|I listened to the BMO conference presentation by CFO Lai. The playback is on the SIMO web site. They had a virtual presentation at a BMO conference.|
They say they will continue to gain meaningful share next year. They say their backlog is "well above" $1.5 billion, but they quote $1.5 billion since that that's the more firm backlog. Above that amount may be some backlog that is subject to cancellation. They also say the backlog is all semiconductors, no Ferri or Shannon. They say basically forget about Shannon, it's done. and Ferri will grow OK this year and next, but it sounds like Ferri is nothing to get excited about.
Not really much change to the story, but the growth trend seems to remain in place and seems amazing.
Now they're saying the client SSD market is 500-550 million units, with penetration now 65%. PCs are (I think) about 300-330 million units, and that's the number they quoted years ago as the size of the market, so the additional rest is "other" (game consoles, external storage, other crap).
They say lots of stuff that convinces me that next year gross margins must go higher. They're selling a richer mix of products, with better pricing power, and the newer products are at lower line widths which mean reduced production costs. I think their gross margins have to go a lot higher than 50%, and I don't think it is understood. The BMO analyst on the presentation said toward the end of the call that "your long term gross margin target is 50%....." then moved on without having the CFO comment, which is a shame. He should have asked the CFO, and I wonder what he would have said. I'll bet they're saving up this info for Q3 or Q4 call.
There's no price pressure, demand is through the roof, low margin Shannon is dead, and within semiconductors they're selling newer higher margin products. What would you expect to happen to gross margins? I think they're going up!
He said the dividend will go up. It's a cash machine.
There's like no bad news. I don't see why SIMO only gets 10x PE. It seems like 2022 sales might grow 50%, after 2021 grows 70%.
I don't see why Intel or MRVL doesn't just buy SIMO for 25x.
Oh well, I'm pretty sure it will get a pop to $100 at some point in the coming quarters, it's just hard to tell in which quarter. I'd like to buy calls in front of the next move.