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原始內容
Kinsus
Solid revenue growth and margin improvement into 2027; Buy
Reiterate Rating: BUY | PO: 1,450 TWD | Price: 1,075 TWD
Raise PO along with hike in estimates
We raise 2026/27/28E EPS by 4%/11%/14% after incorporating (see reports) 1) stronger-than-expected August numbers; and 2) strengthening growth outlook of server CPU (central processing unit) which is also shared by NYPCB. Our PO goes to NT$1,450 (was NT$1,250) same based on 2H27-1H28E P/E. Reiterate Buy on Kinsus given its growing exposure to AI (artificial intelligence) server market via high-end ABF substrate, which in turn bolstering its margin profile in longer-term.
Gross margin improvement carries into 2027
We expect Kinsus' GM (gross margin) to reach 27.8% in 3Q26, then followed by further improvement toward 29.3% along with 10% revenue QoQ in 4Q26, which will be fueled by continuous price hike and mix improvement. For 2027, expect the company's GM to reach 32.5% driven by ongoing improvements in product mix and utilization.
Sustained growth from AI CPU and optical module
For AI and adjacent applications, we expect at least 15-20% revenue from substrate for Vera CPU in 2027, and AI-related application will account for 50% of the firm's revenue in ABF (Ajinomoto build-up film) business in 2028. As for BT (bismaleimide triazine) substrate, growth in near/mid-term will be underpinned by the demand from DSP (digital signal processor) and transceiver (light engine) for pluggable optical module.
Land acquisition for further capacity expansion
Kinsus announced that it spent NT$6bn for acquiring land in Pingzhen, which will be used for K7 site expansion with capacity coming on stream in 2030 at earliest, following the ongoing expansion in K6 for ABF (Ajinomoto build-up film) substrate (reaching 80mn unit capacity/month in 2029-30).
| Estimates (Dec) (NT$) | 2024A | 2025A | 2026E | 2027E | 2028E |
|---|---|---|---|---|---|
| Net Income (Adjusted - mn) | 49 | 1,596 | 5,587 | 14,369 | 27,158 |
| EPS | 0.108 | 3.51 | 10.60 | 27.27 | 51.54 |
| EPS Change (YoY) | 2.5% | NM | 202.5% | 157.2% | 89.0% |
| Consensus EPS (Visible Alpha) | 11.88 | 28.81 | 51.88 | ||
| Dividend / Share | 1.00 | 1.50 | 4.77 | 12.27 | 23.19 |
| Free Cash Flow / Share | (5.69) | 4.58 | (17.35) | 11.32 | 26.92 |
| Valuation (Dec) | |||||
| P/E | 9,977x | 306.68x | 101.38x | 39.42x | 20.86x |
| Dividend Yield | 0.093% | 0.140% | 0.444% | 1.14% | 2.16% |
| EV / EBITDA* | 76.90x | 56.54x | 39.49x | 22.03x | 14.35x |
| Free Cash Flow Yield* | -0.456% | 0.368% | -1.61% | 1.05% | 2.50% |
| * For full definitions of iQmethod 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
10 October 2026
Equity
| Key Changes (NT$) | Previous | Current |
|---|---|---|
| Price Obj. | 1,250.00 | 1,450.00 |
| 2026E EPS | 10.21 | 10.60 |
| 2027E EPS | 25.94 | 27.27 |
| 2028E EPS | 47.82 | 51.54 |
| 2026E EBITDA (m) | 14,489.7 | 14,794.5 |
| 2027E EBITDA (m) | 25,525.6 | 26,526.3 |
| 2028E EBITDA (m) | 40,246.1 | 40,708.1 |
Mike Yang >> Research Analyst Merrill Lynch (Taiwan) +886 2 2376 3729
Stock Data
| Price | 1,075 TWD |
|---|---|
| Price Objective | 1,450 TWD |
| Date Established | 10-Oct-2026 |
| Investment Opinion | C-1-7 |
| 52-Week Range | 118.43 TWD-1,150 |
| TWD | |
| Mrkt Val / Shares Out (mn) | 17,739 USD / 526.9 |
| Market Value (mn) | 566,429 TWD |
| Average Daily Value (mn) | 697.44 USD |
| Free Float | 69.4% |
| BofA Ticker / Exchange | KNSUF / TAI |
| Bloomberg / Reuters | 3189 TT / 3189.TW |
| ROE (2026E) | 12.6% |
