3Q16 sales beat; valuation undemanding
​3Q16 sales a significant beat: Sept sales grew 10% MoM and 21% YoY to a new high, while 3Q16 sales rose 20% QoQ, beating our estimate by 9%, mainly due to 1) strong seasonality; 2) robust demand from emerging markets; and 3) earlier pull-in for China’s National Day. Strong sales growth was mainly driven by robust demand for feature phones. In our view, zero-capacitor driver ICs and sensor segments will be Sitronix’s mid-/long-term growth drivers. We now lift our 2016/17F EPS estimates by 9%/7%. The stock is trading at around 11-12x 2016/17F EPS, at the lower end of its historical P/E range (6-26x). We reiterate BUY and lift our TP to NT$115, based on 13x our new 2017F EPS.
Sitronix Technology Corporation is principally engaged in the design, manufacture and distribution of integrated circuit (IC) products. The Company's IC products are classified into three categories: display driver ICs, such as mobile thin film transistor (TFT) driver ICs, automotive driver ICs, color super twisted nematic (CSTN) driver ICs and tohers; touch ICs, such as capacitive touch controller ICs and touch key ICs, as well as sensor ICs. Its products are used in mobile phones, smart phones, tablet personal computers (PCs), laptop, digital cameras and other consumer electronics. The Company distributes its products primarily in Taiwan, Hong Kong and other markets.
Yuanta is a Taiwan-headquartered brokerage with a growing presence in Asia, especially across Greater China. Our team of 140+ provides cutting-edge analysis on key sectors, spread across offices in Taiwan, Hong Kong, Shanghai (A-Share), Seoul and Jakarta. With an ever-expanding coverage universe of 400+ companies, we provide in depth analysis with unique local color to investors. Consistently being voted the Best Investment Consulting Firm in Taiwan in the AsiaMoney broker poll is evidence of our strength. We target providing an extensive range of research, from small, to mid-sized, to large cap. We bring you the big, well-covered names, as well as going off the beaten track to research the less-familiar companies.
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