Aixtron purpose of this thread

For the time being this forum is closed to keep users that do not contribute essential news around the stock, the market opportunity or messages related to it out.

Please be friendly to eachother and keep political discussions out.

Thank you
  baggo-mh

 

This chart is self-explanatory.  The numbers in black are historical data from Aixtron's annual reports. The red numbers in 2024 are implied projections.  

Is 2024 turning into an exceptional year?  The inventories expensed each year is always bigger than the yearend total inventories  the year before.  A 2023 yearend 395m total inventories imply 395m/40%= 988m future sales.  You make the call.


 

It stands for work in process reported in the annual reports.  Here I add all the items excluding the raw materials and Supplied under inventories.  

the date. Future sales of 988m is not possible no matter how conservative aix management is. Unless, you mean by "future" a timeline of couple of years.  

@fel, thank you for sharing your thoughts on the valuation of the stock and analysis.

Recently, I have spent also some time thinking about this. In addition I would say that also the price-to-book ration 2023 of 3.33 appears moderate comparing to the last several years, expecting even lower value for 2024 at the current stock price.
All in all my gut feeling tells me that now is the moment to buy more Aix stocks or at least we are near the point where one can buy with enough safety margin over a horizon of 1 or 2 years.
As to the catalyst needed for the turnaround you mentioned, I believe that sometimes the stock price and valuation can be catalyst enough to do the job. At least, I observed this multiple times over the years.
Other than that I don't expect any stock price driver before Q2 reporting. Q1 report is just to close to the '23 report to have any stock moving news in terms of guidance change (but one never knows). I think even if with not so good Q2 report the price of the stock might keep the level and falling further.

Latest in the range of 20 EUR/share I consider a large order...but again, depending on the overall market condition.
If we can trust the management, and for now no reason not to do so, I think this dip can be viewed as a good mid-/long-term buying opportunity. Something tells me that latest around 20 EUR there should be a bottom. At that level the valuation gets quite attractive and some long term investors will not be able to resist.

Just sharing my thought and no intention of recommending any action to anybody.

@CWL, Baggo, fel, dlg. and all the other valuable contributors I cannot list:
Your valuable contributions are very much appreciated and I am very thankful about it!
Good luck to everyone!  

well there has to be a reason why other semi stocks rise but Aixtron goes downhill. it's a bit frustraiting.

 

https://www.ariva.de/news/...ron-unter-druck-exane-bnp-sieht-11205908

..."Der Grund sei, dass Hersteller von Elektronikchips von der Produktion von Wafern mit einem Durchmesser von 150 Millimeter auf solche mit 200 Millimeter übergingen, erklärt der Experte. Daher dürften sie anfangs vor allem auf Einzelwafer-Anlagen setzen, statt auf Anlagen für die Massenproduktion, also auf Batch-Anlagen, in denen mehrere Wafer gleichzeitig beschichtet werden."...

Ich hätte gedacht, dass genau deswegen Aix Kunden gewinnen sollte - eben wegen des Übergangs zu 200 mm wafers. Die Begründung kann ich nicht nachvollziehen. Ich glaube nicht, dass  man eine Produktion aufbauen will, indem man zuerst probeweise Einzelwafer Reaktoren nimmt und erst dann auf Batch umsteigt. Bin kein Fachmann aber mein gesunder Verstand geht nicht mit.  

Hi all,

a quick post as I have lots of other things to do. Happy to go into detail if required at a later stage.

Firstly, I strongly stick with my valuation thoughts that I have posted a couple of days ago. I think that Aixtron will most likely achieve the mid-point of the guided revenue and EBIT margin range, maybe even the upper end of the revenue guidance. That is important.

So what is going on with the stock?

There are a number of concerns at the moment: 1. A slowdown in SIC / EV demand; 2. Worries about market share losses in SIC in general (and even customer losses), fueled by some customers moving from 150mm to 200mm wafer size; 3. Uncertainty around MicroLED; 4. Risks around the Q1 results (due 25.04.).

On customer losses. I dont think that the rumours around potentially losing Wolfspeed / OnSemi are correct. But I cant negate those. But I dont think it makes a lot of sense.

