Structural Breakout Story Playing Out

Research evidence excerpt

Structural Breakout Story Playing Out

re earnings potential. ModelWare EPS (€) 1.39 1.74 2.75 3.36

EV/rev 3.6 6.5 5.6 5.0

EV/EBITDA** 12.2 20.7 15.2 12.7

Near-term surprise unlikely, but long term DC upside keeps us OW. The ****EV/EBIT 19.3 32.2 22.6 18.8

Curr P/E 56.3 45.1 28.5 23.3

structural breakout story is playing out, and while we remain confident that Infineon DPS (€) 0.35 0.35 0.35 0.35

will be the clear data centre beneficiary, we think the next print is unlikely to offer a Div yld (%) 0.9 0.4 0.5 0.5

FCF yld ratio (%)** 2.2 1.9 2.9 3.6

guidance surprise. Last quarter, management raised FY revenue and margin guidance Net debt (€mn)* 5,329 2,599 405 (2,625)

to reflect improving cyclical dynamics. We think it is too soon to expect another Net debt/EBITDA** 1.2 0.5 0.1 NM

RNOA (%)** 5.5 8.4 13.9 16.4

guidance uptick but remain positive on the long-term story and earnings potential. ROE (%)** 10.6 13.4 17.2 18.5

We expect the site visit to focus on power semi capacity and product offering, in Unless otherwise noted, all metrics are based on Morgan Stanley ModelWare

particular strength in GaN, which would reaffirm our view of Infineon's key role in framework** = Based on consensus methodology

the DC power semi transition. However, we think this visit will be more of a *e == GAAPMorganorStanleyapproximatedResearchbasedestimateson GAAP

qualitative discussion as opposed to an opportunity for management to update data

centre guidance. We continue to like the long-term story and agree that data centre

guidance is too conservative, however we expect little surprise this quarter.

Morgan Stanley does and seeks to do business with

Expecting an in-line print. Infineon reports FY3Q26 results on 5 August. We expect companies covered in Morgan Stanley Research. As a result,