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Title:Passive Component: Yageo is our only passive component Buy call
Download File:Passive component industry note 180821--sinopac.pdf 
Summary:Buy Yageo (2327 TT), TP at NT$850 (7.2x 2019 P/E): Yageo¡¦s repeated share price declines recently mainly stemmed from unfavorable fund flows and concerns that upward product price momentum might wane in the future. However, given 3Q18 is shaping up to be Yageo¡¦s peak quarter for 2018 and its annual EPS could still reach NT$116.8 and NT$117.08 in 2018 and 2019, we think the stock is attractively valued now at below NT$700. We have Neutral ratings on the other passive component stocks in our coverage. For Walsin, we expect its cash capital increase will extend the pressure from unfavorable fund flow. We are also Neutral on Chilisin (2456 TT), ACX (3152 TT), and TXC (3042 TT) due to their fair valuations.
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