Infineon’s Q2 publication was quite mixed: revenue came in above expectations while profitability fell short. The company provided a new guidance for FY20, following the withdrawal of the previous one on 26 March 2020, which is in line with the consensus.
Companies: Infineon Technologies
Infineon reported strong Q1 result, especially at the profitability level which beat consensus estimates. The company Q2 20 guidance was a bit soft, but the main point of interest is the broader picture of the company, which maintained both growth and profitability assumptions for 2020, implying a back-end loaded year.
Infineon’s Q4 publication was strong. The company achieved a decent profitability level and good cash generation. The sequential outlook was a bit disappointing, but the FY20 guidance implies an even stronger recovery to start in March 2020. On top of this, the equity story of the company, driven by both Power and Digitalisation in Automotive and Industrial applications, remains intact with strong secular growth trends.
The Q3 publication was reassuring for the market, with an expanding top line (in line with expectations) and the confirmation of all guidance for 2019. The only downside might come from the under-utilisation charges recorded in this quarter, and which are expected to continue in Q4, but, still, the margin was above expectations. Lastly, the company is managing well the financing of the Cypress acquisition.
Infineon reported its Q2 19 figures which were in line with expectations, despite a still challenging market environment. Despite, this situation, the company has not discontinued its FY19 guidance given the March adjustment already factors in this view. Automotive should remain the main driver this year, as well as power management, which enjoys resilient demand.
Q1 revenue are up 11% yoy to €1.97bn, in line with expectations
Q1 segment result is €359m (+27% yoy) with a margin at 18.2% (+2.3 ppt), both in line with expectations
Q1 EPS came at €0.22/share, roughly in line with expectation
Q2 revenue expected to be flat on a sequential basis
Q2 segment result margin should decrease by 2ppt to c. 16%
Full-year revenue growth expected to be +9% yoy, representing the lower range of guidance (+11% plus or minus 2%)
Full-year segment result margin should come in at 17.5% vs (18% guided previously)
Investment cut between €100m and €200m for 2019
Q4 FY18 revenues were up 5.5% qoq to €2,047m, above our expectations and above consensus (range €2bn to €2.04bn).
This brings FY18 revenues to €7,599m, up 7.6% yoy, beating again consensus and our expectations (around +7%).
The Q4 Segment Result was up 25% qoq to €400m, above both the consensus and our expectations.
The FY18 Segment Result was up 38% to €1,353m, however, this is slightly below consensus (€1.393bn) and our expectations (€1,427m).
The company recorded a €159m provision related to the Qimonda case, bringing the whole provision for this matter to €180m in the balance sheet.
As a result, the Q4 net result ended-up at €141m, down from €271m in the previous quarter. The FY18 net result was €1,075m up from €790m last year.
Q4 adjusted EPS was €0.28, slightly above the estimate of €0.27 (range €0.22-0.30), which brought the FY18 adjusted EPS to €0.98.
On the back of this good set of results, the company proposed increasing its dividend to €0.27/share (we expected €0.28).
Going forward, Infineon sees its Q1 19 revenues declining 4% qoq due to seasonal effects, implying €1,956m of revenues, which comes slightly above our expectations (€1,931m). The Q1 Segment Result’s margin should reach 17.5% at mid-point of the PY, based on a EUR/USD FX rate of 1.15.
For FY19, the company sees revenue to grow 11% (+/- 2pts) and the Segment Result’s margin to reach 18% at the mid-point of the FY (vs 17.6% for consensus).
Infineon reported quite good Q3 results with revenues growing by 6% seqentially and yoy, boosted all divisions. The operating margin was boosted seqentially mainly thanks to the Industrial Power Control and Power Management & Multimarket divisions. Following these robust results, Infineon expects Q4 revenue growth to be about 3% and the Q4 operating margin to reach about 19%. The upper range of guidance is expected for revenues and a higher operating margin (17.5% vs 17%).
