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Waki it was sus at 1.00 now 1.05 what is your point?
"it will take a long time... just to get back to where SP was prior to suspension".
Yes, like a millisecond. Are you looking at the right share?
But not online...
What a complete shambolic mess..It will take a long time for investing confidence to recover,just to get back to where SP was prior to suspension
Trading resumed
"Overall, there's no way I'm selling at this price. It's just too cheap considering growth prospects as you have pointed out. Although I must say I'm not sure about the P/S comparisons you're using: first of all you should back out the $30m WiseWave Rev as we agreed, also comparing to e.g. cadence and synopsys probably not entirely appropriate considering new involvement in delivery of custom silicon post open-five acquisition."
Alphawave completed an IPO just two years back and have made significant acquisitions therefore there’s a load of one-off costs that are skewing the earnings and profits. That's the reason I use P/S valuations for comparing with other more established peers rather than use P/E.
If I excluded Synopsys and Cadence from the P/S comparison the average P/S doesn’t change that much. It reduces from 8.7 to 8.5. And the average forward P/S reduces from 7.8 to 7.4 (I used analysts forward expectations for the stocks I was comparing with). FWIW, I think comparing with Synopsys and Cadence is appropriate. They too are involved in custom silicon to some extent are they not?
I don’t think one should be knocking off the WiseWave revenue. Revenue is revenue doesn’t matter where it comes from. In any case, when I did the 12 month forward comparison I used Alphawave’s 2023 guidance revenue which already effectively takes account of a reduced revenue from WiseWave. Alphawave’s forward P/S worked out at 2.5 compared to the average of 7.8 (or 7.4 if you want to exclude Synopsys and Cadence). Therefore on the forward revenue comparison AWE are cheaper by two-thirds.
"Subsequent to its acquisition, OpenFive generated revenue of US$70,827,000"
"Subsequent to its acquisition, Precise generated revenue of US$2,251,000"
Yes, but after consolidation adjustments the total revenue from these acquisitions is reduced to $66.1million as stated on pages 1,2 & 4 of report. So the organic revenue for 2022 is $119.3million.
“Then we can take the increase YoY in revenue from Verisilicon and WiseWave partnerships of $23m, and add that 2021 Rev to arrive at $113m (90+23).”
Not sure where you are getting these figures from but in 2021 the total revenue was $89.9million and is made up of $46.9million non-China and $43.1million China revenue.
The 2021 revenue from Wisewave/Verisilicon (again as stated in p2 of report) is $29.8million and increased to $37.5million in 2022. The non-China revenue increased from $46.9 million to $80.7million (as stated on p4).
That’s a 72% increase YOY on non-Wisewave/Verisilcon revenue.
It’s good that you are sceptical and hope you maintain it. I'll admit it’s easy to get carried away.
Hopefully though you won’t feel quite so disappointed now with Alphawave’s Silicon IP non-China portion of the organic revenue.
Just for absolute clarification...
2021's revenue was $89.9m and 100% organic as it was before the acquisitions.
If organic growth (i.e excluding the acquisitions) was 33% then 2022 revenue works out to be about $119.5m.
To cross check that, the report states $66.1m revenue from OpenFive and Precise ITC and total revenue is $185.4m.
So 185.4 - 66.1 = 119.3. So that broadly matches.
The $119.3m 2022 organic revenue is made up of $37.5m from WiseWave joint venture and $81.8m for the remainder.
The report states that non-china revenue in 2021 was $46.9m and therefore china revenue about was about $43m.
(i.e 46.9 + 43 = 89.9)
The report also states that non-china revenue for 2022 was $80.7m , which represents 72% growth.
A slight mismatch between $81.8m and $80.7m but clearly, however you look at it, the increase in organic revenue excluding WiseWave is about 33.8 million which is a heck of a lot more than $6m.
Hope that makes sense to you.
You may be right that I'm mistaken in counting organic growth as Alphawave's standalone revenue growth. This really is an important number: all revenue is not the same.
