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ChipMOS TECHNOLOGIES (Bermuda) LTD. Message Board

  • johnboywalton56 johnboywalton56 Dec 12, 2012 1:42 AM Flag

    My near term outlook on IMOS

    I built my quarterly model for IMOS today for tracking purposes and went back and reviewed company guidance, October's sales numbers and made some assumptions for the last two months of FY 2012, and came up with $1.01 EPS for FY '12.



    Here are the assumptions:



    Nov. rev = $55MM

    Dec. rev = $56MM



    4Q numbers are like this:



    Rev 169.6MM

    COGS 141.0

    Op. Exp. 12.0

    Op. Inc. 14.6

    Tax (2.3)

    Net Inc. 12.3



    That would give them Net Inc. for the full year of $28.4MM or $1.01 EPS based on fully diluted shares outstanding at the end of the third quarter. I assumed no FX loss or gain in the absence of information.



    If you give them a PE of 10X, the current price is fully valued.



    I no longer expect Cowen to initiate new coverage of the company, don't expect management to initiate a new buy back in the near term, and think the dual-listing will take up to a year to fully accomplish. That does not leave a catalyst to drive the stock price up meaningfully unless there are big surprises in monthly sales and gross margins, which should be modest if they do surprise here. That makes this stock a hold with no momentum in the next 2 or 3 quarters, which makes it a year-long hold until dual listing happens.



    Despite what the company said on the last conf. call about being net cash positive by year-end, it doesn't look like that will happen until 1Q 1213.



    All-in-all, pretty disappointing since we have to take macro-economic risk, geo-political risk and normal business cycle risk while we wait for the dual listing.

    Sentiment: Hold

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    • Yes - this years PE is about 10. But next years earnings will be around $2 giving a forward PE of only 5. And for 2014 the earnings should be around $3 giving a PE of 3.33 based on current price.

      When earnings start rolling in that will be enough of a catalyst to make this stock take off - 100% YOY earnings growth and then the following year 50% YOY growth. If sales grow as well then this stock has significant potential to take off. By the end of next year with $2 earnings and projected 50% earnings growth in the future, 100% past growth, net debt of 0,and sales growth of 10-20%, this stock could easily be priced with a PE of 10, 15, 20, even 30. Just do the math - multiply by 2 to pick a price... Patience could be very rewarding.....

      Why do you think there is a paid guy saying aweful things.... There is money to be had by buying at low prices when the future has such potential. He is working for buyers.

      Now all of this assumes no recession next year, and I think there is a good chance next year will be pretty good for the economy. Europe will come out of a recession, housing will accelerate, government will pull back spending and increase taxes by only a limited amount, china is improving, the fed is printing and long leading indicators are pointing up.

      I originally bought around 5-7, sold around 14 on the first run up, and now I'm back in around 10.

    • For folks who have been through thick and thin with this stock, I must say the management did well contrary to what has been said here. Here are my rational:

      1. During the crisis, they lost two of their top customers and almost bankrupt. They said that they are going to diversify their customer base as well as their product portfolio. They did it. They have moved to higher margin mobile solutions and reduce their dependency on commodity DRAM business. Also, they have diversified their customer base.

      2. They have also turned around the company and is now almost net positive from heavily in debt. This company is a cash generating machine now.

      3. The have balanced between high growth and risks by being prudent on their capex investments. In fact, I said that they have learned their lessons from pre-crisis period where they borrowed heavily for capex investment for future growth. They understood now that future growth, no matter how certain is not certain. They would rather have cash in the bank as they do now.

      4. As the business improved but the stock price did not correspond accordingly, we asked them to do a buyback, give a dividend, and do a dual listing.....and they did/doing it. I'm one of those with an opinion that they should not do anymore buyback as this always masks the inefficiency and do not solve the root issues e.g. Home Depot during Nardelle years.

