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1、,Analyst,Limited,FlashnoteTelecoms,Media&TechnologyElectronic Equipment,Taiwan LCD backlight,abcGlobal Research,Equity TaiwanDivergent performances Radiant Sept revenue growth mild,as new product ramp-upslower than expected.4Q target of 15-20%growth intact Radiant to win bulk of backlight orders for
2、 upcoming iPad.Market forecasts for Coretronic appear overly optimistic Reiterate OW(V)on market leader Radiant but lower targetprice of TWD178(was TWD186.4);stay UW(adding V flag)onCoretronic on lower TP of TWD22.5(was TWD24)Delay in new products in September,but 4Q outlook intact.Radiant managemen
3、tsuggests that,due to a slower-than-expected ramp-up in new product,September revenuegrowth will be modest.We now forecast a 15%q-o-q decline(was 12%)in 3Q revenue.Both iMac and prospective iPad Mini pull-in are slower due to issues in other parts of thesupply chain(e.g.,panel,touch,assembly).Manage
4、ment has maintained its guidance of15-20%revenue growth for 4Q.,21 September 2012Jerry Tsai*HSBC Securities(Taiwan)CorporationLimited+8862 6631.twLouis Cheng*AssociateHSBC Securities(Taiwan)Corporation+8862 6631.twView HSBC Global Research at:http:/*Employed by a non-US affiliate ofHSBC Securities(U
5、SA)Inc,and is notregistered/qualified pursuant to FINRAregulations,Divergent performances.While Radiant is likely to ship fewer units of the prospectiveiPad Mini than originally expected in September,our checks suggest Coretronic does nothave any meaningful volume due to unresolved production issues
6、.While Coretronicshould ramp-up in the coming months,we expect Radiant to capture greater share(morethan two-thirds).This is a good example of how Radiants lead over the competition iswidening,as highlighted in our report Pulling away from the pack,16 August.Many innovations to come.In our August re
7、port,we noted there are many innovations tocome in the backlight unit(BLU)space,as technical specifications(e.g.,panel resolution)continue to improve.While we are seeing this(e.g.,the new Kindle Fire has adopted a highresolution panel),low initial yields on new panel designs often lead to delays and
8、 this mayhurt share prices.We would use such pull-backs to accumulate OW(V)-rated Radiant.Reiterate OW(V)on Radiant;UW(V)on Coretronic.We lower 2012-13 earnings by7%and 4.5%for Radiant and 29%and 3%for Coretronic to reflect a slower productramp-up.After the recent rally,we think the downside risk is
9、 greater for Coretronic as ithas outperformed Radiant by 11.5%QTD.We recommend switching into Radiant asmarket expectations for Coretronics new product launch appear overly optimistic.,Issuer ofreport:,HSBC Securities(Taiwan)Corporation Limited,Coretronic is also trading at richer valuation.,Disclai
10、mer&,DisclosuresThis report must be read,Company,Rating TP new/old Potl(TWD)return*,EPS 12e/13e(TWD),EPS conPE ROE12e(TWD)12e/13e 2013e,Valuationmethodology,with the disclosures and,Radiant(6176 TT),OW(V)178/186.4,35%12.71/16.52,12.62 10.8/8.3 32.2%13x 2H12-1H13 EPS,the analyst certifications in,Cor
11、etronic(5371 TT)UW(V),22.5/24,-21%,1.66/2.43,1.82 17.7/12.1,7.2%10 x 2H12-1H13 EPS,the Disclosure appendix,and with the Disclaimer,which forms part of it,*Potential return equals the percentage difference between the current share price and the target price,including the forecast dividend yield when
