MEMSIC is recent IPO that has been lost in the shuffle and pushed down to the single digits with the rest of the semiconductor space.Â However the company is growing rapidly and is already profitable.
In fact the capital raised should provide very high returns given their existing returns and strong demand for MEMS-based sensors.Â
The stock is thinly traded and only two analysts (underwriters) have published estimates out there.Â The consensus for tonight is 6c on $6.5M in revenues for the December quarter.Â 2008 estimates are currently at 52c on $39M.
That’s right the stock is trading at about 12x earnings and growing 56%.
We published a full report on the IPO which is available here (pdf) with more details.Â
Our fair value estimate for the stock is $21.Â If we are only 1/2 right the shares have plenty of potential from here.
The risks to the company are that the larger players will squeeze them out and that their low-cost CMOS technology has limited applications.Â We can’t be certain about that or the quarter per se but the company has been executing well and generating the sort of profits we find attractive.Â
We also are fans of the emerging MEMS technology area.Â The R2 Fund has a long position in MEMS.
— Kris Tuttle