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87KB | 真資料圖 | Exhibit 6：研華 B/B ratio 趨勢圖，1Q20-2Q26，Booking／Shipment 雙柱狀（US$mn，右軸）+ B/B ratio 折線與均值 1.1x 橫線（左軸）；2Q26 標示 1.44、1Q26 標示 1.77（歷史高點） |
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原始內容
Advantech
Upgrade to Buy: industrial AI applications & capex upcycle drive earnings & valuation
Rating Change: BUY | PO: 800.00 TWD | Price: 622.00 TWD
Upgrade to Buy and raise PO to NT$800
We upgrade Advantech to Buy from Neutral in view of solid order backlog into 2027-28 due to industrial AI applications, strong semi capex, and rising edge AI applications in end markets. We lift 2026-28E EPS by 14-29% to reflect the 2Q26 beat and higher sales/OPM under strong order/sales momentum. We raise our PO to NT$800 (35x 2027E EPS) from NT$515 (28x); our higher multiple reflects better sales/OPM amid multi-year AI/semi upcycle. 35x marks the historical P/E peak with high sales growth/margins in 2022-23 (see Exhibit 12).
2Q beat: GM miss on high component costs, but better OPM
2Q26 GM of 37.7% missed guidance of 38.0-40.0% and BofAe/consensus of 39.4%/ 39.4%, mainly due to high memory costs, which could be partially passed through given significant price hikes. OPM of 19.6% came in above guidance of 16.0-18.0% and BofAe/consensus of 18.0%/18.4%, with larger sales scale (+28% QoQ, +46% YoY).
Sales upside from AI/semi upcycle and solid design-wins
We see sales upside from high B/B ratios (1.44x/1.64x in 2Q/July), higher UTR (105-110% in 3Q vs. 90-100% in 2Q in Kunshan/TW), solid design-win in 1H. Mgmt. cited 123 designwin cases in 1H, which implies US$444mn estimated annual sales (9-10% of our new 2027-28E sales). Advantech should benefit from strong industrial AI demand (with long product cycle) from AIDC, semi equipment, medical, and automation across regions. This echoes semi supply chain ' s high capex plan (Exhibit 7). With agentic AI installed in more devices, mgmt. expects rising edge AI sales to 30% by 2026-end, vs. 22.5% in 1H26.
Component risk offset by demand & high customization
Mgmt. sees key component supply (e.g. PCB, SSD/DDR4, CPU, PMIC) as key challenge in fulfilling orders in hand. Yet, we believe strong market demand and better pricing power (customized products for fragmented but strong client portfolio) could offset the issue.
| Estimates (Dec) (NT$) | 2024A | 2025A | 2026E | 2027E | 2028E |
|---|---|---|---|---|---|
| Net Income (Adjusted - mn) | 9,005 | 10,593 | 17,874 | 21,736 | 24,797 |
| EPS | 9.50 | 11.14 | 18.79 | 22.85 | 26.07 |
| EPS Change (YoY) | -17.4% | 17.2% | 68.7% | 21.6% | 14.1% |
| Consensus EPS (Visible Alpha) | 19.90 | 23.65 | 27.59 | ||
| Dividend / Share | 8.40 | 11.20 | 15.97 | 18.28 | 20.86 |
| Free Cash Flow / Share | 9.50 | 7.43 | 10.44 | 16.04 | 21.67 |
| Valuation (Dec) | |||||
| P/E | 65.4x | 55.8x | 33.1x | 27.2x | 23.9x |
| Dividend Yield | 1.4% | 1.8% | 2.6% | 2.9% | 3.4% |
| EV / EBITDA* | 52.6x | 41.7x | 24.8x | 19.9x | 17.3x |
| Free Cash Flow Yield* | 1.7% | 1.3% | 1.8% | 2.8% | 3.8% |
| * For full definitions of iQ method SM measures, see page 10. |
This research report provides general information only. No part of this report may be used or reproduced or quoted in any manner whatsoever in Taiwan by the press or other persons without the express written consent of BofA Securities.
>> Employed by a non-US affiliate of BofAS and is not registered/qualified as a research analyst under the FINRA rules.
Refer to "Other Important Disclosures" for information on certain BofA Securities entities that take responsibility for the information herein in particular jurisdictions.
BofA Securities does and seeks to do business with issuers covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.
