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原始內容
Dynamic Holding
Near-term overhang from cost/margin but Thailand/AI ramp a bigger focus; trim PO
Reiterate Rating: BUY | PO: 200.00 TWD | Price: 122.00 TWD
2Q26 OP behind on GM miss; 2026 capex raised
2Q26 OP (operating profits) of NT$68mn was 81%/78% behind BofAe/consensus given a miss in GM (gross margin), which was caused by rising CCL (copper clad laminate) costs. In addition, FX (foreign exchange) loss further pressured bottom-line from non-op side in 2Q26. The firm now expects 2026 capex to be NT$38.3bn after the newly announced plans in July/August, including the expansion in Huangshi P3 factory, with the output gradually kick off from 3Q27 and an expected revenue scale of NT$10bn annually.
Expect to pass through the cost pressure continuously
To mitigate the impact from cost inflation, the firm raised the ASP in June/July again (after in April), and it will likely raise the pricing further in August/September. For 3Q26, we expect sequential revenue growth across auto, storage (DDR5), networking/server (including accelerator cards) areas.
Updates on Thailand/high-end AI contribution
For the Thailand capacity, currently utilization is ~60% but it is expected to be fully loaded from 1Q27. With the ramp high-end capacity, AI (artificial intelligence) related business is expected to contribute ~40% of revenue in 2027, and the company cites the annual revenue from Thailand could reach NT$42bn in 2028 following the further expansion in Thailand.
Cut estimates and PO to NT$200 but reit. Buy
We cut 2026-28E EPS by 23-94% after factoring in 2Q26 results and updated outlook. Our PO goes to NT$200 (was NT$245), and it is now based on 15x P/E (was 18x) given a tad pressured margin profile, while the valuation period is rolled over to 2027E (from 2H26-1H27E). Reiterate Buy on the stock in view of its increasing exposure to AI server market, which will also bolster its earnings growth and profitability into 2027-28.
| Estimates (Dec) (NT$) | 2024A | 2025A | 2026E | 2027E | 2028E |
|---|---|---|---|---|---|
| Net Income (Adjusted - mn) | 1,051 | 749 | 67 | 3,776 | 7,954 |
| EPS | 3.78 | 2.70 | 0.236 | 13.32 | 28.05 |
| EPS Change (YoY) | 4.7% | -28.7% | -91.2% | NM | 110.7% |
| Dividend / Share | 1.50 | 1.08 | 0.100 | 5.30 | 11.20 |
| Free Cash Flow / Share | (12.59) | (19.51) | (101.68) | (10.50) | (1.58) |
| Valuation (Dec) | |||||
| P/E | 32.24x | 45.25x | 516.13x | 9.16x | 4.35x |
| Dividend Yield | 1.23% | 0.885% | 0.082% | 4.34% | 9.18% |
| EV / EBITDA* | 27.64x | 27.26x | 21.57x | 7.48x | 4.72x |
| Free Cash Flow Yield* | -10.11% | -15.66% | -83.35% | -8.61% | -1.29% |
| * 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
11 August 2026
Equity
| Key Changes (NT$) | Previous | Current |
|---|---|---|
| Price Obj. | 245.00 | 200.00 |
| 2026E EPS | 3.69 | 0.24 |
| 2027E EPS | 23.89 | 13.32 |
| 2028E EPS | 36.36 | 28.05 |
| 2026E EBITDA (m) | 5,051.6 | 3,591.4 |
| 2027E EBITDA (m) | 12,905.2 | 10,358.9 |
| 2028E EBITDA (m) | 17,825.4 | 16,411.7 |
Mike Yang >> Research Analyst Merrill Lynch (Taiwan) +886 2 2376 3729
mike.c.yang@bofa.com
Stock Data
| Price | 122.00 TWD |
|---|---|
| Price Objective | 200.00 TWD |
| Date Established | 11-Aug-2026 |
| Investment Opinion | C-1-7 |
| 52-Week Range | 84.06 TWD-203.50 |
| TWD | |
| Mrkt Val / Shares Out (mn) | 1,074 USD / 283.6 |
| Market Value (mn) | 34,596 TWD |
| Average Daily Value (mn) | 25.59 USD |
| Free Float | 86.6% |
| BofA Ticker / Exchange | XLHCF / TAI |
| Bloomberg / Reuters | 3715 TT / 3715.TW |
