Semiconductor Equipment - Berenberg Bank
Semiconductor Equipment - Berenberg Bank
Semiconductor Equipment - Berenberg Bank
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Applied Materials Inc<br />
Technology Hardware<br />
our estimates. Compared to its peers, AMAT’s payout ratio is higher than ASML (<br />
17% payout ratio), and lower than TEL (35% payout ratio).<br />
Figure 24: Dividend payout<br />
2010 2011 2012 2013E 2014E 2015E<br />
Dividends/share $ 0.26 0.24 0.33 0.38 0.40 0.41<br />
Payout ratio 29.5% 18.2% 44.6% 57.0% 34.7% 31.7%<br />
Source: Company data, <strong>Berenberg</strong> estimates<br />
AMAT repurchased $1,416m in shares in 2012. The total share buyback over the<br />
past three years stands at $2,234m, which is 11% of its market cap. We believe<br />
AMAT will keep returning cash to shareholders through share buyback and<br />
dividends.<br />
Balance sheet and cash flow<br />
Following the aggressive share buyback and the $4.9bn Varian acquisition, AMAT’s<br />
balance sheet is not as strong as it used to be. It had net cash of $904m at end-Q2.<br />
We expect a net cash balance of $1,302m at end-2013.<br />
In the absence of large-scale M&A, we expect AMAT to continue to generate<br />
positive cash flow. We estimate that the company generated free cash flow of<br />
$978m in 2013, $1,845m in 2014 and $1,929m in 2015, representing an FCF yield<br />
of 5%, 10% and 11% for 2013, 2014 and 2015 respectively.<br />
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