On Micro LED. Yes, AMS Osram stopped the project, but Aixtron obviously showed a supplier excellence award by BOE.. so clearly some of Aixtron projects are making progress. I see little risk here, but these are single projects, no volume business.. so does not need to recurr in 2025 but only when customers have really broken through the challenges in the technology.

On Q1 results - and I think these are again the biggest risks right now. H1-24 faces tough comparables for order intake so that order intake in H1 may well decline somewhat, -5-10%. The market will and does not like that as it couples with the worries around EV/SIC etc. In other words: declining orders (even if from a high base) will provide no arguments against the worries by the market. This means it will take time for the worries to be negated.. the comparable base is low in Q3.. but that will only be reported in November. So some limbo / uncertainty until then... annoying!
BUT: The company only needs around € 280m orders in Q1 + Q2 to achieve the upper end of the revenue guidance for 2024. And I think that is doable. But not sure if the market takes this perspective anytime soon. At least it provides conviction for those who are invested (like me).
We know Q1 sales, probably 110m (100-120m guided range). EBIT is probably somewhere around 10m (at least that is what I hope, given the higher sales number). But in the end, EBIT is not key for me as Q1 is a seasonally small quarter.

So I am looking for clear signs of confidence by the management to provide indications on strong orders in the coming quarters and negate the market fears.

Against the fears, a potential upgrade in analyst revnue estimates (will not happen shor-term) coupled with a low valuation (which I described before) usually provides solid fuel for a share price. So this is my conviction. My consequence therefore is to add to my position everytime the stock dips by another -5%.. and trust in the CEOs words of solid high single digit growth again in 2025..

But watch out for Q1.. as we know from Aixtron, the stock can swing quite a bit around earnings days..

One last comment on valuation, e.g. where can be the trough. In 2017-22 the share price traded at a trough in the range of 2-3x book value. Based on the 2023 results book value is € 6.90, giving a range of € 14- 21.. Of course I think that Aixtron today is in much better shape than in that time frame. But supports my point of valuation above.

Regards,
Fel


 

nicht böse gemeint - aber ihr hockt hier schon in eurer Blase.  

Experten halt unter sich - Sentiment ausblenden,  wer anderer Meinung ist: ausblenden...

 

PlayNitride to triple wafer capacity in 2024, projects MicroLEDs to cost less than OLEDs by 2030

https://www.digitimes.com/news/a20240416PD202/...y-microled-cost.html  

Edited News from Taiwan:

PlaNitride (6854) held a corporate briefing yesterday (15th).

Chairman Li Yunli said that he continues to be optimistic about the development of the Micro LED industry this year. Many customers are preparing for shipment this year. In addition to TVs, other applications are also being fermented. However, the biggest key market is the TV market; the other is head-mounted displays, and As for smart watches, customers are continuing to prepare for shipments and are optimistic that overall revenue will maintain multiple growth.

PlayNitride completed the construction of a production line in cooperation with Epistar at the end of last year and opened production capacity in the second quarter of this year; PlayNitride also cooperated with AUO last year and is expected to open production capacity in the third quarter of 2025.

Investors are concerned about the impact of the cancellation of cooperation between Osram and Apple on the introduction of Micro LED into Apple Watch. Li Yunli responded that Apple's stopping of independent research and development does not mean that it will not use Micro LED. It is expected that the customer (note from me: I believe he meant Apple) may start to look for other suitable supply chains, and this matter may be accelerated. With the development of Micro LED, from PlayNitride's perspective, the industry will move toward healthy development.

Li Yunli said that it will continue to reduce the cost of Micro LED to increase market penetration. Nichuang's goal is to expand revenue scale and help build an industrial ecosystem.  

Vishay has an aggressive SiC plan.

From Vishay's 4/2/2024 presentation.  

Each G10-SiC loads six 8" wafers per run and can make ~4 runs per day.  Monthly it makes about 720 8" wafers.

30K  8" SiC wafers monthly capacity will need  about 30,000/720= 42 G10-SiC.

3 phase capacity expansion to reach 100k/month capacity will need 100,000/720=140 G10-SiC
 

great research!!!

What would we do without your valuable input and expertise??

Best regards
baggo-mh

PS. Hauck & Aufhäuser has initiated Aixtron coverage today with BUY and a PT of 29,50.
Deutsche Bank - BUY and PT 34.

