Ferrotec (6890): FY17 Q1 Results – Solar to Semis
Key Points
- Strong semiconductor and OLED-related demand boosted FY17 Q1 Equipment-related Division OP 87% YoY (two-thirds of total OP). More capacity comes on line this year to meet demand.
- Electronic Device OP rose 20% YoY (one third of total OP) and looks set to expand. Thermal modules saw lower auto-related sales on a small pullback in N. America production but luxury vehicle demand is strong. Orders are rising though for transmission stations in China where the move to 4G requires cooling modulation. Power semiconductor-related orders are also up with new capacity soon to be in place. Ferrofluid volumes expanding on good in-car audio system demand and new vibration applications (iPhone).
- Photovoltaic losses equalled 10% of Q1 OP but quarterly losses are shrinking (FY16 Q3 -¥740m, FY16 Q4 -¥640m, FY17 Q1 -¥220m). We expect the Photovoltaic Division to break even by Q3 FY17, though the reduction in fixed costs has not yet been able to offset the weak pricing in the China market since last 2016.
- With strong demand and rising capacity in the mainstay Equipment and Electronic Device divisions and with new products to soon appear in Photovoltaic (N-type single crystal and PERC technology products), we view the company’s 14% upgrade to full-year FY17 OP as conservative.
- On our new FY17 OP, Ferrotec trades on an EV/OP of under 8.0x and PER of 12.6x, both assuming full dilution from the April rights issue. As of August 16th, approximately two-thirds of the rights / warrants issue was exercised.
Ferrotec Holdings is a holding company. Co., through its affiliates, is mainly engaged in the development, manufacture and sale of vacuum seals, ceramics, silicon carbide products and others. Co. operates in three principal business segments: semiconductor and other equipment-related, photovoltaic-related, and electronic device. Co.'s principal products are vacuum feedthrough, quarts products, ceramic products for manufacturing devices, photovoltaic cell silicon crystal production equipment, quartz crucibles, silicon products geared for solar cell applications, crucibles, thermo-electric modules used for thermostats, and Ferrofluid-applied products (Ferrofluid seals).
Founded in 2009, Pelham Smithers Associates (PSA) provides market intelligence on Asian technology, focusing in particular on Japan. The industries covered by our team of specialists are: consumer electronics, telecomms, pharmaceuticals, internet, electronic parts and materials, automotive technology, retail and capital goods.
PSA produces both company and sector reports. The focus of PSA’s research is to identify winners and losers as new technologies impact the top and bottom lines of corporations. Critical to our research is the clear explanation of how these new technologies work and how they impact companies and industries.
The founding partners have worked closely together for twenty years and the team has more than doubled in size since 2012.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.