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RDA Microelectronics (RDA) IPOreport, China, fabless semiconductors

|Includes: RDA Microelectronics, Inc. (RDA)

Nov 8wk IPO calendar

RDA Microelectronics (NASDAQ:RDA), China, fabless semiconductors.  $71mm IPOwith a market cap of $404 at price range mid-point of $9.5.  Scheduled for Wednesday, Nov 10

RDA Valuation Metrics

SUMMARY
RDA looks like a good speculation at the $9.5 price range mid-point
. Business is characterized by volume increases & price declines driven by competition.
. Annualizing September quarter results shows a P/E ration of 13, low for a fast-growing company. The low gross margin of 30%, however, suggests the value add isn’t especially unique & may not be defensible over the longer term. 
. RDA’s S-1 Filing says it competes with the following companies, all of which have higher gross margins.

BUSINESS
Fabless semiconductor company that designs, develops and markets radio-frequency and mixed-signal semiconductors for a broad range of cellular, broadcast, and connectivity applications.

COMPETITION
Competes with MediaTek in a number of products related to mobile handsets in China as well as with multinationals such as Broadcom, Infineon, and STMicroelectronics that offer a broad line-up of stand-alone and integrated semiconductor solutions.
In addition, there are companies that RDA competes with in one particular product or product family, such as RF Micro Devices and Skyworks in power amplifiers; NXP and Silicon Laboratories in FM radio receivers; Maxim and Zarlink in DVB-S tuners; Maxim, MaxLinear and NXP in DVB-T tuners; Telegent in analog mobile television receivers; and CSR plc in Bluetooth solutions.

USE OF PROCEEDS
$62mm
For working capital and other general corporate purposes, including to finance growth, develop new products, and fund capital expenditures.

RDA Valuation Metrics