SIMO usually trades between 12-25 PE.
Not sure if you mean forward looking PE off of forecasts, or backward off of actual numbers. For forward PE SIMO usually trades between 10x-15x. It didn't get a very good multiple due to previously high customer concentration (SK Hynix from 2013-7), and the relative ease to swap out their chips for comparable chips in devices.
The thing I do not like in semiconductors is their cyclicality and I have not spent time following the industry. Do you believe that we are in the early phases of a boom cycle then?
Semis were entering an up cycle before the pandemic began. Now semis are in the worst industry capacity constraint in decades as end product makers (especially autos) ramp up production, but cannot get enough chips. I wouldn't say we are now in the beginning up a boom, but we are in a boom, and the big question is whether it ends in April 2021 or April 2023. Who knows?
Regardless, SIMO is driven by PC and cell phone sales, which are less subject to the normal economy boom and bust as other areas of semis. SIMO is gaining share in SSD controlllers, and SSD controllers are gaining share over disk drives in PCs. This has been the SIMO story - but just a story - for the past 12-18 months, and the story is just now turning into guidance, which hopefully turns into actual results over the next 1-2 years.
In other words, I don't think the general semi cycle is the key, the SIMO share gain and SSD share gain stories are more important that the semi cycle. Even if the semi industry slows, SIMO should do well if their unique story maintains. |
