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原始內容
Taiwan Union Technology Corporation
Clearer picture of capacity expansion toward 2029 expedites share gain; Buy
Reiterate Rating: BUY | PO: 2,600 TWD | Price: 1,020 TWD
2Q26 GM beat even after inventory impacts
2Q26 net income of NT$2.3bn (EPS of NT$8.1) was 4% behind consensus given higherthan-expected tax rate. Yet the OP in 2Q26 was 13%/7% ahead vs BofAe/consensus thanks to 180-220bps beat in GM. We further note that the firm ' s 2Q26 GM would reach 31+%, if excluding the impact from inventory write-down of NT$270mn. Looking into 3Q26, we see positives from 1) an early ramp of the new capacity in Thailand after midJuly; and 2) further price hike though mainly driven by the cost pass-through.
Multiple demand drivers ahead from AI/networking
By customers/applications, we see solid demand outlook (toward end-2026) from the US customers ' CPU/GPU used in AI servers. Elsewhere, we see positives on networking side including 1) a guidance raise on 2026 revenue to $20.5bn (from $19bn) by Celestica earlier this week; and 2) a ramp of 800G/1.6T optical module based on M8-grade CCL from 4Q26-1Q27.
Further capacity expansion in 2028-29 announced
On capacity plan, TUC (Taiwan Union) now expect to add capacity further by 1.5mn/450k sheets per month in 2028/29, with total capacity reaching 5.3/5.75mn in respective years (vs 2.6/3.8mn in 2026/27). For the 1.5mn addition in 2028, 1.2mn/300k will come from Zhongshan/Thailand. As for the 450k addition in 2029, it will be located in Thailand.
Reiterate Buy on faster share gain vs high-end CCL peers
Reiterate Buy given TUC ' s more aggressive capacity expansion to expedite its share gain amidst S/D (supply/demand) tightness in high-end CCL market. We raise 2026-28E EPS by 8-15% after factoring in 2Q26 results and onward outlook. Our PO stays at NT$2,600 same based on 30.5x P/E, incorporating higher opex and tax rate for the 2H27-1H28E valuation period.
| Estimates (Dec) (NT$) | 2024A | 2025A | 2026E | 2027E | 2028E |
|---|---|---|---|---|---|
| Net Income (Adjusted - mn) | 2,604 | 3,409 | 10,910 | 20,012 | 32,034 |
| EPS | 9.56 | 12.13 | 37.78 | 69.30 | 110.93 |
| EPS Change (YoY) | 213.6% | 26.9% | 211.4% | 83.4% | 60.1% |
| Consensus EPS (Visible Alpha) | 35.14 | 72.10 | 126.43 | ||
| Dividend / Share | 6.50 | 7.51 | 25.00 | 46.00 | 73.00 |
| Free Cash Flow / Share | (1.91) | (4.82) | (19.74) | 29.62 | 69.46 |
| Valuation (Dec) | |||||
| P/E | 106.68x | 84.06x | 27.00x | 14.72x | 9.19x |
| Dividend Yield | 0.638% | 0.736% | 2.45% | 4.51% | 7.16% |
| EV / EBITDA* | 79.33x | 62.50x | 19.93x | 10.43x | 6.60x |
| Free Cash Flow Yield* | -0.176% | -0.459% | -1.94% | 2.90% | 6.81% |
| * For full definitions of iQ method SM measures, see page 7. |
This research report provides general information only. No part of this report may be used or reproduced or quoted in any manner whatsoever in Taiwan by the press or other persons without the express written consent of BofA Securities.
>> Employed by a non-US affiliate of BofAS and is not registered/qualified as a research analyst under the FINRA rules.
Refer to "Other Important Disclosures" for information on certain BofA Securities entities that take responsibility for the information herein in particular jurisdictions.
BofA Securities does and seeks to do business with issuers covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.