12、 indicated;pricedat close of 19 Sep 2012.Source:HSBC estimates,Taiwan LCD backlightElectronic Equipment21 September 2012Relative performance(indexed as of 2012/06/29),Revenue growth q-o-q(%),abc,110,Radiant,Coretronic,105100959085,Coretronic,Radiant,25%20%15%10%5%0%-5%-10%-15%,80Jun-12,Jul-12,Jul-12
13、,Aug-12 Aug-12 Sep-12,-20%,1Q12,2Q12,3Q12e,4Q12e,Source:Bloomberg,Source:Company data,HSBC estimates,Valuation and risksRadiant(6176 TT):OW(V),TP TWD178We lower our 2012 and 2013 earnings estimates for Radiant by 7.0%and 4.5%,respectively based onan unchanged 13x forward PE(which is its peak multipl
14、e since the 2008 financial crisis)on our2H12/1H13 earnings estimates to reflect the impact of a slower product ramp-up.We believe a peakmultiple is well-justified,as the company continues to widen its lead over the competition with itssuperior capabilities in BLU design and production.Under HSBCs re
15、search model,the Neutral rating band is 10ppt above and below the hurdle rate of 9.5%for volatile Taiwan equities.Our target price of TWD178 implies a 35.4%potential return,inclusive ofthe forecast dividend yield;therefore,we reiterate our Overweight(V)rating on the stock.Potential returnequals the
16、percentage difference between the current share price and the target price,including theforecast dividend yield when indicated.Downside risks to our view include a faster-than expected ramp-up in OLED technology,weak LCDpanel demand,lower-than-expected sales of Apples iPad tablet series,and greater-
17、than expectedcompetition in the BLU market despite recent consolidation.Meanwhile,affiliate and in-house BLUsuppliers for panel makers could pose a competitive threat.,PE band Radiant(x),PE band Coretronic(x),2402001601208040,Radiant share price(TWD),13x11x9x7x5x,8070605040302010,Coretronic share pr
18、ice(TWD),20 x16x12x8x4x,0,0,Jun-05,Jun-07,Jun-09,Jun-11,Jan-05,Jan-07,Jan-09,Jan-11,2,Source:Bloomberg,HSBC estimates,Source:Bloomberg,HSBC estimates,Taiwan LCD backlightElectronic Equipment21 September 2012Coretronic(5371 TT):UW(V),TP TWD22.5We lower our 2012 and 2013 earnings estimates for Coretro
19、nic by 29.4%and 3.4%,respectively,toreflect the impact of a slower product ramp-up.Our target price of TWD22.5 is still based on a target PEof 10 x,roughly in line with its mid-cycle valuation,but we roll over to 2H12/1H13 earnings estimate.Under HSBCs research model,the Neutral rating band for vola
20、tile Taiwan equities equals the localhurdle rate of 9.5%for Taiwan,plus or minus 10ppt.Our target price of TWD22.5 implies a-20.6%potential return,inclusive of the forecast dividend yield;therefore,we reiterate our Underweight(addingthe Volatility flag)rating on the stock.Potential return equals the
21、 percentage difference between thecurrent share price and the target price,including the forecast dividend yield when indicated.Upside risks to our view include a market share recovery in the TV BLU segment,and greater marketshare captured in the ultrabook and tablet BLU segment.Radiant quarterly ea
22、rnings,abc,Year-end Dec(TWDm)RevenueGross profitOperating profitEBITDANet incomeFD EPS(TWD)BVPS(TWD),1Q12a17,5941,8331,2441,5121,2042.5544.98,2Q12a21,2962,8192,1252,3981,7443.6942.82,3Q12e18,1481,9331,3521,5551,2422.6344.62,4Q12e21,9622,7612,0802,3961,8123.8450.42,1Q13e19,6462,4421,8332,1461,4993.17
23、54.73,2Q13e23,3423,0522,3522,6741,9094.0456.28,3Q13e25,5653,3362,6332,9562,2234.7157.74,4Q13e23,9503,2312,5362,8662,1734.6060.48,2012e79,0009,3466,8017,6516,00212.7150.42,2013e92,50212,0619,35410,2047,80416.5259.99,Margin,Gross marginOperating marginEBITDA marginNet margin,10.4%7.1%8.6%6.8%,13.2%10.
