Chipbond Technology

Transcription

Chipbond Technology

Test & Assembly│Taiwan
April 6, 2015
COMPANY NOTE
Chipbond Technology
6147 TT / 6147.TWO
Market Cap
Avg Daily Turnover
Free Float
US$1,333m
US$10.83m
84.2%
NT$41,287m
NT$341.6m
648.4 m shares
Current
NT$63.60
Target
NT$72.00
Prev. Target
NT$63.00
Up/Downside
13.2%
Conviction|
Connected with resolution rides
Notes from the Field
————————————————————————————————————————
James CHEN
T (886) 2 8729 8382
E [email protected]
Eric LIN
T (886) 2 8729 8380
E [email protected]
Company Visit
Channel Check
Expert Opinion
Customer Views
————————————————————————————————————————
Show Style "View Doc Map"
Contents
BACKGROUND ................................................................... 5
OUTLOOK ............................................................................ 7
RISKS................................................................................. 11
FINANCIALS ...................................................................... 12
VALUATION AND RECOMMENDATION .......................... 12
Price Close
115.0
65.0
107.0
60.0
99.0
55.0
91.0
50.0
83.0
45.0
30
75.0
Vol m
20
10
Jul-14
Oct-14
Jan-15
Source: Bloomberg
52-week share price range
63.60
68.20
47.20
72.00
Current
Target
We reinitiate Chipbond with an Add rating and a NT$72 target, based
on 2.1x CY15 EV/CE on a mid-term ROCE assumption of 15.1%. As the
world’s largest driver IC backend services provider with a 45% market
share, Chipbond is poised to benefit from the continued uptrend in 4K
TVs and the resolution upgrades in smartphones. The company’s
margin expansion is mounted over an increasing utilisation rate, the
bottoming of Simpal’s tape business and the potential growth engines
from TDDIs/PMICs.
After years of market consolidation,
Chipbond remains the leading DDI
backend service provider with 45%
global market share. Under an
oligopolistic market structure and
stable pricing outlook, we are positive
on Chipbond, with the optimistic
outlook driven by the resolution
upgrades in TV and Mobiles.
4K TVs lift DDI demand
TV accounted for 50% of Chipbond’s
sales in FY14. We forecast Chipbond’s
TV sales to grow more than 20% yoy
in anticipation of a doubling of 4K
penetration rate to 16% in 2015. As
there is no aggressive capex ahead for
bumping capacity, we believe that a
severe pricing deterioration in the
DDI backend industry is unlikely in
FY15. We expect the strong TV DDI
orders to improve the company’s
utilisation rate, prompt Simpal
profitability and advance overall gross
margin expansion by 2.6% pts to
26.7% in FY15.
iPhone growth sustained
The mobile segment took 25% of
Chipbond’s sales in FY14. Chipbond
probably remained the sole backend
service provider for next-gen iPhones
and we expect Chipbond to enjoy 19%
shipment growth in FY15. We forecast
Apple’s sales contribution to account
for 15% of total sales in 2015,
compared to 14% in 2014. In the near
term, the decline for iPhones is likely
to slow down to c.5% qoq in 2Q15
compared to a 14-17% qoq decline
during the past two years.
Reinitiate with Add
Chipbond trades at 1.7x FY15 P/BV vs.
its 5-year average of 1.8x. Its share
price is up 8.3% YTD, outperforming
the panel stocks amid the recent noise
over the TV panel price. Downside
should be limited due to solid
fundamentals on the 4K story. We
reinitiate the stock with an Add rating
and target price of NT$72, which
implies a 13% upside.
Financial Summary
Relative to TAIEX (RHS)
70.0
Apr-14
|
Revenue (NT$m)
Net Profit (NT$m)
Normalised EPS (NT$)
Normalised EPS Growth
FD Normalised P/E (x)
Price To Sales (x)
DPS (NT$)
Dividend Yield
EV/EBITDA (x)
P/FCFE (x)
Net Gearing
P/BV (x)
ROE
% Change In Normalised EPS Estimates
Normalised EPS/consensus EPS (x)
Dec-13A
15,811
2,501
4.14
(4.4%)
15.81
2.43
2.79
4.39%
8.64
5.74
24.1%
1.88
12.6%
Dec-14A
17,683
2,550
3.95
(4.6%)
16.18
2.32
2.66
4.19%
7.77
NA
18.9%
1.78
11.3%
Dec-15F
19,879
3,183
4.93
24.8%
12.97
2.07
3.32
5.23%
6.46
13.46
12.5%
1.68
13.3%
(5.3%)
1.01
Dec-16F
22,623
3,712
5.75
16.6%
11.12
1.81
3.88
6.09%
5.35
8.40
1.5%
1.58
14.6%
(17.6%)
1.01
Dec-17F
23,684
3,823
5.92
3.0%
10.80
1.73
3.99
6.28%
4.74
7.26
(9.7%)
1.50
14.2%
SOURCE: CIMB, COMPANY REPORTS
IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT.
Designed by Eight, Powered by EFA
Chipbond Technology│Taiwan
April 6, 2015
PEER COMPARISON
Research Coverage
Bloomberg Code
2311 TT
6147 TT
3034 TT
2325 TT
Advanced Semiconductor
Chipbond Technology
Novatek Microelectronics Corp
Siliconware Precision
Market
TW
TW
TW
TW
Recommendation
HOLD
ADD
ADD
REDUCE
Rolling P/BV (x)
Target Price
47.00
72.0
194.0
52.0
Upside
10.1%
13.2%
18.3%
0.8%
30.0
4.00
25.0
3.50
3.00
20.0
2.50
15.0
2.00
1.50
10.0
1.00
5.0
0.50
Jan-12
Jan-13
Jan-14
0.0
Jan-11
Jan-15
Jan-12
Jan-13
Jan-14
Jan-15
Chipbond Technology
Chipbond Technology
Peer Aggregate: P/BV vs ROE
Peer Aggregate: 12-mth Fwd FD P/E vs FD EPS Growth
2.50
20.0%
2.00
16.0%
1.50
12.0%
1.00
8.0%
0.50
0.00
Jan-11
Price
42.70
63.6
164.0
51.6
12-month Forward Rolling FD P/E (x)
4.50
0.00
Jan-11
Mkt Cap US$m
10,838
1,333
3,222
5,192
4.0%
0.0%
Jan-12
Jan-13
Rolling P/BV (x) (lhs)
Jan-14
Jan-15
18.0
70%
16.0
59%
14.0
48%
12.0
37%
10.0
26%
8.0
14%
6.0
3%
4.0
-8%
2.0
-19%
0.0
Jan-11
Jan-16
ROE (See Footnote) (rhs)
-30%
Jan-12
Jan-13
Jan-14
12-mth Fwd FD P/E (x) (See Footnote) (lhs)
Jan-15
Jan-16
FD EPS Growth (See Footnote) (rhs)
Valuation
Chipbond Technology
FD P/E (x) (See Footnote)
Dec-14
Dec-15
Dec-16
14.85
13.27
12.04
16.18
12.97
11.12
14.17
12.48
11.16
14.99
13.24
12.46
Dec-14
2.24
1.78
3.56
2.27
P/BV (x)
Dec-15
2.09
1.68
3.20
2.19
Dec-16
1.95
1.58
2.95
2.10
Dec-14
7.28
7.77
10.16
6.36
EV/EBITDA (x)
Dec-15
6.47
6.46
8.69
5.66
Dec-16
5.66
5.35
7.88
5.06
Dec-16
16.7%
14.6%
28.1%
17.2%
Dividend Yield
Dec-14
Dec-15
4.43%
4.75%
4.19%
5.23%
3.66%
4.27%
5.82%
6.17%
Dec-16
5.23%
6.09%
4.92%
6.59%
Growth and Returns
Chipbond Technology
FD EPS Growth
Dec-14
47.9%
-2.3%
51.2%
82.9%
(See Footnote)
Dec-15
Dec-16
11.9%
10.2%
24.8%
16.6%
13.6%
11.8%
13.2%
6.2%
ROE (See Footnote)
Dec-14
Dec-15
17.2%
16.3%
11.3%
13.3%
27.3%
27.6%
16.1%
16.7%
SOURCE: CIMB, COMPANY REPORTS
Calculations are performed using EFA™ Monthly Interpolated Annualisation and Aggregation algorithms to December year ends.
