Investment Rating - The report maintains a "Buy" rating for FIT Hon Teng with a target price of HKD 1.65, based on a 9.0x 2024 P/E ratio [2][3][7] Core Views - FIT Hon Teng's 2023 financial performance met expectations, with revenue declining 7.4% YoY to USD 4.196 billion and net profit decreasing 23.5% YoY to USD 130 million [2][8] - The company's "3+3" strategy, focusing on electric vehicles (EV), 5G AIoT, and acoustic products, is expected to drive future growth [2][9] - EV business is seen as a major growth driver, with revenue contribution from EV, 5G AIoT, and acoustic products expected to reach 30% in 2024 and 40% in 2025 [2][9] - The acquisition of SWH (renamed FIT Volaira) is expected to accelerate the company's expansion in the EV market, particularly in Europe [2][10] Financial Performance - 2023 revenue: USD 4.196 billion (-7.4% YoY) [2][8] - 2023 net profit: USD 130 million (-23.5% YoY) [2][8] - 2023 gross margin: 19.2% (+2.3 ppts YoY) [8] - 2023 R&D expenses: 7.3% of revenue (+0.8 ppts YoY) [8] - 2023 administrative expenses: 4.5% of revenue (+1.6 ppts YoY) [8] Future Projections - 2024-2026 EPS forecast: USD 0.023 / USD 0.029 / USD 0.035 [2][7] - 2024-2026 revenue forecast: USD 4.673 billion / USD 5.074 billion / USD 5.472 billion [5] - 2024-2026 net profit forecast: USD 166 million / USD 208 million / USD 245 million [5] Business Strategy - The company is leveraging its global presence and MIH platform to expand its EV business, with a focus on high-voltage connectors and intelligent vehicle systems [9][10] - The acoustic business is benefiting from the company's position as a supplier of TWS products to North American customers [9] - The 5G AIoT and data center markets are expected to drive demand for high-speed connectors, benefiting the company's copper and optical-based products [9] Market Position - FIT Hon Teng is positioned to benefit from the growing EV, 5G AIoT, and data center markets, with a diversified product portfolio and strong R&D capabilities [9][10] - The company's acquisition of FIT Volaira enhances its position in the automotive sector, particularly in Europe [10]

Investment Rating - The report maintains a "BUY" rating for FIT Hon Teng with a target price (TP) raised to HK$2.42, reflecting a 19.3% upside from the current price of HK$2.03 [5][19]. Core Insights - The report highlights opportunities in the US$1.7 billion server connector and cable market, driven by increased demand for next-generation high-speed connectivity in AI servers for FY24/25E [2][3]. - Management expects a 15-20% year-over-year growth in the networking/server segment for FY24E, with AI server-related revenue projected to reach 8-10% of FY24E sales, up from 1% in FY23 [2][3]. - The report anticipates FIT's net profit to grow by 55% and 27% year-over-year in FY24 and FY25, respectively, supported by the ramp-up of AI server connectivity products and consolidation of the Voltaira auto business [2][3]. Financial Summary - Revenue is projected to increase from US$4.196 billion in FY23 to US$4.715 billion in FY24, representing a 12.4% year-over-year growth [18][22]. - Net profit is expected to rise from US$170.3 million in FY23 to US$200 million in FY24, reflecting a 55.4% increase [18][22]. - Earnings per share (EPS) is forecasted to grow from 2.42 US cents in FY23 to 2.83 US cents in FY24 [18][22]. Market Position - FIT Hon Teng is positioned as a global leader in the server connector market, alongside competitors such as Amphenol, TEL, and Molex [2][3]. - The company is expected to capture a 20-30% market share in the global server connector and cable market, aiming for US$500 million in sales by FY25E [2][3]. Valuation Metrics - The report notes that FIT is trading at 9.2x/7.2x FY24/25 P/E, which is attractive compared to the historical average of 15x [3][19]. - The new target price of HK$2.42 is based on an 11x FY24E P/E, reflecting a 33% discount to the 5-year historical average [19].

Investment Rating - The investment rating for FIT Hon Teng is maintained as "Buy" with a target price (TP) set at HK$1.65 [3][7]. Core Insights - The FY23 results were in line with expectations, with operating revenue decreasing by 7.4% year-on-year to US$4,196 million and shareholders' net profit decreasing by 23.5% year-on-year to US$130 million [9][11]. - The company is implementing a "3+3" strategy focusing on the development of electric vehicles (EVs), 5G AIoT, and acoustics, which is expected to drive future growth [11][13]. - The revenue mix from EV Mobility, new Generation 5G AIoT, and Audio is projected to reach 30% in 2024 and 40% in 2025 [11][13]. Financial Performance - Forecasted EPS for FY24-FY26 is US$0.023, US$0.029, and US$0.035 respectively, with a 9.0x PER for 2024 [7][9]. - The gross profit margin increased by 2.3 percentage points year-on-year to 19.2% in FY23, while R&D expenses as a percentage of total revenue increased to 7.3% [9][22]. - The company expects revenue growth in the coming years, with total revenue projected to increase from US$4,196 million in FY23 to US$5,472 million by FY26 [22]. Business Strategy and Market Position - The acquisition of SWH, now FIT Voltaira, enhances the company's product offerings in the EV sector, positioning it to meet the growing demand for high-voltage connectors and wiring harnesses [13][11]. - The company aims to expand its customer base and production capabilities in the EV mobility sector, leveraging its global layout and partnerships through MIH [11][13]. - The audio business is also expected to benefit from the increasing demand for high-speed connections driven by AI server growth and data center construction [11][13].

