FLEX
Flex Ltd
TMT
11/17/2020
Presented
| Date | 11/13/2020 |
| Price | $15.90 |
| Market Cap | $7.97B |
| Ent Value | $7.47B |
| P/E Ratio | 24.63x |
| Book Value | $6.22 |
| Div Yield | 0% |
| Shares O/S | 501.16M |
| Ave Daily Vol | 4,270,135 |
| Short Int | 1.85% |
Current
| Price | $34.38 |
| Market Cap | $13.65B |
| Flex Ltd. engages in provision of real-time supply chain insight and logistics services to companies. It operates through the following segments: Communications and Enterprise Compute (CEC), Consumer Technologies Group (CTG), Industrial and Emerging Industries (IEI), High Reliability Solutions (HRS), and Corporate and Others. The Communications and Enterprise Compute segment includes telecom business of radio access base stations, remote radio heads, and small cells for wireless infrastructure; networking business; server and storage platforms for both enterprise and cloud-based deployments; next generation storage and security appliance products; and rack level solutions, converged infrastructure, and software-defined product solutions. The Consumer Technologies Group segment offers consumer-related businesses in Internet of Things enabled devices, audio, and consumer power electronics, mobile devices; and supply chain solutions for consumer, computing, and printing devices. The Industrial and Emerging Industries segment comprises of metering infrastructure, energy storage, smart lighting, smart solar energy; and industrial, including semiconductor and capital equipment, office solutions, household industrial, and lifestyle, industrial automation and kiosks. The High Reliability Solutions segment relates to health solutions business and automotive business. The company was founded in May 1990 and is headquartered in Singapore. |
Publicly traded companies mentioned herein: Array Technologies Inc (ARRY), Eaton Corporation (ETN), Flex Ltd (FLEX).
Highlights
The presenter is long Flex Ltd (FLEX), viewing it as a newly created SOTP story. FLEX’s NEXTracker asset was hidden within FLEX prior to the IPO of Array Technologies in October 2020. Both NEXTracker and ARRY produce trackers that allow solar panels to track the sun in order to maximize their intake of sunlight. Together they represent ~80% of the market for these solar trackers. While it is not uncommon for SOTP stories to be challenged by headwinds in the underlying businesses, in FLEX’s case, their core contract manufacturing business is doing well. He estimates that FLEX’s core business should be able to generate $1.50 in 2021 earnings. Applying a 15x multiple to that estimate gets him to a price target of ~$22.50/share or ~50% upside.
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