Akoustis Technologies Inc

Akoustis Technologies Inc (NASDAQ: AKTS) is a North Carolina, United States-based high-tech BAW RF filter solutions Company, which is focused on developing, designing, and manufacturing radio frequency filter products for the mobile wireless device industry.

Investment Rationale for Valuation – Speculative Buy at USD 16.13

• With growing customer activity, the Company reported revenue 30% above guidance.
• AKTS achieved several strategic milestones, despite the ongoing COVID-19 pandemic.
• On the liquidity front, the current ratio was 3.34x in December 2020, which was higher than the industry median. Also, the liquidity position stays strong, with the confidence to increase the investment for the future.
• From the technical standpoint, 14-day RSI stood at 44.60, which is supporting the upside movement.

Key Risks

• The Covid-19 outbreak can cause massive supply chain disruption and increased operating costs.
• Lack of product regulations and product safety can lead to safety risks.
• The Company operates in a competitive market and excessive competition could affect the Group’s revenue and profitability.

Recent News

On 1 February 2021, the Company stated that it had locked the process flow for the new WLCSP (wafer-level-chip-scale-packaging) for 5G Mobile Devices, which will support AKTS’s entire XBAW® RF filter product line.

Q2 FY21 Trading Update (as on 1 February 2021)

(Source: Company Website)

• The Company reported revenue 30% higher than the guidance, with growing customer activity in 5G Mobile, Infrastructure, WiFi and Other Markets.
• It achieved design-lock with the new 5.5 GHz and 6.5 GHz WiFi 6E coexistence filters.
• On 31 December 2020, the cash and cash equivalents increased to USD 47.7 million as compared with the previous period (30 June 2020: USD 44.3 million).
• The Company has accelerated fab expansion by doubling its manufacturing capacity.

One Year Share Price Chart

 (Source: Refinitiv, chart created by Kalkine Group)

Conclusion

The Company delivered good growth in H1 and Q2 revenue across all the major market segments. AKTS is shipping multiple 5G small cell XBAW™ filter solutions, delivering preliminary designs of the new 5G mobile filter solutions, delivering volume production of the WiFi 6 tandem filter solution and entering into the WiFi 6E coexistence XBAW® filter solutions. The Company stated that it would double its manufacturing capacity by the end of calendar 2021. Looking ahead, the Company expects revenue to grow while it is planning to expand the capacity at the New York fab. Overall, the Board stays confident in AKTS's ability to emerge from such an unprecedented period. It achieved many of the strategic milestones, which will continue to see improvements in the Company's top and bottom line. The stock made a 52-week low and high of USD 3.76 and USD 19.15, respectively.

Based on the decent growth prospects, we have given a “Speculative Buy” stance on Akoustis Technologies Inc at the closing market price of USD 16.13 (as on 12 February 2021).

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