Taiwan's second largest pure DRAM manufacturer Powerchip will come first with roadshows for a 350 million new share offering scheduled to start early to mid next week, for pricing about 10 days later.
Deutsche Bank is sole lead manager of the deal which should raise $254 million based on Thursday's closing share price of NT$25.4. One GDS unit equals 10 shares. Despite the fact that prices of benchmark 128Mbit DRAM prices have quadrupled since November, the stock itself is still said to hold value since it is trading on a current price to book valuation of 2.3 times forward earnings against a 5.4 times peak for the sector during the last DRAM cycle.
Having returned -7.64% on a one-year basis and 10.43% since the beginning of the year, the stock appears to have stabilised over the past month around the NT$25 level. Taiwanese specialists say that consensus analysts' forecast put the stock on a 2003 p/e of 20 times.
As chip prices have rebounded, the company returned to profit during the first quarter, with company officials reporting an unaudited net income of NT$650 million ($18.6 million) up from NT$383 million a year ago. Proceeds will be used towards the construction of an NT$26 billion 12 inch fab.
As Powerchip prices, rival DRAM manufacturer ProMOS Technologies is likely to launch a 300 million share offering that may incorporate a secondary placement by its parent Mosel Vitelic. Led by Deutsche Bank and Goldman Sachs, the roughly $260 million deal had orginally been primed for launch in late January/early February, but was put on hold until the company completed an NT$5.512 billion loan. The analysts meeting for the deal will be held today (Friday).
ProMOS began production on its first 12 inch fab this March and is expected to hit capacity of 9,000 wafers per month by June. Officials have also said that the company is considering constructing a second 12 inch fab.
