DGAP-News: PVA TePla AG / Key word(s): Statement 
Reply to a letter from Riposte Capital: Explanation of the market 
positioning and strategy of PVA TePla AG 
 
2020-12-17 / 18:40 
The issuer is solely responsible for the content of this announcement. 
 
Wettenberg, December 17, 2020 
 
*Reply to a letter from Riposte Capital: Explanation of the market 
positioning and strategy of PVA TePla AG* 
 
The Supervisory Board and Management Board of PVA TePla AG received a letter 
from Mr. Khaled Beydoun on December 14, 2020. Mr. Beydoun is Portfolio 
Manager & Managing Principal of Riposte Capital, a New York-based investment 
company that is a subsidiary of Jefferies Financial Group. By its own 
account, Riposte Capital has held a 3.6% stake in PVA TePla AG for several 
years. This letter sets out reflections on the strategic positioning of the 
PVA TePla Group with regard to its market capitalization. Here is the letter 
in full: 
 
_"Dear Members of the Board,_ 
 
_We are longstanding shareholders of PVA TePla AG ("PVA TePla" or the 
"Company") and have exposure to about 3.6% of the outstanding shares. We are 
writing to express our concern regarding the depressed valuation despite 
management's attempts at highlighting the merit of the Company's profitable 
assets to the market._ 
 
_PVA TePla sits at the forefront of the Electric Vehicle (EV) revolution 
with its unique ability to manufacture premium systems that produce silicon 
carbide (SiC), the single most important component of EV battery 
productivity (faster charging), range, and economics. SiC in power 
electronics reduces the overall battery size which in turn has a cascading 
impact on wiring, thermal management, packaging, and overall weight of the 
vehicle. In a nutshell, it is invaluable._ 
 
A global shortage of SiC is gradually building with Tesla announcing that 
they are to invest in their own production capacity to keep up with demand 
as third party suppliers are no longer able to fill the void. PVA TePla is 
*the only * 
company globally that supplies machines to silicon manufacturers allowing 
customers to tailor their own SiC process and solutions. While some nascent 
competition is emerging in China, they are at a minimum 10 years behind in 
terms of technology. 
 
_SiC has now displaced traditional silicon in electric vehicles and, as 
such, the Company's early mover advantage and opportunity cannot be 
understated. However, it has become apparent that PVA TePla's SiC platform 
and other wafer manufacturing businesses that supply into powerful global 
mega-trends (i.e. artificial intelligence, internet of things (IoT), 
autonomous vehicles) are greatly underappreciated by the investment 
community resulting in a hefty Company discount. Some of the reasons 
include:_ 
 
_(1) The fact that the semiconductor/wafer business (although 68% of group 
sales) is commingled with more industrial and cyclical activities that 
typically trade at lower multiples in public markets._ 
 
(2) The fact that management has yet to leverage PVA TePla's position in SiC 
given that the total addressable market (TAM) within EVs alone is an over 
&euro1.2 billion opportunity assuming 10% EV adoption by 2025. This is the 
equivalent to 10x the current sales of the Company. However, we suspect that 
this may prove ultra conservative given that China wants battery operated 
vehicles to total 20% of all vehicles sold in the country by 2025 and 50% by 
2035 vs just 5% in 2020. This is equivalent to 400% growth in the next five 
years and 1,000% growth in next 15 years. Unsurprisingly, the sheer size of 
this opportunity is creating a highly competitive Chinese EV production 
market. The more competitive the market and the faster the EV ramp, the 
better the opportunity will be for PVA TePla as the only third-party 
supplier of SiC production systems. We cannot emphasize this enough. 
 
_(3) The fact that there is insufficient buy-side focus and poor stock 
liquidity. This results in the perception that the Company is a German 
small-cap industrial with cyclical headwinds and no secular growth 
optionality._ 
 
In the current capital market environment, companies that demonstrate this 
type of growth potential trade at significantly higher revenue multiples 
compared to PVA TePla's 2.3x1 2021 EV/Sales. Moreover, unlike most peers in 
the EV supply chain, PVA TePla's SiC business is *already profitable, 
*making the dislocation even more extreme and unsustainable. 
 
