Alphawave Ip Share Discussion Threads

[martomarto] 21/4/2023 19:18

Thanks for the research. Added a few more.Slightly vague history, but if they keep transparent and governance on track this will be a star? Dyor.

[dividevil] 21/4/2023 11:15

Hi Valhamos,

Admittedly, I hesitated myself when I read that line, but I think he/she meant higher profit margins. When you are able to produce more at lower cost you are effectively increasing your profit margin. I agree that larger more mature companies have lower growth rates. I think because Alphawave are relatively young and have adopted a vertically integrated one-stop shop 'fabless' business model it makes them an exciting growth prospect.

If I were to have valued them on their 2021 YE figures they would have looked even cheaper as that was the pre-acquistion phase when they were cash rich with no debt.
If I were to value them on next week's 2022 YE figures they will probably look expensive because the acquisitions are relatively recent and they are still consolidating and priming for growth.

I consider it more meaningful to value them on their one year and three year forward earnings guidance projections as these are realistic and achievable numbers because of the bookings already secured and because the growth expectations for the semiconductor market are generally well understood. Even their four year target of 1 billion USD revenue should be comfortably achieved, and if they do, the share price ought to be beyond the IPO price by then.

[dividevil] 20/4/2023 23:36

The values I've given are their guidance values they provided in the January update. They are the guidance values for 2023 & 2025 which they will likely achieve or exceed. Next weeks report will give us the formal 2022 ebitda which won't be that meaningful to evaluate against. They are not just an IP company. It's why they dropped the IP from their name and are now called Alphawave Semi. It's more accurate to describe them as a fabless company. You can go to Alphawave order standard products or order custom specified products and they get delivered to you. The only difference is that Alphawave contract out the build to the foundries rather than make it themselves.

[casholaa] 20/4/2023 23:21

The thing with ebit and ebitda is that you don't know what they are until the fy results are provided, also, the 'da' bit is difficult to guage given that they don't manufacture and it's ip based.

[dividevil] 20/4/2023 22:49

Valuing AWE using EBITDA.



According to the information in the above link, the 2023 semiconductor industry values for:
median EBITDA valuation multiple is 10.4x
average EBITDA valuation multiple is 16.9x.

Note that EV (enterprise value) equals market capitalisation plus net debt.

For Alphawave Semi, based on:
701 million shares in issue,
current closing price of 1.158 GBP (1.44 USD)
net debt value of 35 million USD
Adjusted EBITDA 2023 guidance value 87 million USD,

EV/EBITDA valuation multiple works out to be about 12.
Therefore, using this metric, you could say that Alphawave Semi is currently undervalued by as much as 30% based on the average valuation multiple.

Alphawave Semi however, is a significant growth prospect and are clearly well placed to capitalise on the growth expectations of the semiconductor industry.

Based on the semiconductor average of 16.9x and 2023 guidance EBITDA figure mentioned above works out to a share price of 1.64 GBP (2.04 USD).

Using their 2025 guidance EBITDA figure of 150 million USD, assuming no change in net debt and 5% share dilution, share price works out at 2.73 GBP (3.40 USD), or using the far more conservative median EBITDA valuation multiple of 10.4x, share price works out at 1.66 GBP (2.07 USD).

Moving forward to 2027, Alphawave have a set a target for 1 billion USD revenue.
So based on Adjusted EBITDA margin of 30% (from 2025 guidance values) we would get, an estimated EBITDA of 300 million USD. Assuming no change in net debt and 10% share dilution, share price would work out at 5.24 GBP (6.53 USD) based on the average valuation multiple, and 3.21 GBP (4.00 USD) based on the median valuation multiple.

The above calculations assume that:
Alphawave achieve their guidance targets
Semiconductor industry continues on its expected growth path
World economy doesn’t go into some serious downturn
Company does not take on further debt for new acquisitions etc
Company share price is fairly valued by the market close to the semiconductor average / median valuation basis.

In the 2027 example, if say the net debt was increased to 200 million USD due to a new acquisition, then using the median valuation multiple, this would still yield a share price of approximately 3.04 GBP (3.79 USD).

[trader465] 19/4/2023 08:20

Today ASML Holding NV (ASML) has published its 2023 first-quarter results.
Q1 net sales of €6.7 billion, gross margin of 50.6%, net income of €2.0 billion
Quarterly net bookings in Q1 of €3.8 billion2 of which €1.6 billion is EUV
ASML expects Q2 2023 net sales between €6.5 billion and €7.0 billion and a gross margin between 50% and 51%
ASML expects 2023 net sales to grow over 25% compared to 2022

[trader465] 19/4/2023 05:15

Look at the long-term chart, the price is only just starting to move up, I reckon there’s plenty more upside to come.