Refer to important disclosures on page 11 to 13. Analyst Certification on page 8. Price
07 August 2026
Equity
| Key Changes (NT$) | Previous | Current |
|---|---|---|
| Inv. Opinion | B-2-7 | B-1-7 |
| Inv. Rating | NEUTRAL | BUY |
| Price Obj. | 515.00 | 800.00 |
| 2026E EPS | 16.46 | 18.79 |
| 2027E EPS | 18.39 | 22.85 |
| 2028E EPS | 20.22 | 26.07 |
| 2026E EBITDA (m) | 18,885 | 21,535 |
| 2027E EBITDA (m) | 21,483 | 26,769 |
| 2028E EBITDA (m) | 23,881 | 30,897 |
Robert Cheng >> Research Analyst Merrill Lynch (Taiwan) +886 2 2376 3731 robert.cheng@bofa.com
Doris Kao >> Research Analyst Merrill Lynch (Taiwan) +886 2 2376 3722
doris.kao@bofa.com
Katherine Zhu >>
Research Analyst Merrill Lynch (Hong Kong) +852 3508 3374
kexin.zhu@bofa.com
| Stock Data | |
|---|---|
| Price | 622.00 TWD |
| Price Objective | 800.00 TWD |
| Date Established | 7-Aug-2026 |
| Investment Opinion | B-1-7 |
| 52-Week Range | 269.96 TWD-672.00 |
| TWD | |
| Mrkt Val / Shares Out (mn) | 16,754 USD / 868.3 |
| Market Value (mn) | 540,054 TWD |
| Average Daily Value (mn) | 74.35 USD |
| Free Float | 61.6% |
| BofA Ticker / Exchange | ADTEF / TAI |
| Bloomberg / Reuters | 2395 TT / 2395.TW |
| ROE (2026E) | 30.3% |
| Net Dbt to Eqty (Dec-2025A) | -20.1% |
Acronyms, see Exhibit 15
iQ profile SM Advantech
| Key Income Statement Data (Dec) | 2024A | 2025A | 2026E | 2027E | 2028E |
|---|---|---|---|---|---|
| (NT$ Millions) | |||||
| Sales | 59,786 | 70,882 | 106,120 | 132,338 | 148,734 |
| Gross Profit | 24,376 | 28,198 | 40,827 | 51,985 | 59,100 |
| Sell General &Admin Expense | (9,910) | (10,815) | (13,469) | (17,832) | (20,035) |
| Operating Profit | 9,050 | 11,567 | 20,493 | 25,514 | 29,287 |
| Net Interest &Other Income | 1,925 | 1,123 | 1,425 | 1,245 | 1,246 |
| Associates | NA | NA | NA | NA | NA |
| Pretax Income | 10,975 | 12,690 | 21,918 | 26,759 | 30,533 |
| Tax (expense) / Benefit | (2,086) | (2,189) | (4,105) | (5,084) | (5,797) |
| Net Income (Adjusted) | 9,005 | 10,593 | 17,874 | 21,736 | 24,797 |
| Average Fully Diluted Shares Outstanding | 948 | 951 | 951 | 951 | 951 |
| Key Cash Flow Statement Data | |||||
| Net Income | 8,771 | 10,409 | 17,752 | 21,615 | 24,675 |
| Depreciation &Amortization | 1,094 | 1,210 | 1,042 | 1,255 | 1,610 |
| Change in Working Capital | 3,292 | (1,432) | (6,458) | (5,136) | (3,201) |
| Deferred Taxation Charge | NA | NA | NA | NA | NA |
| Other Adjustments, Net | (2,647) | (284) | 588 | 521 | 521 |
| Cash Flow from Operations | 10,511 | 9,903 | 12,925 | 18,254 | 23,606 |
| Capital Expenditure | (1,505) | (2,837) | (3,000) | (3,000) | (3,000) |
| (Acquisition) / Disposal of Investments | 122 | 362 | 0 | 0 | 0 |
| Other Cash Inflow / (Outflow) | 914 | (1,746) | 0 | 0 | 0 |
| Cash Flow from Investing | (470) | (4,221) | (3,000) | (3,000) | (3,000) |
| Shares Issue / (Repurchase) | 0 | 0 | 0 | 0 | 0 |
| Cost of Dividends Paid | (8,155) | (7,254) | (10,033) | (11,483) | (13,100) |
| Cash Flow from Financing | (7,792) | (7,846) | (10,033) | (11,483) | (13,100) |
| Free Cash Flow | 9,005 | 7,066 | 9,925 | 15,254 | 20,606 |
| Net Debt | (13,345) | (11,090) | (10,982) | (14,753) | (22,260) |
| Change in Net Debt | (2,689) | 2,255 | 108 | (3,771) | (7,506) |
