EnSilica – could this one move up like Filtronics especially with news due - shares 34.50p, broker’s TP 71p

02.06.2025

With Governments across the world looking to spend so much more of their Budgets upon defence and other military needs, investors are searching around for new players in the sector to jump aboard before new orders boost their balance sheets.

So perhaps it is now time to take a look at the shares of EnSilica (LON:ENSI), now 34.50p, with brokers rating the shares as a Buy and targeting a price of 71p.

The Business

EnSilica is a leading fabless design house focused on custom ASIC design and supply for OEMs and system houses, as well as IC design services for companies with their own design teams.

The company has world-class expertise in supplying custom RF, mmWave, mixed signal and digital ICs to its international customers in the automotive, industrial, healthcare and communications markets.

EnSilica has a track record in delivering high-quality solutions to demanding industry standards.

The company, which is headquartered near Oxford, has design centres across the UK, it also has facilities in Bangalore, India, and in Porto Alegre and Campinas, Brazil.   

EnSilica is a leading designer and supplier of mixed signal ASICs (Application Specific Integrated Circuit).

ASICs are tailor-made circuits or semiconductor chips developed for a particular use or product rather than for general purpose usage.

ASICs are in high demand from companies operating across a range of high-tech growth markets as they help differentiate and enhance products through optimised hardware, giving businesses a competitive edge and improving supply chain security.

EnSilica specialises in designing mixed-signal ASICs which combine digital and analogue functions onto a single chip.

They are the most complex chips to design and therefore the highest value.

The company’s historic profitability has enabled it to re-invest a significant proportion of profits to support R&D and the development of intellectual property and its transition to an ASIC design and supply business model.

The ASICs market is expected to reach $25bn by the end of 2030, delivering a CAGR of 5.1% between 2024-2030.

EnSilica has world-class expertise in supplying custom RF, mmWave, mixed-signal and digital ICs to its international customers spanning a number of fast-growing sectors, and it has a track record in delivering high-quality solutions to demanding industry standards.

In February 2025 the group was awarded £10.4m of funding over three years from the UK Space Agency, to increase its competitiveness as a global supplier of semiconductor chips used to connect ground-based user terminals with Low Earth Orbit satellites.

Ensilica’s Design and Supply Model

EnSilica is rapidly migrating its model from a reliance on Consultancy revenues to developing a strong, high-margin, recurring revenue stream of Design & Supply revenues.

From accounting for just 15% of revenues in FY 2020, Design & Supply revenues accounted for 72% of revenues in the year to May 2024.

The gestation period for Design and Supply work can be two-to-five years from the initial Design work to the ASIC entering production and being supplied to the customer.

Some of EnSilica’s early Design work has now entered the Supply stage and the Company has four EnSilica designed ASICs signed off for production.

New Engineering Hub

Facilitated by the recent UK Space Agency C-LEO-funded award, alongside additional contract momentum and customer wins that continue to support the Company's growth, the company announced on /// that it has established a new engineering hub in Cambridge.

With the addition of the new facility and technical expertise, EnSilica will expand its existing mmWave / RF integrated circuit design capabilities, an area in which the Company has already seen significant customer demand.

CEO Ian Lankshear stated that:

"We are delighted to have not only secured a team of highly skilled engineers at a time when there is a very real shortage of engineering talent in the UK, but also to establish a firm base in an established UK tech hub like Cambridge which ideally positions the business to attract additional talent.

By further expanding our engineering know-how across the satellite and communications market, I believe that this investment will enable the business to capitalise further on very real and near-term growth opportunities."

The Equity

There are some 96.6m shares in issue, of which around 18% are held by institutional investors.

Professional holders include Amati Global Investors (5.07%), EdenTree Investment Management (2.54%), Hargreaves Lansdown Asset Management (1.61%), River Global Investors (0.74%), Herald Investment Management (0.57%), Canaccord Genuity Wealth (0.41%), Octopus Investments (0.31%) and HSBC Global Asset Management (0.30%).

Private holders include Ian Lankshear, CEO (16.6%), Richard Hamer (7.1%), Marc Castells (6.0%), Richard Marley (5.7%), Alan Wong, CTO (3.6%), and Mark Hodgkins (CHMN) (0.57%).

Broker’s Views

Analyst Matt Butlin, at Allenby Capital, is looking for the group to increase its revenues in the current year, which has just started, to £33.0m (est £19.5m), enabling a switch to pre-tax profits of £1.88m (est loss £1.7m).

He states that:

“The delay to the contracts is clearly disappointing and we have reduced our forecasts accordingly.

That said, the contracts have not been lost and EnSilica continues to win new contracts.

We estimate that the Company has 14 contracts in the Design stage (vs. three at the time of the May 2022 IPO) to add to the four contracts that have been signed off for production and generating recurring revenues.”  

The trio of analysts at Singer Capital Markets – Harold Evans, James Musker and Roddy Davidson – rate the group’s shares as a Buy, with a 71p Target Price.

For the year to end-May 2025, they estimate £19.7m revenues, and an adjusted pre-tax loss of £1.9m.

For this year to end-May 2026, they go for £33.0m of sales, £2.5m of profits, with 4.8p per share of earnings.

My View

Currently at 34.50p, the shares have been bouncing around the bottom of their price range.

Just over two years ago, buyers were paying up to 99.77p to get aboard the group’s potential.

A couple of contract delays have since seen them fall back to 29p at their lowest.

Getting the group’s latest year out of the way should enable fresh views about its recovery prospects.

Give it a few more months to get some good corporate news into the system, then I feel that they could so easily double over the next year or so.

But cautiously, based upon the broker’s estimates, I now set what should be an easily achieved Target Price of 43p.

(Profile 02.06.25 @ 34.50p set a Target Price of 43p)