[kennyp52] 18/4/2023 14:39

If I sell now you can guarantee it will push the price up guys ... lol

[boozey] 18/4/2023 12:02

Kenny ASML Report tomorrow and AWE on Friday 28th. Massive Director buying up to end of February. I bought for the recovery. But nothing wrong in taking a profit.

[trader465] 18/4/2023 09:17

Run your winners, hold for 1 year for >200p. You won’t get 100% in a year at any bank.

[kennyp52] 18/4/2023 08:59

Is 120p enough ? Thinking of taking the profit

[highly geared] 14/4/2023 17:54

Nice finish for the day and looking primed to continue upwards as we approach the results on 28th April

[trader465] 14/4/2023 12:00

Looking good here, a break of 120p and we’re off to the races

[martomarto] 12/4/2023 15:58

Bots at work?Dyor.

[valhamos] 10/4/2023 10:24

There's a couple of recent pieces on TechArena both featuring Letizia Giuliano of Alphawave.

The semi industry is undergoing dramatic change with the increased use of chiplets and advanced packaging. As semiconductor technology advances, it has become increasingly challenging to produce large, monolithic processors with complex functionalities. Chiplets offer a more modular approach, where smaller functional blocks or cores can be developed independently (even from different suppliers) and then integrated into a chiplet package. This allows for the combination of different technologies optimized for specific tasks, resulting in higher performance and efficiency compared to a monolithic processor.

The story is that Alphawave is well placed to benefit from this trend with its expertise in die to die integration IP.

[trader465] 06/4/2023 11:09

150p in the run up to results on 28th?

[livewireplus] 02/4/2023 00:41

Thanks for that comprehensive report. I'll sleep well tonight ....

[dividevil] 01/4/2023 18:58

A couple of weeks ago I wrote to Jose Cano, Head of Investor Relations, raising some queries on corporate governance particularly given what had recently happened at Wandisco (not invested with them btw) in regards to bookings and revenue. I did so, just to see what kind of response I would get if any. I received a comprehensive reply the next day. The prompt reply was a tick in the box for me.

Here's my summary of his response:
- Alphawave board are committed to the highest standards of corporate governance
- They substantially expanded their governance structure last year (2022)
- They will continue to invest in their governance structure to support the growth of their business
- Their customers are leading semiconductor companies who have stringent controls and procedures around onboarding new vendors and signing of contracts.
- the revenue criteria is set out in detail in their 2021 annual report
- Reports are fully aligned to the applicable accounting standards
- Main contributing factor, in great measure, to growth in the medium to long term is their silicon business
- Accounting of the silicon business is straight forward in that bookings are translated to revenue only once the customer receives the product they ordered
- They outsource the production (i.e AWE are a fabless business) of the silicon chips to the leading foundries and consequently there is an additional layer of controls and procedures around the fabrication, assembly and testing put in place by those foundries, and this contributes to ensuring that revenue is recognised in line with the accounting standards.

I found this response quite reassuring, not that I was particularly concerned in the first place. What happened at Wandisco then seems very unlikely to ever happen at Alphawave because of the high calibre nature of the customers that Alphawave deal with. It effectively means that bookings reported have to be actual, and it is difficult to conceive of a salesman being able to go rogue and reporting false bookings given the nature of customer. It gives me confidence that their financial reports will be a true reflection of their business rather than mere hype of their growth prospects.

[boozey] 01/4/2023 11:50

For anyone looking at this stock and its rather questionable history, the sheer volume of director buys in February could not be ignored. Even for a high net worth individual you don’t invest that much unless you really believe in the company. Director buys in themselves happen at the time, but occasionally they are of such magnitude they can’t be ignored. Alphawave is one such case in point. There are others in recent times. JD Wetherspoon is another where the chairman made a multimillion pound purchase in February at 457p and it now trades at 713p.

[waldron] 01/4/2023 09:21

Upcoming events on ALPHAWAVE IP GROUP PLC

April/28/23 | 07:00am FY 2022 Earnings Release

April/28/23 | 07:00am Q1 2023 Sales and Revenue Release - Trading Statement

April/28/23 | 08:30am FY 2022 Earnings Call

[waldron] 01/4/2023 09:17

next resistance apparently might well be tested at 123p

[waldron] 01/4/2023 09:11

PUG fwiw

Might be just a friday,end of week,end of week thingie

enjoy your weekend and a new start

chuckle and cheers

[highly geared] 01/4/2023 09:03

Based on normal market size at the time, they’ll most likely be buys.