1. One possible reason is the lack of a buyback, which did not give some shareholders confidence. Another is because they gave a lower (but still very high) free cash flow figure than expected during the last conference call because they are notorious for overly conservative predictions when it comes to margins. There was no good, logical reason for the drop.
2. Good question. It's a fantastic bargain right now, they should be buying back as much as they can. They've been very reluctant to spend money before the listing, I think trying to make the balance sheet look good.
3. At least a couple people on the board have met management, and even seen the facilities. Caffeine flew out to see the Shanghai facility this summer, and another poster has met management multiple times and seen the Taiwanese facilities.
4. SJ has 500k shares. Both SJ and SK have a large number of options.
5. The best comparison is Chipbond, the only other company (also Taiwanese) that does outsourcing work on LCD drivers. Depending on what metric you want to use, they are somewhere around 3.5 times the price of Chipmos. You could also compare to a Taiwanese DRAM tester/packager, and then you'd get a price slightly lower, maybe 2.5 to 3 times as high, as DRAM is struggling right now.
6. I guess that depends on the price. There is constant consolidation in the OSAT industry. Chipbond is a little smaller than Chipmos, and they might not be allowed to buy Chipmos anyway due to monopoly considerations. There are 4 (?) larger companies including SPIL who owns a large portion of Chipmos already, but not only have they not shown interest in buying out Chipmos, they were the ones that sold Chipmos part of their current business a couple years ago, in exchange for a partial ownership stake in Chipmos Taiwan. I think the most likely outcome is that Chipmos reaches a higher price level making a buyout less attractive.
Jaret, thank you very much for the detailed answer.
I think I will wait to buy. I am not such a big player like many on this board, but could buy about 10,000 shares. I would rather see if the do a buyback. I would prefer to buy at $12, knowing that I feel good about what management is doing, then buy at $10.60, nervous about management.
Do you have any thoughts on how much the stock would go up on a buyback announcement? Not more than $1 probably, correct?
I won't try to speculate about what a buyback would do. Although they definitely should be doing one, to me it's not the central theme. The huge free cash flow and recently arrived significant profits are the real story as far as I'm concerned.