| Key Balance Sheet Data | |||||
| Property, Plant &Equipment | 12,244 | 14,452 | 16,460 | 18,205 | 19,596 |
| Other Non-Current Assets | 17,298 | 18,770 | 18,253 | 17,853 | 17,453 |
| Trade Receivables | 10,124 | 10,535 | 15,773 | 19,670 | 22,107 |
| Cash &Equivalents | 13,617 | 11,317 | 11,209 | 14,981 | 22,487 |
| Other Current Assets | 18,459 | 20,643 | 25,932 | 29,881 | 32,315 |
| Total Assets | 71,742 | 75,718 | 87,627 | 100,590 | 113,957 |
| Long-Term Debt | 156 | 150 | 150 | 150 | 150 |
| Other Non-Current Liabilities | 4,219 | 4,001 | 4,001 | 4,001 | 4,001 |
| Short-Term Debt | 116 | 77 | 77 | 77 | 77 |
| Other Current Liabilities | 15,453 | 16,440 | 20,509 | 23,219 | 24,888 |
| Total Liabilities | 19,945 | 20,668 | 24,737 | 27,446 | 29,116 |
| Total Equity | 51,797 | 55,049 | 62,891 | 73,144 | 84,841 |
| Total Equity &Liabilities | 71,742 | 75,718 | 87,627 | 100,590 | 113,957 |
| iQ method SM - Bus Performance* | |||||
| Return On Capital Employed | 13.9% | 17.1% | 26.8% | 29.0% | 28.8% |
| Return On Equity | 17.9% | 19.8% | 30.3% | 32.0% | 31.4% |
| Operating Margin | 15.1% | 16.3% | 19.3% | 19.3% | 19.7% |
| EBITDA Margin | 17.0% | 18.0% | 20.3% | 20.2% | 20.8% |
| iQ method SM - Quality of Earnings* | |||||
| Cash Realization Ratio | 1.2x | 0.9x | 0.7x | 0.8x | 1.0x |
| Asset Replacement Ratio | 1.6x | 2.9x | 3.0x | 2.4x | 1.9x |
| Tax Rate (Reported) | 19.0% | 17.3% | 18.7% | 19.0% | 19.0% |
| Net Debt-to-Equity Ratio | -25.8% | -20.1% | -17.5% | -20.2% | -26.2% |
| Interest Cover | NM | NM | NM | NM | NM |
Key Metrics
- For full definitions of iQ method SM measures, see page 10.
Company Sector
Electronics
Company Description
Established in 1983 and listed in 1999, Advantech is major global Industrial PC vendor providing embedded boards/personal computers, network computing boards, industrial automation products and panel PCs to over 25 vertical channels in the global market. Advantech is a pioneer in promoting smart city and smart manufacturing globally. North America, China, and Europe are Advantech's top 3 markets.
Investment Rationale
We assign a Buy rating to Advantech as we believe the company will benefit from the global AI /semi capex upcycle, leading to strong industrial AI applications, high edge AI growth, and multi-year demand from various vertical/channel markets across key regions (US, China, Europe, Taiwan, Japan, Korea, etc.). Advantech's efforts in hardware + software solutions should also help provide a better competitive advantage vs. Asian peers.
Upgrade to Buy; lift PO to NT$800
Advantech is globally the largest IPC firm for various vertical channels/markets. We upgrade to Buy from Neutral in view of solid order backlog into 2027-28 thanks to industrial AI applications, strong semi capex, and rising edge AI applications in various end markets.
We lift 2026-28E EPS by 14-29% (Exhibit 1) to reflect 2Q26 beat and higher sales/OPM under strong order/sales momentum. We raise our PO to NT$800 (based on 35x 2027E EPS) from NT$515 (28x) with a higher multiple driven by better sales/OPM amid multiyear AI/semi upcycle. 35x marks its historical P/E peak (Exhibit 12), with high sales growth/margins in 2022-23 (Exhibit 9 and Exhibit 10).
