Our target price of NT$360 is based on 30x forward EPS, at the higher end of the stock's trading range between 20-35x since 2020, reflecting improving margin profile and ROE.

Key upside risks that could cause Advantech’s shares to trade above our target price include: 1) better-than-expected marcoeconomic outlook; and 2) better-than-expected demand and margin profile. Key downside risks would include: 1) slower-than-expected demand recovery, especially the China market; and 2) further deterioration of demand in US and EU markets.