NPAT/EPS values for calculations and valuations are based on recurring and normalised values for GAAP and IFRS accounting standard companies respectively.
2
April 6, 2015
BY THE NUMBERS
Share price info
Share px perf. (%)
Relative
Absolute
1M
5.8
5.8
3M
6.6
9.7
Major shareholders
12M
9.3
17.1
% held
Compal Electronics, Inc.
5.6
Cathay Life Insurance Co., Ltd.
5.1
Nan Shan Life Insurance Co., Ltd.
4.9
P/BV vs ROE
12-mth Fwd FD Normalised P/E vs FD
Normalised EPS Growth
3.00
25.0%
25.0
300%
2.50
20.8%
20.0
220%
2.00
16.7%
15.0
140%
1.50
12.5%
1.00
8.3%
10.0
60%
0.50
4.2%
5.0
-20%
0.00
Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16
0.0%
0.0
Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16
-100%
Rolling P/BV (x) (lhs)
12-mth Fwd Rolling FD Normalised P/E (x) (lhs)
ROE (See Footnote) (rhs)
Diluted Normalised EPS Growth (rhs)
Profit & Loss
Simpal reported net loss of around
NT$520m in 2014 (NT$0.8 loss per
share).
(NT$m)
Total Net Revenues
Gross Profit
Operating EBITDA
Depreciation And Amortisation
Operating EBIT
Financial Income/(Expense)
Pretax Income/(Loss) from Assoc.
Non-Operating Income/(Expense)
Profit Before Tax (pre-EI)
Exceptional Items
Pre-tax Profit
Taxation
Exceptional Income - post-tax
Profit After Tax
Minority Interests
Preferred Dividends
FX Gain/(Loss) - post tax
Other Adjustments - post-tax
Preference Dividends (Australia)
Net Profit
Normalised Net Profit
Fully Diluted Normalised Profit
Dec-13A
15,811
3,816
5,153
(2,448)
2,705
45
0
506
3,255
Dec-14A
17,683
4,260
5,971
(2,970)
3,001
341
0
117
3,458
Dec-15F
19,879
5,307
6,985
(3,078)
3,907
375
0
0
4,282
Dec-16F
22,623
6,187
7,940
(3,345)
4,596
375
0
0
4,971
Dec-17F
23,684
6,406
8,310
(3,570)
4,741
375
0
0
5,116
3,255
(648)
3,458
(815)
4,282
(998)
4,971
(1,159)
5,116
(1,193)
2,607
(106)
2,643
(94)
3,284
(100)
3,812
(100)
3,923
(100)
2,501
2,607
2,501
2,550
2,643
2,550
3,183
3,284
3,183
3,712
3,812
3,712
3,823
3,923
3,823
Cash Flow
Chipbond is guiding for NT$2bn capex
for 2015, of which 60-70% is budgeted
for chip probers to fulfil the demand of
the PPI upgrades in mobiles.
(NT$m)
EBITDA
Cash Flow from Invt. & Assoc.
Change In Working Capital
(Incr)/Decr in Total Provisions
Other Non-Cash (Income)/Expense
Other Operating Cashflow
Net Interest (Paid)/Received
Tax Paid
Cashflow From Operations
Capex
Disposals Of FAs/subsidiaries
Acq. Of Subsidiaries/investments
Other Investing Cashflow
Cash Flow From Investing
Debt Raised/(repaid)
Proceeds From Issue Of Shares
Shares Repurchased
Dividends Paid
Preferred Dividends
Other Financing Cashflow
Cash Flow From Financing
Total Cash Generated
Free Cashflow To Equity
Free Cashflow To Firm
Dec-13A
5,153
Dec-14A
5,971
Dec-15F
6,985
Dec-16F
7,940
Dec-17F
8,310
(507)
(1,294)
(240)
(306)
1,082
45
(648)
5,890
(3,531)
50
0
(1,865)
(5,346)
6,349
0
0
(1,551)
389
341
(815)
5,378
(1,280)
17
0
(2,813)
(4,076)
(1,801)
0
0
(1,686)
0
375
(998)
5,067
(2,000)
0
0
0
(2,000)
0
0
0
(1,719)
0
375
(1,159)
6,917
(2,000)
0
0
0
(2,000)
0
0
0
(2,146)
0
375
(1,193)
7,187
(1,500)
0
0
0
(1,500)
0
0
0
(2,502)
(3,412)
1,387
1,930
6,893
690
1,262
(2,226)
(924)
(499)
1,536
0
(1,719)
1,348
3,067
3,267
0
(2,146)
2,771
4,917
5,117
0
(2,502)
3,185
5,687
5,887
258
SOURCE: CIMB RESEARCH, COMPANY
3
April 6, 2015
BY THE NUMBERS
Balance Sheet
Chipbond merged Simpal on Oct 13,
with 52 m shares issued (8% dilution).
