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IQE (IQE)

Business description

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, power electronics and CPV solar cells.

Stock data

Market cap.£859.1m
Last close113.40p
High / Low (52 weeks)178.8p / 75.0p
Stock market listingLN
Forecast net cash (£m)48.1
Forecast gearing ratio (%)N/A
TeamTechnology
SectorTechnology

Price performance

%1m3m12m
Actual(12.2)(20.8)50.2
Relative *(11.6)(25.8)44.7

* % Relative to local index

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Company news

Investment summary

Total revenues rose by 16% to £154.5m y-o-y during FY17. The 21% rise in wafer sales was predominantly driven by volume ramp-up during H217 of VCSEL programmes which we infer relate to the iPhone X. Photonics revenues doubled, while wireless revenues were flat. Adjusted PBT rose by 18% to £24.3m. The group moved from £39.5m net debt at end FY16 to £45.6m net cash at end FY17 following a Placing at 140p/share raising £95m (gross) to finance additional capacity and development work to support expected demand in photonics. Based on management’s guidance for this growth trend to continue, we upgrade our FY18 estimates and note the potential for sustained growth over the next three to five years.

Last updated on 27/04/2018

Y/E Dec Revenue (£m) EBITDA (£m) PBT (£m) EPS (p) P/E (x) P/CF (x)
2016A 132.7 33.1 20.6 2.89 39.2 33.9
2017A 154.5 38.4 24.3 3.36 33.8 26.3
2018E 174.9 47.9 32.8 3.63 31.2 22.3
2019E 203.8 59.0 42.3 4.63 24.5 17.4

Last updated on 18/04/2018

Latest video

Executive Interview - IQE

Industry outlook

Management estimates that existing volume programmes will deliver 35-60% growth in photonics revenues during FY18 and that programmes under development are likely to deliver 40-60% CAGR for photonics revenues over the next three to five years. These include VCSELs for hand and body tracking, collision avoidance systems, data communications and industrial applications such as heating, indium phosphide wafers for high speed data networks and infrared sensitive wafers for healthcare applications.

Last updated on 27/04/2018

Key management

Godfrey Ainsworth, Chairman
Drew Nelson, CEO

Company address

Pascal Close
St Mellons
Cardiff
CF3 0LW
United Kingdom
+44 (0) 2920 839 400
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