Our target price of NT$765 is based on 15x 2025E earnings. 15x is at the higher end of historical trading range since 2014, which we think is justified as the company has recovered from its earnings trough in 2Q17 and has started to bear fruit from BU reorganization with improving product offerings. We choose a P/E-based valuation methodology as the market is likely to focus on the company's earnings outlook while the industry consolidates.

Downside risks to our target price being achieved include: 1) weaker-than-expected end demand for PCs and servers/AI servers; 2) margin contraction and pricing deterioration for PCs and motherboard as well as graphic card businesses; and 3) intensified peer competition.