HIMAX TECHNOLOGIES INC HIMX
August 13, 2012 - 12:32pm EST by
rasputin998
2012 2013
Price: 1.71 EPS $0.37 $0.42
Shares Out. (in M): 172 P/E 4.6x 4.1x
Market Cap (in $M): 294 P/FCF 4.5x 4.0x
Net Debt (in $M): -128 EBIT 81 86
TEV ($): 166 TEV/EBIT 2.1x 1.9x

Sign up for free guest access to view investment idea with a 45 days delay.

  • Taiwan
  • Semiconductor
  • Net-Net
  • Discount to Tangible Book
  • Capital Allocation
  • Insider Ownership
  • Market Expansion
 

Description

Himax Technologies (HIMX) is a highly regarded Taiwanese image processing semiconductor company.  The story here is one of recovery from two major blows: the impact of the 2008-2009 recession and the 2010 decision by a very large customer to diversify its supplier base.  Over the last two years, the company has systematically worked to diversify both its customer and product concentrations.  We believe Q4 2011 represented the successful completion of this endeavor.  Throughout this difficult transition, the company maintained profitability and a strong balance street.  It also opportunistically repurchased shares at attractive prices and continued paying a dividend. 

 

It’s Cheap!!

At $1.71 per share, Himax is a Ben Graham “net-net”.  Current assets plus long-term investment securities less all liabilities equates to $1.76 per ADS.  To be really fair to Graham, one might deduct the current deferred tax asset and also not include the investment securities as these appear to be illiquid and not readily marketable.  Nonetheless, the “true net-net” number gives us $1.52 per ADS.  An investor would realize a 40% gain if the stock trades to its book value of $2.40 per ADS and a 30% gain if it traded to its tangible book value of $2.20 per ADS. 

 

The company has generated positive income for all of its reporting history (back to 2004), and we conservatively expect 40 cents per ADS in free cash flow over the next 12 months, with substantial growth prospects on the horizon.  The company market cap is therefore just over 4 times its free cash flow, and its enterprise value is almost exactly 2.5 times its free cash flow after taking into account the 74 cents per ADS of net cash on its balance sheet.

 

 

They’re Generous!!

Although its board does not meet NASDAQ governance standards in that only three of its seven directors are independent, management certainly treats shareholders like owners.  Since 2007, Himax has cumulatively distributed over $1.28 per ADS in cash dividends and spent $158 million repurchasing shares.  This year through the end of April, Himax spent $6.8 million repurchasing 4.6 million ADSs (about 2.7% of the sharecount).  The company just paid its $10.7 million annual dividend on July 25.  Himax sets its dividend based on its prior year’s earnings.  July’s payout of 6.3 cents per ADS represents 100% of the prior year’s earnings, and a 3.7% yield at the current ADS price.  Management stated that the board’s decision to authorize a 100% payout ratio reflected its optimism for 2012’s results.  This is consistent with our view that 2011 represented a trough year for the company.  Management’s policy has historically been to pay out 30-35% of the prior year’s earnings.

 

 

They Have Skin in the Game!!

The company’s management and directors collectively own about 32% of the outstanding shares.  There are no special share classes with voting or distribution rights that differ from those of the ADSs.

 

 

There’s Blue Sky Optionality!!

The company is working with several Silicon Valley leaders on imaging technology that could usher in the next format of computing.  Google’s Project Glass (Google’s widely hyped computer glasses) reportedly is using enabling technology from Himax.  If successful, the rollout of this product should lead to another episode of growth.  For those unfamiliar with the concept, here are some links that introduce it:

 

http://en.wikipedia.org/wiki/Project_Glass

http://news.techeye.net/hardware/google-s-project-glass-to-push-wearable-electronics-boom

 

 

Overview

Himax Technologies, Inc. (NASDAQ: HIMX) is a fabless semiconductor solution provider dedicated to display imaging processing technologies. It is a worldwide market leader in display driver integrated circuits (ICs) and timing controllers used in TVs, laptops, monitors, mobile phones, tablets, digital cameras, car navigation, and many other consumer electronics devices.  Additionally, Himax designs and provides controllers for touch sensor displays, LCOS (liquid crystal on silicon) micro-displays used in palm-size projectors and head-mount displays, LED (light-emitting diode) driver ICs, power management ICs, and chipsets for TVs and monitors.  The company also offers digital camera solutions, including CMOS (complementary metal oxide semiconductor) image sensors and wafer level optics, which are used in a wide variety of applications such as mobile phone, tablet, laptop, TV, PC camera, automobile, security and medical devices.

 

Himax was founded in 2001 and is headquartered in Tainan, Taiwan.  The company currently employs 1,500 people.  It has offices in Tainan, Hsinchu, Taipei, China, Korea, Japan and the US.  The company holds more than 1,200 patents on its display image processing technologies.

 

For the less geeky among us, below is a cheat sheet of the acronyms you will find when researching display technologies:

 

AMOLED = active matrix organic light-emitting diode, used in both televisions and mobile devices (for example, the Nexus One smartphone)

 

LTPS = low temperature polysilicon, a higher end, next generation LCD display technology

 

OLED = organic light-emitting diode

 

TFT-LCD = thin film transistor liquid crystal display

 

LCOS = liquid crystal on silicon, a display technology used in pico-projectors and near-eye applications.

 

 

Industry Discussion

 As one might expect, this industry is fiercely competitive and highly cyclical.  Extreme concentration in Himax’s customer and supplier base forces the company to continually maintain its technological edge and seek new end markets to maintain its negotiating power.  Offsetting this is the moat created by the fact that solution providers must work intimately with the OEMs in designing, testing, and managing the manufacturing supply chain for their products.  Further, the TAM is very large, highly dynamic, and growing rapidly.

 

From the most recent 20-F:

 

The display driver market has specific characteristics, including those discussed below.

 

Concentration of Panel Manufacturers

 

The global TFT-LCD panel industry consists of a small number of manufacturers, substantially all of which are based in Asia.  In recent years, TFT-LCD panel manufacturers, in particular Taiwan-, Korea- and China-based manufacturers, have invested or are planning to invest heavily to establish, construct and ramp up additional fab capacity.  The capital-intensive nature of the industry often results in TFT-LCD panel manufacturers operating at a high level of capacity utilization in order to reduce unit costs.  This tends to create a temporary oversupply of panels, which reduces the average selling price of panels and puts pricing pressure on component companies including display driver companies.  Moreover, the concentration of panel manufacturers permits major panel manufacturers to exert pricing pressure on display driver companies such as us.  The small number of panel manufacturers intensifies this, as display driver companies, in addition to seeking to expand their customer base, must also focus on winning a larger percentage of such customers’ display driver requirements.

