報告_Citi_欣興3037_3Q26_20261027

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Prepared for [訂閱者已遮蔽] citi

27 Oct 2026 13:34:19 ET │ 15 pages

Unimicron (3037.TW)

ABF GM expansion ahead of expectations; Buy

CITI'S TAKE

We view Unimicron's 3Q26 GM of 28.8% (+4.0ppt QoQ) as robust, although we observed that some investors had aggressive expectations of 3Q26 GM at c.30% levels. We think this GM shortfall could be attributed to lowerthan-expected GM improvement in BT/HDI segments. However, we see ABF GM expansion well ahead of expectations, which likely helps reach its longterm ABF GM target of 50-60% earlier than expected. From our perspective, meaningful BT/HDI GM expansion eventually will come after BT capacity conversion into ABF and production ramp for AI PCB products like optical module/AI server products, implying upside potential to Unimicron's GM profile in 2027/28E. Thus, we raise our earnings and DCF-based TP to NT$1,550 (30x 2027E EPS) from NT$1,500 and reiterate our Buy rating.

Robust 3Q26 results: GM beat - 3Q26 sales advanced 23% QoQ, with ABF sales growing at c.30% QoQ. 3Q26 GM posted 28.8% (+4.0ppt QoQ), which came 0.4ppt/1.0ppt than Citi/consensus forecasts, which was mainly driven by ABF GM expansion vs gradual GM improvement in BT and HDI segments. Although we observed that some investors had aggressive expectations of 3Q26 GM at c.30% levels, we still view Unimicron's 3Q26 GM results as robust and think the shortfall could be attributed to gradual improvement in BT/HDI. OPM also saw better leverage with benefit of 0.4ppt QoQ. Overall, OP levels beat Citi/consensus forecasts by 6%/7%. ABF/BT UTR was running at full levels in 3Q26.

4Q26: ABF demand gaining more traction - We currently expect ABF to still take the lead in 4Q26E, resulting in +11% QoQ growth in 4Q26E total sales, considering all the major AI chips entering mass production. For 4Q GM profile, we forecast 32.2% (+3.4ppt QoQ) and ABF drove its GM expansion (vs gradual improvement in HDI GM), more than offset negative impacts from approved salary raise and restricted stock. For OPEX ratio, we forecast +0.2ppt QoQ increase considering employee profit sharing by year-end. We still expect potential price hike of 10-15% in 4Q26E resulting from all the major AI chips ramping up together. For near-term capacity expansion, phase 3 of KF plant 1 just ramped in 3Q26 and phase 1 of KF plant 2 is set to ramp in 2Q27, as per the management.

Earnings Summary

Source: Powered by dataCentral

See Appendix A-1 for Analyst Certification, Important Disclosures and Research Analyst Affiliations.

n Buy

Price (27 Oct 26 13:30)

NT$1,060.00

Target price NT$1,550.00↑

from NT$1,500.00

Expected share price return

46.2%

Expected dividend yield

1.0%

Expected total return

47.3%

Market Cap NT$1,739,769M

US$53,387M

Price Performance (RIC: 3037.TW, BB: 3037 TT)

Jack Chen AC

+886-2-8726-9091 jack1.chen@citi.com

Laura (Chia Yi) Chen +886-2-8726-9090 laura.cy.chen@citi.com

Nicholas Lai +886-2-8726-9093 nicholas.lai@citi.com Prepared for [訂閱者已遮蔽] Prepared for [訂閱者已遮蔽]

Figure 2. Unimicron - Earnings Revisions

© 2026 Citigroup Inc. No redistribution without Citigroup's written permission.

