Grape King Bio (1707 TT): Dual Engines from OEM/ODM and Overseas Drive Structural Improvement and Re-rating
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
4Q25 earnings beat driven by cost control, supporting operating margin expansion: Grape King reported 4Q25 revenue of NT$3bn, in line with expectations, while EPS came in at NT$3.00, beating our estimate of NT$2.93 (+2.6%). Gross margin of 76.5% missed our forecast (77.3%) due to a higher OEM mix and lower Shanghai utilization. However, stronger cost control, with the OPEX declining to 51.7%, supported operating profit beat. For FY25, revenue declined 8.1% YoY and EPS reached NT$8.22, reflecting Taiwan channel adjustments and weak China demand. Despite this, the company raised its payout ratio to 73%, maintaining a NT$6 dividend, highlighting resilient cash flow and shareholder returns.
OEM/ODM drives visibility, with support from new clients and formats: We see OEM/ODM as the most visible growth driver for 2026. Revenue grew 54% YoY in 2025, driven by from its largest US pharmaceutical client. With utilization reaching full levels by end-2025, we expect the strong momentum to carry into 2026, with most orders backed by one-year forecasts .Looking ahead, a major Japanese customer will be onboarded in 2H26, supported by the new Slim Can line, with potential to become a long-term anchor order. Together with new formats (e.g., jelly) and rising export demand for proprietary ingredients, we expect OEM/ODM to sustain double-digit growth and remain the group’s key revenue pillar.
UVACO shifting into a multi-engine growth platform: UVACO is moving beyond its Taiwan-centric base, with growth increasingly driven by product expansion and overseas markets. CordiBella skincare has lifted non-health food contribution from ~4% to nearly 9% in 2025, enhancing product mix and member monetization, and is set to remain a key growth driver into 2026.On the geographic front, the company has secured a direct selling license in Malaysia and plans to launch in 2Q26. Replicating its Taiwan model in Southeast Asia would expand its addressable market and reposition UVACO from a stable cash generator to a mid-term growth engine.
Forecast revisions reflect mix shift, structural improvement supports re-rating: We revise our 2026–2027 earnings forecasts to reflect a higher contribution from OEM and Shanghai. Our estimates imply EPS of NT$9.96 for 2026 and NT$11.81 for 2027. While gross margin is slightly lowered to 75.3%/74.3% due to mix dilution, operating margin continues to improve, supported by operating leverage and cost optimization. Meanwhile, Taiwan adjustments and a Shanghai turnaround should stabilize earnings quality. Under our Base Case, we apply a 14–16x 2026E P/E, implying a valuation range of NT$139–159 (~16%–33% upside). For more details of our assumptions, please visit our initiation of coverage report.
