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   Sep.14, 2015

  •  Taiwan Property & Asset Plays Weekly Briefing
  •  Taiwan Financials Weekly Briefing
  •  Taiwan Airlines Weekly Briefing

  Sinyi Realty Inc. (信義 9940 TT, NR, NT$28.85)  Aug.04, 2015
2Q15 profit rebounds but lower home sales volume weighs on top-line growth
  • Sinyi's 2Q15 profitability rebounded with moderations in the decline of its top-line.
  • Policy headwind has diminished despite looming presidential election.
  • Residential development project in China presents significant upside.

  EVERLIGHT (2393 )    Aug. 17, 2015
Everlight's LT investment value emerges on low valuation in spite of weak 2H1
  • Everlight’s 2Q15 earnings missed our forecast by 50% at NT$309mn or NT$0.74 per share. GM was short by 2.5 ppts at 22.3%, the lowest since 2Q12. The poor results were attributable to: 1) an over 10% ASP decline; 2) a low UTR at 75-80% vs. guidance of 90%; and 3) lower-than-expected sales of backlight/CE LEDs which have above-average GM.
  • We cut our 3Q15 forecasts due to a lack of peak seasonality on non-lighting LEDs. We expect 3Q15 sales/GM/net income to drop by 17.3%/ 2.4ppts/43.3%, respectively, to NT$7.5bn/22.1%/NT$413mn. The adjustments reflect: 1) low PC replacement during back-to-school sales; 2) limited growth seen in the smartphone and TV markets, 3) weakening purchasing power in Europe and emerging countries. Therefore, excluding WOFI (5% of sales), which is in peak season now, Everlight’s UTR is sustained at 75%-80% in 3Q15 vs. 80-90% in 3Q14. The scale of rush orders in 2H15 should also be too small to have any notable impact on its performance. As such, we expect Everlight to resume growth momentum only after the Lunar New Year in 2016.
  • Lighting is the only product line that delivers growth in 2H15. Everlight expects the on lighting to reach 22-23% in 3Q15 from 20% in 2Q15. First, WOFI is in peak season (August – November), with growing demand for commercial/indoor lighting in Europe. Second, in order to sustain margins for lighting products while coping with falling ASPs, Everlight has since mid-year started to use mid/low-power chips from Chinese chipmakers in its commoditized products – i.e. bulbs and tubes (5% of sales) so as to reduce production costs. These chips are over 10% cheaper than those made by Taiwanese counterparts. So, it can sustain it GM when lighting sales pick up. For other products, Everlight stills uses mid/high power chips made by chipmakers in Taiwan, the US, and Japan over concerns about quality and patents.
  • Long-term investment value emerges at currently low valuation of 12.0x 2015E PER- the lowest since 2007. Everlight has a solid financial structure, comparably better margins, and an increasing presence in the supply chain of the lighting industry. These strengths can help it to weather the downturn and resume growth earlier than peers. We thus raise our LT rating to Buy but cut the 12-month TP to NT$56.0 (14.2x PER of average of 2015-2016E EPS) to reflect our negative adjustments made on 2015-16 earnings forecast. Upside potential is 34.0%. We maintain our ST rating of Hold, given expected weakness in 2H15.

Stock Info

 TAIEX 8365.92 
 Electronics Index 322.35 
 Financials Index 1059.5 

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