Title Topkey (4536 TT) Buy, TP: NT$170
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Title:Topkey (4536 TT) Buy, TP: NT$170
Download File:4536 TT Topkey note 200713--sinopac.pdf 
Summary:Raise TP from NT$130 to NT$170 (15x 2021F P/E); Maintain Buy: 1) Topkey expects 3Q20 sales to remain stable (flattish to down slightly), underpinned by the reopening across multiple industries, and projects 4Q20 sales to increase with the shipment of delayed orders; 2) Topkey sees a broadly positive outlook for 2021; it anticipates growth in its two major product categories, bicycles and helmets, thanks to economic reopening and, in the case of helmets, new safety regulations in China, and the company is also sanguine about its medical and other product lines; 3) GM will benefit from low material prices in 2H20; 4) Sustainable long-term trends include rising E-bike penetration and rising adoption of bike rims made from composite materials instead of aluminum. 5) Valuation: Topkey is trading at 8-9x P/E vs. an average P/E of 13-15x over the past three years.
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