(NT$m)
Total Cash And Equivalents
Total Debtors
Inventories
Total Other Current Assets
Total Current Assets
Fixed Assets
Total Investments
Intangible Assets
Total Other Non-Current Assets
Total Non-current Assets
Short-term Debt
Current Portion of Long-Term Debt
Total Creditors
Other Current Liabilities
Total Current Liabilities
Total Long-term Debt
Hybrid Debt - Debt Component
Total Other Non-Current Liabilities
Total Non-current Liabilities
Total Provisions
Total Liabilities
Shareholders' Equity
Minority Interests
Total Equity
Dec-13A
7,006
4,130
1,272
4,088
16,496
13,923
28
0
7,783
21,733
4,872
762
932
1,717
8,283
6,826
Dec-14A
6,129
4,809
1,030
7,283
19,251
12,903
10
0
7,928
20,842
5,828
0
862
3,956
10,647
4,830
Dec-15F
7,477
6,010
1,430
7,283
22,200
11,857
10
0
7,897
19,764
5,828
0
1,169
3,956
10,954
4,830
Dec-16F
10,248
6,248
1,477
7,283
25,257
10,543
10
0
7,865
18,419
5,828
0
1,215
3,956
10,999
4,830
Dec-17F
13,434
6,545
1,550
7,283
28,811
8,505
10
0
7,834
16,350
5,828
0
1,278
3,956
11,062
4,830
479
7,304
0
15,587
21,983
659
22,642
652
5,482
0
16,129
23,165
798
23,963
652
5,482
0
16,436
24,630
899
25,528
652
5,482
0
16,482
26,196
999
27,195
652
5,482
0
16,545
27,517
1,099
28,616
Dec-13A
5.3%
(8.7%)
32.6%
(8.41)
33.91
18.47
19.9%
67.4%
97.60
36.61
25.34
10.4%
9.8%
Dec-14A
11.8%
15.9%
33.8%
(6.98)
35.69
12.80
23.6%
67.4%
92.26
31.30
24.40
7.9%
10.3%
Dec-15F
12.4%
17.0%
35.1%
(4.90)
37.94
19.53
23.3%
67.4%
99.33
30.81
25.44
10.1%
12.7%
Dec-16F
13.8%
13.7%
35.1%
(0.63)
40.35
22.98
23.3%
67.4%
99.16
32.37
26.54
11.7%
14.0%
Dec-17F
4.7%
4.7%
35.1%
4.28
42.39
23.70
23.3%
67.4%
98.58
31.97
26.33
12.6%
13.8%
Dec-13A
N/A
7.6%
N/A
N/A
N/A
-9.2%
N/A
N/A
Dec-14A
N/A
3.7%
N/A
N/A
N/A
10.2%
N/A
N/A
Dec-15F
N/A
11.8%
N/A
N/A
N/A
9.1%
N/A
N/A
Dec-16F
N/A
21.2%
N/A
N/A
N/A
20.8%
N/A
N/A
Dec-17F
N/A
10.8%
N/A
N/A
N/A
16.2%
N/A
N/A
Key Ratios
Our assumption of 20% growth in TV,
12% growth in mobile, and 6-8% yoy
decline in IT and tablet lead to a
forecast of 12.4% growth for 2015
sales.
Revenue Growth
Operating EBITDA Growth
Operating EBITDA Margin
Net Cash Per Share (NT$)
BVPS (NT$)
Gross Interest Cover
Effective Tax Rate
Net Dividend Payout Ratio
Accounts Receivables Days
Inventory Days
Accounts Payables Days
ROIC (%)
ROCE (%)
Key Drivers
ASP Change (%, Main Product)
Unit sales growth (%, main prod)
No. Of Lines (main Product)
Rev per line (US$, main prod)
ASP chg (%, 2ndary prod)
Unit sales grth (%, 2ndary prod)
No. Of Lines (secondary Product)
Rev per line (US$, 2ndary prod)
4
April 6, 2015
Moving with res-migration
BACKGROUND
Oligopolistic in DDI backend service
Chipbond specialises in backend packaging and testing for display driver IC
(DDI) and intends to diversify its product lines into power management chip
(PMIC) and touch display driver IC (TDDI) in 2015 and beyond. After years of
market consolidation, the leading two DDI packaging/testing houses, Chipbond
and ChipMOS (8150.TT, NR), together have 70% of the market (Chipbond: 45%;
ChipMOS: 25%). The rest goes to Korean plays such as Nepes (033640.KS, NR)
with 18% share and LB Semicon (061970.KS, NR) with 4% share. Chipbond’s
revenues registered sequential growth throughout 2014, thanks to the 3.2%
annual growth in worldwide TV panels and the 27% unit growth in global
smartphones.
Figure 1: Peer comparisons
Companies Recomm.
Mkt cap
(US$bn)
Price
(Local cur)
EBITDA Margin (%)
ROE (%)
P/E (x)
P/BV (x)
EV/EBITDA
FY14
FY15
FY16
FY14
FY15
FY16
FY14
FY15
FY16
FY14
FY15
FY16
FY14
FY15
FY16
Chipbond
ADD
1.3
63.6 33.8
35.1
35.1
11.1
13.0
14.2
16.1
12.9
11.1
1.8
1.7
1.6
7.8
6.5
5.3
ChipMOS
n.a.
1.2
44.0 30.7
31.5
30.8
16.3
17.2
17.5
12.4
11.6
10.4
2.1
1.9
1.7
5.2
4.8
4.2
Nepes
n.a.
176.9
8,860.0 14.2
18.8
21.2
-6.1
12.9
17.0
-27.6
12.1
8.0
1.6
1.4
1.2
7.8
4.8
3.6
SPIL
REDUCE
5.2
51.6 31.6
33.5
34.1
15.3
16.4
16.8
14.8
13.3
12.5
2.3
2.2
2.1
6.4
5.7
5.1
ASE
HOLD
10.8
42.7 21.5
20.4
20.9
15.1
15.1
15.5
14.9
13.8
12.5
2.2
2.1
1.9
7.3
6.5
5.7
AUO
ADD
4.9
15.8 19.4
20.0
18.2
10.0
10.1
6.2
8.4
7.7
12.3
0.8
0.8
0.8
2.9
2.7
3.0
Innolux
ADD
5.0
15.6 20.8
21.1
18.5
9.1
9.7
5.7
6.9
6.2
9.6
0.6
0.6
0.5
2.4
2.0
1.7
Novatek
ADD
3.2
164.0 15.4
15.5
15.8
25.7
26.3
27.0
13.9
12.2
10.9
3.6
3.2
2.9
10.2
8.7
7.9
Compared to other Taiwan OSAT companies such as ASE (2311.TT, Hold) and
SPIL (2325.TT, Reduce), Chipbond and ChipMOS are deeply rooted in DDI
backend services and their growth drivers are, therefore, different from those
for ASE and SPIL. ASE is strengthening its System-in-Package (SiP) capabilities
and expects to drive growth in wearable and automotive applications. SPIL, on
the other hand, is likely to invest in additional capacities for flip chip and
bumping, which will hinge on volume from communication and game consoles.
The material, process and equipment used in DDI packaging are not compatible
with that used in ASE and SPIL, leading to an oligopolistic market structure
(Chipbond and ChipMOS) with limited competition. Given the high level of
product concentration (90% display-related), Chipbond’s revenues are strongly
correlated with the rise and fall of the panel industry. Chipbond’s top-tier
clients include Novatek, Himax, Raydium and Renesas which make up nearly
53% of the global DDI market and together contributed 60-65% of Chipbond’s
sales.
Chipbond is the industry leader with 48% bumping capacity. We believe that
severe pricing deterioration in the DDI backend market is unlikely in the next
12 months, considering that Chipbond is operating in an oligopolistic market
and there is no aggressive capex ahead for bumping capacity. In terms of sales
breakdown, Chipbond’s 2014 revenue was 50%, 25%, 15% and 10% generated
by TV, mobile, IT and tablet applications, respectively. In terms of process,
Chipbond’s 2014 revenue was 28%, 23%, 16%, 13%, 11% and 9% derived from
8-inch bumping, Chip-on-Film (COF), Tape, 12-inch bumping, Chip-on-Glass
(COG) and testing services (see Figures 2 & 3). Since Chipbond has mitigated
the gold price fluctuation risk to clients years ago, the company’s earnings
quality will depend on the capacity utilisation rate (CUR) and forex rate.
