Universal Textile Co., Ltd. manufactures and sells fabrics in Taiwan. The company offers polyester filament woven and T/R interweaving fabrics for men and ladies; polyester textured yarns; complex textured yarns; special cross-section polyester filament yarns; and recycled PET products. Universal Textile Co., Ltd. was founded in 1969 and is headquartered in Taipei, Taiwan.

Taiwan

Universal Textile Co., Ltd.

Consumer Cyclical

The company tries to pay dividends regularly but only sometimes does so. It has paid dividends in roughly half the past ten years. Dividend per share (DPS) has grown yearly, and there is a clear trend. In the past 12 months, the dividend yield has barely been above zero and was substantially below that of its peers. On average, the company pays dividends annually. 

1445.TW reported revenue of TWD 989mn in the last 12 months, down 28% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. 

The stock's performance has been mixed in the past six months, with growth following a decline. There is no clear price trend compared to its global peers from the same sector and industry (as shown above). It has underperformed this peer group by 7ppts over six months and grown 6ppts faster in the past month. At the same time, the stock's performance relative to its the peers from the same country and sector is different. It underperformed these peers by 5ppts over six months and grew 2ppts slower in the past month. With respect to the stock's valuation against its peers, its overall price performance is neutral.

The company has reported average EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to -12.0% in the last 12 months, a decline from 79.1% in FY23. 

Historically, 1445.TW has reported strong net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled -20.1%, down from 73.0% in FY23. 

In the last 12 months, the return on capital employed (RoCE) declined to -7.5%, below the peers. 

Universal Textile Co., Ltd. reported a return on equity (RoE) of -7.8% in the last 12 months, down from 46.6% in FY23. 

Another important profitability metric, return on assets (RoA), amounted to -6.8% in the last 12 months, a decrease from 38.5% in FY23. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 2.4 in the past several years. This ratio implies a strong shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are close to minimal. In combination with rigorous business standards, shareholder rights are well protected.

1445.TW has very poor trading liquidity. It will take several trading days for the average private investor to sell a common position under normal market conditions. Liquidity may be unstable and becomes extremely unfavourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. The stock has a tiny market capitalisation, which usually makes its trading liquidity erratic and unpredictable. 

No other major risks have been identified.

The risk of default is moderate. We note strong debt servicing capacity, adequate interest coverage, and an favourable capital structure, among the positive credit factors. Among the negative credit factors, we point to weak positions in its industry, slow historical revenue growth, and negligible return on capital.

In highly turbulent market conditions, 1445.TW is as volatile as an index. In other words, the stock will move with the index in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be limited. 

In normal market circumstances, 1445.TW is as volatile as an index. Put differently, without outstanding market volatility or shocking company news, the stock's price will move with the index. The stock's losses on its worst days (less than 1-5% of the time) will range from very low to minimal. 

Based on key historical and expected multiples, the stock is fairly valued relative to its peers. 

Universal Textile Co., Ltd.

NT$ 14.2

3

Universal Textile Co., Ltd.

NT$ 14.2

3

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

NT$ 14.2

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