Cheng Fwa Industrial Co., Ltd. (5426) AI Stock Analysis

Cheng Fwa Industrial Co., Ltd.

(TPEx:5426)

Select Model

Rating:53Neutral

Price Target:TWD 26.00▼(-7.31% Downside)

Action:initiatedcoverage

Date:11/09/26

Cheng Fwa Industrial scores in the below-average range. The clearest positive is a fortress-like balance sheet — minimal debt, 70% equity funding and real financial flexibility — alongside improving revenue, the best gross margin in six years and stronger operating cash flow. These are offset by weak earnings quality: net income nearly halved, net margin compressed to 4.2%, ROE slipped to 3.3%, and heavy capex pushed free cash flow negative again. Technically, the shares have slipped below their 20-, 50- and 100-day averages with soft momentum, though they still hold above the 200-day average. Valuation adds further caution, with a 42x P/E that assumes a sustained earnings recovery not yet evident, while the 1.2% yield offers limited support. The investment case hinges on converting recent revenue and margin momentum into consistent bottom-line growth and positive free cash flow.

Positive Factors

Conservative Balance SheetVery low leverage gives Cheng Fwa financial resilience through bicycle-industry cycles and reduces interest-related pressure on earnings. A sizable equity base also preserves flexibility to fund operations or investment without relying heavily on additional borrowing.

Negative Factors

Negative Free Cash FlowNegative free cash flow in the latest two years weakens earnings quality because reported profits have not translated into cash available after investment. Persistent cash shortfalls could reduce funding flexibility and make future growth more dependent on balance-sheet resources.

Cheng Fwa Industrial Co., Ltd. (5426) vs. SPDR S&P 500 ETF (SPY)

Market Cap: TWD 4.44B
Dividend Yield: 1.07%
Average Volume (3M): 2.23M
Price to Earnings (P/E): 44.5
Beta (1Y): 0.99
Revenue Growth: 7.49%
EPS Growth: -46.09%
Country: TW
Employees: 816
Sector: General
Sector Strength: 55
Industry: Manufacturing - Metal Fabrication

Cheng Fwa Industrial Co., Ltd. Business Overview & Revenue Model

Company Description

Cheng Fwa Industrial Co., Ltd., established in 1964 and headquartered in New Taipei City, Taiwan, is a leading manufacturer and supplier specializing in high-precision metal stamped components. The company produces parts in various configurations and...

Cheng Fwa Industrial Co., Ltd. Financial Statement Overview

Summary

A conservatively financed but cyclical manufacturer. The balance sheet is the standout strength (score 76): equity funds roughly 70% of the NT$3.22bn asset base, debt-to-equity is just 0.09, and liquidity cushions are ample. The income statement (54) shows encouraging top-line momentum — revenue up ~17% to NT$1.76bn, gross margin at a six-year high of 19.2%, and operating profit tripling to NT$75.7m — but net income nearly halved to NT$74.3m as prior-year one-off gains rolled off, compressing net margin to 4.2% and ROE to 3.3%. Cash flow (51) improved at the operating level (NT$176m, ~2.4x net income) yet free cash flow turned negative again at -NT$46m on heavy capex, the fourth negative year in six. Financially safe, but not yet efficient or consistently cash-generative.

Income Statement

54Neutral

Balance Sheet

76Positive

Cash Flow

51Neutral

Financial statement breakdown
Breakdown	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	1.88B	1.76B	1.50B	1.41B	2.07B	1.66B
Gross Profit	350.69M	337.20M	272.76M	219.09M	358.93M	155.75M
EBITDA	158.87M	156.32M	265.36M	110.87M	317.99M	-23.43M
Net Income	90.91M	74.27M	142.07M	7.46M	163.19M	-88.70M
Balance Sheet
Total Assets	3.18B	3.22B	3.03B	2.68B	3.04B	3.15B
Cash, Cash Equivalents and Short-Term Investments	733.47M	959.91M	902.27M	766.53M	718.51M	875.82M
Total Debt	75.89M	204.51M	5.38M	3.39M	204.83M	556.15M
Total Liabilities	871.70M	962.31M	749.82M	616.88M	942.70M	1.25B
Stockholders Equity	2.30B	2.25B	2.27B	2.06B	2.09B	1.90B
Cash Flow
Free Cash Flow	-190.71M	-45.66M	-12.11M	284.77M	187.08M	-166.56M
Operating Cash Flow	133.31M	175.70M	61.54M	312.23M	215.08M	-123.17M
Investing Cash Flow	-138.54M	-125.81M	79.38M	-253.15M	274.56M	-111.15M
Financing Cash Flow	-4.89M	125.77M	-1.52M	-226.99M	-344.29M	275.33M

Cheng Fwa Industrial Co., Ltd. Peers Comparison

Overall Rating

UnderperformOutperform

Sector (55)

Financial Indicators

TW:5426 against its peers
Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
TW:3046	71Outperform	TWD 3.92B	10.16	―	5.96%	31.68%	27.27%
TW:3287	70Outperform	TWD 3.48B	9.15	―	1.99%	20.68%	―
TW:3556	64Neutral	TWD 3.65B	14.40	―	3.15%	27.26%	133.00%
Sector *	55Neutral	$6.65B	3.83	-15.92%	6.20%	10.91%	7.18%
TW:5426	53Neutral	TWD 3.86B	44.45	―	1.07%	7.49%	-46.09%
TW:5452	45Neutral	TWD 3.70B	69.09	―	1.00%	-4.18%	-24.42%
TW:6126	44Neutral	TWD 3.40B	37.25	―	2.34%	43.73%	-23.83%

* General Sector Average

Performance Comparison

TW:5426 and its peers over the selected period
Ticker	Company Name	Price	Change	% Change
TW:5426	Cheng Fwa Industrial Co., Ltd.	28.05	7.77	38.33%
TW:3046	Aopen Incorporated	50.30	3.55	7.59%
TW:3287	KWorld Computer Co., Ltd.	75.20	45.01	149.07%
TW:3556	eGalax_eMPIA Technology Inc.	61.90	23.95	63.09%
TW:5452	Unic Technology Corp.	25.05	3.07	13.98%
TW:6126	Singatron Enterprise Co. Ltd.	25.60	-5.47	-17.61%

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.

Date of analysis: Nov 09, 2026

Cheng Fwa Industrial Co., Ltd. AI Stock Analysis