20260316-招银国际-FIT_HON_TENG-06088.HK-FY25_earnings_dragged_by_higher_effective_tax_Raise_guidance_on_strong_AI_server_outlook_7页_858kb

FIT Hon Teng (6088 HK) Summary

Core Content

FIT Hon Teng reported its FY25 results, with revenue growing by 12.4% YoY to US$5.0 billion, largely in line with expectations. However, net profit only increased by 2% YoY to US$156.7 million, falling short of the consensus by 8% and 12%, primarily due to higher effective tax. The company's management remains optimistic about future growth, particularly in the cloud and datacenter segment, driven by AI server upgrades and new product launches.

Main Points

• Revenue Growth:

  • FY25 revenue reached US$5.0 billion, up 12.4% YoY.
  • FY26E and FY27E revenue guidance is US$5.754 billion and US$6.688 billion, respectively, with expected growth rates of 15.0% and 16.2% YoY.

• Segment Performance:

  • Cloud/Datacenter: Showed strong momentum with 38% YoY growth in FY25, driven by AI connectivity solutions and new AI server deliveries.
  • Auto: Grew by 94% YoY, attributed to the consolidation of the Auto-Kabel business.
  • Smartphone: Declined by 13% YoY, impacted by lower module replacement demand.
  • Consumer Interconnects: Grew by 7% YoY, but faced a decline due to memory supply shortages.
  • System Products: Grew by 3% YoY, offsetting slower accessory demand with US client's TWS.

• Profitability:

  • Operating profit margin (OPM) was 5.7% in FY25, up from 3.9% in FY24.
  • Net profit margin (NPM) was 3.1% in FY25, slightly lower than the previous year due to higher taxes.
  • Net profit for FY25 was US$156.7 million, while the consensus was US$178 million.

• Guidance for FY26-28E:

  • Cloud/datacenter revenue mix guidance was raised to mid-20% to high-20% to low-30%.
  • Management expects cloud/datacenter revenue to grow by 70% YoY in FY26E.
  • The company anticipates strong growth in the next three years, driven by AI server upgrades and new product launches.

Key Financial Highlights

• EPS:

  • Reported EPS for FY25 was 2.20 USD cents, while the consensus was 2.46 USD cents.
  • FY26E and FY27E EPS are estimated at 4.43 USD cents and 6.09 USD cents, respectively.

• Valuation Metrics:

  • P/E ratio for FY26E is 15.7x and for FY27E is 11.5x.
  • P/B ratio for FY26E is 1.6x and for FY27E is 1.4x.
  • The target price (TP) is HK$7.42, based on a 21x FY26E P/E, maintaining the previous forecast.

• Upcoming Catalysts:

  • GTC 2026 and OFC 2026 events.
  • Launch of new AI server products.
  • These are expected to drive further re-rating of the stock in 2026E.

Analyst Recommendation

• Reiterate BUY: The analyst maintains the BUY rating due to the attractive valuation and positive outlook on AI server growth.
• Target Price: HK$7.42, up from the previous TP of HK$7.33.
• Up/Downside: 35.8%.
• Current Price: HK$5.46.

Shareholding and Stock Data

• Market Cap: HK$39,677.8 million.
• Average 3-Month Turnover: HK$272.5 million.
• 52-Week High/Low: HK$7.02 / HK$1.71.
• Total Issued Shares: 7,267.0 million.
• Major Shareholders:
  • Foxconn Far East Ltd: 71.1%
  • Lu Sung-Ching: 5.5%

Financial Summary

Valuation and Investment Outlook

• Valuation: The stock is considered undervalued with a 15.7x P/E for FY26E and 11.5x for FY27E.
• Rerating Expectations: The analyst expects further re-rating due to higher AI revenue contribution in FY26-27E.
• CMBIG Ratings:
  • BUY: Stock with potential return of over 15% over next 12 months.
  • HOLD: Stock with potential return of +15% to -10% over next 12 months.
  • SELL: Stock with potential loss of over 10% over next 12 months.

Disclaimer

• The report is for informational purposes only and does not constitute investment advice.
• CMBIGM does not provide individually tailored investment advice.
• There are risks involved in trading any securities, and actual events may differ materially from the report's expectations.
• The report may not be reproduced or distributed without prior written consent from CMBIGM.