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原始內容
Hon Precision
Solid AI backlog and accelerated capacity build support strong earnings CAGR
Maintain Rating: BUY | PO: 7,800 TWD | Price: 6,525 TWD
Robust AI orders momentum with extending visibility
Hon Precision ' s July sales were resilient at NT$5.2bn, tracking ahead of our 3Q26 sales forecast at 37%. Its orders backlog remains solid driven by AI/HPC chips testing demand, with AI ASIC strength growing on top of sustained AI GPU/CPU shipment. With order visibility extending through year-end, we see multiple growth catalysts supporting Hon Precision ' s 2026/27 revenue uptrend (BofAe +77%/+43% YoY), including high-end FT/SLT handlers for Tesla, fab expansion from US auto IDM, steady ramps in shipment for Google TPU, robust orders from Nvidia/AMD CPU/GPU, as well as rising demand from China market for local high-end chips testing. GPM should see improvement from 57% in 2026 to 60% in 2028 mainly driven by spec upgrade and better mix, in our view.
Accelerated capacity build and ASP uplift on spec upgrade
Following +45% capacity increase in 1H26, Hon Precision ' s capacity expansion target of +40% YoY in '26 is on track. New DeShen plant scheduled to begin production in 1Q27, China local production from outsourcing partner, and space optimization in headquarters combined should support the company ' s target of +50% YoY capacity increase in 2027, followed by another 50% in 2028. We believe the ongoing capacity build-out would provide firmer headroom to convert current strong order pipeline into revenue. As largepackage handler gradually sees more traction from 4Q26 with adoption rate targeted at 15-30% of total shipment in 2027 and +20~25% in ASP, we expect Hon Precision ' s blended ASP to +7% CAGR over '26-28, while CPO insertion 4 O/E test engineering equipment is on track for delivery to the client in October 2026 and would see more concrete orders and configuration when customer finalize its CPO chip spec.
Maintain Buy on solid AI backlog and decent EPS growth
We maintain our Buy rating with PO at NT$7,800 on 36x 2H27-1H28 P/E. The share valuation looks undemanding at 36x/25x '27/28 P/E (vs. its historical 8-56x range) backed by 40%/42% sales/earnings CAGR on strong order backlog from AI applications.
| Estimates (Dec) (NT$) | 2024A | 2025A | 2026E | 2027E | 2028E |
|---|---|---|---|---|---|
| Net Income (Adjusted - mn) | 5,286 | 12,362 | 22,256 | 32,239 | 45,161 |
| EPS | 32.73 | 75.71 | 123.54 | 178.95 | 250.68 |
| EPS Change (YoY) | NA | 131.3% | 63.2% | 44.9% | 40.1% |
| Dividend / Share | 22.50 | 65.00 | 100.00 | 145.00 | 190.00 |
| Free Cash Flow / Share | 13.56 | 97.37 | 49.33 | 104.29 | 209.49 |
| Valuation (Dec) | |||||
| P/E | 199.37x | 86.19x | 52.82x | 36.46x | 26.03x |
| Dividend Yield | 0.345% | 0.996% | 1.53% | 2.22% | 2.91% |
| EV / EBITDA* | 177.32x | 74.27x | 41.50x | 28.17x | 20.06x |
| Free Cash Flow Yield* | 0.185% | 1.35% | 0.756% | 1.60% | 3.21% |
| * For full definitions of iQ method SM measures, see page 6. |
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 7 to 9. Analyst Certification on page 4. Price
18 August 2026
Equity
Haas Liu >> Research Analyst Merrill Lynch (Taiwan) +886 2 2376 3727 haas.liu@bofa.com
Mike Yang >> Research Analyst Merrill Lynch (Taiwan) mike.c.yang@bofa.com
Cathy Hsu >> Research Analyst Merrill Lynch (Taiwan) cathy.hsu3@bofa.com
Stock Data
| Price | 6,525 TWD |
|---|---|
| Price Objective | 7,800 TWD |
| Date Established | 24-Jun-2026 |
| Investment Opinion | C-1-7 |
| 52-Week Range | 1,532 TWD-8,448TWD |
| Mrkt Val / Shares Out (mn) | 36,878 USD / 179.9 |
| Market Value (mn) | 1,174,043 TWD |
| Average Daily Value (mn) | 143.32 USD |
| Free Float | 46.2% |
| BofA Ticker / Exchange | XXPIF / TAI |
| Bloomberg / Reuters | 7769 TT / 7769.TW |
| ROE (2026E) | 35.2% |
| Net Dbt to Eqty (Dec-2025A) | -93.4% |
See glossary of abbreviations on page 3.
