Iqe Share Discussion Threads

[montanaro] 21/10/2020 13:21

Tiffaboy, Many thanks for your namecheck earlier and I'm sorry I have been so quiet. I have only been scanning the various excellent posts by Sweenoid, Savvy and so many other contributors, my work has been intense recently and my spare time has been more on things like the US election and Covid than on IQE, which I am confident is well set. Like so many others here I was thrilled on September 8th to read the top line £89.9m and then had the air knocked out of my solar plexus by the incredibly cautious second half guidance number - the market reaction was predictable. It really took the change of tack to one of highly conservative reporting in successive statements over the last 2 years to a new, almost self defeating low. As Tom Duck I think posted, even if they do report a £175m full year number it is likely to be viewed as "priced in". Short term the momentum has been totally halted. They would have been better giving no guidance and merely stating their justified caution. But guiding to a minimum £75m v £73.3m second half 2019 after a record first half has led to a predictable hiatus in the shares when surely £85m second half is achievable and £175m guidance would have been probably welcomed, albeit without the need for the shares to get ahead of themselves (ie lower 2nd half than first). I took my time (ie several days) to study the results, to study the company's message for example with the Tim Pullen interview, and I didn't have much more to add to the numerous excellent posts, arguably I still don't have. I think there were a few red herrings thrown in eg the overall importance of the further patent provisions, and I think they once again showed a desire to kitchen sink anything. Buying in the Taiwan minority recently looks sensible. No doubt the company is now on a conservative footing whereas perhaps pre TW/Muddy Waters it was less so. Perhaps on a negative perspective, bearing in mind their comments about how well their principal customers appear to be doing, one of the reminders of the results was how their forward visibility remains limited. I am still a sizeable LTH and a big fan of this opportunity over any timeframe other than between now and the next trading statement. My wait continues but I am patient. The shares look cheap but it's hard not to argue short term that the company on this occasion has created a hand break of its own making. I can understand towing a cautious line, who wouldn't with all the issues that are currently facing the global economy?? But it took me several days to overcome my disappointment after I'd turned short term bullish as well as long term bullish between March and early September. I had hoped to see much more evidence of month on month improvement in the order book as we had between results in April and subsequent "record year" trading statement in early June. Set against that it was nice, stripping out the numbers, to see demonstrated what a cash machine IQE CAN BE as demonstrated by the really excellent cash returns and the very significant reduction in the debt from a good first half. This company's earnings capacity is what I think really bodes well, I believe that the market is yet to fully appreciate just how large is the potential on the existing capital base and that huge increases in profitability can now be achieved with fairly minimal ongoing capital investment, unlike the great 2018 splurge. That's done. From now it should be very much more incremental, perhaps with the exception of Singapore, where i'm really uncertain as to the plans or the current state of the operations. I'd like to post more wisely, with a certain angle uncovered by others, but as mentioned right now I do think this board has a collective grasp of most of the key issues between various posters. I'll certainly post again when I feel I have some strong opinions, I think my psychological approach is yet to produce any greater insight than perhaps it did when we were reeling from the crisis that Donald Trump had foisted upon us with the China trade war and were looking for signs of recovery. This company certainly remains positive on its prospects, linear or non linear growth to follow. I'm certainly yet to identify any company in the UK market that has greater exposure to and direct benefit from the tech revolution we are seeing, ie exposure to the move from hi-speed to super hi speed date transmission and all the related technological developments that are associated. How do investors get a better exposure in a London listed company?? So this will happen, clearly 2021 and 2022 will be pivotal years for proving the pudding. I remain patient and bullish for the years ahead. Savvy, love your posts and please keep them coming, say it how you see it but no need to reply to the opinions on every point you make, don't feel the need to rise or reply to Dave Spencer's every gloomathon, he's best ignored to stew in his own misery, bless him! I'd filter him if his posts weren't so amusing, which they are, so I enjoy reading them! And there is always room for a broad range of opinion. So keep it coming as you see it Dave Spencer if you must by all means, it's called freedom of speech. As for all of us, let's hope for better news before the year end with the trading statement et al. I do think we deserve more information than was contained in the brevity of the results statement. Some of it we could glean from the presentation slides and Tim Pullen's video, but actually the company's advisers should be earning their fees and all the evidence is that September 8th didn't reflect well for them or IQE. In my time in the City I would have been pretty miffed if IQE had come to present their results to me with a clearly more bullish message in the presentation and video than the cautious message communicated by the RNS and in particular the guidance number. Ah well, 6 weeks on from that disappointment now and only a couple of months to Christmas!! GLA and best wishes, Monty.

