Nomura cuts SDI Corp price target to NT$77; keeps neutral rating

Published 08/05/2025, 07:22
Nomura cuts SDI Corp price target to NT$77; keeps neutral rating

On Thursday, Nomura/Instinet analyst Aaron Jeng revised the price target on SDI Corp (2351:TT) to NT$77.00 from the previous NT$102.00, maintaining a Neutral rating on the stock. The adjustment follows SDI Corp’s first-quarter earnings report, which revealed an earnings per share (EPS) of TWD0.62, surpassing analyst expectations due to foreign exchange gains.

SDI Corp reported first-quarter sales of TWD2,526 million, a decrease of 8% quarter-over-quarter but a 6% increase year-over-year. This performance was slightly below the company’s projection of a mid-single-digit percentage decline quarter-over-quarter, attributed to early customer order pull-ins in December 2024. Electronics sales, which constitute 85% of the total, fell 8% quarter-over-quarter, compared to a quarter-over-quarter drop of 9% to 24% among major Integrated Device Manufacturer (IDM) customers. Meanwhile, stationery sales, making up 15% of the total, saw a marginal 1% decrease quarter-over-quarter and an 8% increase year-over-year.

The company’s gross margin (GM) stood at 14.6%, which is an increase of 1.9 percentage points quarter-over-quarter but a decline of 1.7 percentage points year-over-year. The quarter-over-quarter improvement in gross margin was attributed to reduced non-recurring costs of goods sold (COGS), favorable foreign exchange, and material costs.

Looking ahead, SDI Corp’s management anticipates sales to improve in the second quarter of 2025, with expectations of high single-digit percentage growth quarter-over-quarter, assuming a USD/TWD exchange rate of 32.0 compared to 30.3 as of May 7. The forecasted sales growth is driven by stronger demand in the automotive and industrial sectors than in consumer electronics. Despite high inventory levels at IDM customers at the end of the first quarter, SDI expects its customers will replenish inventory of the company’s products during the second and third quarters of 2025. However, management also cautioned of increased uncertainties in the second half of 2025, particularly concerning potential tariffs and currency issues.

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