Shares of Aixtron (AIXG) have moved up quite nicely since mid-December on reports that China’s LED industry will install 700 to 800 units of the metal organic chemical vapor deposition machines (known as MOCVD to their friends) that Aixtron makes. That, according to the unsourced report on Digitimes.com http://www.digitimes.com/news/a20101222PD219.html , would double the pace of installation in 2010.
The report gets specific about what Chinese companies will be doing the ordering. Sanan Optoelectronics, currently the largest LED chipmaker in China, will add 60 units in 2011 to the 40 it had installed at the end of 2010.
No. 2 Xiamen Changelight will increase its number of MOCVD machines to 26 from 9, according to Digitimes’ sources. No. 3 Huanguang Optoelectronics will add 16 units to its current 14.
The total, the story has it, would amount to an order of 400 to 500 MOCVD machines for Aixtron and a total industry order of 700 to 800 units. (Veeco Instruments (VECO) is the other big maker of MOCVD machines. Those shares were up 4.1% as of 1 p.m. in New York.) That big an order, the report notes, would push delivery led times for shipment to China into the third quarter of 2011.
The stock market was more enthusiastic about the report than Aixtron was. “If these numbers come true, it will be fine for both us and Veeco, the other main supplier to this market,” Aixtron told Bloomberg.
“Fine” would seem to be an understatement.
As of January 3 I’m raising my target price on Aixtron to $42 a share by June 2011 from my previous target of $39 by May 2011.
Full disclosure: I don’t own shares of any of the companies mentioned in this post in my personal portfolio. The mutual fund I manage, Jubak Global Equity Fund, may or may not now own positions in any stock mentioned in this post. The fund did own shares of Aixtron as of the end of November. For a full list of the stocks in the fund as of the end of November see the fund’s portfolio at http://jubakfund.com/about-the-fund/holdings/