FRA DNB Engelske raporter

NORDIC SEMICONDUCTOR Investing in accelerating growth Q4 profitability surprised on the downside (EBITDA 52% below our forecast), but higher opex generated value in terms of accelerating growth for NOD, which guided for H1 BLE sales growth of 40–50% YOY (pre-Q4 we forecast 34%). While this has prompted us to lower our 2018–2019e EBITDA by 21–15%, the cut is only c5% when adjusted for cellular IoT R&D. We reiterate our BUY recommendation and have raised our target price to NOK67 (65) on an increased cellular IoT valuation.
Q4 EBITDA 52% below our forecast, but growth is accelerating. While EBITDA was 52% below our estimate and 42% below consensus, sales were 5% above our estimate and 4% above consensus, and NOD’s growth is accelerating. We were negatively surprised by lower than expected profitability, but we see that higher costs are future growth – not only for the short-range business but also for the cellular IoT business.
2018–2019e sales increased by 5–8%, EBITDA (adj.) decreased by ~4%. On what seems to be a higher than expected opex run-rate going forward and a resulting higher growth outlook, we have reduced our 2018–2019e EBITDA by 21–15% for the group but by only ~4% if we exclude opex related to the cellular IoT business. For the cellular IoT business, we now estimate EBITDA break-even in 2020 (EBITDA of cUSD13m).
BUY recommendation reiterated, target price raised to NOK67. We have lowered our 2018–2019e EBITDA but believe NOD’s accelerating growth warrants a premium multiple to peers and we value its short-range business at NOK57/share (NOK60) based on a 2019e EV/EBITDA (excluding cellular IoT investments) of 15x. We consider it important to note that since NOD gives information only on R&D spending related to the cellular IoT business, we have not adjusted for total cellular IoT opex, thereby potentially understating the value of the short-range business. Coupled with an increased valuation of the cellular IoT business of NOK9/share and NOK0.5/share of net cash, we reiterate our BUY recommendation and have raised our target price to NOK67 (65).
BUY