Title Airtac (1590 TT) D/G Neutral
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Title:Airtac (1590 TT) D/G Neutral
Download File:1590 TT Airtac note 180424--sinopac.pdf 
Summary:Downgrade to Neutral: 1) Slower growth starting in 2H18: AIRTAC has enjoyed impressive sales growth thanks to its market share gains during the industry upcycle, but we think slower growth is on the way in 2H18 owing to a high YoY base of comparison and the plateauing of the industry cycle. 2) Rising raw material costs (swing factor for 2Q18 GM): Aluminum accounts for 20% of AIRTAC¡¦s BOM. China regulates aluminum prices so Airtac¡¦s aluminum costs have yet to reflect the uptrend in international aluminum prices, but the divergence can¡¦t last forever. 3) Valuation: AIRTAC exceeded our previous NT$550 TP on APR 10, peaked at NT$597 on APR 18, and has since pulled back to NT$532. The stock is trading at 27x-28x P/E, near the upper end of its 3-year P/E range of 12x-30x.
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