– Semiconductor assembly services provider – the world’s most wonderfully boring businesses to own at 9x earnings and shifting into higher margin services.
– For a semi business, it has very low cyclicality and low Capex needs yet above-industry revenue growth, 3-year CAGR of 20%.
– Trades at 9x earnings.
– Expected to double no later than 2H23.
– Oligopolistic industry – AMKR is the No.2 player with a 25% share, behind $ASX with 35%.
– Due to increasing chip complexity, the industry is shifting towards less commoditized and more advanced packaging/assembly solutions, requiring more R&D and tighter integration with customers.
– This also drives increasing margins for key players.
– Should trade at an above-market multiple of 20x vs 9x today.
– ’23 and ’24 EPS are expected at $3 and $4.
– Easy double with $4 fwd EPS and 10.5x multiple.
– DCF model results in $87/share.
Exp. gain: +100% by 2H23. Or higher if the multiple re-rates.
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