Infineon reported Q1 18 revenues of €1,775m, down by 2.5% sequentially and up by 8.1% yoy. Industrial Power Control was the strongest up-mover yoy despite a slowing momentum (€296m, +12.1%), followed by Power Management & Multimarket (€545m, +9.7%) and Automotive (€770m, +9.2%). Chip Card & Security witnessed reversing momentum (€162m, -6.9%).
The gross margin reached 36.4%, up 30bp yoy, while the Segment result margin reached 15.9%, up 90bp yoy. The best performer was PMM (19.6%), followed by IPC (16.2%), CCS (15.4%) and ATV (13.4%). The operating margin reached 14%, while the net result came in at €205m.
The guidance for Q1 18 is for a sequential increase in revenues of 4% (± 2%), with a Segment result margin of 16%. For FY 2018, at an assumed USD/EUR exchange rate of 1.25, the company downgraded its guidance, with growth of 5% (± 2%) associated with a 16.5% Segment result margin (vs. +9% and 17% previously).
Infineon reported Q4 17 revenues of €1,820m, down by 0.6% sequentially and up by 8.7% yoy. Industrial Power Control was the strongest up-mover yoy (€328m, +17.6%), while all other businesses witnessed a slowing momentum: Automotive at €736m (+6.7%), Power Management & Multimarket at €573m (+7.1%) and Chip Card & Security at €181m (+4.6%).
The gross margin reached 37.5%, up 120bp yoy, while the Segment result margin reached 18%, up 130bp yoy. The best performer was PMM (22%), followed by IPC (18.3%), CCS (18.2%) and ATV (14.8%). The operating margin reached 14.9%, while the net result came in at €176m.
The guidance for Q1 18 is for a sequential decrease in revenues of 2% (/- 2%), with a Segment result margin of 15%. For FY 2018, at an assumed USD/EUR exchange rate of 1.15, the company guided for a growth of 9% (/- 2%) with a 17% Segment result margin.
The proposed dividend for 2017 is €.25 per share (vs. €.22 in 2016).
Infineon reported Q3 17 revenues of €1,831m, up by 3.6% sequentially and by 11.2 yoy. Automotive and Industrial Power Control were up double-digit yoy (€766m, +13.3% and €321m, +14.6%), Power Management & Multimarket showed a persisting ascending momentum (€557m, +9.4%), while Chip Card & Security went back into the black (€185m, +7.6%).
The gross margin reached 38.2%, up by 170bp sequentially and 160bp yoy. The Segment result margin reached 18.5%, up 290bp yoy. The best performer was PMM (23.2%), followed by CCS (18.4%), IPC (17.1%) and ATV (15.7%). The operating margin reached 16.3%, while the net result came in at €253m.
The guidance for Q4 17 is for a sequential flat development in revenues, with a Segment result margin of 18%. For FY 2017, at an assumed USD/EUR exchange rate of 1.15, management has confirmed an increase in revenues of 8-11%, and a Segment result margin of 17%.
Infineon reported Q2 17 revenues of €1,767m, up by 7.6% sequentially and by 9.7% yoy. Automotive and Industrial Power Control were up double-digit yoy (€783m, +16.9% and €293m, +10.6%), Power Management & Multimarket showed growth (€520m, +4.8%) while Chip Card & Security fell back into the red (€169m, -6.1%).
The gross margin reached 36.5%, up by 40bps sequentially and 160bps yoy. The Segment result margin reached 16.8%, up 260bp yoy. All business lines crossed or reached the 15% threshold: PMM reached 17.5%, CCS 17.2%, ATV 16.7% and IPC 15%. The operating margin reached 13%, while the net result came in at €199m.
The guidance for Q3 17 is for a sequential increase of 3% (+/- 2%), with a Segment result margin of 17.5%. For FY 2017, management has confirmed its upgraded guidance and is expecting an increase of 8-11%, while the Segment result margin is expected to reach 17%.
