The average target price of 6176.TW is 165 and suggests 10% upside potential. Usually, this means a HOLD recommendation among investment firms. This neutral recommendation suggests no significant price movement, up or down, in the next 12 months. The most optimistic analyst has a target price of 200.0. This translates into 32% upside potential in the best case. On the other hand, the most pessimistic analyst has a target price of 140.0. This is equivalent to 7% downside potential in the worst case. 

Radiant Opto-Electronics Corporation engages in the manufacture and sale of backlight panels and lighting components for liquid crystal display (LCD) panels in Asia, Europe, and the United States. The company's products are used in various applications, including smartphones, DSC, video phones, tablets, notebooks, dashboards, pocket TVs, DVD players, car navigations, monitors, all in one PCs, and TFT LCD TVs. Radiant Opto-Electronics Corporation was founded in 1984 and is headquartered in Kaohsiung, Taiwan.

Taiwan

Radiant Opto-Electronics Corporation

Technology

The company pays dividends most of the time. It has paid dividends in almost every one of 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. At the same time, the average five-year yield has been significantly higher and exceeded most of its peers. On average, the company pays dividends annually. 

6176.TW reported revenue of TWD 52 835mn in the last 12 months, up 2% from FY24. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS fell 12% from FY24 to TWD 13.78. Market expects EPS to reach TWD 15.19 in FY25.

Over the last six months, the stock performance has varied, with an increase following a drop. When measured against its worldwide peers from the same industry (as shown above), the stock has been weaker, underperforming by 14ppts. There is a distinction between the stock's performance and that of its peers from the same country and industry. Over six months its performance trailed that of this peer group by 10ppts and its growth decelerated by 17ppts in the previous month. 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 19.2% in the last 12 months, a decline from 19.9% in FY23. 

Historically, 6176.TW has reported good net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 12.1%, a growth from 12.0% in FY23. 

Radiant Opto-Electronics Corporation reported a return on equity (RoE) of 17.4% in the last 12 months, up from 15.5% in FY23. The market consensus projects an RoE of 17.3% in FY24, again ahead of its peers. 

In the last 12 months, the return on capital employed (RoCE) grew to 15.7%, above the peers. The consensus estimate for FY24 for RoCE is 23.0%, again ahead of the peers. 

Another important profitability metric, return on assets (RoA), amounted to 9.9% in the last 12 months, an increase from 8.3% in FY23. The market analysts predict that RoA will be 9.7% in FY24, again stronger than its peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 3.7 in the past several years. This ratio implies a excellent 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.

6176.TW has above average trading liquidity. The average private investor can sell his common position in the stock almost immediately. 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. 

No other major risks have been identified.

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

In highly turbulent market conditions, 6176.TW is not volatile. In other words, the stock will fall far 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 very low. 

In normal market circumstances, 6176.TW is not volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will stay within a narrow range. The stock's losses on its worst days (less than 1-5% of the time) will range from very low to negligible. 

Based on key historical and expected multiples, the stock is undervalued relative to its peers. In particular, the stock is underpriced on P/E, 'cheap' on EV/EBITDA, trading at neutral levels on P/FCF. 

Radiant Opto-Electronics Corporation

NT$ 150.5

6

Radiant Opto-Electronics Corporation

NT$ 150.5

6

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

NT$ 150.5

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