Asustek Computer Inc. "Q126 results: Better results from PC/Server but..."

Research evidence excerpt

Asustek Computer Inc. "Q126 results: Better results from PC/Server but..."

Forecast returns

Forecast price appreciation 4.0%

Forecast dividend yield 6.2%

Forecast stock return 10.3%

Market return assumption 6.2%

Forecast excess return 4.0%

Company Description

Asustek is the world's leading motherboard supplier and one of Taiwan's two major PC brand

companies. On 1 January 2008, Asustek spun off its manufacturing business into Pegatron

and has since focused on brand management. Its major product focus includes

motherboards, notebooks, tablets, graphic cards and Internet of Things (IoT). As of 2021, its

product mix was 64% PCs and 36% components and other.

UBS EPS and Consensus EPS

The UBS EPS is an adjusted diluted EPS metric. It is calculated using the UBS analyst's

interpretation of earnings suitable for valuation purposes divided by the diluted number of

shares. This may differ to the way the consensus EPS metric has been calculated.

Valuation Method and Risk Statement

We use a PE-based valuation methodology for Asustek.

Visibility on PC product demand is limited and we believe risks to our forecasts for Asustek

include deviations from our expectations for market demand and competition. Asustek

operates in a highly competitive environment, in which its peers have abundant resources.

The company's margins could be affected by unforeseeable factors, such as intense price

competition, inventory write-downs, an unfavourable product mix, and rising input costs.

Downside risks include worse-than-expected PC and gaming demand, smartphone or new

businesses momentum short of expectations, and weaker margins from unfavourable

product mix, worsening efficiencies and capability to pass on increased costs to customers, as

well as slower-than-expected AI server ramp.