5
April 6, 2015
Figure 2: Product mix in 2014A-2015F
Figure 3: Technology breakdown in 2014A-2015F
100%
100%
90%
80%
12%
15%
10%
70%
60%
9%
10%
11%
10%
13%
11%
16%
17%
23%
25%
28%
28%
2014A
2015F
90%
8%
80%
70%
25%
25%
60%
50%
50%
40%
40%
30%
30%
54%
50%
20%
20%
10%
10%
0%
0%
2014
2015F
TV
Mobile
IT
8" bumping
Tablet
COF
Tape
12" bumping
The bumping material, process and
the equipment used in DDI
packaging are not compatible with
that used in other OSAT peers (such
as ASE & SPIL), leading to an
oligopoly (Chipbond and ChipMOS)
with limited competition.
COG
Testing
Figure 4: Display driver backend suppliers’ market share
Chipbond
ChipMOS
Nepes
LB Semicon
Others
Acquired Simpal to ensure tape sourcing stability
Chipbond believes that the 4K TV boom will lead to a supply constraint in tape
material and hopes that the favourable pricing will accelerate Simpal’s
breakeven. Chipbond's decision to acquire Simpal in 2013 was aimed at
securing tape sourcing stability for COF packaging. Simpal should become
more integrated to offer a better cost structure to its customers. Due to the low
yield and low loading rate, this deal may looks dilutive as Simpal had reported a
net loss of around NT$520m, leading to NT$0.8 loss per share in FY14. Moving
forward, we expect the 4K TV uptrend to improve Simpal’s business, helping
the 100%-held subsidiary to bottom out in 2H15. In the near term, Chipbond
targets to improve Simpal’s production yield from 80% to 90% and expects to
pass customer qualification by 2Q15.
6
April 6, 2015
Figure 5: Illustration of Chipbond’s business segments
Tape
TV
8-inch bumping
Chip on Film
testing
12-inch bumping
Mobile/Tablet/NB
Chip on Glass
Disciplined capacity expansion
We estimate that gross margin will improve 0.8-1.0% pts yoy if capex/sales is
maintained at 10% and depreciation & amortisation/sales is reduced to 15% in
FY15 (vs. 17% in FY14). In 2014, Chipbond’s and ChipMOS’s capex declined
43% to NT$3.9bn in total and Chipbond’s capex/sales ratio fell 15% pts to 7% in
2014. For 2015, Chipbond is guiding for NT$2bn in capex, of which 60-70% is
budgeted for wafer probers to deal with the longer testing time arising from
growing IC complexity. Chipbond’s FY14 depreciation was around NT$3.0bn
and the company projects FY15’s depreciation to stay at a broadly similar level
of NT$2.9bn as the 8-inch bumping lines are probably fully depreciated.
Strong iPhone offset soft TV demand in 4Q14
In all, the buoyant mobile demand likely offset the downward adjustment in
large-sized panels and thus sustained margins with the better product mix in
4Q14. Chipbond disclosed a 4Q14 EPS of NT$1.29 on revenue of NT$4.5bn.
Gross margin came in at 25.9%, compared to 26.0% in 3Q14. Chipbond’s
Chip-on–Glass (COG) utilisation rose 3% pts qoq to 88% and the 12-inch gold
bumping lines operated at full capacity (c. 103%) in 4Q14, thanks to Chipbond’s
major customer, Renesas Electronics, which was the sole DDI supplier for
iPhone6/6Plus. In contrast, Chipbond’s 8-inch bumping and Chip-on-Film
(COF)’s utilisation rate fell 1-2% pts qoq to 55% in 4Q14 due to soft TV DDI
demand. While China and Korean TV brands overbooked TV panels in 2H14,
the IC supply chain had to slow down a bit to digest the accumulated IC
inventory.
OUTLOOK
Multiple earnings drivers in 2015
We project 12.4% revenue growth for Chipbond in FY15 based on our
assumption of 20% growth in TV, 12% growth in mobile and a 6-8% yoy decline
in IT/tablet. Note that TV and mobile applications will remain the critical
growth drivers and the new growth engines such as PMIC and TDDI will not
contribute significant earnings in FY15 due to a limited customer base in the
initial stage.
1) Rapid 4K penetration rate offers long-term DDI growth
We believe Chipbond’s gross margin expansion (estimated 2.3% pts yoy
increase to 26.4% in FY15) comes mostly from the CUR uptrend and is likely to
expand Chipbond’s FY15 operating profits by 31%. We expect the 4K TV
penetration rate to double in 2015 to 16%, which is likely to boost Chipbond’s
TV sales by 20%. Based on that, we expect TV sales to account for 54% of the
total, up from 50% in FY14. Thanks to the optimistic TV demand outlook, the
company’s CUR in 8-inch bumping and COF packaging can be raised to 66%
and 70% in FY15 from 60% and 55% in FY14, respectively.
2) Simpal bottoming out in 2H15 with estimated EPS of NT$0.5 to NT$0.6
7
April 6, 2015
We estimate that the combined effects of rising CUR, improving production
yield and favourable pricing on potential supply constraints can help Simpal to
contribute net profits of NT$300m-400m in FY15, representing NT$0.5-0.6 in
EPS. Simpal used to be an earnings drag but we think that it could reach
breakeven by 2Q15 if the tape yield can be improved from 80% to 90% and
passed the customer qualification. We expect Simpal’s tape business to account
for 17% of total sales in FY15, compared to 16% in FY14.
3) iPhone remains vital to mobile application
We forecast that Chipbond’s mobile sales will increase 12% and advance Apple’s
sales contribution to 15% in 2015, up from 14% in 2014. Mobile accounted for
around 25% of total sales in FY14, of which half came from iPhones and the rest
was mostly generated by white box products. Since the next-gen iPhone
scheduled in 3Q15 may continue to use Renesas’s DDI, we believe Chipbond
will remain the sole backend service provider and enjoy the 19% unit upside in
iPhone shipments in 2015.
4) PPI upgrades will keep the testing tools at full loading
The pursuit of high-end panels by mobile brands and the severe price
competition initiated by display makers will together accelerate the HD-above
resolution penetration in smartphones and benefit Chipbond with a full loading
rate in testing service, as well as a higher operating rate in 12-inch bumping and
COG packaging business. The penetration of HD-above resolution in
smartphones is likely to soar 16% pts to 53.9% in 2015. Chinese mobile brands
are increasing their adoption of the higher-res low temperature polysilicon
(LTPS) panels to differentiate themselves on hardware specs. In the meantime,
Samsung is following closely behind LTPS panels with an aggressive pricing
strategy to promote their AMOLED displays.
5) PMIC and TDDI are new growth engines with meagre contribution in FY15
The development of in-cell displays will accelerate the adoption of TDDI. The
advantages of adopting TDDI include less power consumption, faster operating
speed and less loading burden on application processors. The larger footprint of
TDDI will increase the wafer usage and is good for Chipbond due to more
bumping wafers and longer testing time. TDDI development is likely to be led
by Synpatics (SYNA US, NR), followed by FocalTech (5280 TT, NR) and
Novatek (3034 TT, Add). When these Taiwan IC makers can successfully
provide cost-effective solutions to the market in 2015, we would expect rapid
TDDI migration in 2016 onwards.
The PMIC business is likely to yield a margin higher than Chipbond’s average
margin, at ~30%. It may also help to improve Chipbond’s underutilised 8-inch
bumping capacity but we do not expect meaningful revenue contribution before
2H16 due to a small customer base (ex. Richtek (6286 TT, NR) and GMT (8081
TT, NR) likely accounted for low-single digit share of PMIC market) and a
longer qualification time.
