Value Investing Congress: Taiwan Stock Picks

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taiwan-stock-picksTaiwan is the wealthiest country in East Asia on a per-capita basis, explains Carl Chen of Temple Honor Asia investment group.
China’s market has a negative stigma attached to it. Taiwan, Chen explains, is not China.
It has more economic freedoms, a more pro-business environment, and the fourth-largest foreign reserves per capita. The currency is stable, debt to GDP is manageable.
Taiwan’s stock market, TAIEX, is little known, underappreciated and a proxy for China. Information technology companies make up 44% of the index.
With that in mind, Chen offered up two tech-related Taiwan stock picks – one “risky”, one “safe.” Because there are no 100 year old public companies in Taiwan, there are no traditional value stocks, per se.
However, Chen believes the following are two of Taiwan stock picks:
China Wireless Technologies (2369.HK)

  • Seventh-largest smartphone brand in the world, though few people know that. It’s China’s second-largest vendor by sales of its own brand.
  • Sales on track to double for the second straight year
  • Only pure-play Chinese cell phone maker listed
  • Commands almost 10% of the China smartphone market
  • Catalysts: new products such as tablets and the smart-watch are coming online in the coming quarters
  • 70% upside

MediaTek (2454.TW)

  • A chipmaker that has 42% of the smartphone market in China – more than Qualcomm
  • Created the “white label” phone market in China
  • Solid balance sheet with low debt and plenty of cash on hand
  • Unit shipments are expected to grow 104% this year

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