FII(SH:601138)2024-08-12 03:30Investment Rating - The investment rating for Foxconn Industrial Internet is maintained as BUY with a target price of RMB30.00 [1][4][6] Core Insights - Foxconn Industrial Internet (FII) reported record high revenue and net profit for 1H24, driven by strong demand for AI servers, with revenue reaching RMB266,091 million and attributable net profit at RMB8,739 million, reflecting year-on-year increases of 28.7% and 22.0% respectively [1][2] - The company is positioned strategically in the digital economy and AI development, enhancing its presence in cloud computing and network communications through advanced technology and capacity expansion [1][2] - FII's AI server revenue has multiplied, indicating a rapid growth phase, and the company expects further earnings growth from new-generation servers due to deep cooperation with leading global clients [2][3] Financial Performance - For 1H24, FII's revenue from cloud computing and AI products showed robust growth, with significant contributions from its cloud service provider (CSP) segment [2] - The company maintains its EPS estimates for 2024, 2025, and 2026 at RMB1.25, RMB1.46, and RMB1.63 respectively, and values the stock at 24x 2024E PE, which is above the average of its peers [4][6] - FII's revenue projections for the upcoming years are RMB538,810 million for 2024E, RMB613,666 million for 2025E, and RMB665,779 million for 2026E, with net profit estimates of RMB24,809 million, RMB28,976 million, and RMB32,441 million respectively [5][6] Recent Developments - FII has demonstrated confidence in its sustainable development through a recent share buyback proposal and a capital increase of RMB214 million aimed at accelerating project construction [3] - The capital expenditures of major tech companies like Microsoft, Google, Amazon, and Meta have increased significantly, indicating sustained optimism for future investments in AI computing infrastructure, which benefits FII's cloud computing business [3]