Nuc, I read this the same way that you do. Their business is strong overall, with Asia holding it back from keeping up the growth they had seen in the past. If they can maintain the current levels of profitability till Asia starts to recover(maybe late this year or next year), they should be fine, with great positioning to grow. The other thing to anticipate is that given the nature of the crisis in Asia semi mfg. understandably either postponed or cancelled orders while the turmoil was at its worst. Until they understood how bad things might get this was an understandable reaction. However, once these mfg. see that the bottom has been reached, they can stay in business, etc., they will probably start to make the strategic investments they need to be competitive two, three four years from now. If there is one area of the Asia economies that could quickly turnaround it has to do with semi mfg and related product mfg. This business is so competitive that either they make the investments that are needed or they get out. There isn't much middle ground. Even a couple of years of non-investment could mean becoming completely non-competitive not far down the road.
Alternatively, if it becomes clear that the most affected Asia co's aren't going to make the investments needed in next generation mfg. equipment then co's in other countries will probably step up their purchases to take advantage of the opportunity to increase market share at the expense of the Asians. Either way, the market for the products is not going to shrink, because the market for semiconductors, boards, etc., is only going to grow. I think KLIC is a good investment at these prices, if it goes back down to where it was a few weeks ago it is a great opportunity... |
