20260226-招银国际-FIT_HON_TENG-06088.HK-Strong_2026_outlook_with_AI_interconnect_power_thermal_upgrades_as_key_growth_drivers_7页_826kb

FIT Hon Teng (6088 HK) Summary

Core Content and Outlook

FIT Hon Teng (6088 HK) is projected to have a strong 2026 outlook, driven by upgrades in AI-related interconnect, power, and thermal solutions. The company is expected to benefit significantly from the architecture upgrade in GB300 and VR200 servers, as well as its robust product pipeline in areas such as interconnect (MCIO, cable cartridge, midplane connector), power (busbar, power whip), liquid cooling (UQD, LC busbar), and CPOs (LGA-to-LGA socket, PLS I/O cage).

The AI-related revenue is forecasted to grow at a 95% CAGR from FY25 to FY27, and is expected to account for 18% of total revenue in FY27E (compared to 6% in FY25E). The 4Q25E revenue and net profit are estimated to grow by 6% and 21% YoY, respectively, with the cloud and datacenter segments expected to offset smartphone and consumer product weakness.

The stock is expected to benefit from upcoming events such as GTC 2026 and OFC 2026, which are anticipated to be key catalysts for the market. The target price has been raised to HK$7.33, reflecting new estimates and a higher 21x FY26E P/E compared to the previous 20x due to the rising AI revenue mix and sector re-rating. The current stock price is HK$6.01, trading at 17.5x FY26E P/E and 12.6x FY27E P/E, which are below the 8-year average P/E of 24x.

Key Financial Highlights

Revenue Breakdown by Segment

• Smartphones: Expected to decline in FY25E by 16% YoY (from $839,566mn in FY24 to $792,044mn in FY25E)
• Networking: Projected to grow by 35% YoY to $795,996mn in FY25E
• AI Server: Expected to grow significantly, reaching $324,985mn in FY25E
• Computing: Revenue is expected to increase to $858,083mn in FY25E
• Mobility: Revenue is forecasted to rise to $939,751mn in FY25E
• EV Business: Expected to grow to $128,612mn in FY25E
• Voltaira: Revenue is projected to reach $381,986mn in FY25E
• AK Group: Expected to grow to $429,153mn in FY25E
• Systems Products: Revenue is forecasted to increase to $1,330,024mn in FY25E

Profitability and Cost Structure

• Gross Margin (GPM): Expected to increase from 20% in FY25E to 22.2% in FY27E
• Operating Margin (OPM): Projected to rise from 5.6% in FY25E to 8.8% in FY27E
• Net Margin (NPM): Anticipated to increase from 3.5% in FY25E to 6.5% in FY27E
• SG&A expenses: Represent -8.7% of revenue in FY25E
• R&D expenses: Represent -7.5% of revenue in FY25E

Valuation and Re-rating

• P/E Ratio: Currently trading at 17.5x FY26E and 12.6x FY27E
• P/B Ratio: Currently at 2.1x FY25E and expected to decline to 1.6x FY27E
• Target Price (TP): Raised to HK$7.33 (up 22.0% from current price of HK$6.01)
• Valuation Band: The stock is expected to re-rate due to the increasing contribution of AI revenue, which is anticipated to boost its valuation metrics in FY26-27E

Shareholding and Stock Performance

• Market Cap: HK$43,674.7 million
• Average 3-month Turnover: HK$234.0 million
• 52-Week High/Low: HK$7.02 / HK$1.71
• Total Issued Shares: 7,267.0 million

Shareholding Structure:

• Foxconn Far East Ltd: 71.1%
• Lu Sung-Ching: 5.5%

12-Month Price Performance:

• Absolute: 25.7% (1-month)
• Relative: 20.4% (3-month)
• Absolute: 16.7% (6-month)
• Relative: 12.6% (6-month)

Analyst Ratings and Recommendations

• CMBIGM Rating: BUY
• Reason: Strong product pipeline, robust AI revenue growth, and sector re-rating
• Target Price: HK$7.33
• Previous TP: HK$6.77
• Up/Downside: 22.0%

Analyst Certification

The analyst responsible for the report certifies that:

1. All views accurately reflect their personal views on the securities.
2. Their compensation is not directly or indirectly related to the views expressed in the report.

The analyst also confirms:

1. No trading in the stock covered within 30 days prior to the report.
2. No trading planned within 3 business days after the report.
3. No conflict of interest affecting the objectivity of the report.

Disclaimer

This report is for informational purposes only and does not constitute investment advice. CMBIGM does not provide tailored investment advice. The information is based on publicly available data and is not guaranteed for accuracy or completeness. Investors should consult with a professional financial advisor before making any investment decisions. CMBIGM is not a registered broker-dealer in the United States and is not subject to U.S. rules regarding research reports.