Stars targets 30% growth in second half

       Stars Microelectronics Plc, an electronics manufacturing services subcontractor,expects second-half growth of 25% to 30% as global IT demand rebounds with the economic recovery.
       The company has also received a positive reception from investors ahead of its initial public offering later this month,said CEO Polsak Lertputipinyo.
       The company has set indicative pricing for its IPO at 4.75 to 4.95 baht per share,representing a valuation of seven times earnings compared with a sector average of eight to 12 times.
       SMT will float 92 million shares in its IPO with a two baht par value. Funds raised from the offering will be used to repay debt. Tisco Securities is the financial adviser and lead underwriter for the offering, to be held from Sept 16-18.
       The company posted first-half profit of 115 million baht on sales revenue of 4.59 billion baht, said Mr Polsak.
       Over the past four years, cumulative net profit growth has been a strong 65%,he said. Earnings per share for the first half were 0.42 baht, with a return on equity of 23.1%, ranking among the highest of listed electronic component manufacturers.
       Prasert Tantayawit, head of investment banking at Tisco Securities, said the in-dicative pricing for the offering represented a 25% to 30% discount from the target price of most analysts.
       SMT, founded in 1995, operates two main business lines - microelectronic module assembly (MMA) and integrated circuit (IC) packaging and testing. Products include touchscreens for smart phones, hard-disk control boards used in laptop computers and sensors for the automotive and medical industries.
       MMA accounts for 70% of revenue,with a profit margin of 30-40%. IC units offer a profit margin of about 50%.
       The company operates a 2.7-billionbaht facility in Ayutthaya - with annual capacity of 80 million MMA units and 700 million IC chips - and has a US sales office in San Jose', California.
       Mr Polsak said he was confident of a pickup in sales toward year-end.
       "Usually in this business, the second half is better [than the first], due to the high season. The third quarter is shaping to be better than we expected. Profits and revenues in the second half should grow by around 25-30% from the first half," he said.
       New IC orders were actual orders rather than inventory restocking, he added.
       Production utilisation at SMT in the second half is projected to rise to between 80% and 90% for MMA products and to full capacity for IC, said Mr Polsak. Utilisation in the first half of the year was about 60%.
       "We have already passed our breakeven point. If our capacity utilisation is over 50%, the rest is profit. We expect continuous growth," said Mr Polsak.
       SMT is also developing new microelectromechanical systems (MEMS) technology for use in the auto industry in products such as side-airbag pressure sensors. The company claims to be the sole manufacturer of MEMS technology in Thailand.
       SMT posted first-half revenue of 4.63 billion baht, down from 6.09 billion in the same period last year. First-half net profit increased to 115.28 million baht from 103.34 million a year earlier.
       Second-quarter revenue slid to 2.46 billion baht, down from 3.08 billion in the same period last year. Second-quarter profit increased to 95.74 million, up from 14.87 million year-on-year.