Company Overview: Vishay Intertechnology, Inc. (NYSE: VSH) is a Fortune 1,000 Company focused on manufacturing discrete semiconductors and passive electronic components for innovative designs in the automotive, industrial, computing, consumer, telecommunications, military, aerospace, and medical industries worldwide.
Key Takeaways for Q1FY21 (ended April 03, 2021)
New Product Launches: Post Q1FY21, the company launched various new models for its products. Most recently, on August 02, 2021, it launched the first-ever composite commercial inductor in the 19*19*7 cubic mm 7575 case size (named Vishay Dale IHLP-7575GZ-51). This new inductor offers high-temperature operations (over 155°C) for computer, telecom, and industrial applications.
Previously, on June 28, 2021, VSH launched a new series of HI-TMP surface-mount wet tantalum capacitors. These have +200°C operating temperatures in the compact C case code, include improved thermal shock capability to 300 cycles and life of 2,000 hours.
Segment Wise Revenue Distribution: The company generates revenue from six primary segments, i.e., MOSFETs (metal-oxide-semiconductor field-effect transistor), Diodes, Optoelectronic Components, Resistors, Inductors, and Capacitors.
Segment-Wise Performance; Analysis by Kalkine Group
Other Key Findings in Q1FY21
Balance Sheet & Liquidity Position
Key Metrics: In Q1FY21, the EBITDA margin was 18.2%, higher than the Q1FY20 figure of 15.1%. Operating and net margins stood at 12.7% and 9.4%, higher than the industry median of 7.7% and 4.6%, respectively. Debt/Equity of the company was 0.29x as of April 03, 2021, vs. 0.38x as of April 04, 2020.
Growth and Profitability Profile; Analysis by Kalkine Group
Top 10 Shareholders: The top 10 shareholders together form around 50.99% of the total shareholding, while the top 4 constitute the maximum holding. BlackRock Institutional Trust Company, N.A. and The Vanguard Group, Inc. hold the maximum stake in the company at 10.82% and 9.43%, respectively, as also highlighted in the chart below:
Top 10 Shareholders; Analysis by Kalkine Group
Valuation Methodology: EV/EBITDA Multiple Based Relative Valuation (Illustrative)
Source: Analysis by Kalkine Group
*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.
Stock Recommendation: Over the last three months, VSH has corrected ~9.17%. The stock is currently close to the mid-point of its 52-weeks trading range of USD 14.84 to USD 26.50. We have valued the stock using the EV/EBITDA multiple-based illustrative relative valuation method and arrived at a target price with an upside of high teens (in percentage terms). We believe that the company can trade at a discount compared to its peer’s average, considering the risks involved with supplier concentration, negotiating power of customer group, stiff competition from peers, and industry cyclicality. We have taken peers such as Arrow Electronics, Inc. (NYSE: ARW) and Celestica Inc. (NYSE: CLS). Considering the significant top and bottom-line growth, continuous product launches, encouraging outlook, and current valuation, we give a “Buy” recommendation on the stock at the closing price of USD 21.88, down ~1.13% as of August 02, 2021.
VSH Technical Chart, Data Source: REFINITIV
Note 1: The reference data in this report has been partly sourced from REFINITIV.
Note 2: Investment decision should be made depending on the investors' appetite for upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the valuation has been achieved and subject to the factors discussed above.
Technical Indicators Defined
Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.
Resistance: A level where-in 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 unfavorable movement in the stock prices.
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