Round two for WUS

On 10 June we wrote our first open letter to WUS Printed Circuit, a Taiwan-listed PCB manufacturer with a stake in a Shenzhen-listed company worth around four times its market cap. The company had been ignoring our requests for engagement, so we were forced to go public with suggestions on how to improve the company’s governance and reduce the shares’ 80% discount to net asset value.

Another shareholder subsequently published an open letter and presentation on 14 June also calling for various actions to improve governance and shareholder returns.

The company became more responsive after that, with the chairman writing to us and a senior director making her time available for several calls.

The shares are still heavily discounted though and in our view this stems from a board that is somewhat rudderless since the founder passed away two years ago. Capital allocation expertise seems lacking, most recently evidenced by the company issuing a convertible bond despite the shares trading close to all-time-low valuations, mostly to repay bank loans. The company is also subscribing in small size to the upcoming H-share listing of its mainland China entity, at a valuation five times higher than the shares to be created upon CB conversion.

The one major positive so far is that WUS is reorienting its Taiwan business towards higher-margin, AI-targeted products, with a view to improving profitability at the parent. However we also want to see a medium-term plan with targets for shareholder return and reduction of the NAV discount, a commitment to providing regular progress updates as well as a re-alignment of management incentives similar to that practised at other APAC holding companies. More specifically, instead of buying shares in the mainland company, WUS Taiwan should be selling them – as it did in 2023 and 2025 – and distributing the cash through share buybacks or other means.

Metrica sent a follow-up letter in private to the company last week, and we are ready to increase the pressure if we do not see progress (Metrica’s new joiner – starting soon – will help in that regard). We are aware of or in touch with 11.1% of the register that is also frustrated by the company’s inaction.