AirTAC’s 1H Results Below Expectation; Management Lowers 2022 Guidance; Shares Fairly Valued

Narrow-moat AirTAC’s first-half 2022 net profit of TWD 3.28 billion, up 1% year on year, is below our expectation and we think the firm’s share price may face pressure in the near term. We lower our fair value estimate to TWD 860 from TWD 910 after taking into account lower guidance from the management. We think the firm is currently fairly valued and near-term sentiment will largely hinge on the pace of demand recovery. Our valuation for AirTAC implies a 2022 P/E ratio of about 26 times, roughly in the middle of its five-year historical trading range of around 14 times to 40 times. Our Uncertainty Rating is increased to High from Medium to reflect the murkier demand outlook.