Soitec: Good FY18 results with positive signs of LT growth as Soitec gears up for the future

Soitec: (BUY, Fair Value EUR84 vs. EUR75 (+4%))
Good FY18 results with positive signs of LT growth as Soitec gears up for the future
Yesterday, Soitec reported FY18 results that were broadly in line with our expectations with EBITDA of EUR90.6m. For FY19, the group's guidance is for a growth above 35% at cc and EBITDA margin of around 27%. We take a bullish position on the topline as we believe the undexpected additional installed capacities at Bernin 1 and the ramp-up of Bernin 2 will support a growth well above the 35% at cc expected. This outperformance should reflect the positive newsflow we are seeing for the ramp-up of FD-SOI and an even stronger adoption of the Imager-SOI. While the ramp-up of Bernin 2 and Singapour constraint margins and FCF in short-term, it should poise the group for continuing strong growth in FY20 with improving margins toward Soitec’s LT objective. As such, we have lifted our FV from EUR75 to EUR84 and reiterate our Buy recommendation.