1.375% coupon)
  • The high ROE (51%) is partly leverage-amplified
  • Without leverage, ROE would be approximately 25-30% -- still excellent

Risk quantification: LOW. Leverage is modest relative to cash flow generation. Debt/EBITDA < 1x.

Inversion Section

How could this investment lose 50%+ permanently?

  1. Shipping industry undergoes rapid electrification, eliminating turbocharger demand (< 5% probability in 15 years)
  2. A catastrophic product defect causes fleet-wide reliability issues, destroying the service trust relationship (< 2% probability)
  3. Chinese competitors successfully replicate the service network at half the cost (< 10% probability in 10 years)

What would make me sell immediately (non-price triggers)?

  • Service revenue declining below 65% of total (from 75%)
  • Market share loss below 35% (from ~40-50%)
  • Net leverage exceeding 2.5x EBITDA
  • Dividend cut

3-Sentence Bear Case: Accelleron trades at 42x earnings for a business growing 7% organically -- a pricing multiple that demands perfection. The energy transition will eventually reduce demand for large combustion engines in shipping and power generation, and the installed base will peak and then shrink over a 20-30 year horizon. The ABB spin-off was a clever move to jettison a fossil fuel asset at peak multiples before the market realizes the terminal value problem.

Phase 2: Financial Analysis

Income Statement Summary (USD millions)

Year Revenue Gross Margin Op EBITA Margin Net Margin EPS (USD)
2024 1,023 46.1% 25.6% 17.5% 1.81
2023 915 42.2% 24.4% 12.0% 1.08
2022 781 45.2% 24.6% 16.6% 1.31
2021 756 45.0% 24.6% 20.2% 1.54

Key observations:

  • Revenue CAGR (2021-2024): 10.6%
  • Organic growth 2024: 7.3% (total 11.8% including acquisitions)
  • EBITA margins remarkably stable at 24-26% -- hallmark of pricing power
  • 2023 net income depressed by USD 82M one-time standalone setup costs (ABB separation)
  • 2024 net income bounce-back (+63%) reflects normalization, not a step-change

Balance Sheet Summary (USD millions)

Year Assets Equity Net Debt D/E Net Leverage
2024 1,234 349 206 137% 0.7x
2023 1,100 300 244 140% 1.0x
2022 950 300 133 107% 0.6x

Key observations:

  • Thin equity base (book value CHF 3.54/share) -- a function of the spin-off structure
  • Goodwill ~USD 280M from acquisitions (OMC2, True North Marine, OMT)
  • Net leverage declining from 1.0x to 0.7x despite M&A activity
  • CHF 180M bond at 1.375% = excellent financing locked in

Cash Flow Summary (USD millions)

Year Operating CF CapEx FCF FCF Conversion Dividends
2024 216 39 178 99.1% 84
2023 145 36 109 99.2% 72
2022 133 34 99 76.5% 72

Key observations:

  • Near-perfect FCF conversion (99%) -- minimal working capital absorption
  • Low capital intensity (CapEx ~3.8% of revenue) -- service businesses don't need factories
  • FCF growing at 34% CAGR (2022-2024)
  • Dividend payout ratio ~47% of FCF -- sustainable with room for growth

H1 2025 Update (Most Recent)

Metric H1 2025 H1 2024 Change
Revenue $608M $505M +20.3%
Op EBITA $155M $128M +20.8%
EBITA Margin 25.5% 25.4% +10bp
Net Income $115M $89M +29.5%
FCF $81M $30M +164%

2025 full-year guidance (raised): 16-19% constant-currency revenue growth, 24-25% EBITA margin (lowered 100bp due to 39% US tariff).

Return Metrics

Metric 2024 2023 2022
ROE 51.4% 35.4% 42.9%
ROIC (est.) 28% 22% 25%
ROE (5yr avg) ~44% -- --

DuPont Decomposition (2024):

  • Net Margin: 17.5%
  • Asset Turnover: 0.83x
  • Equity Multiplier: 3.54x
  • ROE = 17.5% x 0.83 x 3.54 = 51.4%

The equity multiplier of 3.54x (reflecting the thin equity base from spin-off) amplifies an already-excellent operating business. Without leverage, on total assets, ROA = 14.5% -- still highly attractive.

