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ChipMOS TECHNOLOGIES (Bermuda) LTD. Message Board

  • davegras davegras Mar 22, 2013 6:15 AM Flag

    Phone Call

    I'll be speaking with SK this Monday about the valuation/time table related to the listing process, the current and possible future buybacks, the divvy, the conversion rate, Mosel, business visibility, and so forth. If you have any questions you'd like me to ask let me know.

    Sentiment: Strong Buy

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    • Thanks for all your hard work, Dave! With the uptake in business starting in March,there's nothing but good news coming.

    • Dave,

      Let me add my thanks and congrats on the update, specifics, and this keeps everything on track.

      Also, I was somewhat dissappointed on the TWSE listing after hearing about the 6-month timetable after the EMS, but those who wanted to qucikly cash out totally miss the big picture. Only concern is macro events affecting business and the more months we wait for strucure to simplify and get on the TWSE the greater (tho not great by any stretch) the chance of Taiwanese companies getting caught in a downdraft.

      The continued backing on the excellent cc guidance, the metrics vs. peers makes this investment one of the best of breed. Short term, this should climb to mid tlow to eens, even today we're heading to new closing month highs while MU corrects today.

      We should continue to take out 14, 22, 50, 200 dma, and today has high volume--that's key.
      Dave, you moved the markets!

      Again, great posts!!

    • Dave, really nothing knew . We all know that IMOS should be worth $25-$35. I think the next big move will be when Taiwan analysts start to put out research reports. That is one of the most important parts of the listing on the ESM now. Now that Chipmos Taiwan is moving from a private entity to a public company analysts will be able to review their books.That is key. Up until now there was no need for research by firms because there was no stock to buy or sell.

      Sentiment: Strong Buy

      • 3 Replies to caffeine444444
      • Turturo57, you are right about someone selling here. In addition, there are quite a few others. "
        Past week has had quite a bit of buying, but also somebody is selling. I don't think the buying will let up soon, but the selling should stop at some point, and that should release this stock in a hurry. I don;'t think Mosel is selling here, and I don;'t think they will unless they really need the money. They have an out if they want in a few months and at higher prices. My guess is that sellers now are those who picked up the stock at $10 during the secondary just a few months ago. 20% profit in just a few months is a good return, and i would bet that most arn't aware of value that Chipmos will have in TW."

        Sentiment: Buy

      • Imos is a good buy down around 8 to 10, a passable buy from 10 to 12, and a hold from 12 to 15 or so. It is a good sell in the 15 to 19 range. It may not go above that despite the hype.

        Sentiment: Buy

      • I don't think Chipmos will follow the traditional listing pattern via IMS where it trades at a substantial discount, and then pops when it moves to the big board. Too many TW analysts will be be involved in this ahead of time. Liquidity issues which are normally an issue with the ESM will be addressed via the Nasdaq listing and money will flow here from TW. People will know that it is going to be tendered in 8 months or so. They will buy here. ESM main benifit will be to get the TW investors on board.

        Good to see that dividend/buybacks are in the cards going forward. Probably a function of stock price. Hope it's the dividend as that would mean that stock price is up.

        Past week has had quite a bit of buying, but also somebody is selling. I don't think the buying will let up soon, but the selling should stop at some point, and that should release this stock in a hurry. I don;'t think Mosel is selling here, and I don;'t think they will unless they really need the money. They have an out if they want in a few months and at higher prices. My guess is that sellers now are those who picked up the stock at $10 during the secondary just a few months ago. 20% profit in just a few months is a good return, and i would bet that most arn't aware of value that Chipmos will have in TW. Tons of interest in this sector in TW, and Chipmos is dirt cheap in just about every metric. This is going to be a fun ride.

        Sentiment: Strong Buy

    • Dave, great job. my first take was maybe a little disappointed on the timing of the big board listing but if we look at the bigger picture the whole idea is to create value that is on par with the other OSAT Taiwan . I think with the ESM listing happening in 2-3 weeks this will give a lot of opportunity for other analysts to write research reports. Also after the 3rd quarter earnings release which is usually the best quarter management could be a lot more agressive with the underwrites in the valuation process. If demand becomes strong on the ESM listing as you said they could increase the share count. It is not like we just wanted to cash out but we are mostly concerned with getting the share price up to parity. IMOS will be a great long term play and wil also be paying out very large dividends Maybe, just maybe the street will finaly start to see the unlocked value and IMOS could move on our own above the highs from last year. I just read both Cowens and Craig Halums reports from last week which were written after the CC. Both companies have stated they are being very conservative and the value will start to be unlocked now with the dual listing. Cowen has been telling their clients all along that the IPO is a 2014 event. As Dave said I think management will do everything in their power to get us the highest valuation possible and if the street does not start to get it then the company will be buying back more shares. Most important the business is doing very well and management is doing a great job.

