ASE stock soars as sales beat target

By Kevin Chen  /  Staff reporter

Wed, Jul 10, 2013 - Page 14

Advanced Semiconductor Engineering Inc (ASE, 日月光半導體) shares rose 2.22 percent to NT$25.35 yesterday after the world’s largest chip packager and tester said last quarter’s sales had beaten its guidance.

The Greater Kaohsiung-based company on Monday said sales generated by its core business — chip packaging and testing — fell 1.7 percent to NT$12.2 billion (US$ 405.4 million) from May, but rose 13.2 percent from a year earlier.

However, revenue for the period between April and last month hit a record-high of NT$36.3 billion, an increase of 15.9 percent from NT$31.32 billion the previous quarter and 11.7 percent higher than NT$32.49 billion recorded in the same period last year, ASE said in a Taiwan Stock Exchange filing.

Driven by the communications sector, last quarter’s 15.9 percent increase superseded ASE’s initial forecast of an 11 to 14 percent increase from the first quarter.

The company did not provide an estimate for sales in the coming quarter, but is expected to give detailed sales and earnings guidance at its quarterly investors’ conference, to take place on July 26.

Analysts said ASE’s revenue from packaging and testing could continue growing by between 6 percent and 10 percent this quarter from last quarter, given its high exposure to advanced packaging and because of a potential high volume of orders from Apple Inc once the US company begins contracting Taiwan Semiconductor Manufacturing Co (台積電) to fabricate wafer services starting this year.

However, the company could face slower growth momentum this quarter compared with the previous one as smartphone inventory corrections take place in emerging markets and due to an unexpected push of electronics manufacturing service (EMS) orders that will last throughout the quarter, analysts said.

“We consider these to be short-term headwinds for ASE,” Fubon Securities Investment Services Co (富邦投顧) analyst Carlos Peng (彭國維) said in a note.

The lukewarm inventory corrections could actually spur strong demand for a new product cycle and benefit ASE in the longer term, Peng said, forecasting that demand for the company’s flip-chip will remain intact in the second half of the year and Wi-Fi module orders will stay robust in the fourth quarter.

From January to last month, ASE’s accumulated packaging and testing revenue grew 9.5 percent year-on-year to NT$67.61 billion.

Including sales from its electronics manufacturing unit, Universal Scientific Industrial Co (環隆電氣), ASE’s consolidated revenue was NT$50.76 billion last quarter, up 5.3 percent from NT$48.19 billion in the first quarter and 10.7 percent from NT$45.87 billion in the second quarter of last year, the company said.

In the first half of the year, total consolidated revenue rose 11.2 percent annually to NT$98.95 billion, ASE said.