Title Advanced Ceramic X (3152 TT) Buy, TP: NT$360
  Micro-Star International (2377 TT) Buy, TP: NT$97
  Makalot (1477 TT) Buy TP: NT$192
  Chlitina (4137 TT), Buy, TP: NT$284
  Fubon FHC (2881 TT), Buy, TP: NT$52
  BizLink (3665 TT), Buy, TP: NT$270
  Ennoconn (6414 TT) Buy, TP: NT$260
  Chailease Holding (5871 TT), Neutral
  Grape King (1707 TT), Buy, TP: NT$219
  Catcher (2474 TT) Neutral
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Title:Makalot (1477 TT) Buy, TP: NT$216
Download File:1477 TT Makalot note 191015--sinopac.pdf 
Summary:Maintain Buy, TP of NT$216 (22x 2020F P/E): 1) Makalot・s ASP downtrend of 2015-2017 reversed in 2018, and order inflow picked up YoY in 2019; 2) Makalot・s capacity shuffling and outsourcing has replaced 80-90% of the capacity lost to fires at its Vietnamese plants, and the two plants will be renovated and automated for resumed mass production in end-1Q20F; 3) Structural changes in the apparel industry (e.g., rekindled demand for plain weave and fashion apparel) will help fuel the company・s operational momentum and GM expansion; 4) Clients Target and GU have powerful growth outlooks for 2020; 5) Makalot・s capacity will remain tight over the next 1-2 years as new capacity coming to the industry next year will be readily absorbed. We estimate 2019F/2020F EPS at NT$8.89/NT$9.82. Considering Makalot・s 4Q sales are typically lower than its 3Q sales and its share price tends to consolidate accordingly, we lower our 12-month target P/E to 22x and adjust our TP from NT$244 (25x 2020F P/E) for the seasonal effect.
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