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OCBC Investment Research says it has raised its rating for STATS ChipPAC to “buy” from “hold” and increased its fair value for the stock to 1.16 sgd per share from 1.05 sgd because of the outlook for the company. The company reported today a net profit of 18.5 mln usd for the third quarter, reversing the net loss of 1.01 mln usd it made a year earlier. Sales rose 31.8 pct year-on-year to 397.11 mln usd and margins increased on the back of reduced operating costs.
In the fourth quarter, the firm expects revenue to rise 1-6 pct quarter-on-quarter. OCBC Investment Research analyst Carey Wong said in note: “Growth drivers are expected to come from the recovery in the PC segment as STATS would be embarking on two new gaming-related programs, although it noted that the communications segment could still see some customers making inventory adjustments.” He added: “While the recovery is nowhere as robust as the traditional double-digit ramp-up, we think that there may not be a big seasonal slowdown in [the] first quarter [of] 2007 either.” OCBC Investment Research has revised upwards its estimates of STATS ChipPAC’s net profit for this year by 8.8 pct to 72.4 mln usd and for next year by 13.2 pct to 91.2 mln usd. At the end of morning trading here, STATS ChipPAC stock was down 0.005 sgd or 0.51 pct at 0.98, on volume of 2.41 mln shares.