 

Customization Requirements

 

Each panel display has a unique pixel design to meet its particular requirements.  To optimize the panel’s performance, display drivers have to be customized for each panel design.  The most common customization requirement is for the display driver company to optimize the gamma curve of each display driver for each panel design. Display driver companies must work closely with their customers to develop semiconductors that meet their customers’ specific needs in order to optimize the performance of their products.

 

Mixed-Signal Design and High-Voltage CMOS Process Technology 

Display drivers have specific design and manufacturing requirements that are not standard in the semiconductor industry.  Some display drivers require mixed-signal design since they combine both analog and digital devices on a single semiconductor to process both analog signals and digital data.  Manufacturing display drivers requires high-voltage CMOS process technology operating typically at 4.5 to 24 volts for source drivers and 10 to 50 volts for gate drivers, levels of voltage which are not standard in the semiconductor industry.  For display drivers, the driving voltage must be maintained under a very high degree of uniformity, which can be difficult to achieve using standard CMOS process technology.  However, manufacturing display drivers does not require very small-geometry semiconductor processes.  Typically, the manufacturing process for large panel display drivers requires geometries between 0.11 micron and 1 micron because the physical dimensions of a high-voltage device do not allow for the economical reduction in geometries below this range.  There are a limited number of fabs with high-voltage CMOS process technology that are capable of high-volume manufacturing of display drivers.

 

Special Assembly and Testing Requirements

 

Manufacturing display drivers requires certain assembly and testing technologies and equipment that are not standard for other semiconductors and are offered by a limited number of providers.  The assembly of display drivers typically uses either tape automated bonding, also known as TAB, or chip-on-glass, also known as COG, technologies. Display drivers also require gold bumping, which is a process in which gold bumps are plated onto each wafer to connect the die and the processed tape, in the case of TAB packages, and the glass, in the case of COG packages.  TAB may utilize tape carrier package, also known as TCP, or chip on film, also known as COF.  The type of assembly used depends on the panel manufacturer’s design, which is influenced by panel size and application and is typically determined by the panel manufacturers. Display drivers for large-sized applications typically require TAB package types and, to a lesser extent COG package types, whereas display drivers for mobile handsets and consumer electronics products typically require COG packages.  The testing of display drivers also requires special testers that can support high-channel and high-voltage output semiconductors. Such testers are not standard in the semiconductor industry.

 

Supply Chain Management

 

The manufacturing of display drivers is a complex process and requires several manufacturing stages such as wafer fabrication, gold bumping and assembly and testing, and the availability of materials such as the processed tape used in TAB packaging.  Panel manufacturers typically operate at high levels of capacity utilization and require a reliable supply of display drivers.  A shortage of display drivers, or a disruption to this supply, may disrupt panel manufacturers’ operations since replacement supplies may not be available on a timely basis or at all, given the customization of display drivers.  As a result, a display driver company’s ability to deliver its products on a timely basis at the quality and quantity required is critical to satisfying its existing customers and winning new ones.  Such supply chain management is particularly crucial to fabless display driver companies that do not have their own in-house manufacturing capacity.  In the case of display drivers, supply chain management is further complicated by the high-voltage CMOS process technology and the special assembly and testing requirements that are not standard in the semiconductor industry.  Access to this capacity also depends in part on display driver companies having received assurances of demand for their products since semiconductor manufacturing service providers require credible demand forecasts before allocating capacity among customers and investing to expand their capacity to support growth.

 

Need for Higher Level of Integration

 

The small form factor of mobile handsets and certain consumer electronics products restricts the space for components.  Small and medium-sized panel applications typically require one or more source drivers, one or more gate drivers and one timing controller, which can be installed as separate semiconductors or as an integrated single-chip driver. Customers are increasingly demanding higher levels of integration in order to manufacture more compact panels, simplify the module assembly process and reduce unit costs.  Display driver companies must be able to offer highly integrated chips that combine the source driver, gate driver and timing controller, as well as semiconductors such as memory, power circuit and image processors, into a single chip.  Due to the size restrictions and stringent power consumption constraints of such display drivers, single-chip drivers are complex to design.  For large-sized panel applications, integration is both more difficult to achieve and less important since size and weight are less of a priority.

 

 

Products

Himax’s product lines include:

 

-         display drivers and timing controllers;

-         touch controller ICs;

-         LCOS products;

-         Power ICs;

-         CMOS image sensors; and,

-         Wafer level optics products.

 

The company separates its segment reporting into Driver ICs and Non-Driver products.  As presented below, Drive ICs represent the vast majority of Himax’s revenues and more than 100% of the company’s profits.  Non-driver products represent a growing but as yet unprofitable portion of the revenue mix.

 

 

 

 

Year Ended December 31,

 

 

 

2009

 

 

2010 

 

 

2011 

 

 

 

(in thousand)

 

Segment Revenues

 

 

 

 

 

 

 

 

 

 

 

 

Driver IC

 

$

646,121

 

 

 

590,057

 

 

 

552,456

 

Non-Driver products

 

 

46,260

 

 

 

52,635

 

 

 

80,565

 

Total

 

$

692,381

 

 

 

642,692

 

 

 

633,021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment profit (loss)

 

 

 

 

 

 

 

 

 

 

 

 

Driver IC

 

$

71,035

 

 

 

54,815

 

 

 

38,401

 

Non-Driver products

 

 

(27,498

)

 

 

(19,457

)

 

 

(21,793

)

Total

 

$

43,537

 

 

 

35,358

 

 

 

16,608

 

 

Within the Driver segment, Himax’s product mix has historically been heavily toward large-sized applications (defined as screen sizes larger than 10 inches measured diagonally).  However, growth in drivers for mobile applications, consumer electronics, and, as mentioned above, Non-Driver products, have just about hit the point where they are offsetting declines in large-sized application Driver revenues. 

