H2-24 recovery outlook offsets weak Q1-24 guidance

Infineon published Q4 figures in line with the consensus and our expectations. The company guided for a weak Q1 24 with €3.8bn in revenues (~8% qoq decline) with the segment margin guided at 22%. However, the FY24 guidance was in line with the market’s expectations, with the ATV segment expected to prove more resilient than had been expected. We will slightly reduce our FY24 estimates but remain confident in the company’s long-term profile.

Q3 23: declining ATV margin worries the market

After two quarters of consensus beats and upgraded guidance, Infineon published its Q3 figures in-line with consensus and re-iterated its FY23 guidance. Revenue stood at €4,089m, and the operating margin at 26.1%. Like its peers, Infineon benefitted from robust automotive and industrial end-markets, partially offset by weakness in the consumer applications end market. For Q4, the company has guided for flat revenues qoq and a segment operating margin of 25% (-110bps qoq and -80bps vs consensus)

Q1 23: consensus-beating performance accompanied by FY guidance upgrade

Infineon published its Q2 figures which beat market consensus. The performance was supported by the good performances in ATV and GIP (previously: IPC). PSS and CSS continued to remain weak as expected by the company. Infineon has given nearly a flat revenue guidance for Q3, but with a lower margin due to the absence of tailwinds as observed in Q2. For the full year, it has upgraded its guidance even though it does not see much improvement in the PSS and CSS segments.

Q4-22: Perfect cocktail of exposure leads to a strong outlook

Infineon performed strongly in its final quarter. The forward guidance was significantly improved, in terms of both the growth prospects but especially profitability. Auto, Industry and renewable energies will continue to be the main growth drivers. Infineon also announced an increase in Capex mainly due to the construction of another fab in Dresden worth €5bn. The punchy guidance combined with the positive signals on slowing rate hikes should propel Infineon shares towards a more appropriate le

Automotive semiconductors, as bullish as can be

Infineon held a conference yesterday to discuss the long term outlook for Automotive and new applications. The growth drivers are not new: electrification, ADAS, premium, automation and other gadgets will continue to drive semiconductor content growth over the coming decade. However, this conference reminded investors of the growth potential to which Infineon is exposed.

Q3-22: Infineon does it again

A strong past, a strong present and a strong future performance. Infineon is surfing on the Auto secular trend that it announced during its last CMD. Even the business divisions exposed to consumer electronics performed better than expected. The strong beat was followed by an upward revision of its guidance on sales, profitability and FCF generation. This is the third quarter in a row with an upwards revision to guidance; simply stunning.

Q2 22: despite FY22 guidance increase, fear for future margins dominates

Infineon has produced a solid set of results, with a beat in all metrics and guidance raised for its full year. It also released guidance for the next quarter, which has frightened the market due to the sequential decline expected in margins. Though the demand for its chips remains far above its production capacity, the macro-economic environment’s pressure on profitability has given a reason for the market to sanction this growth stock.

Q1 22: guidance adjusted upwards

As expected after STM’s and NXP’s strong results, Infineon has published impressive figures and has upgraded its guidance. Driven by electrification and digitalisation, Infineon has performed better than consensus in all end markets but IPC. Demand remains far above its production capacities. This quarter also marks the end of Reinhard Ploss as Infineon’s CEO.

Q4 21: a record quarter to announce more coming

Infineon finished the year with a record quarter, with a consensus beat in both sales and margins. The profitability level is at its peak, and the trend is expected to carry on at least until FY23 as customers are recognising more and more the value in semis. The guidance for FY22 promises another solid year ahead.

Growth ahead

At its capital markets day, Infineon confirmed that both the market and its positioning were well orientated to provide long-term growth. Indeed, through Automotive, Green Energy and Industry, Infineon has the portfolio of products to answer customers’ increasing needs.

Q3 21: Austin now Malacca, supply stays under pressure

Infineon published its Q3 21 results which stood slightly below consensus. The tight supply environment is still currently weighing on revenues, especially due to factory shutdowns in Malacca, in Malaysia, because of COVID-19. Demand remains very strong in all end markets and the good margins partially offset the decline in sales.

Q2 21: good results hidden by shortage fear

Infineon released very convincing results, with growth in most applications, especially Automotive. The huge increase in the book to bill is witness that the tightness in supply is still very real. However, the market fears for “bottlenecks” in the foundries’ supply.

