Siliconware Precision Industries Company, Ltd. (SPIL)

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Siliconware Precision Industries Co., Ltd. (SPIL)

Q1 2013 Earnings Call

April 30, 2013 8:00 AM ET

Executives

Janet Chen – IR

Bough Lin – Chairman

Analysts

Szeho Ng – BNP Paribas

Steven Pelayo – HSBC

Presentation

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Quarter One 2013 Siliconware Precision Industries Co. Ltd. Earnings Conference Call. At this time, all parties are in a listen-only mode. There will be a presentation followed by question-and-answer session.

(Operator Instructions) I must advise you that this conference is being recorded today, Tuesday, April 30, 2013.

I would now like to hand the conference over to your host today, Ms. Janet Chen. Thank you, ma’am. Please go ahead.

Janet Chen

Thank you. Good evening and good morning ladies and gentlemen. Welcome to the first quarter 2013 earnings release of Siliconware Precision Industries. This is Janet and we have Chairman, Mr. Bough Lin.

Bough Lin

Hi, good evening.

Janet Chen

Okay. First of all, I have a very brief of the financial numbers for the first quarter, then we go on to the Q&A. Okay, so today SPIL announced that its consolidated sales revenue for the Q1 of 2013 were NT$13,819 million, which represented a 14.4% decline in revenue compared to the Q4 of 2012 and a 8.6% decline in revenue compared to the Q1 of 2012. SPIL reported a net loss of NT$292 million for the Q1 of 2013 compared with a net income of NT$1,590 million and a net income of NT$891 million for the Q4 of 2012 and the Q1 of 2012 respectively. Diluted earnings per common share for this quarter was minus NT$0.09 or diluted earnings per ADR was minus $0.02 in U.S. dollars. All the figures in this quarter were prepared in accordance with the TIFRS on the consolidated basis.

Okay. So, now we go on directly go on to the Q&A.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions) Your first question comes from the line of Szeho Ng from BNP Paribas. Please ask your question.

Szeho Ng – BNP Paribas

Hi, good evening Bough and Janet.

Janet Chen

Hi good evening.

Bough Lin

Hi.

Szeho Ng – BNP Paribas

Hi good evening, hi. In the afternoon session, you mentioned about the potential upside to your CapEx guidance, just want to note in what areas you are going to build more capacity and if possible could you also share the potential upside and number, in terms of number?

Bough Lin

We didn’t have a number yet, but it’s mainly for the Q4 most of the handset side and tablet side customer. They request a very big the number of the capacity, more than we have at this moment, but we are negotiate with them to decide on what we should invest.

Szeho Ng – BNP Paribas

Okay.

Bough Lin

Mainly, which is BSP and bumping and testing.

Szeho Ng – BNP Paribas

I see alright. And for those orders, are they committed orders, or still just in negotiation?

Janet Chen

Sorry?

Szeho Ng – BNP Paribas

Are they committed orders?

Bough Lin

Normally, our customers don’t commit order they commit some capacity guarantee if we can enter some agreement with that. But most of the customers didn’t have that kind of way to do business. Normally, they give us six months or nine months or even one year rolling forecast, and then request us to commit our support. So, they know how to plan their capacity.

Szeho Ng – BNP Paribas

I see. Okay. And also you gave out very strong Q2 guidance, is it possible for you to share with us how the revenue would pan out on a monthly basis for Q2?

Bough Lin

I think the pattern will be up every month.

Szeho Ng – BNP Paribas

Okay. Alright, okay, thank you very much. That’s very useful.

Janet Chen

Thank you.

Operator

Thank you for your questions. Your next question comes from the line of Steven Pelayo from HSBC. Please ask your question.

Steven Pelayo – HSBC

Yeah, just two quick questions. First on margins, you guys are planning a very aggressive ramp in flip chip CSP, I am looking at some of the competitors out there that have 40%, 50% of revenues from flip chip, and really haven’t seen much margin premium relative to kind of mid to upper 20s level. So, I am curious when you think about ramping flip chip, is it going to be margin additive to you? What kind of gross margins do you think you will be able to be doing with this kind of advanced packaging flip chip and bumping ramp?

Bough Lin

The bumping has no material. So, the margin will be a bit higher. The flip chip side, because the flip chip substrate is very highest percentage on the sales revenue, so the gross margin in the flip chip side should be dull, if customer didn’t consign the substrate. But as I mentioned, our operating leverage is most important to our margin, so the most important unit is to the top line growth to improve the margin.

Steven Pelayo – HSBC

Okay. In general though, is flip chip and bumping combined a 25% gross margin business, or is it more relatively in line with the 20% or so you are doing in second quarter?

Bough Lin

It depends on the utilization rates, normally with quarter based on our 75% (royalty) at certain margin level. And if we can offer that 75% up to 100% then the margin will be expanded. And on the contrary, the margin would be very dull. So, I don’t say that we fix the 20% or 25% maybe normally we will update on the 75% or 80% utilization rate and margin at around 20% to 25% to quarter.

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