Investment Rating - The report maintains a "BUY" rating for FIT Hon Teng with a new target price of HK$2.21, representing a 64.7% upside from the current price of HK$1.34 [4][15]. Core Insights - FIT Hon Teng's FY23 results were in line with expectations, reporting revenue of US$4,196 million, a decrease of 7% year-on-year, and a net profit of US$130 million, down 24% year-on-year. The decline was attributed to softer demand in traditional servers and PCs, while the EV segment saw a significant increase of 100% year-on-year due to the Voltaira merger [2][3]. - The management provided an optimistic outlook for FY24E, forecasting double-digit year-on-year growth in both revenue and gross profit, driven by new product launches and synergies from the Voltaira auto electronics business. Revenue and net profit are expected to rebound by 12.2% and 41.6% year-on-year, respectively [2][10]. Financial Performance Summary - FY23 revenue was US$4,196 million, with a gross margin of 19.2%, an improvement from 16.9% in FY22, due to a better product mix and effective execution of the "3+3 Strategy" [2][19]. - The company expects revenue for FY24E to reach US$4,706 million, with a gross profit of US$931 million, reflecting a gross margin of 19.8% [10][19]. - The net profit for FY24E is projected at US$183 million, with an EPS of 2.58 US cents, indicating a significant recovery from FY23 [11][19]. Growth Drivers - Key growth drivers include the integration of Voltaira's auto business, advancements in AI server and networking products, and increased orders for AirPods expected in Q3 2024 from major US customers [2][10]. - The report highlights the attractive valuation of FIT Hon Teng, trading at 6.6x FY24E P/E, which is considered favorable given the anticipated earnings visibility and growth potential [2][15]. Market Position - FIT Hon Teng's market capitalization is approximately HK$9,737.8 million, with a shareholding structure dominated by Foxconn Far East Ltd, holding 71.1% [5][16]. - The stock has shown strong performance, with a 1-month increase of 38.1% and a 3-month increase of 27.6% [5].

Financial Performance - Revenue for the year ended December 31, 2023, was $4,196 million, a decrease of 7.4% compared to $4,531 million for the year ended December 31, 2022[2] - Profit for the year ended December 31, 2023, was $130 million, down 23.5% from $170 million for the year ended December 31, 2022[2] - Basic earnings per share attributable to the company's owners for the year ended December 31, 2023, was 1.82 cents, a decrease from 2.42 cents for the year ended December 31, 2022[2] - The company did not declare any final dividend for the year ended December 31, 2023[2] - The company reported a total comprehensive income of $90,115 thousand for the year ended December 31, 2023, compared to a loss of $50,611 thousand for the year ended December 31, 2022[5] - The company reported a net profit attributable to shareholders of $128,969 thousand for the year ended December 31, 2023, down from $169,619 thousand in 2022, reflecting a decrease of about 24%[23][25] - Basic earnings per share for 2023 were $1.82, compared to $2.42 in 2022, indicating a decline of approximately 25%[23] - Annual profit decreased by 23.5% to $130 million, with a profit margin decline from 3.8% to 3.1%[47] Revenue Breakdown - Total revenue for the year ended December 31, 2023, was $4,195,550 thousand, a decrease from $4,530,603 thousand in 2022, representing a decline of approximately 7.4%[14] - Revenue from the semi-finished products segment was $3,487,295 thousand, down from $3,858,562 thousand in the previous year, indicating a decrease of about 9.6%[14] - Revenue from the consumer products segment was $708,255 thousand, which remained stable compared to $672,041 thousand in 2022, showing an increase of approximately 5.4%[14] - Revenue from the United States was $1,928,367 thousand, a decrease from $2,039,833 thousand in 2022, indicating a decline of about 5.5%[15] - Revenue from electric vehicles increased significantly to $305,098 thousand from $152,814 thousand in the previous year, marking an increase of approximately 100%[15] - Revenue from the smartphone component market decreased by 17.2% year-over-year due to structural changes in high-end smartphone products and increased competition[33] - Revenue from the networking infrastructure market dropped by 43.7% year-over-year, impacted by inventory destocking in the server supply chain[33] - Revenue from system terminal products increased by 6.0% year-over-year, driven by competitive advantages in existing acoustic products and new wireless charging opportunities[34] Assets and Liabilities - Total assets as of December 31, 2023, amounted to $5,093,736 thousand, an increase from $4,547,183 thousand as of December 31, 2022[7] - Non-current assets totaled $1,981,745 thousand as of December 31, 2023, compared to $1,783,187 thousand as of December 31, 2022[6] - Current assets were $3,111,991 thousand as of December 31, 2023, up from $2,763,996 thousand as of December 31, 2022[6] - Total liabilities as of December 31, 2023, were $2,656,358 thousand, compared to $2,200,244 thousand as of December 31, 2022[8] - Total liabilities as of December 31, 2023, were $2,656,358 thousand, up from $2,200,244 thousand in 2022, marking an increase of around 20%[18][19] Cash Flow and Investments - The company’s cash and cash equivalents increased to $1,316,364 thousand as of December 31, 2023, from $914,045 thousand as of December 31, 2022[6] - The company's net cash generated from operating activities for the fiscal year 2023 was $574 million, while cash used in investing activities was $410 million, and cash generated from financing activities was $249 million[49] - Capital expenditures for the fiscal year 2023 were $510 million, significantly higher than $131 million in 2022, primarily for the acquisition of FIT Voltaira Group GmbH and the establishment of new production bases[50] Operational Efficiency and Costs - The total expenses for sales, distribution, and administrative costs in 2023 were $3,991,541 thousand, down from $4,281,177 thousand in 2022, indicating a decrease of approximately 7%[21] - The cost of goods sold for 2023 was $2,436,724 thousand, a decrease from $2,680,309 thousand in 2022, representing a reduction of about 9%[21] - R&D expenses increased by 4.0% to $308 million, mainly due to the acquisition of FIT Voltaira Group GmbH[44] - Administrative expenses increased by 46.8% to $191 million, driven by the acquisition and increased professional fees[43] - Distribution costs and selling expenses increased by 12.8% to $105 million, primarily due to the acquisition of FIT Voltaira Group GmbH[42] Strategic Initiatives - The company aims to capitalize on the growing demand for connectors in data centers driven by AI and cloud services, focusing on energy efficiency and open standard platforms[35] - The company anticipates stable market demand in 2024 for computer and consumer electronics connectors, despite economic uncertainties[35] - The acquisition of FIT Voltaira Group GmbH is expected to enhance the company's EV product development and expand its market presence in automotive electronics[36] - The company is exploring potential acquisitions to enhance its product portfolio and market reach[70] - A new strategic partnership was announced, expected to drive a 15% increase in operational efficiency[71] Corporate Governance and Compliance - The company has adopted new accounting standards effective January 1, 2023, which are not expected to have a significant impact on the financial statements[11] - The audit committee, consisting of three independent non-executive directors, has reviewed the audited consolidated financial statements for the year ended December 31, 2023[62] - The company's auditor, PwC, confirmed that the figures in the announcement align with the audited consolidated financial statements for the year ended December 31, 2023[63] - The company has complied with all applicable provisions of the corporate governance code during the year ended December 31, 2023, except for the separation of the roles of Chairman and CEO[64] Future Outlook - The company provided a positive outlook for the next quarter, projecting a revenue increase of 10%[70] - New product launches are expected to contribute an additional $50 million in revenue next quarter[71] - The company is expanding its market presence in Vietnam, targeting a 25% market share by the end of the fiscal year[70] - Research and development investments increased by 30%, focusing on innovative technologies[71] - The board of directors approved a share buyback program worth $100 million to enhance shareholder value[71]

Financial Performance - For the six months ended June 30, 2023, revenue decreased by 15.1% to $1,784 million compared to $2,101 million in the same period of 2022[7]. - Gross profit declined by 19.4% to $283 million, resulting in a gross margin of 15.9%, down from 16.7% in the previous year[6]. - Operating profit fell by 60.8% to $47 million, leading to an operating margin of 2.6%, down from 5.7%[6]. - The net loss attributable to the company was $9 million, a significant decrease from a profit of $85 million in the same period last year, representing a 110.6% decline[7]. - Revenue for the first half of 2023 was $1,784 million, a decrease of 15.1% compared to $2,101 million in the same period of 2022[13]. - The company reported a loss of $9 million for the six months ended June 30, 2023, compared to a profit of $85 million for the same period in 2022, resulting in a profit margin decline from 4.1% to -0.5%[21]. - The company reported a total comprehensive loss of $74,630 thousand for the period, compared to a loss of $23,050 thousand in the previous