24、0%11.3%8.2%,10.7%7.5%8.6%6.8%,12.6%9.5%10.9%8.2%,12.4%9.3%10.9%7.6%,13.1%10.1%11.5%8.2%,13.1%10.3%11.6%8.7%,13.5%10.6%12.0%9.1%,11.8%8.6%9.7%7.6%,13.0%10.1%11.0%8.4%,Source:Company data,HSBC estimates3,Taiwan LCD backlightElectronic Equipment21 September 2012Coretronic quarterly earnings,abc,Year-en
25、d Dec(TWDm)RevenueGross profitOperating profitEBITDANet incomeFD EPS(TWD)BVPS(TWD),1Q12a16,9532,0921784892090.2931.6,2Q12a18,4942,3962776332370.3332.6,3Q12e17,8012,4144477963860.5333.0,4Q12e18,1632,4473957373710.5133.0,1Q13e16,7842,4064637984160.5733.3,2Q13e18,7722,5044918194540.6333.6,3Q13e18,6912,
26、5955989205020.6934.0,4Q13e18,7082,5334497653840.5334.3,2012e71,4129,3491,2962,8031,2031.6633.0,2013e72,95410,0372,0013,5841,7562.4334.3,Margin,Gross marginOperating marginEBITDA marginNet margin,12.3%1.0%2.9%1.2%,13.0%1.5%3.4%1.3%,13.6%2.5%4.5%2.2%,13.5%2.2%4.1%2.0%,14.3%2.8%4.8%2.5%,13.3%2.6%4.4%2.
27、4%,13.9%3.2%4.9%2.7%,13.5%2.4%4.1%2.1%,13.1%1.8%3.9%1.7%,13.8%2.7%4.9%2.4%,Source:Company data,HSBC estimatesRadiant HSBC estimates vs consensus,_New_,_Old _ _ Con_,_ Diff(%)N/O_ _Diff(%)Con _,Year-end Dec(TWDm)Sales,2012E79,000,2013E92,502,2012E82,090,2013E94,664,2012E79,955,2013E90,086,2012E-3.8%,
28、2013E-2.3%,2012E-1.2%,2013E2.7%,Gross profit,9,346,12,061,9,751,12,354,-4.2%,-2.4%,Operating profitEBITDANet profitFully diluted EPS(TWD),6,8017,6516,00212.71,9,35410,2047,80416.52,7,2758,1256,27713.66,9,72710,5777,94717.30,6,5237,8535,71712.62,7,3728,8046,26313.90,-6.5%-5.8%-4.4%-7.0%,-3.8%-3.5%-1.
29、8%-4.5%,4.3%-2.6%5.0%0.7%,26.9%15.9%24.6%18.8%,BVPS(TWD),50.42,59.99,51.05,60.57,-1.2%,-1.0%,Margin,Diff(ppt),Gross margin,11.8%,13.0%,11.9%,13.0%,0.0%,0.0%,Operating marginEBITDA marginNet margin,8.6%9.7%7.6%,10.1%11.0%8.4%,8.9%9.9%7.6%,10.3%11.2%8.4%,8.2%9.8%7.1%,8.2%9.8%7.0%,-0.3%-0.2%0.0%,-0.2%-
30、0.1%0.0%,0.5%-0.1%0.4%,1.9%1.3%1.5%,Source:Bloomberg,HSBC estimates4,Taiwan LCD backlightElectronic Equipment21 September 2012Coretronic HSBC estimates vs consensus,abc,_ New _,_Old _,_ Consensus _,_ Diff-new vs old _,Diff-new vs cons _,Year-end Dec(TWDm)Sales,2012e71,412,2013e72,954,2012e71,264,201
31、3e74,122,2012e74,072,2013e83,393,2012e0.2%,2013e-1.6%,2012e-3.6%,2013e-12.5%,Gross profit,9,349,10,037,9,347,9,748,0.0%,3.0%,Operating profitEBITDANet profitFully diluted EPS(TWD),1,2962,8031,2031.66,2,0013,5841,7562.43,1,8673,3741,7032.35,2,1563,7381,8192.51,1,4803,2291,3391.82,2,4904,2581,9932.72,
