Vishay Intertechnology, Inc.

VSH Details

Vishay Intertechnology, Inc. (NYSE: VSH) is a Fortune 1,000 company focused on manufacturing discrete semiconductors and passive electronic components for innovative designs in the automotive, industrial, computing, consumer, telecommunications, military, aerospace, and medical industries worldwide. It generates revenue from six primary segments, i.e., MOSFETs (metal-oxide-semiconductor field-effect transistor), Diodes, Optoelectronic Components (OPTO), Resistors, Inductors, and Capacitors.

Q2FY21 Revenue Segregation by Segments (Investor Presentation, August 2021)

New & Enhanced Product Offerings: On September 22, 2021, VSH improved the Vishay Draloric RCC1206 e3 thick film chip resistor in the 1206 case size with a better power rating of 0.5 W. When compared to a regular thick film chip resistor of the same size, the improved chip provides 2x the power, allowing designers to save space and money in automotive, industrial, telecommunications, and medical applications.

On September 15, 2021, the company launched the Vishay Dale Thin Film PHPA series of AEC-Q200 approved high power thin film wraparound chip resistors. The new series devices combine a self-passivated tantalum nitride film for enhanced moisture resistance with power ratings of 1.0 W and 2.5 W in the 1206 and 2512 case sizes, respectively.

Q2FY21 Results: The company's net revenues increased 40.81% in Q2FY21 (ended July 03, 2021) to USD 819.12 million, compared to USD 581.72 million in Q2FY20 (ended July 04, 2020), primarily due to the continued recovery in demand that started in October 2020. Net earnings (attributable to common shareholders) for Q2FY21 increased to USD 93.19 million from USD 24.65 million in Q2FY20. As of July 03, 2021, the company had cash & cash equivalents (including short-term investments) of USD 855.79 million and total debt of USD 454.03 million.

Key Risks: The company operates in a highly cyclical electronic component industry, which is susceptible to unpredictable declines and downturns from time to time. In addition, most of the raw materials that VSH uses are produced by limited suppliers across the globe. Hence, the company's results of operations may be affected if it faces any issues in obtaining these raw materials in required quantities, if their quality is not up to standard, or if the suppliers increase their prices.

Outlook: In its Q2FY21 release, the company stated that it expects its Q3FY21 revenues to range from USD 810 to 850 million, with a gross margin of 28.3% (+/- 50 basis points) assuming Q2FY21 exchange rates.

Valuation Methodology: EV/EBITDA Multiple Based Relative Valuation

(Analysis by Kalkine Group)

• % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

VSH Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: VSH's stock price decreased 20.54% in the past six months and is currently close to the mid-point of its 52-week range of USD 15.74 to USD 26.50. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 41.71. We have valued the stock using the EV/EBITDA-based relative valuation methodology and arrived at a target price of USD 25.45. Considering the significant correction in the stock price, decent profit margins, continuous product launches, current valuation, and associated risks, we recommend a "Buy" rating on the stock at the current price of USD 20.27, down 0.98% as of October 04, 2021, 1:04 PM ET.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.

*Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached.

Corsair Gaming, Inc.

CRSR Details

Corsair Gaming, Inc. (NASDAQ: CRSR) is engaged in providing and innovating high-performance gear for all gamers and content creators. Its operating segments are 1) Gaming and Creator Peripherals, providing gaming keyboards, mice, headsets, controllers, capture cards, stream decks, USB microphones, studio accessories, etc., and 2) Gaming Components and Systems, which offers power supply units, cooling solutions, computer cases, DRAM modules, and gaming PCs.

Series of New Launches: On September 30, 2021, CRSR launched the XENEON 32QHD165, a new gaming monitor with a 32-inch QHD screen and an IPS LED panel that generates 2560x1440 images. The new monitor provides powerful specs, smart features, and a fantastic design for gamers and creators and comes with a refresh rate of up to 165Hz, AMD FreeSync certificate and NVIDIA G-SYNC compatibility.

The company also released the SABRE RGB PRO WIRELESS gaming mouse on September 16, 2021. The mouse is ergonomically built and exceptionally lightweight, with SLIPSTREAM WIRELESS technology providing esports-ready, high-performance wireless speed.

Partnership with Ubisoft: On September 07, 2021, CRSR announced the extension of its collaboration with Ubisoft, a video game publisher, through which the companies provide in-game lighting integration for all of CRSR iCUE RGB devices to Far Cry 6, the latest version of the Far Cry franchise.

Securing USD 350 Million Credit Facility: On September 07, 2021, the company refinanced its 2017 credit facilities and secured a new USD 350 million credit facility, comprising a USD 250 million term loan and USD 100 million revolving line-of-credit. The new credit facility has a variable interest rate of Base / LIBOR Rate, plus a margin, and will mature in August 2026.

Q2FY21 Results: The company's net revenue increased 24.32% in Q2FY21 (ended June 30, 2021) to USD 472.90 million, compared to USD 380.41 million in Q2FY20, resulting from solid sales growth across all product categories. Net income for Q2FY21 increased to USD 27.75 million from USD 22.60 million in Q2FY20. As of June 30, 2021, the company had cash & cash equivalents of USD 134.57 million and total debt of USD 270.01 million.

Key Risks: In H1FY21, CRSR's top ten largest customers comprised 50% of its net revenue, with Amazon alone generating 24.6% of the revenue during this period. Hence, the loss of any of these critical customers could hurt the company's financials.

Outlook:

FY21 Guidance (Source: Earnings Presentation, August 03, 2021)

Valuation Methodology: Price/Earnings Per Share Multiple Based Relative Valuation

(Analysis by Kalkine Group)

• % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

CRSR Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: CRSR's stock price decreased 25.12% in the past six months and is currently leaning towards the lower end of its 52-week range of USD 18.00 to USD 51.37. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 33.81. We have valued the stock using the Price/Earnings-based relative valuation methodology and arrived at a target price of USD 31.98. Considering the significant correction in the stock price, decent balance sheet, recent product launches, current valuation, and associated risks, we recommend a "Buy" rating on the stock at the current price of USD 25.63, down 2.95% as of October 04, 2021, 10:55 AM ET.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.

*Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached.

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