Title Makalot (1477 TT) Buy, TP: NT$157
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Title:Makalot (1477 TT) Buy, TP: NT$157
Download File:1477 TT Makalot note 180816--sinopac.pdf 
Summary:Maintain Buy, TP of NT$157 (21x 2018F P/E): 1) Order inflows from key customers Gap Inc. and Fast Retailing grew ~15% respectively this year, and we anticipate double-digit % increases again next year from both companies; 2) New customers will account for ~10% of 2018 sales, followed by sequentially increasing shares in 2019F and 2020F; 3) Manufacturers outside of China, including Makalot, are in line for order transfers from Chinese apparel makers if the China-US trade war continues; 4) Valuation: Makalot is trading at 18x 2018F P/E, vs. five-year historical range of 10-30x. Considering clearer order visibility till 1H19, our expectation of further product price hikes into 2019, and the favorable dividend yield, we stand by our Buy rating.
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