Advantech Co Ltd

2395: XTAI (TWN)

Morningstar Rating for Stocks	Fair Value	Economic Moat	Capital Allocation
	TWD 834.00	Ssqfp	Ycqpcswv

Advantech’s Road to Platformization Is Long; FVE Upped to TWD 357 on Better Midcycle Forecasts

Phelix Lee

Mar 3, 2022

We raise our fair value estimate to TWD 357 per share after slightly nudging down operating expenses and a slightly more upbeat long-term industrial Internet of Things, or IIoT, outlook as Advantech redoubles non-hardware IoT efforts. The fair value estimate corresponds to 28 times 2022 P/E, close to the company’s five-year average. Advantech is fairly valued in our view, as reopening prospects are priced in and the benefits of integrating several IIoT platforms may take longer to surface. Near-term upside catalyst of the stock mainly comes from unexpectedly fast customer acquisition in the IIoT segment.

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