Chartered CSM - positive news flow

Following CSM’s upward adjustment (narrowing its 2Q ‘09 estimated loss from US$59mln to US$49mln while raising its sales guidance from US$327mln to US$343mln) in 2Q ‘09 guidance last friday morning, its major customer Qualcomm also raised its 3Q ending June ’09 sales guidance to at least US$2.67bln versus last guidance of at most US$2.6bln (consensus were expecting US$2.55bln), while operating profit will be at least US$830mln versus last guidance of at most US$650mln. Qualcomm is benefitting from China’s launch of their 3G network services.

Other signs to support the recovery of the semiconductor sector can be seen in a recent 10-30% increase in prices of testing and packaging of chips, according to Digitimes.com. This should bode well for STATS whose core business is in the test and packaging of chips.

And currently running close to full utilization rates, UMC, the second largest foundry have raised its ownership in privately held China-based foundry Hejian Tech from 15% to 85% (Digitimes.com reported that UMC plans to double Hejian Tech’s production capacity soon after acquiring a controlling stake in the company).

CSM’s share price was around the $2.20 price level but fell close to the $2 level when CSM’s board dismissed the takeover rumours. But its share price have climbed to $2.36 as of last friday (up 3 cents) after it’s upward guidance for 2Q ‘09 performance. We do not have a rating on CSM.

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