the calculator, by the time Fab 2 is standing, the current stock holders will have no more than 40% of TSEM equity, and that is fine, since by then TSEM will get about $350 MM in new capital. So, if you assume that the middle of 2002 we get the next through in the semi cycle and the number of shares reached about 35 MM (my calculations actually show more shares, but I am using Tower's calculations that by then Israel Corp, will have 30% of the equity, SNDK 10% and other "new investors" 20%, I think that 20% is understated, since ALSC will probably have the same 10% as SNDK and we will have Toshiba and possibly other partners adding dilution). Trailing 12 months sales, at best, IMHO, will not reach more than $350 MM by then (that actually could be quite "generous"), and at the through of a semi cycle getting 1 to 1.5 PSR is not uncommon, so I get a through number of between $10 to $15 per share. Of course, you should back the truck then, since from whatever that through number is, you should be able to get a 6 to 10 bagger, because in the next three years (around 2005), sales will more than triple, and the PSR could double or triple.
Be wary of these numbers, however, three four years ago when I did the same analysis for CYMI, I came up with a potential bottom at $13, and I was wrong, the actual bottom was around $6, my forecast for WFR was even worse, I had $10 as a bottom and it actually went under $3. I hope that this cycle will not be as severe as the last one, and thus hope that my target of $10 to $15 will not be exceeded.
Zeev |
