Stable growth in 2016F
​ WPG’s GM improved in 1Q16 off a low base, which is a plus. But on a full-year basis, GM will be largely flat YoY, so there is not much operating leverage unless top-line growth can surprise on the upside. Meanwhile, mgmt emphasized on its new opportunities in IoT, which could be encouraging in the long-run, but given WPG’s large revenue base, it could take a while before IoT starts making a meaningful contribution. In sum, we forecast its top-line and operating profit to grow by a single-digit % YoY this year, which is not particularly exciting, but not bad either in this environment. We reiterate HOLD, and raise our TP slightly to NT$39 given slightly higher EPS/BVPS estimates.
WPG Holding and its subsidiaries are principally engaged in the distribution of semiconductors and passive components. Co.'s products are classified into seven major group: core components; analog and mixed signal components; discrete logic components; memory components; passive, electromagnetic and connector components; optical components; and other components. Co. has an Asia Pacific service network with more than 40 sales offices located in Greater China and the Asia Pacific region, including Hong Kong, the People's Republic of China, Singapore, Malaysia, Thailand, Philippines and India.
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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