Powertech to buy back 20 million shares

By Kevin Chen  /  Staff reporter

Fri, Dec 14, 2012 - Page 13

Powertech Technology Inc (力成), which provides packaging and testing services for memorychip makers, yesterday announced a second share buyback plan this year, after it repurchased 20 million shares between May and July.

From May 14 to July 10, the company bought back 15 million common shares at NT$50 to NT$70 per share.

In a filing to the Taiwan Stock Exchange after the market closed, Powertech said its board of directors had agreed to buy back 15 million common shares on the open market at a price of NT$40 to NT$60 per share from today through Jan. 31.

The size of the purchase represents 1.93 percent of the company’s outstanding shares. Powertech said it planned to spend up to NT$28.22 billion on the buyback and would transfer the shares to employees in a bid to “boost employee morale,” the filing said.

The Hsinchu-based company had NT$17.26 billion in cash and cash equivalents at the end of September, up from NT$9.97 billion a year earlier, according to the Taiwan Stock Exchange.

Last month, Powertech’s consolidated revenue reached NT$3.48 billion, up 2.8 percent month-on-month and 7.11 percent year-on-year. Cumulative revenue totaled NT$38.18 billion in the first 11 months of the year, up 5.36 percent from a year ago.

Net income in the first three quarters was NT$3.03 billion, which translates into earnings per share of NT$3.83. That compares with a net income of NT$5.05 billion, or NT$6.32 per share, the previous year, company data showed.

Powertech shares rose 2.85 percent to NT$46.90 yesterday, along with other DRAM stocks, which have gained strength in recent sessions following a recovery in spot prices.

Prices for benchmark DDR3 2-gigabit DRAM chips have risen 14.63 percent to US$0.94 a unit from US$0.82 at the end of last month, according to Taipei-based market data compiler DRAMexchange.

However, Powertech’s share price has dropped 26.83 percent since the beginning of the year, compared with the TAIEX’s 9.69 percent rise during the same period. The benchmark index yesterday rose 0.87 percent.

Supported by rising shipments of mobile DRAM and NAND flash products, Powertech could see flat or a slight drop in revenues this quarter from last quarter, which is better than the company’s guidance at an investors’ conference on Oct. 31 of a 5 to 10 percent sequential decline, Fubon Securities Co (富邦證券) analyst Calvin Shao (邵琮淳) said on Wednesday.

In the July-September quarter, Powertech — whose customers include Japan’s Elpida Memory Inc and Toshiba Corp, as well as Kingston Technology Co of the US — saw its consolidated revenue rise 9.6 percent year-on-year to NT$10.64 billion.

“The company’s mobile DRAM is expected to show single-digit quarter-on-quarter growth this quarter. On the other hand, NAND flash sales will also rise due to yield rate and input increases at Toshiba,” Shao said in a client note.

However, Shao said the company’s fourth-quarter gross margin would continue to shrink from last quarter and its outlook for next quarter would remain conservative. Powertech’s gross margin slid to 15.1 percent in the third quarter from 20.8 percent in the previous quarter and 22.3 percent the year before.

Shao said he expects the company’s sales to hit bottom in the first quarter of next year, citing negative factors such as a seasonal slowdown, fewer working days and still-uncertain demand for DRAM chips.