Grape King Bio (1707 TT): Product Mix Upgrade and Overseas Expansion Drive Long-Term Potential
Company Overview
Founded in 1969, Grape King Bio (1707.TW) is a leading Taiwan health-supplement company built on vertically integrated fermentation, branded products, and a fast-growing OEM/ODM platform. Its four business units—Taiwan own-brand, OEM/ODM, UVACO, and Shangh1ai—are supported by in-house R&D and decades of fermentation expertise. With a portfolio grounded in functional mushrooms, probiotics, and clinically supported actives, the company serves both domestic consumers and global brands. Backed by a solid balance sheet and steady cash flow, Grape King is focused on product innovation and international expansion to support long-term growth.
Key Points
1Q26 Earnings Miss Driven by Cost Inflation and Product Mix Pressure: Grape King posted 1Q26 revenue of NT$2.28bn, up 1.1% YoY, supported by continued strength in its OEM/ODM business. However, softer contribution from the higher-margin UVACO segment, together with rising raw material and packaging costs since March, weighed on profitability. Management estimates cost inflation reduced gross margin by roughly 2ppts, bringing consolidated gross margin down to 69.7%. While operating expenses remained well controlled, down 1.6% YoY, this was not enough to fully offset margin pressure, resulting in EPS of NT$1.18, below market expectations. Management emphasized that the company remains focused on product optimization and formulation upgrades rather than aggressive price increases.
UVACO Continues Product Upgrade Cycle; Malaysia Expansion Officially Underway: Although UVACO revenue declined around 5% YoY during the first four months of 2026, management highlighted that newer products and personal care categories are becoming increasingly important growth drivers. The CordiBella skincare series now contributes approximately 13% of segment revenue, while newly launched products such as “Sang Ben Li Yuan” protein mix and “Antrodia Beadlet” each generated roughly NT$40mn in monthly sales. Meanwhile, UVACO will officially begin trial operations in Malaysia at the end of May, with its initial phase focused primarily on membership expansion and organizational building.
OEM/ODM Momentum Remains Strong: OEM/ODM continues to serve as Grape King’s primary growth engine, with revenue rising 35% YoY to NT$276mn during the first four months of 2026. Management remains optimistic on the segment’s outlook and believes full-year growth could still reach 40%–50%. Order visibility remains healthy following the company’s participation at Vitafoods Europe, while overseas customer engagement continues to expand. We believe OEM/ODM is increasingly evolving into Grape King’s key long-term growth and globalization platform, while the branded and Shanghai businesses are also showing gradual operational improvement.
Forecasts Revised Lower, but Long-Term Growth Thesis Remains Intact: We lower our 2026–2027 EPS forecasts to NT$8.81 and NT$10.76, respectively. We believe the market remains overly focused on near-term earnings softness while underappreciating the company’s longer-term structural growth drivers, including OEM/ODM international expansion, rising contribution from UVACO’s new product categories, and the long-term opportunity in Malaysia. In addition, the stock’s dividend yield approaching 6% should provide downside support. Under our Base Case scenario (14-16x PE on average 2026-2027 EPS), this implies a valuation range of NT$137–156 per share.
