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Title:Sporton (6146 TT) Buy, TP: NT$316
Download File:6146 TT Sporton note 201222--sinopac.pdf 
Summary:Maintain Buy, TP of NT$316 (30x 2021F P/E): 1) Sporton¡¯s 5G handset testing projects have grown from 12-13 projects in 2019 to 80 projects as of SEP in 2020. We estimate Sporton will test 100 5G handset models this year, surpassing the company¡¯s guidance of 80 models. 2) We raise our 4Q20 GM estimate from 45% to 46.1% and raise our 2021 GM estimate from 46.9% to 48.1%, and we raise our 2021 EPS estimate to NT$10.96 from NT$10.54. 3) Valuation: The stock is trading at 23x 201F P/E, vs. historical range of 15-30x. We set our TP at 30x because a) we anticipate an EPS leap forward in the 5G era (from NT$7.27 in 2019 to NT$8.28/NT$10.96 in 2020F/2021F) like we saw with the transition from 3G to 4G (EPS ramped from NT$5 to NT$7-8 level, b) we assume Sporton can achieve ROE of 30% in 2021F, and c) Sporton maintains a stable dividend payout of 80%.
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