Q1 21: better to focus on the FY21 guidance

Infineon released its Q1 21 figures, which were roughly in line with expectations, but this was offset by the rather soft Q2 21 guidance. Yet, the demand environment remains robust for Infineon’s products, and is expected to last throughout 2021. We see a profitability improvement throughout the year as the fab utilisation should remain strong.

Q4 20: sharp automotive rebound, cautious 2021 guidance

Overall, the release was in line with estimates, helped by the rebound in automotive markets and better sales in the consumer markets. The Q1 outlook was better than anticipated while FY21’s one was very cautious. We, therefore, believe there is room for improvement. Nevertheless, we see little upwards pressure in the short term given the already demanding valuation of the stock.

Q3 20: slight beat on consensus and solid Q4 guidance

Infineon released its Q3 figures which included Cypress for the first time, the earnings of which have been allocated to ATV, PSS and CSS. Overall, Q3 sales beat consensus expectations while there was a slight disappointment at the profitability level, hampered by both pandemic and Cypress-related costs. Going forward, Infineon anticipates solid growth for Q4, driven by the early signs of stabilisation as well as a one-off effect due to consolidation.

Alphawave Semi: FY23 trading update, amended forward guidance

Alphawave Semi has reduced guidance for FY23 and prospectively citing lower revenues from China, changes in expected revenue recognition from long-term contracts, and continuing investment in R&D. The share price has reacted negatively, giving up most of the gains since the trading statement at the end of January. Current consensus, which is a good match for pre-existing guidance, should be reduced, most likely following release of the FY23 results and full 1Q24 trading update due on 23 April. H

It’s not what you sell, it’s the way that you sell it

This report is intended to help UK small- and mid-cap investors gain a better understanding of software companies’ routes to market, and to highlight how one of the most important facets of the way in which they grow and deliver value is routinely ignored.  We examine sales processes for six UK-listed companies and one that has recently been taken over, and consider why they have followed their respective paths.

Eleco - FY23E EBITDA +3% ahead, FY24-26E EBITDA & EFCF reiterated

Eleco’s FY23 trading update highlights record recurring revenue growth of +22% to £20.7m, strong profitability that leads us to expect FY23E adjusted EBITDA +3% ahead of our previous forecast, and a confident outlook that leads us to reiterate our FY24-26E EBITDA and EFCF. Across the group, excellent execution of the SaaS transition has driven recurring revenue to 74% of group revenue from 64% in FY22, and ARR is +24% yoy to £22.6m (£19.7m at H1), including c£2m of ARR from the successful acquis

LIBERUM: Cirata plc: Cirata from the flames

Zeus Top Picks for 2024 - 2023 review and outlook for 2024

On 9 January last year, we set out our ten top stock picks for 2023, for what turned out to be another relatively poor twelve months for UK equities due to two wars, stubbornly high inflation and further tightening of monetary policy. This was even as other major markets, such as the US, largely recovered in the year. In the 2023 calendar year, the AIM All-Share index fell 8.2% and is still 42% off its 2021 high. From the release of our 2023 top picks note, the average total return (assuming div

Synectics + (SNX, House Stock at 185p) - Strong FY23A profit growth to continue

Maintel - Strong FY23 year-end TU continues trend of over-delivery

Maintel has reported a trading update for the year ending December 2023, indicating revenue in of at least £101m and adj EBITDA of “in excess of £9m”, compared with respective forecasts of £98m and £8.6m. Net debt of £18.1m also outperforms our expected year-end net debt of £18.6m. The group is continuing the trend established with the reintroduction of forecasts in April 2023, where growing confidence in delivery led to upgraded forecasts in both August and September, and still achieving outper

Morning Note – 4 April 2024

Auction Technology Group - H1/24 Trading update

ATG’s H1/24 trading statement indicates revenue for the six-month period to 31 March 2024 was $86m, a 6% increase on H1/23 (1% organic growth), helped by the addition of the EstateSales.Net (ESN) marketplace last year, which performed well in the period. Total marketplace revenue increased 2% (organic), driven by growth in value-added services (VAS) and event fees, offsetting a decline in commission revenue (mainly through lower asset prices).

Intelligent Ultrasound Group - GE Healthcare launches new Voluson Signature with

GE Healthcare has announced the launch of the Voluson Signature 20 and 18 ultrasound systems, with the related press release noting these systems ‘comprehensively integrate artificial intelligence’ to improve the ultrasound procedure for clinicians and the women being scanned. These ultrasound systems include SonoLyst, the AI which incorporates Intelligent Ultrasound’s ScanNav Assist and ScanNav AutoCapture AI software. The launch of additional Voluson systems including the SonoLyst suite of AI