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

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.