An unexpected nice surprise
We lift our BUY TP to NT$43 as we raise 2016F/17F EPS by 8% apiece to NT$3.8/4.0. At 9x 2016F EPS, 1.4x 2016F BVPS (15% ROE), 25% of mkt. cap as net-cash and a 7% cash yield, we think the unexpected margin expansion trend will be a positive share price driver. In addition, Greatek is gaining share in overseas markets. 1Q16 results were a nice surprise. While its 1Q16 sales were down 2% QoQ, its 1Q16 GM of 29% was up 3.3 ppt QoQ & 0.9 ppt YoY, despite a less favorable FX environment in 1Q16.
Greatek Electronic is principally engaged in the provision of integrated circuit packaging and testing services. Co.'s packaging products include plastic dual-in-line package, small outline package, small outline J-lead, shrink small outline package, thin shrink small outline package, mini small outline package, quad flat pack, low-profile quad flat package, thin quad flat pack, plastic leaded chip carrier, diode ICs and quad flat no-lead package. Co. operates mainly in Taiwan, United States, Asia and Europe.
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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