year[41]. Revenue Breakdown - Revenue from the smartphone segment decreased by 22.8% due to a decline in shipments of high-end smartphones[10]. - Revenue from the network infrastructure segment dropped by 41.3%, impacted by inventory destocking in the server downstream[10]. - Revenue from the computer and consumer electronics segment decreased by 6.6%, despite opportunities in acoustic components[10]. - Revenue from the electric vehicle segment decreased by 5.9% due to product updates affecting component sales[10]. - Revenue from system terminal products increased by 1.3%, driven by higher demand for wireless charging products in new smartwatches[10]. - Smartphone revenue decreased by 22.8% to $445.9 million, primarily due to a decline in shipments of high-end smartphones[14]. - Network infrastructure revenue decreased by 41.3% to $218.9 million, impacted by changes in product mix and inventory destocking in the server downstream[15]. - Electric vehicle revenue decreased by 5.9% to $71.6 million, mainly due to product updates and reduced sales of automotive components[15]. - System terminal products revenue increased by 1.3% to $578.9 million, driven by higher demand for wireless charging products for new smartwatches[16]. Expenses and Costs - Total expenses for the six months ended June 30, 2023, amounted to $1,757,560 thousand, down 12.6% from $2,012,955 thousand in the prior year[82]. - The cost of goods sold was $1,052,310 thousand, a decrease of 13.3% from $1,213,514 thousand in the same period of 2022[82]. - R&D expenses increased by 2.2% to $139 million, attributed to higher costs related to molds and materials[18]. - Employee benefits expenses totaled $358 million for the six months ended June 30, 2023, down from $399 million for the same period in 2022, reflecting a reduction in workforce from 53,544 to 52,488 employees[32]. - Legal and professional expenses increased to $33,788 thousand, up 59.5% from $21,226 thousand in the same period of 2022[82]. Cash Flow and Liquidity - Cash and cash equivalents increased from $914 million as of December 31, 2022, to $1,384 million as of June 30, 2023, while total bank borrowings rose from $1,027 million to $1,402 million[22]. - The net cash flow from operating activities for the six months ended June 30, 2023, was $202,743 thousand, compared to $205,829 thousand for the same period in 2022[47]. - Cash and cash equivalents increased by $504,074 thousand for the six months ended June 30, 2023, compared to an increase of $131,160 thousand for the same period in 2022[47]. - The company incurred capital expenditures of $93,560 thousand for the purchase of property, plant, and equipment during the six months ended June 30, 2023[47]. Inventory and Receivables - The average inventory turnover days increased to 105 days, compared to 94 days in the previous year[8]. - Trade receivables decreased from $720 million as of December 31, 2022, to $615 million as of June 30, 2023, attributed to reduced product shipments from declining global demand for consumer electronics[27]. - Trade payables decreased from $661 million as of December 31, 2022, to $535 million as of June 30, 2023, mainly due to reduced procurement linked to lower global demand for consumer electronics[28]. - Inventory decreased to $792,037 thousand from $966,793 thousand, indicating a reduction in stock levels[42]. Strategic Initiatives - The company plans to strategically pursue opportunities in the electric vehicle market and expand its customer base through acquisitions[12]. - The overall market demand is expected to decline in the second half of 2023 due to economic uncertainties and inflation[12]. - The company aims to maintain product competitiveness and expand its global footprint despite a soft consumer electronics market[12]. Shareholder Information - The board did not declare any interim dividend for the six months ended June 30, 2023[36]. - The company did not declare any interim dividends for the six months ended June 30, 2023, consistent with the previous year[104]. - The company recognized share-based payment expenses of $862,000 for the six months ended June 30, 2023, down from $1,582,000 in the same period of 2022[122]. - The company had four subsidiaries in China eligible for a preferential income tax rate of 15% for the six months ended June 30, 2023[85]. Financial Position - Total assets as of June 30, 2023, amounted to $4,619,705 thousand, an increase from $4,547,183 thousand at the end of 2022[42]. - As of June 30, 2023, total equity amounted to $2,272,203 thousand, a decrease from $2,346,939 thousand as of January 1, 2023[44]. - The company’s total liabilities decreased from $979,030,000 to $798,852,000, a reduction of about 18.4%[120]. - The company reported total sales of $225,226,000 to related parties for the six months ended June 30, 2023, down from $296,672,000 in the same period of 2022[136].

