Investment Rating - The report maintains a "BUY" rating for FIT Hon Teng with the target price currently under review [2][9][10]. Core Insights - The company is expected to benefit from multiple growth drivers in FY24/25, including AI server connectors, AirPods production ramp-up, and new opportunities in the electric vehicle (EV) sector [2][9]. - Management has indicated that revenue and gross profit margin (GPM) guidance for Q2 2024 is on track, with potential upside in the smartphone and networking segments [2][9]. - The report highlights a positive outlook for the iPhone replacement cycle and potential order wins in AI server connectivity, which could significantly enhance revenue in the networking segment [2][9]. Revenue and Profit Forecasts - Revenue is projected to grow from US4,715 million in FY24, representing a year-over-year growth of 12.4% [3][12]. - Net profit is expected to increase from US200 million in FY24, reflecting a growth rate of 51.5% [3][12]. - The earnings per share (EPS) is forecasted to rise from 2.81 cents in FY23 to 3.73 cents in FY24 [3][12]. Growth Drivers - Key growth drivers identified for 2025 include AirPods, AI server connectors/cables, and the auto business, particularly through a new joint venture in the EV charger market [2][9]. - The company is expected to ramp up production in Vietnam and India for AirPods, with management anticipating six additional production lines in India by 2025 [2][9]. Valuation Metrics - The company is trading at a price-to-earnings (P/E) ratio of 14.3x for FY24 and 10.8x for FY25, which is considered attractive given the expected EPS growth of 51% and 33% for FY24 and FY25, respectively [2][9][10]. - The report notes that the valuation remains appealing compared to the anticipated recovery in the AI server and smartphone markets [2][9].
FIT HON TENG：CMBI Corp Day takeaways: Multiple growth drivers in AI server, AI PC/phone and AirPods in FY24/25E