WAF GR

Siltronic AG

TMT


Presented:03/16/2017
Price:€54.37
Cap:$1.82B
Current Price:€60.93
Cap:$2.04B

Presented

Date03/16/2017
Price€54.37
Market Cap$1.82B
Ent Value$1.27B
P/E Ratio132.61x
Book Value€14.40
Div Yield0%
Shares O/S30.00M
Ave Daily Vol260
Short IntN/A

Current

Price€60.93
Market Cap$2.04B
Siltronic AG engages in the production of hyperpure silicon wafers used for semicondutor devices. The company was founded in 1968 and is headquartered in Munich, Germany.

Publicly traded companies mentioned herein: GlobalWafers Co Ltd (6488 TT), Siltronic AG (WAF GR), Shin-Etsu Chemical Co Ltd (4063 JP), SK Holdings Co Ltd (034730 KS), Sumco Corporation (3436 JP), Taiwan Semiconductor Manufacturing Co (TSM / 2330 TT), Wacker Chemie AG (WCH GR)

Highlights

The presenter is long shares of Siltronic AG, and believes the risk/ reward is attractive at €55/ share. He views the recent pullback from €60 as a buying opportunity, and sees the stock as materially undervalued relative to its peers and future growth potential. At a high level, there was a supply/ demand imbalance in the wafer market that hurt Siltronic and its peers for years; however, this headwind has now reversed and looks like it will be a tailwind as there isn’t enough capacity in the market. The company should benefit from improved pricing on both their standard 200 mm, and “Ultimate” 300mm diameter silicon wafers over the near-term. Siltronic trades at 7-8x 2017 EBITDA and has a net-cash balance sheet (€175mm). It is likely being penalized for being a subsidiary of Wacker because he sees comps trading at anywhere from 11-13x. If the presenter’s assessment of the market dynamics and setup prove to be accurate, then Siltronic could be trading at just 3.5-4.5x forward annual EBITDA and the stock could double in price (assuming no multiple expansion).

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