Refer to important disclosures on page 8 to 10. Analyst Certification on page 5. Price
29 July 2026
Equity
| Key Changes (NT$) | Previous | Current |
|---|---|---|
| 2026E EPS | 33.64 | 37.78 |
| 2027E EPS | 60.35 | 69.30 |
| 2028E EPS | 103.00 | 110.93 |
| 2026E EBITDA (m) | 12,827.0 | 15,064.9 |
| 2027E EBITDA (m) | 23,950.4 | 28,777.9 |
| 2028E EBITDA (m) | 38,819.9 | 45,452.5 |
Mike Yang >> Research Analyst Merrill Lynch (Taiwan) +886 2 2376 3729
mike.c.yang@bofa.com
Stock Data
| Price | 1,020 TWD |
|---|---|
| Price Objective | 2,600 TWD |
| Date Established | 6-Jul-2026 |
| Investment Opinion | C-1-7 |
| 52-Week Range | 252.00 TWD-1,920 |
| TWD | |
| Mrkt Val / Shares Out (mn) | 9,082 USD / 288.8 |
| Market Value (mn) | 294,550 TWD |
| Average Daily Value (mn) | 185.78 USD |
| Free Float | 77.9% |
| BofA Ticker / Exchange | TWUNF/TWO |
| Bloomberg / Reuters | 6274 TT / 6274.TWO |
| ROE (2026E) | 50.0% |
| Net Dbt to Eqty (Dec-2025A) | -31.0% |
CPU/GPU - central/graphic processing unit
OP - operating profits
GM -gross margin
CCL - copper clad laminate
AI - artificial intelligence
iQ profile SM Taiwan Union Technology Corporation
| Key Income Statement Data (Dec) | 2024A | 2025A | 2026E | 2027E | 2028E |
|---|---|---|---|---|---|
| (NT$ Millions) | |||||
| Sales | 23,070 | 30,340 | 60,362 | 104,405 | 163,619 |
| Gross Profit | 5,342 | 6,898 | 18,216 | 33,757 | 53,219 |
| Sell General &Admin Expense | (1,651) | (2,040) | (3,191) | (5,220) | (8,017) |
| Operating Profit | 3,332 | 4,344 | 14,427 | 27,553 | 43,816 |
| Net Interest &Other Income | 46 | 175 | 125 | 10 | (30) |
| Associates | NA | NA | NA | NA | NA |
| Pretax Income | 3,378 | 4,519 | 14,552 | 27,562 | 43,785 |
| Tax (expense) / Benefit | (773) | (1,109) | (3,642) | (7,550) | (11,752) |
| Net Income (Adjusted) | 2,604 | 3,409 | 10,910 | 20,012 | 32,034 |
| Average Fully Diluted Shares Outstanding | 272 | 281 | 289 | 289 | 289 |
| Key Cash Flow Statement Data | |||||
| Net Income | 2,604 | 3,409 | 10,910 | 20,012 | 32,034 |
| Depreciation &Amortization | 452 | 459 | 638 | 1,225 | 1,637 |
| Change in Working Capital | (2,164) | (3,758) | (5,216) | (6,737) | (7,069) |
| Deferred Taxation Charge | NA | NA | NA | NA | NA |
| Other Adjustments, Net | (239) | 485 | 627 | 0 | 0 |
| Cash Flow from Operations | 653 | 596 | 6,959 | 14,500 | 26,602 |
| Capital Expenditure | (1,172) | (1,949) | (12,659) | (5,946) | (6,545) |
| (Acquisition) / Disposal of Investments | (50) | (4,684) | 1,681 | 0 | 0 |
| Other Cash Inflow / (Outflow) | 116 | 131 | 26 | 26 | 26 |
| Cash Flow from Investing | (1,106) | (6,502) | (10,952) | (5,920) | (6,519) |
| Shares Issue / (Repurchase) | 0 | 0 | 0 | 0 | 0 |
| Cost of Dividends Paid | 0 | 0 | (2,109) | (7,092) | (13,008) |
| Cash Flow from Financing | 1,376 | 4,888 | 8,940 | (7,092) | (13,008) |
| Free Cash Flow | (519) | (1,353) | (5,700) | 8,554 | 20,057 |
| Net Debt | (4,552) | (5,776) | 1,682 | 193 | (6,881) |
| Change in Net Debt | (1,082) | 3,456 | 5,764 | (1,488) | (7,075) |
| Key Balance Sheet Data | |||||
| Property, Plant &Equipment | 4,339 | 5,565 | 14,901 | 18,959 | 27,220 |
| Other Non-Current Assets | 1,275 | 1,825 | 2,595 | 3,150 | 3,825 |
| Trade Receivables | 9,460 | 13,823 | 23,563 | 36,367 | 46,237 |
