Edison Issues ADR Update on Thin Film Electronics (TFECY)

Aug 18, 2016, 05:57 ET from Edison Investment Research

LONDON, August 18, 2016 /PRNewswire/ --

During Q216 Thin Film Electronics (Thinfilm) continued to build on the list of top brands looking to incorporate its NFC tags into their products. New partners include craft beer seller Hopsy, an Italian luxury bag producer and a Fortune 500 pharma producer. Helped by a trial product order for medical devices for the latter, Thinfilm reported 25% y-o-y sales revenue growth in Q2. For us, the one area of disappointment was that the growth in partnerships has not yet translated into volume orders capable of filling the expanded capacity of the plant (fab). Does it matter? Most probably not - the prize for investors is what happens from 2018 onwards. Here we believe that our forecasts could significantly understate earnings, especially if Thinfilm can leverage its expanded salesforce and reduced price points, enabled by low R2R manufacturing costs, into a major slice of the burgeoning NFC market.

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Thinfilm ADRs have outperformed the NASDAQ Composite by 18% over the last year, helped by positive newsflow from major customer signings and increased focus globally on NFC products. Our DCF valuation has remained broadly unchanged at $9.07 (previously $9.06) per ADR following revisions to our forecasts and currency moves.

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Anna Bossong                    
Edison Investment Research        

Katherine Thompson
Edison Investment Research

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