X-FAB : Shaping up for a turnaround year
This morning, we’ve published an in-depth note investigating the impact of various megatrends that will drive sales of Melexis in the next decade. Following the projected 14% sales CAGR of X-FAB’s largest customer over 2020-2023, we have raised our automotive sales forecasts for X-FAB by 3-6%. Furthermore, considering that X-FAB’s foundries operate at EBIT breakeven and sales of $ 135-140m/per quarter and no capacity expansion investments are expected (with manufacturing capacity equivalent to $ 700m of annual sales), we expect gross profit to show a CAGR of 53% over 2020-2023. Our DCF values the company at € 7.5ps. This reflects an 2022E EV/EBITDA multiple of 7.5x, equivalent to a 40% discount vs peers.Melexis designs, develops, tests and markets advanced integrated circuits primarily for the automotive industry. Co. sells its products to a wide customer base in the automotive, medical and industrial markets in Europe, Asia and North America. Co.'s main products are Hall effect ICs, Pressure and Acceleration Sensors, Sensor Interface ICs, Automotive Systems-on-a-Chip, Embedded Microcontrollers, Bus System Chips, Optical and Infrared sensors. In each case the products are primarily developed for automotive applications and designated lead customers with subsequent use in commercial and industrial applications.
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