| Cash &Equivalents | 7,037 | 10,602 | 14,207 | 15,695 | 22,770 |
| Other Current Assets | 3,766 | 7,926 | 8,571 | 15,531 | 22,116 |
| Total Assets | 25,878 | 39,741 | 63,836 | 89,702 | 122,169 |
| Long-Term Debt | 1,524 | 2,686 | 13,419 | 13,419 | 13,419 |
| Other Non-Current Liabilities | 2,145 | 3,821 | 3,951 | 3,951 | 3,951 |
| Short-Term Debt | 962 | 2,141 | 2,470 | 2,470 | 2,470 |
| Other Current Liabilities | 6,910 | 12,480 | 18,926 | 30,587 | 40,875 |
| Total Liabilities | 11,541 | 21,127 | 38,766 | 50,427 | 60,715 |
| Total Equity | 14,337 | 18,614 | 25,071 | 39,275 | 61,454 |
| Total Equity &Liabilities | 25,878 | 39,741 | 63,836 | 89,702 | 122,169 |
| iQ method SM - Bus Performance* | |||||
| Return On Capital Employed | 16.0% | 14.6% | 30.2% | 38.6% | 45.8% |
| Return On Equity | 20.1% | 20.7% | 50.0% | 62.2% | 63.6% |
| Operating Margin | 14.4% | 14.3% | 23.9% | 26.4% | 26.8% |
| EBITDA Margin | 16.4% | 15.8% | 25.0% | 27.6% | 27.8% |
| iQ method SM - Quality of Earnings* | |||||
| Cash Realization Ratio | 0.3x | 0.2x | 0.6x | 0.7x | 0.8x |
| Asset Replacement Ratio | 2.6x | 4.4x | 20.1x | 4.9x | 4.0x |
| Tax Rate (Reported) | 22.9% | 24.6% | 25.0% | 27.4% | 26.8% |
| Net Debt-to-Equity Ratio | -31.7% | -31.0% | 6.7% | 0.5% | -11.2% |
| Interest Cover | NM | 49.0x | NM | NM | NM |
Key Metrics
- For full definitions of iQ method SM measures, see page 7.
Company Sector
IT Hardware
Company Description
Taiwan Union Technology Corporation (TUC) is a leading CCL supplier globally, with headquarters in Hsinchu. The company was founded in 1974 and has a business focus of providing high-speed/high-frequency materials for data transmission. In terms of capacity, TUC has production sites across China, Taiwan, and Thailand. By application, TUC is more focused on providing CCL for networking switch.
Investment Rationale
We have a Buy rating on TUC, as we expect it to be a key beneficiary of the upgrades in networking switch toward 800G/1.6T transmission rate. In addition to networking switch, we see potential upside from AI server and LEO businesses, and we believe the company is well positioned to reap relevant business opportunities, thanks to its technology leadership and output scale.
Exhibit 1: 2Q26 result review
2Q26 operating income was 13%/7% ahead of BofAe/consensus due mainly to the 180-220bps beat in gross margin
| (NT$mn) | 2Q25A | 1Q26A | 2Q26A | QoQ% | YoY% | BofAe | Diff (%) | Consensus | Diff (%) |
|---|---|---|---|---|---|---|---|---|---|
| Revenue | 6,780 | 10,054 | 14,301 | 42.2% | 110.9% | 14,613 | -2.1% | 14,345 | -0.3% |
| Gross profit | 1,435 | 2,529 | 4,250 | 68.1% | 196.1% | 4,019 | 5.7% | 3,998 | 6.3% |
| Gross margin (%) | 21.2% | 25.1% | 29.7% | 4.6 ppt | 8.5 ppt | 27.5% | 2.2 ppt | 27.9% | 1.8 ppt |
| Operating Income | 853 | 1,828 | 3,358 | 83.7% | NM | 2,966 | 13.2% | 3,154 | 6.5% |
| Operating margin (%) | 12.6% | 18.2% | 23.5% | 5.3 ppt | 10.9 ppt | 20.3% | 3.2 ppt | 22.0% | 1.5 ppt |
| Pre-tax Income | 840 | 1,874 | 3,427 | 82.9% | NM | 2,989 | 14.6% | 3,163 | 8.3% |
| Pre-tax margin (%) | 12.4% | 18.6% | 24.0% | 5.3 ppt | 11.6 ppt | 20.5% | 3.5 ppt | 22.0% | 1.9 ppt |
| Net Income | 652 | 1,260 | 2,342 | 85.8% | NM | 2,332 | 0.4% | 2,432 | -3.7% |
