Iqe Share Discussion Threads

[lord loads of lolly] 20/6/2022 11:31

Thanks guildedge. Here's hoping, as you say. They could have made money on a turnover of £160m if they'd priced appropriately (or controlled their overheads more effectively). Though of course whether they'd then have achieved £160m would largely be down to competitor pricing. I still feel any company that persistently calls itself "market-leading" has to have some pricing power left. Unless of course they're not really market-leading after all.

[guildedge] 20/6/2022 10:53

Just to be clear I came up with that 108m figure based on a 40p share price. No one has said they will issue any/all of the 296m or so shares.

The difference now if they have a CEO with the ability to take the next steps. If they continue to turnover 160m they will never make any money. Their current setup is geared for much higher production. They need to make this happen or slash costs. Fact they are still hiring more staff tells a story. They can't all be for research?

At present they don't seem worried about losing money as they must think it will turn around soon.

Let's hope a growth in fabs globally results in great sales for IQE. GF are a partner as they expect big orders. Unclear if GF was an existing client or not.

[lord loads of lolly] 20/6/2022 09:54

Do one paulagomezpaula. No-one's interested in your irrelevant ad scams.

[lord loads of lolly] 20/6/2022 09:42

According to their 2022 factsheet, "IQE’s Mega Foundry in Newport ... currently has ten tools installed and optionality to add up to 90 more, depending on further product qualifications." It had net debt of £39.5m pre- the 2017 £95m fundraise. So where did the remaining £55.5m go? Who in their right minds would subscribe to a further fundraise (let alone one as big as £108m or more) without knowing the answer to this £55.5m black hole? In fact it's probably even worse than that, as net debt on 31 Dec 2021 was £5.8m. So unless the debt position has improved over the past 6 months, I reckon well over £60m of that 2017 fundraise has either been squandered or is unaccounted for. The three new Aixtron G4 reactors & three refurbished Aixtron G3 reactors ordered in 2021 to increase capacity at IQE Taiwan would only account for a fraction of this shortfall.

[guildedge] 19/6/2022 22:02

Actually that previous 2017 post showed they had planned to buy 40-60 machines over 3-5 years before it all went wrong. So 108m should allow the same again. If the share price rises and they are confident of the order no reason why they would stick at 108m. Of course they need funds to take up the shares. So price would be key if this happened. I would hope they retool current machines before doing this.

Big if on this happening butthe option is there if their fortunes turn around in next 12 months.

[longtallsally] 19/6/2022 21:15

Each tool is a bespoke set up for each customer

[guildedge] 19/6/2022 18:04

I think the issue is certain tools are prepared for certain production so it may not be so simple to say plemty of spare tools.

[lpavlou] 19/6/2022 17:18

That 1.40 fundraiser was the best business they have done in ages. 95m has been spent on tools and all the losses they have made. They have plenty of current capacity without the need to buy any new tools in The next couple of years.

[guildedge] 19/6/2022 17:18

Taken from 2017 IPO share issue RNS.
' Following completion of the Placing the Company has agreed to a lock-up
of 90 days.

Rationale for the Placing and use of proceeds


-- IQE is seeking funding to enable it to scale the business to capture
multiple high growth mass market opportunities.

-- This placing will allow IQE to expand its capital expenditure programme
in its new foundry, with the purchase of up to 40-60 new MOCVD machines
over the next three to five years.

-- The additional capacity should enable IQE to address multiple mass market
opportunities, including its leading position in the production of VCSEL
wafers for use in 3D sensing consumer electronic applications.

-- IQE is enjoying material demand for its VCSEL wafers from a leading
global consumer electronics company for use in one of its mass market
consumer products. In conjunction with multiple other customer
engagements IQE expects this demand to increase as its technology is
applied across multiple consumer applications and platforms.

-- This placing should also enable IQE to accelerate the development of new
products and technology; whilst protecting and enhancing its current
positioning in a fast-moving marketplace.

-- This placing will allow the company to de-gear and should enhance IQE's
financial strength and ability to supply global Tier 1 OEMs; both
existing and new customers.

-- This placing in conjunction with the "Cardiff City Deal" should allow IQE
to generate incremental sales. '


I suspect back in 2016 they had 40m debt too. So this might explain where most of it went. Reactors/debt repayment?

