Andrada Mining acquisition elevates the miner to emerging mid-tier status. Watch the video here.
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Here's a recap of some of the key points they mentioned in the prelim results call of 28th April:
The majority $460m bookings (including Q1 2023) are expected to translate to revenue this year hence comfortable in their guidance of $350m revenue for 2023.
In 2022 they recognized revenue from 80 customers (was 20 at IPO) and secured 28 design wins.
In Q1 this year they have secured 8 new design wins spread across 9 customers.
On 25th April they announced the world's first 112gb/sec silicon IP in TSMC 3nm nodes.
In Q4 last year they announced tape outs of 224gb/sec IO as well as PCIe Gen 6 and HBM3 UCIe interface IP in 5 & 4 nm design nodes.
They are now working with more than half of the top twenty world's largest semiconductors companies.
They are only one of less than five companies that are able to design, manufacture and ship chiplet-based devices. They say chiplets are the future of semiconductors because it is now nearly impossible to manufacture large pieces of silicon integrating hundreds of billions of transistors.
They have been working quietly over the last four years on their opto-electronic products (developing leading edge PAM4 technology and coherent DSPs) which is the future for data-centre connectivity.
They estimate by 2026 their addressable market will be nearly $18 billion and they only need to win 5% of that market to achieve $1 billion in revenue. Their ambition is to achieve much more than that.
Blue Raphus, I love your recap of the results, you make me want to buy shares in Alphawave, you should write for the company!
But there is one question that demolishes it all (and it's said with all due respect), so why is this a piddling little company of just £700m market cap that's got itself suspended at 100p, more than 75% below its IPO price of 410p which was just two years ago?
Something ain't adding up, right?
So they are going to run the results announcement to the wire!
The second delay announcement said week commencing May 15th so nothing Monday, Tuesday or Wednesday.
2 days left - or this thing is dead in the water.
So Friday looks like the day.
Good luck all
“..why is this a piddling little company of just £700m market cap that's got itself suspended at 100p, more than 75% below its IPO price of 410p which was just two years ago?..”
Well let’s suppose it was at £4.10 right now, would this be overpriced based on current performance stats?
This would mean a market cap of £2.87 billion (US$3.57 billion) and based on $192.41 million revenue for FY2022 would give us a price to sales ratio of 18.6.
Compare that to the average P/S ratio of 8.7 for its 8 closest peers in the silicon IP sector, then yes you could argue that it would be overpriced by more than double.
Alphawave’s actual current P/S is 4.6 so arguably it is presently undervalued by 47% and if the P/S ratio were allowed to match the peer average then the share price ought to be at £1.90.
Why is it sitting at 100p? Well, the reaction to the suspension pushed it down from £1.20 (aided perhaps by Vikram Kumar’s Kuvari Partners who added approximately another £700k to their short at the start of trading on 28th April. But primarily, it was pushed down from its IPO price thanks to a shorting campaign effort of several hedge funds / small institutions following the Alphaville article of Sept 2021. The article itself was merely a trigger to start the shorting, while the actual content of the article was largely irrelevant. Shorting often tends to get overdone and it can take awhile for a share to normalise to where it should be.
Why did they short it? It was clearly very overvalued. At the IPO in May 2021 the last reported revenue was $32.9 million for FY2020. This would have given it a P/S ratio of about 116! The silicon IP industry average at that time was about 20, so by this metric Alphawave were potentially overvalued by nearly 6 times compared to its peers. (remember semis and tech were leading the market back then and therefore perhaps even a little overpriced themselves).
Why was the IPO itself overvalued? At that time, semiconductor plays were ‘hot’ and leading the market bull run following the collapse caused by the pandemic. The IPO organisers would have gauged the mood and since semiconductor research outfits were (and still are) projecting massive growth for the decade ahead then clearly institutions like Black Rock and Janus Henderson had no problem buying into that mood and were willing to value new starts like Alphawave on the forward growth expectations.
Incidentally, the 8 silicon IP industry peers I used for my P/S valuation assessment are Synopsys, Cadence Design Systems, CEVA, Verisilicon, Rambus, Credo, Marvell and Broadcom and all based on the latest earnings reports available. I discounted Taiwan listed eMemory Technology as they currently have a high P/S which would have upped the average to 12.3.
BlueRaphus
You can quote as many ratios and numbers as you like but investment depends on trust, competence and honesty.
Frankly the directors have none.
This is why they are 100p and heaven knows where they'll be when they start trading again.
Cheers
Barcap
Barcap, it seems that at least you have faith that they'll start trading again! That's a positive!
The opportunity to pick up shares at a bargain price can only happen when the shares are actively trading.
The IPO was managed by Barclays and JP Morgan with no private investor participation.
The UK government was very pro the IPO as it reinforced Cambridge as a technology hub.
Also the UK government had relaxed floatation rules to encourage more companies to float on the London market.
Even after the wheels were starting to come off, Barclays were still pushing the shares with targets of 600p+.
So the institutions and government need to take responsibility for whats happened IMHO.
In the IPO they set out seven strategic objectives. One of these was to ‘‘expand the Group’s global operational footprint” and within that objective one of their intentions indeed was to set up a “UK design team with a R&D headquarters in Cambridge, and the potential acquisition of design teams or key technologies”. While the Cambridge R&D HQ plan does seem to be on the backburner for now, they have at least accomplished the acquisitions of OpenFive, Precise ITC and Israel based Banias Labs as well as opening a new office in Pune India.
Frankly, I’m not that fussed about the Cambridge R&D HQ plans. As much as I would love to see Alphawave play a role in reviving the UK’s declining semiconductor industry, as an investor, I’m more interested in them keeping their focus on maintaining a highly efficient and competitive business with low staffing costs and overheads. I don’t think a Cambridge R&D facility comes cheap and besides there’s plenty of high calibre talent to be found in places like India. Perhaps if the UK government can provide reasonable incentives then the UK plans could be revisited.
I think the institutions that participated in the IPO; Black Rock and Janus Henderson have already paid a price for their involvement. It was their own responsibility to go ahead at that IPO price.
As for the government, if they want to revive the UK’s semiconductor industry then they’re going to have to provide incentives. Parliament committee for Business & Trade launched an inquiry last year, and notably Alphawave are absent from the list of submissions to the report, but that aside, we are still waiting for the government’s response. They should do something similar to the US example of the CHIPS and Science Act which promises a $52.7 billion investment, perhaps something along the lines of $1 billion investment. If they did, I would expect most of any investment would go to the compound semiconductor sector which the UK specialises in.