Exhibit 1: We lift our 2026-28E EPS by 14-29%
Advantech: our estimate revisions summary, 2026-28E
| 2026E | 2026E | 2026E | 2027E | 2027E | 2027E | 2028E | 2028E | 2028E | |
|---|---|---|---|---|---|---|---|---|---|
| NT$mn | New | Old | Diff. | New | Old | Diff. | New | Old | Diff. |
| Sales | 106,120 | 99,696 | 6% | 132,338 | 110,006 | 20% | 148,734 | 120,538 | 23% |
| Gross profit | 40,827 | 39,226 | 4% | 51,985 | 43,540 | 19% | 59,100 | 48,066 | 23% |
| Operating profit | 20,493 | 17,843 | 15% | 25,514 | 20,281 | 26% | 29,287 | 22,428 | 31% |
| Pretax profit | 21,918 | 19,112 | 15% | 26,759 | 21,515 | 24% | 30,533 | 23,663 | 29% |
| Net income | 17,874 | 15,654 | 14% | 21,736 | 17,491 | 24% | 24,797 | 19,234 | 29% |
| EPS (NT$) | 18.79 | 16.46 | 14% | 22.85 | 18.39 | 24% | 26.07 | 20.22 | 29% |
| Margin | |||||||||
| Gross margin | 38.5% | 39.3% | 39.3% | 39.6% | 39.7% | 39.9% | |||
| Operating margin | 19.3% | 17.9% | 19.3% | 18.4% | 19.7% | 18.6% | |||
| Pretax margin | 20.7% | 19.2% | 20.2% | 19.6% | 20.5% | 19.6% | |||
| Net margin | 16.8% | 15.7% | 16.4% | 15.9% | 16.7% | 16.0% |
Source: BofA Global Research estimates
Exhibit 2: Our 2026-28E earnings is 28-33% above consensus
Advantech: BofAe vs consensus, 2026-28E
| 2026E | 2026E | 2026E | 2027E | 2027E | 2027E | 2028E | 2028E | 2028E | |
|---|---|---|---|---|---|---|---|---|---|
| NT$mn | BofAe | Consensus | Diff. | BofAe | Consensus | Diff. | BofAe | Consensus | Diff. |
| Sales | 106,120 | 87,973 | 21% | 132,338 | 98,903 | 34% | 148,734 | 112,774 | 32% |
| Gross profit | 40,827 | 34,729 | 18% | 51,985 | 39,285 | 32% | 59,100 | 44,910 | 32% |
| Operating profit | 20,493 | 15,963 | 28% | 25,514 | 18,931 | 35% | 29,287 | 22,218 | 32% |
| Pretax profit | 21,918 | 17,093 | 28% | 26,759 | 19,981 | 34% | 30,533 | 23,166 | 32% |
| Net income | 17,874 | 13,958 | 28% | 21,736 | 16,284 | 33% | 24,797 | 18,818 | 32% |
| EPS (NT$) | 18.79 | 14.68 | 28% | 22.85 | 17.12 | 33% | 26.07 | 19.79 | 32% |
| Margin | |||||||||
| Gross margin | 38.5% | 39.5% | 39.3% | 39.7% | 39.7% | 39.8% | |||
| Operating margin | 19.3% | 18.1% | 19.3% | 19.1% | 19.7% | 19.7% | |||
| Pretax margin | 20.7% | 19.4% | 20.2% | 20.2% | 20.5% | 20.5% | |||
| Net margin | 16.8% | 15.9% | 16.4% | 16.5% | 16.7% | 16.7% |
Source: BofA Global Research estimates, Bloomberg consensus. Consensus based on data before 2Q26 results announcement. Diff: difference
2Q26 results beat: GM miss on high component costs, but better OPM
2Q26 GM of 37.7% missed guidance of 38.0-40.0% and BofAe/consensus of 39.4%/ 39.4%, mainly due to high memory costs, which could be partially passed through given significant price hikes. OPM of 19.6% came in above guidance of 16.0-18.0% and BofAe/consensus of 18.0%/18.4%, with larger sales scale (+28% QoQ, +46% YoY). Operating profit thus was 9%/28% above BofAe/consensus. With non-operating gain of NT$463mn (including net interest income of NT$68mn, investment income of
BofA GLOBAL RESEARCH
BofA GLOBAL RESEARCH
NT$146mn, and FX gain of NT$35mn), Net profit was 11%/32% above BofAe/consensus.
Exhibit 3: Advantech's 2Q26 operating profit was 9%/28% above BofAe/consensus and net profit was 11%/32% above BofAe/consensus Advantech's 2Q26 results summary
| NT$mn | 2Q26 | QoQ% | YoY% | BofAe | Diff. (%) | Consensus | Diff. (%) | 1Q26 | 2Q25 |
|---|---|---|---|---|---|---|---|---|---|
| Sales | 26,126 | 28% | 46% | 26,126 | 0% | 21,849 | 20% | 20,385 | 17,836 |
| Gross profit | 9,845 | 23% | 38% | 10,296 | -4% | 8,617 | 14% | 7,980 | 7,133 |