[guildedge] 19/6/2022 16:27

I think it's standard for firms to put these motions to raise money in AGM documents in case of expansion or planned takeover. Not checked last years document.

Yes I think they had something similar in 2020 AGM. Not in 2021. I can honestly see IQE using this if they expect big orders to come in.Low share price could be a worry but a turnaround story would move the share price higher anyway.

I think we know a lot of the money was used on new reactors. Likely used to expand operations overseas too.
They do like spending money. Back in May 2021 they had 650 or so staff. Now circa 685.

[lord loads of lolly] 19/6/2022 14:43

Not just dilution that would worry me, but how they’d spend any funds raised. Given the £95m they’ve burnt through in the past 5 years, with little positive to show for it (other than a vastly under-utilised Newport facility), why would they even need any extra cash? Please don’t edit out the question about how that £95m fundraise was spent, guildedge. I think it’s highly relevant - and not one the BOD could easily justify dodging either.

[longtallsally] 19/6/2022 11:53

At current share price that would be a worrying level of dilution.

[guildedge] 18/6/2022 21:17

hxxps://webcasting.brrmedia.co.uk/broadcast/preview/6093e6d7576c9638976d3e8c?v=vkLxvrAOJSw

Last years AGM.

One of the voting options is to allow them to issue 269m shares. If the share price was 40p it would raise 108M. If share price higher then clearly much more. Visa versa. I doubt they would be raising capital at 20p if the share price does fall away for some reason.

[guildedge] 17/6/2022 22:55

I tend to prefer to start with too many questions and cut it down I think the last 2 can be ditched. As it will soon be obvious on that front. I am interested operationally where they are at and if the issue financially is just they have inactive tools. Will have a think and edit it down a bit.

Are you asking any questions this year?

[sweenoid] 17/6/2022 22:45

EDITED
As an investor the AGM gives you the opportunity to ask whatever questions you want to, I have sent my list in and I am not asking anyone else’s opinion on the content.
However there is no point in asking questions that can’t or won’t be answered , therefore open ended questions are best OR if the answer is blindingly obvious to anyone or if they are just plain daft
As such I ‘suggest’; you rewrite and significantly shorten your list.

😉😂
S

[guildedge] 17/6/2022 22:08

1. How are IQE dealing with cost of living crisis with soaring cost of parts and rising day to day costs operationally? What impact do you anticipate this to have on margins?
2. Is the ambition long term to have 100 reactors fully operational at the Welsh site?
3. What percentage of production reactors are currently not in use?
4. How is the process of one product fits all customers coming along?
5. With the issue of currency hedging is there a plan long term to rebase outside of the UK to reduce currency headwind?
6. Can you give a rough breakdown on how the 95m ipo in 2017 was spent?
7. Can you explain why in 2016 Selling, general and administrative expenses was at 16m and now 2021 were at 37m. Yet profit has fallen away from 22m adjusted to a 8m adjusted loss yet revenue is 22m higher? What does the board feel the key change between now and then is that profitability in IQE has fallen away while costs have over doubled?

Okay gutted it down. EDITED.

[guildedge] 17/6/2022 21:58

So far they have announced 2 big partnerships. Porotech and GF. I am guessing as the year goes on this strategy of announcing new partnerships will continue. It was what they suggested as their way out of this black hole they currently seem to be in.

Be interesting to see who gets the next announcement. They used the word partnership in the 2 RNS related to these brands. That is no coincidence.

Could still be a TU next week. Really hard to call.

[indiestu] 17/6/2022 15:59

Yep, oil done. Strap yourselves in for a fun ride over the next twelve months! Have a good weekend all.

[semper vigilans] 17/6/2022 10:04

Needs a shove from somewhere.

[smithless] 17/6/2022 10:00

I do find it very interesting both Lombard Odier and Griffiths now have over a 9% stake in IQE - I assume from T.Rowe. These two investors do work quite closely and have invested either because they see pent up demand in the sector once supply chains normalise or some corporate action. Griffiths looks like he paid 35.2p, so purchased a few at 32p today. DYOR

[wigoyle] 17/6/2022 01:09

Useful sweenoid - thanks!