The document provides an economic and market outlook report for Taiwan in the fourth quarter of 2012. It discusses trends in Taiwan's GDP growth, stock market performance, and certain industries including semiconductors, LED TVs, and smartphones. It also analyzes factors that could impact Taiwan's economy in the near future such as the global economic recovery and cross-strait relations.

1. 2011 12 15 2012
1
2 886.2.2181.8888
, CFA
2012 6000 2H12 7900
1Q12
, CFA
(1) (2)
(3) (4) (5)
2012
2012
2011
4.5% 2012 3.8% 2Q12
(1) (2)
(3) (4) (5)
2012
2012 (1101.TW) (2103.TW)
(2303.TW) (2618.TW) (3036.TW) (4938.TW)
(3231.TW) (4746.TW (5871.TW) (6269.TW)
(6153.TW)
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2. 1
(1101.TW/1101 TT): 15
(2103.TW/2103 TT): 18
(2303.TW/2303 TT): 2Q12 21
(2618.TW/2618 TT): 24
(3036.TW/3036 TT): 27
(3231.TW/3231 TT): 30
(4746.TW/4746 TT): 33
(4938.TW/4938 TT): 2012 36
(5871.TW/5871 TT): 39
(6153.TW/6153 TT): 42
(6269.TW/6269 TT): 2012 45
: 51
: 53
IC : IC 55
32 MCU : 32 MCU 57
: 2012 59
: ODM Ultrabook 61
: 63
LED TV : LE D TV 65
: 67
: Femtocell 69
: ; 71
: 73
: 75
: 77
: 79
: 81
: 2012 83
: 85
: 87
CASH : -CASH 89
94
95
97
98
99
100
102
- 103
- 104
- 105
106
108
109
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3. 1Q12
2012
2012 2 4
600 700
1.5
2008
750
7% 2011 4.5%
2012 3.8% 2012
6000 (12.1X2012 PE& 1.16XPB)
2H12 7900 (16.0X2012 PE& 1.53XPB)
2012
1Q12
“ ” 2012
(1) 2011
32% 2012
1Q12 (1)
(2) : ( /ARM+
1Q12 /Android)
70
(3) (3231.TW, NT$38.6, )
: (4938.TW, NT$33.1, ) (2)
2012/3~5
1Q12 (4) :
0.9~2.3
7140 1.38 2012 (6269.TW, NT$70, ) (6153.TW,
2012 10% NT$32.4, )(3)
11% LED TV
(5) : 2000
2008
(1569.TW, NT$51.5, ) (3376.TW,
NT$51.7, ) (4)
-30% -40% 1Q12 70
2011 8
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4. (2303.TW, NT$12.55, )
(3036.TW, NT$36.95, ) (5)
(2618.TW, NT$18.5, )
(1101.TW, NT$33.5, ) (2103.TW,
NT$72.9, ) (5871.TW, NT$27,
)
-CASH
2011
127 2011
25% 2012 10%
4 8
1-10 100
40% 20% 20%
20% CASH
CASH
Beta 0.9 CASH
(1723.TW, NT$111, ) (2301.TW,
NT$32.35, ) Beta
0.9 CASH (2498.TW,
NT$415, ) (2103.TW, NT$72.9, )
(1326.TW, NT$81.5, )
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5. 1Q12
2011 20
0
(20)
(40)
(60)
(80)
2012
(100)
(120)
Solar LED NB PC/NB Foundry PCB IC design IPC Networking Handset
1Q12 components
(1) (2)
2008
50
78 300
65
2011 2011
32% 3Q11 74
2008 60% 72 1Q12 70
2012
1Q12 1Q12
( ) ( ) ( ) ( )
95 450
100 10,000
50% 90
80 400
13 9,000
60 85
350
40 8,000 80
32% 300
20 7,000 75
10 250
