AirTAC Earnings: Recovery on Track; Shares Overvalued

Narrow-moat AirTAC’s first-quarter net profit of TWD 1.6 billion, down 3% year on year, was mainly due to lower foreign exchange gain and a disposal loss. Meanwhile, operating profit rose 13% year on year and was in line with our expectation. We keep our fair value estimate at TWD 870, and we think the shares are expensive currently, with positive demand outlook largely priced in. Our valuation for AirTAC implies a 2023 P/E ratio of about 24 times, versus its five-year historical trading range of around 14 times to 40 times.