ValueBuddies.com : Value Investing Forum - Singapore, Hong Kong, U.S.

Outlook for 4Q2014/FY2014 :

Management Guidance :

“Typically, the Group’s customer demand in the last quarter of the year is higher than the cyclical low experienced in the third quarter. The improvement that the Group is witnessing now appears to be a little subdued as some end users of our customer has pushed back their deliveries. As such, the Group expects the performance in 4Q2014 to be relatively flat sequentially.”

Revenue (SGD million）:
FY2011 = 114.427
FY2012 = 113.212
1Q2013 = 27.845
2Q2013 = 32.821
3Q2013 = 25.357 (9M2013 = 86.041)
4Q2013 = 34.445 (FY2013 = 120.486)
1Q2014 = 34.309
2Q2014 = 28.689
3Q2014 = 24.771 (9M2014 = 87.769)
4Q2014 = 24.771 ( FY2014 = 112.54 ) = Projection = assuming same as 3Q2014.

Comment:
1) FY 2014 Revenue would likely to be less than FY2013, in similar order to FY2012 & FY2011

NPAT (SGD million):
FY2011 = 27.640
FY2012 = 16.998
1Q2013 = 5.256
2Q2013 = 7.837
3Q2013 = 4.809 (9M2013 = 17.902)
4Q2013 = 10.978 ( FY 2013 = 28.880 )
1Q2014 = 8.558
2Q2014 = 7.229
3Q2014 = 5.465 (9M2014 = 21.252)
4Q2014 = 5.465 (FY2014 = 26.717 ) Projection = assuming same as 3Q2014

Comment:
2) FY 2014 NPAT would unlikely to surpass that of FY2013 but wouldn’t be worse than FY2012

FCF Generated (SGD million):
1Q2013 = 6.4
2Q2013 = 7.3
3Q2013 = 6.3 (9M 2013 = 20.0)
4Q2013 = 5.8 (FY 2013 = 25.8)
1Q2014 = 10.3
2Q2014 = 3.9
3Q2014 = 5.7 (9M 2014 = 19.9) = 4.63 cents per share
4Q2014 = 3.9 (FY2014 = 23.8) Projection = assuming same as 2Q2014
4Q2014 = 5.7 (FY2014 =25.6) Projection = assuming same as 3Q2014

Comment:
3) FCF for FY2014 could still be close to that of FY2013.


DPS
FY2013, total dividend payout = 22.3 m
FCF generated in 9M2014 = 19.9 m = 4.63 cents
For FY2014,
To pay 5.00 cents dividend, FCF (FY) required = 21.5 m
To pay 5.25 cents dividend, FCF (FY) required = 22.6 m
To pay 5.50 cents dividend, FCF (FY) required = 23.7 m
To pay 5.75 cents dividend, FCF (FY) required = 24.7 m
To pay 6.00 cents dividend, FCF (FY) required = 25.8 m

Purchase of PPE: (SGD million)
FY2012 = 1.747
FY2013 = 1.994
9M2013 = 5.457

Comments :
4) For FY2014, if UMS pays out all its FCF generated as dividend, there are possibilities that total dividend payout may surpass that in FY2013 of 22.3 m and DPS may reach 6.0 cents - but I think it is likely to be between 5.0 and 5.50 cents, which is not bad at all, considering that 5.457 m had been spent on PPE in 9M2014.
5) Quarterly results is becoming increasingly difficult to predict – on average as long as there are two good quarters and two “bad or not so good” quarters in a year, FY results would normally end up o.k.
6) If things played out as the above projections, I would be reasonalby pleased.

(vested)

(14-11-2014, 04:26 PM)Boon Wrote: [ -> ]Comments :
4) For FY2014, if UMS pays out all its FCF generated as dividend, there are possibilities that total dividend payout may surpass that in FY2013 of 22.3 m and DPS may reach 6.0 cents - but I think it is likely to be between 5.0 and 5.50 cents, which is not bad at all, considering that 5.457 m had been spent on PPE in 9M2014.
5) Quarterly results is becoming increasingly difficult to predict – on average as long as there are two good quarters and two “bad or not so good” quarters in a year, FY results would normally end up o.k.
6) If things played out as the above projections, I would be reasonalby pleased.

