Chartered Shares Drop to Lowest Since Listing in 1999

Andrea Tan

Chartered Semiconductor Manufacturing Ltd. dropped to the lowest in almost nine years in Singapore trading, after brokerages including Goldman Sachs Group Inc. and Macquarie Group Ltd. downgraded the stock on the company’s unexpected forecast of a third-quarter loss.

Chartered fell 2.3 percent to 63 Singapore cents as of 11:13 a.m. on Singapore’s stock exchange, a third day of declines since the forecast and headed for the lowest level since the shares were first traded in November 1999.

At least nine brokerages including Goldman, JPMorgan Chase & Co. and Merrill Lynch & Co. slashed their 12-month share-price estimates by as much as 43 percent after the Singapore-based chipmaker on July 25 said it won’t be “consistent” in posting profits and warned of a loss in the current quarter.

Chief Executive Officer Chia Song Hwee said July 25 his plan to lower the breakeven utilization target to 65 percent isn’t “in sight” because of the challenging environment of high fuel prices, rising material costs, a weaker dollar and slowing demand.

“Higher breakeven utilization suggests the structural improvement achieved previously is reversing,” Low Horng Han, a Singapore-based analyst at Citigroup Inc. who recommends investors sell the shares, wrote in a report today. “Profitability remains uncertain.”

Low cut his 12-month share-price estimate 22 percent to 70 Singapore cents and reduced the 2008 earnings forecast by 50 percent to $13.9 million profit.

Steven Pelayo, a Hong Kong-based analyst at HSBC Holdings Plc, widened his 2008 net-loss estimate to $41 million from $13 million while JPMorgan’s Bhavin Shah expects Chartered to post a full-year loss of $31.7 million instead of achieving breakeven as he previously forecast.

Seven analysts tracked by Bloomberg recommend investors sell Chartered shares. Eight suggest holding them, while three say investors should buy the stock.

The shares have lost 96 percent from the peak of S$16.03 in March 2000.

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