RAK-Rakon

[Left Field]

In a world of chip shortages I wonder how Rakon does so badly......... and no news on takeover bid....... crikey.

https://www.nzx.com/announcements/431918

Financial Highlights
• Revenue of $128.0 million (FY23: $180.3 million) reflects the completion of one-off chip shortage contracts in the prior year as well as the slower than anticipated normalisation of inventory levels – impacting both the Telecommunications and Positioning segments.
• Rakon continues to be impacted by the cyclical slowdown of 5G deployment by mobile operators.
• Space and Defence revenue was up by more than 27% reflecting Rakon's continued success in growing this segment and diversifying its revenue.
• Gross margin of 45% (FY23: 49%) reflects one-off costs associated with workforce restructuring and inefficiencies of lower production levels.
• Reflecting the success of cost control and efficiency initiatives, operating expenses (excluding the costs related to the acquisition proposal and retention incentives) fell by $1.5 million to $57.3 million despite inflationary pressures and continued investment in the growth plan.
• Underlying EBITDA(1) of $13.5 million (FY23: $42.2million) and Net Profit after tax of $4.5million (FY23: $23.2million).
• Capital expenditure of $17.0 million was spent on strategic investments as Rakon continues to deliver its growth plan.
• Given the FY24 financial performance and unanticipated costs related to the acquisition proposal, the Board has not declared a dividend in relation to FY24. A return to dividends will be considered at the next annual results.

[LoungeLizard]

Focussing on efficiency and growth strategy whilst paying no dividend. Sounds like a cut and paste from the last ten years.
Revenue, EBITDA, NP and margins all significantly down - does such a poor result make them more vulnerable to a takeover or less? Can't see it happening myself.

[Shareguy]

So Rakon have spent $2.2m so far working on a proposal from a mystery bidder (Possibly Skyworks) to buy the entire firm for $1.70 per share, with that money going on legal and consultants' fees, additional director fees and employee retention costs.

Goldman Sachs the same company that has been handling the Comvita interested party has been working on the non-binding offer, which the company received in December 2023. We have all seen how that worked out.....

So what's it worth if this interested party comes to nothing ?

Forbar gets paid by Rak for research notes but says international comparisons have a PE of 17.9 (compco average)

Share price 31/5/24 $.80

FB EPS

FY24 2.0 actual, which is a trailing PE of 40
FY25 1.4 is a PE of 57
FY26 5.5 is a PE of 14.5

So the initial takeover price is $1.70. Even at$.80 I'm sitting on a nice profit but my patience is being tested as I watch the share price decline. Based on history and Forbars estimated forward earnings it's probably sitting around fair value $.70 to $1.00.

Even though I have sold a good portion of what I had, unless a take over goes ahead my decision to sit and wait will have cost be dearly.  A decision must be made but sometimes not the right one, hopefully we will soon find out.

[BlackPeter]

In a world of chip shortages I wonder how Rakon does so badly......... and no news on takeover bid....... crikey.

https://www.nzx.com/announcements/431918

To be fair, I don't think that Rakon produces any of the complex chips used in todays telecom applications. Actually - I used to work designing commercial as well as military communications systems back in Germany and later in NZ, and none of the companies I worked for had a use for Rakon oscillators. Plenty of alternatives around.

I don't think there are any important devices dependent on using Rakon oscillators (maybe with the exception of some space applications, I remember a French a company later bought by Rakon used to have an edge in that area).

Always thought Rakon lives from milking share holders? I guess it seems to have worked so far for the Robinsons, so - why change a winning strategy?

[Greekwatchdog]

Complexities'?? More like Robinsons family refusal to let it go. Poor minor shareholders.

