Gold Circuit Electronics Ltd.: Known Story, Underpriced Outcome – Stay OW

Research evidence excerpt

Gold Circuit Electronics Ltd.: Known Story, Underpriced Outcome – Stay OW

IdeaM

RiskRisk RewardReward– Gold Circuit- GoldElectronicsCircuitLtd. Electronics(2368.TW) Ltd. (2368.TW)

Beneficiary of rising AI server penetration and server/switch PCB upgrade; OW

PRICE TARGET NT$1,660.00 OVERWEIGHT THESIS

Base case, residual income model. Key assumptions include a cost of equity of 9.2% (beta of ▪We stay OW because we think GCE is well

1.0, equity risk premium of 8.7% and risk-free rate of 1.0%), a medium-term growth rate of positioned to benefit from rising demand for

12%, and a terminal growth rate of 3%. AI server PCBs and high-speed networking

PCBs. NT$1,133.00 ▪We see 400G/800G networking PCBConsensus Price Target Distribution NT$750.00 NT$1,660.00 demand increasing in the coming years, MS PT

which should be a tailwind for gross marginSource: Refinitiv, Morgan Stanley Research Mean Morgan Stanley Estimates

in the longer term.

▪Our price target implies ~20x 2027e P/E

vs. GCE's three-year historical range of 7x to

RISK REWARD CHART 21x, which we still find attractive. GCE is

benefiting from a favorable mix and should

NT$2,365.00NT$2,365.00(+75.19%)NT$2,365.00(+75.19%)(+75.19%) show margin expansion in the coming years.

TWD

Consensus Rating Distribution

100%Overweight

NT$1,660.00NT$1,660.00(+22.96%)NT$1,660.00(+22.96%)(+22.96%) 0% Equal-weight

NT$1,350.00NT$1,350.00NT$1,350.00 0% Underweight

MS Rating

1000 Source: Refinitiv, Morgan Stanley Research

NT$1,005.00NT$1,005.00(-25.56%)NT$1,005.00(-25.56%)(-25.56%)

500 Risk Reward Themes

New Data Era: Positive

Secular Growth: Positive

MAY '25 NOV '25 MAY '26 MAY '27 View descriptions of Risk Rewards Themes here

Key: Historical Stock Performance Current Stock Price Price Target

Source: Refinitiv, Morgan Stanley Research