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Post Info TOPIC: UTAC
KK


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UTAC - DBSVickers
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Extracts fm DBSVickers Report dated 19-Oct-05,

Expecting an improved 3Q05 performance : Maintain Buy

Rising utilization levels, above parity book to bill ratio and tightening memory testing capacity amid rising demand are strengthening our positive view on UTAC’s prospects for the rest of 2005 and in 2006. However, market remains unconvinced and seems to hold the view that utilization levels may be toppish and revenue momentum will slow. We think otherwise and expect UTAC to report 3Q05 sales growth at the higher end of the guided range with greater flowthrough due to improved capacity utilization. From a business angle, the Group has continued to secure new customers and is expanding its capabilities to enable UTAC to build a more resilient business model that is better positioned for sustainable growth. Maintain BUY with price target of S$0.88.



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KK


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Date:
UTAC - Lim and Tan
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Extracts fm Lim and Tan Report dated 14-Oct-05,


  • Hynix Semicon, a major (20% of business) and fast growing customer of UTAC reported 3Q ended Sept 2005 results that were above consensus expectations.
  • Net profit of 512bln won was 55% above expectations of 330bln won, while sales of 1.5 trillion won was 10% above expectations. This reflects the better than expected demand from both the flash memory as well as DRAM business segments.
  • Flash memory volumes grew 80% qoq, much better than expectations of 45% qoq growth, reflecting Apple’s switch from HDD based iPod mini to flash based iPod Nano as well as other consumer electronic products switching to flash memory.
  • DRAM prices were better than expected, reflecting the switch from DDR to DDR1 platforms as well as switching existing capacities from DRAM to Flash. The outlook ahead remains robust underpinned by the same reasons given above and management plans to up their capital expenditures from their previous 1.5 trillion won target to 2 trillion won.
  • Hynix’s strength in both flash and DRAMs has benefitted UTAC as evident from the better than expected guidance given by UTAC’s CEO JC Lee yesterday.
  • Hynix is expected to be one of UTAC’s fastest growing customers riding on their outsourcing trend, market share gains and organic growth.
  • The bullish outlook given by Hynix underpins UTAC’s confidence for 4Q2005 as well as 2006. Other customers expected to drive growth include ST Micro, Qualcomm, CSM, Sandisk, TSMC, Freescale, Broadcom and UMCi. Maintain BUY.


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KK


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UTAC
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Extracts fm Lim and Tan Report dated 13-Oct-05,


In an interview with Reuters and Dow Jones Newswire UTAC said that



  1. it is on track to meet its fiscal 2005 sales target of more than US$300mln;
  2. 3Q2005 sales is expected to grow at the higher end of its guidance of 5-10% qoq growth;
  3. 3Q2005 net margin is expected to cross the 10% mark and is expected to remain in the double digit range on a sustainable basis;
  4. it expects to double flash memory output by 1H2006;
  5. it expects flash memory output to account for 10% of sales by end 2005, up from 9% in 2Q2005;
  6. it expects the growth momentum to remain strong going into 2006;
  7. average utilization rates are continuing to improve and would soon be stretched;
  8. all customers that they serve expect healthy growth going into 2006 versus 2005; and
  9. as a result of the strong demand from new and existing customers, capital expenditures would likely have be to revised upwards going forward.

COMMENTS



  1. 10% qoq sales growth in 3Q2005 would translate to sales of US$85.1mln, while net margin of 10.5% would translate to a profit of US$9mln (up 24% qoq and 131%). This is 8% above current consensus expectations.
  2. For the full year, consensus expectations are for net profit of US$29.9mln and sales of US$320mln. Based on the company’s latest guidance, we believe 2005 net profit would likely come in around US$31.5mln. Hence, as we had mentioned in our note on Monday, the company would likely surprise on the upside in 2H2005.
  3. Given strong indications from new and existing customers going into 2006 current expectations of 15-20% bottomline growth may again prove conservative (we expect about 25-30% growth).
  4. The strong growth would be driven by migration to higher margined DDR2 testing platforms, strong demand for Nand flash from Sandisk and ST Micro, more outsourcing of testing from Hynix for both DDR2 and Nand flash, as well as stronger demand from Broadcom, Qualcomm, Freescale, CSM and UMCi. Apple’s conversion from HDD based iPod mini to Nand flash based iPod Nano and in the process booking almost 40-50% of Samsung’s Nand flash capacity is a major contributor to the strong Nand flash demand. This in turn has caused a capacity shortage both in the Nand as well as DRAM segments.
  5. UTAC is trading at 1.1x book versus closest peer’s 3x book (Powertech). Maintain BUY.


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tfwee


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Well look like UTAC is getting ahead of STAT in the advance back end process. After this deal, UTAC look very promising and attractive. Recently, UBS has mantained a TP of $0.90 for UTAC. Please refer below for a summarize report by UBS. If anyone need the report, I can email to you. Send your request to sharetalk@gmail.com as I cannot upload the report to the forum.