| ROE (2026E) | 0.6% |
| Net Dbt to Eqty (Dec-2025A) | 82.6% |
DDR -double data rate
iQ profile SM Dynamic Holding
| Key Income Statement Data (Dec) | 2024A | 2025A | 2026E | 2027E | 2028E |
|---|---|---|---|---|---|
| (NT$ Millions) | |||||
| Sales | 17,787 | 19,453 | 28,228 | 57,541 | 76,541 |
| Gross Profit | 4,110 | 3,762 | 4,627 | 13,278 | 21,109 |
| Sell General &Admin Expense | (1,840) | (1,697) | (2,523) | (4,685) | (5,254) |
| Operating Profit | 1,537 | 1,160 | 910 | 6,818 | 13,000 |
| Net Interest &Other Income | 30 | (99) | (822) | (1,355) | (1,557) |
| Associates | NA | NA | NA | NA | NA |
| Pretax Income | 1,568 | 1,060 | 88 | 5,463 | 11,443 |
| Tax (expense) / Benefit | (492) | (279) | (52) | (1,639) | (3,433) |
| Net Income (Adjusted) | 1,051 | 749 | 67 | 3,776 | 7,954 |
| Average Fully Diluted Shares Outstanding | 278 | 278 | 284 | 284 | 284 |
| Key Cash Flow Statement Data | |||||
| Net Income | 1,051 | 749 | 67 | 3,776 | 7,954 |
| Depreciation &Amortization | 1,265 | 1,682 | 2,682 | 3,541 | 3,411 |
| Change in Working Capital | (976) | (1,801) | 3,912 | 715 | 1,403 |
| Deferred Taxation Charge | NA | NA | NA | NA | NA |
| Other Adjustments, Net | 361 | (38) | (542) | 48 | 56 |
| Cash Flow from Operations | 1,701 | 592 | 6,119 | 8,080 | 12,825 |
| Capital Expenditure | (5,197) | (6,012) | (34,953) | (11,059) | (13,272) |
| (Acquisition) / Disposal of Investments | 30 | (45) | (10) | 0 | 0 |
| Other Cash Inflow / (Outflow) | 21 | 26 | 20 | 0 | 0 |
| Cash Flow from Investing | (5,147) | (6,031) | (34,943) | (11,059) | (13,272) |
| Shares Issue / (Repurchase) | 0 | 619 | 0 | 0 | 0 |
| Cost of Dividends Paid | (417) | (417) | (306) | (27) | (1,510) |
| Cash Flow from Financing | 2,724 | 8,050 | 28,660 | (27) | 1,490 |
| Free Cash Flow | (3,496) | (5,419) | (28,834) | (2,979) | (447) |
| Net Debt | 8,843 | 10,456 | 37,802 | 40,808 | 42,765 |
| Change in Net Debt | 3,962 | 1,658 | 27,347 | 3,006 | 1,958 |
| Key Balance Sheet Data | |||||
| Property, Plant &Equipment | 15,475 | 18,473 | 49,323 | 56,866 | 66,753 |
| Other Non-Current Assets | 2,741 | 2,391 | 4,153 | 4,128 | 4,102 |
| Trade Receivables | 5,661 | 6,840 | 6,474 | 8,942 | 8,831 |
| Cash &Equivalents | 2,849 | 5,571 | 5,824 | 2,819 | 3,861 |
| Other Current Assets | 4,176 | 5,370 | 5,192 | 8,035 | 10,803 |
| Total Assets | 30,902 | 38,645 | 70,967 | 80,789 | 94,349 |
| Long-Term Debt | 3,562 | 10,471 | 33,276 | 33,276 | 33,276 |
| Other Non-Current Liabilities | 1,689 | 1,933 | 3,212 | 3,212 | 3,212 |
| Short-Term Debt | 8,130 | 5,556 | 10,350 | 10,350 | 13,350 |
| Other Current Liabilities | 9,441 | 8,022 | 11,562 | 17,588 | 21,648 |
| Total Liabilities | 22,822 | 25,981 | 58,401 | 64,426 | 71,486 |
| Total Equity | 8,080 | 12,664 | 12,566 | 16,363 | 22,863 |
| Total Equity &Liabilities | 30,902 | 38,645 | 70,967 | 80,789 | 94,349 |
| iQ method SM - Bus Performance* | |||||
| Return On Capital Employed | 7.5% | 4.7% | 1.5% | 8.3% | 13.8% |
| Return On Equity | 14.4% | 8.0% | 0.6% | 30.0% | 45.0% |
| Operating Margin | 8.6% | 6.0% | 3.2% | 11.8% | 17.0% |
| EBITDA Margin | 15.8% | 14.6% | 12.7% | 18.0% | 21.4% |
| iQ method SM - Quality of Earnings* | |||||
| Cash Realization Ratio | 1.6x | 0.8x | NM | 2.1x | 1.6x |
| Asset Replacement Ratio | 4.2x | 3.6x | 13.2x | 3.1x | 3.9x |
| Tax Rate (Reported) | 31.4% | 26.3% | 58.5% | 30.0% | 30.0% |
| Net Debt-to-Equity Ratio | 109.4% | 82.6% | 300.8% | 249.4% | 187.1% |
| Interest Cover | 2.9x | 2.0x | 0.7x | 3.8x | 6.5x |
Key Metrics
- For full definitions of iQ method SM measures, see page 7.
