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Technology Stocks : Amkor Technology Inc (AMKR) -- Ignore unavailable to you. Want to Upgrade?

To: Jim Oravetz who wrote (611)	3/21/2000 3:58:00 PM
From: tech101	Respond to of 1056

Dear Lemons, AMKR would be 110 if it has the same PEG ration equal to S&P500 average. by: gzkom 3/21/00 3:31 pm Msg: 12055 of 12056 Please go to the page: biz.yahoo.com You'll find Amkor's PEG ratio (PE over Growth) for Dec 00 is exactly 1.0 compared to the ELEC COMP-SEMIC sector's 3.08 and S&P 500's 2.10 respectively. AMKR would be at 110 without split should it reach the PEG ratio similar to the S&P500. From whatever point of view, AMKR is undervalued.

To: Jim Oravetz who wrote (611)	3/22/2000 11:52:00 AM
From: tech101	Read Replies (1) \| Respond to of 1056

Prudential Report 03/22/00 12-Month $70 by: amkr_investor 3/22/00 10:47 am Msg: 12068 of 12073 AMKR: RECENT TRIP TO ASIA CONFIRMS STRONG BUSINESS TRENDS IN PACKAGING AND TEST, ANAM FOUNDRY STRATEGY COULD PROVIDE A VALUABLE ASSET PLAY. 12-Month Price: $70 Investment Highlights: Recent trip to Asia confirms strong business trends in both packaging and test as well as wafer fab markets. Packaging and test business strength is muting typical seasonality, expect some modest upside to our 1Q EPS estimate of $0.26. Acquisition of Anam?s K1-K3 proceeding. Upon completion, we expect to initiate cash EPS estimates to reflect the acquisition. Anam Semiconductor is driving a foundry strategy - expanding capacity, expanding customer base, looking for additional capacity. Execution on this strategy could provide a compelling asset play for Amkor which owns 42% of Anam. Valuation on shares of AMKR is very attractive - selling at 22 times our potential 2001 cash EPS of $2.20-$2.30 without consideration of the potential valuation of the Wafer Fab. We are reiterating our Strong Buy Rating and 12-month price target of $70. Discussion: Recent trip to Asia. We recently returned from a 4 day trip to Asia where we visited with 12 companies in the semiconductor supply chain including foundries, IC manufacturers, equipment suppliers, test and packaging companies, and OEM integrators. We visited companies in Taiwan, Korea, and Japan. Demand fundamentals remain strong throughout the supply chain. We continue to be impressed by the strength of the current demand environment. End market demand, especially in communications and consumer electronics is robust. In addition, the infrastructure is being primed to support higher PC unit sales as we move into 2QCY00 - visibility is high, utilization rates remain at high levels and inventory is lower than December 1999. While suppliers are more cautious about the potential for double-bookings, tight capacity should provide a stable supply environment for at least the next 2-3 quarters, the limit of practical visibility. Prudential Report - Part 2 by: amkr_investor 3/22/00 10:48 am Msg: 12069 of 12073 Germane to Amkor. During our visit to Asia, we spent time at Amkor?s K-4 facility in Kwangchu Korea, as well as Anam?s wafer fab in Bouchon (Following the K1-K3 transaction, Amkor will be a 42% shareholder in Anam). In the test and packaging market, we continue to believe that the trend towards outsourcing is accelerating and Amkor is a direct beneficiary. Customer forecasts continue to improve on a weekly basis and revenue growth is more dependent upon available capacity and die support not demand trends. The wafer fab business of Anam is beginning to bring on new customers. The Company is looking to add additional capacity to execute upon a foundry strategy. Successful execution could provide an interesting asset play for shareholders of AMKR. Packaging and Test: Current quarter is strong. While AMKR does not have a ?hard? backlog, the Company monitors customers build requirements every two weeks on a 3 month and 6 month rolling forecast. Current trends in visibility help to support our assertion that IC unit growth in 1H00 is perhaps more robust than most investors expect. AMKR was capacity constrained in 4Q, but as new capacity comes online in 1H00 we expect AMKR to benefit. We have a high degree of confidence in our estimates for 1Q00 of $537 million in revenue and EPS of $0.26, street consensus is $0.27. There is potential for moderate upside to our numbers. Recent visit to K-4. Last week we had the opportunity to travel to Kwangchu, Korea to visit Amkor?s K-4 facility. K-4 was acquired by Amkor from Anam in May of 1999 and represents the largest and most technological advanced packaging facility in the Amkor family. Capacity utilization at K-4 is high, with the need for additional capacity eminent. In addition, the majority of PC related customers (including a large N.A. chipset supplier) have indicated the need to ramp production levels to support higher PC unit sales beginning in 2QCY00. To date, the current cyclical upturn has been more dependent upon strong demand in communications