iqe is a research client of edison investment limited 8 november 2005 has responded to the 2001 2 downturn in some its key end markets by cutting fixed costs improving efficiency diversifying product base into consumer and industrial sectors focussing on winning substantial outsource contracts our view this leaves highly operationally leveraged business model with scope rapidly improve returns leader fast growing epitaxy market world provision advanced semiconductor substrates value added epitaxial foundry services for wireless rf electronics optoelectronics we estimate that demand their products at 10 15 per annum but accelerating trends towards outsourcing should underpin significantly stronger revenue growth management team focused range reducing cost operational capacity reduced company s estimated cash breakeven level c 28m substantially increased earnings cashflow leverage reduction losses 2p eps looks realistic target forecast pre tax over next two years valuation
