Fortune Electric Co Ltd (1519 TT, NT$921) - Capacity expansion gradually coming online, clear sales upturn

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Fortune Electric Co Ltd (1519 TT, NT$921) - Capacity expansion gradually coming online, clear sales upturn

Taiwan Equity | Electrical Machinery

Company Snapshot

The US remains the main export destination, accounting for over 80%, and the ASP for

ultra-high voltage products continues to rise. Overall, Fortune Electric's transformer lead

time remains superior to international peers. Benefiting from expanding demand from

data centers and power infrastructure, the export share continues to increase, driving

sales structure optimization and enhanced profitability. With the “520 policy” momentum

heating up, Fortune Electric is expected to benefit from continuation of the government’s

resilient grid and energy transition policies. We estimate FY26 and FY27 sales to grow

17.2% and 23.2% YoY, respectively.

How are we different?

Our new FY26 and FY27 EPS projections of NT$20.14 and NT$26.58 compare to the

Bloomberg consensus of NT$21.18 and NT$30.14, respectively.

Valuation, risks

FE currently trades at an average FY26-27F PE range of 39-40x. As the company posts

increasing sales weight of exports and data center business, which supports GM growth,

coupled with rapid global electricity demand growth and catalysts from the “520 policy”,

a re-rating is likely. We maintain Buy with a target price of NT$1,050, implying average 45x

FY26-27F PE. Key risks to our recommendation include a shift in the US resilient grid

spending policy, failure to realize benefits from capacity expansion, and adverse impact

from rising costs of key raw materials.

Figure 1: Quarterly EPS review Unit: NT$mn

1Q26 QoQ YoY Fubon Diff Consensus Diff

Net sales 4,757 -41.2% 7.6% 5,701 -16.6% 5,412 -12.1%

Gross profit 2,074 -39.3% 30.9% 2,536 -18.2% 2,288 -9.4%

Op profit 1,008 -35.2% 4.2% 1,026 -1.8% 1,332 -24.3%