Chipbond Technology Corp (頎邦), which provides testing and packaging services for driver integrated circuits (ICs) used in flat panels, yesterday saw shares plunge 6.09 percent after unveiling its plan to sell 43 percent of the shares it owns in a Chinese subsidiary to Chinese funds.
Chipbond shares sank to NT$57.1 on the Taipei Exchange, with 30 million shares changing hands, the largest turnover in more than two years. This year, the stock has risen 24.27 percent, compared with the over-the-counter bourse’s 16.47 percent increase over the period.
It remains to be seen whether investors overreacted to news about the company’s divestment plan, as Chipboard’s fundamentals are healthy.
In the first three quarters of this year, the company reported net income of NT$1.48 billion (US$49.35 million), up 26.84 percent year-on-year, with earnings per share of NT$2.27, compared with NT$1.79 over the same period last year.
Chipbond late on Thursday announced in a filing with Taiwan Stock Exchange that it is to divest shares of Suzhou-based Chipmore Technology Co Ltd (頎中科技) to three Chinese funds, including the Beijing Kinetic Energy Investment Fund (北京芯動能投資基金), for US$112 million.
BOE Technology Group Co (京東方), China’s biggest LCD panel manufacturer, is a major investor in the Beijing Kinetic Energy Investment Fund.
The transaction is to help Chipbond “secure sufficient capital to expand its investments on driver IC and non-driver IC [capacities and technologies],” the filing said.
“The divestment would also give more leeway to the Chinese subsidiary to adjust itself and cope with regulatory changes in China by introducing Chinese investors,” the state-run Central News Agency quoted Chipbond chairman Wu Fei-jain (吳非艱) as saying.
“The deal would also help Chipbond expand its business in China and gain more market share,” he said.
China is likely to surpass South Korea and become the world’s largest manufacturing site for large-size flat panels this year, making up a 35.7 percent share of worldwide capacities, TrendForce Corp (集邦科技) said in September.
China is to see its share increase to 50 percent by 2020, the Taipei-based researcher forecast.
Chipbond expects to book disposal gains of NT$1.9 billion from the divestment, a company filing said.
After the transaction, Chipbond expects to see its share of Chipmore Technology decrease to 31 percent, the company said.
The deal is expected to be completed in the second quarter next year, Wu told reporters.
In a separate stock exchange filing, Chipbond said it plans to invest 240 million yuan (US$36.32 million) in a new joint venture in Hefei, in China’s Anhui Province.
The proposed investment in China is to be a collaboration with Chinese strategic partners, including the Beijing Kinetic Energy Investment Fund and the Hefei City Government, the company said.
Chipbond would own 30 percent of the shares in the joint venture, which would have an initial paid-in capital of 800 million yuan. The venture is to provide chip-on-film packaging services for driver ICs used in the flat panels of smartphones, the company said.
“The investment would complete the company’s ventures in China’s driver IC market,” Chipbond said in the filing. The planned investment is subject to approval by the Investment Commission.
In the first three quarters, Chipbond’s cumulative revenue totaled NT$13.55 billion, up 9.42 percent year-on-year, with gross margin of 23.09 percent from 24.04 percent in the same period the previous year and operating margin of 16.38 percent from 15.21 percent.
The company last month said this quarter’s revenue would drop by 5 percent to 10 percent from last quarter’s NT$4.99 billion due to seasonal factors.
Gross margin for this quarter would decline on a smaller scale, it said, without elaborating.
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