1H15 outlook
TV offsets the soft mobile demand in 1Q15 and is likely to bring about a
recovery in 2Q15.
While seasonal weakness was expected in the first quarter, we estimate
Chipbond to report a moderate qoq sales decline of 5% (compared to the
company’s guidance of 5-10% qoq decline) as the TV replenishment dynamics
after CNY likely offset the soft IT and mobile demand. Due to a lower CUR,
1Q15 gross margin of 24.9% will be lower than 4Q14’s 25.9%. In 1Q15, we
observed a sharp order decline in mobile panels due to a c.30% qoq downward
adjustment in iPhone6/6Plus. For large-sized panels, Taiwan panel makers
may see high single-digit to low-teens qoq decline in 1Q15, with the significant
drop in tablets and IT (NB/MNT) displays.
In 2Q15, TV will lead the departure from the weak seasonal tendencies. We
assume that the TV replenishment for the Golden Week Holiday, accompanied
by the tape yield improvement in Simpal and the sustained iPhone demand,
8
April 6, 2015
will increase Chipbond’s sales by 10% qoq and advance its gross margin to
26.1%, better than 25.9% in 4Q14.
Our research suggests that TV panel inventory likely stayed at the four-week
normal level by Mar 15 and the healthy inventory level seems to initiate an early
pull-in momentum for the upcoming 1 May holiday demand. While we think
that a significant demand recovery in IT sector is unlikely in 2Q15, TV will lead
the recovery with 13% qoq growth while panel makers have seen better order
visibility during the second quarter. For mobile, we believe the decline for
iPhones will probably be around 5% qoq in 2Q15, less than the 14-17% qoq
decline seen during the past two years.
Demand analysis – TV
4K’s rapid penetration will continue to propel global DDI consumption. In
terms of unit shipments, TV DDI increased 6.4% to around 2.5bn units in 2014.
We expect total TV DDI shipments to increase by 21% in 2015, 17% in 2016 and
13% in 2017.
Catalyst 1: Doubling of 4K penetration rate in FY15
We expect 4K TV panels to enjoy 112-117% yoy growth to 42m-46m units and
result in a 16% penetration rate in our base-case scenario estimates of 260m
global TV shipments (+4.3% yoy) in 2015. 4K TVs are attracting attention due
to the better image quality reproduction and a higher degree of realism. Thanks
to the faster adoption in China and the aggressive promotion from TV brands,
4K TV penetration reached 10.2% in 4Q14, a significant leap from 3.2% in 1Q14.
We expect 4K penetration to rise further in 2015 and beyond as panel makers
introduce smaller-sized UHD panels at favourable prices to the mainstream
market and target a 100% 4K adoption in 50”-above models.
Catalyst 2: DDI no. in a 50”+ 4K TV can be 3-3.5x that of a FHD set
While overall 4K panels account for only 7.8% of the global TV market in 2014,
4K penetration in the 50”-above models saw a 17% pts yoy increase to 25% in
2014. We believe the 50”-above segment will act as an important driver of the
global TV DDI usage in 2015 onwards as it will need double source drivers to be
placed on both sides of the TV to enable smoother image data transmission
throughout the larger screen. Under identical conditions, the DDI numbers in a
50”+ 4K model will likely be around 3-3.5 times that of a FHD set. In terms of
the unit shipments, TV driver ICs increased 6.4% yoy to around 2.5bn in 2014,
and we expected the total TV DDI units to grow 21%/17%/13% yoy sequentially
in 2015/2016/2017. The growth momentum will be mostly triggered by the
50”-above models whose yoy growth rate is even more significant at around
48%/30%/17% in 2015/2016/2017 (see. Fig. 6).
Figure 6: TV DDI unit shipment forecast 2012-2017F
4500
70%
(unit: million units)
3,998
4000
60%
3,548
3500
3,044
50%
3000
2,362
2,317
2500
2,515
40%
2000
1,674
1,101
1000
20%
746
550
500
30%
1,435
1500
10%
348
0
0%
2012
2013
50"+ DDI units
2014
Total TV DDI units
2015F
2016F
yoy % (50"+)
2017F
yoy % (TTL)
9
April 6, 2015
Catalyst 3: Narrowing price premium of 4K TVs
Another key factor behind the increase in 4K TV shipments is the narrowing
price gap between UHD and FHD models to an expected 1.1-1.2x from 1.5-1.6x a
year ago. Rapidly falling prices are causing TV makers to push ever more
elaborate features. Among the higher-end models that command a premium
price, newly-introduced features like high dynamic range (HDR), high colour
saturation (HCG) via quantum dots (QD) technology, curved and the ultra-slim
sets will feature prominently this year. In addition, the overall ecosystem is
becoming more “mature” with several TV brands (like Samsung, Sony,
Panasonic and Sharp) and content providers (Disney, Fox, Warner Bros.,
Netflix and DirecTV) now teaming up in a 4K alliance to define 4K standards
and offer 4K video streaming services digitally or via internet. In the future, if
OLED TV becomes price competitive when overall manufacturing has reached
an economical scale, we can expect severe price competition between TFT and
OLED TV to further expand 4K prevalence.
Figure 7: UHD/FHD price gap
1,200
Figure 8: TV technology migration
(X)
Panel price ($)
1.24
1.24
1,000
1.23
1.23
800
1.22
600
1.22
1.21
400
1.21
1.20
200
1.20
0
1.19
Jan-14
Mar-14
May-14
65" FHD
Jul-14
Sep-14
65" UHD
Nov-14
Jan-15
Mar-15
UHD/FHD (X)
SOURCE: CIMB RESEARCH, TOPOLOGY
Demand analysis – Mobile
The shift in consumer tastes towards higher resolution and bigger screen
smartphones will support Chipbond’s 12-inch bumping and COG business,
helping mobile sales grow 12.4% yoy in 2015. In terms of 12-inch gold bumping
capacity, Chipbond accounted for nearly 48% of the market share, followed by
ChipMOS’s 25%. In 2014, around 25% of the company’s revenues were
generated by mobile, and over half was contributed by iPhones (c. 13-14% to the
total).
Catalyst 1: Mobile resolution upgrades continue
We expect the HD+ mobile display penetration in 2015/2016/2017 to reach
53.9%/61.4%/68.0%, up from 17%/38% in 2013/2014. While a number of
followers tried to match Apple with low-priced FHD models (like the 5.5” Meizu
Note and the 5.7” Xiaomi Note), we expect the resolution upgrades from
HD720 to FHD to accelerate in 2015 and benefit Chipbond with the full loading
rate in wafer testing and higher CUR in 12-inch bumping and COG packaging.
CIMB expects global smartphone shipments to increase 12%/9% yoy to
1.45/1.59 billion units in 2015/2016, which will translate to 59% and 25%
growth upside in HD+ resolution panels. As such, Chipbond said 60-70% of its
FY15 capex will be invested in testing machines to fulfill the increasing demand
driven by IC complexity. In our view, 5” FHD panels will become the standard
requirement for mainstream models in 2015. Moreover, the WQHD panels
(2,560 x 1,440) are also furthering its way into the high-end panel segment with
even larger screens of 5.5”-6.0” starting by 2015 (see Fig. 9).
