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 pays dividends from time to time. It has paid dividends in less than half the past ten years. Dividend per share (DPS) has grown yearly, but the dynamics are unclear. 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.

Over the last six months, the stock performance has varied, with an increase following a drop. The stock's price trend wasn't definitive when matched against its global counterparts from the same sector and industry (as depicted above). Within the past six months, its performance has trailed this peer group's by 36ppts and its growth decelerated by 15ppts in the past month. This is equally valid for peers from the same country and industry. Given the stock's valuation versus its peers, its total price movement is neither favourable nor unfavourable.

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. 

Another important profitability metric, return on assets (RoA), amounted to 4.3% in the last 12 months, a decrease from 4.5% 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. 

In the last 12 months, the return on capital employed (RoCE) grew to 6.4%, below the peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 1.8 in the past several years. This ratio implies a good 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 stable and remains 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. 

Based on key historical and expected multiples, the stock is slightly overvalued relative to its peers. Specifically, the stock is fairly valued on P/E, neutral on EV/EBITD. 

Cub Elecparts Inc.

NT$ 72

4

Cub Elecparts Inc.

NT$ 72

4

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

NT$ 72

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