Himax preliminary 4Q20 results and market thoughts +5

08:00 07-Jan-21

Him ax has released its preliminary fourth quarter results:

• 19.7 cents of earnings per ADS beat by 4.7 cents
  
• from $275.8M of revenue, which beats by $11.8M
  

HIMX shares traded up to $8.25 in the early going, but have fallen back somewhat.  The full report is expected in early February and long term pricing for Himax will be highly dependent on the outlook provided then.  However, the same factors that were already driving the company's success seem set to continue.  In addition:

• it seems that 3D-ToF sensing for facial recognition is set to be the next big thing for the mobile industry
• China is set to gain over half of the display market share in the next few years, but it will take longer for it to gain self-sufficiency in chips.

Thus, I think values above the $8 mark are sustainable for at least the short term, and double digits are possible given potential restoration of the annual dividend. 

At this point, broader market sentiment seems like more of a risk than fundamentals, but the honeymoon phase seems about to begin for Biden.  I have no predictions yet on how long that will last, but in the meantime there is an excess of capital being thrown around, as shown by SK Group lavishing $1.5b on hydrogen development.  Xebec investors can expect to be rewarded for management's timely moves in the short term and a wild ride over the longer term.  That goes for the rest of the market as well, in a more generalized way.