 

 

 

Year Ended December 31,

 

 

 

2009

 

 

2010

 

 

2011

 

 

 

Amount

 

 

Percentage
of
Revenues

 

 

Amount

 

 

Percentage
of
Revenues

 

 

Amount

 

 

Percentage
of
Revenues

 

 

 

(in thousands, except percentages)

 

Display drivers for large-sized applications

 

$

493,513

 

 

 

71.3

%

 

$

366,492

 

 

 

57.0

%

 

$

270,372

 

 

 

42.7

%

Display drivers for mobile handsets applications

 

 

69,081

 

 

 

10.0

 

 

 

119,623

 

 

 

18.6

 

 

 

169,248

 

 

 

26.8

 

Display drivers for consumer electronics applications

 

 

83,527

 

 

 

12.1

 

 

 

103,942

 

 

 

16.2

 

 

 

112,836

 

 

 

17.8

 

Others(1)

 

 

46,260

 

 

 

6.6

 

 

 

52,635

 

 

 

8.2

 

 

 

80,565

 

 

 

12.7

 

Total

 

$

692,381

 

 

 

100.0

%

 

$

642,692

 

 

 

100.0

%

 

$

633,021

 

 

 

100.0

%

 

 

Importantly, Himax’s market share within the Small/Medium-sized panel driver segment (i.e., mobile screens) has steadily risen from 5.1% in 2007 to 11.3% in 2011 (source: iSuppli).  In 2011, Himax lost share in large panel drivers because a major customer continued to diversify its driver IC supply base (discussed further below).  However, this was offset by its gains in small and medium size panels, especially in smartphones.  The company states that this growth momentum is expected to continue in 2012 with strong demand coming from both Chinese and international brand customers.

  

 

Customers

Himax’s display driver customers are primarily panel manufacturers and mobile device module manufacturers, who in turn design and market their products to manufacturers of end-use products such as notebook computers, desktop monitors, televisions, mobile handsets and consumer electronics products.  In 2009, 2010 and 2011, Chimei Innolux accounted for 67.5%, 52.8 % and 40.8% of their revenues, respectively. 

 

Their 10 largest customers for the year ended December 31, 2011 are listed below:

 

Chimei Innolux Corporation

Chunghwa Picture Tubes, Ltd.

Excel Asian Taiwan Co., Ltd.

HannStar Display Corporation

Happiness Commercial Co., Limited

Hefei Boe Optoelectronics Technology Co., Ltd.

Perfect Display Limited

Samsung Electronics Taiwan Co., Ltd.

Shanghai Tianma Microelectronics

Truly Semiconductors Ltd.

 

Himax’s customers typically provide the company a long-term (twelve-month) forecast plus three-month rolling non-binding forecasts and confirm orders about one month ahead of scheduled delivery.  In general, purchase orders are not cancellable by either party, although from time to time the company has agreed to amend terms.

 

Competition

 

The markets for Himax’s products are, in general, intensely competitive, characterized by continuous technological change, evolving industry standards, and declining average selling prices. 

 

From the latest 20-F:

 

We continually face intense competition from fabless display driver companies, including DongBu Electronics, Fitipower Integrated Technology, Inc., Ili Technology Corp., Lusem Co., Ltd, Novatek Microelectronics Corp., Orise Technology Co., Ltd., Raydium Semiconductor Corporation, Sitronix Technology Co., Ltd., Silicon Works Co. Ltd. and Solomon Systech Limited.  We also face competition from integrated device manufacturers, such as MagnaChip Semiconductor Ltd., Panasonic Corporation, NEC Electronics Corporation, Renesas Technology Corp., Seiko Epson Corporation, Toshiba Corporation, Sanyo Electric Co., Ltd. and Rohm Co., Ltd. and panel manufacturers with in-house semiconductor design capabilities, such as Samsung Electronics Co., Ltd. and Sharp Corporation.  The latter are both our competitors and customers.

 

Many of our competitors, some of which are affiliated or have established relationships with other panel manufacturers, have longer operating histories, greater brand recognition and significantly greater financial, manufacturing, technological, sales and marketing, human and other resources than we do. Additionally, we expect that as the flat panel semiconductor industry expands, more companies may enter and compete in our markets.

 

For touch controller ICs, we compete with worldwide suppliers, such as Atmel Corp., Cypress Semiconductor Corp. and Synpatics Inc.

 

Our monitor semiconductor solutions compete against solutions offered by a significant number of semiconductor companies including MStar Semiconductor, Inc., Novatek Microelectronics Corp., NXP Semiconductor, Realtek Semiconductor Corp.,. For 2D to 3D conversion solutions, we face competition from Mediatek Corp. and MStar Semiconductor, Inc.

 

For LCOS products, we face competition primarily from digital lighting processing, or DLP, projectors incorporating Texas Instruments Incorporated’s digital light processing technology. We also face competition from a few other mobile projector technologies, including Micron Technology (which acquired Displaytech Inc. in 2009 for its color-sequential ferroelectric liquid crystal on silicon, or FLCOS, projectors), OmniVision (which acquired Aurora Systems in 2010), Syndiant Inc. and Microvision, Inc., a company providing laser-scanning projector solutions.

 

For power ICs, we face competition from Taiwan companies including Richtek Technology Corporation, Global Mixed-mode Technology Inc. and Advanced Analog Technology, Inc. We also compete with worldwide suppliers such as Maxim Integrated Products, Inc., Texas Instruments Incorporated and Rohm Co., Ltd.

 

For CMOS image sensor products, we face competition primarily from Aptina Imaging Corporation, Omnivision Technologies Inc., Samsung Electronics Co. Ltd., Sony Corporation and STMicroelectronics.

 

For wafer level optics products, we face competition primarily from Visera Technologies Company Ltd., Heptagon, Anteryon, Nemotek Technologies and Q-Technology Ltd.

 

 

Financial History

 

From 2002 through 2007, Himax’s revenues grew steadily, from $56 million in 2002 to $918 million in 2007.  Operating income rose similarly, from $1 million in 2002 to $104 million in 2007.  Revenues and income declined precipitously in 2008 and 2009 as the recession hit demand for its customers’ products.

 

From here, the key to understanding Himax’s business trajectory is to contrast its Revenues from third parties line with its Revenues from related parties line.  As detailed in the income statement below, Revenues from third parties had recovered almost all of their 2009 losses in 2010 and by 2011 had exceeded their pre-recession 2007 levels.

