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ChipMOS TECHNOLOGIES (Bermuda) LTD. Message Board

  • davegras davegras Nov 22, 2012 8:32 AM Flag

    ChipMos Margin Question

    Chipbond's net profit margin seems to be around 20% ytd. Does anybody have any thoughts when ChipMos will be at that level as well including depreciation? I think the earnings power is extraordinary. Revenue next year of $725mm x .20 = $145mm / 30mm shares = $4.83/share, under more normal circumstances. More like 10% next year though.

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    • Caffeine, don't respond to me, put me on ignore, good for you.

      To suggest that they are not buying back shares because it would require a distribution from Taiwan, that would lower the book value of Taiwan, and hurt valuation is the absolute dumbest of the many rationalization you have posted over the years. There are 3 large shareholders out of 10s of thousands of funds, and probably one of them sold on earnings. You and your cronies are all so arrogant to thinks that you know something the market doesn't. Why does the stock go down every time management speaks or visits institutions? Because they are not credible. A company at 3x free cash flow buys back stock. Not $10 million, $50 million. They bought $10 million, and sold $25 million. Keep pumping Caff and friends.

      Sentiment: Strong Sell

    • Well said Dave.

      The thing is, they are already below $100-$150M net debt, so they should already be buying back (and nevermind the fact that the price is so ridiculously low, and will probably never be at this level again) I know they see this, and I also know that the capital structure makes it difficult...most of the money is in Chipmos Taiwan rather than Chipmos Bermuda. I guess it's just a matter of priorities, and to me a buyback would be foremost at this price.

      I think Mosel has been our worst enemy, as they have given a negative perception during both of the last 2 times of momentum. They may still have up to 1.8M - 1.9M shares if they haven't sold more since then, which is far less than they once had (they sold about that much in 2012) but still a significant amount. I wish Chipmos would find a way to buy them out with the remaining Chipmos Bermuda money.

      I think it's reasonable to assume a moderate amount of growth in 2013 and 2014. Outsourcing into the OSAT sector continues, and Chipmos is finding new customers, or more business from old customers like AKM, and the possibility of Elpida from the Micron merger. With around 80% utilization I think we can expect steadily improving margins.

      I'll be surprised if we see significant buybacks, but perhaps one or two more small ones, especially once they've dividended to Chipmos Bermuda. There may be a slight share decrease from dissident shareholders both from the Taiwan listing which will remove Chipmos Bermuda, and from the Thailin merger. Unfortunately neither will be at the bargain price we see today.

      Sentiment: Strong Buy

      • 1 Reply to jaretwilson
      • Thanks JW,

        I agree 100% they should be buying back shares. They are being too methodical and only doing one thing at a time which I think is an excuse to postpone spending money. Do they really need $28M in Bermuda? I really feel they want to pay down debt first and foremost and to heck with the cash flow yield. That said, on the CC Caff asked: "Was there any way to dividend some money from ChipMOS Taiwan to ChipMOS Bermuda to do a buyback?" S.J. Cheng - Chairman and CEO: "Yeah. We can do that. I think so, ChipMOS Taiwan making money in 2012. So, we should do dividend these situations by Q2 next year." That sounds promising, but you're probably right in that only a couple of small ones are being discussed for next year. We need to compel them to spend maybe at least half the FCF every month on buying back shares, an ongoing share repurchase program. So the next time you email them, mention ONGOING. It would have a more meaningful impact on the metrics plus a huge psychological impact.

        Yeah, the business outlook looks really good. Its the most important thing, of course, but all this other stuff has a tendency of obfuscating the fact a little.

        Sentiment: Strong Buy

    • Dave here is 3rd quarter results. Chipbond converted to US dollars
      Stock price $1.79
      Sales $111.8 million
      net proffit $24.1 million
      net GP 21.55%
      597 million shares
      per share .04 cents
      annualized 16 cents
      P/E 11.18
      Chipmos 3rd quarter with $13,2 million added back to GP for normalized depreciation of $24 million per quarter and no FX loss
      Stock price $9.94
      Sales $175.5 million
      net profit $30.1 million
      net GP 17.1%
      less minority interest $4.7 million
      IMOS net profit $25.4 million
      30,000 million shares
      per share profit $.84
      annualized $3.36
      P/E 2.95
      IMOS trading at chipbond 11.8 times $39.64 per share

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