RAK-Rakon

[LoungeLizard]

Yep, great traders stock. As a long term investment - awful.

[Left Field]

Small upgrade should help the falling SP ( I was wondering how the chip shortage would effect RAK's revenue.)

https://www.nzx.com/announcements/407904

Rakon Limited (NZX: RAK), a high technology manufacturer of frequency control and timing solutions for the telecommunications, positioning, and space and defence sectors, has released an update on its full-year FY23 EBITDA guidance.
Guidance for FY23 Underlying EBITDA1 has been updated to be in the range of $40-44 million for the financial year to 31 March 2023 (previously $38-44 million), with foreign currency fluctuations remaining as the primary source of uncertainty.
"Continued growth in global demand for our industry-leading products has meant we are on track to deliver a solid full year result," says Chief Executive Dr Sinan Altug.
"We are encouraged by the continued growth in our core business, which has offset the tail-off in the short-term chip shortage business that gave us a significant boost in revenue in FY22, and partially in FY23."

[winner (n)]

Hey leftie ....you left out the first profit warning for F24

[..and possible headwinds from macroeconomic volatility, cost inflation and customers correcting high inventory built up through the recent period of supply chain uncertainty. Looking ahead, Rakon anticipates that these headwinds will continue into the first half of FY24, potentially impacting revenue and profit in the short

[Left Field]

Thanks Winnie..... and you left out the 'short term' bit... not to mention all this optimistic jargon...


"We remain confident that the underlying growth drivers for our business are strong. Our technology and industry leading products position us well to increase market share in our core high growth sectors – Telecommunications, Space and Defence, and Positioning......."
........The company has also accelerated its acquisition strategy with the aim of delivering access to new markets and technologies.......Rakon's new manufacturing facility in Bengaluru, India, is on schedule to open in mid-2023.

Totally appreciate that RAK doesn't get much love from these forums..... but maybe this means that one day it will be a counter cyclical BUY or the Robinson family will sell it for zillions! 

[LoungeLizard]

I can't understand why anyone would want to invest in RAK given its rollercoaster SP and non dividend paying policy. Where's the upside? Your capital is at risk, there's no income stream to mitigate inflation and you are putting your trust in a Board that is absolutely tone deaf to shareholders.
Even if you had shares that were bought at a low point, why would you not sell and take your profits? The opportunity cost of not doing so is huge. Baffling.

[Left Field]

Seems BlackBull are bullish on RAK according to a Business Desk article..(and hopeful of a dividend.)

Good luck with that.


Boutique research house BlackBull Research has thrown its weight behind a call for Rakon to start paying a dividend to revive investor interest and lift what it sees as an undervalued share price.....
 
Equities analyst Eden Bradfield said he's watched Rakon for a long time and seen it fall in and out of favour with investors. A key way to win back shareholders is to offer a dividend, which Bradfield said is a major attraction for NZ investors.

That echoes recent agitation from long-term Rakon shareholder Mike Daniel, who urged the board and management to run a leaner balance sheet – the firm had cash and equivalents of $25.7 million of net paid earnings – and pay a dividend.

BlackBull's Bradfield is even more bullish on Rakon's ability to spit out cash, pointing to its "pretty good" underlying earnings and balance sheet.

[Left Field]

Interesting article regarding the changing strategic nature of the microchip/ semi-conductor market....

https://www.theguardian.com/world/2023/may/22/chinas-war-chest-how-the-fight-for-semiconductors-reveals-the-outlines-of-a-future-conflict

I understand that RAK has many haters on sites such as this however it might be timely to revisit this company and I'll be watching Wednesday's results closely. RAK's new Indian manufacturing plant would seem to be 'very well positioned'. Interesting times.

