Zeng Hsing: World’s #1 Manufacturer of Home-Use Sewing Machines
Global Market Share 30%, ROE 18.9%, EV/EBIT 9.6x, EV/EBITDA 8.2x, Dividend 5.3%

Zeng Hsing (TWSE: 1558 TT) is the world’s largest ODM (Original Design Manufacturer) in home-use sewing machine with a 30% market share – out of the 11m units sold worldwide every year, 3.3m are manufactured by Zeng Hsing in 2014, or nearly 1 out of 3 machines, up from 2.95m units in FY2013 and tripled from 1m units in FY2005. Zeng Hsing’s major production sites are in China’s Zhangjiagang (30-34% of capacity), Vietnam’s Ho Chi Minh city (65-70%) and Taichung’s Taiping (1% in mid-to-high-end models). Established in 1968, Zeng Hsing has focused on household sewing machines for the past 40-plus years and does not carry major non-core investments on its balance sheet.

1) What Makes It a Wide-Moat Business?

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