Investment Rating - The report assigns a "Buy" rating for the company, marking its first coverage [1]. Core Insights - The company is positioned as a leader in interconnected solutions, focusing on key industries such as electric vehicles (EV), 5G AIoT, and audio products through its "3+3" strategic framework [2][13]. - The company has a strong vertical integration advantage, being the only connector and cable platform under the Hon Hai Group, which provides significant support for product development and market penetration [3][17]. - The report highlights a robust growth trajectory in the automotive and communication sectors, with expectations for increased demand for connectors driven by the rise of electric vehicles and advanced communication technologies [4][34]. Summary by Sections Financial Performance - The company achieved total revenue of 32.4 billion USD in the first three quarters of 2024, reflecting a year-on-year increase of 9.9%, with net profit soaring by 599% to 1.1 billion USD [21][22]. - The forecast for net profit from 2024 to 2026 is projected at 1.6 billion USD, 2.4 billion USD, and 3.0 billion USD respectively, with corresponding P/E ratios of 21.0, 14.2, and 11.5 [4][1]. Strategic Positioning - The company has executed a series of acquisitions to enhance its capabilities, including the purchase of Avago's optical module business in 2015 and Prettl SWH in 2023, which have strengthened its core competencies in precision components and integrated production [2][13]. - The "3+3" strategy focuses on three key industries and three core technologies, aiming to leverage advancements in copper to optical, wired to wireless, and component to system products [13][15]. Market Outlook - The global connector market is expected to continue its recovery, with a projected growth rate of 5.8% in 2024 and 4.5% in 2025, driven by demand from the telecommunications and automotive sectors [33][34]. - The report notes that the automotive sector, particularly electric vehicles, is experiencing significant growth, with domestic sales of new energy vehicles in China increasing by 53.8% year-on-year in November 2024 [54][55]. Competitive Landscape - The connector industry is characterized by a fragmented market with significant barriers to entry, as new suppliers face lengthy certification processes to penetrate established supply chains [36][37]. - Major players in the connector market, such as TE Connectivity and Amphenol, hold substantial market shares, indicating a competitive environment where strategic acquisitions play a crucial role in growth [36][38].
FIT HON TENG：互联方案领导者，AI+汽车打开成长空间-20250221