J.P. Morgan maintains Overweight on Hon. Precision and raises target price to NT$8,350

Overview

This report provides J.P. Morgan's earnings review and investment view update on Hon. Precision (7769.TW). The report maintains an Overweight rating and raises the Jun-27 target price to NT$8,350. The core view is that the company's 2Q26 earnings call showed significantly stronger 2027 growth drivers, including large-package ATC handlers, China AI demand, the FT/SLT order pipeline, global OSAT expansion and US reshoring, and progress in CPO ins4 optoelectronic co-test equipment.

Core views

J.P. Morgan views Hon. Precision as the global leader in semiconductor test handlers, with a market share above 35% and approximately 80% of revenue coming from AI and HPC. Upgrades in AI/HPC chip testing specifications, greater thermal-management requirements, and larger package sizes will drive simultaneous expansion in shipment volume and ASP. The report forecasts 2025-2028 handler shipment volume and ASP CAGRs of 41% and 17%, respectively, driving approximately 64%-66% CAGRs in revenue and EPS.

Analysis framework

The report analyzes 2Q26 results, management guidance from the earnings call, order and customer project progress, AI/HPC test-specification migration, regional demand changes, and a relative valuation framework. Valuation uses a 2027E EPS and P/E multiple approach, with the target price based on 38x 2027E P/E.

Methodology notes

• Valuation methodsP/E Valuation

  Target price based on 2027E EPS and a 38x P/E multiple

  J.P. Morgan derives a Jun-27 target price of NT$8,350 using 38x 2027E P/E, a multiple close to the average level around +1 standard deviation since the company began trading on the TWSE Main Board in December 2025.

• Earnings ForecastEPS and Revenue Upgrades

  Forecasts raised based on 2Q26 results and 2027 order drivers

  The report raises 2026E, 2027E, and 2028E EPS to NT$129, NT$220, and NT$347, respectively, while forecasting 2026E and 2027E revenue of NT$55,004mn and NT$87,693mn, respectively.

• Industry DriverAI/HPC Test-Specification Upgrades

  Larger packages, higher thermal capability, and CPO testing driving ASP expansion

  The report believes ASP growth will not primarily come from price increases for existing products with unchanged specifications, but from higher-specification new equipment, including large-package ATC, approximately 10kW thermal capability, FT/SLT platform upgrades, and CPO ins4 O/E co-test equipment.

Asset mapping & comparison

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

• 7769.TW

  Covered company; leader in semiconductor test handlers

  Strengths

  Global No.1 test handler manufacturer with a market share above 35%; AI/HPC accounts for approximately 80% of revenue; possesses core temperature-control and thermal-management technologies; benefits from large-package, CPO testing, China AI, and OSAT capacity expansion.

  Weaknesses

  Some SLT GPU projects have not yet secured confirmed order wins; capacity constraints have delayed some deliveries from 2H26 to 1Q27; limited room for price increases on existing products with unchanged specifications.

  Comparison

  J.P. Morgan believes the market underestimates its multi-year ASP expansion potential; valuation is based on 38x 2027E P/E, close to the historical +1 standard deviation level.

  Risks

  Slower AI demand, declining test intensity, intensifying competition, and slower-than-expected progress in new advanced packaging technologies.

Key data

• RatingOverweightOverweight rating maintained.
• Target PriceNT$8,350Jun-27 target price, raised from NT$8,000.
• Current PriceNT$5,620As of July 30, 2026.
• Implied UpsideApproximately 48.6%Calculated from the target price relative to the current price.
• 2Q26 EPSNT$30.44-5% above J.P. Morgan's and consensus expectations.
• 2Q26 RevenueNT$13.8bnUp 29% QoQ and 100% YoY.
• 2027E EPSNT$219.79New forecast, raised 4.4% from the previous estimate.
• 2027E RevenueNT$87,693mnNew forecast, raised 4.3% from the previous estimate.
• 2025-2028E Revenue CAGRApproximately 64%J.P. Morgan forecast.
• 2025-2028E EPS CAGRApproximately 66%-68%The text cites EPS CAGR figures of 66% and 68%, respectively.
• Large-Package ATC Price Premium20-25%Relative to current FT handlers.
• China FT/SLT Order Growth>60% / >80% YoYDriven by AI, HPC, and automotive applications.
• CPO Equipment Capacity20-30 units/monthFor CPO test ins4 O/E co-test handlers; order timing remains unclear.

Impact & implications

The report believes the market entry point improved significantly after 2Q26, while the current approximately 25x 2027E P/E does not fully reflect the company's multi-year ASP expansion and EPS elasticity. If the market valuation rolls forward to 2028E EPS and applies a 35-40x P/E, the share price could challenge NT$10,000 in the bull case.

Risks

• Slower AI demand.
• Declining test intensity.
• Intensifying competition.
• Slow progress in new advanced packaging technologies.
• GPU SLT handlers have not yet secured confirmed order wins, and related progress requires continued monitoring.
• Order forecasts and timing for CPO ins4 O/E co-test equipment remain unclear.

What to watch

• Penetration of large-package ATC handlers in AI customer shipments in 2027.
• Whether growth in China FT and SLT handler orders and margin improvement materialize.
• Initial CPO ins4 O/E co-test equipment shipments in early October and progress toward volume-production qualification.
• Equipment demand generated by OSAT expansion projects in the US, Thailand, Singapore, China, and South Korea.
• Qualification and order wins for SLT handlers in Nvidia GPU, US CSP ASIC, and Austin-based GPU customer projects.
• Whether customers' thermal-capability roadmaps progress toward approximately 10kW as scheduled.