Valuation

Current multiples:

  • P/E (trailing): 42x
  • P/E (forward 2025E): 36x
  • P/B: 23x
  • EV/EBITDA: 27x
  • EV/Sales: 7.6x
  • FCF Yield: 2.4%

Owner Earnings Calculation:

Owner Earnings = Net Income + D&A - Maintenance CapEx
= $179M + $36M - $20M (est. maintenance, ~50% of total capex)
= $195M USD
= ~CHF 175M

Per share: CHF 175M / 98.8M shares = CHF 1.77/share

Conservative Value (10x): CHF 17.70
Fair Value (15x): CHF 26.55
Premium Value (20x): CHF 35.40

At CHF 74.75, the market is pricing this at 42x owner earnings -- a premium justified only by exceptional growth and quality, but not by traditional value metrics.

Graham Number:

Graham Number = sqrt(22.5 x EPS x BVPS)
= sqrt(22.5 x 1.62 x 3.54)   [EPS in CHF ~1.62, BVPS ~CHF 3.54]
= sqrt(129.1)
= CHF 11.36

Current price is 6.6x the Graham Number. This is emphatically not a Graham-style bargain.

DCF Valuation (Conservative):

Assumptions:
- FCF Year 1: CHF 175M (USD 195M converted)
- Growth Years 1-5: 10% (organic + bolt-on M&A)
- Growth Years 6-10: 6%
- Terminal Growth: 2.5%
- Discount Rate: 9% (reflecting Swiss quality premium)

Year 1-5 FCF: 193, 212, 233, 256, 282
Year 6-10 FCF: 299, 317, 336, 356, 377
Terminal Value: 377 x 1.025 / (0.09 - 0.025) = 5,948

PV of FCF: 1,544
PV of Terminal: 2,738
Enterprise Value: 4,282
Less Net Debt: -206
Equity Value: 4,076M
Per Share: CHF 41.26

Fair Value (DCF): ~CHF 41

DCF Optimistic (higher growth):

Growth Years 1-5: 14% (management guidance level)
Growth Years 6-10: 8%
Terminal Growth: 3%
Discount Rate: 8.5%

Per Share: ~CHF 58

Private Market Value: Comparable transactions in high-quality industrial aftermarket businesses trade at 15-20x EBITDA.

  • At 18x EBITDA: $274M x 18 = $4.9B = ~CHF 50/share
  • At 22x EBITDA: $274M x 22 = $6.0B = ~CHF 61/share

Margin of Safety Calculation

Valuation Method Value/Share (CHF) Current Price Margin of Safety
Graham Number 11.36 74.75 -558% (overvalued)
Owner Earnings (15x) 26.55 74.75 -182% (overvalued)
DCF (Conservative) 41.26 74.75 -81% (overvalued)
DCF (Optimistic) 58.00 74.75 -29% (overvalued)
Private Market (18x EBITDA) 50.00 74.75 -50% (overvalued)

Weighted Intrinsic Value Estimate: CHF 48-55 per share

At CHF 74.75, there is NO margin of safety. The stock trades 36-56% above estimated intrinsic value on conservative-to-moderate assumptions.

Phase 3: Moat Analysis

Moat Rating: WIDE -- Durable 15+ Years

Moat Source 1: Installed Base + Razor-and-Blade Model (PRIMARY)

  • 180,000+ turbochargers in the global installed base
  • 75% of revenue from recurring aftermarket services
  • Maintenance required every 5,000-7,000 operating hours (non-optional -- skipping maintenance risks catastrophic engine failure)
  • Service contracts last 25+ years per turbocharger
  • Approximately 10,000 new turbochargers added to the installed base annually
  • Revenue visibility from existing base extends decades into the future

This is a textbook razor-and-blade model. The initial turbocharger sale is the razor (lower margin), and the decades of mandatory maintenance are the blades (higher margin, recurring). The installed base compounds -- every new unit sold today generates service revenue for the next 25+ years.

Moat Source 2: Service Network Scale (100+ centers globally)

  • No competitor has a service network even close to Accelleron's 100+ centers
  • Ship operators need service wherever their vessels dock -- a global network is essential
  • Building a comparable network would take 15+ years and hundreds of millions in investment
  • The network creates a self-reinforcing loop: more service centers -> more convenient for operators -> more market share -> more justification for more centers

Moat Source 3: Switching Costs

  • Turbocharger specifications are engine-specific. Switching to a competitor's turbocharger often requires engine modifications.
  • Operators' engineering teams are trained on Accelleron products and diagnostics software.
  • Safety certification and marine classification society approvals create regulatory switching costs.
  • A turbocharger failure at sea can cost $100K+ per day in downtime -- the risk of switching to an unproven alternative is unacceptable.