Company Sector
Electronics
Company Description
Prior to the restructuring in 2022, Dynamic Holding was founded as Dynamic Electronics in 1988, and it has been one of the major PCB suppliers in Greater China. The company's capacity has been mainly located in mainland China (Huangshi, Kunshan), but it has also established a factory in Thailand from 2023. The firm's business has been centered on auto-grade PCB since 2014, but it became resolved to the transformation and focused more on AI (networking/server) related PCB from 2024.
Investment Rationale
We have a Buy rating on Dynamic Holding, as we expect it to benefit from the early-mover advantage as a high-end HDI/PCB supplier with sizable output/capacity outside of Greater China, which becomes critical to AI server customers. With the ramp of AI server-related PCB business, we expect its bottom line growth to be fueled by improving gross margin and operating leverage in the upcoming years.
Stock Data
Price to Book Value
3.2x
Exhibit 1: 2Q26 result review
2Q26 GM behind given ongoing pressure from higher CCL costs
| (NT$mn) | 2Q25A | 1Q26A | 2Q26A | QoQ% | YoY% | BofAe | Diff (%) | Consensus | Diff (%) |
|---|---|---|---|---|---|---|---|---|---|
| Revenue | 4,629 | 5,632 | 6,869 | 22.0% | 48.4% | 6,352 | 8.1% | 6,355 | 8.1% |
| Gross profit | 994 | 908 | 963 | 6.1% | -3.1% | 1,175 | -18.1% | 1,123 | -14.2% |
| Gross margin (%) | 21.5% | 16.1% | 14.0% | -2.1 ppt | -7.5 ppt | 18.5% | -4.5 ppt | 17.7% | -3.6 ppt |
| Operating Income | 379 | 130 | 68 | -48.1% | -82.1% | 349 | -80.6% | 303 | -77.6% |
| Operating margin (%) | 8.2% | 2.3% | 1.0% | -1.3 ppt | -7.2 ppt | 5.5% | -4.5 ppt | 4.8% | -3.8 ppt |
| Pre-tax Income | 468 | -416 | -322 | 22.7% | NM | 323 | NM | 265 | NM |
| Pre-tax margin (%) | 10.1% | -7.4% | -4.7% | 2.7 ppt | -14.8 ppt | 5.1% | -9.8 ppt | 4.2% | -8.9 ppt |
| Net Income | 258 | -209 | -230 | -9.7% | NM | 168 | NM | 152 | NM |
| Net margin (%) | 5.6% | -3.7% | -3.3% | 0.4 ppt | -8.9 ppt | 2.6% | -6.0 ppt | 2.4% | -5.7 ppt |
| EPS (NT$) | 0.93 | -0.74 | -0.81 | -9.7% | NM | 0.59 | NM | 0.53 | NM |
Source: BofA Global Research estimates, company data, Bloomberg
Exhibit 2: Earnings estimate change
We cut 2026-28E EPS by 23-94% after baking in the assumption of softer gross margins
| (NT$mn) | BofA 26 (E) | BofA 26 (E) | BofA 26 (E) | BofA 27 (E) | BofA 27 (E) | BofA 27 (E) | BofA 28 (E) | BofA 28 (E) | BofA 28 (E) |
|---|---|---|---|---|---|---|---|---|---|
| New | Old | Diff (%) | New | Old | Diff (%) | New | Old | Diff (%) | |
| Total sales | 28,228 | 27,849 | 1.4 | 57,541 | 53,555 | 7.4 | 76,541 | 71,677 | 6.8 |
| Gross profit | 4,627 | 5,633 | -17.9 | 13,278 | 14,034 | -5.4 | 21,109 | 20,635 | 2.3 |
