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Player Avatar Jeffrey2012 (< 20) Submitted: 9/22/2011 2:32:16 AM : Underperform Start Price: $27.97 VECO Score: +43.26

This stock needs a deeper haircut which it will definitely receive soon. While doing my research, I finally pieced together what investors in this stock don't realize: the bottom is about to fall out. There are numerous reports of companies in China taking equipment sales such as Komatsu and not being paid. Combined that with the huge burdens of the local government vehicles, elimination of subsidies, and quite frankly extremely hot sales and you have a recipe for a disaster for the upcoming year. Investors are still slowly riding this company because it has a decent balance sheet and is well managed. But you can only do so much as a capital intensive company. Another thing, while they do have a lot of cash you have to wonder: how is that cash going to hold up when sales dry up? Veco's customer delays about construction projects pushing out sales further in the quarter are going to blow up.

The final nail in the coffin is AIXG. They just preannounced that sales in China were down significantly and in fact, are going to miss almost a whole quarters revenue. There is no way Veco who is more leveraged to China than Veco is going to escape. If anything, their silence on this matter is making this a particularly interesting short.

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Member Avatar TMFBiggles (33.75) Submitted: 9/30/2011 5:17:12 PM
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Your analysis is intriguing to me, and I wish to subscribe to your newsletter.

Member Avatar TopAustrianFool (61.16) Submitted: 11/8/2011 3:50:43 PM
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Me too. I think your analysis is right on. The Chinese have blown an obscene amount of capital in the alternative energy snake oil industry. It is a super bubble and when the US stops subsidizing solar panel and the other alternative energy garbage China and companies like VECO are going to see a depression like never before. Typical Boom-Bust business cycle spurned by government malinvestment.

Member Avatar Jeffrey2012 (< 20) Submitted: 11/18/2011 11:06:07 AM
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Today's news just confirms my suspicion of unintelligent investors. Goldman came out with upgrades for cree and panl and yet VECO is rallying. Do people not read what the whole report says or are they just lemmings? It is pretty clear that people still haven't factored that the slowdown or near collapse for movcd equipment is still isn't in the books yet. But if you look into AIXG they already lost nearly a quarters worth of revenue if you consider their reduction in guidance.

Also, think of this: this looks remarkably familiar to SUNW when they were on top of the world growing sales tremendously due to the internet build out. However, after the hang over of building, they never recovered. How is this related to VECO? Consider this: Veco relies heavily on China for their market and if you know anything about doing business in China, they consider local grown champions over foreigners. While VECO and AIXG made inroads because their home grown movcd business is just starting, I can guarantee you future build outs with any subsidies will surely be directed to domestic firms. There is no way this is going to repeat a 2nd time!

Member Avatar gedda (< 20) Submitted: 8/13/2012 3:18:09 PM
Recs: 0

Interesting perspective. You clearly know a great deal about economics and particularly The West/China economic paradigm. I'm curious to know how you think these companies will perform at home in the long term considering the inevitable shift from incandescent to LED lighting that these companies are involved in. Wouldn't they constitute a long term hold on any investment?

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