BBU行业报告发布及Dynapack启动后的台湾电子元器件与设备投资者反馈和关键问题

Investor Feedback and Key Questions Post BBU Sector Report andDynapack Initiation CITI'S TAKE Following our Dynapack (3211.TWO) initiation and BBU sector report,investor feedback has generally been constructive. Most investors appearinterested in the BBU theme particularly given rising AI rack power density,increasing adoption of rack-level backup power, and the potential for thehigher BBU content value. Dynapack is viewed as an interesting stock ideato gain exposure to the BBU growth cycle, given its improving sales mix,margin expansion potential and direct exposure to AI power architectureevolution. We highlight several key questions below. Angela HsuAC+886-2-8726-9083angela.hc.hsu@citi.com 1. Would a delay in HVDC rack commercialization or next generation GPUplatforms impact the investment thesis?We think a delay in HVDCcommercialization could postpone the upside from higher-power BBU products butshould not derail the investment thesis. Near-term BBU demand is primarily drivenby rising AI rack power density under existing rack scale architecture and thecontinued ramp of 3kW/5kW products, followed by 8kW/12kW BBU in 4Q26E.HVDC should be viewed as an incremental long-term content value driver, ratherthan a necessary condition for BBU adoption. 2. What is the timeline for Dynapack’s HVDC BBU products?Dynapack is workingon higher-power BBU products including 25kW modules. We expect productverification to take place around 1H27E, with limited initial shipment potentiallystarting in 2H27E. A more meaningful sales contribution is more likely from 2H28E,which means our 2026-2027E sales forecasts remain mainly supported by existing3kW/5kW BBU and the ramp of 8kW/12kW BBU modules. 3. Could PSU suppliers vertically integrate and enter the BBU businessthemselves?We think it is unlikely for PSU suppliers to vertically integrate and enter the BBU business themselves as BBU requires entirely different technical skillsetsincluding battery pack design, BMS integration, thermal management, safetycertification, and highly customized manufacturing. Given the safety-critical natureof BBU, we believe PSU suppliers are more likely to continue partnering withqualified battery pack makers rather than building the entire capability in-house,especially as BBU products become more complex under higher power and HVDCarchitecture. 4. Is there room for TW suppliers to gain shares from Panasonic?While Panasonicremains a strong player with strong cell technology, scale, and direct CSP relationships, we believe its dominant market share is likely to be under pressure as the market scales. We think CSPstypically prefer supplier diversification for supply security, pricing leverage, and qualification redundancy. Taiwan supplierssuch as AES and Dynapack currently have <10% market share each, suggesting room for expansion. We believe Dynapack’sPSU partnership model provides an effective way to gain share as it can access CPS platforms through PSU partners. 5. Why has Dynapack’s share price underperformed in 1H26 despite being a direct beneficiary of AI power architectureevolution?We believe the underperformance mainly reflected a lack of catalysts in 1H26 following the stock’s significant re-rating in 2025. In 1H26, BBU still accounts for not more than 50% of group sales, so overall sales momentum remained partlydiluted by the legacy IT business, which we estimate to decline y/y. in addition to that, we also believe sector rotation towardother high momentum tech segments has contributed to the stock’s relative underperformance. We expect sales to grow meaningfully from 2H26E, driven by continued strong demand for 3kW/5kW BBU products and theinitial ramp of 8kW/12kW products. As BBU becomes a larger sales and profit contributor, we expect the market to refocus onDynapack’s earnings inflection. Dynapack International (3211.TWO; NT$454.0; 1; 09 Jul 26; 15:00) Valuation We assign a 32x target P/E to our 2027E EPS of NT$25 to derive a target price of NT$800. We value Dynapack based on 2027Etarget P/E as we believe 2027E better reflects its earnings power after BBU capacity expansion. Our target P/E of 32x is basedon our forecast EPS CAGR of 66% in 2025-2027E and a PEG of 0.5x, which we benchmark against its major PSU partner, as weexpect Dynapack to grow alongside its partner. Risks Our quantitative model assigns a High Risk rating to Dynapack. However, we believe such a rating is not warranted forDynapack due to: 1) the company is generating solid revenue and earnings growth over next 3 years; the underlying industry,BBU for AIDC, also enjoys secular growth; 2) the business model that involves with product customization and strictsafety/reliability requirements would imply relatively benign competition and therefore stable pricing and margins; and 3) thecompany has a strong balance sheet and has been in net cash position since 2019. Key downside risks to our price target/rating are: 1) Slower-than-expected BBU adoption in AIDC,