HIMX – Value Growth Combo TTM P/E About to Drop Further this ER

HIMX is a fabless semiconductor company that is back in screaming value range. As of market close on Monday it’s TTM P/E is 5.84 but before market open on Thursday it’s Ttm PE will drop below 4.5 after reporting earnings.

Why invest in Himx?

Here is the quantitative analysis. Well not only is it tech growth at a value price but unlike a value trap it’s actually growing revenues significantly yoy and sequentially (75.4% yoy and 15.2% sequentially last er). Their Ttm revenue is about to exceed their market cap and their gross margin has been impressive and improving (47.5% to 51.7%).They also traditionally pay out the majority of their profits as a once a year special dividend. Over the past decade that payout has ranged from 62.5% to 100% of earnings per share.

Here is the qualitative analysis. They are a dominant market player in their segment of display and touch integration ICs. They make display drivers and touch integration for mobile phones, computer displays, TVs, tablets, VR displays, and automotive displays including hud. At their last industry technical conference the ceo of continental described their expanding business relationship with Himx. Since demand for Himx leading technology is through the roof they have had the luxury of prioritizing their highest margin vertical (automotive) which is also their least cyclical vertical for their lowest margin which traditionally has been mobile. If you have driven any modern car recently you understand how much display and TDDI is included in each car. They were first to market on many technologies in the past two years including recently the first display driver to support 8k resolution at 244MHz refresh rates.

I’m very bullish on HIMX as one of those stocks that is a clear dislocation in the market. It’s valuation and analysis so not match up. Even after inflation ramped up the lowest and most conservative discounted cash flow model I have seen values this company at $22.42 per share meaning it could double this year and still give you an insane dividend (it will def be above a 5% yield). Even if it doubles by years end and earnings stay flat it would still be below a 10 trailing pe at that time. Imo these are the kind of gems we need to be successful in this highly volatile 2022.