Thin Film Electronics: Bringing It All Together In 2018
Edison | Nov 21, 2016 08:09AM ET
Thin Film Electronics ASA (OL:THIN) continues to report significant advances on an almost weekly basis. In October it took the keys to its new San Jose facility and recent milestones include new pilot orders in gemstones (Sarine Technology) and food (olive oil) and a partnership to produce combined hologram/NFC document authentication tags. We have cut our near-term earnings forecasts as THIN no longer intends to further de-bottleneck its existing plant (with short-term revenue implications), but our DCF valuation has risen 15% to NOK8.58/share, reflecting the expected boost to long-term cash flows from the greatly increased capacity/reduced cost expectations from the planned new roll-to-roll (R2R) production line.
Q3 cash burn down helped by lower R&D
In Q316 Thinfilm’s revenue dropped 20% y-o-y to $0.8m, reflecting a hiatus in EAS orders from Nedap’s fashion clients. Helped by falling R&D costs, reported operating loss fell from $10.5m to $9.8m and, helped by slow growth in working capital, cash burn declined from $12.8m in Q2 to $9.9m. Net cash balances at end Q3 totalled $27.1m (end Q2: $36.8m), which we see as sufficient to last into Q217.
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