FII(SH:601138) Sou Hu Cai Jing·2025-09-25 09:51Core Viewpoint - Industrial Fulian (FII) is expected to enter a strong profit growth phase starting from Q3 2025, driven by increased market share in AI servers, modular AI data centers, network upgrades, and a seasonal boost in the smartphone market [1][4][6]. Group 1: Revenue Growth Drivers - Increased market share in AI servers due to strong R&D and execution capabilities, enabling the launch of next-generation rack-level AI servers [1][6]. - Collaboration between FII's parent company Hon Hai and Delta Electronics is expected to accelerate the deployment of AI data centers, supporting growth in AI server shipments [1][6]. - Rising demand for high-speed connectivity will boost the shipment of network devices, with product upgrades to 400G/800G increasing revenue per unit [1][6]. Group 2: Profitability and Financial Projections - Strong growth in rack-level AI servers is anticipated to drive revenue growth while maintaining disciplined operating expenses, supporting operating profit margins (OPM) [4][6]. - Net profit forecasts for 2025-2027 have been raised by 3%/3%/4% due to higher expected revenues from AI infrastructure and a positive market response [4][6]. - Operating expense ratios are projected to decrease to 1.9%/1.3%/1.2% for 2025-2027, down from 2.3% in Q2 2025, while SG&A expenses are expected to grow at a CAGR of 2% and R&D expenses at a CAGR of 14% [6]. Group 3: Target Price and Investment Rating - The target price has been raised by 13% to RMB 77.2, with the target P/E ratio adjusted from 26.9x to 29.4x based on stronger forward-looking net income growth [4]. - The investment rating remains "Buy" [4][7].