[nickwild] 21/10/2020 12:52

A lot of weird small trades of 9 and multiples up to 72

[meijiman] 21/10/2020 11:57

I assume most of the takers of the 140p shares were IIs. They must feel they were legged over by the management.

[tomduck] 21/10/2020 11:54

The reviews for the 12 Pro have been good but most saying it’s not worth the upgrade over the 11 Pro, that the cheaper ones are the sweet spot now they all have the same OLED small bezel screens, and last years 11 Pro camera. The Pro Max may well be the best bet as it has several key features the std Pro doesn’t but many people don’t like the bigger phone. As for 5G, many people reading the reviews will start to realise it will be a few years before they need a 5G phone. At the end of the day the phones will sell broadly what the analysts predict, but IQEs fortunes re a major rerated share price will hang on new customers or completely new Apple products over and above the phones n pads imo. If/when IQE announce some new tools being purchased for those empty bays in Wales we will have a real world indicator of this. I think investors have been talking too much about major earnings beats over £165m as it only adds to the potential for disappointment come March if IQE only just beat. The market will say investors expected £185m and then you will see nothing much happen or another fall. It can become something of a self fulfilling prophecy. Let us hope this time that is not the case, would be lovely for us all to believe in IQE again being a source of increasing wealth and persuading new investors to come aboard for the ride like back in 2016.

[provonar] 21/10/2020 11:29

Some test-shooting with the iPhone 12 Pro, including the LiDAR: hTtps://appleinsider.com/articles/20/10/20/photographer-austin-mann-tests-out-iphone-12-pro-camera "The LiDAR worked great here — I realized later I never once messed with the focus it was just locked in on her face the whole time. Also, creating an accurate depth map around the furry hood seems like it would be really complex, but the iPhone 12 Pro did a great job." So, the low-light focus support looks like it works very smoothly, assisted by IQE VCSELs (at least I hope they're from IQE - Lumentum have their Caswell epiwafer fab, but I'm not sure they produce wafers for VCSELs ... yet). If this is found to be so easy to use, then there's scope in the market that more optical device manufacturers would look to start incorporating VCSELs, too. One for the medium term ...

[tomduck] 21/10/2020 09:21

In reality 5G has barely begun, the inclusion on phones for now will probably only be used usefully by a tiny % of customers at most. However by default that means we have 5-10 years ahead of it all being about 5G. We know IQE has more floorspace ;) in 5G so even if they lose margin there is a very realistic chance they will earn more profits in the next period than the last. That is why I remain invested for now. It will be interesting to see what new trends 5G brings, AR perhaps, although I do worry that the Facebooks of this world will use it to walk a advert in front of our eyes at every opportunity which would certainly lead to me ignoring the technology... The board keeps going round in circles, the same people posting the same stuff, it is quite dull, so maybe less posting until we have some evidence either way is called for ;) Given that IQE hardly ever update the market outside of scheduled updates the earliest that is likely to be is Dec. Hopefully that may cast some light on matters, because if not we’ll be waiting til next March for the next meaningful evidence 🍻

[paraone3] 21/10/2020 09:08

Taiwan exports up 10% for September to 50b dollars , 16b dollars of Electronics , so no let up in the uptake of 5g and IOT . Also expect excessive uptake of 5g smartphones in the Chinese markets for the rest of 2020 and into 2021 , only good news for Iqe as the now have diversified into other markets , not a one trick pony anymore , solely reliant on Apple

