There's Lots to Love About ChipMOS (IMOS), Little to Hate - Barron's
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ChipMOS Technologies (Nasdaq: IMOS) shares moved sharply higher Monday following a bullish article in Barron's over the weekend.
According to the report, there is more upside in store for ChipMOS with the semi manufacturer retooling not only factories, but also from where it derives revenue.
Following the financial fallout in 2009, two of its top customers which accounted for 40 percent of turnover went belly-up, sending ChipMOS shares from about $20 down to a low of just 18 cents each. Two keys in the ChipMOS rebound were the improvement in the semiconductor industry, as well as the company's ability to collect $100 million from Spansion (Nasdaq: CODE), which had gone into receivership.
Cash flow at ChipMOS should move from $4 in 2012 to $5 next year, with a commensurate pop in shares also in the works. The growth in cash will allow ChipMOS to be debt free by the end of 2012, possibly boasting as much as 7 cents per year in cash.
Aside from chip testing and modification, ChipMOS has also produced LCD panels for such big names as Apple (Nasdaq: AAPL), Dell (Nasdaq: DELL), and Hewlett-Packard (NYSE: HPQ). Some analysts see demand remaining high and possibly moving higher with refresh of Apple's products, the Amazon (Nasdaq: AMZN) Kindle, and other Google (Nasdaq: GOOG) Android-based devices. Don't forget about Microsoft (Nasdaq: MSFT) and its Windows 8 operating system expected for release later in 2012.
In terms of valuation, Barron's said ChipMOS looks cheap. Trading at 7 times expected 2012 earnings, the number is below a 10 times multiple seen through the industry.
Other factors to consider include an IPO of ChipMOS's Taiwan unit, which may see its shares trade on the Nasdaq, as well as speculation of a possible quarterly dividend. ChipMOS, with a market cap of $361 million, may be a juicy acquisition target.
Shares are about to close up 8.5 percent Monday. The stock had traded up as much as 18.7 percent earlier.
According to the report, there is more upside in store for ChipMOS with the semi manufacturer retooling not only factories, but also from where it derives revenue.
Following the financial fallout in 2009, two of its top customers which accounted for 40 percent of turnover went belly-up, sending ChipMOS shares from about $20 down to a low of just 18 cents each. Two keys in the ChipMOS rebound were the improvement in the semiconductor industry, as well as the company's ability to collect $100 million from Spansion (Nasdaq: CODE), which had gone into receivership.
Cash flow at ChipMOS should move from $4 in 2012 to $5 next year, with a commensurate pop in shares also in the works. The growth in cash will allow ChipMOS to be debt free by the end of 2012, possibly boasting as much as 7 cents per year in cash.
Aside from chip testing and modification, ChipMOS has also produced LCD panels for such big names as Apple (Nasdaq: AAPL), Dell (Nasdaq: DELL), and Hewlett-Packard (NYSE: HPQ). Some analysts see demand remaining high and possibly moving higher with refresh of Apple's products, the Amazon (Nasdaq: AMZN) Kindle, and other Google (Nasdaq: GOOG) Android-based devices. Don't forget about Microsoft (Nasdaq: MSFT) and its Windows 8 operating system expected for release later in 2012.
In terms of valuation, Barron's said ChipMOS looks cheap. Trading at 7 times expected 2012 earnings, the number is below a 10 times multiple seen through the industry.
Other factors to consider include an IPO of ChipMOS's Taiwan unit, which may see its shares trade on the Nasdaq, as well as speculation of a possible quarterly dividend. ChipMOS, with a market cap of $361 million, may be a juicy acquisition target.
Shares are about to close up 8.5 percent Monday. The stock had traded up as much as 18.7 percent earlier.
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