Lock in profit post an 85% rally
​Downgrade to HOLD-OPF: Win Semi’s share price has risen 85% since our upgrade in Sept, 2015, and this rally may have already priced in most of its near-term catalysts, including its 1) GM expansion for nine-straight quarters; 2) announcement to enter OC markets; 3) 30% cash capital reduction; and 4) a 10 mn shares buyback. While we believe the rising RF content story, such as the network upgrade to 4G/5G/CA in smartphones and to 802.11ac/dual band/MIMO in Wi-Fi devices, will remain a long-term tailwind for Win Semi, without near-term earnings upside or new catalysts it will be difficult for the share price to outperform from here. As such, we downgrade to HOLD-OPF and cut our 2016/17 earnings by 2%/6% to factor in our new GM assumptions. As our 2016-17F earnings CAGR is revised to 11% from 15%, we also reduce our TP multiple to 14x 2016 P/E from 15x, to derive our new TP of NT72 (from NT$78).
WIN Semiconductors is principally engaged in the research, development, manufacture and sale of gallium arsenide waters. Through its subsidiaries, Co. is also engaged in the market research; receive retail and customer orders from European, North America and Australia regions; and other investment activities. Co.'s major products include power amplifier and radio frequency switch chips used in mobile communication devices such as smartphones. Co. distributes its products primarily in domestic and overseas market, including Asia, Europe and the Americas.
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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