Catalyst 2: c.19% yoy growth in iPhone shipments
10
April 6, 2015
Note that Chipbond is currently the sole DDI backend service provider for
iPhone6 & 6Plus, and the orders from Renesas have made Chipbond's 12-inch
bumping and COG packaging lines operate in high gear in 4Q14 (103% and
88% respectively). Despite market rumours that the next-gen iPhone is likely to
adopt TDDI instead of the current discrete IC solutions (i.e. individual touch
control from Broadcom plus display driver from Renesas), our studies suggest
that TDDI would not be adopted in 2015, while the integration of touch
controller and display driver may take longer than expected, and there are no
significant spec changes in panels for the iPhone6S. In this case, Renesas will
likely remain the DDI supplier and Chipbond will continue to stay in the supply
chain in 2015.
Figure 9: The mobile resolution trend in each price segment
Figure 10: Mobile shipment forecast by resolution 2013-2016
2,500 (mn,units)
Device ASP
(RMB)
2011
2012
2013
2014
2015
>3000
4.5" QHD
5" HD720
5" FHD
5" HD720
5.5" WQHD
6" WQHD
6" WQHD
1500-3000
4.5" QHD
4.5" HD720
5" HD720
5.5" FHD
5.5" WQHD
1000-1499
4" WVGA
4.5" QHD
4.7" HD720
5" FHD
5.5" HD720
5.5" FHD
5" FHD
700-999
3.5" HVGA
4" WVGA
4.5" QHD
4.5" FWVGA
5" HD720
5" FWVGA
5.5" HD720
5" HD720
500
3.5" HVGA
4" WVGA
4.5" FWVGA
4.7" HD720
5" FWVGA
-
2,000
1,500
<700
1,000
2013
UHD
WQHD
2014F
FHD
HD
2015F
WXGA
QHD
WVGA
2016F
Under WVGA
RISKS
4K momentum may slow if market matures
The 4K penetration rate in 50”+ TV has reached 25.3% in 2014 and we expect
the penetration rate to speed up significantly to 44%/58%/75% in 2015/2016/
2017. According to panel makers, an eventual 100% penetration rate for 50”+
models is likely. As mentioned before, the 50”+ segment will act as an
important factor to drive the global TV DDI as the DDI numbers in a 50”+ 4K
model will likely be up to 3-3.5 times that of a FHD set. For Chipbond whose
8-inch bumping and COF was under-utilised at a 45-55% range in 2014, we
expect the strong 4K momentum to solidly support Chipbond’s margins
through CUR increases.
DDI’s channel output increases
There are some concerns that the DDI content in each 4K TV is reduced if the
output channels of each DDI is increased. However, in our view, adopting
higher channel DDI may not be cost effective for panel makers in terms of total
BOM. On the other hand, while most of the 4K TVs aiming at the high-end
market are featured with slim borders, those DDIs with higher channel outputs
will require more fan-out spacing (i.e. the fan out from the chip pads will get
wider if the channel output is increased) and thus will not be able to be
mounted on the small space of the narrow border design. As such, although the
TV market may see mid-single digit unit growth in 2015, we still expect DDI
consumption to outpace the TV sets’ growth momentum with a 21% yoy growth
rate based on our calculations.
11
April 6, 2015
FINANCIALS
ROCE improves on rising CUR
In Fig.12, we can see that the EBIT margins of Chipbond and ChipMOS were
about the same in 4Q14; the lower ROCE in Chipbond indicates a less efficient
capital turnover compared to ChipMOS. ChipMOS has experienced a great year
in FY14, thanks to double-digit growth in the memory business, solid
relationship with Micron and the healthy demand from specialty DRAM and
Flash. Compared to ChipMOS, Chipbond’s 8-inch bumping and COF capacity
was running on low gear while the 4K industry was still in the early stages.
Moving forward, with 4K upside anticipated in 2015 as penetration rate rises,
we expect better operating efficiency to boost Chipbond’s ROCE to 18%, up
from 14% in 2014.
We expect Chipbond’s gross margin to improve in the next two years due to the
earnings expansion from increasing CUR on 8-inch bumping/COF, the steady
depreciation expenses to sales and the turnaround of its tape business. The
company’s FY15 revenue is expected to grow 12.4% yoy to NT$19.9bn and its
net profit climb 25% yoy to NT$3.2bn, representing an EPS of NT$4.9.
Chipbond’s gross margin in 2014 was maintained at 24.1% mainly due to the
growing sales contribution from mobile (from 22% in 2013 to 24% in 2014), the
improving COF loading rate (from 63% by 2013 to 85% by 2014) and the
weaker NT$.
Figure 11: ROCE comparison
Figure 12: Operating margin comparison
25.0%
8.0%
7.0%
20.0%
6.0%
5.0%
15.0%
4.0%
10.0%
3.0%
2.0%
5.0%
1.0%
0.0%
0.0%
1Q13
2Q13
Chipbond
3Q13
4Q13
ChipMOS
1Q14
ASE
2Q14
1Q13
3Q14
2Q13
Chipbond
SPIL
3Q13
4Q13
1Q14
ChipMOS
2Q14
ASE
3Q14
4Q14
SPIL
VALUATION AND RECOMMENDATION
Chipbond currently trades at 1.7x FY15 P/BV vs. its 5-year average of 1.8x. Its
share price risen 8.3% YTD, outperforming the panel stocks amid the recent
noise over the TV panel price. Our target price of NT$72 is based on our
assumption of 2.1x FY15 EV/CE and mid-term ROE of 15.1%, which translates
into 1.8x FY15 P/BV and 14.7x FY15 P/E. The stock is currently trading at 1.7x
P/BV and 13x FY15 P/E at 13% ROE, compared to ChipMOS which is trading at
1.9x P/BV and 11.6x FY15 P/E with 16.0% ROE. We think Chipbond, as an
industry leader with market share dominance, is undervalued. We reinitiate
Chipbond with an Add rating.
