Section 1: Company Overview and Fundamentals

1.1 Company Overview:

Himax Technologies, Inc. (NASDAQ: HIMX) is a fabless semiconductor solution provider. The company manufactures timing controllers and display driver integrated circuits (IC), which are utilized in a variety of consumer electronics products, including televisions, computers, monitors, mobile phones, tablets, digital cameras, and automotive navigation systems.

1.2 The Key Positives, Negatives, Investment Highlights, and Risks

1.3 Top 10 Shareholders:

The top 10 shareholders together form ~43.04% of the total shareholding. Mr. Bing Seng Wu (Chairman) and Mr. Whei Lan Teng are holding the maximum stake in the company at ~21.51% and ~6.06%, respectively.

1.4 Key Metrics:

The demand for the company's products segments has increased over the past five years, as seen in the graph below, which shows an increasing trend in revenue. Additionally, the increasing gross profit margin illustrates the company's improved ability to control the cost of sales. The firm is now trading at levels below its rivals, according to the second graph's price-based relative value multiples. These go on to imply that the price may rise in the future to trade around the historical average levels relative to its competitors.

1.5 Dividend Overview

At the last traded price, the company is offering a lucrative dividend yield of 17.71%, also since IPO in 2006, the company has remained committed to a dividend policy. Recently on July 12, 2022, announced the annual cash dividend of USD 1.25 per ADS. The payout ratio is 50% of net profit of last year

Source: REFINITIV, Analysis by Kalkine Group

Section 2: Business Updates and Financial Highlights

2.1 Recent Updates:

The below picture gives an overview of the recent updates:

2.2 Insights of Q1FY22:

Section 3: Key Risks and Outlook

Section 4: Stock Recommendation Summary:

4.1 Price Performance and Technical Summary:

4.2 Fundamental Valuation

Valuation Methodology: Price/Cash Flow Per Share - Multiple Based Relative Valuation

Markets are trading in a highly volatile zone currently due to certain macro-economic and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is not a reliable indicator of future performance. 

Note 2: The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: The report publishing date is as per the Pacific Time Zone.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and the uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.