SUMCO Corp, the world's No 2 maker of silicon wafers, gained 18 percent in its market debut on Thursday, driven by robust growth prospects for global wafer demand and the strength of the overall stock market.
SUMCO, a 50-50 joint venture between Mitsubishi Materials Corp and Sumitomo Metal Industries Ltd, raised $1.34 billion in Japan's biggest initial public offering this year.
"The timing of the listing couldn't have been better. It's supported by a recent surge in trading volume and rising optimism over a recovery in the global chip industry," said Yasuo Yabe, director of sales at Meiwa Securities.
Tokyo's Nikkei share average rose 1.70 percent to hit a 4-1/2-year closing high.
SUMCO first traded at 3,720 yen, then rose as high as 4,050 yen before ending at 3,900 yen. It had set an IPO price at the top of its target range at 3,300 yen per share earlier this month.
With more than 140 billion yen worth of shares traded, it was the second most actively traded issue in value terms on the Tokyo bourse's first section.
SUMCO's closing price carries a price earnings (PE) ratio of 24.6 times the company's projected earnings per share for the current fiscal year ending January 2006, compared with against 22.1 for bigger rival Shin-Etsu Chemical Co.
The closing price values SUMCO at 467 billion yen ($3.92 billion), compared with Shin-Etsu's 2.44 trillion yen.
SUMCO's other competitors in the market for silicon wafers, from which microchips are cut, include Germany's Siltronic AG, US-based MEMC Electronic Materials Inc and Japan's Komatsu Electronic Metals Co.
SUMCO, formally known as Mitsubishi Sumitomo Silicon Corp, held a 22.6 percent share of the global wafer market in 2004. That compares with Shin-Etsu's 31.1 percent and Siltronic's 12.8 percent, according to market research firm Gartner Dataquest.
SUMCO, which operates 12 plants in Asia, Europe and the United States, has said it would use most of the IPO proceeds to increase manufacturing of 300-mm silicon wafers, which can yield more than twice as many chips as the conventional 200-mm variety.
Gartner expects global demand for the advanced wafers to jump 48 percent this year in unit terms, followed by a 54 percent surge in 2006.
SUMCO began mass production of 300-mm, or 12-inch, wafers in 2001, and has so far spent 117 billion yen to bolster output.
The 300-mm wafers business now accounts for one-third of SUMCO's total sales, and the company has said it plans to spend another 130 billion yen by April 2009 to further boost output.
Production capacity of 300-mm wafers is expected to reach 700,000 a month by then, up from 380,000 planned by the end of this year, SUMCO President Naoyuki Hosoda told reporters.
"Our study shows that about 2 million to 2.3 million (300-mm) wafers will be needed globally in 2008," Hosoda said. "So we are hoping to win one-third of the market share (by 2008).
"We have superb and cost-efficient manufacturing technology. I'm hoping that will help us become the No 1 maker of 300-mm wafer maker in the near future."
Anticipating robust demand, SUMCO expects to increase its group net profit by 75 percent to 19 billion yen on sales of 205 billion yen in the business year to January 2006.
Ahead of SUMCO's market debut, Mitsubishi Materials and Sumitomo Metal sold 12.21 million existing shares each, cutting their stakes to 31.8 percent each. SUMCO issued 19.2 million new shares.
Comments
Comments are closed.