United Test and Assembly Center - Good Times Ahead

UTAC FY05 Net Profit More Than Triples To $41.8 Million On Doubling Of Revenue
• 4Q05 net profit highest-ever at $20.1 million, a five-fold increase over 4Q04
• 4Q05 revenue grew 19% QoQ, above prior guidance of 10-15%
• Record performance marks 10th consecutive quarter of sequential revenue growth and profit
• Guidance of 3-8% sequential revenue growth in 1Q06 vs 4Q05
• Target revenue growth rate of 40% for FY06



Group President and CEO of UTAC, Mr Lee Joon Chung, said, “We are pleased to have
achieved our 10th consecutive quarter of revenue growth and 7th consecutive quarter of profit growth. I would like to commend the UTAC team for achieving a splendid set of results, recording a milestone $100 million in revenue for a quarter while notching over $20 million in quarterly net profit.”



Company Background


The Company was incorporated in Singapore on 26 November 1997 under the name of United Test Center Singapore Pte Ltd and subsequently changed its name to United Test and Assembly Center (S) Pte Ltd in January 1999. It was converted to a public company limited on 15 May 2000 and changed its name to United Test and Assembly Center Ltd.

UTAC is a leading independent provider of test and assembly services for a wide range of semiconductor devices that include memory, mixed-signal/RF and logic integrated circuits. UTAC was ranked as the 9th largest independent provider of semiconductor test in 2002 by Gartner Dataquest. UTAC was ranked as the 8th largest independent provider of semiconductor test in 2004 by Gartner Dataquest.

Headquartered in Singapore, UTAC has manufacturing facilities in Singapore and Shanghai, as well as well-established sales network in Singapore, China, the United States, Italy, Japan and Israel.

UTAC offers full turnkey services that include wafer sort / laser repair, assembly, test, burn-in, mark-scan-pack and drop shipment, as well as value added services such as package design and simulation, test solutions development and device characterization, failure analysis, and full reliability test. The Company's manufacturing facility in Singapore is certified under ISO 9001, QS 9000, ISO 14001 and SAC Level I quality systems.

Its customers comprise integrated device manufacturers, fables companies and wafer foundries that design and manufacture semiconductors that power modern electronic devices. Its expertise in both memory and non-memory (mixed-signal/RF and logic) semiconductor devices allow it to provide wide-ranging solutions such as multi-chip packages that integrate memory and non-memory die. For the non-memory segment, its "BM/W" strategy focuses on further strengthening its capabilities in the faster growing Broadband and Mobile/ Wireless communications sectors

An Article from Dow Jones:
Utac plans expansion by first half of the year: Sources
UNITED Test & Assembly Center (Utac) is pressing ahead quickly with expansion plans in a sign that demand for chip testing and assembly remains robust.“Utac is looking at expanding the Singapore operations by the end of the first half of this year,” a person familiar with the matter told Dow Jones. A second source said the company would expand its Singapore operations by setting up “a new factory”. “They are also expecting to expand in Shanghai ... and are hiring more engineers there,” this second source said. A company spokesperson could not immediately comment. At Utac’s fourth-quarter earnings conference in January, its chief executive Lee Joon Chung indicated the company wanted to expand production facilities but gave few details.“We are looking at an expansion for new sites ... Our Singapore plant is getting quite tight in terms of capacity,” Mr Lee said. At the January conference, Utac forecasted a capital expenditure of US$180 million to US$200 million ($291 million to $324 million) for its current financial year to expand production in Singapore, Taiwan and Shanghai. Utac expects stronger take-up of thirdgeneration mobile handsets and demand for bluetooth and MP3 players to help it reach its target of a 40-per-cent increase in revenue in the current fiscal year. The chip assembler and tester posted a net profit of US$20.1 million for the three months ended Dec 31, compared with the US$3.8 million recorded in the corresponding
period — DOW JONES


Recent Developments For UTAC:

Media Release - UTAC Begins Testing of Satellite Communications Chip For GCT Semiconductor, Inc.

UTAC Selected As Prime Supplier For European Cordless Chip Maker SiTel

UTAC Attains Prestigious TS 16949 Certification For Automotive Sector

UTAC Starts Turnkey Production For Korean MP3 Chip Maker Telechips

Nepes Corp And UTAC To Invest US$30 Million In First 12-Inch Wafer Bumping Facility In Singapore

UTAC Starts Full Turnkey Production For Infineon's 512Mb DDR2 SDRAM

UTAC Strikes Alliance With RF Designer ARFIC; Becomes Partner In Singapore's ICommunity Consortium

UTAC To Be Preferred Partner For Nine Chinese Fabless Companies

Company recently gave its outlook & guidance

2006 capex to be $180~200m

− $98m has been committed in 4Q05 for delivery in 1H06
− Expansion of all sites
− Additional floorspace and capacity in Singapore
− Taiwan to begin MSLP and expand assembly
− Shanghai to begin assembly

Memory – DDR II growth gaining traction
− Chipset issue resolved, DDR II content projected to be >50% by 2H06
− Dual core processors PCs, new OS to drive up memory demand

NAND Flash market continue to be tight
− Additional test capacity in Taiwan
− New applications to sustain growth

Broad-based momentum for MSLP
− Business grew 30% q-o-q in 4Q05
− Faster 3G mobile growth with more 3G content made available globally
− Demand for Bluetooth, MP3 to continue with greater adaptation (eg automotive, PAN)
− Digital media will expand to include digital video


Screenshoots taken from Slides
















Management Optimistic About Company.
















UTAC operates in a cyclical industry. The investment returns should normally be good if a savvy investor can correctly identify the overall industry cyclical upswing.

UTAC will replace Great Eastern in STI on Wednesday 7th March 2006 and was given a weight of 0.75 which is relatively high.

Singapore's UTAC to replace Great Eastern in STI

See the new changes to the weights of the STI components.
(note: Only changes are shown)
Recapitalisation of STI Component Stock


Cheers
Niversphere.

Please read the prospectus and perform your analysis before making any investment decision. The above does not constitute a recommendation to apply for this company. I will not be liable for any losses incurred by anyone who invests based solely on the above-mentioned information.