Iqe Share Discussion Threads

[poombear] 22/3/2017 11:29

On CREO, does anyone have a view on what the business model would be for this? Would they licence the tech as I doubt IQE would be able to meet the demand that would be generated if it proves to be successful in eliminating the parasitic channel, that is holding back GaN on Silicon products?

[poombear] 22/3/2017 11:23

The Edison report gives a decent breakdown on Capex. Some of which I believe would be to a degree one off, unless they have to ramp up even further this year due to ever increasing demand for their products.

"However, IQE still consumed cash. Net debt increased by £16.3m to £39.5m (20% gearing). The main causes of this were: a £4.9m increase in working capital relating to the intensification in photonics activity and weak sterling; £11.3m final tranche of deferred consideration for Kopin; £6.3m in capitalised development expenditure (higher than £5.0m in FY15 because of the levels of photonic and other development activity); and £11.0m capex (£3.8m in FY15) as IQE invested in equipment ahead of the anticipated ramp-up in photonics volumes."

[sheep_herder] 22/3/2017 11:10

People seem to talk about the capex as if it's a one off. This is a wafer manufacturer - capex will only ever rise as they invest in new technology and/or capacity.

[boboty] 22/3/2017 11:07

Top trump your figures seem to be slightly off. From the results published yesterday cash generated from operations increased by 7.1% not 5 and further if you use the adjusted eps of 3 pence then with a pe of 15 you get a share price of 45 or 60pence using a pe of 20. Remember this is all historic - how it was last year and with current growth and an assurance they are on track I think a share price of 60 would be fairer. It seems most of the cash generated last year (over 20 million) has been spent on capital items to increase production capacity. I hope this is related to the tier 1 OEM discussions the rns refers to. Do you think that might be apple - I hope so.

[yump] 22/3/2017 10:44

(re:analysts)
The other half are IR tax inspectors where you have to run a week's training session just so they can understand your business. "Someone clicks and we make money". What ??!!

[lucas5950] 22/3/2017 10:44

Well it's been a decent run and many of us have made some good money i bet.

I had another look over the results and there honestly is nothing to get excited about.
Was really hoping for IQE to produce more profit then it did.
So for me, it was disappointing, long term this stock may be great, many have held this for years watching it climb and fall - i'd rather not have my money tide up here for years so glad i'm already out.

[big7ime] 22/3/2017 10:37

Well said bestace
Rivaldo the analyst got it wrong didn't he, so why believe him now after the rise? A bit like a chartist that sees a rise over past 9mths and thinks it must be good indication for the future. I'd much rather had invested at 19p (which I did) and now have option to sell
Take analyst targets with a pinch of salt, even some hilarity and you won't lose money following them. Most are fresh out of uni and have no real business sense

[bestace] 22/3/2017 09:58

A dividend would show poor capital allocation IMO when net debt has just risen by 70% and they've just spent a tonne of money on capex. At least wait until that capex is starting to show a return, and the direction of travel on the debt is going down, before thinking about a dividend.

[rivaldo] 22/3/2017 09:32

Agreed Lurki0, a dividend would be nice, but imo is unnecessary except perhaps as a lever/sop to enable dividend-hunting institutions and funds to invest in IQE. If a tiny dividend would enable this to happen, then perhaps it's worth it.

Otherwise I would much rather IQE reinvest their profits to meet the scaling up of the business required for all the new technologies starting to coming on stream.

Anyway, it's encouraging to see once-sceptical analysts now being so positive about IQE.

[lucas5950] 22/3/2017 09:13

Toptrump - Thanks for your post, I think I'll stay out now. I believe a correction is coming.

[lurki0] 22/3/2017 09:10

In view of the volumes I imagine many of us still hold a dividend would be lovely. However such talk from analysts eager to see their own price predictions become reality should be regarded with a sackful of scepticism. Nobody should seriously factor in the possibility of a dividend when investing here -at least not for the next two years I would think.

[yump] 22/3/2017 09:07

OK

Here's a challenge:

Someone pick apart toptrump1's points then, one at a time, properly, leaving aside for the moment the amazing opportunities that exist for IQE, despite the fact that the forecasts haven't included them yet.

Its simply not credible for brokers to have price targets giving p/e's approaching 20, when they themselves have only posted forecasts of 5-12% growth.

[rivaldo] 22/3/2017 08:45

Peel Hunt believe a dividend may be on the cards.....

