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Hi virgoan
Thru email from my broker at UOBKayHian. Here's an extract :
Regional Morning Notes
Tuesday, 28 November 2006
Please see important notice on last page Page 2 of 4
Technology
Holiday season off to a good start
Holiday season off to a good start. More than 140m shoppers hit the stores
on Black Friday weekend according to the National Retail Federation?s (NRF)
2006 Black Friday Weekend Survey. Consumers spent an average of
US$360.15*, up 18.9% yoy. The most popular items are electronics and toys
with retailers offering big bargains on high definition TVs, life-sized robots, MP3
players and video game consoles. More consumers are also shopping online.
47.1% of consumers plan to shop online during this holiday season according
NRF, up from 36% three years ago.
In another survey, ShopperTrak Corporation?s National Retail Sales Estimate
reported preliminary sales estimate of US$8,955m for Black Friday (the day after
Thanksgiving), a healthy increase of 6.0% yoy. This is remarkable given that
Black Friday was the highest sales day in 2005. The impressive sales
performance shows that consumers are willing to spend as recent decline in
energy costs left consumers with more disposal income.
on Black Friday weekend according to the National Retail Federation?s (NRF)
2006 Black Friday Weekend Survey. Consumers spent an average of
US$360.15*, up 18.9% yoy. The most popular items are electronics and toys
with retailers offering big bargains on high definition TVs, life-sized robots, MP3
players and video game consoles. More consumers are also shopping online.
47.1% of consumers plan to shop online during this holiday season according
NRF, up from 36% three years ago.
In another survey, ShopperTrak Corporation?s National Retail Sales Estimate
reported preliminary sales estimate of US$8,955m for Black Friday (the day after
Thanksgiving), a healthy increase of 6.0% yoy. This is remarkable given that
Black Friday was the highest sales day in 2005. The impressive sales
performance shows that consumers are willing to spend as recent decline in
energy costs left consumers with more disposal income.
M&A activities create buzz. Private equity firm Carlyle Group is said to be in
talks to acquire Advanced Semiconductor Engineering (ASE) for US$5.5b.
Taiwan-based ASE is the world's largest test and assembly house. Chairman
and CEO Jason Chang has agreed to sell his 18.4% stake to a consortium led
by Carlyle. ASE would not be governed by Taiwan rules, which severely restrict
technology investment in China, by registering as a foreign company and listing
on a foreign stock exchange such as Hong Kong or Singapore.
ASE is valued at PE of 10.8x for FY06 and 13.1x for FY07 based on Carlyle
Group?s offer of NT39 (consensus EPS is NT3.62 for FY06 and NT2.97 for
FY07) and P/B of 2.6x. The offer price represents a 9.9% premium to last
Friday?s closing price of NT35.50.
talks to acquire Advanced Semiconductor Engineering (ASE) for US$5.5b.
Taiwan-based ASE is the world's largest test and assembly house. Chairman
and CEO Jason Chang has agreed to sell his 18.4% stake to a consortium led
by Carlyle. ASE would not be governed by Taiwan rules, which severely restrict
technology investment in China, by registering as a foreign company and listing
on a foreign stock exchange such as Hong Kong or Singapore.
ASE is valued at PE of 10.8x for FY06 and 13.1x for FY07 based on Carlyle
Group?s offer of NT39 (consensus EPS is NT3.62 for FY06 and NT2.97 for
FY07) and P/B of 2.6x. The offer price represents a 9.9% premium to last
Friday?s closing price of NT35.50.
Technology sector offers value. The profile for the Technology sector has
changed and taken on the likeness of value stocks. For example, many stocks
in the Assembly & Test cluster trades at single-digit PEs and P/B ratio of
between 1x to 2x. This is much lower than average FY06 PE of 15.5x and P/B
of 2.0x for the Strait Times Industrial index.
We expect the two pieces of news mentioned above to have a positive impact
on share price for Technology stocks listed in Singapore. In particular, Global
Testing is most under-valued and is a potential take-over target.
* Spending data includes Thursday, Friday, Saturday and projected spending for
Sunday.
changed and taken on the likeness of value stocks. For example, many stocks
in the Assembly & Test cluster trades at single-digit PEs and P/B ratio of
between 1x to 2x. This is much lower than average FY06 PE of 15.5x and P/B
of 2.0x for the Strait Times Industrial index.
We expect the two pieces of news mentioned above to have a positive impact
on share price for Technology stocks listed in Singapore. In particular, Global
Testing is most under-valued and is a potential take-over target.
* Spending data includes Thursday, Friday, Saturday and projected spending for
Sunday.