iQ profile SM Hon Precision
| Key Income Statement Data (Dec) | 2024A | 2025A | 2026E | 2027E | 2028E |
|---|---|---|---|---|---|
| (NT$ Millions) | |||||
| Sales | 13,992 | 30,271 | 53,544 | 76,302 | 105,252 |
| Gross Profit | 7,700 | 17,114 | 30,523 | 44,852 | 63,019 |
| Sell General &Admin Expense | (778) | (1,028) | (1,512) | (2,556) | (3,507) |
| Operating Profit | 6,285 | 15,046 | 26,931 | 39,726 | 55,830 |
| Net Interest &Other Income | 398 | 538 | 1,025 | 775 | 905 |
| Associates | NA | NA | NA | NA | NA |
| Pretax Income | 6,683 | 15,584 | 27,956 | 40,502 | 56,735 |
| Tax (expense) / Benefit | (1,397) | (3,222) | (5,700) | (8,263) | (11,575) |
| Net Income (Adjusted) | 5,286 | 12,362 | 22,256 | 32,239 | 45,161 |
| Average Fully Diluted Shares Outstanding | 162 | 163 | 180 | 180 | 180 |
| Key Cash Flow Statement Data | |||||
| Net Income | 5,286 | 12,362 | 22,256 | 32,239 | 45,161 |
| Depreciation &Amortization | 46 | 69 | 115 | 115 | 115 |
| Change in Working Capital | (3,509) | (3,998) | (11,403) | (11,605) | (5,601) |
| Deferred Taxation Charge | NA | NA | NA | NA | NA |
| Other Adjustments, Net | 485 | 7,753 | (154) | (47) | (47) |
| Cash Flow from Operations | 2,308 | 16,186 | 10,814 | 20,701 | 39,627 |
| Capital Expenditure | (133) | (286) | (1,940) | (1,940) | (1,940) |
| (Acquisition) / Disposal of Investments | (1,343) | 1,127 | (7,888) | 0 | 0 |
| Other Cash Inflow / (Outflow) | 153 | (272) | 389 | (29) | (5) |
| Cash Flow from Investing | (1,322) | 569 | (9,440) | (1,969) | (1,945) |
| Shares Issue / (Repurchase) | 894 | 34,466 | 0 | 0 | 0 |
| Cost of Dividends Paid | (4,800) | (3,636) | (11,695) | (17,993) | (26,090) |
| Cash Flow from Financing | (3,759) | 30,650 | (11,702) | (17,993) | (26,090) |
| Free Cash Flow | 2,175 | 15,900 | 8,874 | 18,761 | 37,687 |
| Net Debt | (7,888) | (54,228) | (51,758) | (52,497) | (64,090) |
| Change in Net Debt | 2,925 | (47,554) | 10,320 | (739) | (11,593) |
| Key Balance Sheet Data | |||||
| Property, Plant &Equipment | 1,888 | 2,106 | 3,842 | 5,678 | 7,515 |
| Other Non-Current Assets | 441 | 969 | 851 | 822 | 817 |
| Trade Receivables | 2,913 | 2,935 | 5,477 | 8,621 | 10,381 |
| Cash &Equivalents | 8,045 | 54,228 | 51,758 | 52,497 | 64,090 |
| Other Current Assets | 8,579 | 13,033 | 23,940 | 35,513 | 40,848 |
| Total Assets | 21,866 | 73,270 | 85,869 | 103,132 | 123,652 |
| Long-Term Debt | 0 | 0 | 0 | 0 | 0 |
| Other Non-Current Liabilities | 106 | 211 | 221 | 215 | 213 |
| Short-Term Debt | 157 | 0 | 0 | 0 | 0 |
| Other Current Liabilities | 7,871 | 15,028 | 17,387 | 21,176 | 23,113 |
| Total Liabilities | 8,134 | 15,239 | 17,607 | 21,391 | 23,326 |
| Total Equity | 13,732 | 58,031 | 68,262 | 81,741 | 100,325 |
| Total Equity &Liabilities | 21,866 | 73,270 | 85,869 | 103,132 | 123,652 |
| iQ method SM - Bus Performance* | |||||
| Return On Capital Employed | NA | 33.7% | 35.0% | 43.1% | 49.7% |
| Return On Equity | 77.0% | 34.5% | 35.2% | 43.0% | 49.6% |
| Operating Margin | 44.9% | 49.7% | 50.3% | 52.1% | 53.0% |
| EBITDA Margin | 45.2% | 49.9% | 50.5% | 52.2% | 53.2% |
| iQ method SM - Quality of Earnings* | |||||
| Cash Realization Ratio | 0.4x | 1.3x | 0.5x | 0.6x | 0.9x |
| Asset Replacement Ratio | 3.0x | 4.6x | 18.8x | 18.8x | 18.8x |
| Tax Rate (Reported) | 20.9% | 20.7% | 20.4% | 20.4% | 20.4% |
| Net Debt-to-Equity Ratio | -57.4% | -93.4% | -75.8% | -64.2% | -63.9% |
| Interest Cover | NM | NM | NM | NA | NA |
Key Metrics
- For full definitions of iQ method SM measures, see page 6.