      Sentiment: Strong Buy

      • 4 Replies to caffeine444444
      • Dave, Just an update that I believe I and the rest of us missed about the EMS listing in 2-3 weeks. Where I wrote that I was disappointed by what seemed to be a push back with IPO listing in the 3rd quarter that now looks like it will be a 1st quarter 2014 event does not seem to be the case. Based on your call with SK and my call with SK it appears that the full 110 million shares will be sold into the EMS market between April and August and not in an IPO on the larger exchange. That being said will now allow analysts to write research reports because Chipmos Taiwan will now be a public company. As more coverage and market makers start to pick up these releases there will become a larger demand for shares to be sold into the market and at much higher prices then their initial 1.5 million shares. I was under the assumption that all 110 million shares that need to be sold were going to come at a large discount of say 30%. Actually now the 1.5 million shares which represents less then 2 tenths of 1% of the outstanding shares of Chipmos Taiwan is no big deal. I now believe that the catalyst of the EMS listing will be much greater then previous thought. As more shares continue to be sold by IMOS into the market the better the liquidity will be and the price should move closer to peer valuations.

        Sentiment: Strong Buy

      • Imos can continue to trade at a great discount to chipbond even with a much higher gm than it has now. Maybe Imos can reach $13 + (not $30+) and less than $14 when those analysts come on board.

        Sentiment: Buy

      • Maybe the stock will be offered for $10.30 instead of $10.20 then as it was during the recent secondary offering, Mr. Hype-Master and Cult-Leader.

        Sentiment: Buy

      • Caff, SK sent me an analyst report on Chipbond which mentions ChipMos too. They just raised their price target on Chipbond from $TW64 to $TW77, or 13x next year's earnings (presumably a one year target price). At the same multiple ChipMos could reach $30+. Chipbond trades at a P/E of 12.1 and 10.7 on calendar year 2013 and 2014 earnings, respectively; ChipMos is at less than 7. P/B for Chipbond is around 2 and around 0.7 for ChipMos. Chipbond has a gross margin around 30% and ChipMos is about half that but once depreciation falls off while sales grow sequentially we will be moving into the 20s. Analysts in Taiwan will be slobbering over this if the stock doesn't move. By the way, according to the report Chipbond is 56% owned by foreign institutions. I just can't believe IMOS will continue to trade at these levels if there is a large value gap in Taiwan. Money, like water, flows.

        Sentiment: Strong Buy

    • Dave- having trouble...passed it on to more tech savvy posters....again-great job...

    • Great job Davegras...hit a different Topic and then post [btw- would like to communicate privately- I can be reached at magia123@aol] I have said many times, what a Board. Have not found anything within shouting distnace on other Yahoo threads.

      Sentiment: Strong Buy

    • Thanks Dave. Good summary. I was hoping the process would be slightly faster than that, but I know such things are long and complex. I'm intrigued by the 50/50 cash/stock possibility. Does that mean they would need a whole lot of money in ChipMOS Bermuda to pay off everyone? That seems like it would be difficult since they'd then have to dividend massive amounts, and would lose a lot due to the tax withholding.

      Sentiment: Strong Buy

      • 2 Replies to jaretwilson
      • In general, the OSAT industry is growing. It isn’t clear if there will be any consolidation but for ChipMos it is unlikely they will be taken over. In addition, it isn’t easy finding a good fit for the company’s portfolio so it’s equally unlikely that the company will be looking to purchase another firm. Frankly, the focus over the next year will be the listing process and developing new business. After the restructuring is completed, management will continue to focus on building the business organically.
        For those of you who might be a little disappointed about the timing of the TSE IPO don’t be. I think the additional time will give management more opportunities to increase shareholder value. Personally, I think I’ve been underestimating the “sweet spot” ChipMos is starting to enter. Business is good. Very good. And it could get better and exceed our expectations if things fall into place.
        It is hard to say how IMOS will trade following the ESM IPO but I’m hoping that analyst coverage will help reduce any value gap between the two securities.
        I just want to thank SK again for his time. He and SJ are running this business well .