 

The problem with Himax’s recovery is that its key customer, Chimei Innolux, which also happens to be a 15% shareholder in Himax, merged with two other major customers in March 2010.  In 2009 these combined entities represented 64.3% of Himax’s revenues.  Almost immediately following the merger, Chimei Innolux decided to diversify its supply base, and Himax’s large-sized panel revenues declines by 25.7% and 26.25 respectively in 2010 and 2011.  In 2011, Chimei Innolux accounted for approximately 40.8% of Himax’s revenues.

 

The impact of the recession and the Chimei Innolux debacle is highlighted in the income statement below, as Chimei Innolux represents the Related party revenue line that is broken out.

 

 

 

 

Year Ended December 31,

 

 

 

2007

 

 

2008

 

 

2009

 

 

2010

 

 

2011

 

 

 

(in thousands, except per share data)

 

Consolidated Statement of Income Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues from third parties, net

 

$

371,267

 

 

$

312,336

 

 

$

245,075

 

 

$

304,068

 

 

$

374,788

 

Revenues from related parties, net

 

 

546,944

 

 

 

520,463

 

 

 

447,306

 

 

 

338,624

 

 

 

258,233

 

Operating income

 

$

103,905

 

 

$

60,182

 

 

$

43,537

 

 

$

35,358

 

 

$

16,608

 

 

Importantly, while Chimei Innolux’s revenue representation remains unacceptable high, the damage from this supplier diversification decision seems largely behind us.  Moreover, Himax has diversified its product mix into the faster growing, more profitable mobile market to the extent that it is more than offsetting any further revenue and profit declines from this customer.  More recent quarterly data support this view.

 

 

Q2 12 Q1 12 Q4 11

Q3 11

Q2 11

Q1 11

Revenues

$189,510

$166,693

$169,228

$162,121

$160,579

$141,093

Operating Income

$20,205

$14,464

$11,178

-$523

$3,411

$2,540

 

Segment revenue growth based on the most recent quarterly results both on a year over year basis and sequentially illustrate this point even more dramatically, as seen below.


Second quarter 2012 Financial Results

Breakdown by Product Line (USD in millions) (unaudited)

 

Q2 2012

%

Q2 2011

%

% Change

Display drivers for large-size panels

$79.7

42.1%

$76.4

47.6%

+4.3%

Display drivers for small/medium sized panels

$83.8

44.2%

$62.2

38.7%

+34.7%

Non-driver products

$26.0

13.7%

$22.0

13.7%

+18.4%

 

 

 

 

 

 

 

 

Q2 2012

%

Q1 2012

%

% Change

Display drivers for large-size panels

$79.7

42.1%

$71.4

42.8%

+11.7%

Display drivers for small/medium sized panels

$83.8

44.2%

$72.4

43.4%

+15.8%

Non-driver products

$26.0

13.7%

$22.9

13.8%

+13.2%

 

Gross margins continued to improve as non-driver and mobile driver revenues enjoy ever-greater representation in the mix.  Finally, related party revenues declined even further, to 33.4%, in this most recent quarter.  I should point out that the company alerted investors that there will be a 6 cent charge in the coming 3rd quarter to expense for employ Restricted Stock Units (RSUs) to be issued, which is admittedly annoying given the current share price.

 

Conclusion

In conclusion, we believe that Himax has successfully stabilized its business and is in the early stages of growing sales and profitability with products that are in much more attractive markets than what had previously dominated its revenue stream.  The market has not yet recognized this, and so the ADSs can be bought at a very cheap valuation. Moreover, investors can look to management’s history of sharing the company’s success with stockholders for assurance that they will participate in this upcycle.

Catalyst

- Continued improvement in revenues, gross margin, operating income and net income, demonstrating that 2011 was indeed trough.
 
- Continued diversification away from concentrated customer and large driver business.
 
- New product rollout.
 
- Potential Google Project Glass participation.
 
- Accretion of value in business and to investor through ADS buybacks and dividend payments.
    sort by    

    Description

    Himax Technologies (HIMX) is a highly regarded Taiwanese image processing semiconductor company.  The story here is one of recovery from two major blows: the impact of the 2008-2009 recession and the 2010 decision by a very large customer to diversify its supplier base.  Over the last two years, the company has systematically worked to diversify both its customer and product concentrations.  We believe Q4 2011 represented the successful completion of this endeavor.  Throughout this difficult transition, the company maintained profitability and a strong balance street.  It also opportunistically repurchased shares at attractive prices and continued paying a dividend. 

     

    It’s Cheap!!

    At $1.71 per share, Himax is a Ben Graham “net-net”.  Current assets plus long-term investment securities less all liabilities equates to $1.76 per ADS.  To be really fair to Graham, one might deduct the current deferred tax asset and also not include the investment securities as these appear to be illiquid and not readily marketable.  Nonetheless, the “true net-net” number gives us $1.52 per ADS.  An investor would realize a 40% gain if the stock trades to its book value of $2.40 per ADS and a 30% gain if it traded to its tangible book value of $2.20 per ADS. 

     

    The company has generated positive income for all of its reporting history (back to 2004), and we conservatively expect 40 cents per ADS in free cash flow over the next 12 months, with substantial growth prospects on the horizon.  The company market cap is therefore just over 4 times its free cash flow, and its enterprise value is almost exactly 2.5 times its free cash flow after taking into account the 74 cents per ADS of net cash on its balance sheet.

     

     

    They’re Generous!!

    Although its board does not meet NASDAQ governance standards in that only three of its seven directors are independent, management certainly treats shareholders like owners.  Since 2007, Himax has cumulatively distributed over $1.28 per ADS in cash dividends and spent $158 million repurchasing shares.  This year through the end of April, Himax spent $6.8 million repurchasing 4.6 million ADSs (about 2.7% of the sharecount).  The company just paid its $10.7 million annual dividend on July 25.  Himax sets its dividend based on its prior year’s earnings.  July’s payout of 6.3 cents per ADS represents 100% of the prior year’s earnings, and a 3.7% yield at the current ADS price.  Management stated that the board’s decision to authorize a 100% payout ratio reflected its optimism for 2012’s results.  This is consistent with our view that 2011 represented a trough year for the company.  Management’s policy has historically been to pay out 30-35% of the prior year’s earnings.

     

     

    They Have Skin in the Game!!

    The company’s management and directors collectively own about 32% of the outstanding shares.  There are no special share classes with voting or distribution rights that differ from those of the ADSs.

     

     

    There’s Blue Sky Optionality!!

