Fabrinet (FN, $120.97): “Fabrinet Creator of New Chips”
By: Kevin
Igoe, AIM Student at Marquette University
Disclosure:
The AIM Equity Fund currently holds this position. This article was written by
myself, and it expresses my own opinions. I am not receiving compensation for
it and I have no business relationship with any company whose stock is
mentioned in this article.
Summary
• Fabrinet. (NYSE: FN) is an international information technology
company that engages in the provision of optical packaging and electronic
manufacturing services to original equipment manufacturers.
• Fabrinet receives Cisco 2021
EMS partner of the year award for battling through a challenging operational
and commercial climate through 2021 while continuing to perform tremendously
and be a good partner.
• Fabrinet selected by Aeva to produce
the worlds first 4D LiDAR Chip Module using automated driving and beyond using
silicon photonics technology.
• Recently hit a new 52 week high
of $122.53 on November 8, 2021.
• Subject to risks of current ongoing
U.S. China Trade dispute which could have negative effect on 2022 financial
conditions and operating results.
Key
points:
CEO Seamus Grady announced their
Covid-19 vaccination program for Thailand employees has been a great success
and now almost 99% of employees have been vaccinated. This is important because in July 2021 this
effort went underway as many facilities were forced to shut down due to
outbreaks increasing their cost of revenue for the year.
Fabrinet President and COO
recently sold recently sold 2.5 million of his Fabrinet stock decreasing their
holding size by roughly 29%. This is
making shareholders cautious but there is no need to worry because Fabrinet is
increasingly growing profits year over year.
Fabrinet plans to emphasis their
growth strategy more moving forward as a firm their growth strategy includes strengthening
their presence in the optical communications market, continuing to expand their
customized optics and glass vertical integrations, and evaluating strategic
acquisitions.
Moving forward they plan to continue
to establish New Product Introduction (NPI) centers to generate and transfer
new business to their Thailand operations.
Like the recently opened NPI in Silicon Valley they want to expand these
to help generate more business to be available for transfers to Thailand.
What has the stock done lately?
Throughout the last month
Fabrinet has increased an impressive 17.24% being up $17.53 coming towards the
end of 2021. Which was in part due to
announcements made in the FY 21 Q4 earning reports such as revenue of 509.6
million was earned which was more than forecasted for this quarter also their
non-GAAP EPS was $1.31 above their forecasted numbers for this quarter.
Past Year Performance: Fabrinet
has increased 53.65% in value over the past year. Up a total of $41.70 due to major increases
in revenues, gross profit, and operating income respectively going up by 237.5
million, 35.3 million, and 33.4 million.
Proving to shareholders Fabrinet is continually growing on a year-over-year
basis.
My
Takeaway
This new opportunity for Fabrinet
to help Aeva manufacture the worlds first 4D LiDAR chip module shows
shareholders they hold the ability to tap into this new market ahead of their
competitors. Aeva’s decision to use
Fabrinet to help produce these also emphasizes how Fabrinet is ahead of its
competitors in respect to their deep expertise in silicon photonics integrated
devices and advanced optical systems.