Infineon reported Q1 17 revenues of €1,642m, down 2% sequentially and up 5.5% yoy. Automotive and Industrial Power Control were up yoy (€705m, +14.8 and €265m, +6%), Chip Card & Security flat (€174m, +0.6%) and Power Management & Multimarket down (€497m, -2.5%).
The gross margin reached 36.1%, down 20bp sequentially and up 20bp yoy. The Segment result margin reached 15%, down 170bp sequentially and up 90bp yoy. All business lines witnessed a decrease in their profitability compared to the previous quarter, with CSS remaining the best performing at 16.7% and the worse IPC at 9.1%. The operating margin reached 11.2%, while the net result came in at €161m.
The guidance for Q2 17 is for a sequential increase of 5%, with a Segment result margin of 15%. For FY 2017, management has confirmed its guidance and is expecting an increase of 6% +/-2%, while the Segment result margin is expected to reach 16%.
Infineon reported Q4 revenues of €1,675m, up 2.6% sequentially and 4.8% yoy. Automotive and Industrial Power Control were up yoy (€690m, +1.4% and €279m, +3%), Power Management & Multimarket flat (€535m, +0.2%) and Chip Card & Security down (€173m, -4.4%).
The gross margin reached 36.2%, down 30bp sequentially and 270bp yoy. The Segment Result margin reached 16.7%, up 110bp sequentially but down 120bp yoy. All business lines witnessed an increase in their profitability compared to the previous quarter, with the exception of IPC, which was down to 12.9% from 15%.
The operating margin reached 13.7%, while the net result came in at €225m.
The guidance for Q1 17 is for a sequential decrease of 4% (+/-2%), with a Segment Result margin of 14%. The guidance for FY17 is 6% (/-2%) for the top-line, with a Segment Result margin of about 16%. The long-term profitability margin was raised from 15% to 17%.
The dividend was increased by 10% to €0.22 per share.
Infineon reported Q3 revenues of €1,632m, up 1.3% sequentially and 2.9% yoy. All segments increased compared to the previous quarter, with the exception of Chip Card & Security, which was down 4.4% sequentially at €172m but flat yoy. The strongest sequential increase came from Industrial (€280m, +5.7%) while yoy it is Automotive (€676m, +8.9%). Power Management & Multimarkets showed a sequential increase (+2.6%) but a yoy decrease (-1.5%).
The gross margin reached 36.6%, up 150bp sequentially and 180bp yoy. The Segment Result margin reached 15.6%, up 140bp sequentially and 20bp yoy. All business lines witnessed an increase in their profitability compared to the previous quarter, with the exception of CSS, down to 18.6% from 20%. The biggest mover was IPC, up 520bp sequentially at 15%.
The operating margin reached 11.8%, while the net result came in at €186m.
The guidance for Q4 16 is for a sequential increase of 3% (+/-2%), with a Segment Result margin of 17%, therefore validating the previously announced guidance for FY 2016 (revenues increase of 12% +/-2%, Segment Result margin of about 16%).
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The ‘Moving Forward Act', the strongest automotive safety bill in decades, has now been passed in the House of Representatives. The bill is focused on advancing safety technologies proven to reduce crash and harm and to make sure strong safety standards are in place to save lives. The bill, which now needs to be passed in the Senate, will mandate automatic braking, lane-keeping, blind-spot detection, event data recorders as well as DMS in all cars and trucks sold in the US from 2024. This aligns with the European General Safety Regulation, which passed into law in November 2019.
However, in the EU, the European Association of Automobile Manufacturers (ACEA) has requested a 2‐year delay for the introduction of the 2022 Euro-NCAP protocols due to the projected lengthy time that will be needed to recover from the effects of COVID-19. Euro NCAP has agreed, and a delay is now expected to the 2022 and 2024 rating. The new dates will give automakers and Tier 1 suppliers more time to incorporate the necessary changes given the events of recent months with a number of manufacturers announcing 12 month delays to new models.