    The company is working with several Silicon Valley leaders on imaging technology that could usher in the next format of computing.  Google’s Project Glass (Google’s widely hyped computer glasses) reportedly is using enabling technology from Himax.  If successful, the rollout of this product should lead to another episode of growth.  For those unfamiliar with the concept, here are some links that introduce it:

     

    http://en.wikipedia.org/wiki/Project_Glass

    http://news.techeye.net/hardware/google-s-project-glass-to-push-wearable-electronics-boom

     

     

    Overview

    Himax Technologies, Inc. (NASDAQ: HIMX) is a fabless semiconductor solution provider dedicated to display imaging processing technologies. It is a worldwide market leader in display driver integrated circuits (ICs) and timing controllers used in TVs, laptops, monitors, mobile phones, tablets, digital cameras, car navigation, and many other consumer electronics devices.  Additionally, Himax designs and provides controllers for touch sensor displays, LCOS (liquid crystal on silicon) micro-displays used in palm-size projectors and head-mount displays, LED (light-emitting diode) driver ICs, power management ICs, and chipsets for TVs and monitors.  The company also offers digital camera solutions, including CMOS (complementary metal oxide semiconductor) image sensors and wafer level optics, which are used in a wide variety of applications such as mobile phone, tablet, laptop, TV, PC camera, automobile, security and medical devices.

     

    Himax was founded in 2001 and is headquartered in Tainan, Taiwan.  The company currently employs 1,500 people.  It has offices in Tainan, Hsinchu, Taipei, China, Korea, Japan and the US.  The company holds more than 1,200 patents on its display image processing technologies.

     

    For the less geeky among us, below is a cheat sheet of the acronyms you will find when researching display technologies:

     

    AMOLED = active matrix organic light-emitting diode, used in both televisions and mobile devices (for example, the Nexus One smartphone)

     

    LTPS = low temperature polysilicon, a higher end, next generation LCD display technology

     

    OLED = organic light-emitting diode

     

    TFT-LCD = thin film transistor liquid crystal display

     

    LCOS = liquid crystal on silicon, a display technology used in pico-projectors and near-eye applications.

     

     

    Industry Discussion

     As one might expect, this industry is fiercely competitive and highly cyclical.  Extreme concentration in Himax’s customer and supplier base forces the company to continually maintain its technological edge and seek new end markets to maintain its negotiating power.  Offsetting this is the moat created by the fact that solution providers must work intimately with the OEMs in designing, testing, and managing the manufacturing supply chain for their products.  Further, the TAM is very large, highly dynamic, and growing rapidly.

     

    From the most recent 20-F:

     

    The display driver market has specific characteristics, including those discussed below.

     

    Concentration of Panel Manufacturers

     

    The global TFT-LCD panel industry consists of a small number of manufacturers, substantially all of which are based in Asia.  In recent years, TFT-LCD panel manufacturers, in particular Taiwan-, Korea- and China-based manufacturers, have invested or are planning to invest heavily to establish, construct and ramp up additional fab capacity.  The capital-intensive nature of the industry often results in TFT-LCD panel manufacturers operating at a high level of capacity utilization in order to reduce unit costs.  This tends to create a temporary oversupply of panels, which reduces the average selling price of panels and puts pricing pressure on component companies including display driver companies.  Moreover, the concentration of panel manufacturers permits major panel manufacturers to exert pricing pressure on display driver companies such as us.  The small number of panel manufacturers intensifies this, as display driver companies, in addition to seeking to expand their customer base, must also focus on winning a larger percentage of such customers’ display driver requirements.

     

    Customization Requirements

     

    Each panel display has a unique pixel design to meet its particular requirements.  To optimize the panel’s performance, display drivers have to be customized for each panel design.  The most common customization requirement is for the display driver company to optimize the gamma curve of each display driver for each panel design. Display driver companies must work closely with their customers to develop semiconductors that meet their customers’ specific needs in order to optimize the performance of their products.

     

    Mixed-Signal Design and High-Voltage CMOS Process Technology 

    Display drivers have specific design and manufacturing requirements that are not standard in the semiconductor industry.  Some display drivers require mixed-signal design since they combine both analog and digital devices on a single semiconductor to process both analog signals and digital data.  Manufacturing display drivers requires high-voltage CMOS process technology operating typically at 4.5 to 24 volts for source drivers and 10 to 50 volts for gate drivers, levels of voltage which are not standard in the semiconductor industry.  For display drivers, the driving voltage must be maintained under a very high degree of uniformity, which can be difficult to achieve using standard CMOS process technology.  However, manufacturing display drivers does not require very small-geometry semiconductor processes.  Typically, the manufacturing process for large panel display drivers requires geometries between 0.11 micron and 1 micron because the physical dimensions of a high-voltage device do not allow for the economical reduction in geometries below this range.  There are a limited number of fabs with high-voltage CMOS process technology that are capable of high-volume manufacturing of display drivers.

     

    Special Assembly and Testing Requirements

     

    Manufacturing display drivers requires certain assembly and testing technologies and equipment that are not standard for other semiconductors and are offered by a limited number of providers.  The assembly of display drivers typically uses either tape automated bonding, also known as TAB, or chip-on-glass, also known as COG, technologies. Display drivers also require gold bumping, which is a process in which gold bumps are plated onto each wafer to connect the die and the processed tape, in the case of TAB packages, and the glass, in the case of COG packages.  TAB may utilize tape carrier package, also known as TCP, or chip on film, also known as COF.  The type of assembly used depends on the panel manufacturer’s design, which is influenced by panel size and application and is typically determined by the panel manufacturers. Display drivers for large-sized applications typically require TAB package types and, to a lesser extent COG package types, whereas display drivers for mobile handsets and consumer electronics products typically require COG packages.  The testing of display drivers also requires special testers that can support high-channel and high-voltage output semiconductors. Such testers are not standard in the semiconductor industry.

