DQC [UNDERPERFORM -12.0%] - Muted earnings outlook due to margin contraction - Update
We update DQC with a UNDERPERFORM rating and -12% total stock return. Domestic sales fell 1% YoY in 2017 on fierce price competition triggered by low-quality players. Operating profit nosedived 37% YoY in 2017 as DQC trimmed selling prices while shoring up discounts to distributors and sales commissions for LED products. NPAT plummeted 46% YoY in 2017 mostly due to lower non-recurring financial income.