(vested)

After gone thru the 9 months report, here is the comments

The cost saving after major part of production had shifted to Penang, has improved both the GPM and NPM of the company in FY2014.

The EPS, assuming 4Q same as 3Q, is estimated as 6.25 cents per share. 80% payout ratio (quite similar as last FY), gives 5 cents per share.

I am reasonably confident that the DPS of FY2014, should be 5 cents minimum. That gives 9.5% dividend yield @ current price of 52.5 cents.

It is not much diff from Boon's comments.

(happily vested with fellow shareholders here)

NOVEMBER 12, 2014, By IC Insights

Worldwide Cellphone Subscriptions Forecast to Exceed Worldwide Population in 2015!
However, the “unique” cellphone subscriber base is quickly approaching saturation.

Later this month, IC Insights’ new 2015 IC Market Drivers Report will be released. The report contains analyses on The Internet of Things, tablet PCs, smartphones, automotive electronics, medical and health systems, wireless networking and many other fast growing electronic systems. An excerpt from this new 500-page report is included in this research bulletin.

One of the most widely reported metrics concerning the cellphone marketplace is the subscriber base. The subscriber base is defined as the number of cellular service subscriptions that exist at a given point in time.

In 2015, the worldwide population is expected to reach 7.4 billion while the number of cellphone subscriptions is forecast to be slightly over 7.5 billion (Figure 1), marking the first time cellphone subscriptions will exceed the worldwide population. In total, the number of cellular subscriptions from 1999-2018 is forecast to have an amazing 19-year CAGR of 16%. It should be noted that in some regions of the world, cellphone subscription penetration rates now greatly exceed 100% of the population (e.g., Russia 185%, Italy 151%, Brazil 141%, Germany 140%, U.K. 128%).......................

http://www.icinsights.com/data/articles/...ts/732.pdf

(vested)

IoT Sees Real Adoption In Industry, Driving Development Of Ecosystem

Posted on: November 13th, 2014 - Posted by: Paula Doe

Industrial IoT saves companies millions of dollars a year and provides impetus for infrastructure development.

The smart watch may get the press, but smart connected sensors in the factory are quietly saving companies millions a year. Companies from Intel to Rio Tinto are reporting real bottom line results from industrial applications of the Internet of Things. That solid ROI is driving development of the infrastructure needed to ease further adoption in what will likely be the biggest market for the IoT...........

http://semiengineering.com/iot-sees-real...ecosystem/
________________________________________________________________________________________________________________

Chip makers hope to give IoT a push with power-efficient components

Mikael Ricknäs | Nov. 14, 2014

Low battery consumption will be a key to success for IoT products, and chip makers are working on more frugal processors and microcontrollers to make that happen. Improved energy efficiency was a common theme at the Electronica conference in Munich this week, where next-generation IoT chipsets were plentiful. Energy efficiency "is very important indeed, because in many cases you are talking about devices that run on batteries and the battery life has an effect on how affordable and practical it will be to deploy them,"..........................

http://www.computerworld.com.sg/resource...tmdP4.dpuf
________________________________________________________________________________________________________________

Transistor Options Narrow For 7nm

Posted on: November 13th, 2014 - Posted by: Mark LaPedus

The frontrunner is sill a silicon-based finFET, but there are lots of other options on the table.

Chipmakers are currently ramping up silicon-based finFETs at the 16nm/14nm node, with plans to scale the same technology to 10nm. Now, the industry is focusing on the transistor options for 7nm and beyond.

At one time, the leading contenders involved several next-generation transistor types. At present, the industry is narrowing down the options and one technology is taking a surprising lead in the 7nm transistor race—today’s silicon-based finFET [KC]. This technology could go in two directions, namely 7nm bulk CMOS finFETs or SOI finFETs. And in both cases, a 7nm finFET could introduce germanium into the channel.

This, of course, could change overnight if the semiconductor industry finds a better transistor option.......................................

http://semiengineering.com/transistor-op...w-for-7nm/
________________________________________________________________________________________________________________

China, US Strike Tech Trade Deal

Rick Merritt

11/12/2014

SAN JOSE, Calif. — Trade negotiators from China and the US have reached a preliminary deal they say could end tariffs on as much as a trillion dollars in annual global sales of high-tech goods, eliminating tariffs as high as 25% on some next-generation semiconductors. The deal requires approval of the World Trade Organization, which could take up the issue as early as December.