| Operating profit | 5,127 | 38% | 64% | 4,705 | 9% | 4,019 | 28% | 3,728 | 3,123 |
| Pre-tax profit | 5,590 | 37% | 124% | 5,016 | 11% | 4,204 | 33% | 4,068 | 2,493 |
| Net profit | 4,518 | 36% | 127% | 4,082 | 11% | 3,430 | 32% | 3,334 | 1,989 |
| EPS (NT$) | 4.75 | 36% | 127% | 4.29 | 11% | 3.61 | 32% | 3.51 | 2.09 |
| Margin | |||||||||
| Gross margin | 37.7% | -1.5 ppt | -2.3 ppt | 39.4% | -1.7 ppt | 39.4% | -1.8 ppt | 39.1% | 40.0% |
| Operating margin | 19.6% | 1.3 ppt | 2.1 ppt | 18.0% | 1.6 ppt | 18.4% | 1.2 ppt | 18.3% | 17.5% |
| Pre-tax margin | 21.4% | 1.4 ppt | 7.4 ppt | 19.2% | 2.2 ppt | 19.2% | 2.2 ppt | 20.0% | 14.0% |
| Net margin | 17.3% | 0.9 ppt | 6.1 ppt | 15.6% | 1.7 ppt | 15.7% | 1.6 ppt | 16.4% | 11.2% |
Source: BofA Global Research estimates, company data, Bloomberg consensus. Consensus based on data before 2Q26 results announcement. Diff: difference. ppt: percentage point
Exhibit 4: Top-2 segments iSystems/Embedded sales grew 40%/28% YoY in 1H26, vs. overall sales +33% YoY
Advantech's sales by segment, 1H26
| 1H26 sales (US$mn) | YoY% | Sales% | |
|---|---|---|---|
| IoT Automation (iAutomation) | 100 | 19% | 7% |
| Intelligent System (iSystems) | 546 | 40% | 37% |
| Embedded | 510 | 28% | 35% |
| Intelligent Service (iService) | 86 | 2% | 6% |
| Advantech Service+ / Others (AS+) | 228 | 75% | 16% |
| Total | 1,470 | 33% | 100% |
Source: BofA Global Research, company data. Mn: Million. US$: US Dollar
BofA GLOBAL RESEARCH
BofA GLOBAL RESEARCH
Exhibit 5: Top 3 regions showed double-digit YoY sales growth in 1H26 Advantech's sales by region, 1H26
| 1H26 sales (US$mn) | YoY | Sales% | |
|---|---|---|---|
| North America | 432 | 30% | 29% |
| Europe | 233 | 29% | 16% |
| China | 353 | 51% | 24% |
| North Asia | 127 | 24% | 9% |
| Taiwan | 124 | 67% | 8% |
| Asia &InterCon | 141 | 32% | 10% |
| Others | 60 | -19% | 4% |
| Total | 1,470 | 33% | 100% |
Source: BofA Global Research, company data. Mn: Million. US$: US Dollar
Exhibit 6: Advantech's B/B ratio was 1.44x in 2Q26, vs. 1.77x (historical high) in 1Q26 and average of 1.10x Advantech's book/bill (B/B) ratio trend, 1Q20-2Q26
Source: BofA Global Research, company data. B/B: Book-to-bill (Booking-to-shipment)
BofA GLOBAL RESEARCH
BofA GLOBAL RESEARCH
Sales upside from AI/semi upcycle and solid design-wins
We see sales upside from high B/B ratios (1.44x/1.64x in 2Q26/July), higher UTR (105110% in 3Q26 vs. 90-100% in 2Q26 in Kunshan/Taiwan sites), solid design-win in 1H26. Mgmt. cited 123 design-win cases in 1H, which implies US$444mn estimated annual sales (around 9-10% of our new 2027-28E sales). Advantech will benefit from strong industrial AI demand (with long product cycle) from AIDC, semi equipment, medical, and automation across regions. This echoes semi supply chain ' s high capex plan (Exhibit 7 and Exhibit 8). With agentic AI installed in more devices, mgmt. expects rising edge AI sales to 30% by 2026-end, vs. 22.5%/15% in 1H26/2025.
Exhibit 7: Our global team expects key semi foundry names' rising
capex to US$28-89bn in 2028, vs. US$17-66bn in 2026 Global key semi foundry names' annual capex (US$bn) trend, 2018-28E
Source: BofA Global Research estimates, company data. NTD/USD at 30 and KRW/USD at 1,430 for all years (2018-28E)
BofA GLOBAL RESEARCH
Component risk offset by demand & high customization
Mgmt. sees key component supply (e.g. PCB, SSD/DDR4, CPU, PMIC) as key challenge in fulfilling orders in hand. Yet, we believe strong market demand and better pricing power (customized products for fragmented but strong client portfolio) could offset the issue.