SINGAPORE
TECHNOLOGY
OVERWEIGHT
United Test & Assembly Center
(UTAC SP)
BUY
Current Price: S$0.755
Target Price: S$1.08
Memory Devices (MEMD SP)
BUY
Current Price: S$0.335
Target Price: S$0.40
Chartered Semicon (CSM SP)
BUY
Current Price: S$1.40
Target Price: S$1.64
Global Testing (GTC SP)
BUY
Current Price: S$0.26
Target Price: S$0.44
Jurong Tech (JTL SP)
BUY
Current Price: S$1.21
Target Price: S$1.80
Venture Corp (VMS SP)
BUY
Current Price: S$14.10
Target Price: S$15.80
Unisteel Tech (USTL SP)
BUY
Current Price: S$2.26
Target Price: S$2.63
Miyoshi Precision (MIYO SP)
BUY
Current Price: S$0.22
Target Price: S$0.26
Jonathan Koh
�� (65) 6539 1026
jonathankoh@uobkayhian.com
jonathankoh@uobkayhian.com
Regional Morning Notes
Tuesday, 28 November 2006
Please see important notice on last page Page 3 of 4
Comparative Valuation - Assembly & Test (source: Bloomberg, UOB Kay Hian)
(source: Bloomberg, UOB Kay Hian)Market
Cap
Price Target PE (x) Historical
Rating (US$m) 27-Nov-06 Price (Actual=T) (T+1) (T+2) P/B Div Yield ROE
27-Nov-06 Price (Actual=T) (T+1) (T+2) P/B Div Yield ROEAmkor Technology Not Rated 1,774.0 9.96 - 10.3 10.5 10.1 5.1 0.0 (46.1)
Ardentec Corp Not Rated 319.0 28.10 - 11.6 9.9 8.4 2.1 2.5 19.3
ASE Group Not Rated 5,307.8 37.95 - n.a. 9.6 9.9 3.5 0.0 (9.5)
ASE Test Not Rated 1,090.0 10.89 - 7.4 9.6 11.3 1.4 0.0 (6.1)
Global Testing BUY 176.1 0.26 S$0.44 7.9 8.5 7.0 0.9 0.0 16.3
Hana Microelectronics Not Rated 640.1 28.25 - 10.0 10.3 9.5 2.3 5.0 24.3
King Yuan Electronics Not Rated 954.6 28.65 - 20.5 10.3 9.6 1.8 2.3 9.1
Malaysian Pacific Industries SELL 594.7 10.30 - 14.7 17.0 14.4 3.0 3.8 15.8
Siliconware Precision Not Rated 4,351.2 51.30 - 17.0 11.1 10.7 3.2 3.0 22.2
STATS ChipPAC HOLD 1,599.7 1.24 - 16.0 22.5 17.6 2.5 0.0 (2.3)
Unisem Not Rated 195.5 1.59 - 10.4 11.4 10.7 1.1 6.3 3.5
United Test & Assembly BUY 727.1 0.76 S$1.08 9.8 9.9 8.2 1.5 0.0 10.6
Winstek Semicon Not Rated 199.5 24.90 - 21.4 n.a. n.a. 1.9 2.7 9.0
Hana Microelectronics Not Rated 640.1 28.25 - 10.0 10.3 9.5 2.3 5.0 24.3
King Yuan Electronics Not Rated 954.6 28.65 - 20.5 10.3 9.6 1.8 2.3 9.1
Malaysian Pacific Industries SELL 594.7 10.30 - 14.7 17.0 14.4 3.0 3.8 15.8
Siliconware Precision Not Rated 4,351.2 51.30 - 17.0 11.1 10.7 3.2 3.0 22.2
STATS ChipPAC HOLD 1,599.7 1.24 - 16.0 22.5 17.6 2.5 0.0 (2.3)
Unisem Not Rated 195.5 1.59 - 10.4 11.4 10.7 1.1 6.3 3.5
United Test & Assembly BUY 727.1 0.76 S$1.08 9.8 9.9 8.2 1.5 0.0 10.6
Winstek Semicon Not Rated 199.5 24.90 - 21.4 n.a. n.a. 1.9 2.7 9.0
Siliconware Precision Not Rated 4,351.2 51.30 - 17.0 11.1 10.7 3.2 3.0 22.2
STATS ChipPAC HOLD 1,599.7 1.24 - 16.0 22.5 17.6 2.5 0.0 (2.3)
Unisem Not Rated 195.5 1.59 - 10.4 11.4 10.7 1.1 6.3 3.5
United Test & Assembly BUY 727.1 0.76 S$1.08 9.8 9.9 8.2 1.5 0.0 10.6
Winstek Semicon Not Rated 199.5 24.90 - 21.4 n.a. n.a. 1.9 2.7 9.0
Unisem Not Rated 195.5 1.59 - 10.4 11.4 10.7 1.1 6.3 3.5
United Test & Assembly BUY 727.1 0.76 S$1.08 9.8 9.9 8.2 1.5 0.0 10.6
Winstek Semicon Not Rated 199.5 24.90 - 21.4 n.a. n.a. 1.9 2.7 9.0
Winstek Semicon Not Rated 199.5 24.90 - 21.4 n.a. n.a. 1.9 2.7 9.0
Average 13.1 11.7 10.6 2.3 2.0 5.1
Hi Cashiertan, singaporegal
Tks for your advice on JurTech. Yesterday Nokia cuts their profit target due to slower 2007 growth. Will it affect Motorola and then Jurtech target price?
Hi IreneL
Thanks for your advice. Btw where u get latest broker reports?
expecting it will break the resistance but unfortunately a bad day today, so under the profit taking pressure.
But unlikely to see it down to 1.13 soon.
Hi virgoan
You have to decide at what price you are willing to buy into. Today's report from UOBKayHian gave JurTech a buy call with a price target of $1.80.
I was also eyeing this counter last week when it was $1.13. So for me, I am only willing to buy at around $1.14/15 for long term.