On 18 December 2023, Rakon (NZX:RAK) informed the market that it was undertaking a process to consider the unsolicited, non-binding, indicative proposal (the Proposal) received on 7 December 2023. That Proposal was incomplete and highly conditional, including being subject to strict confidentiality controls. Rakon advises today that, following a period of due diligence, the Proposal will not be progressed further and the process is at an end. The parties were unable to reach a suitable resolution to the potential complexities encountered during due diligence (as announced on 13 May 2024). Given the strict confidentiality restrictions which remain in place, Rakon will not be providing further comment. Rakon Chair, Lorraine Witten, commented: "The Board considered the initial Proposal worthy of being assessed and, with support from its external advisers, undertook a comprehensive process to determine if the Proposal could be developed into a transaction to be presented to shareholders for consideration, and to consider any alternative proposals. While this process is now at an end, the interest shown in our company by this credible party is testament to Rakon's leading technology, strong business operations and unrelenting commitment to customers. "The longer-term growth fundamentals for Rakon's core markets remain strong and the opportunities significant, especially within the global space ecosystem and AI hardware sectors, as well as the ongoing evolution of 5G/6G, cloud and edge computing, and autonomous machines and vehicles. Rakon's board and management remain focused on executing on the company's growth strategy and delivering against our strategic priorities of technology innovation, core markets, customer partnerships, and flexible, scalable operations."

[LoungeLizard]

Another sad ending for long suffering shareholders. I came to the conclusion a while back that Rakon is one of those public companies that behaves as though it is still privately owned. This latest cloak-and-daggers episode just reinforces that view.   

[Shareguy]

Well after holding for many years I sold my last parcel and am out. For me it's been a very profitable ride overall but I feel for holders. A company with so much promise but for a lot of investors just one big disappointment.

[LoungeLizard]

Well after holding for many years I sold my last parcel and am out. For me it's been a very profitable ride overall but I feel for holders. A company with so much promise but for a lot of investors just one big disappointment.

Getting out with a profit on RAK is a good effort, regardless of what happens from here. There's plenty who are in no-mans land - wanting to exit but will materialise losses if they do so.
Agree that RAK had so much potential but just not professionally run and tone deaf to shareholder concerns.

[BlackPeter]

Well after holding for many years I sold my last parcel and am out. For me it's been a very profitable ride overall but I feel for holders. A company with so much promise but for a lot of investors just one big disappointment.

Well done for riding this traders stock with success. Takes a lot of guts, skill and/or good luck to ride a horse you can't trust - and clearly, while the Robinsons always looked well after themselves, I can't remember a lot of situations where it appeared that their interests had been aligned with the interests of the retail shareholders.

[Left Field]

The chair of Rakon's "independent' takeover investigation committee resigns.......say no more.

https://www.nzx.com/announcements/433484

( hardly an inspiring endorsement of the Rakon culture.)

[notmaurice]

The CFO of Rakon for the last 5 years now in a position with MCK.

[Left Field]

CFO leaving.... yesterday's news.... not a good look

https://www.nzx.com/announcements/435006

[Left Field]

Mmmmmmm Rakon launches the newest must have space race chip.

https://www.nzx.com/announcements/435480

Not price sensitive and no additional revenue projections. Par for the course.

[Left Field]

Downgrade!? Pretty wide range in their FY25 projections........mind you they mention AI a few times!?

https://www.nzx.com/announcements/436968

Based on current revenue projections, FY25 Underlying EBITDA is expected to be in the range of $5-15 million for the financial year to 31 March 2025 (FY24: $13.5million)

As previously advised, the first half of FY25 has continued to be challenging for the Telecommunications (excluding AI computing hardware) and Positioning segments, as customers navigate the impacts of macroeconomic conditions in each market while continuing to draw down their stockpiled inventory. While improvement is expected over the medium term, with the potential for the market to level out on a year-on-year basis during the second half, Rakon's 1H25 orders to date have reduced, leading to lower revenue year-on-year.

[bulltrap]

Breaking news from the Rakon spin mill is that the future doesn't influence the past!

4 April 2025 – Rakon Limited (NZX:RAK) advises that it does not anticipate a material impact from the US tariffs announced yesterday on its full year results for the 2025 financial year, which ended 31 March 2025.

The company is currently working to fully understand how the new US tariffs will be implemented and the implications for its business.

Better tell the market quick, and don't forget to flag it as price sensitive!