FII(SH:601138)2025-10-31 01:53Summary of Foxconn Industrial Internet (FII) 3Q25 Earnings Call Company Overview - Company: Foxconn Industrial Internet (FII) - Stock Code: 601138.SS - Industry: Hardware and Networking Products Key Financial Highlights - 3Q25 Net Profit: Rmb10.4 billion, beating expectations by 4% and 9% compared to CitiE and BBGe respectively [1][2] - 3Q25 Revenue: Rmb243 billion, representing a 21% increase QoQ and 43% YoY, but below expectations by 12% and 10% [2][9] - Gross Margin: 7.0%, up 0.5 percentage points QoQ, flat YoY, exceeding expectations by 1.2 and 2.6 percentage points [2][9] - Operating Profit: Rmb12.9 billion, a 50% increase QoQ and 56% YoY, beating expectations by 10% and 5% [2][9] - Earnings Per Share (EPS): Rmb0.52, a 51% increase QoQ and 62% YoY [9] Segment Performance - Cloud Computing Revenue: Increased over 75% YoY in 3Q25, up from over 50% in 2Q25, although below the 100% growth guidance [3] - CSP AI GPU Server Sales: Surged by over 5x YoY and 90% QoQ [3] - Switch Business Revenue: Jumped by 100% YoY, with 800G switch revenue growing by over 27x YoY, significantly exceeding the 15x guidance [3] Market Outlook and Growth Projections - 2026 Growth Visibility: Enhanced by the delivery of 14 million additional GPUs over the next five quarters, which is expected to boost investor confidence [1][8] - Rack Shipment Estimates: Increased for 2026 to 42,000 from 35,000, with 2025 estimates maintained at 13,000 [8] - Net Profit Estimates: Raised for 2025, 2026, and 2027 to approximately Rmb35 billion, Rmb77 billion, and Rmb99 billion respectively, which are 8%, 62%, and 73% higher than consensus [8][10] Valuation and Investment Strategy - Target Price: Raised to Rmb101.0, based on a blended P/E of 26x for 2026E earnings [4][20] - Investment Rating: Rated as "Buy" due to expected benefits from CSPs' deployment of AI servers and market share gains [19] Risks and Considerations - Downside Risks: Include lower-than-expected end-demand, AI sector de-rating, intensified competition, component and labor shortages, and production yield issues [21] Additional Insights - Market Capitalization: Approximately Rmb1,604.5 billion (US$226.0 billion) [4] - Expected Total Return: 26.2%, with a dividend yield of 1.2% [4] This summary encapsulates the key financial metrics, segment performance, market outlook, valuation, and risks associated with Foxconn Industrial Internet as discussed in the 3Q25 earnings call.