Analyst Research Report Snapshot


Simplo Technology (6121 TT, NT$131, N): Maintain Neutral




KGI Greater China


16 Mar 2014





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ASP decline not eased by higher battery capacity trend 4Q13 EPS of NT$3.35 (up 24% QoQ & 59% YoY), above guidance on better gross margin 1Q14 sales guided down 30% QoQ, with margin steady 2014 sales guided double-digit growth; gross margin to stay above 10%; 2014 EPS guided to stay above NT$10 We are positive on move into automation/ e-bike business, but contribution limited in 2014F; 12M target price raised from NT$137 (12x 2014F EPS) to NT$144 (12.5x) on EPS revision; maintain Neutral Shares are trading at 11.3x our revised 2014F EPS, not very demanding. Simplo said cash dividend will be at least better than the 2013 level of NT$6.5, implying around 5% cash yield. The decent cash yield coupled with the move toward automation and e-bike/ EV will bolster gross margin and is a positive for the company’s outlook going forwards, though current contribution is muted. But before contribution becomes more meaningful, we moderately increased the target PE multiple. Based on our revised 2014F EPS, we raise our target price to NT$144, on 12.5x 2014F EPS, from NT$137 (12x). We maintain our Neutral rating.

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