Taiwanese semiconductor supplier, $HIMX is undervalued vs peers like $ASML, $TSM, $QCOM. Upto 7x upside comparing P/S ratios (2x for $HIMX vs 14x $TSM & $ASML & 8x $QCOM). Factor in growth & $HMAX is a potential 10-bagger given AR/VR, IoT, smartdevice exposures
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Perhaps, a large part of this valuation lag is explained by $HIMX ’s large exposure to Chinese panel suppliers, who were impacted by Trump’s tech war on China. This risk has been removed for now with the new President likely to adopt a more China-friendly approach vs Trump
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$HIMX supplies IC for “display” products (LCD screens in smartphones/watches, tablets, monitors & touch controllers, displays/dashboard/GPS in cars, etc)
Has 9% market share behind Samsung (23%) & Novatek (22%) in Display. Also, 40% mkt share in tablets & 27% in Autos
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Display & smartphones biz benefitted greatly in C19 due to increased WFH & online learning. Growth in this segment will come from higher sales for digital learning products (tablets), 5G enabled smartphones, upgrade to 4K & 8K TVs, smart-tech adoption in cars, IoT growth etc
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Interestingly, $HIMX also offers Wafer Level Optics (WLO) for 3D sensing solutions (face detection in camera, fingerprint logins in smart-devices, etc) – this is key in areas like AR / VR. Some key customers here are Samsung, LG, Foxconn, Huawei, Logitech, etc. Big names!!!
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This 3D sensing tech when combined with AI makes a powerful combo which finds use in a variety of areas like in Smart Home Devices & Appliances (IoT - for eg smart fridge, bulbs), Air conditioning, Robotics, etc. This I guess is $HIMX 's ‘futuristic solutions’ department!!
The massive supply constraint being experienced alongside unexpected demand growth has made it diff for OEMs like Apple & even autocompanies to get key parts - - > pricing rises - - > good for $HIMX. This will likely continue for a while & $HIMX should benefit
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Q4 results due Feb 4 (Thurs) but prelims showed stellar results. $HIMX beat guidance by a margin and a half (rev+15% qoq vs +10% guidance & gross margin of 31.2% vs 29% guidance. LTM Q3’20 FCF was $40m – in Q4, this should be much much higher given rev and margin growth
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$HIMX insider ownership is c25% with founder & CEO, holding 21.7%. In 2018, the CEO announced intention to use c$5m of his personal funds to buy back shares – this is still ongoing. No question about commitment from insiders here
11/ Summary: leadership position in display segment + exposure to futuristic growth area makes this interesting. Valuation differential is also bonkers giving at least 4-7x upside. With growth factored in, $HIMX is a potential 10-bagger here.
2/ From Fitch's Oct'20 report:
- 40% mkt share in largest segment (sports data & content-related services)
- Well placed as largest player to outpace mkt growth, with 29% avg org rev growth between 2014-19
3/ - Positive sector trends (eg online betting growth with 24hr betting options, e-sports and simulation sports gambling) = more data points for Sportradar to sell on the pre-game and live data markets.
@BabyYodaCapital's thread on $CRTO is v interesting. This one really got me thinking. There is certainly an argument for RV here - meaning $CRTO has lot of upside on pure fundamentals alone Vs the likes of $MGNI and $TTD
But I believe there is a bigger picture here. Bear with me
Let's face it. $CRTO's shift away from retargeting into the 'New Solutions' segment is driven by a need to survive due to the 3rd party cookie issue....
..but I agree that $CRTO's strong relationship with its retail clients has helped it gain access to a potential goldmine - i.e. client 1st party data esp. ecomm.
As a standalone entity, if management are able to execute on this transformation, $CRTO will do amazingly well.
Can someone please explain to me why $TWTR lags so much behind $SNAP?
I get it – it’s a controversial stock – but come on, this lag is just retarded!
If $TWTR were to converge to $SNAP ratios – expect share to be $110 - $137.5 or 2x – 2.5x from here.
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Controversy, you say.
Fine, lets apply a 20% “controversy discount” -- > still indicates 60-100% upside or share price of between $88 - $110 for $TWTR !! A no brainer trade, I say!
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I don’t think people appreciate $TWTR 's true potential. It isnt a charity, they are already monetizing – in fact, $TWTR generated $210m FCF LTM! Probably more when you factor in Q4 growth which is to come. Compare that to $SNAP - still burns cash but trades at 2x valuation
- 31.2% gross margin vs 22.3% in Q3 & vs 29% guidance. Strong demand & better pricing helped. Allocated capacity to higher margin products
- EPS of 19.7c vs 16.7c est and vs 15-16c guidance
- $60M FCF in Q4 alone
2/ Extracts:
$HIMX secured “more capacity for FY21 vs Q4. Expect total capacity to increase qoq in 2021”….“will continue efforts [to acquire] more capacity”.
“Secured meaningful capacity inc in auto where [SC supply shortage] is overwhelming” - its leadership position helps!
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“The overall SC industry supply will not have any signf increase any time soon while strong demand is likely to persist longer than exp. In such an environment, $HIMX is preferred supplier to work with for our sizeable scale, diversified vendors & extensive product offerings”