Investment Rating - The report maintains a BUY rating for FIT Hon Teng with a target price (TP) of HK 2.15 [5][13]. Core Insights - Recent stock price corrections are viewed as overdone, primarily driven by investor concerns regarding Apple's TWS order allocation. Management has confirmed that the first production line of AirPods in Vietnam began shipments in February 2024, expected to contribute 5-7% of sales in FY24E. By 2025, additional production lines will be added in India, positioning FIT and Luxshare as the two largest AirPods suppliers with a projected market share of 30% and 70% respectively [2][3]. - The management has reiterated a solid outlook for 2024, projecting high-teens revenue growth, over 15% gross profit (GP) and operating profit (OP) growth year-on-year, driven by AirPods, AI server connectors, and the auto business [3][4]. Financial Summary - Revenue is projected to grow from US 4,715 million in FY24E, reflecting a year-on-year growth of 12.4%. Net profit is expected to increase significantly from US 201.2 million in FY24E, representing a growth of 55.3% [4][11]. - The earnings summary indicates a consistent improvement in profitability metrics, with gross profit margins expected to rise from 19% in FY23A to 20% in FY24E, and operating profit margins increasing from 6.3% to 7.5% over the same period [11][18]. Growth Drivers - Key growth drivers identified include the AirPods production ramp-up, AI server product launches, and consolidation in the auto business, with expected contributions of 5-7% from AirPods, 7-9% from AI server products, and 8% from the auto business in FY24E [3][4]. - The report highlights that the recent share price correction presents a buying opportunity, with the stock trading at attractive valuation multiples of 9.7x and 7.6x for FY24E and FY25E P/E respectively, compared to a historical average of 15x [3][13].
Recent sell-off looks overdone; AirPods production in Vietnam on track in 1H24E