The Investment Commission may not complete its review of Tsinghua Unigroup Ltd’s (清華紫光) planned investments in two Taiwanese chip testers and packagers before the end of this year, a source said yesterday.
“The commission is not allowed to start to review the cases without lawmakers’ approval,” a high-ranking commission official, who declined to be named due to the sensitivity of the matter, told the Taipei Times by telephone.
The Chinese company in April filed applications to the commission on its planned acquisition of a 25 percent stake in Powertech Technology Inc (力成) for NT$11.9 billion (US$379 million) and a 25 percent stake in ChipMOS Technologies Inc (南茂) for NT$19.4 billion.
However, the Legislative Yuan’s Economics Committee in January passed a resolution demanding the commission report to the legislature before it examines Tsinghua Unigroup’s applications because of concerns the deals could undermine Taiwan’s technology industry.
“If the lawmakers do not summon the commission to report at the Legislative Yuan, there is no way we could begin the examination,” the official said, adding that lawmaker do not seem to have plans to do so.
$58.8 million - highest in 17 months.
MoM and YoY revenue growth.
First YoY revenue growth since March 2015.
Guidance for Q3 was 2% to 7% growth
The company has not posted a sequential MoM growth in the middle month of the quarter in a long time - so for it to post a sequential MoM growth in August is very positive.
Based on July (51m) and August (53.8) means company has to post $52.2 to touch high end estimate of 7%.
Since the final month of the quarter has exceeded the middle month - if this pattern holds - Chippy will exceed the 7% top end of the forecast.
$17.5 strike 3245 contracts
$20 strike 1625 contracts
Closes above $20 by next Friday and that could potentially be 487,000 shares called away.
Few weeks ago was able to pick up $17.5 strikes for 30c and $20 strike calls for 5c. Exited $17.5 calls. Holding $20 strike as a lotto.
Looking for IMOS to pop over $20 by option expiration and be positive for the year like 8150, SPIL, ASX Powertech, and AMKR.
Yesterday was the highest volume on an "up day" in 5 months. Today is off to a good start also - supply being soaked without a discount. A close above $18 would be good start.
Here is my single question:
If the big holders are against the conversion terms - why has not a single institutional holder voiced their disapproval and called for a NO to the merger vote?
Following catalysts by August option expiration:
1. July Monthly Revenue
2. Q2 Earnings, conference call and Q3 2016 guidance
3. Proxy results and Annual meeting
We have 3.5 weeks to August option expiration.
The August $17.5 calls traded at 50c-45c (126 contracts) and $20 strike calls traded for 5c (220 contracts).
The conversion parity is around $23.50 currently.
On top of that - Tsinghua investment approval decision could be announced by option expiration (long shot).
I wonder if all the bad news is priced in and the pricing of call options is another tell (5c options with known catalysts around the corner).
I seriously doubt management would be floating this conversion without the the OK of Baupost and other institutional investors (including new institutional owner Fidelity). Baupost control 11% of the company and are locked in for another year. The top 5-6 firms control 30% of the company. Add SPIL to it and over 1/3 is controlled by 5 institutions and SPIL.
I voted AGAINST all 3 BOD nominees and voted FOR the everything else (including merger and accounting firm).
Before Q1 2016 earnings:
Q2 / 2016 EPS estimates: 14c / 92c respectively w/ Revenue estimates: $155.65 / $638.85
After Q1 2016 earnings:
Q2 / 2016 EPS estimates: 13c / 66c respectively w/ Revenue estimates: $151.65 / $624.95
Q2 / 2016 EPS estimates: 12c / 42c respectively w/ Revenue estimates: $1146.85 / $595.75
On the other hand:
Cash on books, Taiwan LOC, Shanghai LOC and if Tsinghua comes on board (additional $365m) - so north of $1 BILLION. Market does not pay a premium multiple for CASH in a zero / negative interest rate environment.
Writing options and collecting premium works until it does not.
I personally will pass on collecting 50c-75c - just not a fan of covered call writing strategy.
If I recall - last two option expiration the stock closed above $17.50
June: 1% MoM revenue growth.
In NT$ 1618.1
They are guiding $150 million for Q3 & Q4 - so 2016 revenue about $593.3 million. No revenue growth in 2016.
Maybe once the 8150 buyback is complete - it will drop closer to $32. Earnings season is upon us - for starters - with MU down and taking semi group down with it. We get June revenue number probably on Friday - hopefully we see growth of 7% to 8% MoM.