Shares Still Rich After Raising FVE to TWD 327 on Rosier Automation and Infrastructure Prospects.

After factoring in a strong second-half outlook powered by a more certain post-pandemic recovery and more positive industrial automation assumptions, we increase our fair value estimate to TWD 327 per share from TWD 304 per share previously. Advantech’s long-term drivers center around industrial automation in China, and sales of specialized modules for retail, logistics, smart city, and healthcare globally. Although we are confident in Advantech’s long-term thesis, we view the stock to be overvalued as the market appears to be too optimistic on Advantech’s gains from the Biden infrastructure bill and has underestimated the risks in promoting its WISE-PaaS platform in our view.