Although our conversations with senior management and members of the Board 
suggest that the Company recognizes the opportunity at hand, it has failed 
to translate into an appropriate share price (notwithstanding recent price 
appreciation). *Total shareholder return is -1.7% percent in the prior 2.5 
years *during which the Electric Vehicle / ESG revolution has gone into 
overdrive with markets willing to handsomely reward companies that are 
direct beneficiaries. 
We urge the Board to be more proactive and conduct a full strategic review 
of all available options including: 
 
(1) A separation of the Semiconductor Systems division into an independent 
entity (with a possible listing in China, the Company's largest prospective 
market). Under such a scenario, we would recommend that current CEO, Alfred 
Schopf, head this division given that he has been instrumental in developing 
the product and engaging with prospective customers. This separation is even 
more pertinent following the announcement on November 30th that the 
Company's largest client, Siltronic AG, is to be acquired by GlobalWafers 
Co. creating a materially larger customer for the group. 
 
_(2) An outright sale of the semiconductor business to a global player with 
a lower cost of capital who can better leverage the technology 
(incorporating their own SiC solution/process) on a much larger platform. It 
is now clear that stand-alone PVA TePla has significant limitations in 
scaling the opportunity at hand._ 
 
PVA TePla has established some enviable assets that not only have a large 
and unappreciated TAM, but are also among the only currently profitable 
operations in the EV supply/production chain. The Board must now proactively 
and promptly address the Company's unwarranted discount. 
Time does not stand still for anyone and the continued pursuit of this 
laissez-faire, passive strategy is a detriment to all shareholders. With the 
correct strategic positioning, PVA TePla's assets would command a market 
value that is multiples higher than the current &euro360 million market 
capitalization. 
We sincerely hope that the Board will act in the best interest of investors 
and consider actively pursuing a business separation or sale. 
 
_We look forward to your response in due course. 
Regards, 
Khaled Beydoun 
Portfolio Manager & Managing Principal 
Riposte Capital"_ 
 
The Supervisory Board and Management Board would like to thank Mr. Khaled 
Beydoun, a long-standing PVA TePla AG shareholder, for his many years of 
personal, constructive dialog geared towards our company's success. Our 
reply is as follows: 
 
From 2017 to 2019, the sales revenues of the PVA TePla Group grew from EUR 
85 million to EUR 130 million, while EBIT rose from EUR 3.0 million to EUR 
12.3 million in the same period. Based on this development, the company's 
share price has increased more than six-fold from EUR 2.50 to around EUR 17. 
 
On the basis of the company's leading technologies and medium-term strategy, 
the Supervisory Board and Management Board see hugely promising prospects 
for the further development of sales revenues and earnings, and envisage a 
corresponding increase in the PVA TePla Group's enterprise value. 
 
This is largely based on our competitive strength in the semiconductor 
market and the expected growth in the serviced market segments. 
 
- In the silicon wafer sector, a new wave of investment is apparent among 
established manufacturers. In addition, new companies are entering the 
market, and some of them are investing in this technology with substantial 
government backing. PVA TePla has been superbly positioned in this growth 
market for more than 40 years, and has massively expanded its customer base 
in the past three years. 
 
- Sales revenues of systems for quality inspection in the semiconductor 
industry have been consistently posting double-digit growth in recent years. 
A virtual who's who of the world's leading manufacturers in the 
semiconductor industry count among the PVA TePla Group's customers. With the 
recently announced acquisition in the USA, further markets are also being 
tapped into in order to maintain this growth in the long term. 
 
- Furthermore, vacuum and high-temperature systems provide extremely 
important access to the semiconductor market, particularly in the production 
of pure and ultra-pure high-tech materials that are hugely important to 
semiconductor technology. 
 
- In the increasingly established market for silicon carbide wafers, the PVA 
TePla Group is a uniquely positioned developer and manufacturer of crystal 
growing systems, as Mr. Beydoun rightly points out in his letter. As 
electric mobility continues to evolve, markets with extremely high growth 
potential for 2021 to 2030 are emerging. 
 
In addition, strategic options such as cooperations with customers, research 
institutions and suppliers are constantly being explored and enhanced in 
order to further the company's successful development in the interest of its 
shareholders. 
 
With its current positioning, the PVA TePla Group can respond flexibly to 
and make the most of market opportunities that arise in the SiC technologies 
sector. This platform is giving rise to attractive and balanced medium-term 
and long-term prospects in terms of sales revenue and earnings development 
as well as enterprise value. 
 
PVA TePla AG 
 
Alexander von Witzleben 
Chairman of the Supervisory Board 
 
Alfred Schopf 
CEO 
 
*For further information, please contact:* 
 
Dr. Gert Fisahn 
Investor Relations 
Phone: +49(0)641/68690-400 
mailto:gert.fisahn@pvatepla.com 
 
2020-12-17 Dissemination of a Corporate News, transmitted by DGAP - a 

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December 17, 2020 12:40 ET (17:40 GMT)