Financial Performance - Revenue for the six months ended June 30, 2023, was $1,784 million, a decrease of 15.1% compared to $2,101 million for the same period in 2022[2] - The company reported a loss of $9 million for the six months ended June 30, 2023, compared to a profit of $85 million for the same period in 2022[2] - Basic loss per share attributable to owners of the company was $0.13 for the six months ended June 30, 2023, down from earnings of $1.23 per share for the same period in 2022[2] - The operating profit before tax for the six months ended June 30, 2023, was $7,525 thousand, compared to $107,581 thousand for the same period in 2022, indicating a significant drop of around 93%[13] - The gross profit for the six months ended June 30, 2023, was $350,839 thousand, compared to $283,154 thousand for the same period in 2022, showing an increase of approximately 23.8%[13] - The company reported a total tax expense of $16,204 thousand for the six months ended June 30, 2023, down from $22,095 thousand in the same period of 2022[23] - The net loss attributable to the company's owners for the six months ended June 30, 2023, was $(8,952) thousand, a significant decline from a profit of $85,117 thousand in the same period of 2022[25][27] Assets and Liabilities - Total assets as of June 30, 2023, amounted to $4,619 million, compared to $4,547 million as of December 31, 2022[6] - Total liabilities increased to $2,347 million as of June 30, 2023, from $2,200 million as of December 31, 2022[6] - Cash and cash equivalents were $1,384 million as of June 30, 2023, compared to $914 million as of December 31, 2022[5] - Inventory decreased to $792 million as of June 30, 2023, from $967 million as of December 31, 2022[5] - Trade receivables were $615 million as of June 30, 2023, down from $720 million as of December 31, 2022[5] - The company's total liabilities reached $2,347,502 thousand as of June 30, 2023, compared to $2,200,244 thousand at the end of 2022, indicating an increase of approximately 6.7%[18][19] - The division liabilities for semi-finished products were $730,704 thousand, while consumer goods liabilities were $156,537 thousand, totaling $887,241 thousand[18] Revenue Breakdown - Revenue from the smartphone segment was $445,883 thousand, down from $577,628 thousand in the previous year, reflecting a decrease of about 22.8%[15] - Revenue from the networking equipment segment decreased to $218,936 thousand from $373,151 thousand, a decline of approximately 41.4%[15] - Revenue from external customers in the United States was $952,956 thousand, slightly down from $969,903 thousand in the previous year, a decrease of about 1.0%[16] - The geographical revenue breakdown shows that China contributed $541,038 thousand, while Vietnam contributed $209,222 thousand for the six months ended June 30, 2023[21] - Revenue from smartphone components decreased by 22.8% for the six months ended June 30, 2023, due to a decline in high-end smartphone shipments[34] - Revenue from network infrastructure decreased by 41.3% for the six months ended June 30, 2023, impacted by inventory destocking in the server downstream[34] - Revenue from the electric vehicle market decreased by 5.9% for the six months ended June 30, 2023, due to changes in customer specifications[34] Operational Insights - The company continues to focus on the manufacturing and sales of mobile and wireless devices, connectors, and related products for the communications, computer, and automotive markets[7] - The company anticipates increased demand for electric vehicles and related infotainment products, which will drive market demand for power management and vehicle networking products[35] - The company expects overall performance in the network infrastructure business to improve starting in Q4 2023 due to recovering downstream demand[36] Corporate Governance and Compliance - The company has confirmed compliance with the standard code regarding securities trading by all directors for the six months ended June 30, 2023[63] - The company is committed to maintaining high standards of corporate governance and has complied with applicable codes[62] - The audit committee reviewed the unaudited interim consolidated financial information for the six months ended June 30, 2023[59] Strategic Initiatives - The company plans to continue investing in the electric vehicle market and seeks new applications for interconnect solutions through strategic acquisitions[36] - The board has approved a new strategic initiative to enhance customer experience, which is expected to drive a J% increase in customer retention rates[68] - Recent acquisitions are expected to enhance operational efficiency, with projected cost savings of F million annually[68]

Financial Performance - For the fiscal year ended December 31, 2022, the company reported revenue of $4,530,603 thousand, a slight increase from $4,490,215 thousand in 2021, representing a year-over-year growth of 0.3%[7] - The net profit attributable to the company's owners reached $169,619 thousand, compared to $137,625 thousand in the previous year, marking a growth of 23.2%[7] - Operating profit for 2022 was $307,384 thousand, up from $176,668 thousand in 2021, reflecting a significant increase of 74%[7] - The company achieved a 46.32% reduction in carbon emissions in 2022, reflecting its commitment to environmental sustainability[14] - Annual profit increased by 24.1% from $137 million in 2021 to $170 million in 2022, with the profit margin rising from 3.0% to 3.8%[31] Revenue Breakdown - In 2022, the company's revenue was $4,531 million, representing a 0.9% increase compared to the previous year, while profit rose by 24% to $170 million[18] - The electric vehicle segment saw a revenue increase of 10.0% compared to the previous year, indicating strong growth in this