"Market Talk:

Peel Hunt Lifts IQE Target After Earnings

0702 GMT Peel Hunt analyst Andrew Shepherd-Barron lifts his target on semiconductor materials supplier IQE (IQE.LN) to 60p from 35p following its full-year results Tuesday, noting a reversal in the decline in wireless and a big increase in photonics revenue. IQE, whose materials are found in components for smartphones, lasers and light sensors, is also benefiting from cost cutting efforts and has sound finances, says Shepherd-Barron, who also lifts his rating to buy from hold and believes a dividend reinstatement could be in the cards."

[richardc77] 22/3/2017 08:44

Sadly the downside of being a talked about share is the influx of morons ;)

[adventurous] 22/3/2017 08:23

Creative Accounting!! LOL - Adjusted figures are the only ones an investor can use to judge performance and enable forecasting to be more accurate.

[poombear] 22/3/2017 07:43

Beat me to it....

IQE plc (LON:IQE) was upgraded by Peel Hunt to a “buy” rating in a note issued to investors on Wednesday. The firm presently has a GBX 60 ($0.74) price target on the stock, up from their prior price target of GBX 35 ($0.43).

[techno20] 22/3/2017 07:42

Looks like Peel Hunt have upgraded to a Buy, with target moving from 35p to 60p.

[someuwin] 22/3/2017 07:42

Peel Hunt ups target from 35p to 60p

[toptrump1] 22/3/2017 00:28

Many successful investors and fund managers use operational cash flow as a favoured measure of how well a business is performing.

IQEs rise in cash flow was just 5% in 2016
Now this would be OK for an average share but considering the meteoric rise in the share price due no doubt to the Internet tipsheets and the currency gains I really think the results are mediocre

Photonics was expected to be around the 27m mark and fell short considerably
CMOS hasn't got going but is early days and will take years to be profitable
Wireless actually held up well and surpassed expectation and if it wasn't for that the overall result would have been poor.
debt level still remains high due to increase in the
Capital expenditure which is greater than the increase in revenue.

Analysts views of adjusted 3p eps were known 12mths ago 3mths before the start in the share price rise and 9mths before before the new yr share tips so I have to question whether the rise has been overdone and we will get a rebalance

My target is therefore 40.5p based on an Actual p/e of 15, no creative accounting and in line with its peers ave.
I take no notice of housebroker or any other broker tgts, their record is extremely poor, not least with IQE through the yrs.

[rivaldo] 21/3/2017 23:59

This columnist believes "there could be a lot more to come" from IQE - and I agree:



"A good year’s trading

Headline figures include revenue growth of 16.4% compared with the previous year, adjusted diluted earnings per share increasing 15.4%, and cash from operations up 7.1%. Gross borrowings rose around 60% to stand at just over twice the level of operating profits, which looks manageable.

The big question after such a stellar performance is — is there more growth to come? Chief executive Dr Drew Nelson sounds optimistic, putting the firm’s growth in revenues, profit and cash generation down to the company’s “cutting edge intellectual property”, which, he says, is delivering results through a “diverse range of growth engines.”

IQE has its sights set on what it describes as “global leadership across a range of markets”, arguing that advanced semiconductor materials, such as those IQE produces, are becoming an ever more important enabler of many electronics applications. Dr Nelson reckons the firm’s strategy, underpins this year’s strong financial performance and he sees an ”exciting” outlook for the business.

I can’t argue with the company’s operational and share price momentum, and wouldn’t want to bet against either. City analysts following the firm expect earnings to tick up a further 5% this year and 12% during 2018. meanwhile, at today’s share price around 51p, the forward price-to-earnings (P/E) rating for 2018 sits at just over 15. The company does not pay a dividend."

[lpavlou] 21/3/2017 23:47

Having another read through the results, I still feel a little disappointed that they only managed to get to £132.7m turnover, given the strong currency gain. Edison are only forecasting £137m for 2017 and £140m for 2018. That's not very exciting in my book. Appreciate there are potential upsides as i doubt they would have spent £10m on photonics, if they didn't have a strong order book. Aall in all, I reckon the share price in the 45/50p range is fair value, with potential medium term strong growth. Having closed out today, I no longer have a position, but will keep tabs and look to get back in on any market weakness.

[bobd29] 21/3/2017 23:09

Would happily take 69p by next results in November?

[lucas5950] 21/3/2017 20:06

Nothing seemed to move the share price from around 50-51 today. Thought it would continue it's uptrend. I'm expecting another drop tomorrow.

[spoole5] 21/3/2017 20:04

Taking notice of what the IC says is a recipe for losing money.