Title Lungyen Life Service (5530 TT) Buy, TP: NT$87
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Title:Lungyen Life Service (5530 TT) Buy, TP: NT$87
Download File:5530 TT Lung Yen long equity report 171214--sinopac.pdf 
 
Summary:Buy, TP of NT$87 (18x 2018F P/E):

  • >80% YoY earnings growth in 2017F: C&C prepayments for Impression Garden and Flawless will begin to be recognized as sales (with high GM) and earnings.

  • Long-term potential in China market: Tapping into funeral service and cemetery businesses in China via JV with Sino Ocean Group leaves room for imagination on the back of Chinaís aging population.

  • Enhanced earnings visibility for 2018: When construction on some parts of True Dragon Tower Columbarium is completed in 2018, prepayments for those parts will convert to sales and earnings.

  • Stable dividend outlook: Lung Yen said it will try to maintain 50% cash dividend payout ratio going forward (~3% yield based on the DEC 13 close price and our 2017 EPS estimate of NT$4.33.

  • Attractive valuation: At the DEC 13 close, Lung Yen was trading at ~14x 2018F P/E, vs. a 3-year range of 13x-27x. Our TP is set at NT$87 (18x 2018F P/E) given the firmís deployment into China and its healthy growth outlook over the next 2-3 years.

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    Date:2017/12/18
    Author:TaiwanResearch.com
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