20230314-招银国际-FIT_HON_TENG-06088.HK-FY22_Preview__Strong_execution_of__3+3_Strategy__Raise_TP_to_HK_2.66_8页_1mb

FIT Hon Teng (6088 HK) Summary

Core Content

FIT Hon Teng (6088 HK) is a company that is expected to report its FY22 results this week. The company's performance is anticipated to show strong execution of its "3+3 Strategy," with revenue and net profit expected to increase by 2% and 34% YoY, respectively, to US$4,578 million and US$185 million. These figures are slightly above the consensus estimates, indicating positive expectations for the company's performance in the coming year.

Main Points

• FY22E Revenue & Net Profit:
  • Revenue is projected to be US$4,578 million (+2% YoY).
  • Net profit is expected to reach US$185 million (+34% YoY).
• Segment Growth:
  • Smartphone segment: +13% YoY.
  • EV segment: +20% YoY.
  • Networking and computing segments: -15% and -7% YoY, respectively.
• Prettl SWH Acquisition:
  • Expected to close by 2Q23E.
  • Sales contribution will be consolidated in 2H23E.
  • The acquisition is expected to bring significant synergy in terms of product portfolio, client base, and manufacturing facilities.
• Earnings Estimates:
  • FY23E and FY24E revenue and EPS estimates have been raised by 4% and 7%, respectively.
  • The company is trading at 8.7x and 7.6x FY23E and FY24E P/E, respectively.
• Target Price (TP):
  • Raised to HK$2.66, which is 11x FY23E P/E, a 33% discount to the 5-year historical average.
  • Previous TP was HK$1.84.
• Valuation and Performance:
  • The current price is HK$2.10, showing a 26.7% upside to the new TP.
  • The company is expected to outperform the market in the next 12 months with a "BUY" rating.
• Shareholding:
  • Foxconn Far East Ltd holds 71.2% of shares.
  • Lu Sung-Ching holds 5.9% of shares.
• Stock Data:
  • Market Cap: HK$15,769.4 million.
  • 3-month total return: 2.1 million.
  • 52-week high/low: HK$2.46/HK$0.88.
  • Total issued shares: 7,267 million.

Key Information

• Earnings Revision:
  • Revenue estimates for FY22E, FY23E, and FY24E have been revised upward by 0%, 4%, and 7% respectively.
  • Net profit estimates have also been revised upward, with 2% for FY22E, 5% for FY23E, and 7% for FY24E.
• Prettl SWH Integration:
  • SWH Group will operate as a subsidiary of FIT Hon Teng, maintaining its independence.
  • The acquisition is expected to significantly enhance FIT's position in the EV component market.
• Financial Highlights:
  • Revenue growth: 2.0% in FY22E, 13.2% in FY23E, and 13.8% in FY24E.
  • Net profit growth: 34% in FY22E, 16.5% in FY23E, and 14.3% in FY24E.
  • EPS growth: 31% in FY22E, 16.5% in FY23E, and 14.3% in FY24E.
• Valuation Metrics:
  • P/E ratio: 10.1x for FY22E, 8.7x for FY23E, and 7.6x for FY24E.
  • P/B ratio: 0.7x for all periods.
  • ROE: 7.5% in FY22E, 8.3% in FY23E, and 8.8% in FY24E.

Analysts and Contact Information

• Analysts:
  • Alex NG: (852) 3900 0881 | alexng@cmbi.com.hk
  • Lily YANG, Ph.D: (852) 3916 3716 | lilyyang@cmbi.com.hk
  • Claudia LIU: claudialiu@cmbi.com.hk

CMBIG Ratings

• BUY: Potential return of over 15% over the next 12 months.
• HOLD: Potential return of +15% to -10% over the next 12 months.
• SELL: Potential loss of over 10% over the next 12 months.
• NOT RATED: Not rated by CMBIGM.

Industry Ratings

• OUTPERFORM: Industry expected to outperform the relevant broad market benchmark.
• MARKET-PERFORM: Industry expected to perform in-line with the relevant broad market benchmark.
• UNDERPERFORM: Industry expected to underperform the relevant broad market benchmark.

Conclusion

FIT Hon Teng is showing promising growth in its FY22E results, with strong performance in the smartphone and EV segments. The acquisition of Prettl SWH is expected to provide significant synergies and enhance its market position. The company is currently rated "BUY" with a new target price of HK$2.66, indicating a positive outlook for its future performance and growth potential.