Moat Source 4: 100+ Years of Engineering Know-How

  • Accelleron (formerly ABB Turbocharging) has been in the turbocharger business for over a century
  • This accumulated IP, testing data, and field experience cannot be replicated
  • R&D investment of ~$57M/year (2023) maintains technological leadership

Moat Durability Assessment

Threat Severity (1-5) Timeline Company Mitigation
Energy transition (electrification) 2 20+ years Fuel-agnostic designs, dual-fuel retrofits
Chinese competitors 3 10-15 years Service network depth, certification barriers
New technology (e.g., fuel cells) 2 15+ years Active R&D in alternative propulsion solutions
Customer consolidation (bargaining power) 2 5-10 years Essential nature of service, no viable alternative
Regulatory change 1 N/A Actually benefits from emissions regulation (more complex = more tech needed)

Will this moat be wider or narrower in 10 years? WIDER. The installed base continues to compound, and the shift to dual-fuel/alternative-fuel engines increases complexity (favoring the technology leader). Each new unit sold today locks in 25+ years of service revenue.

Phase 4: Management & Incentive Analysis

CEO: Daniel Bischofberger

  • Appointed Division President of Accelleron March 2022 (before spin-off)
  • Prior: Member of Sulzer's Executive Committee, Division President for Rotating Equipment Services (~6 years)
  • Before that: 14+ years at ABB in managerial roles
  • Total 2024 compensation: CHF 1,869,484 (base CHF 600K, bonus CHF 508K, LTI CHF 465K)
  • Shares held (2024): 12,243 shares (~CHF 914K at current price)

Assessment: Compensation is reasonable for a CHF 7B market cap Swiss company. The significant long-term incentive component (25% of total) is positive. Insider ownership is modest in absolute terms but the CEO has been with the business since before spin-off, demonstrating commitment.

Capital Allocation Track Record

Use of FCF 2024 Assessment
Dividends CHF 1.25/share (+47%) Aggressive growth, 47% of FCF
M&A $56M (OMC2 + True North Marine) Bolt-on, complementary
Debt Service Net leverage reduced 0.7x Prudent
Organic CapEx $39M (3.8% of revenue) Maintenance + modest growth

Dividend per share trajectory: CHF 0.73 (2022) -> CHF 0.85 (2023) -> CHF 1.25 (2024) = 71% growth in 2 years. Management is clearly targeting a premium dividend growth story to attract quality investors. The 2025E dividend of ~CHF 1.73 based on consensus implies continued strong growth.

Phase 5: Catalyst Analysis

Catalyst Timeline Probability Impact
H1 2025 earnings beat (achieved) Aug 2025 100% (done) +15% (realized)
US tariff mitigation / pricing power demonstration H1 2026 70% +5-10%
Margin expansion to 26-27% 2026-2027 60% +10-15%
Emergency power demand (data centers, grid instability) Ongoing 80% +5% annually
Dual-fuel retrofit cycle acceleration 2025-2030 65% +10-15% over time

Negative Catalysts:

  • US tariff escalation beyond 39%
  • Global shipping recession
  • Growth deceleration below 5% organic
  • P/E compression as market re-rates "industrial" stocks

Phase 6: Decision Synthesis

Megatrend Resilience

Megatrend Score Notes
China Tech Superiority +1 China is a customer (ships use turbochargers), not a direct competitor yet
Europe Degrowth 0 HQ in Switzerland, global revenue, modest European exposure
American Protectionism -1 39% Swiss tariff is real and hurting margins
AI/Automation +1 AI-enhanced diagnostics, predictive maintenance = moat strengthener
Demographics/Aging 0 Not directly relevant
Fiscal Crisis +1 Essential infrastructure, pricing power, moderate leverage
Energy Transition +1 Fuel-agnostic, dual-fuel retrofit demand is a tailwind
Total +3 T2 Resilient

Expected Return Scenarios

Scenario Probability 3-Year Return Weighted
Bull (P/E stays 40x, 15% EPS growth) 20% +55% +11%
Base (P/E compresses to 30x, 12% EPS growth) 40% -5% -2%
Bear (P/E compresses to 20x, 8% EPS growth) 30% -40% -12%
Disaster (earnings decline, P/E 15x) 10% -60% -6%
Expected 3-Year Return 100% -9%

The expected return from current prices is negative on a probability-weighted basis, driven by the high starting valuation and likely P/E compression.

