Taiwanese Tech, Another Oil SPIL
|Written by GSCR Staff|
|Thursday, 15 January 2015 06:59|
We conclude our Asian emerging market themed cheap oil trade with a tech sector ADR out of Taiwan.
The country is a heavy importer and consumer of oil with little production and long term low oil and gas could trigger extraordinary economic growth which can aid the technology space as well including semiconductor company Silicon Precision Industries Company, Ltd. (NASDAQ – SPIL - $7.66).
The Companyprovides semiconductor packaging and testing services to semiconductor suppliers worldwide. Its packaging and testing solutions comprise substrate packages and lead-frame packages, as well as testing for logic, mixed signal, and embedded memory devices to measure and ensure the performance, functionality, and reliability of packaged semiconductor devices. Silicon Precision also provides testing and other services include wafer probing that involves sorting the processed wafer for defects to ensure that it meets customer acceptance criteria and final testing services for circuit packages. The Company is similar to many American small cap tech stocks we have profiled, but with a Taiwan domicile, SPILserveskey players in Asia.
In addition to its positioning, the Company boasts impressive metrics. For example, its operating margin of 16% is substantially higher than the industry average of 4% which indicates thatSPIL is keeping costs well under control. Additionally, the Company has over $630 million cash on hand as of the end of 3Q14. Analysts’ consensus forecast of 8% growth in revenue from 2014 to 2015 aids in putting its forward P/E at 13. Importantly, while the rest of the market has been taking a brief nosedive, SPILtrades above its 10, 50, and 200 day EMA.
With a global semiconductor growth rate of 5.5% predicted for 2015, SPIL could enjoy a boost if demand sees even slight increases. We think the stock reaches $10 by mid-year.
Have a great day!
Disclosure: Goldman Small Cap Research analysts are neither long nor short these shares but may elect to purchase the stock within the next 48 hours.
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