A bit old, but very positive report from Lehman (Dated June 18th I think):
Headline: Kulicke & Soffa: Positive Monthly Conference Call
Author: Edward C. White, Jr., CFA (212)526-4744/Tolomy Erpf
Rating: 3
Company: KLIC
Country: COM CUS
Industry: SEMICO
Ticker : KLIC Rank(Old): 3-Neutral Rank(New): 3-Neutral
Price : $25 5/16 52wk Range: $35-9.38 Price Target (Old): $33
Today's Date : 06/18/99 11:54AM Price Target (New): $33
Fiscal Year : SEP
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EPS 1998 1999 2000 2001
QTR. Actual Old New Old New Old New
1st: 0.29A -0.38A -0.38A 0.26E 0.26E - -E - -E
2nd: 0.39A -0.32A -0.32A 0.27E 0.27E - -E - -E
3rd: -0.13A -0.10E -0.10E 0.28E 0.28E - -E - -E
4th: -0.52A 0.24E 0.24E 0.29E 0.29E - -E - -E
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Year:$ 0.04A $ -0.55E $ -0.55E $ 1.10E $ 1.10E $ - -E $ - -E
Street Est.: $ -0.56E $ -0.58 $ 1.32E $ 1.34 $ - -E $ - -E
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Price (As of 6/17): $24 7/8 Revenue (1999): 385.7 Mil.
Return On Equity (99): -4.6 % Proj. 5yr EPS Grth: 14.0 %
Shares Outstanding: 23.4 Mil. Dividend Yield: N/A
Mkt Capitalization: 582.19 Mil. P/E 1999; 2000 : N/M; 22.6 X
Current Book Value: $11.33 /sh Convertible: YES
Debt-to-Capital: 0.0 % Disclosure(s): C, A
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Highlights:
* K&S hosted its monthly conference call this morning. The company continues
to see strong order patterns in its wire bonder business, which is expected
to ramp unit sales above prior cyclical peaks by 1QFY00, and in its materials
business, which is experiencing record sales and operating margins.
* Mgmt sees no signs of a seasonal slowdown in the fiscal 4Q, and continues
to expect shipments of wire bonders to increase meaningfully from 325 units
in fiscal 2Q to about 600 in fiscal 3Q and more than 800 in fiscal 4Q.
* Trends in K&S' materials business are particularly strong. Sales could
reach $70MM and operating margins could aproach 10% for 2H99.
* The margins expansion is expected to be constrained for the next 3 Qs by
K&S' investments in leading-edge technology businesses, and by the fixed
costs of operating two manufacturing sites, while the company transitions
production to its single lower cost Singapore-based facility.
* Thereafter, margins should expand at a healthy pace, due the introduction
of a new higher-margin bonder, and the manufacturing costs of the Singapore-based
facility.
Summary:
CUSTOMERS/DEMAND:
Strong demand continues to be dominated by large Asian customers, such as
Anam Amkor, ASE, Orient and Siliconware. Taiwanese customers are attempting
to gain share from Korea-based Anam Amkor, which is ordering equipment at a
healthy pace but reamains somewhat capital constrained. Texas Instruments
and Lucent have also become important customers, as Intel's demand has waned
in favor of internally manufactured advanced packaging technology. Japanese
demand for K&S products is also reportedly at record levels, but still modest
on an absolute scale.
NEW WIREBONDER INTRODUCTIONS:
K&S's new higher-margin 8028 wirebonder is expected to reach significant
production volume in 2QFY00, and 100% of production volume by 3QFY00. The
initial Alpha generation machines, which shipped months ago, had average
selling prices (ASPs) in excess of $100,000, but are expected to stabilize in
the high $90,000 range. However, margins should be higher than those earned
on sales of the current generation 8020 bonder, due to lower materials costs,
and a shift in production to the company's lower cost Singapore-based
facility. These savings are expected to contribute several thousand dollars
in gross profit per unit sold versus the older model 8020.
The ATX-1, successor to the 8028, will be showcased at the industry's
upcoming conference, SEMICON West. Commercial introduction should follow the
usual 15-18 month product lifecycle of the prior generation product.
SINGAPORE FACILITY:
K&S is currently saddled by the fixed costs of operating two manufacturing
sites, one in Willow Grove, PA, and one in Singapore, as it makes a
conservative transition to 100% production at the company's lower cost
Singapore-based facility. First shipments from Singapore are expected in the
month of December, and the shutdown of the Willow Grove facility should take
place by March (2QFY00).
CAPACITY:
The company's production capability for the next six months remains somewhat
fixed, as it is dependent on the level of materials inventory ordered
prevoiusly from suppliers. Beyond the six months' timeframe, however,
capacity is limitless from a practical standpoint, depending solely on
management's willingness to commit capital to inventory.
COMPETITIVE LANDSCAPE:
Management states that business is as usual, as it continues to dominate the
high-end market, and turn away slow-growth, low-margin, low-end business.
BUSINESS DESCRIPTION: K&S is a leading maker of semiconductorassembly
equipment, related services, materials and consumables. Its products include
wire bonders, die bonders, wafer saws, and advanced packaging support. |
