Cheap valuation & improving GM/OPM
​Reiterate BUY and trim our TP to NT$50: Pou Chen’s share price has dropped around 14% since we upgraded the stock in Aug, mainly due to the market’s concerns on 1) a slow-down in sports industry growth weighing on inventory adjustment & ASP pressure; and 2) the uncertainty of Nan Shan Life’s unrealized-loss position. However, better than feared 3Q16 earnings results show these concerns were overdone. Overall, we remain positive on the stock as 1) it benefits from Adidas and UA’s strong footwear sales volume growth; 2) its OEM/retail business’ GM and OPM are still improving; and 3) we see less uncertainty on Nan Shan Life as its unrealized loss position is diminishing. Despite raising our 2016/17F earnings by 6%/2%, we trim our TP to NT$50 (lift NAV discount from
Pou Chen is engaged in the manufacture, processing and sale of athletic and casual footwear, sports apparel and accessories. Through its subsidiaries, Co. is also engaged in the manufacture and sale of electronic components and products such as liquid crystal display module and monitor; import and export of shoes and shoe materials; real estate investment and management; manufacture and sale of mold and mobile phone case; hotel operation; medical biotechnology; manufacture of tooth mold and dental equipment; and property insurance agency. Co. is focused on two major businesses: footwear and sportswear retail. Co. distributes its products in Asia, America, Europe and other countries.
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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