Tong Ming Enterprise Co., Ltd. (5538) AI Stock Analysis

Tong Ming Enterprise Co., Ltd.

(TWSE:5538)

Select Model

Rating:60Neutral

Price Target:TWD 36.00▲(4.50% Upside)

Action:initiatedcoverage

Date:11/09/26

The score reflects a financially stable but low-margin cyclical business trading at an undemanding valuation. Earnings and free cash flow have rebounded strongly from the 2023 trough and the balance sheet is adequately capitalized, but revenue remains flat and well below peak, margins and ROE are about a third of 2021 levels, and leverage has crept higher. A P/E of 7.8 with a 4.4% dividend yield and low beta provides valuation and income support. Offsetting this, near-term technicals are soft, with the price below its 20- and 50-day averages and a negative MACD, though oversold readings and a position above the 200-day average suggest the longer-term trend remains intact.

Positive Factors

Profitability RecoveryProfitability has recovered materially from the 2023 trough, showing that the company can restore earnings when operating conditions improve. The stronger margin and ROE provide a healthier base for reinvestment and indicate that the business remains earnings-generative despite recent revenue pressure.

Negative Factors

Revenue ContractionThe recent revenue trajectory is a fundamental concern because declining sales can limit operating leverage, weaken scale benefits, and make sustained earnings growth harder to achieve. The sharp 2025 contraction also suggests that the company remains exposed to unfavorable demand or business-mix conditions.

Tong Ming Enterprise Co., Ltd. (5538) vs. SPDR S&P 500 ETF (SPY)

Market Cap: TWD 6.70B
Dividend Yield: 4.35%
Average Volume (3M): 90.70K
Price to Earnings (P/E): 7.9
Beta (1Y): 0.34
Revenue Growth: 2.79%
EPS Growth: 64.26%
Country: TW
Employees: 906
Sector: General
Sector Strength: 55
Industry: Manufacturing - Metal Fabrication

Tong Ming Enterprise Co., Ltd. Business Overview & Revenue Model

Company Description

Tong Ming Enterprise Co., Ltd., along with its affiliated entities, specializes in the production and distribution of stainless steel fasteners and wires, marketed under the TONG brand, primarily serving the Mainland Chinese market. Its product portf...

Tong Ming Enterprise Co., Ltd. Financial Statement Overview

Summary

Tong Ming is a cyclical metal fabricator in the early-to-mid stage of recovery. Income statement (56): revenue is essentially flat at NT$12.73B and still ~17% below the 2022 peak, though operating profit (+8%) and net income (+6%) rebounded from the 2023 trough; margins remain thin (12.1% gross, 4.8% net) and EBITDA slipped. Balance sheet (63): equity has grown steadily to NT$7.45B and funds just over half of assets, but debt rose to NT$5.63B (D/E 0.76) and ROE of 8.2% is far below the 22.1% 2021 peak. Cash flow (60): operating cash flow of NT$696M covers net income 1.1x and free cash flow nearly doubled to NT$584M, a clear quality-of-earnings improvement, though the multi-year record includes cash burn in 2020-2022. Overall: financially stable and improving, but low-margin, cyclical, and modestly more leveraged.

Income Statement

56Neutral

Balance Sheet

63Positive

Cash Flow

60Neutral

Financial statement breakdown
Breakdown	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	13.35B	12.73B	12.54B	12.97B	15.43B	13.24B
Gross Profit	1.96B	1.54B	1.49B	967.98M	2.01B	2.70B
EBITDA	1.37B	1.04B	1.19B	548.16M	1.47B	2.10B
Net Income	876.50M	608.14M	575.66M	135.17M	911.22M	1.44B
Balance Sheet
Total Assets	16.09B	14.71B	13.95B	12.29B	13.53B	11.89B
Cash, Cash Equivalents and Short-Term Investments	3.61B	3.31B	2.20B	1.51B	1.92B	2.18B
Total Debt	4.52B	5.63B	4.82B	4.42B	5.01B	3.86B
Total Liabilities	8.11B	7.04B	6.80B	5.74B	6.60B	5.35B
Stockholders Equity	7.99B	7.45B	7.12B	6.52B	6.91B	6.52B
Cash Flow
Free Cash Flow	-638.42M	583.81M	329.33M	851.38M	-652.39M	-974.50M
Operating Cash Flow	-549.53M	696.13M	777.66M	1.60B	369.62M	-130.96M
Investing Cash Flow	-548.31M	-252.56M	-1.05B	-743.30M	-858.31M	-920.75M
Financing Cash Flow	968.23M	471.10M	17.68M	-1.21B	343.28M	808.54M

Tong Ming Enterprise Co., Ltd. Peers Comparison

Overall Rating

UnderperformOutperform

Sector (55)

Financial Indicators

TW:5538 against its peers
Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
TW:2221	69Neutral	TWD 6.43B	56.44	―	0.90%	18.85%	87.57%
TW:5538	60Neutral	TWD 6.98B	7.88	―	4.35%	2.79%	64.26%
TW:9905	58Neutral	TWD 6.33B	12.07	―	5.28%	21.06%	36.11%
TW:2233	57Neutral	TWD 6.87B	20.10	―	3.39%	-2.23%	-20.63%
Sector *	55Neutral	$6.65B	3.83	-15.92%	6.20%	10.91%	7.18%
TW:2030	49Neutral	TWD 7.28B	9.38	―	1.95%	9.86%	784.60%
TW:8374	44Neutral	TWD 6.99B	450.00	―	0.32%	15.67%	-87.91%

* General Sector Average

Performance Comparison

TW:5538 and its peers over the selected period
Ticker	Company Name	Price	Change	% Change
TW:5538	Tong Ming Enterprise Co., Ltd.	34.45	6.73	24.30%
TW:2030	Froch Enterprise Co., Ltd.	25.60	12.02	88.57%
TW:2221	Tachia Yung Ho Machine Industry Co., Ltd.	167.00	139.45	506.28%
TW:2233	Turvo International Co., Ltd.	118.00	-91.87	-43.78%
TW:8374	Ace Pillar Co. Ltd.	62.90	-18.71	-22.93%
TW:9905	Great China Metal Industry Co., Ltd.	20.85	1.88	9.93%

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

Tong Ming Enterprise Co., Ltd. AI Stock Analysis