| Net margin (%) | 9.6% | 12.5% | 16.4% | 3.8 ppt | 6.8 ppt | 16.0% | 0.4 ppt | 17.0% | -0.6 ppt |
| EPS (NT$) | 2.36 | 4.36 | 8.11 | 85.8% | NM | 8.30 | -2.3% | 8.42 | -3.7% |
Source: BofA Global Research estimates, company data, Bloomberg
Exhibit 2: BofAe vs consensus
We raise 2026-28E EPS by 8-15% after baking in the assumption of stronger revenue growth, operating leverage and gross margin
| (NT$mn) | BofA 26 (E) | BofA 26 (E) | BofA 26 (E) | BofA 27 (E) | BofA 27 (E) | BofA 27 (E) | BofA 28 (E) | BofA 28 (E) | BofA 28 (E) |
|---|---|---|---|---|---|---|---|---|---|
| New | Old | Diff (%) | New | Old | Diff (%) | New | Old | Diff (%) | |
| Total sales | 60,362 | 59,376 | 1.7 | 104,405 | 99,458 | 5.0 | 163,619 | 153,924 | 6.3 |
| Gross profit | 18,216 | 16,358 | 11.4 | 33,757 | 29,175 | 15.7 | 53,219 | 46,211 | 15.2 |
| Gross margin | 30.2% | 27.5% | 2.6 ppt | 32.3% | 29.3% | 3.0 ppt | 32.5% | 30.0% | 2.5 ppt |
| Operating profit | 14,427 | 12,186 | 18.4 | 27,553 | 22,744 | 21.1 | 43,816 | 37,218 | 17.7 |
| Operating margin | 23.9% | 20.5% | 3.4 ppt | 26.4% | 22.9% | 3.5 ppt | 26.8% | 24.2% | 2.6 ppt |
| Pretax income | 14,552 | 12,280 | 18.5 | 27,562 | 22,785 | 21.0 | 43,785 | 37,219 | 17.6 |
| Pretax margin | 24.1% | 20.7% | 3.4 ppt | 26.4% | 22.9% | 3.5 ppt | 26.8% | 24.2% | 2.6 ppt |
| Net income | 10,910 | 9,451 | 15.4 | 20,012 | 16,955 | 18.0 | 32,034 | 28,939 | 10.7 |
| Net margin | 18.1% | 15.9% | 2.2 ppt | 19.2% | 17.0% | 2.1 ppt | 19.6% | 18.8% | 0.8 ppt |
| EPS (NT$) | 37.78 | 33.64 | 12.3 | 69.30 | 60.35 | 14.8 | 110.93 | 103.00 | 7.7 |
Source: BofA Global Research estimates
Exhibit 3: BofAe vs consensus
We are 12-13% ahead vs consensus for 2026-27E operating profit, given the assumptions of stronger revenue growth and gross margin
| (NT$mn) | 2026E | 2026E | 2026E | 2027E | 2027E | 2027E | 2028E | 2028E | 2028E |
|---|---|---|---|---|---|---|---|---|---|
| BofAe | Consensus | Diff (%) | BofAe | Consensus | Diff (%) | BofAe | Consensus | Diff (%) | |
| Total sales | 60,362 | 58,344 | 3.5 | 104,405 | 94,347 | 10.7 | 163,619 | 156,700 | 4.4 |
| Gross profit | 18,216 | 16,352 | 11.4 | 33,757 | 28,780 | 17.3 | 53,219 | 49,965 | 6.5 |
| Gross margin | 30.2% | 28.0% | 2.2 ppt | 32.3% | 30.5% | 1.8 ppt | 32.5% | 31.9% | 0.6 ppt |
| Operating profit | 14,427 | 12,900 | 11.8 | 27,553 | 24,365 | 13.1 | 43,816 | 44,286 | -1.1 |
| Operating margin | 23.9% | 22.1% | 1.8 ppt | 26.4% | 25.8% | 0.6 ppt | 26.8% | 28.3% | -1.5 ppt |
| Pretax income | 14,552 | 12,939 | 12.5 | 27,562 | 24,324 | 13.3 | 43,785 | 45,409 | -3.6 |
| Pretax margin | 24.1% | 22.2% | 1.9 ppt | 26.4% | 25.8% | 0.6 ppt | 26.8% | 29.0% | -2.2 ppt |
| Net income | 10,910 | 9,778 | 11.6 | 20,012 | 18,443 | 8.5 | 32,034 | 34,194 | -6.3 |
| Net margin | 18.1% | 16.8% | 1.3 ppt | 19.2% | 19.5% | -0.4 ppt | 19.6% | 21.8% | -2.2 ppt |
| EPS (NT$) | 37.78 | 33.86 | 11.6 | 69.30 | 63.87 | 8.5 | 110.93 | 118.41 | -6.3 |
Source: BofA Global Research estimates, Bloomberg
BofA GLOBAL RESEARCH
BofA GLOBAL RESEARCH
BofA GLOBAL RESEARCH
Exhibit 4: Income statement
We expect the firm's gross margin to improve to 32+% level toward 2027-28 along with 60+% revenue CAGR