market[18] - Revenue from the smartphone segment decreased by 3.5% to $1,261 million, primarily due to a decline in high-end smartphone component shipments in Q4 2022[22][23] - Revenue from the network infrastructure segment decreased by 14.3% to $754 million, mainly due to changes in optical module business and reduced shipments[22][23] - Revenue from system terminal products increased by 20.0% to $1,336 million, benefiting from increased demand for wired headphones and the popularity of new true wireless Bluetooth headphones[22][24] Asset and Liability Management - Total assets decreased to $4,547,183 thousand in 2022 from $5,006,664 thousand in 2021, a decline of 9.1%[8] - Current assets also saw a decline, totaling $2,763,996 thousand in 2022, down from $3,033,884 thousand in 2021, a decrease of 8.9%[8] - Total liabilities decreased to $2,200,244 in 2022, down 15.7% from $2,611,081 in 2021[192] - Current liabilities reduced significantly to $1,539,360, a decrease of 20.6% from $1,937,177 in the previous year[192] - The company maintained a strong equity position with total equity amounting to $2,346,939 thousand in 2022, slightly down from $2,395,583 thousand in 2021[8] Operational Efficiency - The gross profit margin improved to 16.9% in 2022 from 15.0% in 2021, indicating enhanced operational efficiency[6] - Distribution and selling expenses decreased by 11.4% to $93 million in 2022, primarily due to the sale of Linksys shares[26] - Administrative expenses decreased by 19.3% from $161 million in 2021 to $130 million in 2022, primarily due to the sale of Linksys equity[27] - R&D expenses decreased by 1.7% from $301 million in 2021 to $296 million in 2022, mainly due to the sale of Linksys equity[28] - Operating cash flow from business activities increased significantly to $635.725 million in 2022 from $176.149 million in 2021, representing a growth of approximately 261%[197] Strategic Initiatives - The company successfully implemented its 3+3 strategy to enhance operational efficiency and pivot towards higher-margin products despite challenges from geopolitical events and supply chain issues[12] - Strategic acquisitions were made to expand core competencies and meet future demands, laying a solid foundation for continued shareholder value creation[12] - The company plans to strategically seek new application opportunities in the electric vehicle market and increase investment in vehicle electronic systems and autonomous driving components[20] - The company aims to capture opportunities in the electric vehicle and AIoT sectors, which are expected to be major growth catalysts in the next two to three years[15] - The company continues to focus on its 3+3 strategy, targeting high-growth areas such as electric vehicles and 5G AIoT solutions[15] Governance and Leadership - The company reported a significant leadership structure with Sidney Lu as the President and CEO, and his brother, Lu Boqing, serving as the COO and CFO[46] - The company has a diverse board with members who have significant experience in various industries, contributing to its strategic direction[50] - The company emphasizes the importance of independent non-executive directors in maintaining governance standards and compliance with listing rules[145] - The board consists of three executive directors, one non-executive director, and three independent non-executive directors, ensuring compliance with listing rules regarding board composition[126] - The company has adopted the corporate governance code as per the listing rules and has complied with all applicable provisions during the reporting period[124] Shareholder Relations - The company emphasizes effective communication with shareholders to enhance investor relations and ensure timely disclosure of information[166] - Shareholders can propose matters for discussion at the annual general meeting, and voting procedures are detailed in the circular sent to shareholders[167] - Shareholders holding at least 10% of the company's share capital can request a special general meeting within two months of submission[168] - The company adopted a dividend policy considering financial performance and cash flow status[164] - The board reviews the dividend policy periodically and does not guarantee any specific amount of dividends during any designated period[165] Environmental, Social, and Governance (ESG) Commitments - The company has made significant progress in environmental, social, and governance (ESG) goals, including reducing single-use plastic packaging[14] - The ESG Committee is responsible for reviewing significant ESG-related risks and strategic plans, including annual budgets and emergency responses[154] - The company is committed to providing career development opportunities to employees with appropriate experience and skills to promote gender diversity in senior management[148] - The company has adopted a board diversity policy, aiming to enhance performance through diverse perspectives, including gender, age, race, and professional qualifications[147] - The company aims to leverage its management team's extensive industry experience to drive future growth and market expansion[56]

