By Pitt Street Research<\/p>\n
Revasum Inc. ((RVS)) recently inked a multi-year contract with Cree, the world’s largest manufacturer of Silicon Carbide (SiC) wide bandgap semiconductors, used a.o. in Electric Vehicles (EV).<\/p>\n
Cree recently announced a US$1bn Capex plan for the next few years and we expect RVS to be a major beneficiary with its HMG grinder and the recently launched SiC wafer polishing machine. As demand for SiC substrates accelerates, RVS should be very well positioned to reap the benefits.<\/p>\n
Near the end of the cyclical downturn<\/strong><\/p>\n The company recently lowered its revenue guidance for 2H19 from a range of US$11m to US$13m to a range of US$7.5m to US$10m due to delivery pushouts by customers.<\/p>\n We believe, however, that these pushouts only affect the company in the very near-term given that we think the semiconductor cycle has bottomed in mid-2019. We are anticipating a pickup in demand early in 2020.<\/p>\n Furthermore, the guidance for SiC systems was largely intact, indicating customers are still in the market for SiC technology buys used in process development.<\/p>\n Valuation range of $2.30 to $2.69 per share<\/strong><\/p>\n Revasum's focus on SiC tools has put the company in a great position to benefit from strong growth in SiC wafers, needed in high-growth applications such as EVs and 5G infrastructures.<\/p>\n As RVS continues to expand its product portfolio, with the 6EZ polishing machine and a chemical mechanical planerisation (CMP) tool to be introduced in 2020, we believe the growth potential is immense.<\/p>\n We value RVS at $2.30 per share base case and $2.69 per share bull case. We believe that Revasum's strong product pipeline with high average selling prices and a cyclical uptick in demand will lead to significant revenue growth and margin expansion during the next semiconductor upcycle.<\/p>\n Download the full report<\/strong><\/p>\n Earlier today the report above was released by Pitt Street Research for which FNArena is a partner in distribution. The full report can be accessed here:<\/p>\n https:\/\/www.fnarena.com\/index.php\/pitt-street-research\/RVS\/<\/a><\/p>\n Find out why FNArena subscribers like the service so much: "Your Feedback (Thank You)<\/a>" – Warning this story contains unashamedly positive feedback on the service provided.<\/em><\/p>\n