06.13.2001
Buyback may signal bottom for Unicap

• Unicap (5307 'Yao Wen') has decided to buy back up to 12 million of its own shares at a price of between NT$18 and NT$25, beginning Jun13 to Aug12. This amounts to nearly 3% of the company's issued cap. The company's stock price closed at NT$21 yesterday, falling recently from NT$27, caused by a delay in this week's merger with World Wiser (5363 'Xin Xing').

• Although investors have lost the expectation of strong investing capital from the UMC group, IDC statistics suggest in the long term ACGR will continue at 40% until 2004 in BGA (Ball Grid Array) products in the PCB market. BGA manufacturing requires a longer learning curve than traditional PCB manufacturing. This holds true especially in LBGA (Laser BGA), which occupies 58% of BGA series products, and contributes more than 35% of Unicap's gross margin. Meanwhile US giant Xilinx continues to show interest in the company.

• VB Primasia Investment Opinion: On the back of its relatively low P/E (10x) ratio, niche product growth potential, and the repurchase of large quantities of its own stock, we believe that Unicap will bottom out soon. We recommend a BUY rating on this counter.

JesseLin@Primasia.com +886-[0]2-2547-8871