      • Business Outlook:
        Management has a high level of confidence in the business both short and long term even though visibility tends to be limited in this industry. The market is more stable than they’ve seen in some time, even commodity DRAM as we know. This year revenue growth for bumping is expected to be around 20-25%; LCD driver, 15%, and so forth. They need additional testing capacity which they are planning to add. Capital spending will be $95M this year. However, this could increase next year depending on the outcome of one or two business opportunities they are currently working on. If things go well, and there is good chance they will, ChipMos could become a $1B company in three or four years. That equates to 15-20% annual revenue growth. There would be a corresponding jump in cap-ex and that’s something which, on the surface, may make investors a little nervous but they shouldn’t in my opinion because the investment would be in response to certain agreements. In other words, it’s not building capacity based on some industry forecast – it’s based on commitments. Management will provide more color on this but it’s pretty exciting if it occurs.
        I’m back to focusing on just ChipMos Bermuda in my modeling now since the IPO won’t occur until next year. I’m using a gross margin of 18.5% for this year. Next year the company is positioned to achieve above 20% GM without the aforementioned business opportunities and easily above 20% if they come to fruition.

    • Yahoo is not allowing me to post the rest.

    • Part II
      Timetable. After six months ChipMos will apply for a listing on the TSE. The company will submit their financials ending Sept. 30 and the auditing process will take about one month. Approval should come by early Q1, 2014 since there is a formal listing review process and that will take 2-4 months. Therefore, the ChipMos Taiwan IPO should occur by early March 2014. Following that will be the conversion of ChipMos Bermuda, perhaps early Q2 2014. Step by step.

      It is not known what the conversion rate will be. I thought 20:1 but now I’m fairly sure that won’t be the case. Originally, the conversion rate between ChipMos Bermuda and ChipMos Taiwan was 40:1. That turned to 10:1 with the 1:4 split. However, you have to factor in any cash remaining in Bermuda, current and future buybacks, and other items. The bottom line is no one, not even management, knows. The current buyback is $7.5M because that roughly represents the ChipMos Taiwan dividend. Additional buybacks are being seriously considered. Between now and the end of this year there may be another dividend or not, a dividend and buyback, or just buybacks. The company will also receive proceeds from selling shares in Taiwan until August and that money can be used for buybacks. Management is taking this step-by-step and needs to discuss any course of action with the BOD. That said, my feeling is its all good because money will be used to enhance shareholder value. The company may have other options such as buying back Thailin or Mosel shares if they can get away from those cross-holding issues which is possible. Speaking of Mosel, they had 1.8M shares as of 12/31/2012. Their impact on the share price apparently has been minimal. At the time of the ChipMos Bermuda conversion next year, investors may be given an option to take cash and stock, not just ADRS. For example, an investor may be given the option to receive 50/50 cash/stock. Nothing has been decided yet.

      Sentiment: Strong Buy

    • Hello Everyone,
      I spoke with SK today for about an hour. As usual, he was courteous and very helpful. He is also aware that I post notes from our conversations on this board and expressed some concern about this. Both SK and SJ are doing their best to make sure the listing process goes as smoothly as possible. Therefore, he has asked me to exercise just a little more prudence. This is a request I intend to fully respect. Per my suggestion, he will review my notes from our conversations prior to any posting.

      I’ve divided my notes into two sections. The biggest takeaway is that business is very good and the listing process is on track. That said, this is a step-by-step process. Some things haven’t even been addressed yet even though we (many of us large investors) have been speculating. After talking with SK, my confidence in management remains high and I feel their methodical approach will serve us well.

      Taiwan Listing:
      There will be 1.5M shares offered for the ESM IPO. That is the minimum amount needed per regulations. ChipMos sells the shares to the underwriter directly. The underwriter will sell a portion to the market as the market maker. This will occur by mid-April. From that point until the end of August, investors can purchase more stock directly from the underwriter ( the market maker) or even ChipMos directly. ChipMos needs to reduce ChipMos Bermuda’s holdings to under 70%. As a result, the float and liquidity will increase. Concurrent to this, analyst coverage is expected.

      Sentiment: Strong Buy

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