AMKR comments from SSB, excerpts (From Friday 9/3/99):
* Amkor is seeing orders run well ahead of plan and grow faster than at any
time in the company's history, including during the last semiconductor boom
from 1993-95. This gives us increasing confidence the company can
accelerate revenue and earnings growth well into next year.
* We are raising our 1999 EPS forecast from $0.63 to $0.65 and 2000 from
$0.85 to $0.95. Most analysts do not now publish "cash earnings", which
incorporate goodwill from the June acquisition of Anam's K4 fab. Assuming
goodwill per share of $0.16 per year ($28M pre-tax), we are raising our
1999 "cash EPS" estimate from $0.65 to $0.75 and 2000 from $0.95 to $1.10.
* Given the continuing strong outlook for the company's prospects, we are
raising our rating on AMKR from 2S to 1H (Buy, High Risk) and raising our
price target from $18 to $25, 22-times our calendar 2000 cash estimate....
Industry capacity appears to be tightening. The company is now running at
an average utilization rate of about 80-85%, with the low end (QFPs)
running at 70%, and the high end (BGAs) running at 95%. This brings the
company greater pricing power. Though Amkor is not raising prices, it has
stopped cutting prices at the low end. By the December quarter,
management expects that price declines will average about 1-2% per
quarter, compared to a 4% decline in the June quarter. Meanwhile, units,
which grew about 25% last quarter, are continuing to accelerate, which
should set up for higher revenue growth in the second half of this year
and into next. A further additive to earnings, which the company has not
yet talked much about, is Amkor's recent entry into the micro-board
business. Amkor has begun to help design and assemble tiny chip-level
boards for building system-in-a-package solutions for makers of cellular
phones, game players, and other systems requiring smaller form factors,
lower power and lower cost. Margins on this business, which could reach
$50-100 million next year, should be as high as 40%, potentially adding
another $0.05 in EPS.
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