Superannuation and the family home
As one of your subscribers, I refer to what the government and other bodies are considering re super and the family home, and draw attention to the following, which I hope you will bring into the limelight. The current reasoning is absurd in leaving the family home out of consideration. The government is placing that "off limits", so “irrelevant to consideration of the matter of super and the pension”. Let me give two examples. Person A, able to put aside capital during his life, puts as much as possible into the family home, and decides to put what is now $4 million into that, having clocked up $1 million in super. This person will be treated very generously, with only 1 million for retirement, and a tax-free home. On the other hand, person B chooses to live in a house now worth 1 million, but has 4 million in super. Person B, according to what is envisaged, will be taxed as "rich", while person A will be treated as though not rich at all, although person B is the one who will normally be investing in productive assets like shares. Where is the good sense and fairness in this?
I have two questions with respect to two risks mentioned in your latest review of Mobileye (Mobileye: Pioneering automated driving, March 30). I am hoping you could answer them from your knowledge about the company.
1) Reliance on STM as sole manufacturer: Mobileye relies solely on STMicroelectronics NV to manufacture the EyeQ chips. STM manufactures chips at one factory in France.
Is STM the foundry or do they own the design (intellectual property) of the chip?
Foundries are easier to find should one need. There might be a time lag, costs associated with initial setups and test runs, but considering intellectual property still rests with the fabricator, it is only a matter of time before a foundry can place the design on silicon.
2) Technology adoption: Mobileye depends on the adoption of ADAS/autonomous vehicles and the use of monocular cameras (followed by trifocal). Slower ADAS penetration and changes in regulation or better technology from competitors are risks.
Are you able to list some competitors in the same space as Mobileye? I can then look up what they have as technologies and their valuations and make an informed assessment for myself.
Thanks for the review.
Clay Carter’s response: Thanks for your letter.
1.The risk is having only one foundry partner particularly in the case of fire or natural disaster. Product delays could prove costly and the company could lose share. Companies like Apple spread their risk between foundries and component suppliers as much as possible. Mobileye owns the chip technology and algos.
2.There are no DIRECT competitors to Mobileye's machine vision system but there are other ways of manufacturing/acquiring a semi or full autonomous driving system via sensors and Lidar (Google car).
Delphi DLPH US and Robert Bosch which is a private company are active here.
In your Collected wisdom articles on each company you used to include the Stocks In Value valuation. This doesn't seem to be there any more. Is it likely to return?
David Gilmour’s response: Thanks for your letter. We decided to remove the StocksInValue valuations from Collected Wisdom for a couple of reasons.
First of all, StocksInValue doesn't actually give buy, hold or sell recommendations – rather, it determines whether a stock is "out of value" or "in value" based on its own methodology. We believe removing it adds clarity to the consensus analyst calls in Collected Wisdom.
Secondly, we have designed a separate page for subscribers to see each of Stocks In Value's valuations made for Eureka Report under the "Share Recommendations" tab. You can find it here.