Analyst Research Report Snapshot


WT Microelectronics (3036 TT, NT$34.75, OP): Maintain Outperform




KGI Greater China


04 Nov 2013





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3Q13 results and 4Q13 outlook in line Driven by better product mix & inventory restocking, 3Q13 sales increased 11% QoQ & 7% YoY to NT$23.3bn; earnings grew 12% QoQ & 6% YoY to NT$360mn, for EPS of NT$1.07, in line with consensus of NT$1.08 but below our expectation of NT$1.13; gross margin was 5.83% & operating margin was 2.10%, as expected 4Q13F revenue down 2-7% QoQ and GM/OPM forecast of 5.7-5.9%/1.85-2.05% were inline with street and KGI estimates We are positive on longer-term earnings growth in light of improving better product mix & decent opex control; maintain Outperform and 12M TP of NT$42, on 10x 4Q13-3Q14F PE We trim 2013-14F EPS by 6.3% and 2.6%, respectively, from NT$4.05 and NT$4.75 to NT$3.80 and NT$4.63, factoring 3Q13 results and 4Q13F outlook with more conservative margin estimates. We maintain our 12-month target price at NT$42 on 10x 4Q13-3Q14F PE, trading at 2007-12 average PE. We continue to prefer WT Micro over WPG (3702 TT, NT$33.85, N) in the Taiwan distributor space due to former’s more attractive risk-reward profile (trading at 8x 12-month forward ESP vs 10x for the latter) given the two firms’ similar growth profile. Downside risks include slow M&A execution; product and customer concentration; and weak demand.

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