| Gross margin | 16.4% | 20.2% | -3.8 ppt | 23.1% | 26.2% | -3.1 ppt | 27.6% | 28.8% | -1.2 ppt |
| Operating profit | 910 | 2,099 | -56.7 | 6,818 | 9,005 | -24.3 | 13,000 | 14,068 | -7.6 |
| Operating margin | 3.2% | 7.5% | -4.3 ppt | 11.8% | 16.8% | -5.0 ppt | 17.0% | 19.6% | -2.6 ppt |
| Pretax income | 88 | 1,617 | -94.6 | 5,463 | 9,260 | -41.0 | 11,443 | 13,921 | -17.8 |
| Pretax margin | 0.3% | 5.8% | -5.5 ppt | 9.5% | 17.3% | -7.8 ppt | 15.0% | 19.4% | -4.5 ppt |
| Net income | 67 | 1,047 | -93.6 | 3,776 | 6,776 | -44.3 | 7,954 | 10,315 | -22.9 |
| Net margin | 0.2% | 3.8% | -3.5 ppt | 6.6% | 12.7% | -6.1 ppt | 10.4% | 14.4% | -4.0 ppt |
| EPS (NT$) | 0.24 | 3.69 | -93.6 | 13.32 | 23.89 | -44.3 | 28.05 | 36.36 | -22.9 |
Source: BofA Global Research estimates
Exhibit 3: BofAe vs consensus
We are 27% behind consensus for 2027E EPS given the assumption of softer gross margin and bigger nonop loss
| (NT$mn) | 2026E | 2026E | 2026E | 2027E | 2027E | 2027E |
|---|---|---|---|---|---|---|
| BofAe | Consensus | Diff (%) | BofAe | Consensus Diff (%) | Consensus Diff (%) | |
| Total sales | 28,228 | 28,953 | -2.5 | 57,541 | 49,641 | 15.9 |
| Gross profit | 4,627 | 5,996 | -22.8 | 13,278 | 12,430 | 6.8 |
| Gross margin | 16.4% | 20.7% | -4.3 ppt | 23.1% | 25.0% | -2.0 ppt |
| Operating profit | 910 | 2,342 | -61.2 | 6,818 | 7,383 | -7.7 |
| Operating margin | 3.2% | 8.1% | -4.9 ppt | 11.8% | 14.9% | -3.0 ppt |
| Pretax income | 88 | 1,882 | -95.3 | 5,463 | 7,430 | -26.5 |
| Pretax margin | 0.3% | 6.5% | -6.2 ppt | 9.5% | 15.0% | -5.5 ppt |
| Net income | 67 | 1,293 | -94.8 | 3,776 | 5,136 | -26.5 |
| Net margin | 0.2% | 4.5% | -4.2 ppt | 6.6% | 10.3% | -3.8 ppt |
| EPS (NT$) | 0.24 | 4.56 | -94.8 | 13.32 | 18.11 | -26.5 |
Source: BofA Global Research estimates, Bloomberg
BofA GLOBAL RESEARCH
BofA GLOBAL RESEARCH
BofA GLOBAL RESEARCH
Exhibit 4: Income statement
We expect the company's gross margin to reach ~25% level in 2027-28
| NT$mn | 1Q26 | 2Q26 | 3Q26E | 4Q26E | 1Q27E | 2Q27E | 3Q27E | 4Q27E | 2025 | 2026E | 2027E | 2028E |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | 5,632 | 6,869 | 7,738 | 7,991 | 9,712 | 14,565 | 15,585 | 17,680 | 19,453 | 28,228 | 57,541 | 76,541 |
| Cost of Revenue | -4,724 | -5,906 | -6,500 | -6,472 | -7,721 | -11,361 | -11,923 | -13,260 | -15,691 | -23,602 | -44,264 | -55,432 |
| Gross profit | 908 | 963 | 1,238 | 1,518 | 1,991 | 3,204 | 3,663 | 4,420 | 3,762 | 4,627 | 13,278 | 21,109 |
| Operating exp | -777 | -895 | -1,006 | -1,039 | -1,214 | -1,675 | -1,714 | -1,856 | -2,602 | -3,717 | -6,460 | -8,109 |
| Operating income | 130 | 68 | 232 | 479 | 777 | 1,529 | 1,948 | 2,564 | 1,160 | 910 | 6,818 | 13,000 |
| Non-opt net | -546 | -322 | 38 | 8 | -341 | -337 | -336 | -341 | -99 | -822 | -1,355 | -1,557 |
