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Covanta, UDC & MagnaChip schedule 3Q19 reports ?3

10:49 11-Oct-19


MagnaChip has scheduled its third quarter report to be given after market close on October 23rd.  Average analyst estimates call for 28 cents of EPS from $225M in sales, which is expected to drop to $184M this quarter.  MagaChip should do well with its power products, but I don't see shares as attractive in double digits, especially while trade issus over materials drag on.

The broader display industry continues to progress towards another decisive change of the sort I originally predicted with AMOLEDs.  Samsung has just committed to investing almost $11b on quantum dot televisions with AMOLED backlighting.  It will be cannibalizing its LCD lines in the process and should begin production in 2021.  This looks like a superior architecture to LG's, and quantum dots do seem to be the next step forward.  Research continues on new types of TADF materials, and the semiconductors that house them, but In the meantime, Samsung's move makes sense.  All of these developments will help MagnaChip hang on, while hurting UDC.  I still fear for Korea's economy, though, maybe even more than Japan's.

Most important to me is Covanta's report.  It plans to release results or the evening of October 24th.  By then we should know something more about how Brexit will or won't proceed, and I'll be keeping an eye out for any positive or negative impact.  Mostly, though, I'll be monitoring the progress of TAPS, energy and metal hedging from the update given a month ago, and work towards deals in new geographies.  I also continue to wonder how far off the day is when such transactions won't be denominated in dollars.  On average, just 3 analysts expect 10 cents of EPS from $468M in revenue increasing to $487M for the year-end.  The macro environment isn't great right now and CVA seems fully-valued; nonetheless, this is one of the options I see for those who want investments they can buy and hold indefinitely, along with BGCP.

Finally, Universal Display has scheduled its report for the evening of October 30th.  Average analyst estimates are for 58 cents of EPS from $85.9M in revenue,which is expected to rise to $92.1M for the final quarter of 2019.  OLED shares have lost almost a quarter of their value from a $225 high following the volatility I expected after the last report.  I could see this report catalyzing a strong move in either direction, but not be interested in that as a long term investment option.  As ever, I will listen to and comment on the call, but better industry insight usually comes from MagnaChip, a week earlier.