Stable contribution from new products
​Reiterate BUY and lift TP to NT$114: We expect Paiho to see only a limited impact from a revenue growth slowdown for sports brands in North America in 1H16, as its 1) client base is diversified; 2) new products continue to boost revenue and margins; and 3) its bargaining power on pricing is stronger than that of OEM shoemakers. Paiho has continued to take orders from Adidas, UA, and Clark for its four-way stretchable elastic tapes (four-way) and one-piece upper, which we estimate will boost its 2016F earnings by 7% and drive 2016/17F earnings growth of 33%/17% YoY. We lift our TP to NT$114 based on 21x the average of 2016/17F EPS (vs 21x 2016F EPS previously).
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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