Companies: Seeing Machines
The FY 2020 results are in line with our expectations and reflect the impact of the previously announced switch from large perpetual licences to recurring annual term licences during the year. Despite the COVID strictures, with its large global partnerships, D4t4 continues to close numerous lucrative data gathering and data management contracts with major blue-chips around the world. It is successfully converting a high proportion of its new sales to recurring revenue contracts, but this will sacrifice growth and earnings in FY 2020 and FY 2021. Nevertheless, with growing recurring revenue base, an exciting pipeline and a very strong balance sheet, D4t4 is very well positioned for continued long-term growth and security.
Companies: D4T4 Solutions
ECSC Group plc* (ECSC.L, 71.5p/£7.2m) | Trackwise Designs plc (TWD.L, 90.5p/£20.0m) | Transense Technologies plc (TRT.L, 59.5p/£9.7m)
Companies: ECSC Group Trackwise Designs
Gresham continues to show strong progress in difficult times. 18% yoy organic growth in Clareti ARR is amongst the fastest growth of any UK software company. It is being achieved because Gresham has built a disruptive product that is now replacing incumbents at Tier 1 financial institutions around the world. These results underpin our FY20 EBITDA expectations. The implied valuation of Clareti’s ARR is <6x revs, which we think offers value for an emerging leader.
Companies: Gresham Technologies
IMImobile has issued an encouraging trading update, highlighting resilience in the Group’s core cloud communications operation. Gross profit rose 20%, with core Cloud comms (c.90%/revs) up >30% (inc. 3C acquisition). We estimate underlying organic decline at -5% y/y, in the middle of our scenario based range (-15% to 7%) with slow decline implying stabilisation in underlying communication traffic volumes post-lockdown. This stabilisation has been driven by growth in core sectors offsetting decline in sectors adversely impacted by the pandemic. Significantly, demand for the Group’s IMIConnect platform (SaaS revenues model) has remained robust as customers look to accelerate Digital Communication strategies, whilst upsell of additional channels in Q1 is also likely to drive future additional volumes from the Group’s existing base. Net cash of £2m is only modestly light of previous N1S forecasts for H1’21 prior to lockdown (£6.3m) and implies positive FCF through the previous 9-month period. We keep forecasts under review at this stage. In the medium-term, we see a path based on undemanding assumptions to FCF of £15m, offering a 7% yield at current valuation. The Group trades on 12x FY’19 EV/EBITDA (c.10x FY (Mar)’20E EBITDA based on previous forecasts), below recent sector acquisition multiples whilst offering a higher proportion of recurring revenue and operating further up the CPaaS value chain.
SDL held an introductory session for the Group’s new SLATE proposition (launched in June). Good traction has been seen within the Group’s existing base presenting an attractive upsell opportunity, whilst also enabling expansion of the Group’s TAM with a market-leading, highly automated and immensely scalable solution. Management estimate SME and ‘off-grid’ translation projects to be a market worth in excess of $10bn, with SLATE allowing the Group to target these areas in a more meaningful way. The new product fits with SDL’s strategic objectives of building deeper relationships with existing customers and building leadership in Language technologies. N1Se conservatively forecast Language Tech segment revenue growth of +4% and +6% for FY’20E and FY’21E. Outperformance in FY’21 by £2m of sales (FY’21E LT growth: +10% y/y) could deliver £1m uplift to EBITDA and FCF we estimate (+3% and +4% vs current forecasts). N1Se FY’21E forecasts currently generate an FCF yield in excess of 8%, with risk to the upside.
