Advantech Faces Slower Orders, but Improves Long-Term Runway With Subscriptions; FVE Slightly Up

We nudge our fair value estimate on Advantech up to TWD 362 per share, corresponding to 24 times 2023 P/E, after minor reductions in 2022 operating expenses. Advantech is fairly valued in our view, as China lockdown risk and slowing orders are short-term headwinds, and the integration of industrial Internet of Things, hardware and software, are yet to scale. We are marginally more positive after management shed more light on their plans. We believe a short-term catalyst will be a rebound in book/bill ratio, especially in the September figures to be released in early October.