12
April 6, 2015
Figure 13: Prospective P/BV
3.5
Figure 14: Prospective P/E
25.0
(X)
(X)
3.0
20.0
2.5
15.0
2.0
1.5
10.0
1.0
5.0
0.5
0.0
Jan-10
Jan-11
Jan-12
Jan-13
Jan-14
Jan-15
0.0
Jan-10
Jan-16
Jan-11
Jan-12
Jan-13
Jan-14
Jan-15
Jan-16
Figure 15: Chipbond’s quarterly consolidated P&L, key assumptions and valuations
(NT$bn)
Revenues
Gross profit
Operating profit
Net profit
EPS (NT$)
Margins (%)
Gross
Operating
Growth (% qoq, % yoy)
Revenues
Gross profit
Operating profit
EPS
Key assumptions
Wafer output (m pcs)
Chip output (m pcs)
1Q14A
4.2
0.9
0.6
0.5
0.8
2Q14A
4.3
1.0
0.7
0.5
0.7
3Q14A
4.7
1.2
0.9
0.8
1.2
4Q14A
4.5
1.2
0.8
0.8
1.3
1Q15F
4.3
1.1
0.8
0.6
1.0
2Q15F
4.7
1.2
0.9
0.7
1.1
3Q15F
5.4
1.5
1.1
0.9
1.4
4Q15F
5.5
1.5
1.1
0.9
1.4
FY14A
17.7
4.3
3.0
2.5
3.9
FY15F
19.9
5.3
3.9
3.2
4.9
FY16F
22.6
6.2
4.6
3.7
5.7
FY17F
23.7
6.4
4.7
3.8
5.9
21.2
13.7
22.9
15.9
26.0
19.1
25.9
18.7
24.9
17.8
26.1
19.1
27.4
20.4
27.8
20.8
24.1
17.0
26.7
19.7
27.3
20.3
27.0
20.0
8.5
18.7
26.1
13.5
4.2
12.6
20.9
-9.9
8.0
22.4
30.0
65.9
-4.0
-4.0
-5.9
10.5
-5.4
-9.1
-10.2
-24.7
9.9
15.1
17.8
16.5
16.0
21.8
24.2
22.7
1.6
3.1
3.3
3.1
11.8
11.6
10.9
-4.6
12.4
24.6
30.2
24.8
13.8
16.6
17.6
16.6
4.7
3.5
3.2
3.0
586
532
588
559
633
605
613
612
515
531
575
580
681
678
720
729
2,420
2,308
2,704
2,518
3,277
3,042
3,630
3,536
Figure 16: Overview of display driver supply chain
Novatek
DDI design
3034 TT, ADD
TSMC
IC Process
2330 TT, ADD
Film suppliers
IC bumping
Shindo
5753: Tokyo, NR
Chipbond
6147 TT, ADD
8150 TT, NR
Himax
HIMX US, NR
Vanguard
5347 TT, NR
Mitsui
8031: Tokyo, NR
ChipMOS
Samsung
005930 KS, ADD
UMC
2303 TT, ADD
JMC Electrics
19% owned by ChipMOS
LB Semicon 061970 KS, NR
Orise
3545 TT, NR
Megnachip MX US, NR
Simpal
100% owned by Chipbind
Nepes
Ilitek
3598 TT, NR
PSC
5346 TT, NR
Samsung Techwin 012450 KS, NR
Radium
3592 TT, NR
Samsung
005930 KS, ADD
LG Innotek
Parade
4966 TT, ADD
033640 KS, NR
011070 KS, ADD
Synaptics (Renesas) SYNA US, NR
13
April 6, 2015
APPENDIX
4K penetration will continue to propel DDI consumption
4K generally requires 2-to-3 times display drivers over FHD
4K2K, which is also known as ultra-high definition (UHD), is generally of 3,840
x 2,160 pixels with a 16:9 aspect ratio. Since 4K resolution is four times the
FHD (1,920 x 1,080), it might sometimes be dubbed as Quad Full
High-Definition (QFHD). In general, a thin-film transistor (TFT) liquid crystal
display (LCD) of 4K2K resolutions include 2,160 gate lines and 3,840 source
lines, which are orthogonally intersected with each pixel unit composed of
R/G/B elements.
In order to drive the pixel unit in TFT LCD, it will require gate drivers to
generate control signals to activate TFT in corresponding scan lines, and source
drivers to input operation voltages to determine the luminance of each pixel on
the scan lines. For the DDI numbers per 4K TV, it will need 12 source drivers of
960 channels (3,840*3/1026; 3 for R/G/B in each pixel unit) and 8 gate drivers
of 540 channels (2,160/540*2; 2 for doubling gate drivers, totalling 20 drivers
to drive a common 4K TV). In the same case, it will need 8 drivers in a FHD
model instead (DDI usage in UHD/FHD: 2.5x, see Figs. 5&6), making the
UHD/FHD DDI multiple to 2.5 times.
Figure 18: Est. DDI consumption in 50”+ TV model
Figure 17: Est. DDI multiple between UHD/FHD
Resolution
1920
Source Driver
1080
Gate Driver
Total DDI no.
Resolution
Channel outputs
1920
Source Driver
1080
Gate Driver
Total DDI no.
Channel outputs
960
540
960
540
DDI no.
6
2
8
DDI no.
6
2
8
Resolution
Source Driver
Gate Driver
Total DDI no.
Resolution
Source Driver
Gate Driver
Total DDI no.
3840
1080
DDI no.
Channel outputs
960
12
3840
540
8
UHD/FHD driver no. multiple
1080
DDI no.
20
2.5
Channel outputs
1206
720
19
6
UHD/FHD driver no. multiple
25
3.1
(*double gate for UHD, and double source in 50+" models)
(*double gate for UHD, and double source in 50+" models)
16%/25%/33% 4K penetration in 2015/2016/2017
4K TVs are attracting attention due to the better image quality reproduction
with a higher degree of realism. Thanks to the faster adoption in China and the
aggressive promotion from TV brands, 4K TV penetration had reached 10.2%
by 4Q14, a significant leap from 3.2% by 1Q14. We expect the 4K penetration to
accelerate in 2015 as panel makers introduce smaller-sized UHD panels at
favourable prices for the mainstream market.
In that case, we expect 4K TV panels to grow by 112-117% yoy to 42m-46m units
and result in a 16% penetration rate in our base-case scenario estimates of
260m global TV shipments (+4.3% yoy) in 2015. Our 4K estimates based on
basic, positive and aggressive scenarios are illustrated in Figs. 17 & 18.
14
April 6, 2015
Figure 19: UHD penetration trend 2013-2017F
Figure 20: UHD TV shipment forecasts under different
scenarios
(%)
30
100
Est. UHD penetration rate (%)
33%,
34%, 35%
95
92
89
Units (m)
90
25
25%,
26%,
27%
80
66
70
20
72
16%,
17%, 18%
46
42 44
60
15
69
50
40
10
30
19
20
5
10
3
0
4Q17F
3Q17F
2Q17F
1Q17F
4Q16F
3Q16F
2Q16F
1Q16F
4Q15F
3Q15F
2Q15F
4Q14
1Q15F
3Q14
2Q14
1Q14
4Q13
3Q13
2Q13
1Q13
0
2013A
2014A
Base case
Based case
Positive case
2015F
Positive
2016F
2017F
Aggressive
Aggressive case
The popularity of in-cell touch panel may increase the
adoption of TDDI
In the field of display driver IC and touch controller, two major acquisitions
occurred in 2014. Synaptic took over the small and medium-sized driver IC
business of Renesas, and FocalTech acquired Orise aiming at the integrated
touch/display driver IC solution. As shown in Fig.21, we found the industry
consolidation may help to overcome the complexity in the traditional touch
display supply chain. The ongoing market integration in “touch module and
TFT diplay”, and “touch controller and display driver” will likely streamline the
supply chain management in the future.
Figure 21: The introduction of TDDI will streamline the supply chain
Testing
Testing
Foundry
Foundry
Driver IC Design
Touch IC Design
TDDI Design
Touch Panel
Display Panel
Display Panel
AP Design
Mobile OEM
AP Design
Mobile Brand
Mobile OEM
Mobile Brand
Apple was the pioneer in adopting in-cell touch displays in iPhones in 2012,
and likely consumed around 40% of the global LTPS capacity in 2014 as iPhone
accounted for 9.8% of the 2014 market share. The new-added LTPS capacity
from China, Taiwan and Japan panel makers in 2015-2016 raised some
oversupply concerns, and thus we have seen panel makers aggressively
developing out-cell (touch on color filter) and in-cell (touch embedded in TFT
arrays) touch displays (see Fig.22) with LTPS to ease the risk of supply glut.
