Record-High Third-Quarter Profit, Shares Close Higher for Two Consecutive Days
Taiwan Union Technology fell to the daily limit-down intraday on the 27th, then closed higher on the 28th and 29th, with a cumulative gain of 8.59%. Taiwan Union Technology reported its third-quarter results yesterday, with single-quarter EPS reaching 12.88 yuan, a new record high. A local investment advisor issued a report today, maintaining a Buy investment rating on Taiwan Union Technology and raising the target price from 1600 yuan to 1900 yuan, optimistic about operations in the fourth quarter and the first quarter of 2027.
Revenue and Gross Margin Beat Expectations
Taiwan Union Technology third-quarter revenue reached 179.5億元, up 25.5% quarter-on-quarter and up 122.6% year-on-year, with a gross margin of 36.9%, up 7.2 percentage points quarter-on-quarter and up 13.2 percentage points year-on-year, beating the investment advisor's previous estimate of 31.2%. The investment advisor noted the beat mainly came from price-hike effects materializing, with low-end price increases contributing most明显. By product mix, ELL and SLL accounted for 38%, VLL and LL accounted for 28%, HDI and N-LL accounted for 19%, and others accounted for 15%. Third-quarter operating profit was 55.7億元, up 65.8% quarter-on-quarter and up 340% year-on-year, beating investment advisor and market expectations.
Favorable Fourth-Quarter Pricing, Thailand Plant Expansion
Looking ahead to the fourth quarter and the first quarter of 2027, glass fiber cloth and copper foil prices will continue to be raised, low-end CCL will continue to reflect prices, and for high-end CCL, relevant peers also expect further reflection of raw material quotations, making overall fourth-quarter pricing favorable for CCL makers. Taiwan Union Technology is expected to add about 10萬張 of capacity at its Thailand plant. The investment advisor raised its fourth-quarter and first-quarter 2027 revenue forecasts to 212.6億元 and 219.6億元, with gross margins of 37.4% and 37.7%, operating profits of 67.1億元 and 69.3億元, after-tax profits of 47.1億元 and 48.6億元, and EPS of 15.71 yuan and 16.22 yuan.
AI Server Specification Upgrades and LEO Satellite Momentum
Looking to 2026 and 2027, the investment advisor analyzes that Taiwan Union Technology low-end CCL price-hike effects will continue, with subsequent expansion into M7 and above applications continuing to increase, such as AI servers upgrading to M8 and above, and the 1.6T switch upgrade cycle, in both market size and adoption speed, is expected to surpass the 800G upgrade cycle of the past two years, further driving specification upgrades. LEO satellites are another growth driver, currently mainly ground-based versions, with the space-based version already submitted for certification, expected to contribute in the first half of 2027. The space-based version is M7 and above specification, favorable for product mix. The investment advisor revised up 2026 and 2027 revenue forecasts to 635.7億元 and 1056.9億元, with EPS forecasts to 41.07 yuan and 79.98 yuan. Based on 2027 forecast EPS and maintaining a P/E ratio of 24 times, the derived target price is 1900 yuan.