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ChipMOS TECHNOLOGIES (Bermuda) LTD. Message Board

  • memoryxpert memoryxpert Mar 11, 2014 9:23 AM Flag

    Several thoughts on conf call/outlook

    I think SK/SJ did a good job on the conference call. If you count how many time they said "shareholder value" versus 12 or 18 months ago, well clearly they are doing a lot in terms of trying to get proper messaging across.

    Some thoughts:
    1. If you asked me a couple days ago about 1Q I would have said flat to down a couple percent and GM of 15-20%, so this is a very positive outlook, and as management noted, better than seasonal.
    2. SK was not wishy-washy regarding gross margins. Clearly they go up from 1Q. He was VERY comfortable with 22% for the year, and conceivably if things work out, I think we could be a couple hundred bps better. But 22% would be a healthy improvement from 2013.
    3. IPO timing didn't slip. "APRIL" - so many speed-bumps along the way, but not today.
    4. SJ sounded very confident that the IPO will be a major catalyst for shareholder value creation. This is not different than our view, but really nice to hear it from the CEO. I'd assume he has a very good sense of what type of feedback the I-banks are getting. Caff has pointed to some notable examples of uplistings in Taiwan resulting in 20-50% 1 day moves. Not sure if we'll get it, but certainly a very near-term catalyst.
    5. Core business sounds really healthy which could result in a multiple re-rating. IMOS could see double-dig growth which would be a big acceleration. Perhaps this very cheap stock actually gets a decent multiple.

    I realize IMOS not nearly as cheap as it was in the sub $5 or $10 days, and personally, unless facts change for the better, I'm likely out in the $30-$32 range, but this was a very solid 4Q call and 1Q/'14 outlook. Definitely see us going higher in weeks ahead - on absolute and relative basis, stock is still inexpensive.

    Sentiment: Strong Buy

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    • Jay and Silent Bob and I had a great meal this evening in Toledo's finest steakhouse, and commiserated over the underappreciated earnings report.

      Sentiment: Strong Buy

      • 1 Reply to jaretwilson
      • Jaret, I've never heard the local Ponderosa described quite that way. I told you the Silent One throws nickels around like they're manhole covers! Seriously, though, anyone driving through Toledo on I-75 should check out Mancy's.

        Yes, today was a bit disappointing. Perhaps some of these analyst upgrades will hit the wire in the morning and make for a better day. Thanks to Caff for pulling the non-GAAP earnings out of management, but unfortunately the masses do not listen to the call. Our management team, while doing a great job of running the company, sure need help when it comes to framing good news. Thay have definitely improved, but work is still needed. All in all, 2013 was a real solid year, and 2014 is off to an even better start.

    • Memory, I was glad to hear SK feel comfortable with 22% GM this year which is what I've been modeling. Core business is solid, things on track. As for the April IPO, Taiwan is a funny market. You can get a large price jump but often it comes from the discounted price. Maybe the shares are sold at 30tw and jump to 40tw, for example. After some tweeking I'm initially looking at 2.77tw/share this year and using a p/e of 14 to get a fair value of 38tw for IMOST (SPIL is 15x, Chipbond around 13x). That suggests a fair value of $26 for IMOS, in my opinion. However, as I said before the company can do things like buy back shares and as you noted gross margin can hit 23 if things go as expected. I wouldn't sell before $26 and I'd agree that your range of $30-$32 seems like a good exit point.

      Sentiment: Strong Buy

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