News on Chartered Semiconductor
Fri, 21 Oct 2005 14:14:58 +0800
SINGAPORE (AFX) - Chartered Semiconductor Manufacturing Ltd's shares
recovered from the sharp losses seen earlier this week after its
surprised the market by posting smaller losses in the third quarter and
predicted a return to profitability in the fourth quarter, analysts said. At 2.10
pm, Chartered was up 0.05 sgd or 5.26 pct at 1.00, off a high of 1.01,
with 11.15 mln shares traded The Straits Times index was up 5.68 points at
2,232.56 Chartered posted third-quarter net loss of of 34.51 mln usd,
narrower than the 67 mln loss in the second quarter as sales grew
faster than expected, aided by strong demand for chips in the gaming console
market, particularly from Xbox. The loss for the September quarter was
smaller than the company's projected loss of 42-52 mln usd. In the
same quarter last year, Chartered made a net profit of 16.23 mln usd. Sales
jumped to 290.13 mln usd in the third quarter from 257.28 mln a year
ago. Chartered had forecast third-quarter sales at 279-287 mln usd.
Chartered expects sales to grow 22-25 pct quarter-on-quarter to 355-363 mln usd
in the last quarter of the year, allowing it to achieve a net profit of
5-15 mln usd. The company will still report a net loss of about
171.13-181.13 mln usd for the whole of 2005 should it achieve its forecast profit in
the fourth quarter but for 2006, analysts believe Chartered will be
profitable. An analyst with a European brokerage expects Chartered to
post a 50 mln usd net profit in 2006, which he believes is at the lower end
of most analysts' forecasts. "In general the second half of 2005 should
not be a problem for the semiconductor industry. The key is the 2006
outlook," he said. Demand for leading-edge chips, such as 90-nanometer chips,
should remain firm next year, but it remains to be seen by how much
Chartered's earnings will improve. He noted that Chartered's breakeven capacity
utilization level of 75 pct is still high compared to the 55 pct
breakeven level of industry leader Taiwan Semiconductor Manufacturing Corp. The
analyst said he is keeping his "reduce" rating on Chartered. He will,
however, look to accumulate the stock around 0.90 sgd. OCBC Securities
analyst Bryan Yeong said he is keeping his "hold" recommendation on
Chartered Semiconductor as he does not see much upside for the stock.
His fair value estimate for the stock is about 1.09-1.10 sgd. Yeong said
demand for chips from Xbox boosted Chartered's sales in the third
quarter and will continue to push up earnings in the fourth quarter. However,
he said it remains to be seen whether earnings will continue to
strengthen nto 2006. OCBC forecasts that Chartered will make a net profit of 32
mln usd next year but Yeong reckons that earnings could easily swing into
losses if demand for chips dip. "Rising interest rates is also a
concern,"
Yeong said, noting that Chartered expects to pay 60 mln usd in
interest
charges next year. (1 usd = 1.69 sgd) singapore@xfn.com jb/mas
SINGAPORE (AFX) - Chartered Semiconductor Manufacturing Ltd's shares
recovered from the sharp losses seen earlier this week after its
surprised the market by posting smaller losses in the third quarter and
predicted a return to profitability in the fourth quarter, analysts said. At 2.10
pm, Chartered was up 0.05 sgd or 5.26 pct at 1.00, off a high of 1.01,
with 11.15 mln shares traded The Straits Times index was up 5.68 points at
2,232.56 Chartered posted third-quarter net loss of of 34.51 mln usd,
narrower than the 67 mln loss in the second quarter as sales grew
faster than expected, aided by strong demand for chips in the gaming console
market, particularly from Xbox. The loss for the September quarter was
smaller than the company's projected loss of 42-52 mln usd. In the
same quarter last year, Chartered made a net profit of 16.23 mln usd. Sales
jumped to 290.13 mln usd in the third quarter from 257.28 mln a year
ago. Chartered had forecast third-quarter sales at 279-287 mln usd.
Chartered expects sales to grow 22-25 pct quarter-on-quarter to 355-363 mln usd
in the last quarter of the year, allowing it to achieve a net profit of
5-15 mln usd. The company will still report a net loss of about
171.13-181.13 mln usd for the whole of 2005 should it achieve its forecast profit in
the fourth quarter but for 2006, analysts believe Chartered will be
profitable. An analyst with a European brokerage expects Chartered to
post a 50 mln usd net profit in 2006, which he believes is at the lower end
of most analysts' forecasts. "In general the second half of 2005 should
not be a problem for the semiconductor industry. The key is the 2006
outlook," he said. Demand for leading-edge chips, such as 90-nanometer chips,
should remain firm next year, but it remains to be seen by how much
Chartered's earnings will improve. He noted that Chartered's breakeven capacity
utilization level of 75 pct is still high compared to the 55 pct
breakeven level of industry leader Taiwan Semiconductor Manufacturing Corp. The
analyst said he is keeping his "reduce" rating on Chartered. He will,
however, look to accumulate the stock around 0.90 sgd. OCBC Securities
analyst Bryan Yeong said he is keeping his "hold" recommendation on
Chartered Semiconductor as he does not see much upside for the stock.
His fair value estimate for the stock is about 1.09-1.10 sgd. Yeong said
demand for chips from Xbox boosted Chartered's sales in the third
quarter and will continue to push up earnings in the fourth quarter. However,
he said it remains to be seen whether earnings will continue to
strengthen nto 2006. OCBC forecasts that Chartered will make a net profit of 32
mln usd next year but Yeong reckons that earnings could easily swing into
losses if demand for chips dip. "Rising interest rates is also a
concern,"
Yeong said, noting that Chartered expects to pay 60 mln usd in
interest
charges next year. (1 usd = 1.69 sgd) singapore@xfn.com jb/mas
posted by SmartYInvestor at 11:35 PM
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