£377.4m market cap
47.4p 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
The breadth of IQE’s technology portfolio and ability to serve compound semiconductor chip customers in the US and Asia puts it in a good position to benefit from rising demand for compound semiconductor applications for 5G and connected devices. The share price has been hit by the shift to Asian-centric supply chains caused by US-Chinese trade tensions, and resultant reductions to management guidance. Although the timing of a recovery is difficult to gauge, we see scope for earnings recovery as IQE secures additional contracts in Asia and leverages its IP portfolio into sustainable profit growth and cash generation.
Y/E Dec |
Revenue (£m) |
EBITDA (£m) |
PBT (£m) |
EPS (p) |
P/E (x) |
P/CF (x) |
|---|---|---|---|---|---|---|
| 2017A | 154.6 | 37.1 | 24.5 | 3.38 | 14.0 | 11.0 |
| 2018A | 156.3 | 28.4 | 14.0 | 1.38 | 34.3 | 21.3 |
| 2019E | 139.4 | 9.1 | (8.0) | (0.82) | N/A | 54.6 |
| 2020E | 152.1 | 20.9 | 3.0 | 0.28 | 169.3 | 19.4 |
Industry outlook
However, the timing of a recovery is difficult to gauge and with Q120 expected to be seasonally quiet we downgrade our FY19 and FY20 revenue estimates by 5.3% and 15% respectively, with FY19 EPS reduced from a 0.5p profit to a 0.8p loss and FY20 EPS reduced from 2.3p to 0.3p.
Last updated on 17/01/2020
Sector |
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Share price graph
Balance sheet |
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| Forecast net debt (£m) | 17.6 |
| Forecast gearing ratio (%) | 6 |
Price performance
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Key management |
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| Phil Smith | Chairman |
| Drew Nelson | CEO |
| Tim Pullen | CFO |
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