Entry Prices

Intrinsic Value Estimate: CHF 50 (conservative DCF/private market blend)

Strong Buy:   CHF 35  (30% MOS, ~19x earnings)
Accumulate:   CHF 40  (20% MOS, ~22x earnings)
Fair Value:   CHF 50  (DCF/private market)
Hold Zone:    CHF 50-75
Take Profits: CHF 75+ (current level, 50%+ above IV)

Sell Triggers (If Owned)

  1. Thesis Break: Service revenue falls below 65% of total
  2. Moat Erosion: Market share drops below 35%
  3. Management Failure: Acquisitions destroying value (ROIC < WACC on M&A)
  4. Valuation: Already above take-profit level at CHF 74.75

Investment Recommendation

+-------------------------------------------------------------+
|                 INVESTMENT RECOMMENDATION                      |
+-------------------------------------------------------------+
| Company: Accelleron Industries AG    Ticker: ACLN.SW          |
| Current Price: CHF 74.75            Date: Feb 21, 2026        |
+-------------------------------------------------------------+
| VALUATION SUMMARY                                              |
| Graham Number:           CHF 11.36    -558% (overvalued)       |
| DCF (Conservative):      CHF 41       -81% (overvalued)        |
| DCF (Optimistic):        CHF 58       -29% (overvalued)        |
| Private Market (18x):    CHF 50       -50% (overvalued)        |
| Owner Earnings (15x):    CHF 26.55    -182% (overvalued)       |
|                                                                |
| INTRINSIC VALUE ESTIMATE: CHF 48-55                            |
| MARGIN OF SAFETY: NEGATIVE (-36% to -56%)                      |
+-------------------------------------------------------------+
| RECOMMENDATION:  [X] WAIT                                      |
+-------------------------------------------------------------+
| STRONG BUY PRICE:        CHF 35 (30% below IV)                |
| ACCUMULATE PRICE:        CHF 40 (20% below IV)                |
| FAIR VALUE:              CHF 50                                |
| CURRENT GAP TO ACCUMULATE: -87% (need CHF 40 vs CHF 74.75)    |
+-------------------------------------------------------------+
| POSITION SIZE: 0% (wait for entry)                             |
| CATALYST: Tariff mitigation, margin expansion, dual-fuel cycle |
| PRIMARY RISK: Extreme valuation (42x P/E)                      |
| SELL TRIGGER: Service revenue < 65%, market share < 35%        |
+-------------------------------------------------------------+

Quality Grade: A -- Exceptional business with wide moat, high returns, recurring revenue, and pricing power. One of the best industrial businesses globally.

Final Assessment: Accelleron is a phenomenal business that would be a portfolio cornerstone at the right price. At CHF 74.75 (42x P/E), the market is pricing in perfection. The stock needs to decline approximately 47% to reach an Accumulate level. This is realistic only in the event of a broad market correction, a tariff escalation, or a shipping industry cyclical downturn. Add to the watchlist and wait patiently.

Sources

Primary Documents

Document Source Key Data
Annual Report 2024 accelleron.com Revenue, EBITA, segments, dividends
Annual Report 2023 accelleron.com Prior year comparisons
Annual Report 2022 accelleron.com First year as standalone
H1 2025 Report accelleron.com Latest trading update
FY24 Press Release finanzwire.com Detailed financial summary
H1 2025 Press Release finanzwire.com Revenue guidance raise

Web Sources

Source URL Data
Accelleron IR https://accelleron.com/investors/financial-reports All annual reports
MarketScreener marketscreener.com Historical financials, consensus estimates
CompaniesMarketCap companiesmarketcap.com Revenue history, earnings
Arvy.ch arvy.ch/accelleron-abbs-crown-jewel/ Competitive analysis
Investegate investegate.co.uk FY2023 results detail
SIX Exchange six-group.com IPO data, listing price