Rubicon gains; UBS' checks point to strong Chinese sales


Checks suggest Rubicon's (RBCN +2.3%) Chinese sales are up 30% in Q1, writes UBS' Stephen Chin, while upping his PT to $12 from $9.50.

Chin also estimates Rubicon's ASP for 2" sapphire wafers is up 9% Q/Q, and says UBS' China LED tracker "continues to show that fab utilization rates in China are tracking in low 90s and Chinese LED fabs are likely placing rush MOCVD equipment orders."

At the same time, he cautions sapphire "is still in 10-15% oversupply," and estimates Rubicon's Malaysian sapphire wafer-polishing factory has a 10%-20% utilization rate due to weak demand for larger wafers. Chin, who maintains a Neutral, thinks Rubicon won't reach operating breakeven until 2015.

Chin's remarks about MOCVD equipment orders bode well for Veeco (VECO +5.9%) and Aixtron (AIXG +2.7%). The former was upgraded by CLSA this morning, and by UBS 18 days ago.

Also: AppleInsider is reporting Apple and GT Advanced are looking to expand their new Arizona sapphire production facility. Rubicon shares jumped after Apple's deal with GT was announced last fall, as investors bet the deal would lead to a more favorable sapphire supply/demand balance.

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