Win Semi Outlook Dented by Smartphones; Shares Remain Undervalued Despite FVE Cut to TWD 340

We trim our fair value estimate for Win Semiconductors to TWD 340 following guidance that points to longer-than-expected smartphone weakness, which drives our 2022 and 2023 forecasts significantly lower. The fair value estimate corresponds to 34 times 2023 adjusted P/E before normalizing in 2024 to 23 times. Our projections for 2024-2026 are slightly moderated to better account for risks in slower ramp-up in the Kaohsiung cluster. We see the risk-reward of Win Semi as even better as we estimate the share price implies either zero growth beyond 2026, or revenue won’t rebound to 2021 levels before 2026. We think sentiment is at rock bottom and any sign of rebound in smartphone demand can lead to outsize improvement in operating margin and hence the stock.