On 22 March, 2022 Brainchip published on its website this paid for update by Pitt Street Research under the heading Momentum Keeps Building:
Stay updated on the latest developments, advancements, and achievements of BrainChip as they forge ahead with their innovative technologies.
brainchipinc.com
In this report Pitt Street Research acknowledge the developments up to the date of its report but clearly had no official knowledge of the pending SiFive and Nviso partnerships or the MegaChips marketing campaign in the USA spearheading it with AKIDA Ai as the advantage they bring to the market.
At the time of the report Pitt Street Research point out that the then price was sitting at a 58% discount to their true value assessment of $1.50.
Leave aside whether Brainchip's true value has been increased by the above three events beyond $1.50 they most certainly have reinforced the $1.50 true value proposition being argued by Pitt Street Research.
In other words if they were right on 22 March, 2022 with their valuation and present price discount they are on even more solid ground now with these additional assets being added to the Brainchip arsenal.
We all know or at least those who get out of bed that overseas Institutions have been taking interest and accumulating shares in Brainchip and I personally think the reason is dead obvious. However you look at Brainchip it is undervalued and is a buy at these levels as we have seen occurring.
Global events should always be considered as potential risk factors but what are they actually and how do they relate to Brainchip in the short to medium term:
1. Gobal interest rates:
Brainchip does not have any borrowings and has plenty of cash on hand. Rising interest rates only do one thing to Brainchip. They increase the returns on the cash reserves which sit at over $AUD40 million.
Will Brainchip's customers who have debt be affected? Yes of course.
Will this deter them from pursuing AKIDA technology? I would argue no because if you understand the technology adoption saves you money in power and in the reduction in the number of semiconductors you need to carry out your activities and you do not have to throw out your current technology to take advantage.
Also remember the world is legislating compulsory power reduction in all industry which also places AKIDA technology in the right market place.
2. Global semiconductor supply chain issues:
Well just like all boats go up and down with the tide this is an industry wide issue and so is not a specific risk for Brainchip and as they have said because they offer IP as well as chips it is open to their customers to buy the IP and include it on their own chips. Socionext also appears to be a very good strategic partner when it comes to booking foundry time at TSMC.
3. Russia and Ukraine:
Again this is all boats go up and down with the tide and so the risks it creates are equal across the industry unless you are in an industry that thrives on military conflicts and supply defence forces.
The versatility of Brainchip's technology offering means that it is being taken up by the Defence industry and so while this is in its early stages sadly it is one which is being accelerated by the use of existing armaments to supply weapons to Ukraine.
I have not heard the outcome but the US President has asked congress to approve the giving to Ukraine an additional 40 plus billion dollars worth of weapons on top of the 2 billion dollars worth already sent. This means that these weapons worth more than $US40 billion need to be replaced as they were part of the inventory considered necessary to defend the USA. This is effectively a $US40 billion plus stimulus package for the defence industry.
When they run down their inventory the US Military do not purchase outdated inventory they buy the updated improved versions. This will actually create a faster track to the development and take up of AKIDA than would otherwise have been the case. Added to this demand is the realisation by NATO countries that Russia is not a benign neighbour and they are stepping up and also spending large sums to upgrade their military.
The US build up in the Pacific to counter China will also be a factor in increasing this demand supply chain advantage that Brainchip has stumbled into sad as it is in every other respect. Again countries like Japan, South Korea and Taiwan are also joining in the arms race not to mention Australia.
4. The Australian Election:
Before the vote in May we will be lead by politicians and sadly after the election we will be led by politicians. The press will run around running bad news stories but despite their efforts who ever we get will inherit the lucky country with under 4% unemployment and OECD predicted growth of 4.2% for the coming year.
As AKIDA drives energy efficiency it is on trend as far as all politics go so I personally cannot see any head winds for Brainchip as a result of the election either way.
5. Covid:
Not much to say really.
Brainchip is the industry tailor made for remote working.
Its technology has a place in the global health sector so any global health emergency will be good news for Brainchip's bottom line in due course.
Good health never goes out of fashion in fact it is something that everyone from the poorest of society to the most advantaged craves constantly.
There are even medical conditions that turn this craving into a disorder where we humans feign illness just so we can seek medical assistance. In some extreme cases we even make those we love ill so that they can receive medical treatment.
I cannot think of any other industry where demand is so assured so ferocious.
The above are just my uninformed opinions so please treat them as such and as always DYOR
FF
AKIDA BALLISTA
