Macquarie Securities bullish on UTAC

SINGAPORE (XFN-ASIA) - Macquarie Securities said it is initiating
coverage
of United Test and Assembly Center Ltd (UTAC) with a "buy" rating and
a
target price of 1.22 sgd on expectations of strong earnings growth
this
year.

In a note to clients, Macquarie said UTAC is one of its key picks
in
the semiconductor test and assembly field.

"UTAC's rising exposure to DDR2 DRAM via Nanya, Infineon and
Hynix,
and to flash memory testing for Sandisk, combined with strong industry
demand for mixed-signal chips, is driving revenue growth in 2006," the
brokerage said.

"While UTAC is already an efficient company, there is room for
its
asset turnover to improve, as we are still seeing better utilization
of
installed production assets."

Macquarie expects UTAC's net profit for last year to have to 36
mln
usd from 2004's 14 mln usd. It expects profits to further rise this
year
to 60 mln usd.

"In our view, UTAC is a well positioned and competitive
semiconductor
test and assembly firm, with a strong presence in all the key
semiconductor foundry markets across Asia, i.e., Taiwan, Singapore and
China. In addition, it has a unique composition in that it is fully
engaged in both the memory and the mixed signal/logic market," it
said.

At the end of morning trading, UTAC was up 0.02 sgd at 3.90, on
volume of 2.344 mln shares.