Here is a DJ's article on one of ALTR's asian distributers (long)
Asian IPO Focus:Japan Paltek Seen
Benefiting On Pdt Demand
Dow Jones Newswires
TOKYO -- Analysts have high hopes for Paltek Corp.'s debut on Japan's
over-the-counter market later this month because of rising demand for
programmable-logic devices or PLDs, which are semi-custom integrated
circuits.
Paltek derives 90% of its sales from the semiconductor chips that it imports from Altera Corp. (ALTR) of the U.S., a worldwide leader in PLD.
Although the average sales price of PLDs is higher than gate arrays,
another type of semi-custom integrated circuits, PLDs are growing in
popularity, analysts say. PLDs, which are used in electronic equipment, allow the customer to alter the function of chips without having to send them back to the factory for remanufacturing.
Sadahiro Horiko, director at Paltek, says the global PLD market is growing at about 24% a year. The Japanese PLD market, which is still relatively small, is estimated at around Y30 billion to Y40 billion. Last year, Paltek grabbed about Y10 billion of that amount, says Horiko.
Because of rising demand for PLDs, "we can expect Paltek's earnings to
grow," says Takehiko Yoshida, an analyst at Kankaku Research Institute
Inc.
For this year, the company forecasts unconsolidated pretax, or recurring, profit of Y1.69 billion, up 17% from a year ago; net profit of Y825.6 million, also up 17%; and sales of Y13.75 billion, up 34%.
Analysts say Paltek's earnings have been climbing rapidly in the past few years because of the growing demand for PLDs in Japan. In 1994, Paltek's pretax profit totaled Y340.41 million, net profit was Y216.70 billion and sales amounted to Y2.33 billion.
Paltek, which will list July 16, will offer 1.3 million shares in its initial public offering. Of the total, 700,000 are newly issued shares and 600,000 are existing shares currently held in private. Its lead underwriter is Nomura Securities Co.
Takumi Sado, an analyst at Daiwa Institute of Research Ltd., an arm of
Daiwa Securities Co., is also optimistic about Paltek.
"It's a good company," he says, noting that the company is particularly strong in marketing. Not only does the company have a huge database of clients, but contact with its clients is done on a personal basis.
Paltek's Horiko says the company has data on about 70,000 clients, which includes information on the customers' specific technical requirements. Its clients are mainly engineers working for major electronics companies such as NEC Corp. (NIPNY or 6701), Oki Electric Industry Co. (J.OKI or 6703) and Sony Corp. (SNE or 6758).
Among Paltek's 156 employees, about 10% are foreigners who help the
company keep attuned to new market developments worldwide, Horiko
adds.
Because of Paltek's superior marketing know-how, the company should be
able to come up with another profitable product to sell when demand for PLDs eventually becomes sated, notes Sado at Daiwa.
Analysts say the company's tentative IPO price range looks reasonable.
Paltek has set a range of between Y1,850 and Y2,000 per share for the
book-building exercise. That price range translates into a price-earnings ratio of between 15 and 16 times the company's projected earnings per share of Y125.18 for this year. The fixed price will be announced July 6.
Kankaku's Yoshida says similar listed companies have a P/E of about 14
times. Even if Paltek were trading at a P/E of 20 to 30 times, Yoshida says he would still consider the company a good buy because of its growth potential.
As for worries about currency fluctuations, which affect the price of the PLDs Paltek imports, analysts say Paltek has taken steps to minimize its foreign-exchange risks via hedging. At the same time, it has also engaged in price negotiations with Altera to ensure the situation is profitable for both sides.
"Our relationship (with Altera) is based on a win-win situation," says Horiko. When the stronger yen favored Paltek a few years ago, the two companies engaged in price negotiations to balance the situation, he says.
Paltek Corp. is an importer and retailer of programmable-logic devices
(PLDs), which are semi-custom integrated circuits. It derives 90% of its sales from PLDs which it imports from Altera Corp. of the U.S., a
worldwide leader in PLD.
Headquarters: 2-3-12, Shin Yokohama, Kohoku-ku, Yokohama-shi,
222-0033
PARENT FY Ended FY Ended FY Ended
12/31/97 12/31/96 12/31/95
Pretax Pft Y1.45 bln Y1.06 bln Y890.37 mln
Net Profit 707.90 mln 379.01 mln 519.57 mln
Sales 10.28 bln 8.19 bln 6.00 bln
Per Share
Earnings 232.90 223,525.47 314,893.84
Dividend 10.00 10,000.00 10,000.00
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Currency history (dlr vs yen)
12/30/98 12/30/97 12/29/96
Tokyo Close Y129.80 Y115.93 Y102.95 |