The deal was the result of off-and-on negotiations since 2012 to expand the 17-year old Information Technology Act. The deal would eliminate tariffs on as many as 200 product areas including medical equipment, GPS devices, video game consoles, computer software, and next-generation chips..................................................

http://www.eetimes.com/document.asp?doc_id=1324593

(vested)

(29-10-2014, 09:07 PM)Boon Wrote: [ -> ]Tokyo Electron: merger with Applied Materials could be delayed to next year

Wed Oct 29, 2014

Oct 29 (Reuters) - Tokyo Electron Ltd, which is expected to be acquired by the world's largest chipmaking equipment maker, Applied Materials Inc, said completion of the merger could take until next year due to delays in regulatory approvals.

"We cannot deny the possibility of a delay in the merger completion until next year," Yoshiteru Harada, corporate director at Tokyo Electron, said on Wednesday.

In September last year U.S.-based Applied Materials agreed to buy Tokyo Electron in an all-stock deal worth more than $10 billion, combining the two makers of chip-making gear as demand for their products slowed.

Tokyo Electron is seeking regulatory approvals for the deal from eight countries and regions, including the United States, Japan, China, South Korea, Germany and Taiwan.

Of the eight, only Singapore and Israel have approved the two companies merging their operations, said Harada................

http://www.reuters.com/article/2014/10/2...ergersNews

Israel, Singapore and Germany have approved the merger.

3 out of 8, 5 more to go : USA, Japan, China, South Korea and Taiwan.
________________________________________________________________________________________________________________
By Jeff Dorsch, contributing editor

Applied Materials reported in a fourth quarter earnings call that its long-pending merger with Tokyo Electron Ltd. may not close until the first quarter of 2015.

Gary Dickerson, Applied’s president and CEO, told analysts that the combination with TEL has just received unconditional approval from Germany’s competition authority. Without disclosing details, he added that the regulatory process is potentially pushing closing of the transaction into the new year.

Applied and TEL previously said that they expected to complete the mega-merger during the second half of calendar 2014. Shareholders of both companies have approved the transaction, leaving the process in the hands of antitrust regulators in several countries.

http://semimd.com/blog/2014/11/14/applie...q4-report/

UMS Management Guidance :

“Typically, the Group’s customer demand in the last quarter of the year is higher than the cyclical low experienced in the third quarter. The improvement that the Group is witnessing now appears to be a little subdued as some end users of our customer has pushed back their deliveries. As such, the Group expects the performance in 4Q2014 to be relatively flat sequentially.”

Call it “pushed back” or “pushed out”, the reason behind these postponements in orders or taking deliveries of orders by end users, seems to be “yield issues”.

Are foundries facing the most challenging yield issues that the industry has ever faced ?

It seems like ramping leading edge process technologies is becoming increasingly difficult with every new node.

(vested)
_______________________________________________________________________________________________________________

Let the FinFET Yield Controversy Begin!

By Daniel Nenni
Published on 11-03-2014

It never ceases to amaze me how people point fingers and create controversy to cover their mistakes. It happened at 40nm, 28nm, and again at 20nm and now it is time for the regularly scheduled yield controversy. Of course any conversation about semiconductor yield generates clicks for SemiWiki so I’m happy to play along.

It generally starts with a semiconductor equipment manufacturer missing their quarterly numbers then throwing their customers under the yield bus. Just once I would like to hear a CEO say, “Hey, we missed our number, my fault.” Of course they never name the customer so all customers come under suspicion which is exactly what is happening here. This time it is Art Zafiropoulo, CEO of Ultratech:

As we have discussed on past conference calls, the difficult implementation of 3D FinFET microprocessors to high production manufacturing. Once again a major logic manufacturer delayed their FinFET ramp. We had then requested to prepare LSA tools for shipment for the end of the third quarter which was delayed. These LSA shipments for the most part caused our third quarter revenue to be less than projected. These LSA systems have been rescheduled for shipment in the fourth quarter. Due to the continued low yield in FinFET devices for the past two years, we have seen a reduction in new LSA bookings in subsequent shipments…

I’m very sorry you missed your quarterly number Art and that your stock price is less than half what it was in January of last year. I’m also very sorry you have to blame customers using misleading statements such as this. Ramping leading edge process technologies is more difficult with every new node so delays should be expected. How does a CEO of an equipment manufacturer not know this?