     

    Supply Chain Management

     

    The manufacturing of display drivers is a complex process and requires several manufacturing stages such as wafer fabrication, gold bumping and assembly and testing, and the availability of materials such as the processed tape used in TAB packaging.  Panel manufacturers typically operate at high levels of capacity utilization and require a reliable supply of display drivers.  A shortage of display drivers, or a disruption to this supply, may disrupt panel manufacturers’ operations since replacement supplies may not be available on a timely basis or at all, given the customization of display drivers.  As a result, a display driver company’s ability to deliver its products on a timely basis at the quality and quantity required is critical to satisfying its existing customers and winning new ones.  Such supply chain management is particularly crucial to fabless display driver companies that do not have their own in-house manufacturing capacity.  In the case of display drivers, supply chain management is further complicated by the high-voltage CMOS process technology and the special assembly and testing requirements that are not standard in the semiconductor industry.  Access to this capacity also depends in part on display driver companies having received assurances of demand for their products since semiconductor manufacturing service providers require credible demand forecasts before allocating capacity among customers and investing to expand their capacity to support growth.

     

    Need for Higher Level of Integration

     

    The small form factor of mobile handsets and certain consumer electronics products restricts the space for components.  Small and medium-sized panel applications typically require one or more source drivers, one or more gate drivers and one timing controller, which can be installed as separate semiconductors or as an integrated single-chip driver. Customers are increasingly demanding higher levels of integration in order to manufacture more compact panels, simplify the module assembly process and reduce unit costs.  Display driver companies must be able to offer highly integrated chips that combine the source driver, gate driver and timing controller, as well as semiconductors such as memory, power circuit and image processors, into a single chip.  Due to the size restrictions and stringent power consumption constraints of such display drivers, single-chip drivers are complex to design.  For large-sized panel applications, integration is both more difficult to achieve and less important since size and weight are less of a priority.

     

     

    Products

    Himax’s product lines include:

     

    -         display drivers and timing controllers;

    -         touch controller ICs;

    -         LCOS products;

    -         Power ICs;

    -         CMOS image sensors; and,

    -         Wafer level optics products.

     

    The company separates its segment reporting into Driver ICs and Non-Driver products.  As presented below, Drive ICs represent the vast majority of Himax’s revenues and more than 100% of the company’s profits.  Non-driver products represent a growing but as yet unprofitable portion of the revenue mix.

     

     

     

     

    Year Ended December 31,

     

     

     

    2009

     

     

    2010 

     

     

    2011 

     

     

     

    (in thousand)

     

    Segment Revenues

     

     

     

     

     

     

     

     

     

     

     

     

    Driver IC

     

    $

    646,121

     

     

     

    590,057

     

     

     

    552,456

     

    Non-Driver products

     

     

    46,260

     

     

     

    52,635

     

     

     

    80,565

     

    Total

     

    $

    692,381

     

     

     

    642,692

     

     

     

    633,021

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Segment profit (loss)

     

     

     

     

     

     

     

     

     

     

     

     

    Driver IC

     

    $

    71,035

     

     

     

    54,815

     

     

     

    38,401

     

    Non-Driver products

     

     

    (27,498

    )

     

     

    (19,457

    )

     

     

    (21,793

    )

    Total

     

    $

    43,537

     

     

     

    35,358

     

     

     

    16,608

     

     

    Within the Driver segment, Himax’s product mix has historically been heavily toward large-sized applications (defined as screen sizes larger than 10 inches measured diagonally).  However, growth in drivers for mobile applications, consumer electronics, and, as mentioned above, Non-Driver products, have just about hit the point where they are offsetting declines in large-sized application Driver revenues. 

     

     

     

    Year Ended December 31,

     

     

     

    2009

     

     

    2010

     

     

    2011

     

     

     

    Amount

     

     

    Percentage
    of
    Revenues

     

     

    Amount

     

     

    Percentage
    of
    Revenues

     

     

    Amount

     

     

    Percentage
    of
    Revenues

     

     

     

    (in thousands, except percentages)

     

    Display drivers for large-sized applications

     

    $

    493,513

     

     

     

    71.3

    %

     

    $

    366,492

     

     

     

    57.0

    %

     

    $

    270,372

     

     

     

    42.7

    %

    Display drivers for mobile handsets applications

     

     

    69,081

     

     

     

    10.0

     

     

     

    119,623

     

     

     

    18.6

     

     

     

    169,248

     

     

     

    26.8

     

    Display drivers for consumer electronics applications

     

     

    83,527

     

     

     

    12.1

     

     

     

    103,942

     

     

     

    16.2

     

     

     

    112,836

     

     

     

    17.8

     

    Others(1)

     

     

    46,260

     

     

     

    6.6

     

     

     

    52,635

     

     

     

    8.2

     

     

     

    80,565

     

     

     

    12.7

     

    Total

     

    $

    692,381

     

     

     

    100.0

    %

     

    $

    642,692

     

     

     

    100.0

    %

     

    $

    633,021

     

     

     

    100.0

    %

     

     

    Importantly, Himax’s market share within the Small/Medium-sized panel driver segment (i.e., mobile screens) has steadily risen from 5.1% in 2007 to 11.3% in 2011 (source: iSuppli).  In 2011, Himax lost share in large panel drivers because a major customer continued to diversify its driver IC supply base (discussed further below).  However, this was offset by its gains in small and medium size panels, especially in smartphones.  The company states that this growth momentum is expected to continue in 2012 with strong demand coming from both Chinese and international brand customers.

      

     

    Customers

    Himax’s display driver customers are primarily panel manufacturers and mobile device module manufacturers, who in turn design and market their products to manufacturers of end-use products such as notebook computers, desktop monitors, televisions, mobile handsets and consumer electronics products.  In 2009, 2010 and 2011, Chimei Innolux accounted for 67.5%, 52.8 % and 40.8% of their revenues, respectively. 

     

    Their 10 largest customers for the year ended December 31, 2011 are listed below:

     

    Chimei Innolux Corporation

    Chunghwa Picture Tubes, Ltd.

    Excel Asian Taiwan Co., Ltd.

    HannStar Display Corporation

    Happiness Commercial Co., Limited

    Hefei Boe Optoelectronics Technology Co., Ltd.

    Perfect Display Limited

    Samsung Electronics Taiwan Co., Ltd.

    Shanghai Tianma Microelectronics

    Truly Semiconductors Ltd.

     

    Himax’s customers typically provide the company a long-term (twelve-month) forecast plus three-month rolling non-binding forecasts and confirm orders about one month ahead of scheduled delivery.  In general, purchase orders are not cancellable by either party, although from time to time the company has agreed to amend terms.

     

    Competition

     

    The markets for Himax’s products are, in general, intensely competitive, characterized by continuous technological change, evolving industry standards, and declining average selling prices. 

