Hermes Microvision (HMI, 漢微科) shares staged a technical rebound to close 4.89 percent higher, at NT$1,180, on the GRETAI Securities Market yesterday, after falling by the daily limit on Thursday. Investors also gained confidence in the stock after Barclays Capital Securities and Deutsche Bank maintained their positive views toward the company.
The semiconductor equipment maker had seen its share price correct by nearly 20 percent since peaking in April, but Barclays and Deutsche Bank said the company’s fundamentals remain strong in terms of its customer base and industry leadership. The firm supplies electron-beam wafer inspection equipment to chipmakers.
Hermes Microvision shares hit their highest level in the company’s history — NT$1,480 — on April 8, but have fallen consistently since then amid weak market sentiment.
Investors became wary about the company’s sales outlook for the third quarter in the face of a potential order slowdown from Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) regarding new inspection tools for the 16 nanometer (nm) process.
The slide in share prices also came amid market speculation that Hermes Microvision might be acquired by US-based Applied Materials Inc at a discount.
“We have seen no changes to HMI’s fundamentals and nothing to shift our outlook for 2014 and 2015, which remains firm,” Barclays Capital analysts Sebastian Hou (侯明孝) and Andrew Lu (陸行之) said in a client note.
The brokerage therefore has kept its “overweight” rating on Hermes Microvision unchanged, along with a 12-month price target of NT$2,000.
“We remain positive on HMI’s market share gain in the wafer inspection tool market and its dominant position in the e-beam tool market in 2014-16,” Deutsche Bank analysts Kevin Wang and Michael Chou (周立中) said in another note, retaining their “buy” rating with a price target of NT$1,600.
Hermes Microvision holds more than 85 percent of the global e-beam inspection equipment market. While optical inspection tools remain dominant, given their faster scanning speed, major foundries have shown an increasing demand for the e-beam wafer inspection tools to help improve their yield rate, as manufacturers reportedly plan to start 20nm production in the first half of this year and 16/14nm FinFET production early next year.
In the first five months of the year, Hermes Microvision reported NT$2.43 billion (US$80.9 million) in cumulative sales, up 15.87 percent from the same period last year, lagging behind market consensus.
In April, the company projected sales this year would grow between 25 and 30 percent from NT$5.34 billion last year.
However, analysts said that Hermes Microvision would show strong sales performance in the final quarter of the year, driven by semiconductor company orders of its 16/14nm inspection tools. Potential orders may come from TSMC, Samsung Electronics and GlobalFoundries Inc as they plan to build up their 16/14nm capacity, analysts said.
On a quarterly basis, the company is forecast to see sales flatten next quarter, after growing more than 50 percent this quarter, and might register a sales increase of up to 40 percent in the fourth quarter, Barclays Capital said.
However, Deutsche Bank predicted the company could see sales decline 10 percent next quarter, before posting a strong growth of 70 percent in the fourth quarter.
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
The New Taiwan dollar and Taiwanese stocks surged on signs that trade tensions between the world’s top two economies might start easing and as US tech earnings boosted the outlook of the nation’s semiconductor exports. The NT dollar strengthened as much as 3.8 percent versus the US dollar to 30.815, the biggest intraday gain since January 2011, closing at NT$31.064. The benchmark TAIEX jumped 2.73 percent to outperform the region’s equity gauges. Outlook for global trade improved after China said it is assessing possible trade talks with the US, providing a boost for the nation’s currency and shares. As the NT dollar
PRESSURE EXPECTED: The appreciation of the NT dollar reflected expectations that Washington would press Taiwan to boost its currency against the US dollar, dealers said Taiwan’s export-oriented semiconductor and auto part manufacturers are expecting their margins to be affected by large foreign exchange losses as the New Taiwan dollar continued to appreciate sharply against the US dollar yesterday. Among major semiconductor manufacturers, ASE Technology Holding Co (日月光), the world’s largest integrated circuit (IC) packaging and testing services provider, said that whenever the NT dollar rises NT$1 against the greenback, its gross margin is cut by about 1.5 percent. The NT dollar traded as strong as NT$29.59 per US dollar before trimming gains to close NT$0.919, or 2.96 percent, higher at NT$30.145 yesterday in Taipei trading
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