RE: Peel Hunt: Buy with 154p target15 Oct 2018 13:37
FT Alphaville have just posted this from Peel Hunt's note this morning FYI:
"Having joined ARM mid-2017 as CFO, Tim Pullen’s focus has been primarily on the investment strategy and on scaling its finance capabilities. Previously, he gained broad-based FD experience across important business units within several technology (eg O2) and outsourcing (eg Serco) companies. He qualified with E&Y. Tim is to join IQE early 2019 following his notice period at ARM.
We remain convinced by IQE’s strong position within a complex value chain beniffiting from multiple structural growth drivers. Since we initiated, nothing we have been presented with by the IQE bears (eg PMD/Infineon ToF, Mirowave ToF, Multi-camera depth-sensing, Aixtron sales to China, Finisar qualifications, etc, none of which is new news to us) is, in our view, dilutive to our Buy stance.
We think market sentiment towards the VCSEL supply chain will start to improve as we see new phones with facial recognition outsell expectations, helped further by the announcement of new form factors (eg Tablets) adopting the technology. It is therefore time for the reader to revisit our recent initiation, especially, given the recent volatility
In the limited background reading we have done so far, we were impressed by some of the commentary Tim has offered to publications such as The Finance Director. He discusses, with detail, how during his time at O2, he pragmatically championed better management control systems to help O2 become more of a data driven organisation. He also talks about his close collaboration with the CIO/CTOs at O2 to ensure innovation is well managed (‘fail fast’). This speaks to the need for nimbler R&D opex/capex, something that was flagged at the recent IQE CMD. All this is music to our ears. Just within O2, he was FD at its £0.5bn digital business, then at its £1bn O2’s enterprise business and finally at its Operations and Digital Transformation division. He also served as a director at O2’s JVs with Tesco (Tesco Mobile) and Vodafone (CTIL). We think this broad-based experience at O2 will be very relevant to his role at IQE. Given IQE is primarily a multi-national outsourcing business, we think his FD experience at Serco is invaluable to helping IQE in its relationships with a complex supply chain which serves dominant OEMs. He has previously worked at Fujitsu and Dell having qualified with E&Y."
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