0 6,000 70
(20) 65 200
(40) 5,000
60 150
(60) 4,000
Mar-01 Dec-02 Sep-04 Jun-06 Mar-08 Dec-09 Sep-11
Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11
FactSets
(3)
LED 2Q11
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6. ( 2003 SARS 2007 (5)
)
2001/9 2009/1
2012/3~5
1Q12 2000
2008
2Q12
( ) ( )
9 10
80 11,000
60 10,000
9,000
40 8,000
20 7,000
0 6,000
5,000
(20) 4,000
(40) 3,000 ( ) ( )
Jan-96 Jan-98 Jan-00 Jan-02 Jan-04 Jan-06 Jan-08 Jan-10 Jan-12 120 11,000
105
10,000
100 84
Dot-com Sub-prime 9,000
80 8,000
63
58
60 7,000
39 6,000
40
5,000
(4) 20
4,000
0 3,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
0.9~2.3 1.0 TEJ
( 2001 2009 2012 2000
10% 5000 11
11% 2007 12
7140 1.38 2012 30%
1.6
-30%
-40%
ROE
18 3.0
2000 =1.6
15 2.5 2 8 30% 50%
12 2.0
9 1.5
6 1.0
3 0.5
0 0.0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
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7. 2012
2011 (X ) 2012 (Y )
1.2 2012
9
1.0 8
7
0.8 6
5
-30% 4
0.6
3
2
0.4
1
0 1 2 3 4 5 6 7 8 9 10 11 0
Nov-2000 Dec-2007 Aug-2011 0 1 2 3 4 5 6 7 8 9 2011
1
TEJ
1.8
1.6
33%
1.4
1.2
1.0 50%
0.8
0.6
2 4
0 1 2 3 4 5 6 7 8 9 10 11
Sep-2001 Sep-2008 600 700
1
1.5
TEJ
2011 8 2012 2 4
10
80
70
2012 60
50
2012
40
30
20
2012 10
0
Dec- Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec-
2011 2012 2012 2012 2012 2012 2012 2012 2012 2012 2012 2012 2012
2012
2011 3% 2012 2.8%
2012
0.2% 2011 1.6%
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8. 12
9
6
3 ISM ( ) ( )
0 90 80
(3) 80 60
70 40
(6)
60 20
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
50 0
40 (20)
30 (40)
20 (60)
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
2011
( ) ( )
8.0 9.0 2012
6.0 8.0
7.0
4.0
6.0
2.0 5.0
( ) ( )
0.0 4.0
3.0 80 20
(2.0)
2.0 60
(4.0) 15
1.0
40
(6.0) 0.0 10
20
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 5
0
0
(20)
(40) (5)
(60) (10)
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
2011
2012
2012
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9. 2012
2008/06 2008 6 2011 6
15 558
12 2008/07 5000 500
9
2008/08 40% 60%
6
2009/11 MOU MO U 2010 10
3
0
2010/1 QDII 5% QDII 10%
(3)
(6) 2010/6 ECFA 539
2013 267
(9)
(12)
2005 2006 2007 2008 2009 2010 2011F 2012F
2007/12
1,376 2008
2011 4.4% 2012
4.2% 1576
200
4% 2008
2012 750
2011 4.5%
2012 3.8% 2012
10.0 180
160
5.0 140
120
100
0.0
80
60
(5.0) 40
20
(10.0) 0
Jan-03 Feb-04 Mar-05 Apr-06 May-07 Jun-08 Jul-09 Aug-10 Sep-11
2008
2009
2010 2008
( ) ( )
ECFA 539 2013
16 140
14 120
12
10 100
8 80
6
30% 4 60
2 40
50% 0
