UMC Earnings: Resilient Pricing Helps To Weather the Yearlong Storm

We trim our fair value estimate on no-moat United Microelectronics to TWD 62 per share, as we lower our forecasts to account for softer-than-expected inventory digestion and unchanged capital spending that will weigh more on depreciation expenses. Our fair value estimate corresponds to almost 2.2 times price/book. While the March quarter is not as impressive as previous quarters, we are still upbeat on UMC’s opportunities in Internet of Things, image sensors and automotives. Shares are undervalued, in our view, pressured by short-term concerns as to demand and reignited geopolitical concerns between China and the U.S.