IQE plc (lon:iqe)
IQE – Still Unclear To Me.

IQE plc Financials

ItemCurrent PeriodPrevious Period
Year20192018
Period12 Months12 Months
Revenue£140m£153m
Earnings
Adjusted Earnings
EBITDA
Adjusted EBITDA
Statutory Profit
Adjusted Profit
Total Debt
Net Debt(£16m)£20m
IQE plc Share Price
Grade:The Grey Grade - Shares That I Think Are Informative But A Very High Risk Because The Valuation Seems Too High.
Title: IQE – Still Unclear To Me.
Company: IQE - IQE plc
Share Price Then: 50.16p
Author: Ian Smith
Date: Mon 27 Jul 2020
Comments: I manly follow IQE because they are the subject of a Muddy Waters report.

Revenue has been relatively constant over the last 5 around considering the market that the company is in, 2019 did show a 10% drop to around £140m.

However 2019 showed a big change from profits to loss on most measures, along £118m of intangible assets and increased borrowing by £22m.

So for me the questions is still, I don’t understand the demand for the company’s products along with concerns that the business is substantially based on grants, loans and other subsidies associated with academia such as funding from the Cardif Capital Regional and the Welsh government for the foundry in Newport.

This sort of partnership may be good for the area and employees but not necessarily for share holders.
Read Count: 180

Buy/No Buy In A Nutshell
NegativesA few years ago this was a Muddy Waters pick, questioning the accounts. Is it really making money or is destined to always lose money and hide that with turnover subsidised by government grants?
PositivesIf I could really work out how they were doing commercially they may be as advanced as they market themselves to be.
Initial Review Price56p
Last Review Price62.25p
Last Review Date02-Sep-2020
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Share Commentaries, their purpose.

Previous Commentaries On IQE plc
Date Share Price Author Commentary
Mon 18 Nov 201949pIan Smith

IQE – Too Specialized For A Retail Investor?



IQE is the global leader in the design and manufacture of advanced semiconductor wafer products driving connected 5G technologies,

They have just released a trading update with predicted revenue down to £136m and £142m, moving from a cash surplus to £15-£20m of net debt and a predicted operating loss of around £5m down from an operating profit of £17m (2017) and £8m (2018).

However they are not a new business they have had an AIM listing since 2003.

Up until the mid 2016s the share price was fairly flat at around 16p, peaking at around 171p in Nov 2017 and since then you could draw a reasonably smooth straight line down to the current price.

Dr Drew Nelson, the CEO says …IQE is confident it has not lost share and who remain very well positioned for returns to growth in 2020…

Whilst quite possibly true, the nature of the company’s products means that there is little reason to expect a share price rise in the short term and plenty of reason to expect a continual drop.

I can’t help but feel that there has been a share price bubble and relying on a semiconductor maker to stay relevant into the future and return to a possibly inflated value seems quite risky.

Wireless made up about 65% of the revenue, photonics 38% and Infrared 9% so the other areas on their web site such as Solar Panels, power and semiconductor materials are possible growth areas.