20
(2)
(4) 0
1Q00 1Q01 1Q02 1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q11
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10. 2000
-24% 11% 88%
7~10%
7%
6000 (12.1X2012 PE& 1.16XPB) 2H12
7900 (16.0X2012 PE& 1.53XPB)
7.0
6.0
(2011/11/1 =100)
5.0
106
4.0
101
3.0
2.0 96
1.0
1Q95 1Q98 1Q01 1Q04 1Q07 1Q10 91
86
3.0 1-Nov 3-Nov 7-Nov 9-Nov 11-Nov 15-Nov 17-Nov 21-Nov 23-Nov 25-Nov
2.5 Taiex Hang Seng Nasdaq KOSPI
2.0
1.5
1.0
0.5 9,500
1Q95 1Q98 1Q01 1Q04 1Q07 1Q10
9,000
8,500
6.5
8,000
5.5
7,500
4.5
7,000
3.5 6,500
2.5 6,000
1.5 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12
0.5
1Q95 1Q98 1Q01 1Q04 1Q07 1Q10
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11. 2012 NT$27.8, )
“ ” 2012
(1)
(2) (3)
(4) (5)
-CASH
(EMS)
( /ARM+ 2011
/Android) 127 2011
25% 2012 10%
4 8
1-10 100
40% 20% 20%
20% CASH
CASH
Beta 0.9 CASH
(1723.TW, NT$111, ) (2301.TW,
NT$32.35, ) Beta
0.9 CASH (2498.TW,
NT$415, ) (2103.TW, NT$72.9, )
LED TV (1326.TW, NT$81.5, )
2011
3Q11 74
72 1Q12 70
(2325.TW, NT$26.4, ) (2311.TW,
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12. 2012
ODM 1. ODM EMS 2012 2011 75% (4938.TW) 2012
80% 20%
2. ODM 2011 2012
2012
3. (3231.TW)
1. 1Q12 (2303.TW) 1. 2Q12 2.
2. IC IDM
3. 2Q12
(3036.TW) 1. 2Q12 2.
1. 2012 1 ( (6153.TW) 1Q12
70% ) 30-40%
2. 3G
3.
4.
5. LED LED 2011 45%
2012 75%
1. (6269.TW) 1.
2. 3.
2.
3. 45%
2012 (2618.TW) 1. 2012 200
, 2011 2. ,
1. , , 1Q12, 1Q 3.
, ,
2. ,
3. , (1101.TW) 1.
2. 2012
31% 3. 2012
(2103.TW) 1. 2.
3. 2012
8.5 10.6
(5871.TW) 1. 2012 37.7%
38.2% 2.
3. 2012
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13. 1101.TW (6%) (3%)
2011 7.1% 2012 9.5%
2012 30%
( ) 33.50
12 ( ) 44.00
/ (%) 31.3
2103.TW
4Q11/1Q12
( ) 72.90
12 ( ) 94.00
/ (%) 28.9
2303.TW (1). 2012 (2).
(Beta) (3). 45/40 28 45/40
( ) 12.55
12 ( ) 15.50
/ (%) 23.5
2618.TW 2012 21% 2
( ) 18.50
12 ( ) 22.00
/ (%) 18.9
3036.TW (1). 2012 (2).
(3). 2012
( ) 36.95
12 ( ) 56.00
/ (%) 51.6
3231.TW 2012 20%
ultrabook 300-400 10% 2011 2012
3-4 2012 400 2012
25% 2011 36% 2012 40%
( ) 38.60 2012
12 ( ) 46.00
/ (%) 19.2
4746.TW 2011-13
10.5% 27.1%
( ) 69.00
12 ( ) 89.00
/ (%) 29.0
4938.TW DMS 2012 25%
23% 5% 1Q-3Q11 25-30% DMS
DMS 10-15% 4Q11
2012
( ) 33.10 ( ) 12
12 ( ) 42.00 3-4
/ (%) 26.9
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14. 5871.TW (1). 2012 37.7% 38.2% (2).
2011 2012 18.3% 43.9%
2011 2012 6.4% 9.2% 39.8 ( 2012 8.6
1.5 )
( ) 25.00
12 ( ) 39.80
/ (%) 59.2
6153.TW 1Q12
( ) 32.40
12 ( ) 50.00
/ (%) 54.3
6269.TW (1). (2).
