Title Merry Electronics (2439 TT) U/G Buy; TP: NT$198
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Title:Merry Electronics (2439 TT) U/G Buy; TP: NT$198
Download File:2439 TT Merry note 190702--sinopac.pdf 
Summary:Upgrade to Buy, TP at NT$198 (14.5x fully diluted 2019 EPS): 1) Merry previously cautioned that demand from a major handset client would reflect low seasonality in 2Q19, but given Merry¡¯s strong TWS and speaker sales in APR-MAY, we think Merry¡¯s concerns were misplaced and expect Merry¡¯s 2Q19 operating results will show sequential improvement; 2) Entering into the 2H peak season, TWS and speaker businesses will continue to fuel operations, especially as Merry¡¯s penetration for speaker products within the major handset client is likely to climb to 56%. The tailwind from high-GM TWS and UTR gain will propel earnings sharply higher HoH in 2H19; 3) Merry looks undervalued at ~12x 2019 fully diluted EPS. We set our TP at 14.5x 2019F fully diluted EPS of NT$13.65 (or 13.2x undiluted EPS).
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