Lone analyst on a call

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Having listened to more quarterly conference calls from listed companies than I care to mention, two contrasting characteristics are worth mentioning. In the PV industry, players such as First Solar get star treatment. With so many analysts on the call, questions are limited to one and no follow-up. At times, even with that policy in place, not all analysts get a chance to pose a question. However, the reverse can also happen.

Though rare, I have experienced calls when a lone analyst is in attendance, asking a couple of questions and then the call ends sharply. These occurrences are a warning sign that the investor community would rather cover more attractive companies and unless attendance picks-up, normally on the back of improving financial positions of those listed companies then it’s a downward spiral from there.

I have even experienced firms that were in deep trouble, simply stop hosting quarterly conference calls either because it was obvious there was consistently a lone analyst on the call or that the hostility of disgruntled private investors would use the call to vent their frustrations on a management they had little confidence left in them.

Regrettably, there was a lone analyst on the Emcore call yesterday and the Q&A session was over in a blink of an eye. Not that Emcore had attracted a lot of attention from the investor community over the last few years but it would normally host 3-4 analysts, which were also from recognisable investment firms.

They would now seem to have all gone and probably because it is hard to justify coverage to potential customers that a perennial loss-making firm is an attractive bet.

There were however, some vaguely positive tones echoing from management in the call, regarding their CPV segment of their business.

The company noted that they had a current order backlog for 15MW of CPV system, at its China-based JV, Suncore. They also planned to complete two CPV solar power project in New Mexico and Arizona totalling 3MW this year, using CPV components manufactured by Suncore, which coupled to improved design and lower manufacturing costs is intended to regain lost competitiveness.

Management also noted that they would be expanding its project development team and hopefully start further projects to build sales.

Its space business, typically a bumpy business to be in has had some recent contract successes but the backlog has now declines again and is expected to decline further in the March quarter.

According to the company its total addressable market for space applications was reportedly US$400 million, of which US$250 million was in the commercial space segment and and US$150 million came from the defense segment. Emcore management noted that the defence segment was now a new addressable market for Emcore, having recently received preliminary facility security clearance as a trusted supplier to the U.S.Government.

Part of the problem for Emcore is that the two CPV projects they mentioned in the call were announced last year, and with systems being supplied from the China JV later this year (factory being built at the moment), the lack momentum remains an issue.

Ever the optimist, Emcore’s President and Chief Executive Officer, Hong Hou finished his prepared statement to the lone analyst by saying, “We will continue with the same rigor for cost control and cost reduction. With these efforts, we are setting a strong foundation for our future.”

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