Summary of Foxconn Industrial Internet Co. Ltd. Earnings Call Company Overview - **Company**: Foxconn Industrial Internet Co. Ltd. - **Industry**: Greater China Technology Hardware - **Market Cap**: US$95,655 million - **Stock Rating**: Overweight - **Price Target**: Rmb33.00 - **Current Price**: Rmb36.59 Key Financial Results - **2Q25 Operating Profit**: Rmb8,687 million, a 24% beat to estimates, up 32% QoQ and 78% YoY [1] - **Operating Margin**: Expanded by 0.2 percentage points QoQ and 1 percentage point YoY to 4.3% [1] - **Revenue**: Rmb200 billion, 7% below estimates [1] - **Net Profit**: Rmb6,883 million, or EPS of Rmb0.35, 1% higher than expectations [1] Revenue Growth Areas - **Cloud Equipment Revenue**: Increased by over 50% YoY in 2Q25, with AI server revenue growing over 60% YoY [2] - **CSP Customer Revenue**: Grew by over 150% YoY [2] - **Telecom and Networking Equipment**: Shipments increased significantly, with 800G network switch revenue in 2Q25 being three times that of the full year 2024 [3] - **Precision Component Business**: Grew by 17% YoY in 1H25, driven by AI smartphone demand [3] Future Outlook - **Management Expectations**: Anticipates continued growth in shipment volume for GB200 server rack projects due to improved integration yields [2] - **Margin Trend and Business Outlook**: Awaiting management comments on margin trends and business outlook for 2H25/2026 [6] Valuation and Risks - **Valuation Methodology**: Based on a multi-stage residual income (RI) valuation model with a 10% cost of equity and a medium-term growth rate of 14% [9][10] - **Upside Risks**: Faster project wins in IIoT solutions, lower competition, and stronger macro outlook [10] - **Downside Risks**: Slow project wins, increased competition, and weaker macro outlook [10] Additional Information - **Fiscal Year Ending**: December 2024 - **Projected EPS**: Rmb1.17 for FY24, increasing to Rmb2.19 by FY27 [4] - **EBITDA Projections**: Expected to grow from Rmb33,432 million in FY24 to Rmb56,244 million by FY27 [4] This summary encapsulates the key points from the earnings call, highlighting the financial performance, growth areas, future outlook, and valuation risks associated with Foxconn Industrial Internet Co. Ltd.