ASE bond sale boosts shares

By Lisa Wang  /  Staff reporter

Sat, Aug 31, 2013 - Page 14

Shares of Advanced Semiconductor Engineering Inc (ASE, 日月光半導體) rallied 3.93 percent yesterday, after the company announced it had sold US$400 million in corporate bonds at a 30 percent premium.

ASE, the world’s top chip testing and packaging service provider, sold its five-year convertible bonds at NT$33.085 per share, which represented a 30 percent premium over its closing share price of NT$25.45 on Thursday.

The bonds are scheduled to be issued and listed on the Singapore market on Thursday. The zero-coupon bonds are due on Sept. 5, 2018, the company said.

The high premium showed investors’ positive outlook on ASE, as the company is expanding production capacity and upgrading technology to meeting rising demand.

The company said earlier it plans to earmark between US$700 million and US$750 million for capital expenditure this year.

“We are pleased about the fund-raising program as the proceeds will be used in boosting high-end packaging capacity, which will help enhance ASE’s competitiveness,” SinoPac Securities Co (永豐金證券) said in a report.

In addition to the US$400 million overseas corporate bonds, SinoPac said ASE’s board also approved the issuing of as many as 160 million new shares via rights issue. The brokerage did not say where it obtained the information.

In total, the new fund-raising programs would only dilute ASE’s capital shares by about 6.8 percent, SinoPac said. That would erode the company’s earnings by between NT$0.12 per share and NT$0.14 per share, next year, if all those corporate bonds were all converted into common shares.

ASE’s board said the bonds will only dilute the firm’s capital shares between 6.3 percent and 6.8 percent.

SinoPac forecasts that ASE’s revenue will grow 8.5 percent annually next year to NT$230.1 billion (US$7.7 billion). Earnings per share is expected to increase to NT$2.28 next year, it said.

SinoPac maintained its “buy” rating on ASE with its target price at NT$30.

However, Yuanta Securities Co (元大證券) kept its “neutral” rating on ASE, saying the recent inventory correction would limit its growth and lead to a lower gross margin.

Shares of ASE ended at NT$26.45 in Taipei trading yesterday.