[nickwild] 20/10/2020 19:10

JPMorgan Asset Management (UK) Ltd 0.57% -0.12% 19 Oct 2020

[tiffaboy] 20/10/2020 18:52

Savvy, don't listen to Frank Spencer and Co...have enjoyed reading your posts over the years with the likes of Sweenoid and Monty who at least put their views and information across in a way that never upsets anyone or rubs people up the wrong way. Some of the points these people make are valid and have some merit to counterbalance yours and others upbeat posts.but there's no humility or class whatsoever. As always, people can make up their own minds what is best for them with this share.I have lost a fair bit of money with IQE but have reinvested in my SIPP.. i did that, not by looking back but by looking forward ..otherwise i would have run a mile :-).

[savvy investor] 20/10/2020 15:40

If you didnt understand, and continue to want to think you are right to focus on the last 2 years, good luck

[dave_spencer] 20/10/2020 14:43

Savvy - The leveraged margin model is fine if you want to believe the hype. Let’s face it several institutions did !! They must be ecstatic with the price of £1.40 that they paid. How can the success of the iPhone 11 model be irrelevant? You clearly want to ignore the extremely important fact that IQE’s volumes hardly moved as a result of Apple’s success. And now you unrealistically expect iPhone 12 to accelerate IQE’s share price. I won’t hold my breath. Carry on...............

[savvy investor] 20/10/2020 12:55

Spencer I raise my glass to you in peace. You made me laugh. I'm not a ramper, I have strong belief and state clearly why. Just to be clear and to quote (nearly) Tim Pullen. IQE offer a leveraged margin model that means little profit made until volume goes above N. The new iPhones (and many other phones) are not only adding more content to each phonez nearly all having 5G and they are also selling the higher end models as evidenced by cnbc article about china sales I posted today. So not making profits on good volumes in iphone 11 IMHO is irrelevant to the argument I am making and the reason I invest so heavily now, for what is about to come...invest as you decide to I genuinely hope you make some smart decisions, history is not irrelevant, I just prefer to make my decisions more on what i expect in the future.

[dave_spencer] 20/10/2020 11:48

Savvy - thank you for your educated response !! Backward looking drivel. Interesting choice of words. I certainly don’t need educating by somebody who demonstrates such an amazing lack of understanding with regards to how businesses operate successfully. And please don’t make idiotic offers that your overdraft arrangements probably couldn’t facilitate with regards to my shares. Interesting that you didn’t bother to explain why IQE haven’t benefitted from the phenomenal success of iPhone 11. I guess it is because you can’t. Forget profit there’s absolutely no evidence that volumes increased dramatically. I love positivity but I absolutely loathe pompous overblown rampers like yourself.

[savvy investor] 20/10/2020 11:22

I was being literal about buying his shares. I have 1.1million and add 10k a month while it is under 80p, stupid perhaps, but that is my money and my decision.

[tomduck] 20/10/2020 10:59

Savvy it is a little silly to keep saying you’ll buy all shares under 80p. Are you going to sell your house or family and just keep buying? The share price has been under 80p for a long while now, and I doubt you’re able to afford all the shares under 80p that are on offer 😉 Because there comes a point when you frankly just sound unbelievable and at that point people will switch off from what you say as it lacks credibility. There are plenty of big holders here who have large 6 or 7 figure holdings. We get you are very positive and hopefully you will be proved correct in that stance come March and we will all prosper 👍🍻

[lord loads of lolly] 20/10/2020 10:06

OK, let's keep calm everyone. Both sides of the argument have equally valid points. Only time - & results over the next couple of years - will tell who called it right. As I've said many a time, my views lie somewhere in the middle. I'm still heavily invested, but history has taught me to remain sceptical. So I won't be adding more, however high - or low - they go.

