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Applied Optoelectronics, Inc. (NASDAQ:AAOI), a semiconductor company with a market capitalization of $1.46 billion and impressive revenue growth of 78% over the last twelve months, has entered into a 15-year premises lease agreement for a property in New Taipei City, Taiwan, according to a press release statement filed with the Securities and Exchange Commission. InvestingPro analysis indicates the company is currently trading above its Fair Value, with notable volatility in its stock performance.
On September 1, Prime World International Holdings Ltd., a wholly owned subsidiary of Applied Optoelectronics, signed the lease with International Games System Co., Ltd. The agreement covers a parcel of land measuring approximately 65,580 square feet and a building of about 346,212 square feet, located at No. 49, Wugong 6th Rd., Wugu District, New Taipei City. The lease excludes about 54,086 square feet that is already leased to an existing tenant.
The lease term will begin on November 1, 2025, and run through October 31, 2040. A two-month renovation period from September 1 to October 31, 2025, will precede the lease term, during which no rent will be charged. Monthly rent will start at NTD 6,800,000 for the first five years, increase to NTD 7,004,000 for the following five years, and rise to NTD 7,214,120 for the final five years of the agreement. Rent will increase by 3% every five years. According to InvestingPro data, the company maintains a healthy current ratio of 2.11, indicating sufficient liquidity to meet its lease obligations, though it’s worth noting the company is currently experiencing negative EBITDA of -$25.22 million.
Under the lease, Prime World may modify the building at its own expense to meet production requirements. The agreement restricts early termination by either party during the lease term, except as otherwise specified.
Additional rights for Prime World include a right of first refusal to purchase the property if the lessor decides to sell, assurance that the lease remains in effect if the property is sold to a third party, a right of first refusal to renew the lease, and protection against early termination in the first eight years. From the ninth year onward, the lessor may terminate with twelve months’ prior written notice and payment of three months’ rent.
Applied Optoelectronics is a semiconductor and related devices company headquartered in Sugar Land, Texas. The information is based on a press release statement included in the company’s recent SEC filing.
In other recent news, Applied Optoelectronics reported its second-quarter 2025 financial results, revealing a loss of $0.16 per share, which was larger than the anticipated loss of $0.08. The company’s revenue reached $103 million, falling short of the forecasted $106.16 million. Despite these figures, Rosenblatt reiterated its Buy rating on the company with a $34.00 price target, citing positive developments such as the expected growth in 400G sales. Needham also maintained its Buy rating and a $32.00 price target, noting the potential of 800G technology. B.Riley, however, lowered its price target from $15.00 to $13.00 while keeping a Neutral rating on the stock. Rosenblatt highlighted that the company’s third-quarter guidance suggests a potential all-time revenue record of approximately $121 million. The firm also pointed out the possibility of Amazon becoming a significant customer, contributing 10% or more to the company’s revenue. These developments indicate varying analyst perspectives on the company’s future performance.
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