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ChipMOS TECHNOLOGIES (Bermuda) LTD. Message Board

  • atermofcondition atermofcondition Jun 10, 2013 6:23 PM Flag

    Upcoming catalysts?

    God this baby is a cash cow, ain't she. Moo Moo Ca Choo.

    But on a serious note, I've been with this stock it was down at $11, and I have a target price of +$26. Can those most knowledgable (you know who you are) please list the price catalysts for this quarter? Any help is appreciated.

    Go long!

    Sentiment: Strong Buy

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    • In summary, the biggest catalyst will be bullish guidance for 3Q and 4Q at the 2Q conference call.

      Unfortunately the revenue numbers seem to be at the lower end of guidance given at the 1Q 2013 conference call when they stated:

      "The Company expects revenue for second quarter of 2013 to increase by approximately 10% to 14%, as compared to the first quarter of 2013. The Company expects gross margin on a consolidated basis to be in the range of approximately 14% to 18% for the second quarter of 2013. The Company anticipates depreciation and amortization expenses for the second quarter of 2013 to be approximately US$29 million. Operating expenses are expected to be approximately 6% to 7% of revenues in the second quarter of 2013.

      April revenue was $53.3 and May was $55. To meet the upper end of guidance (14%), they will need to do $60.7 for June which only has 30 days. For the lower end of guidance (10%), they will need to do $54.8 which seem reasonable.

      If revenues are at the lower end of guidance, it would seem margins will also be at the lower end of guidance which was the case for 1Q 2013 as compared to 4Q 2012 when revenue was $163.3.

      So, IMOS will probably be a 2nd half 2013 most all other tech firms seem to be saying (TQNT, HIMX, etc. are on record saying this).

      So, as the market is supposedly forward looking, the key for IMOS will be to guide higher for 3Q. Hopefully, they can repeat the $55 million from May although June only has 21 business days while May had 23 business days (2 more business days with revenue being over $2 million per business day).

    • I'm not particularly knowledgable, but here is my take. In July the first of two or three tranches of the IMOST secondary offering will be underwritten, presumably at a "liquidity discount" in the range of 20% from the market rate for the existing IMOST shares.

      On July 12th or 15th the company will release revenue only numbers for June and the 2nd quarter. 2Q revenues are likely to come in at about $166M, which will be ~ 11% higher than Q1 and flat year over year.

      On August 16th or 19th the company will release its 2nd quarter financials and hold its quarterly conference call with 3Q guidance for revenues, opex, depreciation, capex and gross margin ranges. This event, if it confirms the positive outlooks for revenue growth and margin expansion that many of us anticipate should be a nice catalyst for the stock price as it will become obvious to the markets that the company is likely to post full year 2013 EPS double that of FY 2012, with good growth prospects for 2014. In my view, the timing of this release should also benefit the 2nd (and 3rd, if required) tranches of the IMOST secondary offerings by making the underwriter's discount, in relative dollar terms, less significant than the discount for the initial July tranche.

      The stock is up 79% over the last three months. Personally, I think we will see a pause in the appreciation of the share price over the next two months, but we should see a resumption in share price appreciation after the August conference call. There are always "what ifs", though, and if Pac Rim analysts initiate new coverage with strong buy recommendations before the August conference call, that should make the next run up in the stock price start prior to the conference call. JMO.

      • 1 Reply to johnboywalton56
      • That sounds about right. A few more tidbits in random order...

        Management expects that each quarter's revenue will beat the previous one.

        They also expect that the LCD driver segment will increase by 30% this year while capacity will increase by 20%, driving margins steadily higher. There is only one significant competitor in the LCD driver bumping/testing business.

        The shares that will be issued in Taiwan are likely to be sold at significantly higher price than they trade here. The proceeds are likely to be used for buybacks here, creating a great arbitrage opportunity that will benefit IMOS shareholders.

        ChipMOS's second largest customer, Micron, (14% of revenue and growing) is about to complete a merger with Elpida, as well as take Elpida's stake in Rexchip. Micron is also now taking 100% of Inotera's production. ChipMOS is bidding for the business from Elpida and if the numbers work, could take a significant portion of the business. Elpida's current testing and assembly costs are far higher than what Micron pays.

        ChipMOS is net cash positive for the first time in the company's history, paid its first (small) dividend last year, and is motivated to pay much higher dividends in the future due to the 10% tax levied against profits retained by Taiwanese companies. It would not be surprising to see dividends in excess of 50% of profit in the future. At the current stock price that's a nice yield.

        The memory business is on fire due to supply outpacing demand. For a startling picture look at the DRAM price graph on dramexchange. NAND too is thriving. ChipMOS's memory customers can be expected to run at high volumes throughout the year and beyond.

        Soon the company will have a corporate structure that people can actually understand.

        Not hard to find catalysts with this investment.

        Sentiment: Strong Buy

    • As stated by others the third qtr. should be awesome. Remember IMOS gives out monthly revenue numbers. But most importantly IMO will be the sale of the 120M shares of 8150 [the TW new company]. This will create the market where the action will be. This will encourage comparisions with Chipbond. And with a record 3rd qtr. this will propel IMOS to fair value.

      Sentiment: Strong Buy

      • 1 Reply to marnis123
      • Imos had the biggest lasting increase in stock price from mid-March through mid-May this year, about an 80% increase. Even a move to $30, which is approximately its fair value, would be only a 67% rise and that would take place over several months. What do you think is the fair value price and when do you expect imos to reach it? If the 3Q results and 4Q expectations and the sale of the 120 M shares of 8150 drive it to fair value sometime this fall, will imos not see much of a rise in price through the following spring and summer, when it will have been listed on the big board in Taiwan?

        Sentiment: Hold

18.20-0.63(-3.35%)Jun 24 4:00 PMEDT