Title Kaori Heat Treatment (8996 TT) Buy, TP: NT$91.0
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Title:Kaori Heat Treatment (8996 TT) Buy, TP: NT$91.0
Download File:8996 TT Kaori Heat Treatment note 200518-sinopac.pdf 
Summary:Maintain Buy, TP of NT$91 (15x 2021 EPS of NT$6.02): 1) Kaori will limp out of 2Q20 but will have the wind at its back in 3Q20 as deferred orders from fuel cell giant Bloom Energy (BE) begin to ship; Kaori will also benefit from transferred orders from BE that the original recipient, an Indian company, could not fill due to COVID-19 lockdowns. Added with gradually rekindled demand for traditional plate heat exchanger, we expect powerful sales momentum for 3Q20; 2) We estimate EPS from sales of cooling distribution units (CDUs) for a key datacenter clientĄ¯s liquid cooling systems will climb to NT$0.9/NT$3.3 in 2020/2021. Other companies are also developing liquid cooling products in cooperation with Kaori, ensuring that Kaori will be a major winner in the liquid cooling industry; 3) BE has been gaining market share in fuel cells, consistently delivering double-digit % sales growth in recent years. Although the client temporarily suspended production during the pandemic, the pent-up demand shall set the stage for stronger momentum in 2H20-2021 as Kaori is the primary supplier for the client.
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