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.

Tracsis - Interims: FY order book visibility and a doubled pipeline

Interims to January are in line with the February TU, and materially unchanged forecasts for the FY July 2024. After the well flagged expected 1H24 revenue movement of -7% (vs 1H23 which had been strengthened by c£2m perpetual licence sales in the US), prospects for the second half are supported by several new contracts that will generate revenue in 2H24, in addition to material contract delivery milestones from existing large projects such as major TRACS Enterprise, Railhub deployments, and Rem

Eleco - FY23 recurring revenue growth of +22%, EBITDA +2% ahead

Eleco’s FY23 results show robust organic recurring revenue growth of +17% with recurring revenue +22% to £20.7m, adj EBITDA +2% ahead of the January update, and a confident outlook with Q1 ARR already at £24.5m vs £22.6m at FY23. At this point, the excellent start to FY24 leads us to reiterate our FY24-26E revenue, adj EBITDA, EFCF, and DPS, and we include the April 2024 acquisition of Vertical Digital in our FY24-26E net cash, as we explain below. As Eleco builds upon the successful acquisition

An excellent win, momentum rebuilding

Made Tech has won a material expansion (worth up to £19.5m/2yrs) with a long-standing customer, The Department for Levelling Up, Housing and Communities (“DLUHC”). Coming off the back of a soft H1 bookings performance, we expect this win to materially boost investor sentiment and reassure how notwithstanding a tough backdrop (given an impending general election) MTEC continues to outcompete legacy providers and in-so-doing, grow its share of wallet with large/strategic customers. Landing near FY

Morning Note – 24 April 2024

LIBERUM: 1Spatial: Walk the talk and get SaaSy

Alphawave Semi - FY23 results, 1Q24 trading update

Following the updated guidance published last week, Alphawave reported a 74% YoY increase in revenue to US$321.7m for FY23 generating adjusted EBITDA of US$62.6m, up 34% YoY. As previewed, bookings in 1Q24 were strong at US$117.9m, up 20% YoY and ahead of guidance. The results release and conference call confirm that revised guidance mainly reflects a more conservative approach to revenue recognition under new CFO, Rahul Mathur, and an acceleration in the pace at which Alphawave is pivoting away

tinyBuild (TBLD LN) - Focused on H2 recovery

tinyBuild’s FY23 results confirmed a sharp drop in revenue and swing into adjusted EBITDA losses, as well as asset impairments and high cash burn. After already making $10m of annualised cost savings, the company continues to run-down its cash balance and now relies on a H2-weighted release schedule to reduce cash outflows.

LIBERUM: Cerillion: Continued strong trading in 1H

Morning Note – 23 April 2024

Pennant International - FY23 update and appointment

We view confirmation of market forecasts / PEN's February update as providing further validation for the company's strategy. Ongoing business streams (including the concluding stage of the Boeing / Apache contract) provide underpinning for forecasts for the current year and software-derived earnings as strategized look set to rise in FY24 with the launch of the company's GenS technology (well-regarded and long-established OmegaPS series update). Tuesday's statement from the Prime Minister ple

Synectics + (SNX, House Stock at 188p) - Positive AGM statement

To infinity…

Cerillion has announced a very solid update, as H1 sales and EBITDA are both up 10% y/y to £22.5m and £10.9m respectively, notwithstanding the exceptionally strong base period (sales and EBITDA +27% and +38% resp.). Results therefore point to continued strong customer demand, reflecting how Cerillion’s out-of-the-box product continues to resonate and gain adoption, particularly in a ‘budget conscious’ environment, by offering faster time to market, greater configurability and at a lower cost. Me

Checkit - Signposting the path to profitability

In a tough trading environment, Checkit managed to grow FY24 revenue by 17% and reduce EBITDA losses by nearly half. The company has had a positive start to FY25 with new contract wins and the launch of a new module. Focus on growth from its existing customer base combined with strict cost control is helping Checkit to make steady progress towards its target of positive EBITDA and cash generation in FY27.

Hybridan Small Cap Feast - 24 April 24

24th April 2024 * A corporate client of Hybridan LLP ** Arranged by type of listing and date of announcement *** Alphabetically arranged **** Potential means Intention to Float (ITF) has been announced Dish of the day Admissions: Delistings: What’s baking in the oven? ** Potential**** Initial Public Offerings: Reverse Takeovers: 16 April 2024: Electric Guitar (ELEG.L) Concurrent with its Admission to trading on AIM, Electric Guitar is proposing to acquire the entire issued share capital of 3radi

In-line H1, strategic initiatives advancing at pace

As reported in March, underlying EBITDA profitability improved to record levels despite FX headwinds. Further platform and proposition developments were completed, key steps on its digital roadmap, and it has already won 7 contracts YTD. Alongside planned growth in private membership, this will at least offset the loss of one contract. Forecasts are left unchanged today and, as member engagement throttles back up, FX headwinds ease, and proof points of digital efficiency emerge, markets should b