| name | tw-stock-fundamental |
| description | Fundamental analysis for Taiwan-listed stocks — financial-statement reading, revenue momentum, industry structure, and dividend policy as filters. Covers the MOPS data source, monthly/quarterly/annual report timing, key ratios, selection frameworks (yield, growth, value), and common red flags. Concept- oriented; not tied to a specific tool.
|
| category | finance |
| tags | ["stock","taiwan","tw-stock","fundamental-analysis","investing","value-investing"] |
| keywords | ["MOPS","ROE","ROA","P/E","P/B","PEG","EPS","free cash flow","moat"] |
| related | ["tw-stock-chip","tw-stock-technical","tw-stock-quant","tw-stock-data","tw-stock-options","tw-etf-investing","portfolio-construction","tw-stock-tax","tw-stock-trend"] |
Taiwan Stock Fundamental Analysis
Fundamentals answer "is this company worth owning?" Chip flow answers "is this a good moment to enter?" The two are complementary, not exclusive.
When to Use This Skill
- Filtering down 1,800+ Taiwan-listed names into a deeper-research shortlist
- Estimating a fair value range for a single stock
- Judging whether a high yield is real value or a value trap
- Reading freshly released monthly revenue / quarterly / annual reports
- Building a long-term dividend or growth portfolio
1. Data Sources and Reporting Timeline
Primary sources
| Source | What it gives you |
|---|
| MOPS (mops.twse.com.tw) | Official filings: financials, material announcements, insider holdings, dividend policy |
| TWSE (twse.com.tw) | Listed company prices, monthly revenue, P/E, dividend yield |
| TPEx (tpex.org.tw) | OTC company data |
| Industry associations, broker research | Industry trend, market share, competitive analysis |
Key release schedule
| Release | Deadline |
|---|
| Monthly revenue | By the 10th of the following month |
| Q1 report | May 15 |
| Q2 report | August 14 |
| Q3 report | November 14 |
| Annual report (incl. Q4) | March 31 of the following year |
| Dividend proposal (board approval) | Around the annual report |
Key insight: monthly revenue is a leading indicator; quarterly reports lag. A turn upward in monthly revenue typically leads price by 1–2 months.
2. Reading the Three Statements Quickly
Income Statement — how much the company earns
Order of attention: Revenue → Gross profit → Operating income → Net income → EPS
| Item | What to look for |
|---|
| Revenue | YoY and MoM, for growth signal |
| Gross margin | Pricing power and cost control |
| Operating margin | Core profitability after operating expenses |
| Non-operating income/loss | One-offs that inflate EPS — exclude when comparing |
| EPS | Per-share earnings — most direct profitability number |
Quick reads:
- Falling gross margin → competition or rising cost; warning
- Operating income growth < revenue growth → opex out of control
- Heavy non-op weight → unstable EPS; focus on the core business
Balance Sheet — is the structure healthy?
Watch: Cash → Receivables → Inventory → Debt → Equity
| Item | Warning sign |
|---|
| Receivable days lengthening | Customers paying slower; quality may be deteriorating |
| Inventory days lengthening | Goods aren't selling; may need to write down inventory |
| Sharp jump in short-term borrowing | Cash tightening |
| Debt ratio > 60% (non-financials) | Leverage high; cyclical reversal risk |
Cash Flow Statement — is the profit real cash?
Most important: Operating Cash Flow (OCF)
- ✅ OCF > Net income → reported profit backed by cash
- ❌ OCF < Net income for years → receivables or inventory inflating; profit may not be real
Free Cash Flow (FCF) = OCF − Capex
- Positive FCF → can pay dividends, buy back shares, reinvest
- Long-term negative FCF → constantly raising capital; dividend investors should avoid
3. Key Financial Ratios
Profitability
| Ratio | Formula | Reading |
|---|
| ROE | Net income / Equity | Buffett's favorite. > 15% is good; 5 years above 15% is excellent |
| ROA | Net income / Total assets | Asset utilization; > 5% is good |
| Gross margin | Gross profit / Revenue | Reflects market position; > 30% usually means pricing power |
| Operating margin | Operating income / Revenue | Core operational efficiency |
Valuation
| Ratio | Formula | Reading |
|---|
| P/E | Price / EPS | Lower = cheaper. TW market average ≈ 15–18x. Growth stocks tolerate higher |
| P/B | Price / book value | < 1 means below liquidation value. Useful for financials and traditional industries |
| PEG | P/E / EPS growth rate | < 1 cheap, > 2 expensive. Best valuation tool for growth |
| Dividend yield | Cash dividend / Price | Core for dividend investors. > 5% is high; > 7% is suspicious — could be a trap |
Safety
| Ratio | Warning level |
|---|
| Debt ratio | Non-financials > 60% is high |
| Current ratio | < 100% indicates short-term solvency tight |
| Quick ratio | < 80% (excluding financials) |
| Interest coverage | < 2x means earnings barely cover interest |
4. Selection Frameworks (Pick One per Goal)
Framework A: Dividend (yield-based holding)
Goal: stable income, ~5–7% annualized.
