Uni-President Enterprises' Profit to Rebound in 2022 but Grow at Modest Pace, Reducing FVE to TWD 63

We transfer coverage of Uni-President Enterprise with the no-moat rating maintained but our fair value estimate revised down to TWD 63 per share from TWD 72 per share. We think the stock is slightly overvalued, with short-term downside risks from volatility in President Chain Store's profitability. We think revenue and margin pressure in 2021 has been mostly priced in, but more muted bottom-line growth over the medium term would drag stock price down the road. Our fair value estimate implies 2022 forward P/E of 18 times, which lands roughly at the lower midpoint of its historical multiples range (15 to 22 times), and EV/EBITDA of 6 times. These multiples are reflective of the company's lukewarm growth outlook in topline and earnings. Our fair value estimate also implies a 4% dividend yield, which is reasonable in our view based on historical valuations.