- We cut our target price (TP) for DGW by 5% but maintain our BUY rating. The company’s share price has dropped 10% since December 1, 2022.

- We believe DGW looks attractive at a 2023F PER of 9.6x PER , which is a 16% discount vs the three-year average of our selected peer median TTM PER of 11.4x. In addition, we forecast DGW’s 2022-2027F earnings CAGR at 12%.

- Our lower TP is mainly driven by 1%/6%/7% lower 2025/26/27F NPAT-MI as we are more conservative on the medium-term sales growth of Xiaomi mobile phones and laptops. This negative impact is partially offset by our 10%/7% higher forecast earnings in 2023/24F that are primarily due to our increased sales growth assumptions for the office equipment (OE) and consumer good segments.

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