20230104-招银国际-FIT_HON_TENG-06088.HK-Positive_on_the_acquisition_of_Germany_automotive_component_supplier__Reiterate_BUY_5页_1mb

报告摘要

Summary of FIT Hon Teng (6088 HK) Document

Core Content

FIT Hon Teng (6088 HK) has announced the acquisition of Prettl SWH Group, a Germany-based automotive component supplier, for EUR186.6mn, which is equivalent to 6 times Prettl's FY22E EBITDA. The acquisition is expected to close by 2Q23E and is projected to contribute positively to FIT's financial performance in FY24E.

Main Points

Acquisition Overview: FIT Singapore, a wholly-owned subsidiary of FIT Hon Teng, will fully acquire Prettl SWH Group. Prettl specializes in automotive sensor cables, wiring harnesses, and power management products.
Strategic Impact: The acquisition is expected to enhance FIT's automotive product portfolio and support its "3+3 Strategy" initiatives, particularly in the EV, 5G AIoT, and Audio segments.
Financial Projections: The deal is anticipated to increase FIT's revenue by 7–8% and EPS by 3–4% in FY24E. The EV segment, currently at 3% of 3Q22 revenue, is expected to grow to 10–11% of FY24E revenue.
Valuation: FIT is currently trading at a P/E ratio of 9.0x for FY22E and 8.1x for FY23E. The analyst reiterates a BUY rating, citing an attractive risk-reward ratio.
Target Price: The target price is HK$1.84, which is 11% below the current price of HK$2.08.
Earnings Growth: FIT's EPS for FY22E–FY24E is projected to be 15–28% above the consensus estimate.
Market Cap: FIT's market cap is HK$15,163.0 million.
Shareholding Structure: Foxconn Far East Ltd holds 71.2% of the shares, while Lu Sung-Ching holds 5.9%.

Key Financial Highlights

Earnings Summary (FY20A–FY24E)

Year	Revenue (US$ mn)	YoY Growth (%)	Net Profit (US$ mn)	YoY Growth (%)	EPS (Reported) (US$ cents)	Consensus EPS (US$ cents)
FY20A	4,315	-1.3%	43	-81.8%	0.64	na
FY21A	4,490	4.1%	136.8	221.3%	2.04	na
FY22E	4,578	2.0%	183	33.8%	2.63	2.20
FY23E	4,998	9.2%	207	12.9%	2.96	2.30
FY24E	5,504	10.1%	231	11.9%	3.32	2.80

Revenue Breakdown (FY21–FY24E)

Segment	FY21 (US$ mn)	FY22E (US$ mn)	FY23E (US$ mn)	FY24E (US$ mn)
Computing	880,770	819,116	860,072	903,076
Smartphones	1,253,290	1,416,218	1,487,029	1,561,380
Networking	894,110	759,994	835,993	944,672
EV Mobility	133,600	160,320	200,400	260,520
Systems Products	1,099,230	1,242,130	1,428,449	1,642,717
Others	200,210	180,189	185,595	191,163

Profitability Metrics

Metric	FY20A	FY21A	FY22E	FY23E	FY24E
Gross Profit Margin	17%	13%	16%	16%	16%
Operating Margin	6.3%	2.9%	3.9%	4.8%	4.9%
Return on Equity (ROE)	2.0%	6.0%	7.4%	7.9%	8.3%

Acquisition Synergies

Prettl has 13 global factories and is well-regarded by global tier-one clients.
The acquisition is expected to lead to synergies in product portfolio, client base expansion, and global manufacturing & product development capabilities.
Prettl's revenue in 2020/21 was EUR318.5mn/EUR351.2mn, with net profit after tax of EUR0.1mn/(0.236mn), affected by the pandemic.
FIT's management anticipates improved profitability for Prettl in 2023/24E.

Cash Flow and Liquidity

FIT's cash and equivalents at the end of FY22E is expected to be US$833mn.
Net cash from operations is projected to be US$360mn in FY22E and US$338mn in FY24E.
The company maintains a current ratio of 1.7x in FY22E, indicating strong liquidity.

Conclusion

The acquisition of Prettl SWH Group is viewed as a strategic move that will enhance FIT's presence in the automotive sector, particularly in the EV segment, and support its long-term growth initiatives. The analyst reiterates a BUY rating, citing strong earnings growth, an attractive valuation, and the potential for significant revenue and EPS increases in FY24E. The deal is expected to close in 2Q23E, and the risk-reward profile remains favorable.

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