FIT HON TENG：Upbeat 3-year guidance reaffirmed our positive view; Raise TP to HK$4.38

Investment Rating - The report maintains a BUY rating for FIT Hon Teng (6088 HK) with a new target price of **HK$4.38**, representing a **40$3.14 [2][16] Core View - The report is optimistic about FIT Hon Teng's growth prospects, driven by strong 3-year guidance (2025-27) with a 20% revenue CAGR and GPM/OPM targets of 22%/8% by FY27E [2] - Key growth drivers include AI server/networking (GB200 ramp-up, product portfolio expansion), Auto-Kabel Group integration, and AirPods production capacity expansion in India [2] - The company's 3Q24 results were in-line with expectations, showing accelerated margin recovery with GPM at 21.7% and OPM at 8.2%, despite weakness in the EV segment [3] Financial Performance - For FY24E, the report estimates revenue growth of 9% YoY and net profit growth of 43% YoY, driven by high single-digit revenue growth and GPM of 20%+ [3] - The company's FY25-27E guidance includes a 20% revenue CAGR, with GPM/OPM targets of 22%/8%, supported by growth in AI server, mobility, and audio products [4] - FY25E revenue is projected at US$5,896 million**, with **net profit of US$308.1 million, representing a 67.2% YoY growth [6] Valuation - The stock is trading at 9.3x/7.1x FY25/26E P/E, which is considered attractive given the 67%/31% EPS growth projected for FY25/26E [5] - The new target price of HK$4.38** is based on a **13x FY25E P/E**, reflecting confidence in the company's **"3+3 Strategy"** and **profitability recovery** [16] Growth Drivers - **AI Server/Networking**: FIT Hon Teng is expected to benefit from **GB200 AI server component orders**, with **power busbar and CDU liquid cooling connectors** starting delivery in **4Q24E** [4] - **Auto-Kabel Integration**: The integration of Auto-Kabel is expected to close soon, contributing **meaningful revenue in FY25E** [4] - **AirPods Production**: The first production line in India is on track for **mass production in early FY25E**, with a second line to begin construction in **1H25E** [4] Revenue Breakdown - **Networking revenue** is expected to grow **59$591.6 million in FY25E, growing significantly from US$233.75 million in FY24E** [11] Scenario Analysis - The report provides a **bull, base, and bear scenario** for FIT's **AI server revenue in 2025**, with **total NVDA AI server revenue** ranging from **US$238.3 million (bear) to US$962.6 million (bull) [13][14][15]