Clearly Art is talking about Intel in regards to 3D FinFET microprocessors for which I understand. Last September Intel CEO BK held up a laptop that was powered by a 14nm CPU and claimed silicon would ship by the end of 2013. That chip is now shipping (about 2 Quarters late) with products due in time for the holiday season. It really is an impressive microprocessor so congrats to Intel on this one: Intel?s 14-nm Parts are Finally Here! | Chipworks Blog

Now check out this interpretation of Art’s comments from the Motley Fool’s “Senior” Technology Specialist:

However, after listening to the earnings call of chip equipment vendor Ultratech (NASDAQ: UTEK ) , it's clear to me that neither TSMC nor Samsung quite has the FinFET transistor structure (which promises higher performing transistors at lower power) figured out. This, as far as I can tell, strongly suggests that Intel's manufacturing lead remains intact.

Comparing the TSMC manufacturing capabilities to Samsung’s is absurd. These are two VERY different companies so don’t be a fool and lump them together. This "Senior" Technology Specialist owns Intel stock of course.

An interesting note, when comparing the density of Intel’s 14nm process against TSMC it is always pointed out that 16nm uses the 20nm process with FinFETs instead of planar transistors. When talking about yield however it is not mentioned, especially now that 20nm is in full production with a better than expected yield ramp. Weird hu

Also read: Cliff Hou at TSMC OIP

Here are some FinFET notes from Dr. Mark Liu, president and co-CEO at the TSMC OIP Forum held earlier this month:
•Today 20nm production has a monthly volume of 60,000 wafers with good defect density
•The yield learning on 20nm production will directly benefit 16nm production
•20nm capacity can quickly support the coming 16nm ramp up
•More than 90 percent of TSMC's equipment for the established 20nm node is being reused at 16nm.
•TSMC's 16nm defect learning has reached a similar level as 20nm (they are less than six months apart)
•10 customer 16nm tape-outs in 2014 so far, more than 45 are expected in 2015
•TSMC is already in production with a 16nm FinFET network processor for HiSilicon Technologies Co. Ltd.
•TSMC is ahead of schedule on their 2014 CAPEX

Look at the papers that were presented, they are all about 16nm silicon:

TSMC 2014 OIP - Paper Abstracts

Bottom line: The "major logic manufacturer that pushed out an equipment order" is not TSMC, I'm sure of that. Nor do I think it's Samsung or Intel as they have already moved 14nm equipment in and are ramping production. If I had to pick one from the other possibilities it would be UMC. They licensed IBM 14nm and I have not heard of any production equipment moving in yet. Just my opinion of course. The truth will come out in 2-3 quarters so lets circle back then and see who is true to their word.

https://www.semiwiki.com/forum/content/3...begin.html

Source from CIMB:

Target S$0.56 (Stock Rating: HOLD)

9M14 core net profit was in line at 75% of our and consensus forecasts. There will be no 4Q earnings growth recovery as management hoped; UMS is seeing orders being pushed back and is expecting 4Q to be flat qoq. The usual 1 Sct DPS was declared and its balance sheet remains in net cash with no debt. It may be too early to upgrade UMS; 4Q13 was an exceptionally strong quarter, impeding yoy comparison. We also believe management will be prudent hence the chance of a special dividend in 4Q14 is low. We cut our FY14-16 EPS by 4-7.5% to factor in the slowdown it is currently going through. At 1.19x CY15 P/BV, our target price notches up slightly to S$0.56. Maintain Hold. Re-rating could come from earlier-than-expected recovery in customer demand.


Slowdown but still profitable
3Q14 sales fell 2.4% yoy while core net profit dipped 1.6% yoy. Gross material margin was relatively flat at 54% in both 3Q14 and 3Q13. On a 9M basis, a higher proportion of semiconductor components sales, which have better margins, helped to improve the gross material margin to 54% in 9M14 versus 50% in 9M13. Balance sheet remains healthy, with net cash of S$33.0m. With the customary 1 Sct DPS declared, YTD dividends declared is 3 Scts.

