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Thinking Electronic Industrial Co Ltd 2428
April 28, 2020 - 3:30pm EST by
Griffin
2020 2021
Price: 82.50 EPS 0 0
Shares Out. (in M): 128 P/E 0 0
Market Cap (in $M): 354 P/FCF 0 0
Net Debt (in $M): -89 EBIT 0 0
TEV ($): 265 TEV/EBIT 0 0

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Description

THINKING ELECTRONIC INDUSTRIAL CO LTD (2428.TW)

 

IDEA

 

Thinking Electronic (TE) is a global market leader for thermistors and varistors, listed in Taiwan. TE’s products are used in power supply and most electrical devices to help regulate temperature, voltage and current. A large market share of 40% has allowed the company to develop cost advantages. The products are tailor-made and represent a low cost - yet crucial - item for their customers. Customers sign long term contracts with trusted suppliers whom they believe can meet their requirements in terms of R&D, timing, quality, cost etc. and can guarantee the supply, typically for a period of 10 years. These attractive characteristics resulted in a strong historical financial performance with revenue growth of 5% p.a., EPS CAGR of 12% and high operating margins & ROE over the past 5 years of respectively 21% and 18%.  

The share price has declined 17% from its peak early this year because of concerns over COVID. Although there will be a short-term impact on TE’s financial performance we believe the longer-term outlook remains positive. At a trailing P/E of 9.5x (7.6x net of excess cash), we believe our downside is protected and the probability of generating an attractive return is high.

 

BUSINESS

 

TE is a manufacturer of a broad range of circuit protection solutions that guarantee user safety for electrical devices. The slide below provides an overview of product categories and applications.