£399.2m market cap

50.1p 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 that it expects H120 revenues to be at least £85m. This is 27% higher than H119 and a record first half performance. Despite this encouraging start to the year, we leave our estimates unchanged given the prevailing uncertainty regarding the impact of the coronavirus pandemic on global handset demand.

Y/E Dec
Revenue (£m)
PBT (£m)
EPS (p)
P/E (x)
P/CF (x)
2018A 156.3 26.4 14.0 1.38 36.3 22.5
2019A 140.0 16.2 (7.0) (2.46) N/A 44.1
2020E 143.7 19.4 (6.2) (0.83) N/A 30.4
2021E 164.9 38.7 11.6 1.13 44.3 11.1
Industry outlook

IQE’s production facilities in the UK, the US, Taiwan and Singapore remain operational and there has not been any significant issues with supplies of materials. While economists predict that the COVID-19 pandemic is likely to cause a global recession, we understand that this has not had an impact on demand for IQE’s epitaxy so far. Our estimates assume that IQE’s wireless revenues will not reduce by as much as the global handset market in FY20 because new business for a major Taiwanese foundry will help IQE increase its market share.In addition, we expect that the commencement of volume deliveries of VCSEL epitaxy for multiple Android related supply chains will support growth in photonics revenues in FY20.

Last updated on 02/07/2020
Share price graph
Balance sheet
Forecast net debt (£m) N/A
Forecast gearing ratio (%) N/A
Price performance
Actual 24.6 93.0 (24.7)
Relative* 24.3 67.7 (10.1)
52-week high/low 75.0p/20.0p
*% relative to local index
Key management
Phil Smith Chairman
Drew Nelson CEO
Tim Pullen CFO

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