Asia Memory-Bad memories fading

TMT
Memory Devices Technology
8 October 2010
abc
Financials & valuation: Winbond Electronics
Overweight (V)
Financial statements
Year to 12/2009a 12/2010e 12/2011e 12/2012e
Profit & loss summary (TWDm)
Revenue 19,533 32,596 33,796 37,642
EBITDA 4,246 14,594 13,729 15,477
Depreciation & amortisation -10,241 -11,033 -11,297 -11,815
Operating profit/EBIT -5,995 3,561 2,431 3,662
Net interest -640 -629 -390 -258
PBT -8,613 3,532 2,366 3,904
HSBC PBT -8,613 3,532 2,366 3,904
Taxation 0 0 -355 -703
Net profit -8,613 3,532 2,011 3,201
HSBC net profit -8,613 3,532 2,011 3,201
Cash flow summary (TWDm)
Cash flow from operations 4,768 11,837 13,143 14,593
Capex -4,200 -8,000 -7,500 -7,500
Cash flow from investment -15,535 -746 -7,540 -7,540
Dividends 0 0 0 0
Change in net debt -2,453 -7,744 -5,573 -6,850
FCF equity 568 3,837 5,288 6,390
Balance sheet summary (TWDm)
Intangible fixed assets 1,531 1,106 813 517
Tangible fixed assets 45,866 43,297 39,833 35,854
Current assets 12,834 29,317 35,329 43,584
Cash & others 2,859 14,570 20,143 26,994
Total assets 65,163 78,653 80,907 84,887
Operating liabilities 7,250 13,223 13,466 14,244
Gross debt 24,058 28,025 28,025 28,025
Net debt 21,199 13,455 7,882 1,032
Shareholders funds 33,854 37,405 39,416 42,617
Invested capital 50,121 45,928 42,366 38,717
Ratio, growth and per share analysis
Year to 12/2009a 12/2010e 12/2011e 12/2012e
Y-o-y % change
Revenue -10.5 66.9 3.7 11.4
EBITDA 36.0 243.7 -5.9 12.7
Operating profit -31.7 50.6
PBT -33.0 65.0
HSBC EPS -43.1 59.2
Ratios (%)
Revenue/IC (x) 0.4 0.7 0.8 0.9
ROIC -10.7 8.4 5.3 8.1
ROE -23.9 9.9 5.2 7.8
ROA -11.5 5.8 3.3 4.5
EBITDA margin 21.7 44.8 40.6 41.1
Operating profit margin -30.7 10.9 7.2 9.7
EBITDA/net interest (x) 6.6 23.2 35.2 60.1
Net debt/equity 62.6 36.0 20.0 2.4
Net debt/EBITDA (x) 5.0 0.9 0.6 0.1
CF from operations/net debt 22.5 88.0 166.7 1414.7
Per share data (TWD)
EPS Rep (fully diluted) -2.36 0.97 0.55 0.88
HSBC EPS (fully diluted) -2.36 0.97 0.55 0.88
DPS 0.00 0.00 0.00 0.00
Book value 9.28 10.25 10.80 11.68
Valuation data
Year to 12/2009a 12/2010e 12/2011e 12/2012e
EV/sales 2.3 1.2 1.0 0.7
EV/EBITDA 10.7 2.6 2.4 1.6
EV/IC 0.9 0.8 0.8 0.7
PE* 8.3 14.6 9.2
P/Book value 0.9 0.8 0.7 0.7
FCF yield (%) 2.3 15.7 21.6 26.2
Dividend yield (%) 0.0 0.0 0.0 0.0
Note: * = Based on HSBC EPS (fully diluted)
Issuer information
Share price (TWD) 8.03 Target price (TWD) 10.80 Potent’l return (%) 34.5
Reuters (Equity) 2344.TW Bloomberg (Equity) 2344 TT
Market cap (USDm) 945 Market cap (TWDm) 29,362
Free float (%) 74 Enterprise value (TWDm 37885
)
Country Taiwan Sector Semiconductors
Analyst Carolyn Poon Contact +852 2996 6586
Price relative
13
11
9
7
5
3
1
2008 2009 2010 2011
Winbond Electronics Rel to TAIWAN WEIGHTED INDEX
Source: HSBC
Note: price at close of 06 Oct 2010
13
11
9
7
5
3
1
97