- We cut our target price (TP) for DGW by 14% but maintain our BUY rating.

- Our lower TP is due to cutting our aggregate 2023-25F NPAT-MI by 31% (-45%/-31%/-20% in 2023/24/25F, respectively), which is mainly the result of (1) lowering our forecast for DGW’s ICT (mobile phones & laptops) aggregate 2023-25F revenue by 26% and (2) trimming DGW’s GPM by 50 bps to 6.6% 2023F, respectively, due to significantly weaker-than-expected results in Q1 2023, coupled with our previous expectation for weak consumption throughout 2023. This is partly offset by (1) increasing our aggregate 2023-25F consumer goods revenue by 40% and (2) rolling our TP horizon forward to mid-2024.

- We believe DGW looks attractive at a 2024F PER of 9.4x vs its 3Y average TTM PER of 13.8x and 3Y average of our selected peer median TTM PER of 11.3x.

- Upside catalysts: Further partnership or value-accretive M&A that expands DGW’s product portfolio — especially in home appliances and/or consumer goods.

- Downside risks to our view: Loss of contracts with major brands; weaker-than-expected consumer spending on ICT goods.

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