Optical seeing better growth; upgrade to Buy: Stronger infra outlook and faster laser diode progress; upgrade to Buy

研报英文原文证据摘录

Optical seeing better growth; upgrade to Buy: Stronger infra outlook and faster laser diode progress; upgrade to Buy

in 2025 to 32.8% in 2027E.

UBS VIEW We upgrade WIN Semi from Neutral to Buy with a NT$500 PT (from NT$535), based on 40x 2027-

28E average PE (vs historical range of 10-57x). We revise 2026E/27E/28E EPS by 12%/-1%/4%,

respectively, on an improved outlook for infra and optical, offset by softer cellular/Wi-Fi. We apply a

lowered multiple (prior 47x 2027 PE) for our PT given the valuation contraction for the optical sector.

Our 2026-28E EPS is 14-23% ahead of consensus and we believe the rising sales contribution from

infrastructure and optical, and improving margins should support further upside.

EVIDENCE WIN Semi's utilisation recovered to 65% in Q226 and we expect further improvements, supported by

infrastructure growth, new optical project wins, cellular share gains and Wi-Fi 7 proliferation. This

should support a GM recovery, especially as depreciation is guided to remain low following

disciplined capex control from 2023-25 and the disposal of the Kaohsiung plant. With higher loading

and reduced sales exposure to the lower-margin smartphone-related business (down from 70% of

sales in 2020-22 to 50% in 2025), its GM recovered to nearly 30% in H225.

WHAT´S PRICED IN? The stock has declined ~50% over the past three months with the overall valuation contraction for

the optical sector and weaker smartphone outlook amidst an inflationary environment. We believe

WIN Semi's improving fundamentals, including gross margin recovery and stronger optical traction,

are not reflected in the current share price. Trading at 44x/30x/25x 2026E/2027E/2028E P/E, we see

limited downside and an increasingly attractive risk-reward profile.Please

Upside/Downside

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