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• | ESG Note: Sercomm (5388 TT) Buy, raise TP by 25% to NT$100 |  |
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• | Topkey (4536 TT) Buy, TP: NT$170 | |
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• | Largan (3008 TT) Downgrade to Neutral | |
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• | TCI (8436 TT) Buy, TP: NT$335 | |
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• | U-Ming Marine Transport (2606 TT) Buy: TP: NT$38.0 | |
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• | Marketech (6196 TT) Buy, TP: NT$103.00 | |
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• | Equity Note: Taiwan Hon Chuan (9939 TT) Buy, TP: NT$66 | |
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• | Nanya Tech (2408 TT) Buy, TP: NT$77 | |
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• | Merida (9914 TT) Buy, TP: NT$223 | |
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• | ESG Equity Note: TXC (3042 TT) Buy, TP: NT$74 | |
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| Title: | ESG Note: Sercomm (5388 TT) Buy, raise TP by 25% to NT$100 |
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| Download File: | 5388 TT Sercomm 200715--sinopac.pdf  |
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| Summary: | Raise TP to NT$100 (16x 2020 P/E); Maintain Buy: 1) 2Q20 sales beat; we raise our 2Q20 earnings estimate by 16%; 2) 3Q20 momentum will come from WiFi 6 shipment to a new US client and resumption of normal shipment from the Philippine production lines; 3) WiFi 6 uptrend will be a major driver for the company in 2021. For its small cell business, we remain sanguine about 4G shipment growth in 2020, and look for initial 5G shipment in 2021 to provide an additional boost to the steady 4G shipment growth; 4) Valuation: The company is trading at ~13x 2021 P/E vs. historical P/E of 9-16x. It will pay cash dividend of NT$3 (~71% payout ratio) from 2019 earnings, the same as the previous year, implying a yield of 3.7%. After rolling our TP basis forward one year, we raise our TP by 25% to NT$100 from NT$80 (16x 2020 P/E). |
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| Date: | 2020/07/15 |
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| Author: | TaiwanResearch.com |
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Market Commentary