02.23.2001
ASE conservative on 2001

• Advanced Semiconductor Engineering Group (ASE, 2311 'Ri Yue Guang') released 2000 financial results yesterday. Net sales came in at NT$51b, up 56% YoY, and net income was NT$6.1b, a YoY decrease of 22% or increase of 170%, depending on whether or not 1999 capital gains on Taiwan Depository Receipts and Global Depository Receipts are excluded. With 2,752m shares outstanding, EPS stands at NT$2.20.

• 4Q00 revenue lagged 3Q00 revenue by 3.7%. So far in 1Q01, visibility remains low, and we expect ASE, revenue and utilization to all decline by 10% by end-1Q01.

• 2001 CAPEX is budgeted at US$0.3b. Gross margin and operating margin are forecast at 20%-25% and 10%, down from 30% and 19%, respectively, in 2000. Despite the current cyclical weakness, ASE expects a revenue boost from outsourcing contracts while most companies are cutting CAPEX and concentrating resources in core businesses.

• ASE's pessimistic forecast for the year is due to low orders and ASP pressure from customers. A 10% operating margin will result in only minimal growth in net income.

AngelLo@Primasia.com +886-[0]2-2547-8865