2021-11-25-瑞士信贷集团-台湾地区下游行业_库存进一步上升_23页_1mb

Taiwan Downstream Sector 9M21 Review Summary

Core Content Overview

The report provides a detailed analysis of the Taiwan downstream sector performance in the first nine months of 2021, focusing on financial metrics, inventory trends, and sector-specific insights. The key themes include rising inventory levels, revenue and profit growth deceleration, aggressive capital expenditure, and evolving supply chain dynamics.

Key Financial Highlights

• Inventory Levels: Inventory days reached record highs across most sub-sectors, indicating procurement anxiety due to IC supply tightness and rising material costs. This was particularly evident in raw material (RM) and finished goods (FG) inventory.

  • RM Inventory Days: Increased to record highs in five sub-sectors compared to three in 6M21.
  • FG Inventory Days: Also saw an increase in five sub-sectors, reflecting slower customer pull-in due to supply chain imbalances.
  • Auto Supply Chain: Total inventory days hit a new record high, driven by raw material inventory growth rather than finished goods, suggesting less demand concern.
  • iPhone Assemblers: Finished goods inventory is less of a concern, but raw material inventory growth accelerated significantly (+38% YoY vs. +11% sales growth).

• Revenue Growth: Decelerated to +12% YoY, primarily affected by chip supply constraints. PCB remained the largest revenue contributor (30% of total revenue), followed by power supply (25%).

• Operating Profit Growth: Further decelerated to +14% YoY, with most sub-sectors experiencing contraction. PCB accounted for the largest share of operating profit (29%), driven by better pricing in IC substrates and profit recovery in FPC during peak season.

• EBITDA Margin: Improved to 15.9% in 9M21, up 21 bp YoY. Passive components had the highest ROIC at 38%, while acoustic had the lowest at -5.1%.

• Labour Costs: Grew 10% YoY, representing 17.1% of revenue, slightly below the historical average. Lens had the highest labour intensity at 25.1%, while battery pack had the lowest at 7.3%.

• Capex Spending: Increased by 46% YoY, outpacing revenue growth. PCB accounted for 52% of total capex, followed by power supply (15%). Capex-to-sales ratio rose to 9%, up from the 2008-20 average of 6.2%.

• ROIC (Return on Invested Capital): Improved to 16.3% in 9M21, up 60 bp YoY. Passive components had the highest ROIC at 38%, while acoustic had the lowest at -5.1%.

Sub-sector Analysis

IT Hardware

• Component - Total: RM and FG inventory days both hit record highs.
• Power Supply: Inventory days increased, with RM and FG showing similar trends.
• Battery: RM and FG inventory days both showed growth, with FG increasing more significantly.
• Hinge: Inventory days remained stable, but WIP and FG showed slight increases.
• PC Component: RM and FG inventory days hit record highs, with WIP and FG showing growth.
• Connector: Inventory days remained steady, with a focus on high-speed/high-frequency designs.
• Casing: Inventory dollar declined YoY, with RM and FG inventory days showing mixed trends.
• Handset Component: RM and FG inventory days both increased, with FG showing a significant rise.
• Passives: RM and FG inventory days hit record highs, while OPM and EBITDA margins declined.
• Cooling: Inventory days increased, with RM and FG showing similar trends.
• PCB: Inventory days and capex intensity were at record highs, with PCB accounting for the largest revenue and capex share.

Auto Supply Chain

• Inventory days hit a new record high, driven by raw material inventory growth.
• Near-term outlook is dampened by chip supply constraints, but 2022 growth is expected due to EV demand, business model changes, and new design opportunities.

EMS/IPC

• EMS: Revenue grew 11% YoY, with operating profit up 37% YoY. Hon Hai expanded its operating profit share to 62%, while Pegatron's share declined to 6%.
• IPC: Revenue grew 12% YoY, but OPM and ROIC declined. Capex increased significantly, and inventory days rose.

Stock Highlights

• Hon Hai: Maintained strong position in EMS, with a capex-to-sales ratio of 1.3%.
• BizLink: Expected to benefit from its acquisition of Leoni's BG and diversification into Europe and industrial segments.
• Unimicron: Demonstrated better ABF pricing power and a top pick in the PCB sector.
• Hu Lane: Expected to benefit from EV growth, China substitution demand, and a more balanced regional mix.
• Largan: Saw a decline in ROIC, with potential challenges in its transition period.
• Delta: Continued to be a top performer in the components sector with a high ROIC and P/E ratio.
• TXC: Recorded high revenue growth and ROIC, making it a top pick.
• Catcher: Experienced a significant drop in EPS, though capex growth was strong.
• Advantech: Showed strong growth in both revenue and ROIC, with a focus on new business opportunities.

Valuation and Outlook

• Sector Valuation Matrix: The components sector showed mixed valuation trends, with some companies having higher P/E and P/B ratios, while others faced challenges.
• ROIC Recovery: The overall ROIC for the components sector improved, but sub-sectors like acoustic saw significant contraction.
• R&D Spending: Increased in line with revenue growth, with connectors and FPC showing high R&D intensity for high-speed and high-frequency designs.

Risks

• End-demand weakness
• Component shortages
• Pricing pressures
• China electricity restrictions
• FX volatility
• International outbreaks of COVID-19

Conclusion

The downstream sector in Taiwan is experiencing a mix of challenges and opportunities in 9M21. Inventory levels are at record highs, driven by procurement anxiety and supply chain imbalances. Revenue and profit growth have slowed, with the auto and EMS sectors showing more resilience. The report highlights the importance of diversification and innovation in maintaining profitability, especially in high-speed and high-frequency components. Despite the challenges, some companies like Unimicron, BizLink, and Hon Hai are positioned for continued growth and are recommended for investment.