Exhibit 9: We model 2026-28E sales CAGR at 18%
Advantech's sales and sales YoY trend, 2017-28E
Source: BofA Global Research estimates, company data. RHS: right hand side
BofA GLOBAL RESEARCH
Exhibit 10: We expect quarterly OPM at 19.1-19.6% in 3Q26-4Q27E Advantech's quarterly OPM trend, 1Q16-4Q28E
Source: BofA Global Research estimates, company data
Exhibit 8: Our global team expects semi equipment makers' high capex
of US$647mn-2.9bn in 2028, vs. US$376mn-2.6bn in 2026 Global key semi equipment makers' annual capex (US$mn) trend, 2018-28E
Source: BofA Global Research estimates, company data
BofA GLOBAL RESEARCH
BofA GLOBAL RESEARCH
Exhibit 11: Advantech trades at higher valuation of 28x 2027E P/E, with above-average ROE and EV/EBITDA
Valuation comparison: Advantech vs. global IPC/automation peers
| Share price | Market cap | P/E (x) | P/E (x) | P/B (x) | P/B (x) | Dividend yield (%) | Dividend yield (%) | ROE (%) | ROE (%) | EV/EBITDA (x) | EV/EBITDA (x) | Net cash (debt) to market cap | Net cash (debt) to market cap | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Ticker | Company | (LC) | (US$mn) | 26E | 27E | 26E | 27E | 26E | 27E | 26E | 27E | 26E | 27E | 26E | 27E |
| 2395 TT | Advantech | 622.00 | 16,747 | 33.1 | 27.2 | 9.4 | 8.1 | 2.5 | 2.9 | 30.3 | 32.0 | 25.2 | 20.3 | 2% | 3% |
| Greater China IPC/automation peers | Greater China IPC/automation peers | Greater China IPC/automation peers | Greater China IPC/automation peers | Greater China IPC/automation peers | Greater China IPC/automation peers | Greater China IPC/automation peers | Greater China IPC/automation peers | Greater China IPC/automation peers | Greater China IPC/automation peers | Greater China IPC/automation peers | Greater China IPC/automation peers | Greater China IPC/automation peers | Greater China IPC/automation peers | Greater China IPC/automation peers | Greater China IPC/automation peers |
| 6414 TT | Ennoconn | 468.00 | 2,117 | 18.2 | 16.3 | 2.2 | 2.0 | 3.4 | 3.8 | 13.4 | 12.0 | 7.6 | 7.4 | -19% | -18% |
| 3022 TT | IEI Integration | 100.50 | 550 | 17.7 | 14.8 | n.a | n.a | n.a | n.a | 8.5 | 9.7 | n.a | n.a | n.a. | n.a. |
| 6206 TT | Flytech | 144.50 | 641 | 16.6 | 12.6 | 3.4 | 3.1 | 4.8 | 6.3 | 26.8 | 25.9 | 9.2 | 7.9 | 13% | 16% |
| 8114 TT | Posiflex | 225.50 | 535 | 13.4 | 10.5 | 2.1 | 1.9 | 5.8 | 6.7 | 23.1 | 22.3 | 3.6 | 3.1 | 34% | 35% |
| 3088 TT | Axiomtek | 134.00 | 451 | 17.4 | 17.8 | 2.5 | n.a | n.a | n.a | 14.3 | 13.9 | n.a | n.a | n.a. | n.a. |
| 2308 TT | Delta | 1,680.00 | 135,322 | 41.3 | 27.5 | 10.9 | 8.6 | 1.2 | 1.8 | 29.1 | 34.9 | 26.5 | 17.6 | 3% | 3% |
| 300124 CH | Inovance* | 63.39 | 25,432 | 28.6 | 23.5 | 4.3 | 3.7 | 0.9 | 1.1 | 15.3 | 16.6 | 22.7 | 18.3 | 3% | 6% |
| 002008 CH | Han's Laser* | 95.20 | 14,524 | 36.1 | 24.3 | 4.9 | 4.1 | 0.5 | 0.9 | 13.7 | 18.0 | 25.9 | 18.0 | -2% | 0% |
| Greater China peers average | Greater China peers average | 23.7 | 18.6 | 4.3 | 3.9 | 2.8 | 3.4 | 18.1 | 19.2 | 15.9 | 12.1 | 5% | 7% | ||
| Global IPC/automation peers | Global IPC/automation peers | Global IPC/automation peers | Global IPC/automation peers | Global IPC/automation peers | Global IPC/automation peers | Global IPC/automation peers | Global IPC/automation peers | Global IPC/automation peers | Global IPC/automation peers | Global IPC/automation peers | Global IPC/automation peers | Global IPC/automation peers | Global IPC/automation peers | Global IPC/automation peers | Global IPC/automation peers |
| KTN GY | Kontron | 20.76 | 1,611 | 12.9 | 10.7 | 1.6 | 1.5 | 2.8 | 3.6 | 10.9 | 13.3 | 7.0 | 5.9 | -6% | -4% |
| SU FP | Schneider | 300.40 | 199,794 | 31.6 | 24.9 | 6.4 | 5.6 | 1.5 | 1.6 | 23.5 | 26.2 | 20.3 | 17.3 | -6% | -5% |
| ABBNSW | ABB | 82.34 | 185,400 | 19.1 | 22.5 | 7.6 | 7.4 | 1.3 | 1.3 | 43.8 | 33.0 | 23.8 | 21.0 | 3% | 2% |
| GE US | General Electric | 381.22 | 395,540 | 47.7 | 41.0 | 21.4 | 21.3 | 0.5 | 0.6 | 45.1 | 52.2 | 39.9 | 35.6 | -11% | -11% |
| EMR US | Emerson | 162.47 | 90,626 | 24.8 | 22.2 | 4.4 | 4.2 | 1.4 | 1.4 | 17.9 | 19.3 | 21.1 | 19.3 | -10% | -9% |
| Global peers average | Global peers average | 27.2 | 24.3 | 8.3 | 8.0 | 1.5 | 1.7 | 28.2 | 28.8 | 22.4 | 19.8 | -6% | -5% | ||
| Overall average | Overall average | 25.0 | 20.6 | 6.0 | 5.8 | 2.2 | 2.6 | 21.8 | 22.6 | 18.9 | 15.6 | 0% | 1% | ||
| Overall median | Overall median | 21.7 | 21.3 | 4.3 | 4.1 | 1.4 | 1.6 | 18.5 | 19.6 | 21.1 | 17.6 | -2% | 0% |
Source: BofA Global Research estimates, Bloomberg. Note: share price and market cap as of 2026/08/06 (Asia) or 08/05 (rest). ROE refers to average ROE. *A-share and non-covered companies' forecasts based on Bloomberg consensus.