Recovery delayed
The company's previous hope that 4Q will see an earnings growth recovery has been dashed. The guidance now is for 4Q to be relatively flat sequentially. We understand that no orders have been cancelled though. UMS is also confident that 4Q will remain profitable.

Too early to upgrade
It may be too early to upgrade our call on UMS. We note that 4Q13 was exceptionally strong. By our estimates, we believe 4Q14 core earnings could fall 54% yoy. 4Q13's special DPS of 1.5 Scts is also unlikely to be repeated. Our FY14-16 DPS assumption is 5 Scts. Maintain Hold, with a target price of S$0.56, which is still based on 1.19x CY15 BVPS.

(17-11-2014, 05:57 PM)valuebuddies Wrote: [ -> ]Source from CIMB:

Target S$0.56 (Stock Rating: HOLD)

9M14 core net profit was in line at 75% of our and consensus forecasts. There will be no 4Q earnings growth recovery as management hoped; UMS is seeing orders being pushed back and is expecting 4Q to be flat qoq. The usual 1 Sct DPS was declared and its balance sheet remains in net cash with no debt. It may be too early to upgrade UMS; 4Q13 was an exceptionally strong quarter, impeding yoy comparison. We also believe management will be prudent hence the chance of a special dividend in 4Q14 is low. We cut our FY14-16 EPS by 4-7.5% to factor in the slowdown it is currently going through. At 1.19x CY15 P/BV, our target price notches up slightly to S$0.56. Maintain Hold. Re-rating could come from earlier-than-expected recovery in customer demand.


Slowdown but still profitable
3Q14 sales fell 2.4% yoy while core net profit dipped 1.6% yoy. Gross material margin was relatively flat at 54% in both 3Q14 and 3Q13. On a 9M basis, a higher proportion of semiconductor components sales, which have better margins, helped to improve the gross material margin to 54% in 9M14 versus 50% in 9M13. Balance sheet remains healthy, with net cash of S$33.0m. With the customary 1 Sct DPS declared, YTD dividends declared is 3 Scts.

Recovery delayed
The company's previous hope that 4Q will see an earnings growth recovery has been dashed. The guidance now is for 4Q to be relatively flat sequentially. We understand that no orders have been cancelled though. UMS is also confident that 4Q will remain profitable.

Too early to upgrade
It may be too early to upgrade our call on UMS. We note that 4Q13 was exceptionally strong. By our estimates, we believe 4Q14 core earnings could fall 54% yoy. 4Q13's special DPS of 1.5 Scts is also unlikely to be repeated. Our FY14-16 DPS assumption is 5 Scts. Maintain Hold, with a target price of S$0.56, which is still based on 1.19x CY15 BVPS.

The full report could be down loaded here:
http://cimbresearchsgx.blogspot.com/

I wonder why the report does not give any qualitative analysis on FCF, but it does gives a projection on FCF available to Equity for FY2014 of SGD 48.95 million, which is questionable, IMO.

(vested)

Automotive IC Market to Display Strongest Growth Through 2018
From luxury to base models, IC content on all new cars is increasing.

NOVEMBER 18, 2014 By IC Insights.

Later this month, IC Insights’ new 2015 IC Market Drivers Report will be released. The report contains analyses on automotive electronics, the Internet of Things, tablet PCs, smartphones, medical and health systems, wireless networking, and many other mature and emerging electronic systems.

The upcoming IC Market Drivers Report finds that of the six major end-use applications for ICs, (computer, consumer, communications, automotive, industrial/medical, and government/military) it is the automotive IC market that is forecast to experience the strongest average annual revenue growth rate through 2018 (Figure 1)...........

http://www.icinsights.com/data/articles/...ts/736.pdf
________________________________________________________________________________________________________________

Gartner Says in 2015, 50 Percent of People Considering Buying a Smart Wristband Will Choose a Smartwatch Instead

Wearable Electronic Fitness Devices Market Still Poised for Strong Growth

STAMFORD, Conn., November 18, 2014

Wearable electronic devices for fitness shipments are forecast to reach 68.1 million units in 2015, down from 70 million units in 2014, according to Gartner, Inc. This temporary dip in sales will be driven by an overlap in functionality between smart wristbands, other wearable fitness monitors and smartwatches. However, the market for smart wristbands and other fitness monitors will rebound in 2016 because of versatile designs and models with lower-cost displays.