| Net Dbt to Eqty (Dec-2025A) | 4.8% |
iQprofile SM Kinsus
| Key Income Statement Data (Dec) | 2024A | 2025A | 2026E | 2027E | 2028E |
|---|---|---|---|---|---|
| (NT$ Millions) | |||||
| Sales | 30,535 | 39,351 | 54,119 | 81,332 | 114,156 |
| Gross Profit | 8,668 | 8,314 | 14,326 | 26,458 | 42,367 |
| Sell General & Admin Expense | (4,961) | (3,035) | (3,984) | (4,925) | (5,895) |
| Operating Profit | 1,095 | 2,670 | 7,545 | 18,050 | 32,534 |
| Net Interest & Other Income | 508 | 417 | 546 | 434 | 434 |
| Associates | NA | NA | NA | NA | NA |
| Pretax Income | 1,603 | 3,087 | 8,091 | 18,483 | 32,967 |
| Tax (expense) / Benefit | (272) | (370) | (1,148) | (2,796) | (4,390) |
| Net Income (Adjusted) | 49 | 1,596 | 5,587 | 14,369 | 27,158 |
| Average Fully Diluted Shares Outstanding | 454 | 455 | 527 | 527 | 527 |
| Key Cash Flow Statement Data | |||||
| Net Income | 49 | 1,596 | 5,587 | 14,369 | 27,158 |
| Depreciation & Amortization | 6,133 | 7,244 | 6,653 | 7,992 | 7,690 |
| Change in Working Capital | (956) | (1,966) | (2,815) | (2,440) | (4,448) |
| Deferred Taxation Charge | NA | NA | NA | NA | NA |
| Other Adjustments, Net | 2,480 | 1,219 | (4,568) | 2,044 | 1,786 |
| Cash Flow from Operations | 7,705 | 8,093 | 4,857 | 21,966 | 32,186 |
| Capital Expenditure | (10,289) | (6,007) | (14,000) | (16,000) | (18,000) |
| (Acquisition) / Disposal of Investments | 1,359 | (1,594) | 0 | 0 | 0 |
| Other Cash Inflow / (Outflow) | (178) | (268) | 0 | 0 | 0 |
| Cash Flow from Investing | (9,107) | (7,869) | (14,000) | (16,000) | (18,000) |
| Shares Issue / (Repurchase) | 137 | 13 | 7,200 | 0 | 0 |
| Cost of Dividends Paid | (454) | (457) | (2,514) | (6,466) | (12,221) |
| Cash Flow from Financing | 996 | (3,270) | 531 | (6,466) | (12,221) |
| Free Cash Flow | (2,584) | 2,086 | (9,143) | 5,966 | 14,186 |
| Net Debt | 865 | 1,969 | 10,582 | 11,082 | 9,117 |
| Change in Net Debt | 1,959 | 1,364 | 8,612 | 500 | (1,965) |
| Key Balance Sheet Data | |||||
| Property, Plant & Equipment | 36,409 | 41,937 | 49,283 | 57,291 | 67,601 |
| Other Non-Current Assets | 13,350 | 9,099 | 9,122 | 9,145 | 9,167 |
| Trade Receivables | 5,284 | 6,804 | 9,357 | 12,200 | 17,123 |
| Cash & Equivalents | 15,366 | 12,281 | 3,669 | 3,169 | 5,133 |
| Other Current Assets | 9,027 | 9,853 | 11,215 | 12,707 | 14,357 |
| Total Assets | 79,435 | 79,973 | 82,646 | 94,511 | 113,382 |
| Long-Term Debt | 13,779 | 11,197 | 11,197 | 11,197 | 11,197 |
| Other Non-Current Liabilities | 8,788 | 7,297 | 7,297 | 7,297 | 7,297 |
| Short-Term Debt | 2,452 | 3,053 | 3,053 | 3,053 | 3,053 |
| Other Current Liabilities | 14,539 | 17,053 | 13,608 | 17,569 | 21,504 |
| Total Liabilities | 39,557 | 38,600 | 35,155 | 39,116 | 43,051 |
| Total Equity | 39,878 | 41,373 | 47,492 | 55,395 | 70,331 |
| Total Equity & Liabilities | 79,435 | 79,973 | 82,646 | 94,511 | 113,382 |
| iQmethod SM - Bus Performance* | |||||
| Return On Capital Employed | 2.0% | 4.3% | 10.6% | 21.6% | 33.9% |
| Return On Equity | 0.1% | 3.9% | 12.6% | 27.9% | 43.2% |
| Operating Margin | 3.6% | 6.8% | 13.9% | 22.2% | 28.5% |
| EBITDA Margin | 24.9% | 26.3% | 27.3% | 32.6% | 35.7% |
| iQmethod SM - Quality of Earnings* | |||||
| Cash Realization Ratio | NM | 5.1x | 0.9x | 1.5x | 1.2x |
| Asset Replacement Ratio | 1.7x | 0.8x | 2.1x | 2.0x | 2.3x |
| Tax Rate (Reported) | 17.0% | 12.0% | 14.2% | 15.1% | 13.3% |
| Net Debt-to-Equity Ratio | 2.2% | 4.8% | 22.3% | 20.0% | 13.0% |
| Interest Cover | NA | NM | NM | NM | NM |
Key Metrics
- For full definitions of iQmethod SM measures, see page 7.
