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Hallo,

ein höchst(!!!) erfreuliches Ergebnis für Q4 und auch für 2001 ... und der Ausblick stimmt auch ... ich denke, 2002 wird ein gutes Jahr für ESS Technology ...

Den beiden Meinungen aus dem USA-Board kurz nach der Conference Call kann ich mich grundsätzlich nur anschließen - wobei ich den Kurs nicht mehr bei $ 15 sehe und für Ende 2002 nicht $ 30 , sondern eher $ 34 erwarte - wait and see :)

O-Text 1:

Blowout q4 with a capital B. Nothing could have been better. Now let us get to what matters, forward guidance. Now we know why the Chans were selling and why the chart has showed weakness of late. Guidance is downright awful. I have the same question that Peak had on the call: How do you sell 3.5 million units in q1 but only do 50%-70% of net income from 3q when you sold the same amount? Their answer is that VCD sales should be down from q3/q4 and gross margins should fall to 39% due to seasonal weakness. This is due to pressure on ASP`s and seasonal weakness. 38% is their gross margin outlook long term. I still don`t understand why they need a secondary. They have loads of cash but they claim they need cash to make acquisitions as not to get behind on technology? Whatever.

On the bright side of this, I would expect earnings and revenues at the high end of the ranges management provided. That would be $.14 for q1 and $.17 for q2. The primary reason I say this is that I believe management is being conservative and the #`s just don`t add up to what they are projecting. Revenues should be about $60 million for q1 and $66 for q2. ESST suffering the same bug GNSS is fighting with the Chinese new year according to management. 2 weeks without production is a killer. The second half of 2002 should be a surprise IMO. We should expect it to be seasonally strong like 2001. $.60 seems rational for the 2h of 2002. That would put us just below current consensus with $.91 for 2002. Short term ESS will take a hit no doubt. With market weakness, poor technicals, and poor short term guidance, $15 is probably in the cards. At $15, ESST is an add without a doubt but I don`t see much reason to step in at current prices. $30 is possible by year end 2002.

O-Text 2:

Fantastic Quarter....Revenue and earnings have beaten expectations and business remains strong.

The company has made solid traction in all areas of the DVD and VCD markets. They are citing growth out of India, Indonessia, Malaysia, and Brasil as well as China. The product offering including Vibratto, their Systems on a Chip Controller, The Indigo line are all very well positioned for growth. They have gained numerous design wins in the Japan and Korea markets. Channel inventories are reported to be low....considerably lower than Q4 last year. The company beleives it has the number one market share of all DVD chip suppliers and holds 60%-70% of the VCD market and has a clear strategic vision with respect to the emergence of Digital Home Entertainment Systems and their future growth potential.

In terms of the numbers....the balance sheet strengthed and EPS estimates will move higher from here......current consensus is in the $0.90 vicintity and EPS should move closer to $1.15-$1.20 for 2002 whith potential for 2003 EPS in the $1.50 to $2.00 range.

WOW

They are guiding for 11-14 cents for Q1....but this seems quite conservative given that inventories are quite low.....Scovel had an estimate of 9 cents for Q1. I expect them to be able to beat this initial guidance which seems conservative and come in closer to Q3 EPS levels. We are now looking at the following scenerio:

In terms of guidance for 2002 look for Q1 EPS to be the low for the year at $0.15-$0.20. From there we should be in the fantastic situation of sequential growth for each of the next 3 2002 quarters in tandem with upward pressure on gross margins based on the product mix shift towards more DVD unit sales and new product launches.

This leads to an earnings stream of:

Q1: $0.15-$0.20
Q2: $0.20-$0.25
Q3: $0.35-$0.40
Q4: $0.45-$0.50

As such I get a range of: $1.15 EPS to $1.35

I see no reason whatsoever to change my 2002 estimate of $1.20 EPS and again I`ll reiterate that the Street will move closer to it off this report.

I`ll maintain a price target of 30 times my estimate as an appropriate immediate term valuation or $36 per share.

Even a more conservative multiple of 25 times earnings and the low end of reasonable estimates values the shares immediately at $28. There is absolutley no justification for shares to trade any lower. This stock is on track to be a big winner in 2002.....with very aggresive valuations also possible if the comapny beats estimates again next quarter or raised guidance intra-quarter again of 35 times the higher end of the range or $47 per share. A price of $47 in 2002 is not unrealistic.....it`s not my mainstream scenerio but one which may well manifest if we get intra-quarter increases in guidance again, and strong earnings reports Q1 and Q2.....the market will get forward looking and price off the 2003 outlook by midyear. So very big picture I see fair value between $28-$47. With prices anywhere around here offering extreme value considering that ESST is the leader in the DVD controller field and has seeminglessly transitioned from a slower growth to a higher growth firm.

Guidance for 1st half of 2002 is down. That will weigh on the stock short term. Considerable upside exists to 2nd half of 2002 IMO. You could look at this as a buying opportunity now but I tend to believe you can buy more at a lower price. JMO.



Viel Spass weiterhin mit ESS Technologies ;)
Duffy2000
 
aus der Diskussion: ESS Technologies - ein immer noch unentdecktes Juwel
Autor (Datum des Eintrages): Duffy2000  (24.01.02 01:28:05)
Beitrag: 6 von 13 (ID:5413858)
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