 

https://ir.vishay.com/static-files/...f08-f205-408a-830f-e208a8e730a8  

G10-SiC tools should be delivered and installed by the end of Q3 for the Q4'24 start.

“We are very grateful for the opportunity to partner with Vishay and deliver our state-of-the-art epi production system with flexible 150 & 200 mm SiC wafer configuration for Vishay’s automotive-certified Newport fab in South Wales. Our strong customer service team in the South Wales Compound Semiconductor Cluster is dedicated to fully support the production ramp of Vishay’s SiC inhouse epitaxy to the highest productivity within a short period of time.”, said Dr. Frank Wischmeyer, Vice President SiC, AIXTRON SE.

 

your research work is ;)
Thanks!
I am excited about the call tomorrow. I expect a clear statement from the management on the market acceptance of G10-SiC. Albeit we have already heard such statements, I believe a reiteration after the rumors (spread intentionally I believe) would be very much appreciated.  

This the fun time of owning Aixtron, a day before the revelation.  Investors will pay strong attention to the Q1 orders and Q2's sales guidance.  

I have posted before that the total H1 order inputs need to be about 320m to meet the midpoint 2024 sales guidance of 675m.  If Q1 orders are weak, then Q2 orders should be strong.

The average estimates on Q2 sales is 150m with the low being 137m and the high 165m, comparing to 2023 Q2 's revenue of 173m.  Such bearing view of a 13% drop is reflected by the poor stock performance.

Fundamentally I believe the company is doing fine.  Strong orders  and high work-in-process inventories at 2023 yearend both point to a very good H1. Based on those numbers, I believe Aixtron's 2024 Q2 sales guidance will be much higher than 2023's 173m.

Fingers crossed.

 

https://www.aixtron.com/de/investoren/...rfolg%2520bei%2520SiC_n12568

Weiterer Top 5 SiC Kundengewinn
Starker McroLED Auftragseingang
Exporte nach China

Prognose bestätigt.

Schaun mer mal was der Markt draus macht.

Gruß
baggo-mh

 

My quick take & comparison to expectations:

Qualitative comments – very strong (e.g. SiC and microLED)
Q1 sales – in line/slightly above
Q1 gross profit – slightly below
Q1 EBIT – strongly below (9.9m vs 14.8m cons.)
Order entry – in line to slightly below (120m reported vs e.g. Citi at 117m and Berenberg at 130m)
Free cash flow – no cons., the (33)m do not look that positive IMHO
Confirmation of annual guidance – as expected
Q2 sales guidance - ? (120-140m compares to ?)

In ‘normal’ times, I would call this a lacklustre/uninspiring set of results. Considering the recent share price performance this year from a peak ~38 Euro to ~23 Euro, I am not that sceptical in terms of today’s share price reaction. Keep my fingers crossed.

Appreciate any assessment from you guys!  

Q2 sales guidance of 120-140m (mid point would bring H1-2024 exactly in line with H1-2023) is quite markedly worse than your "I believe Aixtron's 2024 Q2 sales guidance will be much higher than 2023's 173m." above. Any educated guess as to why and what it means for your overall/2024 expectation? This also means that Q2 order entry needs to come in at above EUR 200m, right?

Have to admit that I just reduced my position, i.e. some money/risk management. CF not inspiring, order intake only OKish, flat H1 revenue guidance and EBIT sharply below expectation (needless to say: in the most unimportant quarter). Not sure how this should be supportive for the share price, except for the qualitative comments from Aixtron and the effect I mentioned above (i.e. share prive level at 23 Euro).  

I agree with a number of points from your post @DLG and personally I was braced for a -10% day.. a classic Aixtron. Lots hope we can dodge this this time after the painful YTD performance, but the jury is still out.

The call at 3 pm will be key

A couple of additions though:
FCF was actually quite solid! -33m includes -26m in capex, let’s assume 20m of that is for the large capex project. PLUS another WC buildup of -21m, part of which is inventory increasing (!).
So I would be happy to adjust for those 41m which takes the FCF to positive 8m after 3m in Q1-23.

Given that we know that the capex program ends in 2024 and that an inventory buildup should drive revenue growth, I would not emphasize the FCF number.

I would be more interested in a response to why inventory increases again despite a weakish Q2 revenue Guide.. why would I increase inventory today for Q4?!