(3). 45%
( ) 70.00
12 ( ) 96.00
/ (%) 37.1
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15. (1101.TW/1101 TT)
2011 12 15
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1
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3 angus.chuang@kgisia.com.tw
(6%)
L (3%)
12 12 ( ) 33.5
12 ( ) 44.0
/ (%) 31.3
(percentile,%) 66 91.58%
-12/11 (%) 6.0
50 2,200 2012
2011 7.1% 2012 9.5%
M
-12/11 (NT$) 26.1
-12/11 (x) 1.3
-12/11 (%) 0.8 2012 30%
N
52 ( / ): 28.1 - 47
: / 123.7/4,092
( ): 3,692
( ): 3,692
( ): 1,286
3M ( ): 18.4
(3,6,12M) (%) -4; -14; 9.2
(3,6,12M) (%) 2.1; 9.7; 37 44
10.6
15 6%
12 31 EBITDA
( ) ( ) ( ) ( ) ( ) ( )
2009A 20,904 1,950 842 2,611 7,425 2.23
2010A 22,097 1,208 107 1,832 8,031 2.41
2011F 24,021 1,711 535 1,927 9,006 2.44
2012F 26,274 2,504 1,243 2,645 11,700 3.17
12 31 EV/sales EV/EBIT EV/EBITDA EV/Inv. C
(x) (x) (x) (x) (x) (%)
2009A 5.9 37.9 47.1 15.0 1.2 9.8
2010A 5.5 37.5 66.3 13.9 1.1 9.2
2011F 5.2 38.4 64.6 13.7 1.1 9.4
2012F 4.8 38.8 47.6 10.6 1.0 11.9
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16. 1946 3
0.79 0.79 0.79
0.74 0.76
0.70
0.65
(01136.HK)
0.36
4Q10 1Q11 2Q11 3Q11 4Q11F 1Q12F 2Q12F 3Q12F
Other [1.7] 50 80
70
45 60
50
40 40
RMC 30
44
35 20
54 10
Cement and clinker 30 0
(10)
25 (20)
Dec-10 Jan-11 Mar-11 Apr-11 Jun-11 Jul-11 Sep-11 Oct-11 Dec-11
6,900 65 26.8x 23.3x
19.8x
6,600
55
6,300 16.3x
45
6,000
12.8x
5,700 35
5,400 9.3x
25
5,100 5.8x
15
4,800
4,500 5
4Q10 1Q11 2Q11 3Q11 4Q11F 1Q12F 2Q12F 3Q12F 2007 2008 2009 2010 2011
9.5 9.5 65
9.0 2.3x
8.5
55 2.0x
7.1 45 1.7x
6.4
5.9 1.4x
5.4 35
1.1x
25
0.8x
15
0.5x
5
4Q10 1Q11 2Q11 3Q11 4Q11F 1Q12F 2Q12F 3Q12F 2007 2008 2009 2010 2011
http://research.kgi.com.tw 2011 12 15 16

17. 12 31 ( ) 2008A 2009A 2010A 2011F 2012F 12 31 ( ) 2008A 2009A 2010A 2011F 2012F
99,494 104,578 116,546 119,010 124,363 24,241 20,904 22,097 24,021 26,274
12,402 11,539 21,825 20,041 19,948 22,107 18,954 20,889 22,310 23,769
5,696 5,847 15,516 13,209 12,520 2,134 1,950 1,208 1,711 2,504
1,853 1,435 1,431 1,528 1,628
1,131 1,109 1,100 1,176 1,261
3,796 3,802 4,292 4,666 5,104
1,003 842 107 535 1,243
1,057 456 586 637 697
(470) (344) (276) 15 12
87,092 93,038 94,721 98,969 104,415
