Thanks;
considering all the excitement about inventories I would have expected a little bit more coverage...
I just typed in TSM and that's all I got - I didn't get anything for UMC...doesn't make sense because these are the guys that actually DRIVE a good portion of capex
TSM: Reit Outperform - TSM reported 2Q04 results exceeding our estimates. It raised the `04 capex budget by 20% (YOY) while guiding to improving gross margins. However, given the company`s lower than expected 3Q04 wafer shipment and flat ASPs, we are modifying our estimates downward slightly, but maintaining our Outperform rating. We are pleased with TSM`s view on the overall semiconductor market that the current inventory correction should not take more than a few months. The company`s increased capex for `04 and possibly higher capex in `05 illustrates, in our view, its confidence in the longevity of the cycle.
Taiwan Market Afternoon Commentary, July 30, 2004
TAIEX reacted positively to guidance offered by TSMC¡¦s chairman, Morris Chang, yesterday during the firm¡¦s investor conference, in which he also suggested that he would personally buy more shares of TSMC, believing them to be attractively valued. In addition, he painted a bullish picture on the company¡¦s 2H04 outlook and 2005. Meanwhile, its 2Q04 results were in-line with market expectation. TSMC reported 2Q04 gross margin of 43.4%; net profits of NT$23.41bn; and EPS at NT$1.00. It¡¦s 3Q04 and 4Q04 utilization rate will remain above 100%, according to company guidance.
Shares of panel makers gained on news that Corning, the world¡¦s largest LCD glassmaker, is entering its annual maintenance season thus will reduce its glass supply. Investors in battered LCD shares welcomed this news in early session but turned to profit taking as session progressed. On the day, TAIEX gained 70.91 points, or 1.33%, to close at 5420.57 points on turnover of NT$55.31bn. The average buy size order was 9.3 lots versus sell size orders of 8.3 lots. .
a) TSMC¡¦s chairman, Morris Chang, said that he would personally buy TSMC shares. TSMC (2330 TT, $42.90, +4.6%, mkt. cap US$29 billion) reported 2Q04 numbers in line with market expectation. TSMC reported 2Q gross margin 43.4%, Net profits of TW$23.41bn. EPS came in at TW$1.00. TSMC¡¦s 2Q04 wafer shipment grew 9.4%, ASP rose 3.2% and fab loading was at 106%. The company 3Q04 guidance is for ASP to remain flat, gross margin to reach around 45%, and 3Q04 utilization rate to remain above 100%.
Investors also listened intently to the firm¡¦s 4Q04 and 2005 guidance after UMC failed to provide any. The firm guides flat to slightly rising ASP in 4Q04, utilization rate above 100%, and revenue showing sequential growth. For 2005, Morris Chang opines that the semiconductor industry will show an 8% growth rate, TSMC even better. In addition, Capex will also increase in 2005. TSMC is trading at 2.4x 2004 book (at a high 26% ROE in 2Q04) vs. the historical low of 2.2x (when ROE was 0%) in 2H02. |
