Here’s why the Revasum (ASX:RVS) share price surged 33% today

It was a big day in the green for the semiconductor specialist today.

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Shares in semiconductor specialist Revasum Inc (ASX: RVS) gained an impressive 33% on Tuesday, closing the session at 58.5 cents apiece.

Revasum shares started the day on the up as investors responded positively to a company announcement made at the 10th annual December CEO summit. Here are the details.

What did Revasum present?

In a presentation at the summit, Revasum’s CEO Rebecca Shooter-Dodd gave an in-depth overview of the company’s technology, its operations, and its outlook.

The company touts itself as a “market leader for SiC [silicon carbide] single-wafer processing solutions”.

It achieves this via a product offering of a fully-automated single water tool set comprised of the 7AF-HMG SiC grinder and the 6EZ SiC polisher.

The polisher was commercialised in FY21 and, since then, the first tool has been shipped, installed and accepted, Revasum says.

The company stated it has achieved consistent revenue growth through FY21 with a 117% quarter on quarter increase seen in Q3 FY21. It anticipates total revenue of US$13.3 million-US$15.6 million for FY21.

It also boasts “confirmed customer purchase orders of US$9.0 million as of December 4” and anticipates shipping 40-50 tools over FY22 and FY23.

What’s the outlook for Revasum?

The company also believes it is well-positioned to deliver long-term sustainable growth. The assertion comes on the back of forecasts of a 60%-125% year on year revenue increase in FY22, around US$25 million-US$35 million.

Part of this growth is said to be fuelled by a forecast 183% compound annual growth rate (CAGR) in 8-inch wafer volume between 2020-2025, demonstrating the size of Revasum’s total addressable market.

According to the company, the move to 8-inch wafers is necessary to reduce the overall cost of SiC wafers. Revasum says its tool kit is easily configured for 6-inch and 8-inch SiC wafers with customers able to easily switch between the two.

The company also expects to be free cash flow positive in FY22. It anticipates gross margins to lift with an “FY21 year to date margin of 35.4%” — a step above the FY20 margin of 31.8%. 

Aside from this, the company expects its strategy will continue growing recurring revenue streams to build into its earnings profile.

The release also notes US President Joe Biden’s announcement in 2021 for plans to invest US$52 billion in semiconductor manufacturing and research, as part of the nation’s US$2 trillion infrastructure plan.

Revasum share price snapshot

Over the past 12 months, the Revasum share price has gained almost 47% after rallying almost 68% this year to date.

It has reversed course this past month and is down 16% in that time, however, still leads the S&P/ASX 200 Index (ASX: XJO) across longer timeframes.

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The author has no positions in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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