£706.6m market cap
88.3p last close
IQE is the leading supplier of epitaxial compound semiconductor wafers globally. The principal applications include radio frequency semiconductors, devices for optical networks, vertical cavity lasers, infrared semiconductors and power electronics.
Investment summary
IQE has announced it expects FY20 revenues to be c £178m. This is ahead of our estimates, which we revised upwards in November, reflecting outperformance in both the wireless and photonics segments. We have updated our FY20 forecasts. Given IQE’s leveraged business model, this results in a 64% uplift in EPS. Noting the uncertainty about the effect of a pandemic-related recession on the rate of smartphone sales growth, we leave our FY21 estimates unchanged for the time being.
Y/E Dec |
Revenue (£m) |
EBITDA (£m) |
PBT (£m) |
EPS (p) |
P/E (x) |
P/CF (x) |
|---|---|---|---|---|---|---|
| 2018A | 156.3 | 26.4 | 14.0 | 1.38 | 64.0 | 39.6 |
| 2019A | 140.0 | 16.2 | (7.0) | (2.46) | N/A | 77.7 |
| 2020E | 178.3 | 33.3 | 6.6 | 0.63 | 140.2 | 21.7 |
| 2021E | 183.3 | 38.8 | 12.0 | 1.16 | 76.1 | 27.5 |
Industry outlook
In September we noted that IQE’s longstanding wireless customers had benefited from major design wins and investment in 5G infrastructure and handsets. This trend has continued. Similarly production for IQE’s major vertical cavity surface emitting laser (VCSEL) customer, which we have previously inferred is involved in the Apple supply chain, has been consistently strong throughout the year so far.
Last updated on 21/01/2021
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Share price graph
Balance sheet |
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| Forecast net debt (£m) | 46.1 |
| Forecast gearing ratio (%) | 17 |
Price performance
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Key management |
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|---|---|
| Phil Smith | Chairman |
| Drew Nelson | CEO |
| Tim Pullen | CFO |
| Amy Barlow | Head of Investor Relations |
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