Goldman Sachs: Yageo Corp. (2327.TW) – Strong AI Demand Drives Profitability; Buy with New TP of NT$346
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Goldman Sachs maintains its Buy rating on Yageo Corp. (2327.TW) and raises the 12-month target price from NT$302 to NT$346, based on a 15x price-to-book/ROE valuation. The firm expects Yageo's profitability driven by solid AI demand to become the new norm, following first-quarter 2026 results that exceeded both Goldman and Bloomberg consensus estimates for core business revenue, gross margin, and net profit.
Management guided for slight sequential improvements in Q2 2026 across revenue, gross margin, and operating margin. This outlook is supported by sustained strength in AI-related demand, strategic price adjustments, and rising capacity utilization. Standard and premium product capacity utilization rates are projected to increase from 70-72% and 80-82% in Q1 to 75% and 85% in Q2, respectively.
AI's contribution to total revenue increased from 13% in Q4 2025 to 14-15% in Q1 2026, with expectations to surpass 15% for the full year. Tantalum capacitor demand remains particularly robust, driven primarily by AI applications. The book-to bill ratio for this segment is the highest among all products, with order visibility extending into the second half of 2026. The company has implemented multiple price adjustments for tantalum capacitors to reflect rising raw material costs.
Goldman upgraded its 2026, 2027, and 2028 earnings per share estimates by 3%, 7%, and 6%, respectively, reflecting MLCC and tantalum capacitor pricing improvements. Key downside risks include weaker OEM inventory builds, soft IT terminal demand, and slower-than-expected integration of recent acquisitions.