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FIT HON TENG：Share pressure overdone; Raise estimates for stronger AirPods/AI server upside
06088FIT HON TENG(06088) 招银国际·2024-07-09 01:31

Investment Rating - The report maintains a "BUY" rating for FIT Hon Teng, with a target price (TP) raised to HK4.24basedonarolled−over13xFY25EP/E,upfromtheprevious11xP/E[2][13].CoreInsights−FITHonTenghasannouncedapositiveprofitalertfor1H24,projectingearningsbetweenUS4.24 based on a rolled-over 13x FY25E P/E, up from the previous 11x P/E [2][13]. Core Insights - FIT Hon Teng has announced a positive profit alert for 1H24, projecting earnings between US28-33 million, a significant recovery from a net loss of US9millionin1H23,primarilydrivenbystrongerdemandinthecomputingandnetworkingsegments[2][7].−Thestockpricehasfacedpressureduetoconcernsregardingthepaceofearningsrecoveryin2024andincreasedoperatingexpenses(OPEX)relatedtoAirPodsandVoltairabusinesses.However,thereportsuggeststhattherecentstockcorrectionisoverdone,andthecompanyisexpectedtobenefitfrommultipleproductlaunchesandoperatingleverageinthesecondhalfof2024[2][8].−Themanagementhasmaintainedacoreoperatingprofitmargin(OPM)estimateof5.59 million in 1H23, primarily driven by stronger demand in the computing and networking segments [2][7]. - The stock price has faced pressure due to concerns regarding the pace of earnings recovery in 2024 and increased operating expenses (OPEX) related to AirPods and Voltaira businesses. However, the report suggests that the recent stock correction is overdone, and the company is expected to benefit from multiple product launches and operating leverage in the second half of 2024 [2][8]. - The management has maintained a core operating profit margin (OPM) estimate of 5.5% for FY24, up from 4.9% in 2023, indicating improved operational efficiency [2][7]. Financial Summary - Revenue is projected to grow from US4,196 million in FY23 to US5,108millioninFY24,reflectingayear−on−yeargrowthof21.85,108 million in FY24, reflecting a year-on-year growth of 21.8%. This growth is expected to continue, reaching US6,332 million in FY25 and US7,497millioninFY26[3][16].−Netprofitisforecastedtoreboundsignificantly,fromUS7,497 million in FY26 [3][16]. - Net profit is forecasted to rebound significantly, from US131.8 million in FY23 to US194.3millioninFY24,representinga47.4194.3 million in FY24, representing a 47.4% year-on-year increase. The net profit is expected to further rise to US298.3 million in FY25 and US$373.4 million in FY26 [3][16]. - The report revises FY25 and FY26 EPS estimates upward by 12% and 10%, respectively, reflecting stronger demand for AI servers and progress in AirPods production [2][8]. Market Outlook - The management has expressed optimism regarding the outlook for FY24, driven by recovery in the PC market, networking demand, and AirPods shipments. The company anticipates a 48% and 54% year-on-year increase in net profit for FY24 and FY25, respectively [2][8]. - Near-term catalysts include the progress of AirPods shipments, potential auto mergers and acquisitions, and updates on AI server products, which are expected to enhance earnings visibility [2][13].