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Technology stocks such as UTAC, Chartered Semiconductor and Beyonics Technology could be takeover targets, DBS Vickers said in a report released on Wednesday.
DBS said there has been a resurgence in tech buyouts, following Kohlberg Kravis Roberts & Co.'s (KKR) US$664 million takeover of MMI Holdings and Temasek Holding's [TEM.UL] US$1.6 billion buyout of STATS ChipPAC.
"The M&A party for tech companies would continue because the sector's low valuation is still appealing to private equity or value buyers, and eroding margins in competitive marketplaces are pushing corporates to amass scale and consolidate," DBS said.
The report said "UTAC's attributes -- substantial operating scale, strong cashflow -- and undemanding valuations make it a desirable candidate for private equity managers." It added that UTAC's "fragmented shareholding structure of 90% free float" also makes it a likely target.
Calling this "the golden age of private equity", DBS cited the Emerging Markets Private Equity Association, which reported that "private equity investments in the emerging markets of Asia, Eastern Europe, Latin America, the Middle East and Africa, rose by 29% in 2006 to a total of US$33.2 billion."
DBS also singled out tech firms such as Amtek Engineering, Seksun Corp. and Ellipsiz, which are "reportedly talking with potential buyers widely speculated to be private equity". These firms' common traits include decent earnings growth and strong and consistent cash generation.
Chartered Semiconductor and Beyonics Technology are "ripe for picking" by strategic buyers, said DBS.
These buyers could include suppliers, vendors, or customers who see strengths of the targeted company from which they can benefit either for vertical integration, market share or diversification.
"It could probably make sense for TSMC to consider acquiring Chartered's Silicon-On-Insulator (SOI) wafer technology," to complement TSMC's business, said DBS.
"With the recent acquisition of MMI by KKR, it makes sense for Nidec Corp. to buy Beyonics' HDD division for secured baseplate supply, to reinforce its No.1 position in the HDD motor assembly business," DBS noted.
Japan's Nidec acquired Brilliant Manufacturing Ltd. last year.
Haha..ya beginning to learn from you disciple! Lol.
You have a good week?
To me, its all about timing and 'friends' that invest together. Hehehe...
My good sifu 'nextdoor' has done some homework and given us a good list of Tech Stocks. :)
I believe my sifu will definitely have a very Merry Christmas soon!
All the best to you, my dear sifu :).
---------------
Thanks guys!
It's one that worth investing for mid to long term.
Hi Nextdoor,
TA point of view, Jur Tech has just turned bullish.
Also bullish are Brandway and Sarin.
Cheers
Hi IreneL,
I?m not a TA person, but I expect their Wireless Accessories business and new KRZR and RIZR models from Motorola Wireless Accessories such as bluetooth headsets and battery packs to continue to enjoy strong demand into the next few quarters. The Group also expects a sequentially stronger 4Q06 and FY2006 net profit to exceed that for FY2005. I?m looking at mid-term and not short term. Just my view!! My average holding price as of today is ard $1.13. Wish me luck and I?m looking for fat profit after X?mas!!
FYI:-NASDAQ Composite and NASDAQ 100 indices have gained 21% and 24% respectively in 2H06. Looking good!
tech stock seems weak in the sgx market.china stock seems good investment in sgx market .up and down very fast.tech stock seem always stag and not moving at all.this is my view only.what do you think?
Hi nextdoor
Why are you so confident in Jurong Tech? Thanks.
SINGAPORE TECHNOLOGY OVERWEIGHT-FYI :-))
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$0.33
Target Price: S$0.40
Chartered Semicon (CSM SP)
BUY
Current Price: S$1.28
Target Price: S$1.64
Global Testing (GTC SP)
BUY
Current Price: S$0.24
Target Price: S$0.44
Jurong Tech (JTL SP)
BUY!!!!!!!!!
Current Price: S$1.17
Target Price: S$1.80
Venture Corp (VMS SP)
BUY
Current Price: S$13.50
Target Price: S$15.80
Unisteel Tech (USTL SP)
BUY
Current Price: S$2.17
Target Price: S$2.63
Miyoshi Precision (MIYO SP)
BUY
Current Price: S$0.20
Target Price: S$0.26