32、-30.6%-16.9%-29.4%-29.4%,-7.2%-4.1%-3.4%-3.4%,-12.4%-13.2%-10.2%-8.5%,-19.6%-15.8%-11.9%-10.8%,BVPS(TWD),33.0,34.3,33.7,34.6,-2.0%,-0.8%,Margin,Diff(ppt),Gross margin,13.1%,13.8%,13.1%,13.2%,0.0%,0.6%,13.1%,13.8%,Operating marginEBITDA marginNet margin,1.8%3.9%1.7%,2.7%4.9%2.4%,2.6%4.7%2.4%,2.9%5.0%
33、2.5%,2.0%4.4%1.8%,3.0%5.1%2.4%,-0.8%-0.8%-0.7%,-0.2%-0.1%0.0%,-0.2%-0.4%-0.1%,-0.2%-0.2%0.0%,Source:Bloomberg,HSBC estimates5,Taiwan LCD backlightElectronic Equipment21 September 2012Financials&valuation-RadiantFinancial statements,Key forecast drivers,abc,Year to,12/2011a,12/2012e,12/2013e,12/2014e
34、,Year to,12/2011a,12/2012e,12/2013e,12/2014e,Profit&loss summary(TWDm),Global LCD TV shipment(m),206,220,249,RevenueEBITDA,63,4315,463,79,0007,651,92,50210,204,96,20211,061,Global LCD monitor shipment(mGlobal NB PC shipment(m),169179,171191,170195,Depreciation&amortisationOperating profit/EBITNet in
35、terestPBT,-9284,5352505,521,-8506,8015497,717,-8509,3543559,809,-85010,21137010,721,HSBC PBTTaxation,5,521-1,133,7,717-1,715,9,809-2,005,10,721-2,144,Valuation data,Net profitHSBC net profit,4,3874,387,6,0026,002,7,8047,804,8,5778,577,Year to,12/2011a,12/2012e,12/2013e,12/2014e,Cash flow summary(TWD
36、m),EV/salesEV/EBITDA,0.910.8,0.88.1,0.76.1,0.75.8,Cash flow from operationsCapexCash flow from investmentDividendsChange in net debt,4,474-2,085-8,181-1,6173,946,3,980-1,500-6,987-2,8513,114,6,913-2,000-6,938-3,604838,9,167-1,500-5,944-4,6861,481,EV/ICPE*P/Book valueFCF yield(%)Dividend yield(%),3.7
37、14.23.12.72.7,3.110.82.73.44.8,2.78.32.37.86.0,2.77.52.012.37.9,FCF equity,1,654,2,113,4,813,7,527,Note:*=Based on HSBC EPS(fully diluted),Balance sheet summary(TWDm),Intangible fixed assets,427,419,410,402,Price relative,Tangible fixed assetsCurrent assetsCash&othersTotal assetsOperating liabilitie
38、sGross debtNet debtShareholders fundsInvested capital,8,00938,94017,43547,66813,86014,839-2,59618,96816,081,8,71543,38115,32152,84217,23915,83951822,11819,955,9,74748,28416,48458,77218,92217,8391,35526,31823,036,10,23249,15016,00360,12019,68218,8392,83630,20924,099,17815813811898785838,1781581381189
39、8785838,18,18,2010,2011,2012,2013,Ratio,growth and per share analysis,Radiant Opto-Electronics,Rel to TAIWAN WEIGHTED INDEX,Year to,12/2011a,12/2012e,12/2013e,12/2014e,Source:HSBC,Y-o-y%changeNote:price at close of 19 Sep 2012,RevenueEBITDAOperating profitPBTHSBC EPS,31.342.749.965.957.1,24.540.050.