[savvy investor] 20/10/2020 09:47

Spencer if you dodnt understand the significance of which phones for apple have IQE content and this mornings cnbc article explaining which phones are being selected and how cost and margin on nth sales in volume IT works then I wont try to educate you further. Please sell me your shares, i am happy to pay 56p today and always happy to pay the full offer price under 80p. I will use my analysis, some of which I have shared rather than your backward looking drivel

[dave_spencer] 20/10/2020 09:37

Savvy - And I could write a diatribe with an example of a company going into liquidation due to chasing volume with a vision of future profits that never actually transpired. IQE have historically failed miserably to make money. They are a little bit like the racehorse that was destined for greatness but never really tuned up on the day. Why do you constantly go on about Apple? The iPhone 11 has been the best selling phone in the world since it was launched 12 months ago. IQE’s turnover, profit and year end predictions don’t seem to have benefited in anyway whatsoever. Just take a look at what has happened to Apple’s share price, turnover and profit during the last 12 months.

[savvy investor] 20/10/2020 09:02

Jim, I was responsible for pricing and hence margin for a very very large storage software company for the EMEA region. Very regularly to sign large customers you have to give what could be considered aggressive pricing to win the deal. We signed our biggest customer with revenue to us of over $150m per Annum, with margin of negative 40percent in Year1. The Margin was calculated carefully based on volume expectation, and increases over the term of the contract in 3 ways. We reduce Cost due to economies of scale, We develop like product to replace original but with higher capacity and hence again lower cost (read 8inch wafer), and of course 3 we sell more, hence increasing the benefit of the first 2, and we sell incremental product to our trusted customer along with using them as reference to sell to others who didnt want to do the same level of due dilligence in choosing supplier to keep costs lower for them (and us). At year 3 the margins were 42% positive. I believe Tim Pullen is far smarter than I. Here I believe the volume hasnt been there yet, but now and forthcoming will be at the levels to rapidly increase margins on the nth sale above £160m. So I have made investments accordingly and the article about the content in Iphones, and todays link to CNBC about customers going for the top models should rapidly bring this to the balance sheet. Good luck, please dont listen to me....

[jimboyce] 20/10/2020 08:07

You have to ask the question of who is responsible for pricing because if you are in negotiations with a major customer for a large contract or order, you have to have a reliable cost and overhead figure to get to a profit margin right and to make it worthwhile doing it. If you are blinded by the fact that it is a very large order and you must have it, you may just be going through the motions without actually making any money.Management hopefully approve all the contracts to ensure that they are worthwhile and not being just busy fools. If we are bidding to just get our foot in the door, then long term this is not going to help anyone. Tim Pullen is the accountant who has the job of reporting the historical results. Hopefully he is also very much involved in providing the information that is needed to make a good commercial decision when it comes to the most important job of all and that is getting the pricing right.

[savvy investor] 20/10/2020 08:07

Agree Lord! And I am pleased how many times he has referred to the model that means revenue growth now is hugely margin generative. Here is some pleasant reading for you, roll on 80p https://www.cnbc.com/2020/10/20/apple-chinese-users-are-mainly-snapping-up-iphone-12-and-iphone-12-pro.html

[lord loads of lolly] 19/10/2020 23:17

Agreed, though I’m less worried about FY revenues. More concerned whether they make any decent money out of it. Tim Pullen should paper his entire office with three simple words “margin, margin & margin”.

[crosswires] 19/10/2020 18:57

Provonar, point number 2 is the crux of the matter I believe. I think the reason they usually seem to do worse than investors expectations are this. If in March 21 they do not handsomely beat £165m then this will be the reason, and if so I may exit because if the margin keeps being eroded the growing market doesn’t really help us.

[provonar] 19/10/2020 16:55

lord loads of lolly - indeed, no chickens being counted. Now that the demand/release risk is reduced, the two big down-side risks I see that remain are: 1. IQE losing market share - there is an ongoing expansion in epiwafer production capacity across the globe, including with many vertically-integrated manufacturers; 2. Low IQE pricing power, especially on volume orders. I can see how IQE are fighting the first risk, with their diversification into a 'materials-solution provider', but there's no visibility into how the second one is being addressed (expanding your customer base can help, but there's no knowing whether the customer demand is out-stripping the IQE supply). The next trading update will be very interesting to try to deduce what's going on at present...