Financial Performance - For the six months ended June 30, 2022, the company's revenue was $2,101 million, representing a 6.0% increase compared to $1,982 million in the same period of 2021[10]. - Gross profit for the same period was $350.8 million, a 31.0% increase from $267.8 million year-over-year[10]. - Operating profit surged to $119.9 million, reflecting a significant increase of 652.9% from $15.9 million in the prior year[10]. - Profit attributable to the company's owners reached $85.1 million, marking an 818.8% increase compared to $9.3 million in the same period last year[10]. - The gross margin improved to 16.7%, up from 13.5%, an increase of 3.2 percentage points[9]. - Revenue for the six months ended June 30, 2022, was $2,101,326 thousand, an increase of 6.0% compared to $1,982,056 thousand in the same period of 2021[51]. - Gross profit for the same period was $350,839 thousand, up from $267,776 thousand, reflecting a significant increase in profitability[51]. - Operating profit surged to $119,936 thousand, compared to $15,929 thousand in the prior year, indicating strong operational performance[51]. - Net profit for the period reached $85,486 thousand, a substantial increase from $7,880 thousand in the previous year[53]. - Basic earnings per share rose to 1.23 cents, compared to 0.14 cents in the same period last year, demonstrating improved shareholder value[51]. Revenue Sources - The smartphone component market remained the largest revenue source, with a 26.6% increase in revenue compared to the same period last year[14]. - Revenue from the smartphone segment increased by 26.6% to $613.8 million, driven by strong demand for high-end smartphones[19]. - Revenue from the networking infrastructure market decreased by 19.1% due to chip supply shortages[14]. - Revenue from the electric vehicle market increased by 12.3%, driven by rising demand for electric vehicles[14]. - Revenue from the electric vehicle segment increased by 12.3% to $72.0 million, reflecting growing demand in the market[20]. - The United States contributed $969,903 thousand to revenue, a 21.5% increase from $798,125 thousand in 2021[83]. - Customer A contributed $773,619 thousand, a substantial increase of 48.5% from $520,989 thousand in the previous year[85]. Expenses and Costs - Distribution costs and selling expenses decreased by 9.8% to $46 million, attributed to the sale of Linksys shares[24]. - Administrative expenses decreased by 11.0% from $91 million for the six months ended June 30, 2021, to $81 million for the same period in 2022, primarily due to the sale of Linksys equity[25]. - R&D expenses increased by 3.8% from $131 million for the six months ended June 30, 2021, to $136 million for the same period in 2022, mainly due to investments in 5G AIoT and wireless charger product development[26]. - The total cost of goods sold, including inventory impairment, was $1,213,514 thousand for the six months ended June 30, 2022, compared to $1,194,621 thousand in 2021, reflecting a slight increase[96]. - The company incurred a total tax expense of $22,095 thousand for the six months ended June 30, 2022, compared to $5,992 thousand in the same period of 2021, indicating a higher tax burden[98]. Cash Flow and Assets - Cash and cash equivalents increased from $769 million as of December 31, 2021, to $854 million as of June 30, 2022[31]. - Total assets as of June 30, 2022, were $4,833,138 thousand, down from $5,006,664 thousand at the end of 2021[54]. - Inventory increased from $982 million as of December 31, 2021, to $1,123 million as of June 30, 2022, primarily due to overall business expansion[36]. - Trade receivables decreased from $1,033 million as of December 31, 2021, to $780 million as of June 30, 2022, mainly due to seasonal factors in the business[37]. - Total liabilities decreased to $2,459,023 thousand from $2,611,081 thousand, reflecting improved financial health[55]. Strategic Focus and Future Outlook - The company plans to strategically focus on the electric vehicle market, anticipating strong demand from major customers[17]. - The company expects the smartphone market to remain a significant revenue contributor despite a projected decrease in shipments in the second half of 2022[17]. - The company aims to explore new applications for interconnect solutions and other products in the electric vehicle sector[17]. - The company will collaborate with brand companies to create new market opportunities in the smart home sector following the divestment of Linksys[17]. - The company plans to continue expanding its market presence, particularly in the semi-finished products sector, which is primarily produced in China and Vietnam[79]. - The company is considering strategic acquisitions to enhance its product offerings, with a budget of $300 million earmarked for potential deals[191]. Employee and Shareholder Information - The total employee benefits expenses for the six months ended June 30, 2022, amounted to $399 million, compared to $368 million for the same period in 2021[44]. - The company had approximately 52,988 employees as of June 30, 2022, a decrease from 57,527 employees as of December 31, 2021[44]. - The company did not declare any interim dividends for the six months ended June 30, 2022[46]. - The company has implemented stock incentive plans to attract and retain talent[44]. - The company is evaluating new stock incentive plans that comply with listing rules[44]. Financial Risk Management - The company has adopted a prudent foreign exchange hedging policy to mitigate foreign exchange risks[45]. - The company has no significant contingent liabilities or guarantees that could materially affect its financial condition as of June 30, 2022[41]. - The group maintains a cautious liquidity risk management strategy, ensuring sufficient cash and committed credit facilities to meet obligations[67]. - The group has a rolling forecast for liquidity needs to ensure sufficient cash is available to meet operational requirements[67]. Corporate Governance - The board of directors has adhered to the corporate governance code and principles applicable to the company, with no significant deviations reported[180]. - The audit committee, consisting of three independent non-executive directors, reviewed the unaudited interim financial information for the six months ended June 30, 2022[184]. - All directors confirmed compliance with the standard code of conduct regarding securities trading for the six months ended June 30, 2022[181].