Company Sector
Semiconductors
Company Description
Kinsus, founded in 2000, is headquartered in Taiwan and has production facilities in Taiwan (Taoyuan) and in China (Suzhou). The main business is IC substrate manufacturing, with a wide range of product offerings including SiP, FPGA, FCCSP, CSP, RF modules and FCBGA. Its clients include Qualcomm, AMD, NVIDIA, Broadcom, Xilinx, Altera, TI, and MTK etc. The main competitors include Unimicron (3037 TT), NYPCB (8046 TT), Ibiden (4062 JP), Shinko (6967 JP), SEMCO (009150 KS) and AT&S (ATS AV), etc.
Investment Rationale
We have an Buy rating on Kinsus, in view of its growing traction to AI server market from 2026 mainly via offering the ABF substrate for server CPU. For other businesses, we also recognize the solid growth outlook in BT substrate thanks to the demand from memory chips, while the growth in contact lens business should remain stable.
Stock Data
Price to Book Value
11.9x
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Exhibit 1: Earnings estimate change
We raise 2026-28E EPS by 4-8% after baking in the assumptions of stronger revenue growth and operating leverage
| (NT$mn) | BofA 26 (E) - New | BofA 26 (E) - Old | BofA 26 (E) - Diff (%) | BofA 27 (E) - New | BofA 27 (E) - Old | BofA 27 (E) - Diff (%) | BofA 28 (E) - New | BofA 28 (E) - Old | BofA 28 (E) - Diff (%) |
|---|---|---|---|---|---|---|---|---|---|
| Total sales | 54,119 | 52,495 | 3.1 | 81,332 | 77,520 | 4.9 | 114,156 | 108,635 | 5.1 |
| Gross profit | 14,326 | 13,891 | 3.1 | 26,458 | 25,447 | 4.0 | 42,367 | 40,226 | 5.3 |
| Gross margin | 26.5% | 26.5% | 0.0 ppt | 32.5% | 32.8% | -0.3 ppt | 37.1% | 37.0% | 0.1 ppt |
| Operating profit | 7,545 | 7,240 | 4.2 | 18,050 | 17,149 | 5.3 | 32,534 | 30,672 | 6.1 |
| Operating margin | 13.9% | 13.8% | 0.1 ppt | 22.2% | 22.1% | 0.1 ppt | 28.5% | 28.2% | 0.3 ppt |
| Pretax income | 8,091 | 7,786 | 3.9 | 18,483 | 17,483 | 5.7 | 32,967 | 31,005 | 6.3 |
| Pretax margin | 14.9% | 14.8% | 0.1 ppt | 22.7% | 22.6% | 0.2 ppt | 28.9% | 28.5% | 0.3 ppt |
| Net income | 5,587 | 5,379 | 3.9 | 14,369 | 13,670 | 5.1 | 27,158 | 25,195 | 7.8 |
| Net margin | 10.3% | 10.2% | 0.1 ppt | 17.7% | 17.6% | 0.0 ppt | 23.8% | 23.2% | 0.6 ppt |
| EPS (NT$) | 10.60 | 10.21 | 3.9 | 27.27 | 25.94 | 5.1 | 51.54 | 47.82 | 7.8 |
Source: BofA Global Research estimates
Exhibit 2: BofAe vs consensus
We are 11%/14% higher vs consensus for 2027/28E EPS, due mainly to the assumption of stronger operating leverage
| (NT$mn) | 2026E - BofAe | 2026E - Consensus | 2026E - Diff (%) | 2027E - BofAe | 2027E - Consensus | 2027E - Diff (%) | 2028E - BofAe | 2028E - Consensus | 2028E - Diff (%) |