I am trying to calculate what Revenue growth would have been had they not made the acquisitions which are dilutive to margins.
Another way of looking at it could be to use rev generated by acquired entities after acquisition and work from there.
We get:
"Subsequent to its acquisition, OpenFive generated revenue of US$70,827,000"
"Subsequent to its acquisition, Precise generated revenue of US$2,251,000"
so total Rev of 185.4 - 73 = 112.4
So taking away the contribution of these acquisitions, Revenue for the year would be $112.4m
Then we can take the increase YoY in revenue from Verisilicon and WiseWave partnerships of $23m, and add that 2021 Rev to arrive at $113m (90+23).
This actually paints a worse picture. What I'm trying to say is that their core pre-acquisition business saw almost no growth outside of their China partnerships, something which I don't find very encouraging!
Overall, there's no way I'm selling at this price. It's just too cheap considering growth prospects as you have pointed out. Although I must say I'm not sure about the P/S comparisons you're using: first of all you should back out the $30m WiseWave Rev as we agreed, also comparing to e.g. cadence and synopsys probably not entirely appropriate considering new involvement in delivery of custom silicon post open-five acquisition.
Overall, we both agree that the business is worth more than it is being valued at, I am just warranting a slightly more nuanced / skeptical view of things.
Hi Olly,
I'm not able to verify exactly where you are getting only $6m increase in revenue outside of WiseWave/Verisilicon agreement and I don't really have the time to have another detailed dig through the accounts.
However, I'm wondering if you are just referring to the increase in Alphawave's standalone revenue (i.e not including the revenue coming from Precise ITC and OpenFive)? According to page 20 of their presentation slide (from 19th May), they state 33% of organic revenue growth and revenue outside China of $81m (a 72% increase on last year) Their Year on Year increase of North American revenue is 36% and for the APAC region they claim 84% YoY increase as well as generating revenue from the EMEA region for the first time. This is actual revenue not bookings by the way and I believe is due mainly to the acquisitions.
If you look at it from the perspective of bookings you can see (from page 19 of the presentation) that in 2021 China bookings accounted for 64% of the total, and North America 29% whereas for 2022 China bookings is 39% and North America now 46% with a new 9% from EMEA region. If I have recalled correctly from the calls, I believe the CEO indicated that most of the backlog will translate to revenue within 12 months with some bookings only taking something like 2 or 3 months.
Fair response.
Although I think you have slightly misunderstood what I'm disappointed by! The WiseWave framework like you say is sort of irrelevant, I just don't count it. What I am disappointed by is the lack of pretty much any organic growth outside of their two China partnerships last year - as my calculations show, this increased around $6m.
Had the WiseWave / Verisilicon rev increased just as much, or even more, but we had seen organic rev from other areas grow as expected then I would not mind at all. I didn't invest for the China aspect, I don't really care how it has panned out, what I was trying to highlight is that they saw minimal growth in the selling of their IP outside of their China partnerships.
Personally, I have never been counting on the WiseWave revenue. I only became interested in Alphawave from January of this year purely on account of the growth prospects in the connectivity sector together with the company's strategy of focusing on the high end product segment of that market, and for which they are currently the global leaders.
Having read the IPO prospectus, I can understand why anyone might feel disappointed with how the Wise Road Framework Agreement has panned out. This was meant to have been a $400 million investment of which Alphawave's 42.5% stake meant they had a commitment to invest $170 million. The geopolitical situation with China effectively forced the company to change its strategy with China such that they intend by end of 2025 to no longer have a stake in the WiseWave joint venture.
Of the $467.6m current backlog, less than 15% is to come from WiseWave.
I don't have significant concern for the WiseWave revenue even if it ends up being a bit of a liability because it is clearly being overtaken by the growth from all the other revenue streams. They have indicated that China revenue in the future will represent around 10% or less, yet they remain on course to report around $360m total revenue for this year. They anticipate $500m by 2025 and more than $1billion by 2027. It remains to be seen if these targets will be achieved of course but there's little doubting that the revenue growth is heading with significant pace in the right direction.
