UPEC Earnings: Upstream Business Dragged Operating Profit; Retain Fair Value Estimate

No-moat Uni-President Enterprises, or UPEC, reported 2023 results that moderately trailed our revenue and margin estimates. Revenue and margin declines in the upstream packaging business were the major causes for the miss, while other major operating segments mostly met our expectations. Our long-term forecasts are largely unchanged, and we retain our fair value estimate of TWD 68 per share, which implies 17 times 2024 price/earnings, 5 times EV/EBITDA, and a 4.3% dividend yield. We think UPEC’s shares look overvalued at the current price, and we prefer shares of its subsidiary Uni-President China, which are undervalued and trade at a 14% discount to our fair value estimate.