WinWay Technology (6515.TW): 2Q26 Margin Miss Weighs, but Correction Already Reflects Headwinds; Cut TP; Reiterate Buy

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06 Aug 2026 12:43:24 ET │ 16 pages

WinWay Technology (6515.TW)

2Q26 Margin Miss Weighs, but Correction Already Reflects Headwinds;

Cut TP; Reiterate Buy

CITI'S TAKE

WinWay’s 2Q26 results missed on margins, with net profit coming in below

Citi/cons forecasts. GPM weakness reflected an unfavorable product mix,

alongside costs from scaling up new test socket capacity to meet robust

backlog. While contract-based pricing limits near-term pass-through on

existing projects, we expect scale effects to support recovery as capacity

ramps: Jul-26 revs reached another record high. We trim 2026E/27E

earnings by 4%/7% and cut our TP to NT$11,500 (from NT$13,000; 41x vs.

45x 2H27-1H28E EPS) to reflect margin headwinds. We believe the recent

share price correction (c.-16% since Jul vs. TAIEX at c.-4%) already reflects

these headwinds, offering a more attractive entry point. Reiterate Buy.

2Q26 results missed on margins — WinWay reported 2Q26 net profit of NT$672m

(-4% QoQ/+228% YoY), missing Citi/cons forecasts by 16%/11%, driven primarily by

weaker-than-expected margins. GPM came in at 38.3% (-4.7ppts QoQ/-10.6ppts

YoY), below cons estimates, reflecting unfavorable mix (probe card contribution at

28% of revs), alongside costs associated with scaling up new capacity for AI/HPC

test sockets to keep pace with a substantial order backlog. We believe WinWay’s

capacity expansion roadmap will continue to weigh on margins over the near term.

Growth trajectory remains intact despite margin pressure — As WinWay’s projects

and products are highly customized, it remains difficult to pass through pricing

increases on existing programs to key customers under contract-based term.

However, we expect rev to benefit from scale effects as new capacity comes online.

We now model 3Q26 revenue to grow 25% QoQ, with margins seeing a mild recovery.

WinWay reported Jul-26 rev of NT$1.6bn (+10% MoM/+156% YoY), driven by

continued AI/HPC demand alongside capacity ramp-up. Sustained AI GPU/server

CPU shipments and AI ASIC project ramp-up will support 2H26 growth.

Implications — We cut 2026E/27E earnings forecasts by 4%/7% and slightly tweak

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