Solid industry position; weaker than expected 3Q16F seasonality
​We trim our 2016F earnings forecast by 4% to reflect our revised sales assumptions, but still expect 2016F sales and earnings to hit new highs. While we forecast 3Q16F sales will only see minor growth QoQ (decline YoY) due to weaker than expected seasonality, we believe 4Q16F sales will continue to grow QoQ, with YoY growth turning positive. With exposure to the IoT & smart home segments, we anticipate surveillance business to account for 36%/34% of overall earnings in 2016/17F and for Sercomm to become the leader in Taiwan’s surveillance industry. Our TP of NT$88 is based on 15x (unchanged) 2016F EPS of NT$5.84. We remain positive on Sercomm, given 1) its solid position in the networking industry; and 2) 2016F sales and earnings will likely hit record highs.
Sercomm Corp.. SerComm Corporation is a Taiwan-based company principally engaged in the research, development, manufacture and distribution of wireless network products and wired network products. The Company's main products include fixed mobile convergence products, broadband access equipment, smart home control devices, commercial working network equipment, home working network equipment and vehicle-carried communication equipment. The Company mainly distributes its products in overseas markets, such as the Americas, 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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