To The Moon

I. Company Profile: One of the world's largest manufacturers of semiconductor storage and imaging products

Micron Technology, Inc. is one of the world's largest manufacturers of semiconductor storage and imaging products, including DRAM, NAND flash memory and CMOS image sensors. Micron Technology's advanced products are used in a wide range of mobile, computing, service, automotive, networking, security, industrial, consumer and medical applications, providing customers with targeted solutions for these diverse end-use applications.

In fact, Micron is not far from our daily life, and Micron products can be bought very easily on Jingdong, mainly memory sticks and solid state drives and other storage devices. According to the August 2022 news, Micron Technology's automotive-grade high-performance LPDDR5 DRAM memory and UFS 3.1 products based on 3D TLC NAND technology have been applied to Ideal's intelligent flagship SUV model - the Ideal L9. - RISO L9.

Micron Technology was founded in 1978 and listed in the U.S. stock market in 1984. Its current (June 29, 2023) market cap of $70.3 billion, PE (TTM) of -24.2 and dividend yield (TTM) of 0.72% indicate that the company is losing money but has a lot of cash on its books. The company has risen more than 28 times since its IPO, with an annualized share price return of 9%, making it a long-time bull stock.

From the above profile, we can know that Micron Technology is a semiconductor company specializing in storage. Since it is a semiconductor company, it will be affected by the semiconductor cycle, and given its long history, analysis of its recent financial performance may reveal investment opportunities.

Second, the analysis of earnings: revenue fell year-on-year, a slight increase in the ring, net profit turned to a loss year-on-year, the ring loss narrowed, but good even than expected, the performance of the bottoming characteristics are obvious.

After the bell on June 28th, Micron Technology announced its earnings for the Q3 fiscal quarter of 2023.

(1) From the gap with market expectations, Micron Technology's third-quarter revenue of $3.75 billion was higher than market expectations of $3.69 billion; Non-GAAP operating loss of $1.47 billion, with an operating loss ratio of 39.2%, better than market expectations of a loss of $1.69 billion; adjusted profit margin declined 16.1%, narrower than analysts' expectations of 21.1%. Adjusted loss per share was $1.43, better than the expected loss of $1.59.

(2) On a year-over-year and sequential basis, Q3 revenue was $3.75 billion, compared to $3.69 billion last fiscal quarter, up 2% sequentially, and $8.64 billion a year ago, down 57% year-over-year. In terms of net income, Q3 loss was $1.896 billion, compared to a loss of $2.312 billion in the previous quarter, narrowing 18% sequentially, and a profit of $2.626 billion in the same quarter last year, a year-over-year turnaround.

(3) In terms of future outlook, the company expects to report adjusted revenue of $3.7 billion to $4.1 billion for the fourth quarter, which is above market expectations of $3.87 billion, according to the earnings report. Sanjay Mehrotra, president and CEO of Micron Technology, said the revenue trough in the memory industry is over and margins are expected to improve as the industry supply-demand balance gradually returns. Therefore, the results are expected to improve gradually.

(4) Looking at the revenue breakdown, dynamic random access memory (DRAM) contributed 71% of revenue in the fiscal third quarter, while flash memory devices (NAND) contributed 27% of revenue. Although Micron's customers are getting rid of and consuming large amounts of excess inventory, the company does not expect a rapid return to growth in 2023.

(5) Looking at the net profit structure, gross profit improved significantly YoY, from -32.7% to -17.8%, indicating that the underlying logic supporting the company's net profit is improving, and the same is happening above operating profit and ultimately net profit.

(6) From the historical revenue, the company's revenue growth rate roughly shows a 3-4 year cycle (as shown in the chart below), but the overall revenue is growing, currently in the lowest revenue period, there may be only 23 years 1 year, may be 24 years will also be relatively throw to, but should be better than 2023.

(7) From the perspective of historical net income, the company's 4-year cycle feature is more obvious (as shown in the chart below), about 4 years a cycle, it is expected that 2023 to 2024 is the bottom range of performance.

Therefore, the cyclical changes in revenue and the trend of the chain change in the latest earnings report of 2023 Q3, it is probable that 2023 and 2024 are the bottom of the performance, and the bottoming feature is more obvious.

Third, the trend analysis:

(1) news analysis: from the news side, the market for the general interpretation of earnings, or analysts for the industry's forecast, or the huge losses of competitors such as Samsung in South Korea, all indicate that Micron Technology may eventually win in this round of semiconductor storage elimination race, thus leading to the entire semiconductor down cycle is nearing the end, so the news is mainly positive.

(2) technical analysis: from a technical point of view, the medium and long-term upward trend line is solid, currently in the weekly level upward trend, but the daily level is short-oriented, the current daily downtrend just fell to the weekly level upward support line near, so the technical side of the short-term bearish, medium and long-term bearish-oriented.

(3) valuation analysis: given that the semiconductor industry is asset-driven industry, so the bp-band to valuation analysis, the current valuation already belongs to a reasonable valuation category, so the expected follow-up stock price shock will be more.

In summary, combined with the conclusion of the fundamental analysis, that is, Micron Technology's future share price in 2023 to 2024 may not rise too well, more likely to be a piece of shock up mainly.

IV. Key Conclusions

(1) Micron Technology's Q3 earnings results fell sharply year-on-year, but improved sequentially, and the decline was better than the market expected, indicating that the company's fundamentals are showing signs of improvement.

(2) Combined with Micron Technology's historical revenue and net profit performance, 2023 to 2024 is a period of bottoming out performance. Combined with the improvement in Q3 earnings year-over-year in 2023 and news analysis, there is a high probability of bottoming out in 23 years.

(3) From the current trend, the main focus is on the shock upward, the stock price may be difficult to have a large market performance.

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