|---|---|---|---|---|---|---|---|---|---|
| Total sales | 54,119 | 53,240 | 1.7 | 81,332 | 79,776 | 2.0 | 114,156 | 116,711 | -2.2 |
| Gross profit | 14,326 | 14,069 | 1.8 | 26,458 | 25,715 | 2.9 | 42,367 | 43,208 | -1.9 |
| Gross margin | 26.5% | 26.4% | 0.0 ppt | 32.5% | 32.2% | 0.3 ppt | 37.1% | 37.0% | 0.1 ppt |
| Operating profit | 7,545 | 7,379 | 2.3 | 18,050 | 16,415 | 10.0 | 32,534 | 29,239 | 11.3 |
| Operating margin | 13.9% | 13.9% | 0.1 ppt | 22.2% | 20.6% | 1.6 ppt | 28.5% | 25.1% | 3.4 ppt |
| Pretax income | 8,091 | 7,665 | 5.6 | 18,483 | 16,682 | 10.8 | 32,967 | 29,481 | 11.8 |
| Pretax margin | 14.9% | 14.4% | 0.6 ppt | 22.7% | 20.9% | 1.8 ppt | 28.9% | 25.3% | 3.6 ppt |
| Net income | 5,587 | 5,384 | 3.8 | 14,369 | 12,957 | 10.9 | 27,158 | 23,777 | 14.2 |
| Net margin | 10.3% | 10.1% | 0.2 ppt | 17.7% | 16.2% | 1.4 ppt | 23.8% | 20.4% | 3.4 ppt |
| EPS (NT$) | 10.60 | 10.22 | 3.8 | 27.27 | 24.59 | 10.9 | 51.54 | 45.13 | 14.2 |
Source: BofA Global Research estimates, Bloomberg
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BofA GLOBAL RESEARCH
BofA GLOBAL RESEARCH
Exhibit 3: Income statement
We expect the firm to record ~45% revenue CAGR during 2026-28
| (NT$mn) | 1Q26 | 2Q26 | 3Q26E | 4Q26E | 1Q27E | 2Q27E | 3Q27E | 4Q27E | 2025 | 2026E | 2027E | 2028E |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | 11,105 | 12,496 | 14,540 | 15,979 | 16,656 | 18,943 | 21,756 | 23,976 | 39,351 | 54,119 | 81,332 | 114,156 |
| COGS | -8,755 | -9,235 | -10,504 | -11,299 | -11,608 | -12,859 | -14,580 | -15,826 | -31,037 | -39,794 | -54,874 | -71,788 |
| Gross Profit | 2,349 | 3,261 | 4,036 | 4,679 | 5,048 | 6,084 | 7,176 | 8,150 | 8,314 | 14,326 | 26,458 | 42,367 |
| Operating | -1,459 | -1,581 | -1,763 | -1,977 | -1,922 | -2,034 | -2,150 | -2,303 | -5,645 | -6,780 | -8,409 | -9,834 |
| expenses | ||||||||||||
| SG&A | -886 | -933 | -1,028 | -1,137 | -1,148 | -1,190 | -1,249 | -1,338 | -3,035 | -3,984 | -4,925 | -5,895 |
| R&D | -573 | -649 | -735 | -839 | -774 | -843 | -901 | -965 | -2,610 | -2,797 | -3,483 | -3,938 |
| Operating | 891 | 1,679 | 2,273 | 2,702 | 3,126 | 4,051 | 5,026 | 5,847 | 2,670 | 7,545 | 18,050 | 32,534 |
| income | ||||||||||||
| Non-operating | 74 | 105 | 183 | 183 | 103 | 103 | 113 | 113 | 417 | 546 | 434 | 434 |
| income Interest | -13 | -13 | -13 | -13 | -13 | -13 | -13 | -13 | -4 | -50 | -50 | -50 |
| income | ||||||||||||
| Investment | 6 | 6 | 6 | 6 | 6 | 6 | 6 | 6 | 18 | 23 | 23 | 23 |
| income | ||||||||||||
| Others | 81 | 112 | 190 | 190 | 110 | 110 | 120 | 120 | 404 | 573 | 461 | 461 |
| Pre-tax profit | 964 | 1,784 | 2,456 | 2,886 | 3,230 | 4,154 | 5,139 | 5,960 | 3,087 | 8,091 | 18,483 | 32,967 |