Financial Performance - Revenue for 2021 was $4.49 billion, representing a 4.1% increase compared to $4.31 billion in 2020[10]. - Profit attributable to owners increased by 219% from $42.5 million in 2020 to $137.6 million in 2021[10]. - Gross profit margin improved to 15.0% in 2021 from 13.4% in 2020[9]. - Operating profit margin increased to 3.9% in 2021 from 2.9% in 2020[9]. - Total assets reached $5.01 billion in 2021, up from $4.64 billion in 2020[11]. - Current assets increased to $3.03 billion in 2021 from $2.85 billion in 2020[11]. - Total equity rose to $2.40 billion in 2021, compared to $2.19 billion in 2020[11]. - Cost of sales increased by 2.2% from $3,735 million in 2020 to $3,817 million in 2021, primarily due to increased revenue[36]. - Gross profit rose by 16% from $580 million in 2020 to $673 million in 2021, with gross margin increasing from 13.4% to 15%[36]. - Operating profit increased by 41.6% from $125 million in 2020 to $177 million in 2021, with operating margin rising from 2.9% to 3.9%[39]. - Income tax expense decreased by 58.1% from $74 million in 2020 to $31 million in 2021, with the effective tax rate dropping from 63.5% to 18.3%[41]. - Annual profit surged by 219% from $43 million in 2020 to $137 million in 2021, with profit margin increasing from 1.0% to 3.0%[42]. Revenue Segmentation - The mobile devices segment generated a revenue decrease of 15.8% due to the removal of wired earphones in new smartphone models, although Lightning cable products partially compensated for this[24]. - The communication infrastructure segment saw a revenue increase of 10.7% driven by the demand for CPU sockets and network interface products during the pandemic[24]. - Revenue from the computer and consumer electronics segment increased by 11.5% due to the rise in demand for laptops and tablets during remote work and online classes[24]. - The automotive, industrial, and medical segment experienced a revenue growth of 21.9% in 2021[24]. - The smart home segment's revenue decreased by 34.5% following the sale of the Linksys division on September 25, 2021[24]. - The smart accessories segment's revenue increased by 59.4% as physical retail channels reopened in Europe and the U.S.[24]. - Revenue from the mobile device segment decreased by 15.8% to $1,391 million, primarily due to the removal of wired headphone configurations in new smartphones[32]. - The communication infrastructure segment saw a revenue increase of 10.7% to $887 million, driven by increased demand for CPU sockets and network interface products during the pandemic[33]. - Revenue from the computer and consumer electronics segment increased by 11.5% to $976 million, supported by the ongoing trend of remote work and online learning[33]. - The automotive, industrial, and medical segment experienced a revenue increase of 21.9% to $176 million, attributed to rising demand for electric vehicles[33]. - The smart accessories segment grew significantly by 59.4% to $863 million, reflecting the increasing popularity of various smart accessory products[31]. - The smart home segment's revenue decreased by 34.5% to $196 million, following the sale of Linksys, which is no longer included in the group's financials[31]. Strategic Focus and Investments - The company aims to capture new market shares in rapidly developing industries[15]. - The company is focusing on high-margin product offerings and next-generation product lines to improve operational efficiency and financial performance[16]. - The acquisition of Sound Solutions International (SSI) expanded the company's micro-speaker and receiver module product offerings, enhancing its ODM acoustic business[21]. - The company aims to leverage opportunities in electric vehicles, 5G AIoT, and acoustic applications as key pillars of the future digital world[19]. - The company plans to strategically focus on mobile devices and the automotive, industrial, and medical markets for future growth opportunities[29]. - The company aims to invest more in developing vehicle electronic systems and key components for autonomous driving[29]. Corporate Governance - The board consists of three executive directors, one non-executive director, and three independent non-executive directors, ensuring compliance with listing rules regarding board composition[156]. - The board is committed to maintaining high standards of corporate governance, ensuring effective and transparent operations to protect shareholder interests[153]. - The company has adopted a standard code of conduct for securities trading by directors, ensuring compliance during the reporting period[167]. - The board has established four committees to oversee specific areas, including audit, remuneration, nomination, and environmental, social, and governance matters[154]. - The audit committee consists of three independent non-executive directors, responsible for overseeing the appointment and remuneration of external auditors[171]. - The company emphasizes corporate governance as a shared responsibility among directors, focusing on compliance with laws and regulations[170]. - The company will continue to review and monitor its corporate governance practices to ensure compliance with applicable codes[153]. Risk Management and Compliance - The company maintains a robust internal control and risk management system, subject to regular review by the audit committee[173]. - The Audit Committee reviews the integrity of financial statements and compliance with accounting standards and regulations[173]. - The company has established a whistleblowing policy to allow employees to report concerns confidentially regarding financial reporting and internal controls[184]. - The company has adopted a prudent foreign exchange hedging policy to manage risks associated with currency fluctuations[59]. Shareholder Information - As of December 31, 2021, the company’s major shareholder, Hon Hai, holds 5,179,557,888 shares, representing 72.61% of the total equity[99]. - The company did not recommend the payment of a final dividend for the fiscal year ending December 31, 2021[76]. - As of December 31, 2021, the company's distributable reserves were approximately $1,844 million, an increase from approximately $1,673 million as of December 31, 2020[82]. Employee and Management Information - Employee benefits expenses rose to $816 million from $750 million, with the workforce expanding from approximately 55,402 to 57,527 employees[58]. - The CEO, Sidney Lu, has over 40 years of experience in the industry, having held various positions at Foxconn since 1990[60]. - The COO and CFO, Lu Boqing, has extensive experience in strategic business development and previously served as CEO of Deloitte China[60]. - The management team is committed to leveraging their extensive industry experience to drive growth and innovation in the company's operations[71]. Environmental, Social, and Governance (ESG) Initiatives - The Environmental, Social, and Governance (ESG) Committee held 2 meetings during the reporting period to discuss the ESG report for the year ending December 31, 2020, and the implementation of ESG activities for 2021[199]. - The ESG Committee reviewed the significant ESG-related risks and matters, including strategic plans and policies[199].