AboCom Systems, Inc. researches, develops, manufactures, and sells digital, data network communication information, audio-visual electronic, memory, and notebook computer peripheral equipment in Taiwan. The company offers netcom manufacturing, automatic factory, VCSEL chip, and wafer reclaim/thinning products and solutions. It also provides IoT applications for electronic shelf labels; and memory devices, such as DRAM, SSD, USB, and MicroSD cards. The company was founded in 1984 and is headquartered in Hsinchu City, Taiwan.

Taiwan

AboCom Systems, Inc.

Technology

The company pays dividends on rare occasions. There have only been a few years with dividend payments in the past ten years. Dividend per share (DPS) has grown yearly, but the dynamics are somewhat mixed. In the past 12 months, the dividend yield has barely been above zero and was substantially below that of its peers. 

2444.TW reported revenue of TWD 1 393mn in the last 12 months, down 24% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS grew 49% from FY23 to TWD -0.24.

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 18ppts and its growth decelerated by 4ppts 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 weak EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 5.3% in the last 12 months, up from 4.3% in FY23. 

Historically, 2444.TW has reported weak net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled -1.7%, down from -0.9% in FY23. 

AboCom Systems, Inc. reported a return on equity (RoE) of -2.5% in the last 12 months, down from -1.6% in FY23. 

In the last 12 months, the return on capital employed (RoCE) declined to -1.5%, below the peers. 

Another important profitability metric, return on assets (RoA), amounted to -1.2% in the last 12 months, a decrease from -0.8% in FY23. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 0.2 in the past several years. This ratio implies a weak 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.

2444.TW has very poor trading liquidity. The average private investor can sell his common position in the stock in a single trading day under normal market conditions. Liquidity is relatively stable and remains favourable 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 low margin volatility, among the positive credit factors. Among the negative credit factors, we point to weak positions in its industry, slow historical revenue growth, bleak profitability, and negligible return on capital.

In highly turbulent market conditions, 2444.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, 2444.TW is volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will move much wider than the index. The stock's losses on its worst days (less than 1-5% of the time) will range from limited to notable. We would also like to highlight the notable intraday volatility of the instrument. 

Considering past and projected metrics, the stock is slightly 'cheaper' than its peers. Specifically, the stock is neutral on EV/EBITDA, underpriced on P/FC. 

AboCom Systems, Inc.

NT$ 11.95

3

AboCom Systems, Inc.

NT$ 11.95

3

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

NT$ 11.95

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