Asia Vital Components 1Q26 GM beat; 2Q26 GM should further surprise on the upside; OW

Research evidence excerpt

Asia Vital Components 1Q26 GM beat; 2Q26 GM should further surprise on the upside; OW

J P M O R G A N Asia Pacific Equity Research

14 May 2026

Asia Vital Components Overweight

3017.TW, 3017 TT

1Q26 GM beat; 2Q26 GM should further surprise on the Price (14 May 26):NT$2,555.00

upside; OW ▲Price Target (Dec-26):NT$3,200.00 Prior (Dec-26):NT$3,000.00

AVC reported its 1Q26 earnings and held an investor meeting. The 1Q26 results

were largely in line with our above-consensus estimates with stronger GM growth Technology

to ~30% from ~26% in 4Q25. For 2Q26, we believe the weaker 2Q26 revenue William Yang AC

growth outlook (JPMe +3% QoQ), which we highlighted in our preview note (see (886-2) 2725-9899

our May 6 note, link), has been largely reflected in the company’s recent share price william.yang@jpmorgan.com

weakness (underperforming Taiex by 4.4% in the past 1 month). Meanwhile, we Megan Hsueh

further revise up our GM estimates for 2026 and 2027 to ~32% and 33% (vs (886-2) 2725-9249

megan.hsueh@jpmorgan.com

consensus still at ~29% and 30%). We think the stronger expansion from product J.P. Morgan Securities (Taiwan) Limited

mix and yield enhancement will continue to drive earnings upward revisions for

the company. Lastly, management highlighted during the meeting that whether the

cold plate requires gold-plating or not, it would not impact AVC's profits as the Key Changes (FYE Dec)

gold-plating is outsourced and done by other vendors. In our view, the recent Prev Cur Δ

investor concerns should be gradually mitigated after today’s earnings beat and Adj. EPS - 26E (NT$) 97.21 100.36 3.2%

Adj. EPS - 27E (NT$) 137.53 146.02 6.2%

positive outlook from management.

Quarterly Forecasts (FYE Dec)

• Solid 1Q26 results with GM beat. Reported EPS of NT$20.2 (+19% QoQ, Adj. EPS (NT$)