Iqe Share Discussion Threads

[grity] 22/3/2017 17:26

Good move someuwin , wished ide
Topped up on that pullback. Will
Be adding soon though. 10m trades
Again !

[panic investor] 22/3/2017 17:24

Unless it gets bought out of course - but other than that agreed

[toptrump1] 22/3/2017 17:08

It was only yesterday! You likely have several months before further news

[spursspurs] 22/3/2017 17:05

lucas and others no longer invested, why dont you go and be so wise on boards where you are invested, if you are not part of it we dont care , if you are out, great, go and do something useful, of course you will have bought at the bottom and sold at the top- well done!!

[lucas5950] 22/3/2017 17:00

definitely overblown. I agree, possible short term increase, but not worth the risk for me.

[lucas5950] 22/3/2017 16:58

Toptrump - i am in complete agreement with you on the outlook of IQE. Not sure where sense is not being made??

[toptrump1] 22/3/2017 16:53

I may not buy back as I wasn't impressed by the reduction in earnings and lack of net cash generation, iqe is not an early stage co it has been around for a long time.

[toptrump1] 22/3/2017 16:41

Now you're not making any sense Tw
Lucas, if you read the thread and the other one you get a good idea of what people think. I think it has overblown for now based on what was expected etc and think it will settle back to around 50 before next leg

[someuwin] 22/3/2017 16:18

Bought a few more now the results excitement seems to be receding.

[lucas5950] 22/3/2017 16:16

i guess no one will answer my question...

[twatcher] 22/3/2017 16:01

Your weeks ago conclusion resulted in you not selling until a few days ago...makes perfect sense :)

[toptrump1] 22/3/2017 15:58

So r u saying it's the very top now? You don't make any sense

[yump] 22/3/2017 14:53

... and after all the time spent talking about the tech., which is all very interesting, it took poombear to actually post something of real use in the way of figures. It only took a few lines as well.

Given a bit of time, I'm sure its possible to extrapolate some of the photonics figures and the capex and get to some sort of estimates that aren't entirely dependent on the whims of brokers, or someone assuring everyone that the future is bright.

Perhaps someone will start an info. thread - as in useable info. for the purposes of working out where the business is actually going.

At this point some clues on the likely movement of wireless revenues might be handy - I've been digging a bit but it hasn't really revealed anything of use. Part of the increase in wireless, apart from currency, must have been last year's increase in Skyworks. Presumably that hasn't gone up or down by much for this next year, as no announcements.

[lucas5950] 22/3/2017 14:48

My last exit was @54p. Do you think the profit IQE has generated justifies the current SP, the 150%+ increase?

[adventurous] 22/3/2017 14:39

poombear - I thought it was too obvious to mention (its all in the fy15 & fy16 annual report) - although Sweenoid's been highlighting Photonics for quite some time!!

[twatcher] 22/3/2017 14:29

^^^^^^^^^^
confused

Your post seem to be justifying your case for selling weeks ago but the share price is still HIGHER than it was anytime "weeks ago" ???

[lucas5950] 22/3/2017 14:23

Still rambling rubbish, what if...etc etc.Underlying profit was disappointing let's be honest.SP has been ramped up constantly and now reality is hitting. I said this weeks ago and it's why I sold. Great run up and bank the profits at the top.If things change, I will definitely be back in. Until then, out.

[rogerrail] 22/3/2017 14:06

poombear

great spot,

in this respect it is also important to re-emphasise the following statement

"Capital investment of GBP19.1m represents a GBP9.1m increase over the
prior year to address growth opportunities, principally in photonics,
GaN and cREO. Investment in capital equipment was up GBP7.1m, and
investment in intangibles was up GBP1.9m".

[yump] 22/3/2017 12:41

That is a big difference. Some pencilling in to do with some assumptions now.

[poombear] 22/3/2017 12:36

It's worth noting the big difference in profit margin between Wireless and Photonic.

