ASE shares robust after chairman raises stake

Shares of integrated circuit packaging and testing services provider Advanced Semiconductor Engineering Inc. (ASE, ???) rose Monday morning, outperforming the broader market, after ASE Chairman Jason Chang's (???) heavy buying in the stock in recent sessions, dealers said.

Chang's share purchase showed confidence in the company's outlook and encouraged investors to pick up the stock soon after the local main board opened, dealers said.

As of 11:35 a.m., shares of ASE had risen 0.78 percent to NT$38.90 (US$1.22) with 13.66 million shares changing hands on the Taiwan Stock Exchange, while the weighted index was down 0.51 percent at 9,084.96 points.

In a statement issued to the U.S. Securities and Exchange Commission (SEC) over the weekend, ASE said that in the period Aug. 17-26, Chang bought 34.30 million ASE shares at a cost of almost NT$1.3 billion through his fully owned investment company Value Tower Ltd.

ASE said it will file a report on Chang's share purchase with the TWSE, in accordance with local regulations.

Since ASE has American depositary receipts listed in the U.S. market, any significant change in major shareholding must be reported to the SEC, according to Taiwan's regulations.

Hua Nan Securities analyst Kevin Su said Chang's huge buy of ASE shares was an indication of his confidence in the company's future, particularly in view of the its plans to establish a joint holding company with Siliconware Precision Industries Co. (??).

"Investors simply followed Chang's lead and jumped onto the trading floor," Su said. "That's why the stock stood out today compared with the broader market, which is in consolidation mode."

In June, ASE announced said that it had reached an agreement with Siliconware to set up a holding company that will put both companies under a single corporate umbrella, in a bid to take on escalating global competition.

ASE is the world's largest IC packaging and testing firm, while Siliconware is among the top five.

"The decision by ASE and Siliconware to join forces is good for Taiwan's IC industry at a time when China is gearing up to build its own semiconductor business," Su said. "The combination of ASE and Siliconware is expected to help fend off Chinese competition."

The two companies have submitted an application to Taiwan's Fair Trade Commission for approval to establish the joint enterprise and they will also seek a greenlight from China and the U.S.

"ASE has sound fundamentals and has become one of the market favorites of foreign institutional investors," Su said. "I think the stock will remain on an uptrend."

He said foreign institutional investors bought a net 39.34 million ASE shares between Aug. 16 and 26.

In the second quarter of the year, ASE posted NT$0.61 in earnings per share, up from NT$0.48 in the same period of last year. The company's EPS for the first six months of the year stood at NT$1.16, up from NT$1.06 a year earlier.

Source: Focus Taiwan