Regards,
Fel
 

Thanks for the clarification and additional flavour on the FCF. Even taking your pro-forma underlying adjusted FCF of 8m/+5m y-o-y, this would not be particularly impressive IMHO... LTM, cash position is down by ~180m.

Anyway, assume you have spent more on time this, while I haven't even read the Q-Report or Q-PPTX. Agree that some parts of the 3pm call could be crucial/exciting.  

37% only.

A reason could be that the service reevnue in Q1 was relatively high with 21%
Guidance for the full year stands at addtional 90 million or 90 + 25 (118 *21%) = 115 Million

Depending on the Rev. range applied that translates to between 18,2% and 15,9% top end.

"Technical  progress      with   G10-SiC§confirmed by multiple customers – upgrades for installed base throughout 2024"

from the IR Presentation  https://www.aixtron.com/de/investoren/publikationen#IR%2520Pr%C3%A4sentationen

My assumption is that these upgrades ar done with low margin built in.

Best regards
 baggo-mh

 

I just took a quick look at the earnings. Obviously my Q2 sales projection is way off.  

H1 sales: 118m+ 130m= 248m. H2 sales : 675m-248m=427m. That's >200m sales per Q if Aixtron meets its guidance and we just divide H2 by 2.  My +50m sales overestimation would go to Q3.  

I was assuming that Aixtron would clear its high inventories in Q4'23, but Aixtron went the other way.  The inventories instead are up another 40m in Q1'24 from Q4'23.  

With the Q1'24 inventories of 436m, they will turn into >1B future sales (436/0.4).  Aixtron is taking the risk away from its customers.  I don't understand why the management would do that, unless they are extremely certain about the future and trusting its customers.


 

I personally liked the call  as it confirmed a few issues that have been discussed before. It clearly demonstrates that the rumors spread are not true

LED and MicroLED
AMS/Apple rumor does not mean the technology is dead
Order intake in Q2 lower than Q1 but stronger again in Q3 and Q4
Transfer still the major technological issue but mass market expected from 2026 onwards
Strong order intake has not shifted the revenue contribution from the Feb. guidance

GaN
Silicon power supply replacement up to 650 Volts, but also for
- 100 or 200 Volt applications
- AI Power supply for data centers but also for the chips internally
- large penetration and adoption

 

SiC
Rumor: 200mm batch reactor not suitable or competitive for transformation customers:
Of multi sourcing customer – Aixtron systems are running in case of overcapacity
“Felix’s answer – money talks”
- 2 customers collecting SiC orders at the moment AMS and Aixtron. Therefore both are reporting of gaining market share. Early adopters are now on 8’ already. By 2026 the whole market will be on 8’ as it offers 69% more wafer space and the ensuing back end costs are mor or less the identical to 6’
- incumbent 6’ supplier not competitive at 8’
- New Top 5 customer win (contract signed) majority of the orders not yet in the order backlog yet due to missing export license. To me an indication that the customer is Infineon, as they build out 200mm in Villach (Austria no export license needed) and Kulim Malaysia.
- reported Wolfspeed orders to be shipped to Durham and Siler City in 2024 and 2025
- Vishay ramp plan is confidential
- demand is normalizing (“honeymoon phase is over”), but with the high inventory levels Aixtron is well or better equipped to catch the momentum. Equipment to be used typically 8-10 years; in Aixtron’s case closer to 15 years.
- no dilution of the optimistic 2025 outlook given in February
- Chinese customers are buying 8’ systems from Aixtron Time lag of 6 to 9 months from the rest of the world. Paying standard prices – “of course”
- “The best defense against copying from the Chinese (has not happened yet) is innovation”, suggesting to me the next generation of tools is already being worked on - G20 ??
- SiC demand ramp will be the deciding factor on whether to upper or lower end of the 2024 guidance will be reached.

order intake and revenue recognition
- The high inventory is in anticipation of a large shipments in H2 (as late as end Q3) to still be turned into revenue in Q4.
- Wait and see mentality of the Aixtron clients will result with lower end of the 2024 revenue guidance.
- Aixtron is not reliant on 1 or 2 big customers, has high segmentation and multiple customers. Therefore pot. pushouts are not really a problem for reaching the 2024 guidance.

Best regards
baggo-mh