新思科技2025年第二季度业绩报告

Restricted - External Andrew Keches, CFA+1 212 412 5248andrew.keches@barclays.comBCI, USRemy Neuhaus+1 212 526 6840remy.neuhaus@barclays.comBCI, US FIGURE 1. China sales have been steadily decreasing in SNPS's overallFIGURE 2. EDA names (SNPS and CDNS) have some of the largest US-China sales disparities0%10%20%30%40%50%60%QCOMMRVL AMAT NXPI INTC AVGO NVDA SNPSMUCDNSChinaUSShown as % of overall revenues originating in China and the US for FY24.Source: Barclays Researchweakness, and reiterated that 55% of revenue will flow through in the second half of the yearthrough typical company seasonality of renewals and hardware roll-outs.Credit metrics in line, deleveraging set to begin.Free cash flow for the quarterwas $220mn, and the company guided to $1.3bn in FCF for FY 25, slightly lower than priorguidance, due to incremental financing and acquisition-related costs. We calculate pro formagross leverage at closing of about 3.7x, in line with guidance on the roadshow. The companyhas said that it expects to take leverage below 2x within two years of deal close, pausingbuybacks until this level is reached, while SNPS targets <1x longer term. We consider thiscadence to be credible, given the company's muted cyclicality relative to the broader semisector. Its high concentration of longer-term contracts also provides confidence for theoutlook, while demand for R&D and innovation from the industry overall is showing few signsof abating.FIGURE 3. We expect SNPS to meet its leverage target of 2.0x (gross) within two years of close0.0x0.5x1.0x1.5x2.0x2.5x3.0x3.5x4.0x3Q254Q251Q262Q263Q264Q261Q272Q273Q274Q27Gross Debt/EBITDA2Y leverage targetNet Debt/EBITDAAssuming deal close in SNPS F3Q25.Source: Barclays Research2 Shown as % of overall SNPS revenues.Source: Barclays Research29 May 2025 • 2Trump Orders US Chip Designers to Stop Selling to China, Financial Times, May 29, 2025•China EDA ban reports.A few hours prior to SNPS's releasing results, the Financial Timesreported2that the Trump administration was moving toward restricting the sale of chipdesignsoftwareto China as part of a broader initiative to curb the Chinese semiconductorindustry's ambitions to build a leading-edge domestic industry. SNPS managementconfirmed that it is aware of the speculation, but said it had yet to receive any letters fromBIS, as the report suggested it had, and added that it does not want to speculate on thepotentialeffecton the business should the policy go intoeffect.While the company's Chinabusiness is already facing headwinds this year, an outright ban of sales to the country wouldstill have a meaningfuleffecton performance and warrant adjustments to FY25 guidance.Still, relative to other semi companies (chip designers), the EDA peers (SNPS, CDNS) havesome of the lowest concentration of China sales (Figure 2). Price action suggests that themarket views these reports as credible (stock down 10% on the headline), but until theadministration confirms consideration or implementation, policy details and its ultimateeffectwill remain uncertain.•ANSS deal still guided for 1H25 close.Management reiterated its guidance for 1H25 and itsacquisition of Ansys and confirmed that regulatory clearance from China's SAMR is the lastjurisdiction pending approval. It continues to work "cooperatively and actively" throughthose negotiations and expects the deal to secure regulatory clearance in the next month.That said, if the EDA ban is confirmed, the ANSS approval might be subject to a prolongedtimeline as negotiating leverage for US-China trade policy in the sector. An EDA ban wouldleave the new SNPS-ANSS entity unable to serve its China customers, suggesting a motive forChina to utilize its pending status in broader trade talks between the two countries.Relative Value - Maintain MWSales into China are a new risk to consider, but arguably one thataffectsthe entire sector at thispoint (see NVDA'seffectfrom the H20 ban). Though not our base case, a block of the Ansysacquisition could actually be positive for credit, as leverage would drop to modest levels,begging the question as to why SNPS (Baa1/BBB) should be lower rated than CDNS (A3/BBB+(Pos)/A-). However, assuming the deal proceeds as planned, it is hard to argue that SNPS isoutright cheap at these levels with the structure flat to AVGO (arguably a nearer-term single-Acandidate), 15bp back of CDNS and 20-25bp back of CSCO. Still, we view SNPS as one of theleast cyclical names in the broader semi landscape, with relatively high earnings and cash flowvisibility andwe recommend buying the 2035s.With financial policy tilted in favor of lendersduring the deleveraging period, we see scope for SNPS to compress towards CDNS over time.Thus, we see value in owning the 2035s from a longer-term perspective, with some option valueto the extent that ANSS faces deal scrutiny. 3 Open in Barclays Live ChartSource:Credit- Barclays Trading, S&P Global Market IntelligenceFIGURE 5. Financial Summary2Q254/30/2025Financi