46,429 54,073 57,347 61,612 67,947 33 6 9 22 19
37,171 35,517 33,267 33,979 33,089 504 349 285 7 7
3,492 3,449 4,108 3,378 3,378 4,111 7,018 8,195 8,265 10,335
27,455 25,467 21,625 22,468 23,505 640 43 138 300 300
14,676 7,126 14,225 7,302 7,788 0 0 0 0 0
1,426 1,129 1,399 1,495 1,592 5,283 7,558 8,163 9,115 11,890
10,857 4,672 11,333 4,185 4,421 (478) 134 132 109 190
2,393 1,325 1,492 1,622 1,774 5,761 7,425 8,031 9,006 11,700
12,779 18,341 7,401 15,166 15,717 EBITDA 2,805 2,611 1,832 1,927 2,645
7,328 12,880 2,000 9,765 10,316
( ) 1.74 2.23 2.41 2.44 3.17
5,451 5,461 5,401 5,401 5,401
72,039 79,110 94,921 96,542 100,858
32,922 32,922 36,922 36,922 36,922
25,082 29,074 38,780 38,780 38,780
14,035 17,114 19,219 20,841 25,156
0 0 0 0 0
12 31 ( ) 2008A 2009A 2010A 2011F 2012F
7,344 4,687 8,383 5,836 6,419
5,761 7,425 8,031 9,006 11,700
1,802 1,769 1,725 1,392 1,402
150 (352) (179) (297) (347)
12 31 ( ) 2008A 2009A 2010A 2011F 2012F (369) (4,156) (1,194) (4,265) (6,335)
(% ) 7,482 (3,560) (2,214) (1,375) (512)
(1.3) (13.8) 5.7 8.7 9.4 (267) 15 621 (2,005) (412)
(55.3) (16.0) (87.2) 398.4 132.2 8,049 (3,488) (2,080) 0 0
EBITDA (34.3) (6.9) (29.8) 5.2 37.2 (301) (87) (754) 629 (100)
(30.2) 28.9 8.2 12.1 29.9
Free Cash Flow 14,826 1,127 6,169 4,461 5,908
(30.4) 28.6 7.8 1.3 29.9
(%)
(15,897) (977) 3,500 (6,767) (6,597)
8.8 9.3 5.5 7.1 9.5 (16,549) (354) 7,780 (7,384) (7,384)
4.1 4.0 0.5 2.2 4.7 1,262 (634) (4,219) 617 787
EBITDA 11.6 12.5 8.3 8.0 10.1 (609) 10 (61) 0 0
23.8 35.5 36.3 37.5 44.5 (1,071) 150 9,669 (2,306) (690)
5.5 7.3 7.3 7.6 9.6
7.4 9.8 9.2 9.4 11.9
(%) 25.2 22.2 14.0 14.5 14.6
(%) 17.3 14.8 Net cash 0.8 2.2 ROIC (Return on Invested Capital)
(X) 11.5 22.6 29.6 1337.3 1658.9
(X) 0.5 1.6 0.7 2.2 2.7 12 31 1- + + =
Cash Flow Int. Coverage (X) 14.6 13.4 29.4 855.5 895.1 2008A 83.8% 7.4% 4.7% 4.1%
Cash Flow/Int. & ST Debt (X) 0.6 0.9 0.7 1.4 1.4 2009A 82.2% 8.5% 5.3% 4.0%
(X) 0.8 1.6 1.5 2.7 2.6 2010A 86.7% 7.8% 5.0% 0.5%
(X) 0.7 1.4 1.4 2.5 2.4 2011F 87.1% 5.8% 4.9% 2.2%
(NT$ ) 11,323 12,097 4,761 (721) 1,480 2012F 85.1% 5.3% 4.8% 4.7%
(NT$ )
12 31 1/ + + =
1.74 2.23 2.41 2.44 3.17
2.28 2.77 2.93 2.82 3.55 2008A 0.2 1.5 0.1 0.5
