CrowdWisers™--- the subscriber area has no ads and those above are not selected or endorsed by this site ---
Xebec 2Q20 schedule and Brazilian Energy ?3
08:27 30-Jul-20
One more AES note, to document an unspecified follow-on investment in 5B, which makes pre-fab solar panels for quick installations. I've often wondered why more solar doesn't use this approach and like the move. I would have liked details even better.
MACom blew away estimates with its fiscal third quarter report:
- 33 cents of EPS beats by 12 cents
- from $137.3M of revenue, which beats by $6.3M
- 4Q20 guidance: 38+/-2 cents of EPS from $146+/-2M of revenue, which beats by $14M
Data center strength and new 5G-related business come as no surprise, but there may also be some pull forward due to COVID-19. I note that the $40 after hours stock price would mean a very high 25 P/E even if such results were sustainable beyond this year. With 2 of 3 10%+ customers in Asia, I'm certainly not willing to chase the stock.
The real reason why I'm adding commentary to this note, besides being ready for BGCP in the morning, is the plans for adding gas-fired co-generation to the domestic fabrication facilities in 18-months. This is a prime example of the sort of corporate energy transition that I cited below. It is expected to save MACom $1M annually while improving production resiliency and reducing carbon footprint.
Looking even longer term, the company's work on silicon photonics is also technologically interesting. The redesigns that MACom has had to do is another sign of Intel's fumbling of 3d-Xpoint since the Micron breakup. For now, just recognize that the eventual shift toward pervasive (beyond the current network) edge computing, and away from CPU-centric architectures is still coming, but delayed for at least a couple more years. If the world continues looking like a smaller and more divided place in the meantime, that favors companies that can operate locally. The Fed and Congressional theater today certainly don't give me any reason to forecast anything else.
On 7/29/20 11:52 AM, Esekla wrote:
Xebec Adsorption has scheduled its second quarter report for the morning of August 11th. The company is garnering much more attention, with 7 analysts estimates, up from 2 and 1 in the prior quarters. The current average of estimates comes to a penny of profit from $18.3M of revenue, increasing to $22.2M this quarter. I still see XBC/XEBEF as buy-the-dips, at best, but much depends on one's current position and fear of missing out.
Instead, I've been consistent in pointing out that emerging markets may offer a better look at the transformation of energy, and AES just confirmed the purchase of Tietê shares from BNDES. The $246M price tag for an 18% stake is at or slightly below the valuation that Eneva was offering, according to my calculations. The transaction is expected to close this quarter and AES Corp. notes that increasing its stake to almost 43% will add a penny or two to earnings, as well as constituting progress toward its goal of generating less than 30% of its energy from coal.
Though I also see AES as fairly valued, I note that investment in Brazilian renewables seems ready to grow again, spearheaded by the sort of private corporate deals that I've highlighted for Nokia and Vodafone. If the Real, which bottomed in May at $0.17 reverts to a more historically normal valuation around $.025 (currently $0.194), that could increase the contribution to the AES bottom line. Longer term, it's not a stretch to expect BRL/USD to double, for even greater upside. Consequently, I was probably premature in predicting a sale. Instead, AES intends to push for migration of Tietê to the Novo Mercado, the listing class with the highest governance level on the Brazilian stock market, in order to gain greater liquidity and value for the shares. All of this is probably helped by Bolsanaro seeming to solidify his health and position, but Brazilian politics need continual monitoring.
Golar investors should also take note of the developments above. The next ex-date for GMLP and GMLPP is August 6th.