15
April 6, 2015
Figure 22: Illustration of in-cell/out-cell display; TDDI and individual DDI and touch controller
Cover Glass
Cover Glass
DDI
Touch sensor
TFT LCD
TDDI
Touch sensor
TFT LCD
In-cell touch display +
TDDI
Touch controller
Out-cell touch module + TFT-LCD
&
Discrete DDI + touch controller
Compared to out-cell, we found panel makers are now accelerating the in-cell
panel development with the “self-capacitance” technology which likely avoided
the infringement with Apple’s “ mutual- capacitance” patent. More than that,
panel makers are trying to manufacture in-cell displays without adding further
photo masks to maintain the cost and save the margins. In the end, those panel
makers believe the touch function will be an add-on features in LCD display at
no extra cost to the end-customer. In that case, it will help panel makers to
secure margins within the LCD displays and wash the individual touch module
houses out of the supply chain.
The development of in-cell displays will accelerate the adoption of TDDI. The
advantages of adopting TDDI include less power consumption, faster operating
speed and less load on application processor. The larger footprint of TDDI will
also increase the wafer numbers, benefitting Chipbond from more wafers in
bumping and longer testing time due to IC complexity. TDDI development is
likely led by Synpatics, followed by FocalTech (5280 TT, NR) and Novatek
(3034 TT, Add). Once the Taiwan IC makers successfully provide cost-effective
solutions to the market by 2015, we can foresee a rapid introduction of TDDI
from 2016 onwards.
16
April 6, 2015
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Distribution of stock ratings and investment banking clients for quarter ended on 31 December 2014
1586 companies under coverage for quarter ended on 31 December 2014
Rating Distribution (%)
Investment Banking clients (%)
Add
58.4%
6.0%
Hold
29.4%
4.3%
Reduce
12.2%
1.0%
Spitzer Chart for stock being researched ( 2 year data )
Chipbond Technology (6147 TT)
Hold
Neutral
Dec-13
63.00
50.00
61.00
70.00
75.00
na
88.0 Recommendations & Target Price
83.0
78.0
73.0
68.0
63.0
58.0
53.0
48.0
43.0
Add
Outperform
38.0
Apr-13
Aug-13
56.00
Price Close
Reduce
Underperform
Apr-14
20
Trading Buy
Aug-14
Trading sell
Dec-14
Not Rated
April 6, 2015
Corporate Governance Report of Thai Listed Companies (CGR). CG Rating by the Thai Institute of Directors Association (Thai IOD) in 2014.
AAV – Very Good, ADVANC – Very Good, AEONTS – not available, AMATA - Good, ANAN – Very Good, AOT – Very Good, AP - Good, ASK – Very Good,
ASP – Very Good, BANPU – Very Good , BAY – Very Good , BBL – Very Good, BCH – not available, BCP - Excellent, BEAUTY – Good, BEC - Good, BECL –
Very Good, BGH - not available, BH - Good, BIGC - Very Good, BJC – Good, BLA – Very Good, BMCL - Very Good, BTS - Excellent, CCET – Good,
CENTEL – Very Good, CHG – not available, CK – Very Good, CPALL – not available, CPF – Very Good, CPN - Excellent, DELTA - Very Good, DEMCO – Good,
DTAC – Very Good, EA - Good, ECL – not available, EGCO - Excellent, GFPT - Very Good, GLOBAL - Good, GLOW - Good, GRAMMY - Excellent, HANA Excellent, HEMRAJ – Very Good, HMPRO - Very Good, ICHI - not available, INTUCH - Excellent, ITD – Good, IVL - Excellent, JAS – not available, JUBILE –
not available, KAMART – not available, KBANK - Excellent, KCE - Very Good, KGI – Good, KKP – Excellent, KTB - Excellent, KTC – Good, LH - Very Good,
LPN – Very Good, M - not available, MAJOR - Good, MAKRO – Good, MBKET – Good, MC – Very Good, MCOT – Very Good, MEGA – Good, MINT Excellent, OFM – Very Good, OISHI – Good, PS – Very Good, PSL - Excellent, PTT - Excellent, PTTEP - Excellent, PTTGC - Excellent, QH – Very Good,
RATCH – Very Good, ROBINS – Very Good, RS – Very Good, SAMART - Excellent, SAPPE - not available, SAT – Excellent, SAWAD – not available, SC –
Excellent, SCB - Excellent, SCBLIF – Good, SCC – Very Good, SCCC - Good, SIM - Excellent, SIRI - Good, SPALI - Excellent, STA – Very Good, STEC - Good,
SVI – Very Good, TASCO – Good, TCAP – Very Good, THAI – Very Good, THANI – Very Good, THCOM – Very Good, THRE – not available, THREL – Good,
TICON – Good, TISCO - Excellent, TK – Very Good, TMB - Excellent, TOP - Excellent, TRUE – Very Good, TTW – Very Good, TUF - Good, VGI – Very Good,
WORK – not available.
CIMB Recommendation Framework
Stock Ratings
Definition:
Add
The stock’s total return is expected to exceed 10% over the next 12 months.
Hold
The stock’s total return is expected to be between 0% and positive 10% over the next 12 months.
Reduce
The stock’s total return is expected to fall below 0% or more over the next 12 months.
The total expected return of a stock is defined as the sum of the: (i) percentage difference between the target price and the current price and (ii) the forward
net dividend yields of the stock. Stock price targets have an investment horizon of 12 months.
Sector Ratings
Overweight
Neutral
Underweight
Definition:
An Overweight rating means stocks in the sector have, on a market cap-weighted basis, a positive absolute recommendation.
A Neutral rating means stocks in the sector have, on a market cap-weighted basis, a neutral absolute recommendation.
An Underweight rating means stocks in the sector have, on a market cap-weighted basis, a negative absolute recommendation.
Country Ratings
Overweight
Neutral
Underweight
Definition:
An Overweight rating means investors should be positioned with an above-market weight in this country relative to benchmark.
A Neutral rating means investors should be positioned with a neutral weight in this country relative to benchmark.
An Underweight rating means investors should be positioned with a below-market weight in this country relative to benchmark.
*Prior to December 2013 CIMB recommendation framework for stocks listed on the Singapore Stock Exchange, Bursa Malaysia, Stock Exchange of Thailand,
Jakarta Stock Exchange, Australian Securities Exchange, Taiwan Stock Exchange and National Stock Exchange of India/Bombay Stock Exchange were
based on a stock’s total return relative to the relevant benchmarks total return. Outperform: expected to exceed by 5% or more over the next 12 months.
Neutral: expected to be within +/-5% over the next 12 months. Underperform: expected to be below by 5% or more over the next 12 months. Trading Buy:
expected to exceed by 3% or more over the next 3 months. Trading Sell: expected to be below by 3% or more over the next 3 months. For stocks listed on
Korea Exchange, Hong Kong Stock Exchange and China listings on the Singapore Stock Exchange. Outperform: Expected positive total returns of 10% or
more over the next 12 months. Neutral: Expected total returns of between -10% and +10% over the next 12 months. Underperform: Expected negative total
returns of 10% or more over the next 12 months. Trading Buy: Expected positive total returns of 10% or more over the next 3 months. Trading Sell: Expected
negative total returns of 10% or more over the next 3 months.
21

Chipbond Technology

Transcription

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