Falling Knife of the Week: STATS ChipPAC

STATS ChipPAC (SGX: S24) has fallen by 13.6% during the week to close at S$0.35 on Thursday. The firm is headquartered in Singapore and provides advanced semiconductor packaging and test services to a diversified global customer base servicing the computing, communications and consumer markets.

On 22 April 2014, the company announced its first quarter results. Revenue for the quarter was at US$365.5 million, a decrease of 10.1% from US$406.4 million in the previous year. The decrease in revenue was largely due to weaker demand in the wireless communications market that’s targeted at the high-end smartphone segment.

STATS ChipPAC has three business segments – advanced packaging, wirebond packaging, and test services. Revenue from the advanced packaging category slumped by 10% to $179.3 million due to lower demand in the wireless communications market. Revenue from wirebond packaging decreased by 9.5% to $108.8 million due to the transition of technology from leaded wirebonding to advanced packaging. Lastly, revenue from test services declined by 11.0% to $77.4 million because of lower demand.

STATS ChiPAC saw a net loss of US$15.8 million for the first quarter, as compared to a net profit of US$3.5 million in the prior year.

Mr Tan Lay Koon, President and Chief Executive Officer of STATS ChipPAC, was optimistic about the next quarter despite suffering losses in the first quarter as he said, “Based on current visibility, we expect second quarter 2014 revenues to increase 9% to 14% compared to the prior quarter”. At the same time, the firm warned that the outlook for the second quarter is “subject to a number of risks and uncertainties that could cause actual events or results to differ materially from those disclosed”.

The semiconductor outfit trades at approximately 0.7 times its book value based on its price at Thursday’s close.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.