Investment Rating - The investment rating for FIT Hon Teng is maintained as "Buy" with a target price (TP) set at HK$2.42, corresponding to a 12.5x 2024 price-to-earnings ratio (PER) [2][3][7]. Core Insights - FIT Hon Teng's 1Q2024 results were in line with expectations, showing a revenue increase of 12.0% year-over-year (yoy) to US$965 million, with a gross profit margin improvement of 4.5 percentage points yoy to 20.3% [2][8]. - The company anticipates a ramp-up in its True Wireless Stereo (TWS) business for major customers in North America in the second half of 2024, with significant growth expected in 2025 [2][10]. - The management projects a double-digit revenue growth for the full year 2024, with gross margins stabilizing around 20% and a significant increase in operating profit [10][11]. Financial Performance - In 1Q2024, the gross profit increased by 44% yoy, and shareholders' net profit reached US$10 million, compared to a net loss of US$9 million in 1Q2023 [2][8]. - Forecasted earnings per share (EPS) for 2024, 2025, and 2026 are US$0.025, US$0.034, and US$0.042, respectively [2][7]. - The revenue mix from Electric Vehicle (EV) Mobility, new Generation 5G AIoT, and Audio is expected to reach 30% in 2024 and 40% in 2025 [11]. Strategic Initiatives - The company is implementing a "3+3" strategy focusing on the development of EVs, 5G AIoT, and acoustics, which is expected to drive growth [11]. - FIT Hon Teng plans to expand its production capacity significantly, including the addition of six more production lines in India by 2025 [2][10]. - The management is optimistic about capturing opportunities in the US$1.7 billion server connector and cable market, with plans to mass-produce AI-related products in the second half of 2024 [9][10].
1Q2024 Results Were in Line with Expectations; 3+3 Strategy to Bring Continuous Increment, “Buy”