| Tax | -89 | -204 | -393 | -462 | -355 | -665 | -822 | -954 | -370 | -1,148 | -2,796 | -4,390 |
| Net income | 1,171 | 2,701 | 2,390 | 2,693 | 3,245 | 3,879 | 5,673 | 5,325 | 5,587 | 14,369 | 27,158 | |
| EPS (NT$) | 1.17 | 2.49 | 3.21 | 3.86 | 4.85 | 6.10 | 7.51 | 8.81 | 1,596 3.51 | 10.60 | 27.27 | 51.54 |
| Margin | ||||||||||||
| Gross margin | 21.2% | 26.1% | 27.8% | 29.3% | 30.3% | 32.1% | 33.0% | 34.0% | 21.1% | 26.5% | 32.5% | 37.1% |
| Operating margin | 8.0% | 13.4% | 15.6% | 16.9% | 18.8% | 21.4% | 23.1% | 24.4% | 6.8% | 13.9% | 22.2% | 28.5% |
| Pre-tax margin | 8.7% | 14.3% | 16.9% | 18.1% | 19.4% | 21.9% | 23.6% | 24.9% | 7.8% | 14.9% | 22.7% | 28.9% |
| Net margin | 10.5% | 21.6% | 16.4% | 16.9% | 19.5% | 20.5% | 26.1% | 22.2% | 4.1% | 10.3% | 17.7% | 23.8% |
| QoQ growth | ||||||||||||
| Revenue | 2.7% | 12.5% | 16.4% | 9.9% | 4.2% | 13.7% | 14.9% | 10.2% | ||||
| Gross profit | -1.8% | 38.8% | 23.8% | 15.9% | 7.9% | 20.5% | 17.9% | 13.6% | ||||
| Operating | -3.3% | 88.5% | 35.4% | 18.9% | 15.7% | 29.6% | 24.1% | 16.3% | ||||
| profit Pre-tax profit | -8.6% | 85.0% | 37.7% | 17.5% | 11.9% | 28.6% | 23.7% | 16.0% | ||||
| Net profit | -3.3% | 130.6% | -11.5% | 12.7% | 20.5% | 19.5% | 46.2% | -6.1% | ||||
| YoY growth | ||||||||||||
| Revenue | 28.8% | 30.7% | 40.4% | 47.8% | 50.0% | 51.6% | 49.6% | 50.1% | 28.9% | 37.5% | 50.3% | 40.4% |
| Gross profit | 21.0% | 61.8% | 105.5% | 95.5% | 114.8% | 86.6% | 77.8% | 74.2% | -4.1% | 72.3% | 84.7% | 60.1% |
| Operating profit | 77.7% | 170.8% | 261.9% | 193.5% | 251.0% | 141.3% | 121.1% | 116.3% | 143.7% | 182.6% | 139.2% | 80.2% |
| Pre-tax profit | 37.8% | 188.0% | 244.6% | 173.4% | 234.9% | 132.9% | 109.2% | 106.5% | 92.6% | 162.1% | 128.5% | 78.4% |
| Net profit | -38.2% | 203.3% | 188.2% | 122.3% | 177.1% | 43.6% | 137.4% | 97.8% | 3164.4% | 250.1% | 157.2% | 89.0% |
Source: BofA Global Research estimates, company data
BofA GLOBAL RESEARCH
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Price objective basis & risk
Kinsus (KNSUF)
We set our PO at NT$1,450 based on 35x 2H27-1H28E P/E, which is at mid-to-high-end level in its historical trading range (8-40x) since 2013. In our view, the multiple is backed by ROE and operating margin recovery to 36% and 25% in 2027-28E (vs 8% and 10% in 2025-26E).
Upside risks to our PO are (1) tighter ABF supply, (2) increasing adoption of SiP and AiP, (3) lower competition pressure and (4) slow development of alternative technology.
Downside risks are (1) greater ABF expansion from peers, (2) muted SiP/AiP adoption, (3) more severe competition, and (4) unfavorable technology development.