21.67 23.80 25.71 26.15 27.32 2009A 0.2 1.7 0.2 0.5
7.29 6.29 5.98 6.51 7.12 2010A 0.2 1.5 0.2 0.5
2011F 0.2 1.4 0.1 0.6
EBITDAshr 0.30 0.25 0.03 0.15 0.34
2012F 0.2 1.3 0.1 0.6
1.32 1.80 2.00 2.00 2.20
12 31 x x 1- = ROIC
2008A 4.1% 0.5 109.0% 2.4%
(X) 0.2 0.2 0.2 0.2 0.2
2009A 4.0% 0.5 98.2% 1.9%
57.1 66.4 70.9 70.9 70.9
2010A 0.5% 0.5 98.4% 0.3%
27.9 25.0 23.6 23.2 22.6 2011F 2.2% 0.6 98.8% 1.3%
21.5 19.7 23.1 22.7 22.1 2012F 4.7% 0.6 98.4% 2.9%
63.6 71.7 71.4 71.4 71.4
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18. (2103.TW/2103 TT)
2011 12 15 橡膠
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L
12 12 ( ) 72.9
12 ( ) 94.0
4,200 / 1,550
/ (%) 28.9 / 40%
(percentile,%) 59 - 4Q11/1Q12
-12/11 (%) 6.9
M Dexco
-12/11 (NT$) 27.7 2013
-12/11 (x) 2.6
-12/11 (%)
N
52 ( / ): 51.4 - 79.6 ;
: / 52.1/1,724
( ): 715
( ): 715
( ): 291
3M ( ): 3.9
(3,6,12M) (%) 0.8; -2.3; 39.6
(3,6,12M) (%) 7.2; 24.1; 74.7 4Q11/1Q12
2012 3 94
7% 36%
12 31 EBITDA
( ) ( ) ( ) ( ) ( ) ( )
2009A 22,112 4,826 3,709 4,392 2,332 3.26
2010A 36,686 6,586 5,031 5,747 3,279 4.59
2011F 55,844 12,902 10,651 11,348 6,283 8.79
2012F 57,096 12,963 10,680 11,396 6,215 8.69
12 31 EV/sales EV/EBIT EV/EBITDA EV/Inv. C
(x) (x) (x) (x) (x) (%)
2009A 2.4 N.A. 12.2 22.4 2.7 16.7
2010A 1.5 N.A. 9.3 15.9 2.5 22.4
2011F 0.9 N.A. 4.5 8.3 1.8 35.9
2012F 0.9 N.A. 4.3 8.4 1.7 29.4
:
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19. 3Q11
1973
(BR) - 2.29 2.32
2.17 2.13 2.16
(SBR) (TPE) 1996 SBR 2.01
BR TPE 70% 1.66
SBR BR
1.23
SEBS( TPE)
3Q10 4Q10 1Q11 2Q11 3Q11F 4Q11F 1Q12F 2Q12F
/
7,000 85 70
6,000 80 60
5,000 75 50
40
4,000 70
30
3,000 65
20
2,000 60 10
1,000 55 0
0 50 (10)
Oct-06 Apr-07 Nov-07 Jun-08 Dec-08 Jul-09 Feb-10 Aug-10 Mar-11 Oct-11 Dec-10 Jan-11 Mar-11 Apr-11 Jun-11 Jul-11 Sep-11 Oct-11 Dec-11
CIF Platts
16 100 12.0x
90 10.5x
14
80 9.0x
12
70 7.5x
10 60
6.0x
8 50
4.5x
40
6
30 3.0x
4 20
2 10
3Q10 4Q10 1Q11 2Q11 3Q11F 4Q11F 1Q12F 2Q12F 2007 2008 2009 2010 2011
26.8 100
24.1 24.0 90 2.9x
22.5 23.0 80
22.0 2.5x
20.0 70
2.1x
60
17.1 50 1.7x
40 1.3x
30 0.9x
20
0.5x
10
3Q10 4Q10 1Q11 2Q11 3Q11F 4Q11F 1Q12F 2Q12F 2007 2008 2009 2010 2011
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