Filters:
- 10+ consecutive years of dividends
- Yield > 5% (and not because price collapsed)
- Payout ratio between 60–80% (too high → no reinvestment in growth; too low → ungenerous)
- ROE > 10% for 5 consecutive years
- Debt ratio < 60%
- FCF positive for 5 consecutive years
Typical sectors: financials, telecom, utilities, mature manufacturing (Formosa Plastics group, etc.).
Framework B: Growth
Goal: capital gains, 15%+ annualized.
Filters:
- Revenue YoY growth > 15% for 3+ consecutive quarters
- EPS YoY growth > 20%
- Gross margin stable or rising
- PEG < 1.5
- ROE > 15%
- Industry has structural growth (AI, EV, renewables, etc.)
Note: growth stocks are volatile. Before buying, confirm momentum hasn't yet reversed (check monthly revenue).
Framework C: Value (Graham-style)
Goal: buy undervalued good companies cheaply.
Filters:
- P/E below industry average and below the stock's own historical average
- P/B < 1.5
- 5 consecutive years of profit
- Debt ratio < 50%
- Cash + short-term investments > short-term liabilities
- Visible moat (intangible assets, switching costs, network effects, cost advantage, efficient scale)
Note: cheap ≠ undervalued. Confirm there's no structural decline first.
5. Red Flags and Traps
1. EPS inflation traps
- Non-op gains (land sale, divestiture) spike EPS → not core, not sustainable
- FX gains → check whether they reverse next quarter
- Share count shrink (buybacks/cancellations) inflates EPS → earnings unchanged, ratio changed
Counter: focus on "core net income" excluding non-op.
2. High-yield trap
- Price drops first → yield rises mechanically
- Outlook turning sour → high yield because the market doesn't believe
- One-time large dividend (asset disposal) → unsustainable
Counter: for yield > 7%, audit 3-year dividend stability and revenue momentum.
3. Reporting-quality red flags
| Sign | Possible meaning |
|---|
| Receivables grow >> revenue | Forced sales; goods can't be moved |
| Inventory grows >> revenue | Stock pile-up |
| OCF << net income | Reported profit lacks cash |
| Frequent auditor changes | Disagreement on accounting |
| Major shareholder pledging / selling | Insiders not optimistic |
| Frequent material-info corrections | Internal control issues |
4. Misjudging cyclicals
Cyclicals (shipping, commodities, panels, DRAM) have the lowest P/E at the peak of the cycle (looking the cheapest). That's a sell signal, not a buy. Use P/B for cyclicals, not P/E.
6. Personal Selection Workflow
Step 1: Coarse screen (free screeners)
Set conditions: e.g. ROE > 15%, dividends for 5 years, revenue YoY > 10%.
1,800+ TW names usually narrow to 50–100.
Step 2: Industry and business model
- What does the company do? Who buys?
- Upstream / downstream relationships?
- Is there a moat?
- Is the industry growing, mature, or declining?
Read broker reports or the "business overview" in the annual report. Skip companies you can't understand.
Step 3: Three statements (last 5 years)
- Trend in ROE, gross margin, net margin
- Is OCF healthy?
- Is the debt structure reasonable?
- Recent 3–6 months of monthly revenue
Step 4: Valuation
- Estimate fair-value range with P/E, PEG, yield
- Compare to historical P/E band (5-year high/low/avg)
- Decide entry, add-on, and stop-loss prices
Step 5: Record the thesis
Write down "why I'm buying this". When that reason no longer holds, sell. The most-skipped, most-important step.
7. Pre-Buy Checklist
Confirm each before buying:
8. Advanced Concepts
Moats (Pat Dorsey's five types)
- Intangible assets: brand (Wei Chuan vs Uni-President), patents (TSMC process), licenses (telecoms, banks)
- Switching costs: expensive for customers to leave (enterprise ERP, banking)
- Network effects: more value with more users (card networks, social platforms)
- Cost advantage: scale, process, geography (Formosa, China Steel, TSMC)
- Efficient scale: market only supports one profitable player (utilities, airport runways)
Moat + reasonable price + long holding = Buffett's core logic.
DuPont decomposition (breaking down ROE)
ROE = Net Margin × Asset Turnover × Equity Multiplier
- High net margin → pricing power (luxury, TSMC)
- High asset turnover → low margin, high volume (retail, distribution)
- High equity multiplier → leverage (financials, real estate)
The same ROE from different sources implies very different risk and business models.
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