end-markets than PC unit sales. A resurgence in PC unit sales especially in the corporate market should provide upside and longevity to the current cycle. Prudential Report - Part 3 by: amkr_investor 3/22/00 10:49 am Msg: 12070 of 12073 The Acquisition of K1-K3 and the strong demand environment provides upside to estimates. Amkor recently announced its intent to acquire the last three packaging and test manufacturing facilities of Anam Semiconductor, K1-K3, for $950 million. In addition, Amkor plans to make a $459 million equity investment in Anam?s wafer fab. The transaction is due to close in 2QCY00. Amkor currently has $410 million in private equity to fund the deal and recently sold $225 million of 5% convertible subordinated notes. We expect the company to issue additional debt (bank and convertible) for the remaining $765 million. In 1999, K1-K3 contributed approximately 39% or $750 million of AMKR?s $1.9 billion in revenue. This implies a valuation of 1.3 times TTM revenue which we believe is fair. Amkor is currently contracting capacity at K1-K3 at an 11.5% gross margin. Once the transaction is completed we anticipate that full gross margins from these facilities will be comparable to margins achieved at mature plants in the Philippines - low to mid 30% range. We believe the additional cash flow resulting from the deal will offset any effects the additional debt will have on operating metrics - times interest earned should be at least current levels as a result of the acquisition. Upon closing of the deal, we expect our new 2001 cash EPS estimate to be at least 25% accretive to our current 2001 EPS estimate of $1.70. PSI and the street will begin to value shares of AMKR and publish estimates on a cash EPS basis after the deal closes - which we believeis a more accurate metric of Amkor?s results. AMKR to own approximately 42% of Anam Semiconductor after the closing of K1-K3 purchase. As a result of the agreement in which Amkor will acquire Anam?s K1-K3 packaging and test facilities, Amkor plans to also make an equity investment of $459 million in Anam?s wafer fab operations resulting in a 42% equity stake in Anam. Amkor contracts wafer foundry services with Anam which accounted for approximately $300 million (15% of total) in revenues in 1999. We believe that Amkor?s investment in Anam is an excellent equity play given that most foundries are currently valued at 15-20X FTM revenues. Anam Semiconductor wafer fab outlines expansion plans. Anam ended 1999 with fab capacity of 17k wafer starts per month. Currently wafer start capacity stands at 20k per month - going to 25k per month by May 2000 and 30k per month by the end of the year. We estimate that 22k wafer starts per month represents the break-even point for the fab. The fab is currently running 0.25/0.22 micron process technology leveraged from its relationship with TXN. Prudential Report - Part 4 by: amkr_investor 3/22/00 10:49 am Msg: 12071 of 12073 Approximately 17K wafers per month are currently being dedicated to TXN DSPs. Anam on its way to becoming a pure play communications/portable leveraged foundry. Anam is attacking specific markets. Given the company?s strong relationship with TI with several generations of DSPs, we believe Anam is skilled in the production of high performance and low power/leakage devices-resulting in leverage towards the communications markets. Key to implementing this strategy and unlocking the potential valuation of the foundry, is Anam?s ability to bring on new customers and new capacity. We believe that besides TXN, Anam is currently running wafers in limited quantity for Atmel, Displaytec, Toshiba, NEC, Alcatel, PACT, and Ericsson. In addition, we believe the Company is close to negotiating additional fab capacity - potentially purchasing a shell that can be turned into functional capacity by 1Q01. We believe that combined capacity of the current fab and a new fab could raise wafer starts per month to an approximately 70-100k wafer per month when completed and provide the basis for investors to view Anam as a pure-play foundry. Valuation on core business is compelling, asset play on foundry could be significant. We believe that current valuation based upon Amkor?s core business is compelling. Our 12-month price target of $70 (40% upside from current levels) is based upon a 40 multiple to our current 2001 EPS estimate of $1.70 but only 30 times our expected 2001 cash EPS of between $2.20-2.30. In addition to the core business, we believe that a well executed foundry strategy by Anam could provide significant upside to valuation. Currently, comparable foundry companies (Charter, TSMC) are sell at approximately 15-20X FTM revenue. Anam?s wafer fab should be at a $500 million run-rate by 4Q00 implying a potential a comparable market valuation of $7.5 billion to $10 billion or $3.1 to $4 billion for Amkor?s 42% stake - this equates to $25 to $30 per share above and beyond our 12 month target of $70.