Wireless £7.9m adj profit from £91m sales

Photonics £6.8m adj profit from £22m sales

Going forwards continued growth in Photonics will greatly improve profit margin.

[poombear] 22/3/2017 12:01

SH if it creates a monopoly because it's the only solution on the market, licencing the IP would generate a lot of very high margin revenue. It depends on how much of a game changer the solution is.

[yump] 22/3/2017 11:56

That's probably the most balanced anything I've seen on here.

I'd love to find out somehow how heavily geared IQE are to increases in photonics output, but I guess that's internal management info.

[sheep_herder] 22/3/2017 11:44

poombear - why would they not be able to cope with the demand? cREO is their holy grail - I very much doubt they will let anyone else near it.

[bestace] 22/3/2017 11:38

The fact that some people on here were disappointed with the results even though they exceeded broker forecasts says it all - expectations got too far ahead of reality, hence the sell off.

I agree with most of toptrump1's post; in particular wireless seems to have surpassed even management's expectations given they had previously flagged mid single digit growth. However I disagree on a few points:

Firstly on photonics growth. I'm not sure where £27m expectations for photonics came from, but if genuine it underlines the point about expectations being way too high. All the company told us in December was "Photonics continues to be the fastest growing business segment, enjoying strong double digit growth year on year."

In the interims they also used the phrase "strong double digit growth" where photonics had grown by 45% in H1. A reasonable inference would have been to apply the same 45% figure to the H2 2015 figures to get a forecast H2 2016 of £12.5m, giving FY16 revenue of £23.2m.

As it turns out that wasn't very far away from the actual H2 of £12.1m and FY16 of £22.8m.

Maybe that's post hoc rationalisation, but to get to £27m would have required an increase of 69% YoY which may literally be consistent with "double digit growth", but would have required an acceleration in H2 to £16.3m, some 89% higher than H2 2015. Growth accelerating to that degree would surely have been described differently in the December trading update.

Secondly on broker's forecasts. 12 months ago I reckon the brokers had 2.5p EPS pencilled in, not 3p. Prior to the December trading update they had 2.7p, which increased further to 2.9p post trading update.

That's an increase of 16% over the last 12 months, still much less than the increase in share price over the same period, but then again their peers and the wider markets were re-rating upwards so to an extent it is understandable why the share price would appreciate by more than the fundamentals might have implied.

Looking at those broker forecasts, and reading through the Edison notes, I think they were far more grounded in reality than some private investors.

Edison said in September, when the price was 28p: "IQE’s rating still remains undemanding on a fundamental basis and relative to its peers, giving scope for further share price appreciation", then in November "Our indicative valuation range of 40-45p puts IQE on multiples that are close to the mean of our sample of listed peers", then in December "Our indicative valuation range of 45-49p... places IQE on multiples that are close to the mean of our sample."

Now they are saying "... the shares look fairly priced at current levels. However, given the potential for upward earnings revisions based on commercial ramp-up of photonics projects, this higher than average rating does not seem totally unreasonable to us. We see the scope for upward price movement if greater clarity regarding the rate of volume ramp-up of photonics programmes results in estimate upgrades."

That seems reasonable to me - mid to longer term price appreciation if the chips fall their way, but no reason to spike higher in the short term.

[yump] 22/3/2017 11:29

poombear
I haven't a clue where 27m for Photonics came from.

Sheep_Herder
That is one of the reasons why this business is much more complex that people would like to think.

Its an ongoing battle between cost of capacity and utilisation rate, to get a profit before the next set of modifications is needed.

Best case: the capacity built will cope with variations and demand for several years of sales. Worst case: sales don't reach a level that gives significant contribution to overheads and costs.

Even making creme eggs on a single plant years ago had the same risks, that the product wouldn't sell enough to payback.

This is way more complex. Creme Eggs always made the same way and not subject to price fluctuation. Not the same for IQE's products.