Chenbro Micom (MV $189m): World’s #1 Independent Server Chassis Maker
ROE 26.6% and trading at EV/EBIT 6.8x, EV/EBITDA 5.8x

Chenbro Micom (TSEC: 8210) is the world’s largest independent server and storage chassis designer and manufacturer with around 9% global market share based on the 10m+ server units shipped worldwide in 2015 and benefitting from the rising demand of large-scale data centers which increasingly require customized integrated chassis solution design which account for 5-20% of total server cost. For every 600 smartphones or 122 tablets, a new server is required to support the data management. Server chassis solution now contribute 92% of Chenbro’s sales, up from 60% in 2006, while PC chassis account for the remaining 8% of sales. Founded in 1983 by Chairman & CEO Maggie Chen, Chenbro started off as the first in the world to make desktop and tower PC chassis and removable motherboard tray. This DNA of innovation has been inherited in later pedestal server in 1999 and rackmount server chassis in 2001, which contributes to Chenbro’s leading position in the industry. Chenbro has long-term world-class customers and partners of all three of the largest server equipment companies IBM, HP and Dell; China’s largest server equipment companies Lenovo/ Legend Holdings, Inspur, Dawning Information Industry, Huawei-HiSilicon, Sugon and the world’s largest security surveillance company Hangzhou Hikvision; and Amazon, Google, Facebook, Microsoft, Oracle, Apple are all Chenbro’s end customers via the local system integrators. Chenbro is not merely a chassis manufacturer, as it takes care of the whole product development cycle from the concept design, tolling and molding for specialty components, to on-site product-assembly/quality control and finally, product testing. Chenbro has accumulated sizable and valuable molding assets and superb design flexibility know-how. Company headquarter is located in Taipei, Taiwan, with around 1,500 employees worldwide, and manufacturing sites in Dongguan and Kunshan in China, Chenbro has set up wholly-owned subsidiaries in the United States, Europe and China, to offer a full range of services including product specification proposal, professional R&D development, customization and production capacity to the customers such as system integrators and channels, while keeping innovation and penetrating into the solutions for data centers, surveillance, large enterprises and education.

1) What Makes It a Wide-Moat Business? Fundamental Dynamics Behind 23.3% ROE

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