[Left Field]

Interesting..........results out, not overly great IMO (Net profit down 30% to $23.2 mill ).....BUT RAK now a div yield stock!!  ( and that should give the SP a boost!)

https://www.nzx.com/announcements/411943

Highlights
• Revenue increased $8.4 million (5%) to $180.3 million reflecting core business growth offsetting chip-shortage revenue impacts
• Revenue growth was consistently strong across all core markets - Telecommunications up 17% to $100.6 million, Space and Defence up 18% to $28.9 million and Positioning up 21% to $33.8 million
• Underlying EBITDA1 of $42.2 million (FY22: $54.4 million) reflecting increased investment in growth initiatives and inflationary pressures
• Operating cash flow of $11.1 million (FY22: $30.2 million) reflects increased investments in growth initiatives, inventory built up to provide supply chain resilience and inflationary pressures
• Achieved all FY23 milestones in three-year growth plan including nearing completion of India Manufacuring facility and increased presence in Space and NewSpace ecosystem
• Commences dividend payments declaring fully imputed FY23 dividend of 1.5 cents per share and to introduce a Dividend Reinvestment Plan


Can't help thinking RAK dreamed up the inaugural Dividend to cover a balance sheet clean out. As suggested by Rawz, it's possible that cash generated from the global chip shortage has allowed RAK to pay for a new manufacturing facility in India and clean up their balance sheet.  Only time can tell if this theory is right. Definitely one to watch.

[Left Field]

New India plant opened...... a good strategic move?..... the increased margins may even help pay future dividends!

https://www.nzx.com/announcements/413283

Rakon's long-term growth strategy includes increasing production in India to service global customers and meet product demand arising from its position as a strategic supplier, under the Indian Government's 'Make in India' initiative, to key agencies and leading companies across India's telecom, aerospace and defence industries.

The long-term strategy also includes transferring some of Rakon's product lines that are currently manufactured at sites in New Zealand and France to the new facility. As this transfer occurs the company expects to see a positive effect on margins due to lower manufacturing overheads. In line with this, Rakon has enabled future expansion for its proprietary XMEMS® resonators and nanotechnology manufacturing process within the new facility. The added capacity of the facility and production diversification will lower Rakon's global production risk and provide additional supply chain certainty for customers.
 
In future, Rakon anticipates that the annual revenue from its India operations may rise from 25-35% of all revenues currently, to around 50%.

To date, Rakon has invested NZ$15m in the land, building and equipment for the Centre of Excellence and the company intends to invest a further NZ$55 million over the next 5 years. Rakon currently employs around 500 people in India and expects to employ a further 300 people over the next 5 years.

[Left Field]

A slight upgrade??...... will it be enough to get the SP above $1.00??

https://www.nzx.com/announcements/414749

• Q1 FY24 performance slightly above expectations across all three core markets
• Temporary slowdown in telecoms sector represents risk to FY24 EBITDA1 guidance (up to $10 million)
• Space and defence demand outlook remains strong with healthy order book to FY25
• Initiatives underway to improve efficiency and recalibrate resources and cost structures globally
• Strategic direction on track with good progress on FY24 milestones.........

..........Despite the temporary slowing of the global 5G rollouts, the drivers behind the technology continue to be strong. In Ericsson's Q2 results, released on Friday, the company confirmed its earlier forecast for global 5G subscriptions to reach 1.5 billion connections by the end of calendar 2023 and 4.6 billion by 2028. There are also significant market opportunities for Rakon with cloud and edge computing, autonomous machines and vehicles, aerospace and the entire NewSpace ecosystem.

Rakon remains on track with its strategic direction which provides a solid foundation for future expansion in both core and new markets. It is making good progress with its FY24 milestones, including accelerating the process for the transfer of select product lines from its France and New Zealand manufacturing sites into its new facility in India. This recently opened high-tech facility is expected to support improved product margins in FY25. The company also continues to actively seek growth opportunities, including acquisitions, where it sees future value creation and alignment with its growth strategy.

[Shareguy]

A downgrade of size is how I see it.

[winner (n)]

I read it that ebitda guidance (unchanged) has $10m at risk embedded in it

Meaning they warning ebitda could be $10m less than guidance

Bad news ...or my comprehension is failing me

[Left Field]

Meaning they warning ebitda could be $10m less than guidance

I reckon you're right.... they seem to be saying there's a risk of $10m less than guidance in their telecoms sector..... but just maybe other factors will see a "slight" improvement overall.

That word, "slight." ........Hardly exciting!

[LoungeLizard]

Rakon's management are perennial optimists so the fact that they are signalling that $10m of ebitda is at risk, says to me that they almost certainly won't meet guidance.

[Shareguy]

Nice to finally get a return this week after many years. Took the DRP as see it as good buying.  Holding out for a big pay day.