The six-year projection against the four targets

The initiative does not reach an operating profit inside the horizon. That is the single most important line in the table.

Free cash flow is operating profit plus depreciation, less capital expenditure and the increase in working capital. Depreciation is added back because operating profit is struck after a plant charge, and subtracting capital expenditure without adding it back would charge capital twice.

Capital is phased so that the first two years carry only recertification, one converted line and the quality system, with capacity build from 2029. That is the least capital-hungry order available, and it still produces the figures above.

Against the four criteria:

Two things about the IRR deserve stating rather than burying.

Every year of free cash flow is negative on the base case, so an internal rate of return excluding terminal value has no solution. There is no positive flow for a discount rate to act on. The entire return is the value of the business at the end.

The terminal value is therefore the whole of the return, so it is taken from published transaction bands rather than assumed. Medical device contract manufacturers with $25M to $50M of EBITDA transact at 7 to 9.5 times, with certified medical manufacturers noted as trading two to four turns above the general manufacturing baseline. At an operating loss of $2.8M in 2032 plus $18.4M of depreciation, EBITDA is $15.6M, and the terminal value is $129M at the midpoint of 8.25 times. The internal rate of return is -20% there, -26% at the bottom of that band and -14.8% at the top.

A note on which band applies, because it decides the size of the loss rather than its sign. The band above is what certified medical contract manufacturers transact at, and that is what this business would be. Valued instead at the general manufacturing baseline those figures sit two to four turns above, roughly 5.25 times, terminal value falls to $82M and the return to -36.6%.

Net present value at a 10% cost of capital is -$99M, and it is insensitive to the discount rate because almost every flow is an outflow: -$99M at 8% and -$99M at 12%. On the general manufacturing multiple it is -$128M. The peak funding requirement is $221M, rising to about $261M if capital runs 25% over.

The comparison that matters most is not against the targets. It is against the business MERIDIAN already has. Zhen Ding, the world's largest printed circuit manufacturer with over half its revenue in flexible circuits, reported 2025 revenue of NT$182.5B, gross profit of NT$36.1B and operating profit of NT$13.9B, which is a 19.8% gross margin and a 7.6% operating margin. This initiative reaches 26.1% and -1.7%. Gross margin is better by 6.3 points. Operating margin is worse by 9.3 points.

The strategic premise of this entry is that medical is a higher-value place to stand. At the participation tier the brief has chosen, and after paying for the organization that tier requires, it is a slightly lower-value place to stand than the one MERIDIAN already occupies. The gain is diversification of customers, not margin, and this analysis should be read that way.