MediaTek Is Dirt Cheap Amid Fears in Smartphone Demand; Non-Consumer Growth Is Effectively 'Free'

Without material changes in our forecasts, we retain our fair value estimate on MediaTek at TWD 1,800 per share, corresponding to 21.4 times 2022 P/E. MediaTek is trading at 10 times 2022 P/E, which makes it a compelling buy. Using its five-year average P/E of 18 times, we estimate the market is pricing in two consecutive EPS plunges of over 20% in 2023 and 2024, respectively, due to price erosion in its mobile systems-on-chip, or SoCs, amid competition from Qualcomm. We reckon the market is assigning negligible value to its endeavors in enterprise, automotive and industrial applications. But we view MediaTek can at least win customers in auto infotainment, and customized datacenters where power management plays a pivotal role.