Shares in Orient Semiconductor Electronics Ltd rose 4.65 percent to NT$36 yesterday as investors showed renewed interest in chipmaker stocks. Any sustained rise in its share price will depend on the performance of the DRAM-related stocks, analysts said.
Orient Semiconductor is one of Taiwan's largest chip-packaging and testing firms, and plans to increase its capacity this year to meet the increased demand in the IC testing business. Funds raised through the issue of shares to international investors are likely to be used for this expansion, according to securities analysts.
On Tuesday, the company received approval from the Securities and Futures Commission to issue 120 million global depository receipts, and is authorized to raise up to US$340 million. However, an official at Orient Semiconductor refused to confirm how the funds would be used.
"According to the regulations of the SFC in the US, we can't talk about the GDR offering in the local newspapers," said Michael Lee, director of the finance department at Orient Semiconductor.
The company's share price rise yesterday and on Tuesday followed strong gains by TSMC
"People will compare IC packaging stocks with the DRAM makers," said an electronics analyst at International Securities Co.
"Foreign investors became a little concerned about the future prospects of the semiconductors over the next half year, so the stocks fell a lot," he said.
Being the next step in the integrated circuit manufacturing process, IC packaging stocks followed down the slippery slope, the analyst said. Orient Semiconductor's stock fell from a high of NT$60 in the middle of June, to NT$32 last week.
"The price will go up because it fell so far," the analyst said, "but if DRAM-related stocks aren't so strong in the near future, the packaging stocks will remain depressed."
The company at least, is anticipating a strong second half year, and according to Lee, is confident of reaching its target revenue for the year of NT$17.17 billion. It also predicts net income to rise more than 150 percent to NT$2.62 billion, or NT$2.52 per share.
The company reported earlier this week that July sales rose by more than 75 percent compared to the same month last year to NT$1.28 billion.
Net sales in the seven months to July increased 73.6 percent over the same period last year to NT$8.155, or 48 percent of the year's target.
The 5.7 percent drop in July sales from the previous month was "quite normal," according to the analyst at International Securities.
Lee said that the lower monthly revenue was due to the change to a new generation of products in the third and fourth quarter of the year, and the subsequent change of ordering schedule by customers.
"We also just started to move our production line to the new headquarters from last month," said Lee, "so we had reduced production."
With increased production and the peak season in the third and fourth quarter, the company should reach its target revenue. But a research report by International Securities said that, because the company's first half results missed their target, about NT$1.2 billion worth of its annual revenue might come from the sale of shares held in one its subsidiaries.
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