Strength led by memory
Capacity likely to tighten at memory
We expect capacity to tighten at UTAC's memory business in Q405, driven by rising memory output and outsourcing trend at DRAM customers. In addition, we expect UTAC to benefit from the industry migration towards DDR2 in the next 1-2 quarters, partly given longer test time.
Growth potential in flash
Flash accounted for 8% of Q205 sales at UTAC, mainly driven by Sandisk's NAND flash orders. Given that NAND flash is a growing market, we believe this product could offer UTAC further growth potential, especially if key NAND flash makers accelerate backend outsourcing, or find second sources.
Utilisation improving at mixed-signal/logic
Mixed signal/logic business at UTAC continues to improve, driven by wireless handsets and RF testing at the comms segment. This is coupled with a pick-up in orders for wafer-sort from Chartered. With utilisation improving, we expect strength to extend into Q405.
Valuation: Maintain Buy 2 rating
We believe UTAC could benefit from increased volume shipments in Q405, especially in memory. In particular, we look for further growth potential in its NAND flash business to serve as a catalyst to stock price performance. Given its attractive valuation, we maintain our Buy 2 on UTAC, with a PT of S$0.90, based on 2006E EV/CE of 1.5x.

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KK


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SGX Release,

Nepes Corp and UTAC to Invest $30 Million in First 12-Inch Wafer Bumping Facility in Singapore




  • Nepes’ first wafer bumping investment outside Korea; meeting overseas customers’ demand
  • Enables UTAC to engage in bumped wafer sorting and flip chip packaging for high performance chips
  • Production to begin by 2Q06


SINGAPORE, 4 October 2005 – Premier KOSDAQ-listed wafer bumping and assembly services provider, Nepes Corporation of Korea ("Nepes Corp.") and Singapore Exchange-listed United Test and Assembly Center Ltd ("UTAC"), announced today that they will form a joint venture to build a $30 million state-of-the-art semiconductor wafer bumping facility in Singapore. Nepes Corp. and UTAC will establish a new company, Nepes Pte Ltd ("Nepes"), in which Nepes Corp will own 67% of the equity and UTAC the balance of 33% equity.


The initial $30 million investment will comprise of $10 million equity investment from Nepes Corp., $5 million equity investment from UTAC, and about $10 million to be procured in loans. Nepes will raise the remaining amount from other equity investors at a later stage. Both contributions from Nepes Corp. and UTAC will be funded from internal resources.


Wafer bumping is the production of an array of interconnects on the surface of the silicon die for electrical connections to the substrate. This allows the entire die surface to be utilised and exponentially increases the input/output ("I/O") bandwidth per unit area as compared to conventional perimeter wire bonding methods. Such advanced high-speed devices, commonly known as flip chips, are often used in products like graphics cards, CPUs, LCDs, OLEDs, mobile phones and next generation high-speed memory applications.


Singapore currently hosts two of the world’s most advanced 300mm wafer foundries, but does not have the enabling 300mm wafer bumping manufacturing facility on the island. Such wafers are mostly shipped to Taiwan for bumping and the subsequent flip chip testing and assembly services. The establishment of the joint venture facility will meet the expanding demand for flip chip production in Singapore and the region.


The planned facility will be fully automated and is expected to begin production in the second quarter of 2006 ("2Q06"). It will be able to handle both 200mm and 300mm wafers. The joint venture will initially have over 40 engineers and its own research and development team who will collaborate closely with Nepes Corp. to develop more advanced solutions for the 300mm wafer platform. Together, both Nepes and UTAC will be able to offer full turnkey solutions for customers. Total capacity at the end of year 2006 is expected to reach 15,000 wafers monthly.


"We believe our new bumping plant in Singapore will be the bridge for LCD and semiconductor industries in Korea and Singapore and will stimulate further cooperation for relevant industries," said Mr B. K. Lee, Chairman and CEO of Nepes Corp. "This is a major step forward for Nepes Corp. and a timely decision for us to establish a presence in Singapore."


"Before, we were racing to meet the rapidly expanding demands of the domestic Korean market, and had to restrict our desire to expand significantly into the global market. As more overseas customers are engaging Nepes Corp. today, the 300mm wafer bumping services void in Singapore offers a golden opportunity for us to enhance both our capability and capacity. We are fortunate to find the ideal partner in Singapore-based UTAC whose track record as a leading global provider of semiconductor test and assembly services will help springboard Nepes Corp. beyond our traditional market of Korea," added Mr Lee.


"Worldwide flip chip shipment is growing at a record compounded annual growth rate ("CAGR") of 17.7%* between 2004 to 2008 and this trend is clearly mirrored in our customers’ orders. In addition, growth of solder bumped wafers will increase at a CAGR of 43.3%** between 2004 to 2009. Our strategic partnership with Nepes Corp. will allow us to expand our range of value added services to include wafer bumping (through Nepes), bumped wafer sorting and flip chip packaging for high performance chips for our customers," said Mr Lee Joon Chung, Group President and CEO of UTAC. "In addition, we believe our partnership with Nepes Corp. will strengthen our global competitiveness."


"The partnership between Nepes and UTAC is a reflection of the role that Singapore is carving for ourselves as a Global Entrepolis – a compelling global hub for business and investment where entrepreneurs and enterprise converge, spark and realise innovations, forge partnerships, and create value in manufacturing and services industries," said Mr Ko Kheng Hwa, Managing Director of the Economic Development Board of Singapore. "This advanced wafer bumping facility in Singapore will enhance our competitiveness in the semiconductor industry and further strengthen our full manufacturing value chain of activities, ranging from IC design, manufacturing, intellectual property management, supply chain management to global and regional HQs. We believe this joint venture, together with the ongoing investments by other semiconductor players, will result in greater synergies, bringing forth many more years of steady growth in Singapore's semiconductor industry."



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