Just a follow up, the section which I was initially referring to and had copied into my original post (which never posted) was this:
"The revenue from our joint venture in China, WiseWave, predominantly relates to a five-year subscription licence agreement where we have recognised US$31.1m (2021: US$27.7m) based on our deliveries of IP to WiseWave. The remaining revenue from WiseWave relates to a separate agreement signed in Q4 2021 to deliver chiplet IP and revenue recognised through WiseWave acting as master reseller of IP to VeriSilicon."
I can only imagine they are using WiseWave as the 'Reseller' of their IP as this is preferable for VeriSilicon - it looks like they are buying their chiplet IP from a Chinese company rather than a Western one. I guess I can understand this.
I'm not usually inclined to build my own models, and I feel at this stage of AWE there is too much uncertainty for it to be even worth it, but I would honestly recommend just not counting any revenue from the WiseWave subscription licence agreement ($30m). This is funded by alphawave itself through its own investment into WiseWave. You may say well at least they are receiving more revenue than they are giving to WiseWave, however this is pretty much accounted for by AWE sharing in WiseWave's annual losses. Overall, $30m of revenue that I wouldn't even count, has essentially no benefit to us shareholders.
Any fellow shareholders or interested parties; would be v interested to hear your thoughts on my posts regarding China Revenue.
Hi BlueRuphus, very much appreciate the responses.
Regarding the Banias Labs acquisition, seems like a case of high risk high reward like you say and am happy to defer to management's judgement here. I did not watch the capital markets investor presentation / any releases surrounding the acquisition so all I had was the section at the end of the report. appreciate extra colour.
Regarding China revenue, I don't like it at all. Verisilicon and WiseWave revenue combined grew around $23 million. Total rev in 2021 was $89,931. Considering organic growth of 33% i.e. just under $30 million, the substantial majority of organic growth last year can be accounted for by the Verisilicon and WiseWave partnerships. This is what I am most concerned about. Following the short report in Sep 2021, it seemed management dealt appropriately with the matter, and obviously the "simplified go-to-market plan" (i.e. GTFO) is good to hear, however it also was made to seem like there would be much more organic growth in other markets than what we realistically got.
I think it is easy to miss this with the Precise-ITC numbers baked in as well and the revenue numbers from China partnerships quite far into the report. It is however, quite significant.
In regard to your comment about the Banias Labs acquisition, this for me is one of the main reasons (together with custom silicon and chiplets) why I'm invested here. The Banias Labs acquisition is a classic risk reward investment where there is considerable potential upside to the reward.
To appreciate this you need to understand where most of the future growth potential in the semiconductor connectivity sector is going to be.
That growth is going to be in opto-electronics especially in data centres where a 36% CAGR is expected over the next three years.
Don't forget that Alphawave have already secured an agreement with a leading North American hyperscaler (thought to be Amazon) where I understand they are developing a product roadmap involving coherent DSPs and opto-electronics that will result over the next few years in the shipping of at least $300 million and is expected to be significantly more than that.
When you own a business (i.e Banias Labs) where one of its key customers is also one of its major competitors (i.e Synopsys), it's an indication that you are ahead of the game...
[https://semiwiki.com/ip/327703-synopsys-accelerates-first-pass-silicon-success-for-banias-labs-networking-soc/]
It does come with risks though. Competitors are also hard at work developing new coherent DSP products but I think at the moment there is so much growth anticipated that there is still plenty of room to accommodate competition without spoiling the reward potential.
If Alphawave hadn't acquired Banias Labs or other similar outfit where would you have expected them to invest the money to secure growth for the business?
I hope this helps.
Hi ollycoto21,
There are 95 references to WiseWave, 61 references to joint venture and 33 references to VeriSilicon in the report. Unravelling that lot to make sense of it admittedly takes quite some effort.
