Headquartered in Chunan, Taiwan, SemiLEDs Corporation (LEDS) is one of the popular players in the semiconductor space. It manufactures ultra-high brightness light emitting diode (LED) chips with fabrication facilities. The stock has been on a roll, gaining 688.3% over the past year to close yesterday’s trading session at $24.20 after hitting its 52-week high of $31.44.
LEDS’ revenue increased 67% year-over-year to $1.21 million for its fiscal second quarter, ended February 28. However, the company’s net loss for the quarter came in at $254 million compared to $707 million loss in the prior-year period. Its loss per share was $0.06 compared to $0.17 in the year-ago period. But,despite the company’s unimpressive financials, its stock is currently trading at an expensive valuation. In terms of trailing-12-month Price-to-Book ratio, LEDS’ 61.90x is 1,116.1% higher than the 5.09x industry average. And the stock’s 18.52x trailing-12-month EV/S is 301.7% higher than the 4.61X industry average. So, we think LEDS could witness a retreat in the near term. However, there are several other Taiwanese semiconductor stocks that appear to be better investment options now.
Taiwan is known for having a significant market share in the global semiconductor space. With the growing adoption of advanced technologies, such as internet of things (IoT) and artificial intelligence (AI), and the increasing demand for chips across various industries, such as automotive and electronics, the industry is expected to continue benefiting in the coming months. According to a report published by Taiwan News in May 2021, Taiwan is expected to grow 11.4% in 2021 and will contribute to 10.9% growth of the global semiconductor market. So, we think it could be wise to bet on Taiwan-based semiconductor companies United Microelectronics Corporation (UMC), Himax Technologies, Inc. (HIMX), and ChipMOS TECHNOLOGIES INC. (IMOS). Their valuations appear to be in sync with their impressive growth prospects.
Click here to checkout our Semiconductor Industry Report for 2021
United Microelectronics Corporation (UMC)
UMC operates as a semiconductor wafer foundry internationally. The company operates through two segments—wafer fabrication and new business. It provides circuit design, mask tooling, wafer fabrication, and assembly and testing services, and researches, develops, and manufactures products in the solar energy and LED industries.
The company announced on April 28 that it plans to expand capacity at its 300mm Fab 12A Phase 6 (P6) in Taiwan’s Tainan Science Park through a collaboration with several of its leading global customers. This could lead to further growth of UMC’s business in the semiconductor space while sustaining its profitability.
UMC’s operating revenue increased 11.4% year-over-year to $1.65 billion for the first quarter, ended March 31, 2021. Its operating income grew 123.2% year-over-year to $267 million, while its net income increased 703.8% year-over-year to $347 million. The company’s EPS increased 347.4% year-over-year to $0.15.
In terms of forward EV/EBITDA, UMC’s 6.98x is 58.6% lower than the 16.85x industry average. In terms of forward non-GAAP PEG, the stock’s 0.86x is 52.7% lower than the 1.82x industry average. For the quarter ending September 30, 2021, analysts expect UMC’s EPS to be $0.14, which represents a 180% year-over-year increase. It surpassed the consensus EPS estimates in three of the trailing four quarters. The company’s annual revenue is expected to increase 14.9% year-over-year to $7.13 billion in 2021. The stock has gained 240.9% over the past year to close yesterday’s trading session at $9.58.
UMC’s POWR Ratings reflect this promising outlook. The company has an overall A rating, which translates to Strong Buy in our proprietary ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
The stock has a B grade for Momentum, Quality, Value, Stability and Sentiment. Within the B-rated Semiconductor & Wireless Chip industry, UMC is ranked #2 of 98 stocks.
To see UMC’s rating for Growth as well, click here.
Himax Technologies, Inc. (HIMX)
HIMX is a fabless semiconductor company that provides display imaging processing technologies. It operates through two product segments: driver IC and non-driver IC. The company offers display driver integrated circuits (ICs) and timing controllers that are used in televisions, laptops, monitors, and mobile phones. It also designs and provides controllers for touch sensor displays.
On May 19, HIMX unveiled its phase modulation liquid crystal on silicon (LCoS) technology for two key application platforms, namely AR Head-up Display (AR HUD) and Wavelength Selective Switch (WSS). AR HUD is expected to be one of the next key features in the automotive space and could potentially disrupt the current HUD standard. So, this could drive increasing sales for the company.
HIMX’s net revenue increased 67.4% year-over-year to $309 million for the first quarter, ended March 31, 2021. Its income from operations grew 1,724.8% year-over-year to $84.8 million. Its profit for the period increased 2,259.2% year-over-year to $66.29 million. And its EPS came in at $0.38, up 1,915.8% year-over-year.
In terms of forward non-GAAP P/E, HIMX’s 8.74x is 66.5% lower than the 26.07x industry average. The stock’s 5.22x forward EV/EBIT is 75.5% lower than the 21.34x industry average.
Analysts expect HIMX’s EPS and revenue to increase 4,500% and 81.4%, respectively, year-over-year to $0.46 and $324.70 million for the current quarter, ending June 30, 2021. It surpassed the Street’s EPS estimates in each of the trailing four quarters. The stock has rallied 334.6% over the past year to close yesterday’s trading session at $14.43.
HIMX’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system. It has an A grade for Growth and Value, and a B grade for Sentiment.
We have also graded HIMX for Stability, Momentum and Quality. Click here to access all HIMX’s ratings. HIMX is ranked #15 in the same industry.
ChipMOS TECHNOLOGIES INC. (IMOS)
IMOS researches , develops, manufactures, and sells high integration and high precision integrated circuits (ICs) and related assembly and testing services. Its segments include testing and assembly for liquid crystal display and other flat panel display driver semiconductors and bumping. Its products and services are applied across several markets, including the personal computers, communication equipment, office automation and consumer electronics markets.
The company’s revenue came in at $227 million for its fiscal first quarter (ended March 31, 2021), which represents a 15.7% year-over-year increase. This impressive performance was driven primarily by strong memory and DDIC demand, along with improvements in both volumes and pricing. IMOS’ revenue for the month of March 2021 came in at $82.30 million, representing a new record for the company. .
In terms of forward EV/EBITDA, IMOS’ 3.85x is 77.2% lower than the 16.85x industry average. In terms of forward P/S, the stock’s 1.23x is 69.6% lower than the 4.04x industry average.
IMOS’ revenue is expected to increase 35.3% year-over-year to $249.11 million for the current quarter, ending June 30, 2021. The stock gained 70.6% over the past nine months to close yesterday’s trading session at $33.49.
IMOS’ POWR Ratings reflect its solid prospects. The company has an overall A rating, which translates to Strong Buy in our proprietary ratings system. It has an A grade for Value and Sentiment, and a B grade for Stability and Momentum.
To see additional POWR Ratings for IMOS (Growth and Quality), click here. IMOS is ranked #1 in the same industry.
Click here to checkout our Semiconductor Industry Report for 2021
UMC shares were trading at $9.32 per share on Tuesday morning, down $0.26 (-2.71%). Year-to-date, UMC has gained 10.56%, versus a 12.84% rise in the benchmark S&P 500 index during the same period.
About the Author: Nimesh Jaiswal
Nimesh Jaiswal’s fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles. More…
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