We value Accton based on PE multiple as we believe the company’s earnings performance and industry dynamics will be the key focus of the market. Our TP of NT$1,100 is based on 33x 2Q25E-1Q26E EPS, which is at upper end of historical trading range since 2020. We believe our target multiple is justified by the company’s robust earnings growth, customer diversifications, share gain opportunities and rising ROE.

Key downside risks that could cause Accton’s shares to trade below our target price include: 1) potential volatility in capex deployment from key customer; 2) peer competition; and 3) FX volatility and component price hikes.