BofA GLOBAL RESEARCH
Exhibit 13: Advantech's historical P/B average since 2007 is 3.8x Advantech's P/B with -1/+1 standard deviation since 2007
Source: BofA Global Research, TEJ, Bloomberg
Exhibit 12: Advantech's historical P/E average since 2013 is 22x Advantech's P/E with -1/+1 standard deviation since 2013
Source: BofA Global Research, TEJ, Bloomberg
BofA GLOBAL RESEARCH
Exhibit 14: We model Advantech's 2026-28E sales/earnings CAGR of 18%/18% Advantech's quarterly earnings summary, 2025-28E
| NT$mn | 1Q26 | 2Q26 | 3Q26E | 4Q26E | 1Q27E | 2Q27E | 3Q27E | 4Q27E | 1Q28E | 2Q28E | 3Q28E | 4Q28E | 2025 | 2026E | 2027E | 2028E |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Sales | 20,385 | 26,126 | 28,553 | 31,055 | 31,687 | 32,713 | 33,770 | 34,168 | 34,830 | 36,540 | 38,353 | 39,011 | 70,882 | 106,120 | 132,338 | 148,734 |
| Gross profit | 7,980 | 9,845 | 10,923 | 12,078 | 12,352 | 12,814 | 13,279 | 13,539 | 13,747 | 14,498 | 15,263 | 15,592 | 28,198 | 40,827 | 51,985 | 59,100 |
| Operating profit | 3,728 | 5,127 | 5,584 | 6,054 | 6,047 | 6,272 | 6,525 | 6,671 | 6,712 | 7,117 | 7,669 | 7,789 | 11,567 | 20,493 | 25,514 | 29,287 |
| Pretax profit | 4,068 | 5,590 | 5,894 | 6,365 | 6,357 | 6,584 | 6,836 | 6,983 | 7,023 | 7,429 | 7,980 | 8,101 | 12,690 | 21,918 | 26,759 | 30,533 |
| Net income | 3,334 | 4,518 | 4,824 | 5,198 | 5,127 | 5,282 | 5,592 | 5,736 | 5,662 | 5,958 | 6,524 | 6,652 | 10,593 | 17,874 | 21,736 | 24,797 |
| EPS (NT$) | 3.51 | 4.75 | 5.07 | 5.47 | 5.39 | 5.55 | 5.88 | 6.03 | 5.95 | 6.26 | 6.86 | 6.99 | 11.14 | 18.79 | 22.85 | 26.07 |
| Margin% | ||||||||||||||||
| Gross margin | 39.1% | 37.7% | 38.3% | 38.9% | 39.0% | 39.2% | 39.3% | 39.6% | 39.5% | 39.7% | 39.8% | 40.0% | 39.8% | 38.5% | 39.3% | 39.7% |
| Operating margin | 18.3% | 19.6% | 19.6% | 19.5% | 19.1% | 19.2% | 19.3% | 19.5% | 19.3% | 19.5% | 20.0% | 20.0% | 16.3% | 19.3% | 19.3% | 19.7% |
BofA GLOBAL RESEARCH
Exhibit 14: We model Advantech's 2026-28E sales/earnings CAGR of 18%/18%
Advantech's quarterly earnings summary, 2025-28E
| NT$mn | 1Q26 | 2Q26 | 3Q26E | 4Q26E | 1Q27E | 2Q27E | 3Q27E | 4Q27E | 1Q28E | 2Q28E | 3Q28E | 4Q28E | 2025 | 2026E | 2027E | 2028E |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Pretax margin | 20.0% | 21.4% | 20.6% | 20.5% | 20.1% | 20.1% | 20.2% | 20.4% | 20.2% | 20.3% | 20.8% | 20.8% | 17.9% | 20.7% | 20.2% | 20.5% |
| Net margin | 16.4% | 17.3% | 16.9% | 16.7% | 16.2% | 16.1% | 16.6% | 16.8% | 16.3% | 16.3% | 17.0% | 17.1% | 14.9% | 16.8% | 16.4% | 16.7% |
| QoQ% | ||||||||||||||||
| Sales | 14% | 28% | 9% | 9% | 2% | 3% | 3% | 1% | 2% | 5% | 5% | 2% | ||||
| Gross profit | 12% | 23% | 11% | 11% | 2% | 4% | 4% | 2% | 2% | 5% | 5% | 2% | ||||
| Operating profit | 33% | 38% | 9% | 8% | 0% | 4% | 4% | 2% | 1% | 6% | 8% | 2% | ||||
