In an interview with Digitimes.com,

The above news bodes well for STATS.

STATS is tightly held with

With Temasek’s last failed privatization attempt having lapsed in late May ’07, would they likely launch another bid now that the price is significantly below (Feb ’08 low was $1.10 and current is $1.24) that of their last offer price of $1.75 per share? Recently, on May 21 2008, Temasek said that they are still considering their options and have not made a decision yet.

L&T believe that Temasek would only do so if they are 100% sure that they can succeed this time round. And in this regard, Fidelity and Marathon Asset Management who together owns 12.17% of the company holds the key. Both funds had rejected Temasek’s last offer as they deemed it unattractive then. They were proven right as STATS’ Sept ’07 sales and net profit improved to US$414mln and US$28mln from July ’07’s US$370mln and US$7.4mln and even more so in Dec ’07 when sales hit a record US$477mln and profit US$41mln.

However, since then when the US sub-prime crisis and credit tightening hit global economies late last year, STATS has similarly been hit hard as well, with 1Q2008 sales declining to US$390mln and net profit dropping to US$17mln. Management said that softer demand, tighter inventory control by customers as they become increasingly cautious about their business outlook due to the global economic uncertainties, higher raw material costs and weaker US$ against Asian currencies had negatively impacted their results.

This together with the fact that STATS had traded to a low of $1.10 in Feb ’08 and is currently at $1.24 may help Temasek if they are trying to convince Fidelity and Marathon Asset Management to sell their stake. Assuming a similar offer of $1.75 a share, it would cost Temasek about $600mln, while somewhere in between ($1.24 and $1.75) of $1.50 would cost them about $528mln.

With the industry showing early signs of recovery and STATS’ current valuation at a discount to Taiwanese peers such as SPIL (2.3x book and 2.4x sales), Powertech (3.6x book and 2.7x sales) and ASE Test (2.2x book and 3x sales) L&T believe that even without another privatization offer, the stock is currently attractive (1.3x book and 1.1x sales), except that liquidity is low with the stock being tightly held.Temasek owning 84%, Fidelity 6.12% and Marathon Asset Management 6.05% of the company.UTAC CEO JC Lee is bullish about the performance of mixed signal and analog ICs as order visibility for these products has extended through Q3 of this year. Orders for communication, networking, mixed signal and analog ICs began to increase in 4/08 after a slow 1Q08 underpinned by robust orders from Broadcom and Qualcomm. Their production capacity is almost fully booked till the end of the year.