MediaTek Shares Still Attractive With 5G Momentum To Be Succeeded by Computing Applications

We increase our fair value estimate on MediaTek to TWD 1,800 per share, corresponding to 21.7 times 2022 P/E, after lifting 2022 to 2025 revenue forecasts by up to 6% and net profit projections by about 10% to account for a more bullish outlook in PC and enterprise computing markets. We think MediaTek shares are attractive at 12.7 times 2022 P/E, pressured by near-term fears of smartphone inventory correction and not fully pricing in long-term growth in PCs; Internet of Things; augmented or virtual reality, AR/VR; and enterprise application specific integrated circuits. Our uncertainty rating on MediaTek is lowered to high from very high as it appears worsening of the chip shortage is improbable and better chip performance should better protect the company from abrupt price wars.