      5. We have also asked them to do a roadshow in the US and attract analysts coverage. They also did that as well as hire a PR person. Craig Hallum initiated favorable coverage. Since this is a microcap firm, I'm not sure we are going to attract more analyst coverage. After all, this is post-Lehman years and the analyst groups have been shrinking in many investment firms.

      6. They have also provide accurate guidance. In fact, their guidance is always spot on. No sand-bagging or over-promise

      Now, how many companies can we say do the above as 'advised' by their shareholders. I will challenge anybody to go over the last 5 years of earnings call transcripts and let me know what they said they will do but did not do it. You will be hard-pressed to find any.

    • So does it look to you like imos will not surpass it's March 19th, 2011 high in 2013?

      Sentiment: Hold

    • Now there is someone who speaks the truth. Imos is a value trap.

      Sentiment: Hold

      • 1 Reply to silmarilion123
      • It has been awhile since I post in this forum. I'm not sure why we are being harsh on management. To me, they have did a wonderful job. It is just that the price of this stock does not reflect it. Here are my rational:
        1. During the crisis of losing their top two customers, they said they are going to diversified their customers as well as their product portfolio. They have did that..increasing the number of customers to reduce risks and slowly exiting commodity DRAM market into more high margin mobile solution market.

        2. Their guidance is always spot on. No overpromise and no sand-baggging.

        3. They have turned the company around from almost bankrupt to almost net cash positive. Currently, this is a cash generating machine.

        4. They have been prudent about capex spending, learning from the pre-crisis days of not over-spending. You will definitely need to spend some capex as it is the future of your company but not over-spend. This also means that they will not have outrageous growth given their capex spending.

        5. We asked them to give dividend, initiative buy back, and dual list thier shares....and surprising they did it all. However, we are greedy and asked them to do more buyback. I'm one of those that thinks they should not do anymore buyback. They should just make sure they pay down their debt and be net positive. Buyback is an easier way for management to 'rig' the EPS, showing improved EPS while fundamentally, it is not e.g. Home Depot during Nardelli era.

        6. We have also asked them to go to roadshow in the US and get some coverage...again, they did that and had an analyst from Craig Hallum covering. I don't think they are going to get more coverage. This is a microcap in the the post-Lehman era. Analysts are being very selective in their coverage.

        I challenge the nay-sayers to go back and read the past 5 years of the earnings call tanscripts and let me know where they said they going to do but did not.

    • On the call SK said that opex would be about $10M, not $12M. I just went back and looked at the transcript to verify.

      There should be some FX loss.

      Who cares about PE? Look at forward (2013) PE and what do you get, around 4? or Price / FCF, under 3, or Price / forward FCF...

      Significantly under book value, almost no net debt, forward PE of 4 and currently profitable, with a dividend (albeit a small one this year, bigger next year)...I wouldn't call that "fully valued."

      I also think you're wrong on both Cowen and the timeframe for the dual listing, although if you include the Thailin portion it might take that long.

      Sentiment: Strong Buy

      • 1 Reply to jaretwilson
      • I appreciate your feedback, Jaret (honestly)! Given the convoluted corporate structure here, and the poor job of promoting the stock by management, the cashflow story seems to get lost on potential new investors. I think new investors will wait to see a sustained positive track record on EPS before establishing new positions, which suggests to me that we may have to wait several more quarters before this name shows up on their screens. I spoke with Cowen regarding coverage, and while they were coy about their plans (or lack thereof), I was left with the general impression that initiating coverage was not in the offing at this time I am in for just under 30,000 shares, which is not an insignificant commitment given the size of my portfolio, so I would like nothing more than to see the stock move sooner rather than later. At this point, however, I don't see alot of upward movement in the stock or any near term catalysts to drive up the price. My $12M reference was to Op. Expenses, which is within ther guidance. Capex is a cash flow item. I was looking at earnings and EPS. Obviously, I hope I am wrong and the stock rallies soon, but I think I will a have to look at this as a one year hold to get the returns I am after. Just my read on things.

        Sentiment: Hold

 
IMOS
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