Rechi Precision: Global #4 Air-Conditioner Compressor pumping into new applications and the multi-billion BLDC motor market

Trading at P/B 1.63x, EV/EBITDA 7.2x, EV/EBIT 10.6x, Dividend 6.37%

Rechi Precision (TWSE: 4532 TT) is the world’s #4 compressor manufacturer with 10% market share, up from 3.5% in 2000. Regionally, Rechi has 39% in Taiwan, 30% in North America, 3% in China, 12% in Europe, 9% in Japan, 13% in South America, 14% in ASEAN. Rechi also has niche dominance in compressor for the recreational vehicle (RV) market in North America with 60% market share and over 90% market share in heat-pump dryer in Europe in partnership with Bosch. Rechi’s annual compressor capacity is 15m units, with 3m in Taiwan, 9m in Qingdao and 3m in Huizhou, and has plans to expand by 6m units to 21m units in 2H15. Rechi has a diversified customer base that include Haier, TCL, Midea, Sharp, Sanyo, Carrier, Sampo, Goodman, Bosch, Electrolux, Miele. Rechi is a 25.4% affiliate of Sampo Corp (1604 TT) and other strategic shareholders include Taiwan steel giant China Steel Corp (2002 TT) with 4.91% stake and Japan’s electronics giant Sharp (6753 JP) 4.86%.

1) What Makes It a Wide-Moat Business?

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