Source: Citi Research estimates Long-term strategies: Resources concentrated on ABF/AI PCB - As we highlighted, Unimicron has been converting BT capacity into ABF, which currently causes some BT capacity to be idle during the transition period (negative impact will likely last into 1H27, in our view). Thus, currently, we are less bullish on its BT GM recovery in the near term vs other BT peers. However, we expect this conversion will help the company to secure more ABF demand earlier considering customers currently are still waiting for those ABF greenfield capacity expansion projects to come in the next few years. For HDI/mSAP, Unimicron would only focus on AI server/optical module products in the long term. To note that, the company is still less aggressive in HDI capacity expansion given higher competition from Chinese peers. Meanwhile, the company is also downsizing its traditional PCB capacity (i.e., for non-AI business) and just announced its plan to sell its PCB plant in Japan to other players. We expect there will be more downsizing plans to come for traditional PCB capacity.

GM expansion on track; reiterate Buy - We raise our 2026/27/28E by 10%/5%/5% to factor in robust GM expansion by ABF. We remain positive on its GM expansion by ABF and also see potential upside coming from HDI and BT segments. We raise our DCF-based TP to NT$1,550 (30x 2027E EPS) from NT$1,500 and reiterate our Buy rating .

Figure 1. Unimicron - 3Q26 Results

© 2026 Citigroup Inc. No redistribution without Citigroup's written permission.

Source: Citi Research Estimates, Company Reports, Bloomberg Prepared for [訂閱者已遮蔽]

Figure 3. Unimicron - Key Earnings Estimates

© 2026 Citigroup Inc. No redistribution without Citigroup's written permission.

Source: Company data, Citi Research estimates Prepared for [訂閱者已遮蔽]

Bull/Bear: Unimicron (3037.TW)

Spread 75pp

Current Price and expected returns (upside/downside) as of 27 Oct 2026

BULL Assumptions

• Better-than-expected ABF recovery on Al and PC
• Rapid improvement in the yield of HDl for Al products
• ASP hike on T-glass shortage

BASE Assumptions

• & +46%/+64% revenue YoY in 26/27E
• 26.9%/40.4% GM and 17.5%/32.4% OPM in 26/27E

BEAR Assumptions

• Weakening ABF demand, dragged by recession
• GM pressure if tariff is not removed or stays at high levels
• Slow improvement in the yield of HDI for Al products

Prepared for [訂閱者已遮蔽]

Unimicron

Company description

Established in 1990, Unimicron is the world's No.1 PCB maker and HDI board maker. After the acquisition of PPT in late 2009, its revenue exposure to substrate has surpassed 40%, with the rest almost equally shared by conventional PCB and HDI. Unimicron has manufacturing sites in Taiwan and China (Suzhou, Kunshan, Shenzhen). UMC is the largest shareholder, with a ~13% stake.

Investment strategy

We rate Unimicron shares a Buy. Our positive view is premised on: more upside potential in the ABF segment thanks to product-mix improvements, better pricing on more complex product upgrade, and capacity expansion. Despite macro uncertainty, from a long-term perspective, we believe the tightness in ABF is unlikely to ease without much new capacity ramped aggressively in the upcoming years, and Unimicron should be the largest beneficiary with its scale in ABF. Thanks to AI GPU/ASIC demand, we now see strong growth in 2026/27E ABF consumption. We believe Unimicron could see strong revenue growth again as it did in 2019-21 from both ABF new capacity and a BT rebound.

Valuation

Our target price for Unimicron is NT$1,550. We use a 1-year forward-looking DCF-based valuation (ie, end-2027) to reflect Unimicron's ability to generate stable cash. With a risk-free rate of 5.0% (10-year government bond rate), a market risk premium of 7%, and an equity beta of 1.43 (2-year weekly share price), we calculate Unimicron's WACC as 14.6%. Our target price is equivalent to 62x/30x 2026/27E EPS, which is higher than the +1std level of consensus PE multiple of the past five years. However, as the market focuses on 2027 upcycle, we believe valuation on 2027E EPS is still in line with historical peak valuations of 25-30x during the last upcycles.

Risks

Key downside risks that could mean Unimicron shares trade below our target price include: 1) weaker-than-expected HDI business; 2) significant increase in ABF supply in the industry; and 3) stronger-than-expected margin pressure from depreciation due to higher capex investments.

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Appendix A-1

圖片清單（已驗證 2026-10-28）