Company Sector
Semiconductor Capital Equipment
Company Description
Hon Precision is a Taiwan-based semiconductor equipment supplier specializing in test handler system for FT and SLT across a wide range of applications, including AI/HPC, automotive, memory, and consumer electronics. Founded in 2025, with roots tracing back to Hon Technology established in 1999, the company's core strength lies in its turnkey service offering, delivering comprehensive, on-step test handler systems integrated with ATC solutions and cold plate technologies.
Investment Rationale
We have a Buy rating on Hon Precision, in view of its strong technology leadership in the semiconductor back-end testing equipment. It has a solid market position with around 70% share in FT handler market and close to 50% share in SLT handler market. Longer-term, the company could ride on the AI-driven structural back-end testing demand and dollar content gain from chips migration toward more complicated designs.
Stock Data
Price to Book Value
17.2x
Focus tables
Exhibit 1: Hon Precision 3Q26-4Q26 and 2026-28 estimates BofAe vs. street
We now model GUC's 2026/27/28 EPS to be NT$123.54/178.95/250.68
| 3Q26E | 3Q26E | 3Q26E | 4Q26E | 4Q26E | 4Q26E | 2026E | 2026E | 2026E | 2027E | 2027E | 2027E | 2028E | 2028E | 2028E | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| BofAe | Street | vs. street | BofAe | Street | vs. street | BofAe | Street | vs. street | BofAe | Street | vs. street | BofAe | Street | vs. street | |
| Sales(NT$mn) Sales QoQ / YoY (%) | $14,249 3.3% | $14,129 12.6% | 1% | $14,776 3.7% | $16,056 13.6% | -8% | $53,544 76.9% | $53,561 76.9% | 0% | $76,302 42.5% | $88,216 64.7% | -14% | $105,252 37.9% | $143,696 62.9% | -27% |
| Gross profit (NT$mn) GMs (%) | $8,156 57.2% | $8,080 57.2% | 1% 0% | $8,599 58.2% | $9,188 57.2% | -6% 1% | $30,523 57.0% | $30,489 56.9% | 0% 0% | $44,852 58.8% | $51,127 58.0% | -12% 1% | $63,019 59.9% | $85,206 59.3% | -26% 1% |
| Operating profit (NT$mn) OpMs (%) | $7,282 51.1% | $7,155 50.6% | 2% 0% | $7,603 51.5% | $8,090 50.4% | -6% 1% | $26,931 50.3% | $27,085 50.6% | -1% 0% | $39,726 52.1% | $46,283 52.5% | -14% 0% | $55,830 53.0% | $76,050 52.9% | -27% 0% |
| Pretax profit (NT$mn) Pretax margins (%) | $7,466 52.4% | $7,409 52.4% | 1% 0% | $7,797 52.8% | $8,461 52.7% | -8% 0% | $27,956 52.2% | $28,305 52.8% | -1% -1% | $40,502 53.1% | $47,594 54.0% | -15% -1% | $56,735 53.9% | $79,790 55.5% | -29% -2% |
| Tax expense (NT$mn) Tax rate (%) | -$1,519 20.3% | -$1,665 22.5% | -9% -2% | -$1,591 20.4% | -$1,903 22.5% | -16% -2% | -$5,700 20.4% | -$5,946 21.0% | -4% -1% | -$8,263 20.4% | -$10,024 21.1% | -18% -1% | -$11,575 20.4% | -$16,255 20.4% | -29% 0% |
| Net profit (NT$mn) Net margins (%) | $5,948 41.7% | $5,744 40.7% | 4% 1% | $6,205 42.0% | $6,558 40.8% | -5% 1% | $22,256 41.6% | $22,359 41.7% | 0% 0% | $32,239 42.3% | $37,570 42.6% | -14% 0% | $45,161 42.9% | $63,535 44.2% | -29% -1% |
| EPS (NT$) | $33.01 | $33.05 | 0% | $34.44 | $37.50 | -8% | $125.40 | -1% | $178.95 | $207.99 | -14% | $250.68 | $349.29 | -28% | |
| $123.54 |
Source:
BofA Global Research estimates, Bloomberg
Exhibit 2: Terms and definitions
Glossary of abbreviations/acronyms
| Term | Definition |
|---|---|
| AI | Artificial Intelligence |
| ASIC | Application Specific Integrated Circuit |
| CPO | Co-Packaged Optics |
| FT | Final test |
| GPU | Graphic Processing Unit |
| HPC | High-Performance Computing |
| SLT | System level test |
Source: BofA Global Research
BofA GLOBAL RESEARCH
BofA GLOBAL RESEARCH
Price objective basis & risk
Hon Precision (XXPIF)
Our PO of NT$7,800 is based on 36x 2027E P/E, positioned at the upper half of its historical trading range of 8-56x. We believe a P/E based valuation is appropriate given Hon Precision's consistent profitability profile and structurally improving earnings quality through industry cycle, and the valuation multiple is underpinned by: 1) 40%/44% CAGR in sales and operating profit over 2026-28E, and 2) sustained ROE in the 30-40% range.
Downside risks are: 1) slowdown in back-end testing capacity expansion and 2) misexecution on equipment development and production ramp.