Gfinity plc* (GFIN.L, 1.625p/£14.0m) | Blackbird plc* (BIRD.L, 16.5p/£55.4m) | Tern plc* (TERN.L, 11.5p/£31.1m) | The Panoply Holdings (TPX.L, 72.5p/£39.9m)
Companies: GFIN BIRD TERN TPX
Oxford Metrics has delivered solid 1HMar20 results, with sales of £15.0m (PY: £16.1m) and adj. PBT £0.3m (PY: £1.7). Within this, Yotta demonstrated continued ARR progression (up +15% to £6.8m) while at Vicon, the division added additional bluechip customers, further validating its industry leading position. Progress was, however, held back by lockdown restrictions. £1.1m of expected orders slipped to post period, but have now largely been fulfilled. Had they occurred as expected group sales would have been flat y/y. Looking ahead, CV19 related uncertainty leads us to withdraw forecasts. At this stage we expect disruption to be short-lived. As such – and considering OMG’s persuasive track record - we continue to view the company as a long-term winner in this growth industry.
Companies: Oxford Metrics
A concerted move into managed services is improving the quality of revenues. Management is targeting the growth in recurring revenues to cover the cash cost base of the company by 2022. This event will mark a material derisking of the investment case and is the pathway to the share price doubling or more over the next 2-3 years. Buy.
LoopUp has provided an update on trading to coincide with today’s AGM…in essence, the group continues to see activity “materially” above pre-COVID levels, and is confident of exceeding expectations for 2020. We choose to leave our forecasts (that we believe to be roughly in line with consensus estimates) unchanged for now, in advance of further detail likely with a fuller H1 update in early July.
Companies: Loopup Group
EBITDA of £10.5m (£10.4mE) was delivered from revenue of £49.2m (£46.7mE) with net cash of £24.1m, (as revealed in August), comfortably ahead of our £21.5m year-end forecast. Newsflow in the period included three acquisitions, the securing of a five year framework agreement for deployment of TRACS Enterprise with a major Train Operating Group, and the successful transition of the CEO role to Chris Barnes. The Group continues to deliver the proven mix of self-funded acquisitions and organic growth, demonstrating comfortable delivery of forecasts reiterated at interims, and a very strong balance sheet giving capacity to deliver much more of the same. With the new CEO able to deliver operational efficiencies to a Group already well versed in delivering successful acquisitions, we look forward to the next part of Tracsis journey. Target 775p reiterated.
A strong interim period to January 2020 delivered the expected £26m revenue as reported in the February trading update, with a 31 January net cash balance also of £26m – EBITDA of £5.6m (post IFRS16), and adjusted PBT of £4.6m highlighting a strong performance. The Group has unchanged strategic ambitions – organic growth and M&A, both in evidence in Rail Technology & Services (RT&S) with 13% organic growth and the post period end acquisition of iBlocks. We withdrew forecasts last week due to the impact of COVID-19 on the 2H-weighted Traffic & Data Services business, given the exposure to cancelled large scale summer events, and uncertainty over traffic surveys; however, the potential for the Group is unchallenged when the world normalises. New contract wins, new product launches, new acquisitions and a hearty balance sheet continued to offer significant upside in 1H and post period end. Target price 900p remains based on our FY21 forecasts, which in theory should be consistent with previous forecasts and we look forward to reinstating numbers when the virus dust settles.
LoopUp recently updated on the first four months of 2020, which have seen an exceptional level of customer activity and new client wins. This is largely driven by the COVID-19 pandemic and the associated shift towards remote working with additional use of conference calls, but the group has also recently implemented an increased focus on Professional Services, which in our opinion could boost long-term potential. This note focuses on current activity levels within the business, the opportunity within Professional Services and the attitude of investors towards remote meetings companies.
Following the announcement of a business restructure and temporary cost reduction measures to reduce costs by A$12m, we have updated our forecasts for Seeing Machines. We believe that the significant measures taken by the management offset a weaker revenue outlook, as the impact of COVID-19 looks likely to continue for longer than anticipated. The net result is a similar to previous expectations in terms of cash, which we believe remains sufficient to see the company through FY22 ahead of profitability in FY23. The long-term effects of the business restructure is expected to be positive for shareholder value as demonstrated by our DCF based valuation which increases to 7.2p (from 7.0p).
AGM statement as expected; Resume with a Buy
Companies: Cloudcall Group