| NT$mn;% | 1Q26 | 2Q26 | 3Q26E | 4Q26E | 1Q27E | 2Q27E | 3Q27E | 4Q27E | 2025 | 2026E | 2027E | 2028E |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | 10,054 | 14,301 | 16,767 | 19,240 | 21,627 | 23,381 | 27,580 | 31,817 | 30,340 | 60,362 | 104,405 | 163,619 |
| Cost of Revenue | (7,525) | (10,051) | (11,485) | (13,083) | (14,815) | (15,899) | (18,616) | (21,318) | (23,442) | (42,145) | (70,647) | (110,401) |
| Gross profit | 2,529 | 4,250 | 5,282 | 6,157 | 6,813 | 7,482 | 8,963 | 10,500 | 6,898 | 18,216 | 33,757 | 53,219 |
| Operating exp | (701) | (892) | (1,023) | (1,174) | (1,298) | (1,403) | (1,627) | (1,877) | (2,554) | (3,789) | (6,205) | (9,403) |
| Operating income | 1,828 | 3,358 | 4,259 | 4,983 | 5,515 | 6,079 | 7,336 | 8,622 | 4,344 | 14,427 | 27,553 | 43,816 |
| Non-opt net | 46 | 69 | 5 | 5 | (20) | 10 | 10 | 10 | 175 | 125 | 10 | (30) |
| Income before tax | 1,874 | 3,427 | 4,264 | 4,988 | 5,495 | 6,089 | 7,346 | 8,632 | 4,519 | 14,552 | 27,562 | 43,785 |
| Income Tax | (614) | (1,085) | (895) | (1,047) | (1,539) | (1,218) | (2,204) | (2,590) | (1,109) | (3,642) | (7,550) | (11,752) |
| Net income | 1,260 | 2,342 | 3,368 | 3,941 | 3,956 | 4,871 | 5,142 | 6,043 | 3,409 | 10,910 | 20,012 | 32,034 |
| EPS (NT$) | 4.4 | 8.1 | 11.7 | 13.6 | 13.7 | 16.9 | 17.8 | 20.9 | 12.2 | 37.8 | 69.3 | 110.9 |
| Margin; tax rate | ||||||||||||
| Gross margin | 25% | 30% | 32% | 32% | 32% | 32% | 33% | 33% | 23% | 30% | 32% | 33% |
| Operating expenses | 7% | 6% | 6% | 6% | 6% | 6% | 6% | 6% | 8% | 6% | 6% | 6% |
| Operating margin | 18% | 23% | 25% | 26% | 26% | 26% | 27% | 27% | 14% | 24% | 26% | 27% |
| Pretax margin | 19% | 24% | 25% | 26% | 25% | 26% | 27% | 27% | 15% | 24% | 26% | 27% |
| Net margin | 13% | 16% | 20% | 20% | 18% | 21% | 19% | 19% | 11% | 18% | 19% | 20% |
| Tax rate | 33% | 32% | 21% | 21% | 28% | 20% | 30% | 30% | 25% | 25% | 27% | 27% |
| Sequential growth% | ||||||||||||
| Revenue | 10% | 42% | 17% | 15% | 12% | 8% | 18% | 15% | 32% | 99% | 73% | 57% |
| Gross profit | 26% | 68% | 24% | 17% | 11% | 10% | 20% | 17% | 29% | 164% | 85% | 58% |
| Operating exp | -3% | 27% | 15% | 15% | 11% | 8% | 16% | 15% | 27% | 48% | 64% | 52% |
| Operating income | 42% | 84% | 27% | 17% | 11% | 10% | 21% | 18% | 30% | 232% | 91% | 59% |
| Net income | 16% | 86% | 44% | 17% | 0% | 23% | 6% | 18% | 31% | 220% | 83% | 60% |
Source: BofA Global Research estimates, company data
BofA GLOBAL RESEARCH
Price objective basis & risk
Taiwan Union Technology Corporation (TWUNF)
Our PO NT$2,600 is based on 30.5x 2H27-1H28E P/E, which is at the high-end of the historical trading range of 8-31x during 2016-2026. In our view, the valuation multiple is justified, given 1) gross/operating margin expansion to 32% and 26% in 2026-28E, 2) expanding ROE toward around 59% in 2026-28E, and 3) robust free-cash flow generation in 2027-28E.
Downside risks are
- 1) Fluctuation in raw material prices, which could lead to a more volatile gross margin for TUC in the near term
- 2) More intensified competition in CCL, which could pressure TUC's overall margin profile
- 3) Adoption of new type of upstream material (e.g., quartz), which could bring business uncertainty for the names in CCL industry, including TUC
- 4) Worse-than-expected execution by the company, which could cause market-share loss and/or decreased business traction with customers