| | | After listening to SIMO's conference call the conclusion is 98% of their business is chugging along great, gaining share, expecting significant revenue (and profit) growth going forward.
Client SSD, eMMC/UFS, autos and mobile cards are all gaining market share, and should have sales growth even if their served markets don't grow much. PCs and cell phones are about 2% per year growers, but market share gains in these segments will allow SIMO to grow sales for at least 2-3 years. NAND controllers in autos is growing organically and SIMO is gaining market share as well.
That's 98% of SIMO's current business.
The one "delayed" product area in Mon Titan, their enterprise SSD controller which targets high capacity datacenter SSDs. The space is exploding higher, but Mon Titan is not growing any time soon, they're now saying they hope it gets to 5%-10% of sales by "late 2026/27". Why late? Well, seems they don't have the design wins which will sell today. Oh well, this segment was zero in H1 2025 so any growth would be great, but a complete failure of the product won't be a disaster. If it ever does get some nice design wins, it could be massive.
They said the Singapore Arbitration about the MXL deal cancellation had a first meeting this month, and will have a final meeting next March with resolution some time thereafter.
All in all good news, although the most exciting product (Mon Titan) isn't catching near term design wins yet it seems, if that ever picks up it could move SIMO to another level.
It's not that hard to see 2027 with $1.2 billion sales and a 25% operating margin, so $300 operating profit, $250m net income, which is about $7.50 EPS. 20x PE and SIMO is $150. I think SIMO can do that in 2027 WITHOUT Mon Titan. If Mon Titan kicks in then the PE will be larger, and the sales growth story will extend for many more years.
I think it's a good report, but not one which moves the stock much RIGHT NOW. But as 2026 sales materialize SIMO is going higher I would think. |
|
