Taitron Components

A net-net with a real business and valuable real estate

Taitron Components (TAIT) is a net-net trading at a 10% discount to net cash. The company has an operating business that historically generates modest free cash flow, shareholder-aligned management (insiders own just over 50% of shares), and a clear reason for their currently discounted price (tariff headwinds and the decision to delist from the NASDAQ). I estimate a very conservative book value of $2.16/share, with upside potential of $3.00-$3.50/share. At the time of this writing, shares are trading at $1.20/share.

TAIT sells a variety of semiconductor components and small electronic devices. They design a number of the components themselves and wholesale a large variety of others from suppliers in China and Taiwan. Their proprietary components sell for a higher margin than their wholesale offerings, and management has been gradually pivoting their focus to the in-house design side of the business. Neither side of the business has particularly impressive margins, but TAIT has managed to be profitable 8 out of the last 10 years and has generated positive free cash flow in 9 out of the last 10 years. Tariffs have dramatically impacted TAIT’s revenue in 2025, but at least through the first 3 quarters they have generated positive cashflow from operations. The decline in revenue and a decision to delist from the NASDAQ has sent the share price down over 50% since the start of 2025.

Because of this share price drop, TAIT is trading at a very cheap price, relative to the value of its assets. TAIT has cash and treasury bills worth a total of $10mm against total debt of just $2mm for a total net-cash value of $8mm ($1.33/share). TAIT also owns a 50,000 square foot facility in Valencia California that is mixed-use office, warehouse, and factory space. At crisis-level pricing (just $100/sq. ft), this adds an additional $5mm of book value, for a very conservative book value of $13mm ($2.16/share). This assumes their inventory and international real estate (they own small offices in China and Taiwan) are totally worthless and ignores their deferred tax assets.

Let’s look at cash burn. TAIT has been cashflow positive 11 out of the last 12 years, with 2024 being the worst year with $500k of cash burn. Through the first three quarters of 2025 they have generated about $600k in positive FCF. To be hyper-conservative, let’s assume they average double the cash burn of their worst year ($1mm) going forward. It isn’t a cash “burn,” but TAIT also pay a substantial dividend (management has committed to $.14/share annually going forward) that will lower their cash balance.

Let’s say a TAIT investor today holds shares for 3 years using these cash burn assumptions. We can estimate that they will use $3mm in cash from operations, and pay out $2.4mm in dividends. A super-conservative book value would then be $7.6mm, or $1.27/share. The cash burn and dividends are comfortably covered by TAIT’s current cash, so there wouldn’t be any need to raise additional cash via share sales. In this worst-case scenario, investors collect the 12% dividend yield for 3 years and own a stock that is still cheap relative to its asset value. This assumes the share price doesn’t decline further, but also assumes the share price doesn’t appreciate up to my conservative book value estimate. This is a tolerable worst-case outcome in my opinion.

Positive catalysts could be a return to meaningful profitability (perhaps the tariff landscape changes sometimes in the next 3 years), or a sale/buyout at a more fair asset valuation. Real estate in Valencia, CA comparable to TAIT’s facility is being listed for closer to $200-$250/sq ft (adding at least another $5mm in book value). If one assumes that TAIT’s inventory could be sold at a 50% discount (instead of a 100% discount), that is another $1mm of book value. Their foreign real estate (offices in China and Taiwan) is likely not worthless. Let’s assume they could net $1mm from selling those offices. TAIT’s book value with these slightly better assumptions is $21mm, or ~$3.50/share. $TAIT could reasonably be a 2-bagger in the next 3 years and the dividend payments help to lower the opportunity cost in the meantime.

A very brief note about management. TAIT is a controlled company, with management owning over 50% of the A shares and 100% of the B-class shares that give them extra voting rights. The company’s founders are still heavily involved in running the company (one co-founder is the CEO and two others are on the board of directors) and I see evidence that they care about shareholders. Their compensation packages are reasonable (both the CEO and CFO have salaries below $200k), they have taken steps to cut costs in hard times, and their commitment to dividend payments demonstrate they aren’t just looking to hoard cash to pay themselves high salaries/bonuses in the future without returning cash to shareholders.

In summary, TAIT is a net-net trading at about a meaningful discount to its net cash position, with a real operating business and shareholder-aligned management. I also take comfort in their being a clear reason to explain the recent share price decline. A “Worst case” outcome is about a 35% gain over 3 years, and there is a reasonable chance for shareholders to realize a 200-300% percent gain in that time (or even sooner).

I own TAIT shares in my personal portfolio and I have a personal price target of $3.00/share.