Semiconductor packaging and testing specialist Advanced Semiconductor Engineering (ASX +1.37%) is hardly a household name. Followed by a mere handful of Wall Street analyst firms and thinly traded despite its respectable $10.4 billion market cap and $9.2 billion in annual sales, the company is easily overlooked. If you want to know ASE a bit better, I'm here to show you around.
Here are the five most important things you should know before making an investment in ASE.
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- ASE is based in Taiwan but serves chip designers around the world. The company runs manufacturing facilities in six Asian countries with additional sales offices in Belgium and all over the U.S.
- The company approached sector peer Siliconware Precision Industries (NASDAQ: SPIL) with an unsolicited buyout offer in the summer of 2015. Nine months (and a lot of wrangling) later, the two companies jointly announced a proper merger. That transaction is still pending, moving slowly through the regulatory machinery of several countries. When completed, the Siliconware merger should boost ASE's annual sales by roughly 30% and push EBITDA profits at least 45% higher.
- Orders from U.S. customers accounted for two-thirds of ASE's external revenue in 2016, including a single customer representing 24% of the overall sales flow. Thus, the company is closely connected to American end-user markets with a particularly large interest in chips for mobile and embedded devices.
- Over the last five years, ASE's annual revenue has increased by a total of 39% while free cash flows doubled. These growth rates compare favorably with more familiar names in the semiconductor industry, despite some stumbles along the way:
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ASX Revenue (TTM) data by YCharts.
- Share prices rose 45% higher over the same span, alongside a generous dividend policy that provides a 4% dividend yield today.
There's a lot to like here, and I encourage you to dive deeper into Advanced Semiconductor Engineering. This stock just might have a place in your own investment portfolio.