My unqualified interpretation is that gross revenue for 2022 from Verisilicon was $3.2 million and revenue from the WiseWave joint venture was $58.2 million. After adjustments the combined revenue was $37.5 million.
The report on page 75 provides the following note that clarifies the split in revenue:
"All revenue from VeriSilicon and related balances are in respect of transactions signed with VeriSilicon prior to the VeriSilicon reseller agreement moving under WiseWave as master reseller effective November 2021. All revenue and associated balances in respect of transactions signed with VeriSilicon since that date are now recognised through the WiseWave joint venture line."
They assigned the VeriSilicon reseller arrangement to WiseWave in order to consolidate the China activities under a single entity.
Hopefully this helps to answer your question. If you need further clarification I would suggest dropping an email to their investor relations. They are usually very responsive.
It’s worth pointing out that:
2022 revenue from China was about 57% of the total revenue at nearly $105 million and the WiseWave portion of that revenue was $58.2 million.
Joint Venture income is a five year contract that expires in 2026 and Reseller fee income is a three year contract that expires in 2024.
Alphawave currently own a 42.5% stake in the WiseWave JV and are contractually committed to $170 million investment of which so far, they have invested $31.4 million. However, WiseWave do not anticipate requiring the full commitment and are likely to undertake an external financing round in the medium term instead. AlphaWave are not expecting to make further significant contributions in the future. They intend to sell their equity stake in WiseWave over the next two years and they expect a gradual decline in China revenue to about 10% or less and will be offset mainly by the increase in North American revenue. This is essentially all part of Alphawave’s deliberate simplification of the ‘China go-to-market’ strategy and is due to the change in the geopolitical and macroeconomic situation in the last couple of years.
Slightly concerning that Banias Labs is a pre-revenue company, with 50 employees, and management have decided to spend $245m on this. Have to trust that they know what they are doing and the new hyper-scaler partnership pays off but it seems like a host of questionable decisions here. Take into account a further $31m in deferred cash rights to Banios employees related tot he acquisition and it's a mighty expensive deal.
Certainly less certain of the future of this company and competence of management now than I am after the 2021 report. I guess we'll have to wait and see how their two big acquisitions pay off, safe to say I'm not too happy overall ...
So Revenue from Joint Venture doubled to around $60m.
Half accounted for by subscription license and half by Wisewave now being recognized as "master reseller" to Verisilicon. Is this not double counting rev? Selling IP to Wisewave then wisewave effectively selling that IP to Verisilicon, recognizing both tranches of revenue as their own.
I tried to post before but it's not showing up, apologies if this is a repost.
Any opinions on this / alternative interpretation would be appreciated.
So based on the info on Carr and DX, 10 month suspension needs 1 month to get relisted; 2.5 month suspension needs 1 week to get relisted. Therefore Awe may get relisted in a couple of days
You having a laugh Glowacki? Where’s the laughing emoji on here? Even with the ‘downgraded’ revenue, it still represents a CAGR of 185% over a four year period. Its corresponding operating profit growth is more than 150% CAGR. Please show me another stock on the LSE that has achieved this kind of growth. Expecting a halving of the share price when it’s already nearly half the value of its NASDAQ peers? Well if it does I’ll be picking them up at that price.
3 delays to audited accounts..Revenue is now downgraded from preliminary statement last month.Profit is reduced from earlier..Finance officer leaves immediately (sacked in other words)Once suspension lifted l am expecting the SP to halve.
DX. plc, a company I hold, had their shares suspended for failing to publish audited results on time. They re-listed about a month after publication of the audited results (that was after a 10 month suspension).
"According to John Lofton Holt it could take from a few hours -> a few days to lift suspension"
Yes he said a few hours to a couple of days but it can sometimes take longer than that.
For comparison Carr's Group who suspended their shares on 4th January eventually released their audited results on 23rd March (a much longer period than Alphawave). FCA granted trading almost a week later on 29th March.
Well, that's a range skewed to the upside given a mid price of 100.7p. Let's see where it really sits on opening.
Manual trading with a price range of 96p-130p is already available