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DQC [UNDERPERFORM -10.0%] - Battling ugly price war and commoditization - Update

We downgrade DQC to UNDERPERFORM with -10% total stock return. DQC looks unattractive as it faces downbeat earnings prospects, but is cushioned by solid one-year dividend yield. We cut our TP by 21% due to DQC’s severe margin contraction caused by ASP cuts. DQC is being drawn into a pricing battle that risks commoditizing the lighting industry in Vietnam.