     

    From the latest 20-F:

     

    We continually face intense competition from fabless display driver companies, including DongBu Electronics, Fitipower Integrated Technology, Inc., Ili Technology Corp., Lusem Co., Ltd, Novatek Microelectronics Corp., Orise Technology Co., Ltd., Raydium Semiconductor Corporation, Sitronix Technology Co., Ltd., Silicon Works Co. Ltd. and Solomon Systech Limited.  We also face competition from integrated device manufacturers, such as MagnaChip Semiconductor Ltd., Panasonic Corporation, NEC Electronics Corporation, Renesas Technology Corp., Seiko Epson Corporation, Toshiba Corporation, Sanyo Electric Co., Ltd. and Rohm Co., Ltd. and panel manufacturers with in-house semiconductor design capabilities, such as Samsung Electronics Co., Ltd. and Sharp Corporation.  The latter are both our competitors and customers.

     

    Many of our competitors, some of which are affiliated or have established relationships with other panel manufacturers, have longer operating histories, greater brand recognition and significantly greater financial, manufacturing, technological, sales and marketing, human and other resources than we do. Additionally, we expect that as the flat panel semiconductor industry expands, more companies may enter and compete in our markets.

     

    For touch controller ICs, we compete with worldwide suppliers, such as Atmel Corp., Cypress Semiconductor Corp. and Synpatics Inc.

     

    Our monitor semiconductor solutions compete against solutions offered by a significant number of semiconductor companies including MStar Semiconductor, Inc., Novatek Microelectronics Corp., NXP Semiconductor, Realtek Semiconductor Corp.,. For 2D to 3D conversion solutions, we face competition from Mediatek Corp. and MStar Semiconductor, Inc.

     

    For LCOS products, we face competition primarily from digital lighting processing, or DLP, projectors incorporating Texas Instruments Incorporated’s digital light processing technology. We also face competition from a few other mobile projector technologies, including Micron Technology (which acquired Displaytech Inc. in 2009 for its color-sequential ferroelectric liquid crystal on silicon, or FLCOS, projectors), OmniVision (which acquired Aurora Systems in 2010), Syndiant Inc. and Microvision, Inc., a company providing laser-scanning projector solutions.

     

    For power ICs, we face competition from Taiwan companies including Richtek Technology Corporation, Global Mixed-mode Technology Inc. and Advanced Analog Technology, Inc. We also compete with worldwide suppliers such as Maxim Integrated Products, Inc., Texas Instruments Incorporated and Rohm Co., Ltd.

     

    For CMOS image sensor products, we face competition primarily from Aptina Imaging Corporation, Omnivision Technologies Inc., Samsung Electronics Co. Ltd., Sony Corporation and STMicroelectronics.

     

    For wafer level optics products, we face competition primarily from Visera Technologies Company Ltd., Heptagon, Anteryon, Nemotek Technologies and Q-Technology Ltd.

     

     

    Financial History

     

    From 2002 through 2007, Himax’s revenues grew steadily, from $56 million in 2002 to $918 million in 2007.  Operating income rose similarly, from $1 million in 2002 to $104 million in 2007.  Revenues and income declined precipitously in 2008 and 2009 as the recession hit demand for its customers’ products.

     

    From here, the key to understanding Himax’s business trajectory is to contrast its Revenues from third parties line with its Revenues from related parties line.  As detailed in the income statement below, Revenues from third parties had recovered almost all of their 2009 losses in 2010 and by 2011 had exceeded their pre-recession 2007 levels.

     

    The problem with Himax’s recovery is that its key customer, Chimei Innolux, which also happens to be a 15% shareholder in Himax, merged with two other major customers in March 2010.  In 2009 these combined entities represented 64.3% of Himax’s revenues.  Almost immediately following the merger, Chimei Innolux decided to diversify its supply base, and Himax’s large-sized panel revenues declines by 25.7% and 26.25 respectively in 2010 and 2011.  In 2011, Chimei Innolux accounted for approximately 40.8% of Himax’s revenues.

     

    The impact of the recession and the Chimei Innolux debacle is highlighted in the income statement below, as Chimei Innolux represents the Related party revenue line that is broken out.

     

     

     

     

    Year Ended December 31,

     

     

     

    2007

     

     

    2008

     

     

    2009

     

     

    2010

     

     

    2011

     

     

     

    (in thousands, except per share data)

     

    Consolidated Statement of Income Data:

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Revenues from third parties, net

     

    $

    371,267

     

     

    $

    312,336

     

     

    $

    245,075

     

     

    $

    304,068

     

     

    $

    374,788

     

    Revenues from related parties, net

     

     

    546,944

     

     

     

    520,463

     

     

     

    447,306

     

     

     

    338,624

     

     

     

    258,233

     

    Operating income

     

    $

    103,905

     

     

    $

    60,182

     

     

    $

    43,537

     

     

    $

    35,358

     

     

    $

    16,608

     

     

    Importantly, while Chimei Innolux’s revenue representation remains unacceptable high, the damage from this supplier diversification decision seems largely behind us.  Moreover, Himax has diversified its product mix into the faster growing, more profitable mobile market to the extent that it is more than offsetting any further revenue and profit declines from this customer.  More recent quarterly data support this view.

     

     

    Q2 12 Q1 12 Q4 11

    Q3 11

    Q2 11

    Q1 11

    Revenues

    $189,510

    $166,693

    $169,228

    $162,121

    $160,579

    $141,093

    Operating Income

    $20,205

    $14,464

    $11,178

    -$523

    $3,411

    $2,540

     

    Segment revenue growth based on the most recent quarterly results both on a year over year basis and sequentially illustrate this point even more dramatically, as seen below.


    Second quarter 2012 Financial Results

    Breakdown by Product Line (USD in millions) (unaudited)

     

    Q2 2012

    %

    Q2 2011

    %

    % Change

    Display drivers for large-size panels

    $79.7

    42.1%

    $76.4

    47.6%

    +4.3%

    Display drivers for small/medium sized panels

    $83.8

    44.2%

    $62.2

    38.7%

    +34.7%

    Non-driver products

    $26.0

    13.7%

    $22.0

    13.7%

    +18.4%

     

     

     

     

     

     

     

     

    Q2 2012

    %

    Q1 2012

    %

    % Change

    Display drivers for large-size panels

    $79.7

    42.1%

    $71.4

    42.8%

    +11.7%

    Display drivers for small/medium sized panels

    $83.8

    44.2%

    $72.4

    43.4%

    +15.8%

    Non-driver products

    $26.0

    13.7%

    $22.9

    13.8%

    +13.2%

     

    Gross margins continued to improve as non-driver and mobile driver revenues enjoy ever-greater representation in the mix.  Finally, related party revenues declined even further, to 33.4%, in this most recent quarter.  I should point out that the company alerted investors that there will be a 6 cent charge in the coming 3rd quarter to expense for employ Restricted Stock Units (RSUs) to be issued, which is admittedly annoying given the current share price.

