Cub Elecparts Inc. manufactures and supplies automobile electrical and electronic parts in Taiwan, China, the United States, Germany, and internationally. It offers advanced driver assistance systems; aftermarket service parts comprising sensors and other parts; switches, such as ignition lock, power window, combination, and headlight; OEM products; and tire pressure monitoring sensors. Cub Elecparts Inc. was founded in 1979 and is based in Changhua, Taiwan.

Taiwan

Cub Elecparts Inc.

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. 

2231.TW reported revenue of TWD 4 671mn in the last 12 months, up 6% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS grew 5% from FY23 to TWD 3.38. Market expects EPS to reach TWD 3.11 in FY25.

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 16ppts over six months and grown 11ppts slower in the past month. This is largely true for peers from the same country and sector. 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 21.0% in the last 12 months, up from 18.2% in FY23. 

Historically, 2231.TW has reported good net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 10.2%, a growth from 10.2% in FY23. 

Cub Elecparts Inc. reported a return on equity (RoE) of 11.2% in the last 12 months, up from 10.8% in FY23. The market consensus projects an RoE of 5.5% in FY24, however, this time below its peers. 

Another important profitability metric, return on assets (RoA), amounted to 4.3% in the last 12 months, a decrease from 4.5% in FY23. The market analysts predict that RoA will be 2.3% in FY24, again weaker than its peers. 

In the last 12 months, the return on capital employed (RoCE) grew to 6.4%, below the peers. The consensus estimate for FY24 for RoCE is 3.4%, again behind the peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 1.4 in the past several years. This ratio implies a average 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.

2231.TW has average trading liquidity. The average private investor can sell his common position in the stock in a single trading day. Liquidity is usually quite stable and remains mildly favourable on the days with the lowest activity. However, please consider that under highly turbulent market conditions, the trading volume tends to decrease significantly. The stock has a small 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 robust profitability and adequate interest coverage, among the positive credit factors. Among the negative credit factors, we point to weak positions in its industry, slow historical revenue growth, and poor working capital management.

In highly turbulent market conditions, 2231.TW is not overly volatile. In other words, the stock will fall less than 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 low. 

In normal market circumstances, 2231.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 low to minimal. 

From both historical and forecast perspectives, the stock is overpriced compared to similar stocks. In particular, the stock is overpriced on P/E, 'expensive' on EV/EBITD. 

Cub Elecparts Inc.

NT$ 88.6

4

Cub Elecparts Inc.

NT$ 88.6

4

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

NT$ 88.6

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