Equity Analyst, LightStream Research

Farha Sabri

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Equity Bottom-Up

<ul>
<li>Several of <a href="https://www.smartkarma.com/entities/13382" target="_blank" data-smartkarma-citation="entities:13382:1">Micron Technology Inc (MU US)</a>’s products were recently hit with a temporary ban from China. However, these products are said to constitute to a mere 1% of the company’s revenue and would not be much of an impact to Micron’s top line growth.</li>
<li>We believe trade tensions would not come in the way of the company’s solid top line and bottom line growth. We expect 49% YoY growth in revenue and an OPM of around 48% in FY08/18 followed by revenue growth of 17-18% YoY in FY08/19 with OPM reaching around 47% over the same period.</li>
<li>The data economy will be a catalyst in driving the company’s future growth. The advent of the data economy is expected to increase the value of memory and storage as a percentage of total semiconductor revenue to around 35% by 2019 compared to approximately 25% in 2017.</li>
<li>We also expect the tight supply situation to continue in to 2019 as capex investments will take some time to realise in the form of production capacity expansions. This should bode well for the demand for Micron’s products.</li>
<li>As per our estimates, Micron is trading at a FY2 EV/OP of 4.2x (year-end FY08/19), lower than its historical median of 8.6x.</li>
</ul>


Several of Micron Technology Inc (MU US)’s products were recently hit with a temporary ban from China. However, these products are said to constitute to a mere 1% of the company’s revenue and would not be much of an impact to Micron’s top line growth.
We believe trade tensions would not come in the way of the company’s solid top line and bottom line growth. We expect 49% YoY growth in revenue and an OPM of around 48% in FY08/18 followed by revenue growth of 17-18% YoY in FY08/19 with OPM reaching around 47% over the same period.
The data economy will be a catalyst in driving the company’s future growth. The advent of the data economy is expected to increase the value of memory and storage as a percentage of total semiconductor revenue to around 35% by 2019 compared to approximately 25% in 2017.
We also expect the tight supply situation to continue in to 2019 as capex investments will take some time to realise in the form of production capacity expansions. This should bode well for the demand for Micron’s products.
As per our estimates, Micron is trading at a FY2 EV/OP of 4.2x (year-end FY08/19), lower than its historical median of 8.6x.


Micron: Stabilising DRAM Prices Could Keep Margins Near Record Levels