Himax Technologies: Fabless Model Not Working So Well (NASDAQ:HIMX)

Small-cap ($658 million) Taiwan based Himax Technologies (HIMX) is a 30-year old company that specializes in display technologies and human interfaces. On October 6, the company announced preliminary Q3 results that were bullish. The stock popped 10%+ on the news, but is still trading more than 20% below where it was earlier in the year prior to the global pandemic. Yet I think the stock is no bargain and here’s why.

The Q3 Preliminary Update

The preliminary Q3 report (unaudited) was bullish for the following reasons:

  • Q3 revenue of $239.9 million would be +28.3% sequentially (+46.1% yoy) and significantly higher than previous guidance (+20%).
  • Gross Margin was ~22.3%, exceeding the guidance and +130 basis points sequentially and +280 basis points from 19.5% in Q3 of 2019.
  • IFRS earnings expected to be around $0.049/ADS, exceeding the guidance and +510.0% sequentially and +217.1% yoy.

Mr. Jordan Wu, Himax President and CEO, commented:

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