| Income before tax | -416 | -254 | 271 | 488 | 436 | 1,192 | 1,612 | 2,223 | 1,060 | 88 | 5,463 | 11,443 |
| Income Tax | 163 | 13 | -81 | -146 | -131 | -358 | -484 | -667 | -279 | -52 | -1,639 | -3,433 |
| Net income | -253 | -241 | 189 | 341 | 305 | 835 | 1,128 | 1,556 | 781 | 37 | 3,824 | 8,010 |
| EPS (NT$) | -0.7 | -0.8 | 0.6 | 1.2 | 1.0 | 2.9 | 3.9 | 5.4 | 2.7 | 0.2 | 13.3 | 28.0 |
| Margin% | ||||||||||||
| Gross margin | 16.1% | 14.0% | 16.0% | 19.0% | 20.5% | 22.0% | 23.5% | 25.0% | 19.3% | 16.4% | 23.1% | 27.6% |
| Operating expenses | 13.8% | 13.0% | 13.0% | 13.0% | 12.5% | 11.5% | 11.0% | 10.5% | 13.4% | 13.2% | 11.2% | 10.6% |
| Operating margin | 2.3% | 1.0% | 3.0% | 6.0% | 8.0% | 10.5% | 12.5% | 14.5% | 6.0% | 3.2% | 11.8% | 17.0% |
| Pretax margin | -7.4% | -3.7% | 3.5% | 6.1% | 4.5% | 8.2% | 10.3% | 12.6% | 5.5% | 0.3% | 9.5% | 15.0% |
| Net margin | -4.5% | -3.5% | 2.4% | 4.3% | 3.1% | 5.7% | 7.2% | 8.8% | 4.0% | 0.1% | 6.6% | 10.5% |
| Sequential growth% | ||||||||||||
| Revenue | 3.8% | 22.0% | 12.7% | 3.3% | 21.5% | 50.0% | 7.0% | 13.4% | 9.4% | 45.1% | 103.8% | 33.0% |
| Gross profit | -5.8% | 6.1% | 28.6% | 22.6% | 31.1% | 60.9% | 14.3% | 20.7% | -8.5% | 23.0% | 187.0% | 59.0% |
| Operating exp | -0.1% | 15.1% | 12.4% | 3.3% | 16.9% | 38.0% | 2.4% | 8.3% | 1.1% | 42.9% | 73.8% | 25.5% |
| Operating income | -29.8% | -48.0% | 242.2% | 106.5% | 62.1% | 96.8% | 27.4% | 31.6% | -24.5% | -21.6% | 649.4% | 90.7% |
| Net income | n.a. | 4.6% | n.a. | 80.2% | -10.7% | 173.7% | 35.2% | 37.9% | -27.4% | -95.3% | 10367.7% | 109.5% |
Source: BofA Global Research estimates, company data
BofA GLOBAL RESEARCH
Price objective basis & risk
Dynamic Holding (XLHCF)
PO of NT$200 is based on 15x 2027E P/E, roughly in-line with the company's average P/E in its trading history, in view of the growing exposure to AI server market. The multiple (15x) is also at around 30% discount vs 22x we apply to major peers, considering a smaller scale by the company. In our view, the 15x multiple can be justified by expanding OPM (operating margin) and ROE to around 11% and 22% in 2026-28 (vs 8% and 15% respectively in 2023-25), and a growing exposure to AI server PCB to 40+% in 2027/28.
Downside risks are 1) a slower demand growth from AI server customers, which will negatively impact the company's capacity utilization rate, margin profile, and profitability, 2) a less-satisfactory execution in the capacity expansion/ramp for high-end HDI/PCB in Thailand, which could curtail the company's growth trajectory and undermine its track record to the customers, and 3) sharper competition from peers in the PCB industry, which will lead to pressured margin outlook and/or capped upside to the company's market share in AI server PCB.