Goldman Sachs reiterates Buy on SZS, raising the target price to NT$300 on foldable iPhone-driven hinge demand.

Overview

Goldman Sachs reiterates Buy on SZS and raises its 12-month target price to NT$300 from NT$286. The central thesis is that SZS's hinge capabilities, capacity expansion and in-house MIM production position it to benefit from a foldable iPhone launch and faster global adoption of foldable smartphones, despite a weaker-than-expected August revenue result and lower 2026 estimates.

Core views

Goldman Sachs argues that the expected roll-out of the foldable iPhone, referred to as iPhone DUO, could expand demand for sophisticated smartphone hinges. The report cites a starting price of US$1,999 and a new form factor as supportive of consumer interest in the latest technology and premium smartphone models. It forecasts global foldable-phone penetration of 3.6% in 2026E, 5.9% in 2027E and 6.8% in 2028E, compared with 1.6% in 2025. SZS is viewed as a key beneficiary because it is described as a global leading hinge supplier; the foldable iPhone hinge is said to contain more than 100 small precision components, creating high dollar content. Goldman Sachs highlights SZS's accumulated hinge-product know-how, R&D capability, capacity expansion and in-house metal injection molding as relevant competitive strengths. The near-term operating picture was softer. SZS reported August revenue of NT$820 million, down 10% year-on-year but up 1% month-on-month, and 38% below Goldman Sachs estimates. The institution attributes the shortfall to muted growth in wearable and notebook hinges. Nevertheless, it remains positive on new projects and expects growth to recover as clients launch new products and seasonal demand improves. Its September 2026 revenue forecast is NT$1.578 billion, approximately NT$1.6 billion, implying 92% growth both year-on-year and month-on-month. The report also forecasts 3Q26E revenue of NT$3.210 billion, up 72% year-on-year and 74% quarter-on-quarter. Reflecting the August miss and a longer expected delay before new projects contribute meaningfully, Goldman Sachs reduces 2026E revenue by 9% to NT$18.675 billion and 2026E net income by 11% to NT$1.306 billion. It cuts gross profit by 10% to NT$3.261 billion and operating income by 13% to NT$1.535 billion; forecast gross, operating and net margins become 17.5%, 8.2% and 7.0%, respectively. For 2027E, it raises revenue by 1% to NT$28.511 billion and net income by 1% to NT$2.695 billion, reflecting its constructive view of foldable-phone demand; 2028E estimates are largely unchanged, with revenue of NT$33.313 billion and net income of roughly NT$3.1 billion. The NT$300 target price is based on a 21.9x 2027E P/E multiple, raised from 21.0x, despite the lower near-term earnings forecast. Goldman Sachs derives the multiple from a sector relationship between 2027E P/E and 2027E-28E earnings growth and says that a foldable-phone-driven re-rating supports the higher multiple. It also notes that 21.9x lies within SZS's trading range since August 2019. The report reiterates Buy, showing the target as 63.9% above the NT$183.00 closing price on 11 September 2026.

Analysis framework

The report starts with foldable-smartphone adoption and the expected foldable iPhone launch, then links higher hinge content to SZS's manufacturing and technology capabilities. It incorporates the August revenue shortfall into near-term earnings forecasts, assesses the expected recovery from customer launches and seasonality, and values SZS using a sector-derived relationship between forward P/E multiples and forecast earnings growth.

Methodology notes

• Industry AnalysisPenetration-Rate S-Curve

  Foldable-phone penetration forecast

  Goldman Sachs uses the projected increase in foldable-phone penetration from 1.6% in 2025 to 3.6% in 2026E, 5.9% in 2027E and 6.8% in 2028E to support its demand outlook for SZS's hinges.

• Valuation methodsP/E and PEG Valuation

  Forward P/E multiple linked to forecast earnings growth

  The target price uses a 21.9x 2027E P/E multiple derived from a sector correlation between 2027E P/E and 2027E-28E earnings growth, then applied to SZS's earnings forecast.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• SZS (3376.TW)

  Primary covered company and a projected key beneficiary of rising foldable-phone penetration and foldable iPhone hinge demand.

  Strengths

  Global leading hinge-supplier position, hinge R&D know-how, capacity expansion and in-house MIM capability.

  Weaknesses

  August revenue growth was weak because wearable and notebook hinge growth was muted.

  Comparison

  The 21.9x 2027E P/E target multiple is derived from a sector correlation between forward P/E and forecast earnings growth.

  Risks

  Weaker headset-hinge demand, slower foldable-phone penetration, more supplier competition and soft market demand.

Key data

• August 2026 revenueNT$820 millionDown 10% year-on-year, up 1% month-on-month, and 38% below Goldman Sachs estimates.
• September 2026E revenueNT$1.578 billionForecast to rise 92% year-on-year and 92% month-on-month.
• Global foldable-phone penetration3.6% / 5.9% / 6.8% in 2026E / 2027E / 2028ECompared with 1.6% in 2025.
• 2026E revenue revisionNT$18.675 billionReduced 9% from NT$20.508 billion.
• 2026E net income revisionNT$1.306 billionReduced 11% from NT$1.471 billion.
• 2027E net income revisionNT$2.695 billionRaised 1% from NT$2.667 billion.
• Valuation multiple21.9x 2027E P/ERaised from 21.0x and used to derive the NT$300 target price.

Impact & implications

The report's positive longer-term case depends on SZS converting expanding foldable-phone demand into hinge revenue through its technical capability, capacity and MIM production. The August miss delays rather than changes that thesis in Goldman Sachs's view, leading to lower 2026 forecasts but modestly higher 2027 earnings expectations and a higher valuation multiple.

Risks

• Headset-hinge demand could be weaker than expected.
• Foldable-phone penetration could rise more slowly than forecast.
• More suppliers could intensify competition.
• Overall market demand could remain soft.