Himax preliminary 4Q22 results, CPI and more +5

09:30 12-Jan-23


Himax has pre-announced 4Q22 results:

This confirms management's predictions in the prior report, that inventory had peaked, and my assertion that that HIMX was undervalued.  I also note that lackluster semiconductor demand had caused analysts to undershoot the guidance provided by the company then.  However, gross margin of 30.5% was 2% lower than guidance, and inventory levels will take another 2 to 3 quarters to normalize.  Consequently, even though HIMX is up 5% in the pre-market to trade around $7.50, my assertion that Himax is a transformed company may take longer to be fully realized.

Even so, I think this could wind up being seen a turning point for the company in hindsight, as the CPI report showed headline inflation falling by a tenth of a percent versus flat expectations.  However, core inflation rose 0.3% meeting expectations.  Most of the discrepancy is due to sharply falling gas prices, but the cost of Shelter actually accelerated continuing the trend I've long warned about.  For global stocks like HIMX, though, China's resumption of Australian coal signals how serious it is about renewed growth and is more important.  For the broader market, American equity indexes initially jumped, but enthusiasm should revert somewhat as investors absorb the details; even the structurally biased economists at the Fed will have to view this report with caution and not take this as a green light for easing.

Taiwan Semiconductor also reported mixed results this morning, beating on the top & bottom lines, but warning of misses for 1Q23.  I mention this primarily as a warning about Intel's upcoming earnings.  Although its latest Sapphire Rapids and Ponte Vecchio data center chips are the most important technological upgrades in a long time, the are finally hitting the market at a bad macro phase.

I also don't see this as good news for Europe, where the Vodafone executive exodus continues.  Energy prices have been manipulated by weather, governments and the financial industry, but only the first reflects reality.  I expect we saw the bottom on Henry Hub natural gas around $3.50; it is now at $3.80.  I note that while TTF and JKM have also come down, the spread has been maintained, justifying the gains in NFE.

Finally, for the record, I am aware of but less interested in eMagin's positive preliminary revenue announcement.