"Fitness wearables are used for tracking health, which goes hand-in-hand with fitness and wellness," said Angela McIntyre, research director at Gartner. "Consumers will be able to integrate the data from most wearables into a single account where their data can be analyzed using cognizant computing to provide useful insights to wearers. Funding initiatives from Qualcomm, Apple (HealthKit), Google (Google Fit), Samsung (S.A.M.I.), Microsoft, Nike and Intel, among others, will build on early innovation in wearable fitness and health monitoring and create the infrastructure for merging data relevant to health and fitness."

The five main fitness wearable form factors are smart wristbands, sports watches, other fitness monitors, heart rate monitor chest straps and smart garments.

Sports watches and chest straps are well established, compared with smart wristbands first popularized by the Jawbone Up, which launched in 2011. However, Gartner believes that the smart garment product category has the greatest potential for growth going forward because the category is emerging from the testing phase and smart shirts are available to athletes and coaches of professional teams. Smart garment shipments are forecast to grow from 0.1 million units in 2014 to 26 million units in 2016 (see Table 1)........................

http://www.gartner.com/newsroom/id/2913318

(vested)

Interesting read...............

Globalfoundries is still an alternative supplier for many of its customers, playing second fiddle to TSMC. Naturally, it has aspirations to turn the tables. And it may have a chance at 10nm (which involves 1,000 process steps...............Wow )

(vested)
________________________________________________________________________________________________________________

Globalfoundries' Fab 8 Has Come A Long Way, Baby

11/19/2014

Not long after Tom Caulfield, general manager of Globalfoundries’ Fab 8 — the largest silicon foundry in the United States — came into the conference room and sat down, he looked over at me and said, “You have a tick crawling on your shoulder.”.................................

...................... He believes that the demand for microprocessor chips of all types is there, what with the increase in data traffic driven by the Internet of Things (IoT), high-mobility devices like smartphones and tablets, and the build-out of computing infrastructure to accommodate all this traffic. And the group of manufacturers that can afford to build plants to supply microprocessors is only shrinking. The upfront investment is just too high. “It’s a big investment, and it never stops,” said Caulfield. Thus, it’s down to Globalfoundries, Taiwan Semiconductor Manufacturing Company (TSMC), Samsung, and Intel INTC -1.04%. Intel mostly makes its own chips, but has begun to do foundry work for others. TSMC is a pure foundry. Samsung is a hybrid, making some parts for itself and some for others.

The scale Caulfield is hoping to reach is based on TSMC, which claims to have a current annual capacity of 16.4 million eight-inch equivalent wafers. Globalfoundries doesn’t have to get that big, but it has to be somewhere in the ballpark. The IBM assets will definitely help. Not only does the deal come with two good fabs, a skilled workforce, and a decent customer base, but also outright ownership of ~10,000 patents. These last will help Globalfoundries in any cross-licensing agreements into which it may have to enter.........................

Currently, the generation of chips being used by most Globalfoundries customers has features 28nm wide. Although 20nm is theoretically next, Caulfield says it won’t be a high-volume node. 20nm requires a second pass to lay on circuits (adding expense), but does not have 3D (FinFET) features, which competitor Intel already has on its 22nm parts. Recently, Globalfoundries abandoned its own design for 14nm and entered into an alliance with Samsung to make use of Samsung’s 3D technology. The 14nm parts will issue from one Globalfoundries fab and three Samsung fabs for customers worldwide. Caulfield expects 14nm to be big.

Globalfoundries is still an alternative supplier for many of its customers, playing second fiddle to TSMC. Naturally, it has aspirations to turn the tables. And it may have a chance at 10nm, the last node to which the industry can see a clear, if difficult, path. When it entered into the agreement to acquire IBM’s fabs in the Northeast, Globalfoundries acquired the technology that will get it to 10nm.

At the moment, the company is involved in a project that has produced “integrated 10nm flow” at the Albany Nanotech Institute, which is run by IBM and funded by the large equipment suppliers. Soon, Caulfield said, the company will have that same 10nm flow — which involves almost 1,000 process steps — at Fab 8

http://www.forbes.com/sites/rogerkay/201...-way-baby/