Strong JPY driving GM expansion
​Maintain HOLD-OPF; lift TP to NT$800: Although we downgraded St. Shine to HOLD in Jan 2016 as the sales growth catalyst was largely priced in, its recent rally was driven by the strong JPY as Japanese clients account for about 60% of total sales. 2Q16 sales of NT$1.547 bn (up 2.2% QoQ/11% YoY) were in line. GM returned to 43-44% thanks to the favorable F/X trend, according to mgmt. We raise our 2016/17F EPS estimates to NT$35.8/40.1 to reflect better GM and lift our TP to NT$800 from NT$676 based on a 2017F P/E of 20x.
St Shine Optical and its subsidiaries are engaged in the manufacture, processing and trading of medical equipment, contact lenses, optical glasses and other related products. Co.'s main products include conventional contact lens and disposable soft contact lens.
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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