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Sivers Semiconductors

* Currently unprofitable with negative cash flow, requiring access to capital markets for funding through debt or equity issuance.
* Operating in a fragmented market with numerous competitors, making it challenging to establish clear market dominance.
* Difficulty in identifying sustainable competitive advantages at this early stage of market development.
* Potential for high customer concentration if a few large clients transition from evaluation to commercial orders, which could increase business risk.

* Strong positioning in high-growth markets driven by AI acceleration and millimeter wave adoption, with a serviceable addressable market of USD2bn by 2028.
* Asset-light business model using a "hybrid fabless" approach in Photonics and fully fabless in Wireless, enabling efficient scaling without heavy reinvestment.
* Products aligned with long-term secular trends in data centers, 5G networks, and satellite communication, reducing risk of disruption.
* Active collaboration with customers for innovation, as evidenced by strategic partnerships like the one with Ayar Labs.

* Operating margin (EBIT) below 20%, indicating potential challenges in maintaining profitability.
* Weak financial health indicators, including low current ratio and high debt levels relative to cash flows.
* Likely need to raise capital through debt or equity within 12 months, potentially diluting existing shareholders.

* Strong gross profit margin exceeding 40%, indicating profitable product mix and pricing power.
* Operating margin (EBIT) has improved for three consecutive years, suggesting improved cost management and operational efficiency.
* Efficient inventory and accounts receivable management, with both ratios below 20% and their 5-year averages.

* Recent appointment of CEO and CFO (both in 2023-2024) means limited track record in delivering on promises and executing strategy within Sivers specifically.
* Company is still in scale-up phase and loss-making, unable to demonstrate attractive returns on capital or pay dividends, potentially limiting investor appeal.
* Continuous share dilution without corresponding EPS growth, increasing from 126m to 235m shares between 2019 and 2024, potentially concerning for long-term shareholders.

* Strong visionary leadership from new CEO Vickram Vathulya, with 25+ years of industry experience and a focus on long-term growth in AI acceleration and millimeter wave adoption.
* Commitment to innovation demonstrated through partnerships with industry leaders and successful grant acquisitions, positioning Sivers at the forefront of technological advancements.
* Transparent and focused communication strategy, emphasizing long-term value creation and clear market share ambitions, fostering investor trust and understanding.
* Significant insider ownership (28%) and board member stakes, indicating strong alignment with shareholder interests and confidence in the company's future.
* Diverse and experienced board of directors with expertise well-aligned to Sivers' business strategy and growth ambitions in SATCOM and AI datacenter markets.

Sivers IMA has recevied yet another order of SEK 21m from its first Fortune 100 customer. All these orders in total sum up to about SEK 70m.
The order is related to optical sensing and provides more evidence of quality and progress. Redeye thinks the order could be related to optical sensing applications mentioned in previous company presentations, which would suggest major volumes. Moreover, the press release mentions several different projects, although the company does not want to comment on the exact number of projects.
The order will be billed during 2020. Q1&#8217;20 sales extrapolated amount to SEK 90m. We expect sales of SEK 105m for full-year 2020, with the Corona uncertainty as a swinging factor.  At the moment, we choose to not make any estimate changes, but we recognize that our estimates could prove very conservative.
We reiterate our base case of SEK 11 per share, following two upward revisions in a row since March 30. However, shares barely moved on the news (+2%). Our experience is that the stock market often has a name fixation, and needs a customer name, as opposed to an anonymous &#8220;Fortune 100 customer. When the name is eventually announced, we think there could be a major positive stock reaction. In addition, we expect several other news, during the remainder of 2020, to potentially move the stock.