     

    Conclusion

    In conclusion, we believe that Himax has successfully stabilized its business and is in the early stages of growing sales and profitability with products that are in much more attractive markets than what had previously dominated its revenue stream.  The market has not yet recognized this, and so the ADSs can be bought at a very cheap valuation. Moreover, investors can look to management’s history of sharing the company’s success with stockholders for assurance that they will participate in this upcycle.

    Catalyst

    - Continued improvement in revenues, gross margin, operating income and net income, demonstrating that 2011 was indeed trough.
     
    - Continued diversification away from concentrated customer and large driver business.
     
    - New product rollout.
     
    - Potential Google Project Glass participation.
     
    - Accretion of value in business and to investor through ADS buybacks and dividend payments.

    Messages


    SubjectRE: Questions
    Entry08/14/2012 01:12 AM
    Memberrasputin998
    MIP -
     
    Thanks for your questions.  Our responses are below.
     
    Do you see top-line growth from mobile handsets & consumer electronics to outpace the decrease in large-sized application in the near future? 
     
    Answer: Yes, small/medium sized panels and non-driver products should grow meaningfully faster in the future.  Still, management believes that large-size panels business has bottomed and can resume modest growth. 
     
    Furthermore, can you detail the margins placed on large-sized, mobile handsets, and consumer electronics? You say that the mobile segment is more profitable but I want to get a better idea of the #s. 
     
    Answer:
     
    Categorizing the products the way that the company does, estimated gross margins are as follows: 
     
    Panels: large size, 20-22%; small to medium sized, 27-30%;
     
    Non-driver products: cmos image sensors, 20-25%; LCOS microdisplays, 30-45%, touch panel controllers, over 55%, power management, 35-40%; LED driver ICs, 25-30%; other, not meaningful and varied depending on product.
     
    Finally, do you think the company could take on more debt to achieve a better capital structure? Use additional funds into R&D (you say its a competitive space) or buy back more shares? Also, any personal estimates beyond the 40 cents per ADS?
     
    Answer: I believe the company will always run with net cash of about $100 million until the business matures or new products gain meaningful traction.  R&D will increase as revenue increases but not as fast.  The company will consider using all cash flows available after dividends to buy back stock, but only at right price.  The company was very aggressive when stock fell below working capital in Q4 2011 and Q1 2012, but slowed the buyback down last quarter when stock advanced above $2.00 per share. 
     
    If some of the non-driver products gain traction, earnings can double in a few years.  The company is still losing approximately $.10 a share on the non-driver businesses, so earnings can advance to $.50 with only modest profitability in this segment.  Another $100 million in revenue from this segment and small to medium panel segment adds another $.14 of earnings, so there seems to be a very reasonable path to $.64 of earnings.  If the company gains more visibility as an important and diverse supplier to top tier tablet/cell phone suppliers, a 10 p/e + cash seems plausible and gets you a $7.00 stock .       

    SubjectRE: RE: RE: RE: Questions
    Entry08/14/2012 11:13 AM
    Memberzzz007
    FWIW, I am pretty certain that Himax's CFO was previously the CFO of Tongxin, one of my most painful Chinese investments.  It appears that her official bio has been scrubbed of this detour in her professional trajectory.
     
    Tongxin wasn't a fraud in the classic sense, i.e. a completely fictitious creation, but was more a case of American shareholders (and management) getting completely screwed by the local shareholders.  Jackie (CFO) was, in my opinion, actually one of the good guys who was focused on getting the right controls in place, and doing the right thing for US shareholders.  Just thought I'd share the info.

    SubjectRE: RE: RE: RE: RE: Questions
    Entry08/14/2012 04:20 PM
    Memberrasputin998
    ZZZ -
     
    Thanks for pointing this out as it clearly requires deeper digging.  We actually spent a lot of time (about six hours or so face to face in total) with Jackie Chang and were impressed with her depth of knowledge about the company (Himax, that is) and its management culture.  We also found her to have a very good grasp of the numbers.  She is very straightforward in communicating the data, business trends, strategy etc.  She is also not shy about sharing her opinions. 
     
    We did ask a lot of questions about her background at Nissan, Playhut, and her experiences in China, Taiwan and the United States.  We also knew that she had been with Himax for only about a year.  However, she never mentioned the Tongxin "detour", as you aptly put it.  We followed that story somewhat but never really did much work on it, and unfortunately we never made the connection between the CFO's names.  Nonetheless, you are definitely correct that she is indeed the same person. 
     
    Based on the information we've been able to gather today, the story is that she came into Tongxin and hired real accountants, implemented real account systems, CRM systems, etc., and and set them up to operate under proper practices by western standards without any knowledge of the issues there.  In fact, when she uncovered related party payments that weren't adequately explained, she went right to the board.  Further, when she refused to certify their financial statements, she was fired.  We've been told that there are legal and regulatory reasons why there has been no discussion with shareholders on this topic.
     
    We're obviously very concerned about the lack of forthrightness and will do more digging.

    SubjectRE: CFO
    Entry08/17/2012 07:14 PM
    Memberzzz007
    rasputin,
     
    Sorry, didn't see your first response to my post or I would have responded earlier.
     
    Just wanted to reiterate that I wasn't trying to paint Jackie in an unfavorable light.  Notwithstanding the disclosure issue (and I can sympathize with both points of view in this regard), I always felt like Jackie was forthright and professional with me.  Outside of perhaps being a little on the optimistic side (with 20-20 hindsight) about the ability of the "good guys" at TXIC to effect positive change, she was always clear about the challenges facing the business, and was in no way associated with the local Chinese a-holes that stole the company.  The circumstances surrounding her firing provide pretty good evidence in this regard.
     
    Anyway, that's all.  I liked her.
     
    zzz

    SubjectWow
    Entry04/09/2013 09:57 AM
    Memberangus309
    Unbelievable...Congrats Rasputin.
      Back to top