RE: Auditor issues22 Apr 2022 22:42
In case people interested - this is from a Jefferies report on 14th April:
Key Takeaway
We view the negative reaction to the FY21 results delay as overdone. We believe
the delay is purely due to logistical issues at KPMG rather than internal accounting
complications. FY21 results should at least meet consensus, based on continued
order momentum from US chip vendors and hyperscalers, which we believe is
continuing in H1-22. The 65% discount to peers remains unjustified, in our view,
given AWE's long-term growth outlook & attractive margin profile.
FY21 results delay is nothing to be concerned about: The market has reacted
negatively to news that AWE's FY21 results have been delayed by a week to 29th
April, yet we believe this caution to be overdone. Clearly, the concern around a results
push out is that it raises concerns on internal accounting issues in areas such as
revenue and cost recognition, which, given current negative sentiment, is less than
ideal. However, management have confirmed that the external audit was completed
on time, and add that the delay was unavoidable on the KPMG side due to unforeseen
staff shortages. They are confident that the new results date will not move.
Strong FY21 results expected, reiteration of guidance: We remain of the view
that Alphawave will at least meet, if not beat market expectations in its FY21
results, with strong revenue and earnings momentum expected to continue in 2022.
We expect revenues for FY21 to reach $83m (+152% YoY), driven by sustained
strong order momentum from major US chip vendors as well as hyperscalers. The
adjusted EBITDA margin is estimated at 55.9%. Longer-term forecasts are expected
to remain unchanged from those provided at the time of the OpenFive acquisition
announcement. The company is also likely to provide a Q1 trading update at the
results, which we expect to be positive.
Our bull thesis remains intact: since mid-February, AWE's share price has fallen by
a further -10%, which we attribute to a sustained misunderstanding of the stock and
overly negative sentiment. However, we retain our positive view on the company and
continue to believe in a number of key growth pillars that should drive a meaningful
inflection over the short and medium term. Substantial investments by hyperscalers
to increase data centre capacity and performance creates significant demand for
AWE's IP from major US chip vendors and hyperscalers, whilst vertical integration at
hyperscalers, automotive OEMs and CSPs widens the customer base. Importantly,
growing complexity of leading edge nodes is increasing the adoption of chiplets in
areas like communications ICs and microprocessors.
Shares remain attractively valued: AWE continues to trade at a 65% discount to
its peer group, at 13x FY23E P/E versus the sector average at 33x. Given the
long-term growth outlook and attractive margin profile, we see this discrepancy as
highly unjustified. We believe that IP licensing
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