07.26.2001
Elan poised for challenge in 2H01

• Findings: Elan reports 1H01 PAT of NT$389m, an interim EPS of NT$1.76, with gross margin well maintained at 40%. Similar to peers, the firm indicated poor visibility continues to shorten order time by customers.

• Analysis: Based the poor outlook, we have lowered our estimates in revenue by 13% and profitability by 9%. We believe Elan is on the brink of falling below 80% of its in-house financial forecast, which may lead to official downward forecast revision.

• Primasia View: Although the firm is trading at relatively low multiples (11x), we believe Elan is fairly priced, as shares have been discounted reflecting financial instability of a major shareholder.