$鸿腾精密科技(06088)$ FIT HON TENG(06088)
FIT Hon Teng posted a solid set of 1Q24 results, in-line with its positive profitalert, and mgmt. reiterated its FY24E guidance (rev +low-double digit YoY, GP+mid-double digit YoY, OPM 5.5%) in earnings call. After hosting post-resultsNDR call with mgmt. on 10 May, we believe recent stock correction was mainlydue to profit taking after a 101% rally in the past three months, and we remainpositive on its 2H24E outlook backed by AirPods ramp-up, integration of Voltairaauto electronics business and order wins of AI server/networking products(US$500-1,000 content value per compute tray). We slightly adjust FY24-26Eforecasts to reflect higher GPM and better sales mix offset by higher opex fornew products. Reiterate BUY with a new TP of HK$2.40 based on same 11xFY24E P/E. Catalysts include AirPods shipments and AI server productupdates.1Q24 earnings in line. FIT’s 1Q24 revenue of US$965mn (+12% YoY) andnet profit of US$10.2mn (vs US$9.3mn of loss in 1Q23), were in line with itsearlier positive profit alert, driven by recovery of PC/server markets, solidVoltaira business and a stronger Networking segment. GPM improved450bps YoY to 20.3% thanks to a better product mix. By segment, EVsegment jumped +205% YoY due to the Voltaira merge, while computingsegment grew 6% YoY on market recovery and networking segment grew9% YoY for AI demand and new CPU related products. Despite higher 1Qopex ratio of 17.8% for automotive modules and new audio products, FITmaintained opex ratio target of below 13% for FY25E (vs 14.4% in FY23).AI server update: US$500-1,000 content value in compute tray. Duringthe earnings call, mgmt. reiterated AI revenue share of 7-9% in FY24E (vs 1%in FY23), and shared business updates on AI-related products and new CPUplatforms in 2H24E, such as certified MCIO, EDSFF, PCIe 6.0 and memorysocket products. As for FIT’s business opportunity in AI server like GB200NVL36/72, mgmt. expected US$500-1,000 content value per compute tray(excl. copper cables) for the latest AI servers in FY24E. Overall, we expectFIT’s revenue/net profit to rebound 12%/52% YoY in FY24E.Our FY24-26E EPS are 13-33% above consensus; Reiterate BUY. Webelieve FIT’s share price correction post 1Q24 results was mainly due toprofit taking after a 101% rally in the past three month. Trading at 8.9x/6.7xFY24/25E P/E, we think the valuation is extremely attractive given multiplegrowth drivers into FY24-26E. Maintain BUY with new TP of HK$2.40