| Pretax profit | 11% | 37% | 5% | 8% | 0% | 4% | 4% | 2% | 1% | 6% | 7% | 2% | ||||
| Net income | 7% | 36% | 7% | 8% | -1% | 3% | 6% | 3% | -1% | 5% | 10% | 2% | ||||
| YoY% | ||||||||||||||||
| Sales | 17% | 46% | 61% | 73% | 55% | 25% | 18% | 10% | 10% | 12% | 14% | 14% | 19% | 50% | 25% | 12% |
| Gross profit | 14% | 38% | 58% | 69% | 55% | 30% | 22% | 12% | 11% | 13% | 15% | 15% | 16% | 45% | 27% | 14% |
| Operating profit | 28% | 64% | 106% | 115% | 62% | 22% | 17% | 10% | 11% | 13% | 18% | 17% | 28% | 77% | 25% | 15% |
| Pretax profit | 26% | 124% | 80% | 73% | 56% | 18% | 16% | 10% | 10% | 13% | 17% | 16% | 16% | 73% | 22% | 14% |
| Net income | 22% | 127% | 74% | 67% | 54% | 17% | 16% | 10% | 10% | 13% | 17% | 16% | 18% | 69% | 22% | 14% |
Source: BofA Global Research estimates, company data
Exhibit 15: Acronyms
Acronyms used in the report
| Acronym | Acronym | Acronym | |||
|---|---|---|---|---|---|
| AI | Artificial Intelligence | IPC | Industrial Personal Computer | PO | Price Objective |
| AIDC | Artificial Intelligence Datacenter | KRW | Korean Won | ppt | Percentage Point |
| B/B ratio | Book-to-Bill ratio | LC | Local Currency | RHS | Right Hand Side |
| CAGR | Compound Annual Growth Rate | Mgmt. | Management | ROE | Return On Equity |
| Capex | Capital Expenditure | NTD/NT$ | New Taiwan Dollar | S.D. | Standard Deviation |
| CPU | Central Processing Unit | OPM | Operating Profit Margin | Semis | Semiconductors |
| DDR | Double Data Rate | P/B | Price to Book Value Ratio | SSD | Solid-State Drive |
| Diff | Difference | P/E | Price to Earnings Ratio | TW | Taiwan |
| EPS | Earnings Per Share | PC | Personal Computer | US | United States |
| FX | Foreign Exchange | PCB | Printed Circuit Board | USD/US$ | US Dollar |
| GM | Gross Margin | PMIC | Power Management Integrated Circuit | UTR | Utilization Rate |
Source:
BofA Global Research
BofA GLOBAL RESEARCH
BofA GLOBAL RESEARCH
Price objective basis & risk
Advantech (ADTEF)
Our PO of NT$800 is based on 35x 2027E EPS. Our 35x P/E multiple is roughly 2SD above the company's historical trading average since 2013 to capture Advantech's double-digit% YoY sales/earnings CAGR expected in 2026-28E, supported by the AI/semi capex upcycle (to drive strong demand from datacenter infrastructure and semi equipment) and rising edge AI contribution. 35x also marks the historical P/E level when Advantech showed significant quarterly OPM improvement in 1H23.
Upside risks to our PO are: (1) stronger demand recovery in the US and Europe, (2) faster- and higher-than-expected China recovery, and (3) stronger-than-expected edge AI sales growth.
Downside risks are: (1) slower-than-expected global market demand due to macro uncertainties, (2) slower-than-expected China recovery, (3) slower progress in service IoT and software business, and (4) weaker-than-expected edge AI sales growth.