40、039.833.1,17.133.437.527.130.0,4.08.49.29.39.9,Ratios(%),Revenue/IC(x)ROICROEROAEBITDA marginOperating profit margin,5.330.526.111.68.67.1,4.429.429.212.59.78.6,4.334.632.214.411.010.1,4.134.730.314.911.510.6,EBITDA/net interest(x),Net debt/equityNet debt/EBITDA(x)CF from operations/net debt,-13.7-0
41、.5,2.30.1768.8,5.20.1510.1,9.40.3323.2,Per share data(TWD),EPS reported(fully diluted)HSBC EPS(fully diluted)DPSBook value,9.559.553.6943.24,12.7112.716.5050.42,16.5216.528.2259.99,18.1618.1610.6868.86,6,Taiwan LCD backlightElectronic Equipment21 September 2012Financials&valuation-CoretronicFinancia
42、l statements,Key forecast drivers,abc,Year to,12/2011a,12/2012e,12/2013e,12/2014e,Year to,12/2011a,12/2012e,12/2013e,12/2014e,Profit&loss summary(TWDm),Global LCD TV shipment(mn),206,220,249,RevenueEBITDA,77,0633,600,71,4122,952,72,9543,740,75,1433,853,Global LCD monitor shipment(mGlobal NB PC shipm
43、ent(mn),169179,171191,170195,Depreciation&amortisationOperating profit/EBITNet interestPBTHSBC PBT,-1,5772,022172,5212,521,-1,6561,296721,8101,810,-1,7392,001802,4612,461,-1,8262,0271002,5272,527,Taxation,-602,-450,-505,-556,Valuation data,Net profitHSBC net profit,1,5131,513,1,2031,203,1,7561,756,1
44、,7711,771,Year to,12/2011a,12/2012e,12/2013e,12/2014e,Cash flow summary(TWDm),EV/salesEV/EBITDA,0.23.8,0.25.4,0.24.7,0.35.1,Cash flow from operationsCapexCash flow from investmentDividendsChange in net debt,155-2,166-2,222-2,5344,050,830-2,000-2,051-1,0592,279,919-1,800-1,846-8421,768,998-1,800-1,84
45、1-1,2292,072,EV/ICPE*P/Book valueFCF yield(%)Dividend yield(%),0.914.20.9-6.94.9,1.417.70.94.33.9,2.312.10.95.95.7,2.412.10.86.20.0,FCF equity,-1,440,898,1,239,1,298,Note:*=Based on HSBC EPS(fully diluted),Balance sheet summary(TWDm),Intangible fixed assets,0,0,0,0,Price relative,Tangible fixed asse
46、tsCurrent assetsCash&othersTotal assetsOperating liabilitiesGross debtNet debtShareholders fundsInvested capital,9,68937,89014,34749,42918,4437,085-7,26323,76014,789,10,18235,99511,06850,56524,0776,085-4,98423,90311,031,10,40033,7548,30053,19728,2955,085-3,21624,8187,558,10,53831,4765,22952,87728,43
47、34,085-1,14425,3598,352,575247423732272217,575247423732272217,12,12,2010,2011,2012,2013,Ratio,growth and per share analysis,Coretronic Corp,Rel to TAIWAN WEIGHTED INDEX,Year to,12/2011a,12/2012e,12/2013e,12/2014e,Source:HSBC,Y-o-y%change,RevenueEBITDAOperating profitPBTHSBC EPS,-16.5-40.8-56.1-49.1-
48、57.2,-7.3-18.0-35.9-28.2-20.5,2.226.754.436.046.0,3.03.01.32.70.8,Note:price at close of 19 Sep 2012,Ratios(%),Revenue/IC(x)ROICROEROAEBITDA marginOperating profit margin,6.012.96.43.94.72.6,5.58.45.03.04.11.8,7.818.57.24.15.12.7,9.421.57.14.05.12.7,EBITDA/net interest(x),Net debt/equityNet debt/EBI
49、TDA(x),-30.6-2.0,-20.8-1.7,-13.0-0.9,-4.5-0.3,CF from operations/net debtPer share data(TWD),EPS reported(fully diluted)HSBC EPS(fully diluted)DPSBook value,2.092.091.4632.82,1.661.661.1633.01,2.432.431.7034.28,2.452.450.0035.02,7,Taiwan LCD backlightElectronic Equipment,abc,21 September 2012Disclos
50、ure appendixAnalyst CertificationThe following analyst(s),economist(s),and/or strategist(s)who is(are)primarily responsible for this report,certifies(y)that theopinion(s)on the subject security(ies)or issuer(s)and/or any other views or forecasts expressed herein accurately reflect theirpersonal view
